UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 40-F
[X] REGISTRATION STATEMENT PURSUANT
TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[ ] ANNUAL REPORT
PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the fiscal year ended ______________________
|
Commission File Number:
______________________
|
AURORA CANNABIS
INC.
(Exact name of Registrant as specified in its
charter)
|
British Columbia, Canada
|
2833
|
N/A
|
|
(Province or Other Jurisdiction of
Incorporation or Organization)
|
(Primary Standard Industrial
Classification Code)
|
(I.R.S. Employer
Identification
No.)
|
Suite 500 – 10355 Jasper Avenue
Edmonton, Alberta
Canada T5J 1Y6
Tel: 1-844-928-7672
(Address
and telephone number of Registrant’s principal executive offices)
CORPORATION SERVICE COMPANY
251 Little Falls Drive
County of New Castle
Wilmington, Delaware 19808
Tel: 1-800-927-9800
(Name,
address (including zip code) and telephone number (including area code) of agent
for service in the United States)
Securities registered or to be registered pursuant to section
12(b) of the Act:
|
Title of Each Class
|
Name of Each Exchange on Which Registered:
|
|
Common Shares, no par value
|
New York Stock Exchange
|
Securities registered or to be registered pursuant to Section
12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant
to Section 15(d) of the Act:
None
For annual reports, indicate by check mark the information
filed with this Form:
|
[ ] Annual Information Form
|
[ ] Audited Annual Financial
Statements
|
Indicate the number of outstanding shares of each of the
Registrant’s classes of capital or common stock as of the close of the period
covered by the annual report:
Not applicable
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [
]
No [ ]
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the Registrant was required to submit and post such
files).
Yes [
] No
[ ]
Indicate by check mark whether the registrant is an emerging
growth company as defined in Rule 12b-2 of the Exchange Act.
Emerging growth company [X]
If an emerging growth company that prepares its financial
statements in accordance with U.S. GAAP, indicate by check mark if the
registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards† provided pursuant to
Section 13(a) of the Exchange Act.
[ ]
ii
INTRODUCTORY INFORMATION
Aurora
Cannabis Inc. (the “
Company
” or “
Aurora
”) is a Canadian public
company whose common shares are listed on the Toronto Stock Exchange. Aurora is
a “foreign private issuer” as defined in Rule 3b-4 under Securities Exchange Act
of 1934, as amended (the “
Exchange Act
”), and is eligible to file this
registration statement on Form 40-F (the “Registration Statement”) pursuant to
the Canada/United States multi-jurisdictional disclosure system (the
“
MJDS
”).
References to the “Registrant” or “Aurora” mean Aurora Cannabis Inc. and its
subsidiaries, unless the context suggests otherwise.
PRINCIPAL DOCUMENTS
Each of
the documents that is filed as an exhibit to this Registration Statement, as set
forth in the Exhibit Index attached hereto, is incorporated by reference herein.
The
Registrant has filed the written consent of the expert named in the foregoing
Exhibits as Exhibit 99.211, as set forth in the Exhibit Index attached
hereto.
DESCRIPTION OF COMMON SHARES
A
description of the common shares of the Registrant registered pursuant to this
Registration Statement, as required by General Instruction B.(2) of Form 40-F,
is set forth in the section entitled “
Description of Capital Structure –
Common Shares
” starting on page 51 of the Annual Information Form of the
Registrant for the year ended June 30, 2018 filed as Exhibit 99.205, as set forth in the Exhibit Index attached hereto.
FORWARD-LOOKING STATEMENTS
This
Registration Statement includes or incorporates by reference certain statements
that constitute “forward-looking statements” within the meaning of the United
States
Private Securities Litigation Reform Act of 1995
. Forward-looking
information involves statements that are not based on historical information,
but rather relate to future operations, strategies, financial results or other
developments. Forward-looking information is necessarily based upon estimates
and assumptions, which are inherently subject to significant business, economic
and competitive uncertainties and contingencies, many of which are beyond the
Company’s control and many of which, regarding future business decisions, are
subject to change. These uncertainties and contingencies can affect actual
results and could cause actual results to differ materially from those expressed
in any forward-looking information made by or on the Company’s behalf. Although
the Company has attempted to identify important factors that could cause actual
actions, events or results to differ materially from those described in
forward-looking information, there may be other factors that cause actions,
events or results to differ from those anticipated, estimated or intended. All
factors should be considered carefully and investors should not place undue
reliance on the Company’s forward-looking information as actual results may
vary. Examples of such forward-looking information within this Registration
Statement include statements relating to the Company’s expectations with respect
to: the integration of the operations of CanniMed Therapeutics Inc.
(“
CanniMed
”) and MedReleaf Corp. (“
MedReleaf
”) with those of the
Company; the integration of completion and timing of further strategic
acquisitions and investments; completion of construction and commencement of
operations at Aurora’s facilities; the yield from cannabis growing operations;
revenue growth; product demand; changes in prices of required commodities;
competition; and government regulations.
Forward-looking information reflects the Company’s current views with respect to
expectations, beliefs, assumptions, estimates and forecasts about the Company’s
business and the industry and markets in which the Company operates.
Forward-looking information is not a guarantee of future performance and
involves risks, uncertainties and assumptions, which are difficult to predict.
Assumptions underlying the Company’s expectations regarding forward-looking
statements or information contained in this Registration Statement include,
among others, the Company’s ability to comply with applicable governmental
regulations and standards, the Company’s success in implementing its strategies
and achieving its business objectives, the Company’s ability to raise sufficient
funds from equity or other financings in the future to support its operations,
and general business and economic conditions. The foregoing list of assumptions
is not exhaustive.
1
Persons
reading this Registration Statement are cautioned that forward-looking
information is only a prediction, and that the Company’s actual future results
or performance are subject to certain known and unknown risks, uncertainties and
other factors that may cause actual results to be materially different from
those expressed or implied by such forward-looking information, including:
|
|
•
|
the completion of the construction of its 800,000 square
foot Aurora Sky cannabis facility located at Edmonton International
Airport, Alberta, Canada, and receipt of the related license from Health
Canada, the department of the Federal Government of Canada with
responsibility for national public health;
|
|
|
|
|
|
|
•
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the completion of Aurora Sun, the Company’s planned
1,200,000 square foot, high-technology hybrid greenhouse cannabis
facility, currently in the design stage, at Medicine Hat, Alberta, and
receipt of the related Health Canada license;
|
|
|
|
|
|
|
•
|
the completion by Aurora Nordic Cannabis A/S (owned 51%
by the Company and 49% by Scandinavian Cannabis A/S) of a planned
1,000,000 square foot cannabis facility, currently in the design stage, at
Odense, Denmark, and completion of retrofitting at the Aurora Nordic’s
existing greenhouse facilities at Odense;
|
|
|
|
|
|
|
•
|
performance of the Company’s business and
operations;
|
|
|
|
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|
|
•
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the Company’s expectations regarding revenues,
expenses and anticipated costs;
|
|
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•
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future production costs and capacity;
|
|
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•
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the ability to renew the Company’s licenses
from Health Canada;
|
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•
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whether Aurora will have sufficient working
capital and its ability to raise additional financing required in order to
develop its business and continue operations;
|
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•
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industry growth trends, including with respect
to projected sales and number of patients;
|
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•
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the ability of the Company to successfully
integrate CanniMed and MedReleaf;
|
|
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•
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the Company’s expectations with respect to the
expected growth of CanniMed’s revenue, MedReleaf’s revenue, and the
Company’s revenue generally;
|
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•
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the legalization of cannabis for recreational use in
Canada, including federal and provincial regulations pertaining thereto
and the timing related thereof and the Company’s intentions to participate
in such market, if and when such market is legalized;
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•
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the medical benefits, viability, safety,
efficacy, dosing and social acceptance of cannabis;
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•
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the Company’s plans with respect to the payment
of dividends;
|
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•
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the impact of general business and economic
conditions;
|
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•
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whether Aurora will continue to be in
compliance with regulatory requirements; and
|
2
|
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•
|
whether the key personnel will continue their
employment with Aurora.
|
Some of
the important risks and uncertainties that could affect forward-looking
statements are described in this Registration Statement. Should one or more of
these risks and uncertainties materialize, or should underlying factors or
assumptions prove incorrect, actual results may vary materially from those
described in forward-looking statements. Material factors or assumptions
involved in developing forward-looking statements include, without limitation,
that:
|
|
•
|
the Company will continue to hold its licenses
from Health Canada and be able to renew such licenses on a timely basis;
|
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•
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the Company successfully complying with the regulatory
requirements for licensed cannabis producers (“
Licensed Producers
”)
under the
Access to Cannabis for Medical Purposes
Regulations
(the “
ACMPR
”) promulgated under the
Controlled Drugs and
Substances Act
(Canada) and Health Canada;
|
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•
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the laws, regulations and guidelines generally
applicable to the medical cannabis industry not changing in ways currently
unforeseen by the Company;
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•
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the proposed laws, regulations and guidelines
generally applicable to the adult-use recreational cannabis industry not
changing in ways currently unforeseen by the Company;
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•
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future clinical research studies on the effects of
medical cannabis do not lead to conclusions that dispute or conflict with
the Company’s understanding and belief regarding the medical benefits,
viability, safety, efficacy, dosing and social acceptance of cannabis;
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•
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the medical cannabis industry and market in
Canada will continue to grow, and the Company will be successful in this
new industry and market;
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•
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the Company has the ability to compete for market share
with other companies, including Licensed Producers, which may have longer
operating histories and more financial resources, manufacturing and
marketing experience than the Company;
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•
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the Company is able to attract or retain key personnel
with sufficient experience in the medical cannabis industry, and has the
ability to attract, develop, and retain additional employees required for
the Company’s development and future success;
|
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•
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the Company will not encounter significant
interruption in its access to certain key inputs such as raw materials,
electricity, water and other utilities;
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•
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the Company will be able to meet expected
revenue growth projections;
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•
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the ramp up in the harvest and production of
cannabis at the Company’s new facilities will meet the Company’s
expectations and not be significantly delayed or interrupted;
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•
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demand for the Company’s cannabis products will
not abate and the legalization of recreational, adult-use cannabis in
Canada will not be unreasonably delayed;
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•
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Aurora will have sufficient working capital and
be able to secure additional funding necessary for the continued
development of its products and business interests;
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•
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the Company will successfully integrate
acquired businesses and assets; and
|
3
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•
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the Company will continue to be successful in
acquiring assets and investments that strategically fit and at competitive
prices.
|
See also
“Description of the Business – Risk Factors” in the Annual Information Form for
the fiscal year ended June 30, 2018.
This
discussion, and the discussion of risk factors contained in the Annual
Information Form for the fiscal year ended June 30, 2018, are not exhaustive of
the factors that may affect any of forward-looking statements or information
concerning the Company. Further, any forward-looking statement speaks only as of
the date on which such statement is made, and, except as required by applicable
law, the Company does not undertake any obligation to update any forward-looking
statement to reflect events or circumstances after the date on which such
statement is made or to reflect the occurrence of unanticipated events. New
factors emerge from time to time, and it is not possible for management of the
Company to predict all such factors and to assess in advance the impact of each
such factor on the business of the Company or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statement.
Our
forward-looking statements are based on the reasonable beliefs, expectations and
opinions of management on the date of this Annual Information Form. Although we
have attempted to identify important factors that could cause actual results to
differ materially from those contained in forward-looking information, there may
be other factors that cause results not to be as anticipated, estimated or
intended. There is no assurance that such information will prove to be accurate,
as actual results and future events could differ materially from those
anticipated in such information. Accordingly, readers should not place undue
reliance on forward-looking information. We do not undertake to update any
forward-looking information, except as, and to the extent required by,
applicable securities laws, including applicable United States federal
securities laws. The forward-looking statements contained in this Registration
Statement (including the documents incorporated by reference herein are
expressly qualified by this cautionary statement.
NOTE TO UNITED STATES READERS
REGARDING DIFFERENCES
BETWEEN UNITED STATES AND CANADIAN REPORTING PRACTICES
The
Registrant is permitted to prepare this Registration Statement in accordance
with Canadian disclosure requirements, which are different from those of the
United States. The Registrant has historically prepared its consolidated
financial statements in accordance with International Financial Reporting
Standards, as issued by the International Accounting Standards Board, which
differ in certain respects from United States generally accepted accounting
principles (“
US GAAP
”) and from practices prescribed by the SEC.
Therefore, the Registrant’s financial statements incorporated by reference in
this Registration Statement may not be comparable to financial statements
prepared in accordance with U.S. GAAP.
OFF-BALANCE SHEET ARRANGEMENTS
The
Registrant has not entered into any “off-balance sheet arrangements”, as defined
in General Instruction B(11) to Form 40-F, that have or are reasonably likely to
have a current or future effect on the Registrant’s financial condition, changes
in financial condition, revenues, expenses, results of operations, liquidity,
capital expenditures or capital resources that are material to investors.
4
CONTRACTUAL OBLIGATIONS
Below is
a tabular disclosure of the Registrant’s contractual obligations as at June 30,
2018:
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Less than one
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1-3
|
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More than 5
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Total
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year
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years
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3 to 5 years
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years
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Convertible notes
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$
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231,696,000
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|
|
-
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$
|
229,758,000
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$
|
1,938,000
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-
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Finance lease obligations
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$
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510,801
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$
|
232,453
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$
|
242,050
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$
|
36,298
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|
-
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Operating lease obligations
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$
|
82,500
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$
|
60,000
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$
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22,500
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-
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-
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Lease agreements for rental
of office facilities
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$
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47,256,937
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$
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5,332,326
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$
|
10,114,472
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|
$
|
9,004,617
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$
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22,805,522
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Contingent
consideration
(1)
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$
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23,742,400
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$
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14,438,387
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$
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9,304,013
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|
|
-
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|
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-
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Other long-term liabilities
reflected on Aurora’s balance sheet
(2)
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$
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13,489,178
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$
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3,774,577
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$
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2,996,899
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$
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1,378,976
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$
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5,338,726
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Capital commitments
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$
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38,474,000
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$
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38,474,000
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-
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-
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-
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Total
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$
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355,251,816
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$
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62,311,743
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|
$
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252,437,934
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$
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12,357,891
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$
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28,144,248
|
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Notes:
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|
1.
|
Contingent consideration represents the gross amount
estimated to be paid out on achievement of future performance milestones
related to the acquisition of CanvasRx Inc. completed August 17, 2016, the
acquisition of B.C. Northern Lights Enterprises Ltd. and Urban Cultivator
Inc. completed September 29, 2017, and the acquisition of H2 Biopharma Inc.
completed November 30, 2017.
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2.
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Other long-term liabilities reflected on the balance
sheet as at June 30, 2018, include deferred gain on derivatives of
$2,253,510.
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5
UNDERTAKING AND CONSENT TO SERVICE OF PROCESS
Undertaking
The Registrant undertakes to make available, in person or by
telephone, representatives to respond to inquiries made by the Commission staff,
and to furnish promptly, when requested to do so by the Commission staff,
information relating to: the securities registered pursuant to Form 40-F; the
securities in relation to which the obligation to file an annual report on Form
40-F arises; or transactions in said securities.
Consent to Service of Process
Concurrently with the filing of this Registration Statement,
the Registrant will file an Appointment of Agent for Service of Process and
Undertaking on Form F-X signed by the Registrant and its agent for service of
process with respect to the class of securities in relation to which this
Registration Statement applies.
Any change to the name or address of the Registrant’s agent for
service shall be communicated promptly to the Commission by amendment to Form
F-X referencing the file number of the Registrant.
6
SIGNATURES
Pursuant to the requirements of the Exchange Act, the
Registrant certifies that it meets all of the requirements for filing on Form
40-F and has duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
|
Date: October 5, 2018
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A
URORA
C
ANNABIS
I
NC
.
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By:
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/s/ Terry Booth
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Terry Booth
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Chief Executive Officer
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7
EXHIBIT INDEX
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|
Exhibit
Number
|
Exhibit Description
|
|
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(1)
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99.1
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Material
change report dated July 10, 2017
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(1)
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99.2
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Material
change report dated July 12, 2017
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(1)
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99.3
|
Material
change report dated July 13, 2017
|
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(1)
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99.4
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Material
change report dated July 18, 2017
|
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(1)
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99.5
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Material
change report dated July 21, 2017
|
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(1)
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99.6
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Material
change report dated July 24, 2017
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(1)
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99.7
|
Change
of Status Report dated July 26, 2017
|
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(1)
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99.8
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Material
change report dated July 31, 2017
|
|
(1)
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99.9
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Material
change report dated August 8, 2017
|
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(1)
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99.10
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Material
change report dated August 31, 2017
|
|
(1)
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99.11
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Material
change report dated September 18, 2017
|
|
(1)
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99.12
|
Material
change report dated September 19, 2017
|
|
(1)
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99.13
|
Annual
financial statements for the years ended June 30, 2017 and 2016
|
|
(1)
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99.14
|
Management
Discussion and Analysis for the three and twelve month periods ended June
30, 2017
|
|
(1)
|
99.15
|
Annual
Information form for the financial year ended June 30, 2017, dated
September 25, 2017
|
|
(1)
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99.16
|
Certification
of Annual Filings Following an IPO/RTO/Becoming a Non-Venture Issuer by
CEO dated September 26, 2017
|
|
(1)
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99.17
|
Certification
of Annual Filings Following an IPO/RTO/Becoming a Non-Venture Issuer by
CFO dated September 26, 2017
|
|
(1)
|
99.18
|
Material
change report dated September 26, 2017
|
|
(1)
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99.19
|
Material
change report dated September 28, 2017
|
|
(1)
|
99.20
|
Material
change report dated September 29, 2017
|
|
(1)
|
99.21
|
Material
change report dated October 2, 2017
|
|
(1)
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99.22
|
Material
change report dated October 5, 2017
|
|
(1)
|
99.23
|
Management
Information Circular dated October 2, 2017
|
|
(1)
|
99.24
|
Notice
of annual and special meeting of shareholders dated October 2, 2017
|
|
(1)
|
99.25
|
Form
of proxy for annual and special meeting of shareholders to be held on
November 13, 2017
|
|
(1)
|
99.26
|
Material
change report dated October 10, 2017
|
|
(1)
|
99.27
|
Material
change report dated October 10, 2017
|
|
(1)
|
99.28
|
Material
change report dated October 10, 2017
|
|
(1)
|
99.29
|
Material
change report dated October 16, 2017
|
|
(1)
|
99.30
|
Material
change report dated July 31, 2017
|
|
(2)
|
99.31
|
Material
contract filed October 20, 2017 (Investment Agreement dated July 31, 2016)
|
8
|
(2)
|
99.32
|
Material
contract filed October 20, 2017 (Amended and Restated Share Purchase
Agreement dated August 9, 2016 and amended August 16, 2016)
|
|
(2)
|
99.33
|
Material
contract filed October 20, 2017 (Memorandum of Understanding dated
December 13, 2016)
|
|
(2)
|
99.34
|
Material
contract filed October 20, 2017 (Share Purchase and Transfer Agreement
dated May 18, 2017)
|
|
(2)
|
99.35
|
Material
contract filed October 20, 2017 (Investor Rights Agreement dated September
15, 2017)
|
|
(2)
|
99.36
|
Material
contract filed October 20, 2017 (Option Agreement dated September 15,
2017)
|
|
(1)
|
99.37
|
Material
change report dated October 23, 2017
|
|
(1)
|
99.38
|
News
release dated October 30, 2017
|
|
(1)
|
99.39
|
Material
change report dated November 2, 2017
|
|
(1)
|
99.40
|
News
release dated November 6, 2017
|
|
(1)
|
99.41
|
Material
change report dated November 6, 2017
|
|
(1)
|
99.42
|
Material
change report dated November 6, 2017
|
|
(1)
|
99.43
|
Material
change report dated November 7, 2017
|
|
(1)
|
99.44
|
Material
change report dated November 7, 2017
|
|
(1)
|
99.45
|
Interim
financial statements for the three months ended September 30, 2017 and
2016
|
|
(1)
|
99.46
|
Management
Information Circular for the three months ended September 30, 2017
|
|
(1)
|
99.47
|
Certification
of Interim Filings Following an IPO/RTO/Becoming a Non-Venture Issuer by
CEO, dated November 9, 2017
|
|
(1)
|
99.48
|
Certification
of Interim Filings Following an IPO/RTO/Becoming a Non-Venture Issuer by
CFO, dated November 9, 2017
|
|
(1)
|
99.49
|
Material
change report dated November 9, 2017
|
|
(1)
|
99.50
|
Material
change report dated November 14, 2017
|
|
(1)
|
99.51
|
Material
change report dated November 14, 2017
|
|
(1)
|
99.52
|
Material
change report dated November 15, 2017
|
|
(1)
|
99.53
|
Material
change report dated November 16, 2017
|
|
(1)
|
99.54
|
Material
change report dated November 16, 2017
|
|
(1)
|
99.55
|
Report
of voting results from the annual and special meeting held on November 13,
2017
|
|
(1)
|
99.56
|
Material
change report dated November 20, 2017
|
|
(1)
|
99.57
|
News
release dated November 23, 2017
|
|
(1)
|
99.58
|
News
release dated November 23, 2017
|
|
(1)
|
99.59
|
News
release dated November 23, 2017
|
|
(1)
|
99.60
|
Material
change report dated November 29, 2017
|
|
(1)
|
99.61
|
Material
change report dated November 29, 2017
|
|
(1)
|
99.62
|
Debenture
Indenture dated November 28, 2017
|
|
(1)
|
99.63
|
Special
Warrant Indenture dated November 28, 2017
|
|
(1)
|
99.64
|
News
release dated December 4, 2017
|
|
(1)
|
99.65
|
News
release dated December 4, 2017
|
9
|
(1)
|
99.66
|
News
release dated December 5, 2017
|
|
(1)
|
99.67
|
News
release dated December 11, 2017
|
|
(1)
|
99.68
|
News
release dated December 12, 2017
|
|
(1)
|
99.69
|
Management
Information Circular dated December 8, 2017
|
|
(1)
|
99.70
|
Notice
of special meeting of the shareholders dated December 8, 2017
|
|
(1)
|
99.71
|
Form
of proxy for special meeting of the shareholders to be held on January 15,
2018
|
|
(1)
|
99.72
|
News
release dated December 13, 2017
|
|
(1)
|
99.73
|
Master
Services Agreement dated November 5, 2017
|
|
(1)
|
99.74
|
News
release dated December 19, 2017
|
|
(1)
|
99.75
|
News
release dated January 2, 2018
|
|
(1)
|
99.76
|
News
release dated January 2, 2018
|
|
(1)
|
99.77
|
News
release dated January 4, 2018
|
|
(1)
|
99.78
|
News
release dated January 5, 2018
|
|
(1)
|
99.79
|
Material
change report dated January 5, 2018
|
|
(1)
|
99.80
|
News
release dated January 8, 2018
|
|
(1)
|
99.81
|
News
release dated January 9, 2018
|
|
(1)
|
99.82
|
News
release dated January 15, 2018
|
|
(1)
|
99.83
|
News
release dated January 15, 2018
|
|
(1)
|
99.84
|
News
release dated January 15, 2018
|
|
(1)
|
99.85
|
Term
Sheet: Strategic Investment Arrangement dated January 4, 2018
|
|
(1)
|
99.86
|
Subscription
Agreement for Subscription Receipts dated January 4, 2018
|
|
(1)
|
99.87
|
News
release dated January 18, 2018
|
|
(1)
|
99.88
|
News
release dated January 23, 2018
|
|
(1)
|
99.89
|
Material
change report dated January 26, 2018
|
|
(1)
|
99.90
|
Support
Agreement dated January 24, 2018
|
|
(1)
|
99.91
|
News
release dated January 29, 2018
|
|
(1)
|
99.92
|
News
release dated February 7, 2018
|
|
(1)
|
99.93
|
News
release dated February 8, 2018
|
|
(1)
|
99.94
|
Interim
financial report for the three and six months ended December 31, 2017 and
2016
|
|
(1)
|
99.95
|
Management’s
Discussion and Analysis for the three and six months ended December 31,
2017 and 2016
|
|
(1)
|
99.96
|
Certification
of interim filings in connection with the filing of interim financials and
MD&A for the period ended December 31, 2017 by CEO, dated February 8,
2018
|
|
(1)
|
99.97
|
Certification
of interim filings in connection with the filing of interim financials and
MD&A for the period ended December 31, 2017 by CFO, dated February 8,
2018
|
|
(1)
|
99.98
|
Material
change report dated February 8, 2018
|
|
(1)
|
99.99
|
News
release dated February 14, 2018
|
|
(1)
|
99.100
|
Material
change report dated February 16, 2018
|
10
|
(1)
|
99.101
|
News
release dated February 22, 2018
|
|
(1)
|
99.102
|
News
release dated February 27, 2018
|
|
(1)
|
99.103
|
Investor
Rights Agreement dated January 12, 2018
|
|
(1)
|
99.104
|
News
release dated March 1, 2018
|
|
(1)
|
99.105
|
News
release dated March 9, 2018
|
|
(1)
|
99.106
|
News
release dated March 12, 2018
|
|
(1)
|
99.107
|
News
release dated March 13, 2018
|
|
(1)
|
99.108
|
News
release dated March 15, 2018
|
|
(1)
|
99.109
|
News
release dated March 15, 2018
|
|
(1)
|
99.110
|
Material
change report dated March 19, 2018
|
|
(1)
|
99.111
|
News
release dated March 26, 2018
|
|
(1)
|
99.112
|
News
release dated March 28, 2018
|
|
(1)
|
99.113
|
News
release dated April 2, 2018
|
|
(1)
|
99.114
|
News
release dated April 4, 2018
|
|
(1)
|
99.115
|
News
release dated April 11, 2018
|
|
(1)
|
99.116
|
News
release dated April 13, 2018
|
|
(1)
|
99.117
|
News
release dated April 13, 2018
|
|
(1)
|
99.118
|
News
release dated April 16, 2018
|
|
(1)
|
99.119
|
News
release dated April 16, 2018
|
|
(1)
|
99.120
|
News
release dated April 30, 2018
|
|
(1)
|
99.121
|
News
release dated April 30, 2018
|
|
(1)
|
99.122
|
News
release dated May 1, 2018
|
|
(1)
|
99.123
|
News
release dated May 2, 2018
|
|
(1)
|
99.124
|
Business
acquisition report dated April 30, 2018
|
|
(1)
|
99.125
|
News
release dated May 3, 2018
|
|
(1)
|
99.126
|
Interim
financial statements for the three and nine months ended March 31, 2018
and 2017
|
|
(1)
|
99.127
|
Management’s
Discussion and Analysis for the three and nine months ended March 31, 2018
|
|
(1)
|
99.128
|
Certification
of interim filings in connection with the filing of interim financials and
MD&A for the period ended March 31, 2018 by CEO, dated May 8, 2018
|
|
(1)
|
99.129
|
Certification
of interim filings in connection with the filing of interim financials and
MD&A for the period ended March 31, 2018 by CFO, dated May 8, 2018
|
|
(1)
|
99.130
|
News
release dated May 8, 2018
|
|
(1)
|
99.131
|
News
release dated May 10, 2018
|
|
(1)
|
99.132
|
Debenture
Indenture dated March 9, 2018
|
|
(1)
|
99.133
|
News
release dated May 15, 2018
|
|
(1)
|
99.134
|
News
release dated May 22, 2018
|
|
(1)
|
99.135
|
News
release dated May 23, 2018
|
11
|
(1)
|
99.136
|
Material
change report dated May 24, 2018
|
|
(1)
|
99.137
|
News
release dated May 25, 2018
|
|
(1)
|
99.138
|
News
release dated May 25, 2018
|
|
(1)
|
99.139
|
News
release dated May 28, 2018
|
|
(1)
|
99.140
|
News
release dated May 30, 2018
|
|
(1)
|
99.141
|
News
release dated June 7, 2018
|
|
(1)
|
99.142
|
News
release dated June 8, 2018
|
|
(1)
|
99.143
|
News
release dated June 11, 2018
|
|
(1)
|
99.144
|
News
release dated June 12, 2018
|
|
(1)
|
99.145
|
News
release dated June 13, 2018
|
|
(1)
|
99.146
|
News
release dated June 18, 2018
|
|
(1)
|
99.147
|
News
release dated June 20, 2018
|
|
(1)
|
99.148
|
Management
information circular dated June 18, 2018
|
|
(1)
|
99.149
|
Notice
of special meeting of shareholders dated June 18, 2018
|
|
(1)
|
99.150
|
Form
of proxy for special meeting of shareholders to be held on July 18, 2018
|
|
(1)
|
99.151
|
News
release dated June 20, 2018
|
|
(1)
|
99.152
|
News
release dated June 21, 2018
|
|
(1)
|
99.153
|
News
release dated June 25, 2018
|
|
(1)
|
99.154
|
News
release dated June 26, 2018
|
|
(1)
|
99.155
|
News
release dated July 3, 2018
|
|
(1)
|
99.156
|
News
release dated July 5, 2018
|
|
(1)
|
99.157
|
News
release dated July 6, 2018
|
|
(1)
|
99.158
|
News
release dated July 6, 2018
|
|
(1)
|
99.159
|
News
release dated July 11, 2018
|
|
(1)
|
99.160
|
News
release dated July 11, 2018
|
|
(1)
|
99.161
|
News
release dated July 11, 2018
|
|
(1)
|
99.162
|
News
release dated July 16 , 2018
|
|
(1)
|
99.163
|
News
release dated July 16, 2018
|
|
(1)
|
99.164
|
News
release dated July 18, 2018
|
|
(1)
|
99.165
|
Report
of voting results for special meeting of shareholders held on July 18,
2018
|
|
(1)
|
99.166
|
News
release dated July 23, 2018
|
|
(1)
|
99.167
|
News
release dated July 24, 2018
|
|
(1)
|
99.168
|
News
release dated July 30, 2018
|
|
(1)
|
99.169
|
News
release dated July 28, 2018
|
|
(1)
|
99.170
|
Material
change report dated August 3, 2018
|
|
(1)
|
99.171
|
News
release dated August 7, 2018
|
|
(1)
|
99.172
|
News
release dated August 8, 2018
|
12
|
(1)
|
99.173
|
News release dated August 10,
2018
|
|
(1)
|
99.174
|
News release dated August 13, 2018
|
|
(1)
|
99.175
|
News release dated August 14,
2018
|
|
(1)
|
99.176
|
News release dated August 14, 2018
|
|
(1)
|
99.177
|
News release dated August 16,
2018
|
|
(1)
|
99.178
|
Depository Agreement dated June 18, 2018
|
|
(1)
|
99.179
|
First Supplemental Indenture
Agreement dated July 25, 2018
|
|
(1)
|
99.180
|
Material change report dated August 16, 2018
|
|
(1)
|
99.181
|
News release dated August 17,
2018
|
|
(1)
|
99.182
|
News release dated August 20, 2018
|
|
(1)
|
99.183
|
News release dated August 21,
2018
|
|
(1)
|
99.184
|
News release dated August 22, 2018
|
|
(1)
|
99.185
|
News release dated August 27,
2018
|
|
(1)
|
99.186
|
News release dated September 4, 2018
|
|
(1)
|
99.187
|
News release dated September 7,
2018
|
|
(1)
|
99.188
|
News release dated September 10, 2018
|
|
(1)
|
99.189
|
Credit Agreement dated August
29, 2018
|
|
(1)
|
99.190
|
Material change report dated September 10, 2018
|
|
(1)
|
99.191
|
News release dated September
11, 2018
|
|
(1)
|
99.192
|
News release dated September 12, 2018
|
|
(1)
|
99.193
|
News release dated September
14, 2018
|
|
(1)
|
99.194
|
Business acquisition report dated September 5,
2018
|
|
(1)
|
99.195
|
News release dated September
18, 2018
|
|
(1)
|
99.196
|
News release dated September 18, 2018
|
|
(1)
|
99.197
|
Voting and Support Agreement
dated September 8, 2018
|
|
(1)
|
99.198
|
Arrangement Agreement dated September 8, 2018
|
|
(1)
|
99.199
|
Material change report dated
September 18, 2018
|
|
(1)
|
99.200
|
News release dated September 19, 2018
|
|
(1)
|
99.201
|
News release dated September
21, 2018
|
|
(1)
|
99.202
|
News release dated September 24, 2018
|
|
(1)
|
99.203
|
Annual consolidated financial
statements for the years ended June 30, 2018 and 2017
|
|
(1)
|
99.204
|
Management Discussion and Analysis for the year
ended June 30, 2018
|
|
(1)
|
99.205
|
Annual Information form for the
financial year ended June 30, 2018
|
|
(1)
|
99.206
|
Certification of Annual Filings by CEO dated
September 25, 2018
|
|
(1)
|
99.207
|
Certification of Annual Filings
by CFO dated September 25, 2018
|
|
(1)
|
99.208
|
Notice of Change of Auditor
|
|
(1)
|
99.209
|
Letter from successor auditor
|
|
(1)
|
99.210
|
Letter from former auditor
|
|
(1)
|
99.211
|
Consent of MNP LLP
|
(1)
filed herein to this Registration Statement on Form 40-F.
(2)
to be filed with Amendment No. 1 to this Registration Statement on Form 40-F.
13
|
EX-1.10 11 exhibit1-10.htm EXHIBIT 1.10
|
|
|
BRITISH COLUMBIA
ALBERTA
ONTARIO
QUEBEC
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the "
Company
")
1500 – 1199 West Hastings Street
Vancouver, BC V6E 3T5
Telephone:
(604) 362-5207
|
Item 2.
|
Date of Material Change
|
July 10, 2017
A news release issued on July 10, 2017
at Vancouver, British Columbia relating to the material change described herein
was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
The Company has received conditional
approval from the Toronto Stock Exchange (the "TSX") to graduate from the TSX
Venture Exchange and list its common shares on the TSX.
Full Description of Material
Change
The Company has received conditional
approval from the Toronto Stock Exchange (the "TSX") to graduate from the TSX
Venture Exchange and list its common shares on the TSX. Upon receiving final
approval, the common shares will continue to trade under the symbol “ACB”. In
conjunction with listing on the TSX, the common shares will be voluntarily
delisted from the TSX Venture Exchange prior to the commencement of trading on
the TSX.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
- 2 -
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Senior Vice President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Corporate Secretary
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive Officer
Mobile: (780) 722 - 8889
Email: terry@auroramj.com
DATED July 10, 2017.
- 3 -
Aurora Cannabis to Graduate to TSX
Vancouver, BC – July 10, 2017 – Aurora Cannabis Inc. (the
“Company” or “Aurora”) (TSXV: ACB) (OTCQX: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
announced today that the Company has received conditional approval from the
Toronto Stock Exchange (the "TSX") to graduate from the TSX Venture Exchange and
list its common shares on the TSX. Upon receiving final approval, the common
shares will continue to trade under the symbol “ACB”. In conjunction with
listing on the TSX, the common shares will be voluntarily delisted from the TSX
Venture Exchange prior to the commencement of trading on the TSX.
“Aurora’s graduation to the TSX, for which we anticipate
receiving final approval imminently, is another exciting milestone, reflecting
our remarkable pace of growth and expansion, both across Canada and
internationally,” said Terry Booth, CEO. “Since we began commercial operations
18 months ago, Aurora has established itself as a driving force, with one of the
strongest brands in the cannabis industry, due to constant innovation and
consistent execution. Tangible developments, such as the construction of Aurora
Sky, our 100,000 kg per year cannabis production facility, the acquisitions in
Québec and Germany, as well as our strategic investments in Cann Group in
Australia, and Radient Technologies in Alberta, reflect how Aurora continues to
set new standards in the industry. Having uplisted from the CSE to the TSXV in
October, 2016, we believe that now graduating to the TSX will enable us to
address an even wider investor audience, both domestically and internationally.
We remain focused strongly on building shareholder value, and look forward to
reporting on our progress as a member of Canada’s flagship stock exchange.”
About Aurora
Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s
Access to Cannabis for Medical Purposes Regulations (“ACMPR”). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, and is currently constructing a second 800,000 square foot
production facility, known as “Aurora Sky”, at the Edmonton International
Airport, and has acquired, and is undertaking completion of, a third 40,000
square foot production facility in Pointe-Claire, Quebec, on Montreal’s West
Island. In addition, the company is the cornerstone investor with a 19.9% stake
in Cann Group Limited, the first Australian company licensed to conduct research
on and cultivate medical cannabis, as well as owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union
("EU"), based in Germany. Aurora’s common shares trade on the TSX-V under the
symbol “ACB”.
- 4 -
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth, CEO
This news release includes statements containing certain
"forward-looking information" withinthe meaning of applicable securities law
(“forward-looking statements”). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
The TSX Venture Exchange nor its Regulation Services Provider
(as that term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
###
Further information:
|
For Aurora Cannabis Inc.
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
NATIONAL Equicom
|
|
+1.905.864.5525
|
mlakmaaker@national.ca
|
|
cam@auroramj.com
|
+1.416.848.1397
|
|
www.auroramj.com
|
|
|
EX-1.11 12 exhibit1-11.htm EXHIBIT 1.11
|
|
|
BRITISH COLUMBIA
ALBERTA
ONTARIO
QUEBEC
FORM 51-102F3
MATERIAL CHANGE
REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver,
BC V6E 3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
July 12, 2017
A news release issued on July 12, 2017
at Vancouver, British Columbia relating to the material change described herein
was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. passes the first
stage of German domestic production tender application process to become a
licensed producer of medical cannabis in Germany.
Full Description of
Material Change
Aurora Cannabis Inc. announced that
its wholly owned subsidiary, Pedanios GmbH (“Pedanios”), has successfully passed
the first stage of the tender application process to become a licensed producer
of medical cannabis in Germany.
As a result of initial stage
evaluations, the German Federal Institute for Medicines and Medical Products
(“BfArM”), has requested Pedanios’ participation in second and final stage of
the application process which involves a competitive bid proposal and contract
negotiations to cultivate, process, store, package and deliver cannabis for
medical purposes in Germany.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
- 2 -
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Senior Vice President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Corporate Secretary
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive Officer
Mobile: (780) 722 - 8889
Email: terry@auroramj.com
DATED July 12, 2017.
- 3 -
Aurora Cannabis Passes First Stage of German
Domestic Production Tender Application Process
Vancouver, BC – July 12, 2017
– Aurora
Cannabis Inc. (the “Company” or “Aurora”) (TSXV: ACB) (OTCQX: ACBFF) (Frankfurt:
21P; WKN: A1C4WM) is pleased to announce that its wholly owned subsidiary
Pedanios GmbH (“Pedanios”) has successfully passed the first stage of the tender
application process to become a licensed producer of medical cannabis in
Germany.
As a result of initial stage evaluations, the German Federal
Institute for Medicines and Medical Products (“BfArM”), has requested Pedanios’
participation in second and final stage of the application process which
involves a competitive bid proposal and contract negotiations to cultivate,
process, store, package and deliver cannabis for medical purposes in Germany.
Pedanios is well positioned to provide a world class and highly
competitive bid for the production contracts in Germany by leveraging the
expertise, resources, genetics, intellectual property, and other competitive
advantages possessed by the Company’s other wholly owned subsidiary Aurora
Cannabis Enterprises Inc. (“ACE”). One of the world’s largest and most
successful licensed producers of medical cannabis, ACE currently serves more
than 16,000 patients in Canada under the Access to Cannabis for Medical Purposes
Regulations (“ACMPR”).
As the country’s largest importer, exporter, and distributor of
medical cannabis, Pedanios has shipped to more than 1,000 German pharmacies, and
currently relies exclusively on imported medical cannabis products from
federally regulated producers in Canada and the Netherlands. Future German
production is designed to complement the country’s ongoing import of medical
cannabis by identifying, licensing and establishing supply contracts with select
domestic producers to support the country’s growing medical market from 2019 to
2022.
“We are excited to take the next step in this historic tender
process, and look forward to working with Pedanios, the country’s go-to source
for quality medical cannabis and customer service, to provide the German market
with locally produced, high quality cannabis,” said Terry Booth, CEO of Aurora.
With a population of more than 80 million, Germany is expected
to become a robust market for medical cannabis. Of note, Germany is the first
county in the world to cover the cost of medical cannabis, for any therapeutic
application approved by a physician, through its national health insurance
system. The market for medical cannabis in Germany is expected to expand
rapidly. Dr. Franjo Grotenhermen, leading cannabis physician and managing
director of the International Association for Cannabinoid Medicines, anticipates
the number of patients using medical cannabis in Germany to grow from several
thousand today, to approaching a million in the coming years (source:
https://www.tagesschau.de/inland/cannabis- 137.html, March 3, 2017)
- 4 -
About Aurora
Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s
Access to Cannabis for Medical Purposes Regulations (“ACMPR”). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, and is currently constructing a second 800,000 square foot
production facility, known as “Aurora Sky”, at the Edmonton International
Airport, and has acquired, and is undertaking completion of, a third 40,000
square foot production facility in Pointe-Claire, Quebec, on Montreal’s West
Island. In addition, the company is the cornerstone investor with a 19.9% stake
in Cann Group Limited, the first Australian company licensed to conduct research
on and cultivate medical cannabis, as well as owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union
("EU"), based in Germany. Aurora’s common shares trade on the TSX-V under the
symbol “ACB”.
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth, CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
(“forward-looking statements”). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward- looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
The TSX Venture Exchange nor its Regulation Services Provider
(as that term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
###
Further information:
|
For Aurora Cannabis Inc.
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
NATIONAL Equicom
|
|
+1.905.864.5525
|
mlakmaaker@national.ca
|
|
cam@auroramj.com
|
+1.416.848.1397
|
|
www.auroramj.com
|
|
|
EX-1.12 13 exhibit1-12.htm EXHIBIT 1.12
|
|
|
BRITISH COLUMBIA
ALBERTA
ONTARIO
QUEBEC
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the "
Company
")
1500 – 1199 West Hastings Street
Vancouver, BC V6E 3T5
Telephone: (604)
362-5207
|
Item 2.
|
Date of Material Change
|
July 13, 2017
A news release issued on July 13, 2017
at Vancouver, British Columbia relating to the material change described herein
was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. hosts Australian
Delegation led by the Honourable Jaala Pulford, Minister of Agriculture and
Minister for Regional Development for the State of Victoria.
Full Description of Material
Change
The Company will be hosting a
delegation from Australia, led by the Honourable Jaala Pulford, Minister of
Agriculture and Minister for Regional Development for the State of Victoria. The
purpose of the visit to Canada, during which the delegation will also meet with
federal officials in Ottawa, is knowledge transfer with regard to the
regulations governing the medical cannabis sector, as well as more detailed
insight into best practices relating to cultivation, production and
distribution. The visit will provide insights into the elements that have made
the Canadian system, which currently serves approximately 200,000 patients, so
successful.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
- 2 -
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Senior Vice President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Corporate Secretary
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive Officer
Mobile: (780) 722 - 8889
Email: terry@auroramj.com
DATED July 13, 2017.
- 3 -
Aurora Cannabis Hosts Australian Delegation
Led by the Honourable Jaala Pulford, Minister of
Agriculture and Minister
for Regional Development for the State of Victoria
Vancouver, BC – July 13, 2017
– Aurora Cannabis
Inc. (the “Company” or “Aurora”) (TSXV: ACB) (OTCQX: ACBFF) (Frankfurt: 21P;
WKN: A1C4WM) is pleased to announce that today the Company will be hosting a
delegation from Australia, led by the Honourable Jaala Pulford, Minister of
Agriculture and Minister for Regional Development for the State of Victoria. The
purpose of the visit to Canada, during which the delegation will also meet with
federal officials in Ottawa, is knowledge transfer with regard to the
regulations governing the medical cannabis sector, as well as more detailed
insight into best practices relating to cultivation, production and
distribution. The visit will provide insights into the elements that have made
the Canadian system, which currently serves approximately 200,000 patients, so
successful.
The Australian delegation will spend a full day with Aurora
executives, visiting both the highly automated 800,000 square foot Aurora Sky
facility now under construction at Edmonton International Airport and the
Company’s existing 55,000 square foot production facility in Mountain View
County, Alberta, which was Canada’s first purpose-built indoor cannabis growing
facility.
Also meeting with the Minister today will be the Honourable
Shaye Anderson, Alberta’s Minister of Municipal Affairs and MLA for
Leduc-Beaumont, as well as executives representing two of Aurora’s strategic
partners: Peter Crock, CEO of Cann Group Limited, Australia’s first licensed
cannabis company, in which Aurora holds a 19.9% stake; and Denis Taschuk, CEO of
Radient Technologies Inc., an Edmonton concentrates company, in which Aurora
holds a 17% stake.
Australia's Victorian Minister for Agriculture, Jaala Pulford,
stated, “This visit to Canada presents an eye- opening opportunity to learn from
the best in the industry. Australia's medicinal cannabis industry is in its
earliest days, and the knowledge that has been gained in Canada over recent
years will help guide us and take us forward.”
Just last month, Victoria marked a hugely significant milestone
in the development of the medicinal cannabis industry in Australia with the
awarding of the first commercial permit to Melbourne-based company Cann Group.
“Partnerships like the one between Aurora and Cann Group will
play a critical role in establishing best practices and developing Australia's
newest economic sector. Victoria’s involvement in the medicinal cannabis
industry is in its early phases and we are keen to find out from other, more
established markets what some of the opportunities and challenges are,” added Ms
Pulford.
- 4 -
“We are very pleased to be hosting Minister Pulford and her
delegation, and look forward to a day of discussion about the critical success
factors required to establish and rapidly develop a world-leading medical
cannabis system,” said Terry Booth, CEO. “We believe the Canadian cannabis
regime under the Access to Cannabis for Medical Purposes Regulations (ACMPR), as
implemented by Health Canada, has created the most successful, well-developed
cannabis system in the world. The ACMPR has the potential to inspire programs in
other countries, such as Australia, where medical cannabis programs are in their
early stages, and we are honoured to be part of this knowledge transfer
initiative.”
About Aurora
Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s
Access to Cannabis for Medical Purposes Regulations (“ACMPR”). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, and is currently constructing a second 800,000 square foot
production facility, known as “Aurora Sky”, at the Edmonton International
Airport, and has acquired, and is undertaking completion of, a third 40,000
square foot production facility in Pointe-Claire, Quebec, on Montreal’s West
Island. In addition, the company is the cornerstone investor with a 19.9% stake
in Cann Group Limited, the first Australian company licensed to conduct research
on and cultivate medical cannabis, as well as owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union
("EU"), based in Germany. Aurora’s common shares trade on the TSX-V under the
symbol “ACB”.
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth, CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
(“forward-looking statements”). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward- looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
The TSX Venture Exchange nor its Regulation Services Provider
(as that term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
###
- 5 -
Further information:
For Aurora Cannabis Inc.
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
NATIONAL Equicom
|
|
+1.905.864.5525
|
mlakmaaker@national.ca
|
|
cam@auroramj.com
|
+1.416.848.1397
|
|
www.auroramj.com
|
|
|
EX-1.13 14 exhibit1-13.htm EXHIBIT 1.13
|
|
|
BRITISH COLUMBIA
ALBERTA
ONTARIO
QUEBEC
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the "
Company
")
1500 – 1199 West Hastings Street
Vancouver, BC V6E 3T5
Telephone:
(604) 362-5207
|
Item 2.
|
Date of Material Change
|
July 18, 2017
A news release issued on July 18, 2017
at Vancouver, British Columbia relating to the material change described herein
was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. (the “Company” or
“Aurora”) and Melbourne based Cann Group Limited (“Cann”) Execute Technical
Services Agreement.
Full Description of Material
Change
Aurora and Cann Group have entered
into a technical services agreement. This agreement covers the period until the
end of 2022, will facilitate an exchange of information and support across areas
including the cultivation and processing of medical cannabis; extraction and
manufacturing technology; and analysis of cannabis extracts.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable
.
|
Item 7.
|
Omitted Information
|
None
- 2 -
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Senior Vice President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Corporate Secretary
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive Officer
Mobile: (780) 722 - 8889
Email: terry@auroramj.com
DATED July 18, 2017
.
- 3 -
Aurora and Cann Group Execute Technical Services
Agreement
Vancouver, BC & Melbourne, Australia – July 18,
2017
– Aurora Cannabis Inc. (the “Company” or “Aurora”) (TSXV: ACB)
(OTCQX: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) and Melbourne based Cann Group
Limited (“Cann”) (ASX: Can), today announced that the companies have entered
into a technical services agreement.
The agreement, which covers the period until the end of 2022,
will facilitate an exchange of information and support across areas including
the cultivation and processing of medical cannabis; extraction and manufacturing
technology; and analysis of cannabis extracts.
Aurora is Canada’s second largest publicly listed medical
cannabis producer and the first Canadian company to establish purpose built
cultivation facilities. Aurora is a 19.9% shareholder of Cann, having taken a
cornerstone position at Cann’s initial public offering in May of this year.
The agreement was executed at Aurora’s state of the art
production facility in Mountain View County, where Aurora management hosted a
visit of the Cann Board of Directors.
Cann Chairman Allan McCallum said the agreement with Aurora
will provide critical technical support as Cann proceeds with the expansion of
its research and development and cultivation facilities in Melbourne. “Aurora’s
experience and technical know-how are recognized around the world as
industry-leading. Cann is at the forefront of Australia’s fledgling medical
cannabis industry and is committed to adopting industry best-practices across
all of our operations, said Allan McCallum, Chairman of Cann. “This agreement
will facilitate close co-operation and valuable technical support as we continue
to develop our business in the Australian market. The agreement with Aurora
strengthens our R&D programs, cultivation, manufacturing and service to
patients, and we believe will help us build strong brand equity in the
Australian market.”
Cann CEO Peter Crock added, “To position ourselves as one of
the significant players in the Australian market, we are completing the
expansion of our southern facility, as well as expect to commission a larger
capacity northern facility by the end of this year. Aurora is incorporating
industry leading technology in the world’s most advanced new facility now under
construction in Edmonton, and we will benefit greatly from a regular exchange of
information, including reciprocal visits of key personnel.”
“This agreement with Cann is a key element in executing on our
international expansion strategy,” said Terry Booth, CEO. “By transferring
important operational know-how to Cann, our intention is to support not only the
development of one of the leading players in this market, but also to accelerate
the development of the broader Australian medical cannabis sector.”
The visit of Cann’s Board coincided with a visit to Canada by
Victorian Agriculture Minister Jaala Pulford, who met with Aurora management and
inspected the company’s facilities.
- 4 -
Allan McCallum said it was pleasing that the Minister was
investing the time and effort to visit facilities and meet with industry leaders
in other parts of the world. “It is important that Australia learns from the
experience gained in countries where the industry has been established for some
time and adopts high standards and best practices.”
About Cann Group
Cann Group is building a world-class business focused on
breeding, cultivating and manufacturing medical cannabis for sale and use within
Australia. The company has established research and cultivation facilities in
Melbourne and is striving to provide access to medical cannabis for Australian
patients. Cann Group has executed collaboration agreements that will enable it
to establish a leading position in plant genetics, breeding, extraction,
analysis and production techniques required to facilitate the supply of medical
cannabis for a range of diseases and medical conditions.
Cann was issued with Australia’s first medical cannabis
research licence in February 2017, in addition to Australia’s first medical
cannabis cultivation licence in March 2017. The company has also been issued
with permits that facilitate the establishment of breeding plants for
propagation purposes; a research program being undertaken with CSIRO to develop
unique cannabis extracts; and the supply of plant material for manufacturing
into medical cannabis products for patient use. The first plants being
cultivated by Cann are expected to be harvested in August 2017.
About Aurora
Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s
Access to Cannabis for Medical Purposes Regulations (“ACMPR”). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, and is currently constructing a second 800,000 square foot
production facility, known as “Aurora Sky”, at the Edmonton International
Airport, and has acquired, and is undertaking completion of, a third 40,000
square foot production facility in Pointe-Claire, Quebec, on Montreal’s West
Island. In addition, the company is the cornerstone investor with a 19.9% stake
in Cann Group Limited, the first Australian company licensed to conduct research
on and cultivate medical cannabis, as well as owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union
("EU"), based in Germany. Aurora’s common shares trade on the TSX-V under the
symbol “ACB”.
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth, CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
(“forward-looking statements”). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward- looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
- 5 -
The TSX Venture Exchange nor its Regulation Services Provider
(as that term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
###
|
Further information:
|
|
|
|
|
|
For Aurora Cannabis Inc.
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
NATIONAL Equicom
|
|
+1.905.864.5525
|
mlakmaaker@national.ca
|
|
cam@auroramj.com
|
+1.416.848.1397
|
|
www.auroramj.com
|
|
|
|
|
|
For Cann Group
|
|
|
|
|
|
For further information please contact:
|
|
|
Peter Crock
|
Matthew Wright
|
|
Cann Group Limited
|
NWR Communications
|
|
+61 (0) 3 9095 7088
|
+61 (0) 451 896 420
|
|
contact@canngrouplimited.com
|
matt@nwrcommunications.com.au
|
|
EX-1.14 15 exhibit1-14.htm EXHIBIT 1.14
|
|
|
BRITISH COLUMBIA
ALBERTA
ONTARIO
QUEBEC
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver,
BC V6E 3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
July 21, 2017
A news release issued on July 21, 2017
at Vancouver, British Columbia relating to the material change described herein
was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. (the "Company" or
"Aurora") Starts Trading on Toronto Stock Exchange (the "TSX"). Company Will
Ring the Bell to Open the Market Monday July 24.
Full Description of Material
Change
Aurora announced today that common
shares of the Company will commence trading on TSX effective Monday July 24.
Common shares will continue to trade under the symbol "ACB". In conjunction with
listing on TSX, the common shares have been voluntarily delisted from TSX
Venture Exchange, effective close of trading today, Friday, July 21, 2017.
Aurora will “ring the bell” to open TSX on Monday July 24, 2017.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
- 2 -
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Senior Vice President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Corporate Secretary
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive Officer
Mobile: (780) 722 - 8889
Email: terry@auroramj.com
DATED July 21, 2017.
- 3 -
Aurora Cannabis Starts Trading on Toronto Stock
Exchange
Company Will Ring the Bell to Open the Market Monday July
24
VANCOUVER, July 21, 2017
- Aurora Cannabis
Inc. (the "Company" or "Aurora") (TSXV: ACB) (OTCQX: ACBFF) (Frankfurt: 21P;
WKN: A1C4WM) announced today that common shares of the Company will commence
trading on Toronto Stock Exchange (the "TSX") effective Monday July 24. Common
shares will continue to trade under the symbol "ACB". In conjunction with
listing on TSX, the common shares have been voluntarily delisted from TSX
Venture Exchange, effective close of trading today, Friday, July 21, 2017.
Aurora will “ring the bell” to open TSX on Monday July 24, 2017.
"Aurora's graduation to TSX reflects the remarkable commercial
and operational progress we have made since listing on TSX Venture Exchange late
last year,” said Terry Booth, CEO. “We are achieving record yields at our
Mountain View County production facility, progressing rapidly with the
construction of our 100,000+ kg per annum Aurora Sky facility at Edmonton
International Airport, and are executing consistently on our national and
international expansion strategy. The acquisition of our third production
facility, in Pointe-Claire, Québec will further support our domestic growth. Our
acquisition of Pedanios, Germany’s largest medical cannabis distributor, and our
strategic investment in Australia’s Cann Group, have established Aurora as a
global leader in the cannabis sector. Aurora continues to drive innovation in
the industry, as evidenced by our research collaboration with and investment in
Radient Technologies, the launch and upgrades of our one-of-a-kind mobile
application, and the expansion of our same-day and next-day delivery program. We
expect that graduating to TSX will further increase our shareholder audience,
and represents another important strategic step in enhancing shareholder
value.”
About Aurora
Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s
Access to Cannabis for Medical Purposes Regulations (“ACMPR”). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, and is currently constructing a second 800,000 square foot
production facility, known as “Aurora Sky”, at the Edmonton International
Airport, and has acquired, and is undertaking completion of, a third 40,000
square foot production facility in Pointe-Claire, Quebec, on Montreal’s West
Island. In addition, the company is the cornerstone investor with a 19.9% stake
in Cann Group Limited, the first Australian company licensed to conduct research
on and cultivate medical cannabis, as well as owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union
("EU"), based in Germany. Aurora’s common shares now trade on TSX under the
symbol “ACB”.
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth, CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
(“forward-looking statements”). Forward-looking statements arefrequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward- looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
- 4 -
Neither TSX nor TSX Venture Exchange (nor its Regulation
Services Provider as that term is defined in the policies of TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of this
release.
###
|
Further information:
|
|
|
|
|
|
For Aurora Cannabis Inc.
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
NATIONAL Equicom
|
|
+1.905.864.5525
|
mlakmaaker@national.ca
|
|
cam@auroramj.com
|
+1.416.848.1397
|
|
www.auroramj.com
|
|
|
EX-1.15 16 exhibit1-15.htm EXHIBIT 1.15
|
|
|
BRITISH COLUMBIA
ALBERTA
ONTARIO
QUEBEC
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver,
BC V6E 3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
July 24, 2017
A news release issued on July 24, 2017
at Vancouver, British Columbia relating to the material change described herein
was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. Rings the Bell to
Open the Market on First Day of Trading on Toronto Stock Exchange
Full Description of Material
Change
To celebrate the graduation of Aurora
Cannabis Inc. (“Aurora”) to the Toronto Stock Exchange (“TSX”), senior
management, directors, key stakeholders and supporters of Aurora will ring the
opening bell today, as the Company starts trading on TSX.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
- 2 -
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Corporate Secretary
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive Officer
Mobile: (780) 722 - 8889
Email: terry@auroramj.com
DATED July 24, 2017.
- 3 -
MEDIA ADVISORY: Aurora Cannabis Rings the Bell to Open the
Market
on First Day Trading on Toronto Stock Exchange
VANCOUVER, July 24, 2017
- To celebrate the
graduation of Aurora Cannabis Inc. (the "Company" or "Aurora") (TSXV: ACB)
(OTCQX: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) to the Toronto Stock Exchange
(“TSX”), senior management, directors, key stakeholders and supporters of Aurora
Cannabis will ring the opening bell today, as the company starts trading on
Toronto Stock Exchange
|
When:
|
Monday, July 24, 2017 at 9:30 am ET
|
|
|
|
|
|
|
|
Where:
|
TMX Broadcast Centre
|
|
|
Studio
|
|
|
130 King St West
|
|
|
Toronto, Ontario
|
|
|
|
|
Contact:
|
Cam Battley
|
|
|
Executive Vice President
|
|
|
cam@auroramj.com
|
|
|
|
|
|
+1.905.864.5525
|
TV Editors:
Live feed available via TOC
(Television Operations Centre) - TSX Transmit 1
Now trading on Canada’s’ flagship stock exchange, Aurora
previously began trading on the TSX Venture exchange in October of 2016. Since
that time, the Company has achieved significant commercial and operational
progress including:
|
|
•
|
Approximately doubling its active registered
patients
|
|
|
•
|
Approximately tripling monthly revenue, with
increased revenue per patient
|
|
|
•
|
Adding $600M in shareholder value, from ~ $350M
to ~ $950M
|
|
|
•
|
Raising $175M in financing
|
|
|
•
|
Making rapid progress on construction of Aurora
Sky, which is anticipated to be the world’s largest capacity, most
advanced cannabis production facility
|
|
|
•
|
Acquiring a third production facility in
Pointe-Claire, Québec
|
|
|
•
|
Launching international expansion in Australia
and Germany
|
|
|
•
|
Raising the bar on product quality and safety
for whole industry, with the world’s most comprehensive and transparent
cannabis testing and disclosure protocol
|
|
|
•
|
Establishing Aurora as the second largest
cannabis company in the world by market capitalization
|
- 4 -
About Aurora
Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s
Access to Cannabis for Medical Purposes Regulations (“ACMPR”). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, and is currently constructing a second 800,000 square foot
production facility, known as “Aurora Sky”, at the Edmonton International
Airport, and has acquired, and is undertaking completion of, a third 40,000
square foot production facility in Pointe-Claire, Quebec, on Montreal’s West
Island. In addition, the company is the cornerstone investor with a 19.9% stake
in Cann Group Limited, the first Australian company licensed to conduct research
on and cultivate medical cannabis, as well as owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union
("EU"), based in Germany. Aurora’s common shares trade on the TSX-V under the
symbol “ACB”.
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth, CEO
###
|
Further information:
|
|
|
|
|
|
For Aurora Cannabis Inc.
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
NATIONAL Equicom
|
|
+1.905.864.5525
|
mlakmaaker@national.ca
|
|
cam@auroramj.com
|
+1.416.848.1397
|
|
www.auroramj.com
|
|
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
(“forward-looking statements”). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward- looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of TSX and TSX
Venture Exchange) accepts responsibility for the adequacy or accuracy of this
release.
|
EX-1.16 17 exhibit1-16.htm EXHIBIT 1.16
|
|
|
BRITISH COLUMBIA
ALBERTA
ONTARIO
QUEBEC
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver, BC V6E
3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
July 31, 2017
A news release issued on July 31, 2017
at Vancouver, British Columbia relating to the material change described herein
was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. (the “Company” or
“Aurora”) and Hempco Food and Fiber Inc. (“Hempco”) Agree on Terms for Strategic
Investment.
Full Description of
Material Change
Aurora and Hempco have agreed to
amended terms whereby Aurora will make a strategic investment in Hempco for an
ownership stake of up to 19.9% on a fully diluted basis, subject to applicable
regulatory approvals.
Additionally, Aurora will be granted
an option to acquire certain shares from the majority owners of Hempco, which,
upon exercise, would bring Aurora's total ownership interest in Hempco to 50.1%
on a fully diluted basis (the “Option”). If Aurora elects to exercise this
Option, the shares will be acquired in tranches, the pricing of which is
contingent on certain performance milestones of Hempco.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
- 2 -
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Corporate Secretary
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive Officer
Mobile: (780) 722 - 8889
Email: terry@auroramj.com
DATED July 31, 2017.
- 3 -
|
|
|
|
|
July 31, 2017
|
TSX: ACB
|
TSXV: HEMP
|
Aurora and Hempco Agree on Terms for Strategic
Investment
Vancouver, BC & Burnaby, BC – July 31,
2017
– Aurora Cannabis Inc. (the “Company” or “Aurora”) (TSX: ACB)
(OTCQX: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) and Hempco Food and Fiber Inc.
(“Hempco”) (TSX-V: HEMP) are pleased to announce that, further to the Companies’
press release of June 8, 2017, as well as Hempco's press releases of June 16 and
June 23, 2017, the companies have agreed to amended terms whereby Aurora will
make a strategic investment in Hempco for an ownership stake of up to 19.9% on a
fully diluted basis, subject to applicable regulatory approvals.
Additionally, subject to customary conditions including Hempco
shareholder approval and the negotiation and execution of an option agreement,
Aurora will be granted an option to acquire certain shares from the majority
owners of Hempco, which, upon exercise, would bring Aurora's total ownership
interest in Hempco to 50.1% on a fully diluted basis (the “Option”). If Aurora
elects to exercise this Option, the shares will be acquired in tranches, the
pricing of which is contingent on certain performance milestones of Hempco.
Hempco is one of the world’s largest producers of industrial
hemp products, and currently offers three primary product lines: (1) bulk and
packaged food products (e.g. hemp protein powder, hemp seed nut/ hearts, and
hemp seed oil etc.); (2) hemp fibre; and (3) functional food/nutraceuticals.
Hempco’s line of consumer packaged goods (CPG are sold under the brand
“PLANETHEMP,” and Hempco products are distributed in seven countries.
Pursuant to the agreed upon terms, Aurora has agreed to
purchase 10,558,676 units of Hempco at $0.3075 per unit for total gross proceeds
of $3.2 million (the “Investment”). Upon completion of the Investment, Aurora
shall hold 19.9% of the share capital in Hempco on a fully diluted basis. Each
unit shall consist of one share and one full share purchase warrant (the
“Warrants”). Each Warrant gives Aurora the right to purchase, for a period of
two years following the closing date, one additional common share of Hempco for
an exercise price of $0.41. The Warrants are subject to accelerated expiry in
the event that Hempco common shares trade at or above a volume weighted average
price of $0.65 for any 30-day period following the closing. In such event, the
Warrants will be subject to accelerated expiry on 30 days from notice of the
accelerated expiry being given by Hempco. Closing of this private placement is
subject to receiving shareholder approval.
In connection with the Investment, Aurora has agreed to advance
to Hempco $1.5 million at a rate of 10% per annum, and the advance shall be
secured by Hempco. In the event that Hempco shareholders do not approve the
Aurora Option within 60 days of the advance, the advance, together with accrued
interest, will become repayable on demand, and Aurora shall not be required to
proceed with the Investment. Following shareholder approval of the Aurora
Option, funds advanced by Aurora, including the $750,000 that Aurora previously
advanced to Hempco, as announced on June 8, 2017, will be applied against the
purchase price for the Investment.
- 4 -
Additional Partnership Details
Should regulations change to allow for extraction of CBD from
hemp, Hempco has agreed to provide Aurora right of first refusal to purchase all
of the industrial hemp flowers and leaves that Hempco can acquire for extraction
of CBD. Any material that Aurora does not purchase under the right of first
refusal may be sold to a third party, but Hempco will not extract CBD from this
material itself, unless authorized by Aurora to do so.
Additionally, Aurora and Hempco have agreed to enter into an
investor rights agreement whereby Aurora shall have the right to appoint two
members to Hempco’s Board of Directors and shall have the right to participate
in future financings of Hempco in order to allow Aurora to maintain its
ownership stake in Hempco for so long as Aurora maintains a 10% ownership
interest in Hempco.
In order to focus his efforts on the commercial development of
Hempco, Charles Holmes will resign from his position as CEO of Hempco upon an
appropriate replacement being selected by Hempco’s Board of Directors and
approved by Aurora. The companies will endeavour to recruit new leadership with
deep experience in packaged goods and marketing to work with existing management
in growing the business to its full potential.
Management commentary
“Having successfully completed due diligence, we have decided
to progress with our strategic investment in Hempco, thereby gaining access to a
rapidly growing health supplement market, as well as securing considerable
quantities of low-cost raw material for the potential future production of CBD
extracts,” said Terry Booth, CEO of Aurora. “The diversification that our
investment in and collaboration with Hempco brings to Aurora further strengthens
our position as innovation leader in the industry, and we look forward to
executing on our partnership with Hempco.”
Charles Holmes, CEO of Hempco, added, “This transaction will
greatly accelerate our commercial development, enabling us to aggressively
pursue growth in the hemp-based dietary supplements industry, and become a
meaningful supplier to Aurora of CBD-containing raw material. I look forward to
working with the Aurora team in taking Hempco to the next level in its
development.”
About Aurora
Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s
Access to Cannabis for Medical Purposes Regulations (“ACMPR”). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, and is currently constructing a second 800,000 square foot
production facility, known as “Aurora Sky”, at the Edmonton International
Airport, and has acquired, and is undertaking completion of, a third 40,000
square foot production facility in Pointe-Claire, Quebec, on Montreal’s West
Island. Aurora also recently acquired Pedanios GmbH, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union
(“EU”), based in Berlin, Germany. In addition, the company is the cornerstone
investor with a 19.9% stake in Cann Group Limited, the only Australian company
licensed to conduct research on and cultivate medical cannabis, Aurora’s common
shares trade on the TSX under the symbol “ACB”. Visit www.auroramj.com for more
information.
- 5 -
About Hempco
For more than 15 years Hempco has been a trusted and respected
pioneer, innovator and provider of premier hemp seed foods. Hempco is committed
to developing hemp foods, hemp fiber and hemp nutraceuticals, a “tri-crop”
opportunity for producers and processors. Hempco is expanding its processing
ability to meet global demand through a 56,000 sq. ft. facility located at
Nisku, Alberta. Hempco’s common shares trade on the TSX Venture Exchange under
the symbol “HEMP”.
On behalf of the Board of Directors,
|
AURORA CANNABIS INC.
|
Hempco Food & Fiber
|
|
Terry Booth, CEO
|
Charles Holmes, CEO
|
###
|
Further information:
|
|
|
|
|
|
Aurora Cannabis Inc.
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
NATIONAL Equicom
|
|
+1.905.864.5525
|
+1 416 848 1397
|
|
cam@auroramj.com
|
mlakmaaker@national.ca
|
Hempco Food and Fiber Inc.
Don Mosher
Business Development Executive
+1 604-685-6465
don@hempcocanada.com
www.hempcocanada.com
www.planethemp.ca
- 6 -
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
(“forward-looking statements”). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward- looking statements throughout this news release,
including the assumptions that the Hempco shareholders will approve the creation
of a new control person and allow the private placement to proceed. Forward-
looking statements are based on the opinions and estimates of management at the
date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Companies are under no obligation, and expressly disclaim, any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
None of the TSX, the TSX Venture and their Regulation Services
Provider (as that term is defined in the policies of the Toronto Stock Exchange
and the TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
|
EX-1.18 19 exhibit1-18.htm EXHIBIT 1.18
|
|
|
BRITISH COLUMBIA
ALBERTA
ONTARIO
QUEBEC
FORM 51-102F3
MATERIAL CHANGE
REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver, BC V6E 3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
August 08, 2017
A news release issued on August 08,
2017 at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. (the “Company” or
“Aurora”) Expands Leadership Team, Appointing New Vice Presidents and
Officers
Full Description of Material
Change
Aurora Cannabis Inc. is pleased to
announce that Nilda Rivera, Nick Whitehead, Dieter MacPherson and Debra Wilson
have been appointed as Vice Presidents and Officers of the Company
.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
- 2 -
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Corporate Secretary
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive Officer
Mobile: (780) 722 - 8889
Email: terry@auroramj.com
DATED August 08, 2017.
- 3 -
Aurora Cannabis Expands Leadership Team, Appointing New Vice
Presidents and Officers
VANCOUVER, August 8, 2017
- Aurora Cannabis Inc. (the
"Company" or "Aurora") (TSX: ACB) (OTCQX: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
is pleased to announce that Nilda Rivera, Nick Whitehead, Dieter MacPherson and
Debra Wilson have been appointed as Vice Presidents and Officers of the
Company.
Nilda Rivera, who has served as Aurora’s Controller and
Corporate Secretary since August, 2015, has been promoted to Vice President
Finance, reporting to the CFO. Ms. Rivera has more than 20 years of experience
in accounting, financial reporting and corporate governance with public
companies. As Vice President, Finance, she will be a strategic leader for the
Company and be involved in directing operations related to global manufacturing
controllership, shared services transaction processing, and corporate
accounting.
Nick Whitehead, who joined Aurora in January, 2016 as Manager
of Public Affairs, has been promoted to Vice President Market Development. Mr.
Whitehead, who has been an integral part of the Company’s business development
team, has established and managed relationships with Aurora’s extensive
physician referral network, developed supply/demand tracking tools, in addition
to performing due diligence and business analysis for Aurora’s acquisitions and
other strategic transactions. Prior to joining Aurora, he was Director of
Organizing for Sensible BC, a non-profit political advocacy campaign dedicated
to cannabis law reform. In his new role, reporting to the CEO, he will be
responsible for planning, strategic development and delivery for the pending
Canadian adult consumer market.
Dieter MacPherson has been promoted to Vice President
Production. Mr. MacPherson has approximately 10 years of experience as an
advocate for sensible regulations and fair access to medical cannabis, working
with one of Canada’s oldest compassion clubs, contributing to the development of
municipal regulations while with the Canadian Association of Medical Cannabis
Dispensaries (CAMCD), and presenting and speaking across the country on the
evolution of cannabis policy and regulation. Since joining the Company in
February, 2017 as Manager of Production, Mr. MacPherson has been responsible for
planning, development and implementation of processes and procedures to increase
productivity, create efficiencies and improve profitability. He has overseen a
consistent enhancement in crop yields and overall production, while also playing
a key role in facility design and workflow for Aurora Sky and the Company’s
Pointe-Claire, Quebec production facility. As Vice President Production, he will
be responsible for strategic development and direct management for all Aurora
cannabis production facilities. Reporting to the COO, Mr. MacPherson will have
the General Managers of each production facility as direct reports.
Debra Wilson has also been appointed as an Officer of the
Company, further to her appointment as Vice President Human Resources, as
previously announced on June 29, 2017.
“I am delighted that Aurora continues to attract and develop
top management talent, building the team we need to execute on our aggressive
domestic and international expansion strategy,” said Terry Booth, CEO. “We have
a large number of key initiatives underway, and it is vital that we execute on
these with discipline and speed. The addition of Nilda, Nick, Dieter and Debra
to our executive team gives us the strength and scope of leadership to achieve
our objectives across all functions, and to continue building the world’s most
agile, innovative and successful cannabis company.”
- 4 -
Stock Options Granted to Officers
Aurora also announced the grant of an aggregate of 1,000,000
options to purchase common stock to Officers of the Company. The options have an
exercise price of $2.39 per share, and expire August 8, 2022. The options will
vest evenly on a quarterly basis over 36 months.
About Aurora
Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s
Access to Cannabis for Medical Purposes Regulations (“ACMPR”). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, and is currently constructing a second 800,000 square foot
production facility, known as “Aurora Sky”, at the Edmonton International
Airport, and has acquired, and is undertaking completion of, a third 40,000
square foot production facility in Pointe-Claire, Quebec, on Montreal’s West
Island. In addition, the company is the cornerstone investor with a 19.9% stake
in Cann Group Limited, the first Australian company licensed to conduct research
on and cultivate medical cannabis, as well as owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union
("EU"), based in Germany. Aurora’s common shares trade on TSX under the symbol
“ACB”.
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth, CEO
###
Further information:
|
For Aurora Cannabis Inc.
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
NATIONAL Equicom
|
|
+1.905.864.5525
|
mlakmaaker@national.ca
|
|
cam@auroramj.com
|
+1.416.848.1397
|
|
www.auroramj.com
|
|
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
(“forward-looking statements”). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward- looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expresslydisclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law. Neither TSX nor its Regulation Services Provider (as
that term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release
.
|
EX-1.19 20 exhibit1-19.htm EXHIBIT 1.19
|
|
|
BRITISH COLUMBIA
ALBERTA
ONTARIO
QUEBEC
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver, BC V6E 3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
August 31, 2017
A news release issued on August 31,
2017 at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. Announces
Operational Update.
Full Description of Material
Change
Aurora Cannabis Inc. is pleased to
provide the following operational update: Continued Strong Patient Growth; New
Monthly Revenue and Sales Records; Pedanios Update; Cann Group Completes First
Harvest, Signs Vaporizer Licensing & Distribution Agreement; Wholesale
Supply Agreement Secured; Appointment of John Barnet as Chief Cultivator; Aurora
Sky Construction Update; Québec Production Facility Update; CanvasRx Continues
Rapid Expansion; and CanvasRx Milestone Payment.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
- 2 -
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive Officer
Mobile: (780) 722 - 8889
Email: terry@auroramj.com
DATED August 31, 2017.
- 3 -
Operational Update: Aurora Cannabis Surpasses 19,000
Patients;
Record Monthly Revenue, Shipments, Grams Sold
Vancouver, BC – August 31, 2017 –
Aurora Cannabis Inc.
(“Aurora” or the “Company”) (TSX: ACB) (OTCQX: ACBFF) (Frankfurt: 21P; WKN:
A1C4WM) is pleased to provide the following operational update:
Continued Strong Patient Growth
As of August 28, 2017, Aurora has surpassed 19,000 active and
pending registered patients less than 20 months after the Company’s first
product sale in January, 2016. Aurora added approximately 3,000 patients during
the months of July and August, 2017.
New Monthly Revenue and Sales Records
Aurora is on track to set a new monthly revenue record,
projecting gross revenues
i
for cannabis sales in Canada and Germany
to exceed $3.0 million for August 2017. In Canada, the Company anticipates
selling more than 275,000 grams or gram equivalents of cannabis products, and
shipping approximately 15,000 orders this month. Both figures represent new
highs for Aurora. Exceptional demand for the Company’s cannabis oil products has
proven to be a significant revenue driver, with sales now representing
approximately 26% of gross revenues.
Pedanios Update
Pedanios, Aurora’s 100% owned German subsidiary, reported on
its progress
|
1.
|
Pedanios continues to grow revenues successfully,
leveraging its access to supply from its existing partners in Canada and
the Netherlands. At the same time, the organization has built record order
backlog. Pedanios anticipates being able to introduce Aurora-grown product
onto the German market in September, which will allow it to better meet
this exceptional demand.
|
|
|
|
|
2.
|
Pursuing further growth, Pedanios is actively progressing
discussions regarding entry into other European jurisdictions.
|
|
|
|
|
3.
|
Preparations for the organization’s tender for a domestic
cultivation license remain on track, including detailed planning for the
first ever indoor cannabis cultivation facility in Germany. Results of the
tender process are expected before the end of
2017.
|
- 4 -
Cann Group Completes First Harvest, Signs Vaporizer
Licensing & Distribution Agreement
Cann Group, in which Aurora holds a 19.9% stake, and which is
the first company in Australia to be licensed to conduct research on and
cultivate medical cannabis, recently reported two major milestones
|
1.
|
Cann Group successfully completed the harvest of its
first cultivation cycle of medicinal cannabis at the company’s Southern
facility in Victoria. Cann is producing medicinal cannabis for
manufacturing into a final product that can be accessed by patients via
clinical trials, or through the TGA’s Authorised Prescriber or Special
Access Scheme. The original press release can be accessed here:
http://bit.ly/2xKTHFN
|
|
|
|
|
2.
|
Cann Group completed a licensing and distribution
agreement with CannaKorp, Inc. to import and sell the Cannacloud
vaporizing device and to produce medical cannabis pods to be used with it.
The vaporizing system will be sold as an open platform for licensed
medicinal cannabis cultivators looking to have their cannabis available
via a vaporization device. The original press release can be accessed
here: http://bit.ly/2xLh1TQ
|
Wholesale Supply Agreement Secured
Aurora has secured an agreement to purchase a significant
volume of wholesale product from a licensed producer of high quality cannabis,
to help satisfy extremely high demand and support continued rapid sales growth.
The additional supply, which will be designated on the Aurora product menu as
“Aurora Certified”, will be tested and cleared by Anandia Labs. Anandia
continues to be the laboratory of choice for Aurora, as they consistently
achieve the testing requirements that meet the Aurora Standard for production
practices and product quality. Further details regarding this supply agreement
will be disclosed in the coming weeks.
Appointment of John Barnet as Chief Cultivator
The Company has promoted John Barnet to the role of Chief
Cultivator, reporting to the Vice President of Production. Mr. Barnet joined
Aurora in February 2016, and his experience, skill set and attitude have made
him a key contributor in establishing the Aurora Standard as the industry
benchmark for the large- scale cultivation of pesticide and gamma
irradiation-free, premium quality cannabis.
Mr. Barnet, an honours graduate from the Canadian College of
Osteopathy, was a nationally ranked rock- climber, is currently a sponsored
ambassador for Kebbek Skateboards and Orangatang Wheels, and has completed
several world tours as a professional long boarder in the World Cup of Downhill
Skateboarding.
Aurora Sky Construction Update
Construction of the Company’s new 800,000 square foot, 100,000+
kg per annum Aurora Sky production facility at Edmonton International Airport
(“EIA”) is progressing well. Daily, 80-100 construction and installation workers
are on site. Site supervision, co-ordination and general contracting have been
awarded to Dawson Wallace Construction and David Robinson Construction, who are
supported on-site on a daily basis by the Company’s international engineering,
construction and supply partners PB Techniek, Kubo, Codema and Verkade.
- 5 -
To date, 250,000 square feet of greenhouse structure has been
erected, 80% of which with glass fully installed. Of a total of 17 planned
growing bays, six have been erected, with two out of three vegetative rooms
standing. Deep services (water and gas) are 70% complete, while the electrical
ring is nearly half complete. To date 120 out of 500 total required sea-cans
have been received on-site, with up to a further 100 presently in transit across
the Atlantic. Providing another indication of the scale of the project,
construction of the water reservoir has been completed, which will hold 17,000
m
3
of water, equivalent to nearly 7 Olympic-sized swimming pools.
With the project progressing well, management reiterates its
expectation of having plants growing in the facility before the end of 2017,
with completion of the Aurora Sky construction anticipated in the first half of
2018.
Québec Production Facility Update
Construction upgrades are nearly complete at Aurora’s
Pointe-Claire, Québec facility. Internal design and construction have been
conducted specifically to ensure the facility meets Good Manufacturing Practices
(GMP) standards. The Aurora cultivation team has validated breeding and
selection for approximately a dozen new strains of cannabis to be grown in
Pointe-Claire. This will further enhance the Company’s market offering to
clients. The Company expects that production at the facility will commence
before the end of 2017.
CanvasRx Continues Rapid Expansion
CanvasRx remains the leading Canadian network of cannabis
counseling and outreach centres, with more than 28,000 registered patients.
Nearly 8,000 medical doctors across Canada have referred patients to CanvasRx or
its affiliated medical clinics. On September 12, 2017, CanvasRx welcomes its
first location in British Columbia. Located in Vancouver, the newest centre will
represent the 25
th
CanvasRx location, and the 7
th
opened
in 2017.
CanvasRx Milestone Payment
The Company issued 3,178,177 common shares, at a deemed price
of $2.135 per common share, to the vendors of CanvasRx Inc. ("CanvasRx") in
accordance with CanvasRx achieving certain earn-out payment milestones for the
period ended June 30, 2017, as set out in the share purchase agreement
previously announced on August 10, 2016.
About Aurora
Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s
Access to Cannabis for Medical Purposes Regulations (“ACMPR”). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, and is currently constructing a second 800,000 square foot
production facility, known as “Aurora Sky”, at the Edmonton International
Airport, and has acquired, and is undertaking completion of, a third 40,000
square foot production facility in Pointe-Claire, Quebec, on Montreal’s West
Island. In addition, the Company holds approximately 9.6% of the issued shares
(12.9% on a fully- diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union ("EU"), based in Germany. Aurora’s common shares
trade on TSX under the symbol “ACB”.
- 6 -
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
###
|
Further information:
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
NATIONAL Equicom
|
|
+1.905.864.5525
|
mlakmaaker@national.ca
|
|
cam@auroramj.com
|
+1.416.848.1397
|
|
www.auroramj.com
|
|
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
(“forward-looking statements”). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward- looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release.
|
____________________________________
|
|
i
Gross Revenues, which reflects sales prior
to compassionate use discounts, is not a measure of financial performance
under International Financial Reporting Standards. Aurora believes it is a
leader in ensuring all Canadian medical cannabis patients have access to
quality medicine and offering compassionate pricing discounts to low
income Canadians. Accordingly, Aurora believes gross revenue is an
important metric for comparability of our results with other licensed
producers.
|
|
EX-1.20 21 exhibit1-20.htm EXHIBIT 1.20
|
|
|
BRITISH COLUMBIA
ALBERTA
ONTARIO
QUEBEC
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver, BC V6E 3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material
Change
|
September 18, 2017
A news release issued on September 18,
2017 at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis and Hempco Food and
Fiber Inc. (“Hempco”) Complete Investment Agreement and Aurora’s Allan Cleiren
appointed to Hempco Board of Directors
Full Description of Material
Change
Aurora Cannabis Inc. and Hempco are
pleased to announce that, further to Hempco’s press releases of June 8, June 16,
June 23, July 31 and September 12, 2017, the companies have signed definitive
agreements permitting them to move forward with Aurora’s strategic investment in
Hempco, which remains subject to Hempco shareholder approval.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable
.
|
Item 7.
|
Omitted Information
|
None
- 2 -
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive Officer
Mobile: (780) 722 - 8889
Email: terry@auroramj.com
DATED September 18, 2017.
- 3 -
|
|
|
|
September 18, 2017
|
TSX: ACB • TSX-V: HEMP
|
Aurora Cannabis and Hempco Complete Investment
Agreement
Aurora’s Allan Cleiren appointed to Hempco Board of
Directors
Vancouver, BC – September 18, 2017 – Aurora Cannabis Inc.
(“Aurora”) (TSX:ACB) (OTCQX:ACBFF) (Frankfurt: 21P; WKN:A1C4WM) and Hempco Food
and Fiber Inc. (TSX.V:HEMP) (“Hempco”), are pleased to announce that, further to
Hempco’s press releases of June 8, June 16, June 23, July 31 and September 12,
2017, the companies have signed definitive agreements permitting them to move
forward with Aurora’s strategic investment in Hempco, which remains subject to
Hempco shareholder approval.
As previously announced, the transaction consists of two
connected components: a private placement between the two companies, and an
option agreement in which two of Hempco’s principal shareholders grant to Aurora
an option to purchase Hempco shares owned by them, thus enabling Aurora to
increase its ownership of Hempco shares should it so choose.
“Once approved by our shareholders, this strategic investment
by Aurora strengthens our company, not just financially, but especially through
the market reach, brand recognition and exclusive access to innovative
technologies that Aurora brings to the table,” said Charles Holmes, Hempco’s
CEO. “Additionally, if the current regulations prohibiting the extraction of
cannabidiol (CBD) from hemp products were to change, which we anticipate will
happen in the near to mid-term future, Hempco will be very well positioned to
capitalize on this opportunity through its relationship with Aurora.”
“Our pending investment in Hempco represents an attractive
opportunity for further expansion into another closely-related and
rapidly-growing international market, while at the same time securing a
potentially material source of raw CBD material for our medical concentrates
business,” said Terry Booth, Aurora’s CEO. “We look forward to working with
Hempco to capitalize on the many opportunities for growth on a global
scale.”
In the private placement, Aurora has entered into an amended
and restated subscription agreement (the “Subscription Agreement”) providing for
the purchase of 10,558,676 units (each a “Unit”) of Hempco at a purchase price
of $0.3075 per Unit for total gross proceeds of $3,246,792 (the "Private
Placement"). Each Unit is to consist of one Hempco common share (each, a “Hempco
Share”) and one non-transferable common share purchase warrant (each, a
"Warrant"). Each Warrant will entitle Aurora to purchase one additional Hempco
Share at a price of $0.41 until the second anniversary of the closing date. Each
Warrant will include an acceleration clause providing that if the volume
weighted average price per Hempco Share on the TSX Venture Exchange (“TSXV”)
exceeds $0.65 for a period of 30 consecutive calendar days, Hempco will have a
limited right to accelerate the expiration date of the Warrants. The
Subscription Agreement provides that closing of the Private Placement is subject
to conditions, including the execution of an investor rights agreement and an
option agreement with Charles Holmes and Angela Holmes, TSX Venture, TSX and
Hempco disinterested shareholder approval.
- 4 -
As noted, one of the conditions to completion of the Private
Placement is that Charles Holmes and Angela Holmes, each of whom is a principal
shareholder, officer and director of Hempco, enter into an option agreement (the
“Option Agreement”) granting to Aurora an option (the "Option") to acquire up to
an aggregate of 10,754,942 Hempco Shares currently owned by them (50% from
Charles Holmes, 50% from Angela Holmes). This condition has been satisfied.
Also as noted, another condition to completion of the Private
Placement is that Aurora and Hempco enter into an investor rights agreement (the
“Investor Rights Agreement”) that will allow Aurora to nominate two directors to
the Hempco Board of Directors, require that Hempco adopt and expenditure policy,
provide for certain matters related to CBD extraction from hemp and provide
Aurora with anti-dilution protection. This condition has also been
satisfied.
Both the Option Agreement and the Investor Rights Agreement are
dated September 15, 2017 but will become effective on the closing of the Private
Placement, and closing of the Private Placement remains subject to disinterested
Hempco shareholder approval. Because they are parties to the Option Agreement,
each of Charles Holmes and Angela Holmes has an interest in the transaction and
they will not be permitted to vote at the extraordinary shareholder meeting to
be called by Hempco to approve the transaction and the change of control that
will result from the issuance of the Hempco Units to Aurora. If the shareholders
of Hempco do not approve the Private Placement, both the Option Agreement and
the Investor Rights Agreement will be void.
Although the Investor Rights Agreement will not take effect
until the closing of the Private Placement, Hempco has signed an undertaking,
effective immediately, to use reasonable efforts to appoint the two Aurora
nominees to the Hempco Board immediately, that it will use reasonable efforts to
find a suitable candidate to be the new Chief Executive Officer of Hempco, with
the goal of having the new candidate in place as soon as reasonably possible,
that Hempco will adopt an expenditure policy, and that funds advanced to Hempco
by Aurora pursuant to a bridge loan (see description below) will be used to
develop the Hempco facility in Nisku, Alberta, and for the payment of certain
Hempco accounts receivable.
Hempco will now call an extraordinary meeting of its
shareholders for the purpose of asking them to approve the change of control
that will result from completion of the Private Placement transaction.
Further to the Hempco undertaking mentioned above, and
effective immediately, the Hempco Board of Directors has appointed Mr. Allan
Cleiren as a director of Hempco. Mr. Cleiren is the Chief Operating Officer of
Aurora and is the first of two nominees appointed, expanding the Board to 6
directors, 4 of whom are independent.
- 5 -
Mr. Cleiren is Chief Operating Officer of Aurora Cannabis Inc.
and has nearly three decades of leadership experience in finance and operations
management with both privately and publicly held companies. Throughout his
career, Mr. Cleiren's focus has been on achieving operational excellence and
efficiency, contributing to significant revenue and profitability growth. Mr.
Cleiren is also is a member of the Board of Directors of Universal Rail Services
Inc., Metalogic Inspection Services Inc., and is Chair of the Board for the
Alberta Automobile Insurance Rate Board.
In order to enable Hempco to pay certain obligations in advance
of the closing of the Private Placement, Aurora has agreed to make a secured
bridge loan to Hempco in the amount of $1,500,000. Hempco intends to repay this
loan, together with a prior Aurora loan to Hempco in the amount of $750,000, out
of the proceeds of the Private Placement. If the Private Placement does not
close, both loans will mature on December 21, 2017.
About Hempco
For more than 12 years Hempco has been a trusted and respected
pioneer, innovator and provider of premier hemp seed foods. Hempco is committed
to developing hemp foods, hemp fiber and hemp nutraceuticals, a “tri-crop”
opportunity for producers and processors. Hempco is expanding its processing
ability to meet global demands in a 56,000 sq. ft. facility located at Nisku,
Alberta. Hempco’s common shares trade on the TSX Venture Exchange under the
symbol “HEMP”. Hempco® has grown its business significantly and is generating
value and profits for shareholders.
About Aurora
Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s
Access to Cannabis for Medical Purposes Regulations (“ACMPR”). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, and is currently constructing a second 800,000 square foot
production facility, known as “Aurora Sky”, at the Edmonton International
Airport, and has acquired, and is undertaking completion of, a third 40,000
square foot production facility in Pointe-Claire, Quebec, on Montreal’s West
Island. In addition, the Company holds approximately 9.6% of the issued shares
(12.9% on a fully- diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union ("EU"), based in Germany. Aurora’s common shares
trade on TSX under the symbol “ACB”.
On behalf of the Board of Directors,
|
AURORA CANNABIS INC.
|
HEMPCO FOOD AND FIBER INC.
|
|
|
|
|
Terry Booth
|
Charles Holmes
|
|
CEO
|
CEO
|
##
#
- 6 -
|
Further information:
|
|
|
|
|
|
For Aurora Cannabis
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
NATIONAL Equicom
|
|
+1.905.864.5525
|
mlakmaaker@national.ca
|
|
cam@auroramj.com
|
+1.416.848.1397
|
|
www.auroramj.com
|
|
For Hempco
John Ross, Chief Financial Officer
HEMPCO FOOD AND FIBER
INC.
T: +1 647-291-4234
john@hempcocanada.com
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
(“forward-looking statements”). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward- looking statements throughout this news release.
Forward-looking statements in this press release include those concerning
Hempco’s anticipation of shareholder approval, its belief that Aurora’s
strategic investment will strengthen Hempco, and its anticipation that the
current regulations prohibiting the extraction of cannabidiol (CBD) from hemp
products will change in the near to mid-term future and that, if they do, Hempco
will be very well positioned to capitalize on this opportunity through its
relationship with Aurora. Forward-looking statements are based on the opinions
and estimates of management at the date the statements are made, and are subject
to a variety of risks and uncertainties and other factors that could cause
actual events or results to differ materially from those projected in the
forward-looking statements. The Company is under no obligation, and expressly
disclaims any intention or obligation, to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release
.
|
EX-1.21 22 exhibit1-21.htm EXHIBIT 1.21
|
|
|
BRITISH COLUMBIA
ALBERTA
ONTARIO
QUEBEC
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver, BC V6E 3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
September 19, 2017
A news release issued on September 19,
2017 at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. Begins Supplying
German Medical Cannabis Market. Export/Import Permits Received and First 50 kg
Shipped.
Full Description of Material
Change
Aurora Cannabis Inc. announced today
that it has received all the required permits to ship dried cannabis flower from
Canada to Germany, enabling the Company to begin supplying the German medical
cannabis market through its wholly-owned subsidiary Pedanios GmbH.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
- 2 -
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive Officer
Mobile: (780) 722 - 8889
Email: terry@auroramj.com
DATED September 19, 2017.
- 3 -
|
September 19, 2017
|
TSX: ACB
|
Aurora Begins Supplying German Medical Cannabis
Market
Export/Import Permits Received, First 50 kg Shipped
Vancouver, BC – September 19, 2017 – Aurora Cannabis Inc.
(“Aurora” or the “Company”) (TSX: ACB) (OTCQX: ACBFF) (Frankfurt: 21P; WKN:
A1C4WM) announced today that it has received all the required permits to ship
dried cannabis flower from Canada to Germany, enabling the Company to begin
supplying the German medical cannabis market through its wholly-owned subsidiary
Pedanios GmbH (“Pedanios”).
Aurora is now in receipt of a Health Canada issued Export
Permit, as well as provisional import status from the German Bundesopiumstelle
(Federal Narcotics Bureau), to import medical cannabis products into Germany. On
September 18, 2017, the Company shipped 50 kg of dried cannabis from its
facility in Mountain View County, Alberta, to Berlin-based Pedanios, Germany’s
leading medical cannabis distributor. Import permits for additional product have
been secured, and ongoing, regular shipments are scheduled.
Upon delivery to Pedanios, the product will be distributed to a
network of more than 1,500 pharmacies across Germany, a country of more than 82
million people. Germany currently represents the largest single federally-legal
medical cannabis market in the world, and is experiencing a significant shortage
of supply. Through Pedanios, Aurora plans to become a top producer and supplier
of medical cannabis products in Germany, as well as other European Union (EU)
markets.
“This represents a huge milestone for Aurora and Pedanios, and
a critical step in our aggressive international expansion strategy,” said Neil
Belot, Chief Global Business Development Officer. “Our team has done an
outstanding job accelerating our entry into Europe. This is the first step in
unlocking future potential markets in the EU of several hundred million people,
and strongly validates Aurora’s acquisition of Pedanios as one of the most
significant strategic transactions to date in the cannabis industry.”
Terry Booth, CEO, added, “With the receipt of our first
international export/import permits and our first shipment to Germany complete,
Aurora has further strengthened its position as one of the dominant operators in
the global cannabis sector. Germany has more than twice Canada’s population,
with a rapidly-growing medical cannabis market that can currently be serviced by
only four international producers – three of which have distributed product
through Pedanios. Moreover, Pedanios provides a well-established gateway to the
wider EU market, which continues to grow as additional countries proceed in
improving patient access through the establishment of their own national medical
cannabis systems. We will continue to diversify our operations, bring the Aurora
Standard to new markets, and enjoy first mover advantages as we aim to set the
cannabis industry standard across Europe and beyond.”
- 4 -
About Aurora
Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s
Access to Cannabis for Medical Purposes Regulations (“ACMPR”). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, is currently constructing a second 800,000 square foot
production facility, known as “Aurora Sky”, at the Edmonton International
Airport, and has acquired, and is undertaking completion of a third 40,000
square foot production facility in Pointe-Claire, Quebec, on Montreal’s West
Island.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing investment in Edmonton-based Hempco Food and Fiber for an ownership
stake of up to 50.1% . Furthermore, Aurora the cornerstone investor with a 19.9%
stake in Cann Group Limited, the first Australian company licensed to conduct
research on and cultivate medical cannabis. Aurora also owns Pedanios, a leading
wholesale importer, exporter, and distributor of medical cannabis in the
European Union ("EU"), based in Germany. Aurora’s common shares trade on TSX
under the symbol “ACB”.
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
###
|
Further information:
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
NATIONAL Equicom
|
|
+1.905.864.5525
|
mlakmaaker@national.ca
|
|
cam@auroramj.com
|
+1.416.848.1397
|
|
www.auroramj.com
|
|
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
(“forward-looking statements”). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward- looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release
.
AURORA CANNABIS INC.
Consolidated Financial Statements
For the years ended June 30, 2017 and 2016
(In
Canadian Dollars)
|
Management's
Responsibility
|
To the Shareholders of Aurora Cannabis Inc.:
Management is responsible for the preparation and presentation
of the accompanying consolidated financial statements, including responsibility
for significant accounting judgments and estimates in accordance with
International Financial Reporting Standards and ensuring that all information in
the annual report is consistent with the statements. This responsibility
includes selecting appropriate accounting principles and methods, and making
decisions affecting the measurement of transactions in which objective judgment
is required.
In discharging its responsibilities for the integrity and
fairness of the consolidated financial statements, management designs and
maintains the necessary accounting systems and related internal controls to
provide reasonable assurance that transactions are authorized, assets are
safeguarded and financial records are properly maintained to provide reliable
information for the preparation of consolidated financial statements.
The Board of Directors and Audit Committee are composed
primarily of Directors who are neither management nor employees of the Company.
The Board is responsible for overseeing management in the performance of its
financial reporting responsibilities, and for approving the financial
information included in the annual report. The Board fulfils these
responsibilities by reviewing the financial information prepared by management
and discussing relevant matters with management and external auditors. The
Committee is also responsible for recommending the appointment of the Company's
external auditors.
MNP LLP, an independent firm of Chartered Professional
Accountants, is appointed by the shareholders to audit the consolidated
financial statements and report directly to them; their report follows. The
external auditors have full and free access to, and meet periodically and
separately with, both the Committee and management to discuss their audit
findings.
September 25, 2017
|
“Terry Booth”
|
|
“Glen Ibbott”
|
|
Terry Booth
|
|
Glen Ibbott
|
|
Chief Executive Officer
|
|
Chief Financial Officer
|
Independent Auditors’ Report
To the Shareholders of Aurora Cannabis Inc.:
We have
audited the accompanying consolidated financial statements of Aurora Cannabis
Inc., which comprise the consolidated statement of financial position as at June
30, 2017 and June 30, 2016, and the consolidated statements of loss and other
comprehensive loss, changes in equity and cash flows for the years then ended,
and a summary of significant accounting policies and other explanatory
information.
Management’s Responsibility for the Consolidated
Financi
al Statements
Management is responsible for the
preparation and fair presentation of these consolidated financial statements in
accordance with International Financial Reporting Standards, and for such
internal control as management determines is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to
fraud or error.
Auditors' Responsibility
Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits. We conducted our audits in accordance with Canadian generally accepted
auditing standards. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditors’ judgment, including
the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the consolidated financial statements in
order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made
by management, as well as evaluating the overall presentation of the
consolidated financial statements.
We believe that the audit evidence we have obtained in our
audits is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of
Aurora Cannabis Inc. as at June 30, 2017, June 30, 2016 and its financial
performance and its cash flows for the years then ended in accordance with
International Financial Reporting Standards.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vancouver, British Columbia
|
|
|
|
|
|
|
September 25, 2017
|
|
Chartered Professional Accountants
|
|
AURORA CANNABIS INC.
|
|
Consolidated Statements of Financial Position
|
|
June 30, 2017 and 2016
|
|
(In thousands of
Canadian dollars)
|
|
|
|
Notes
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
|
|
159,796
|
|
|
170
|
|
|
Restricted cash
|
|
|
|
|
-
|
|
|
89
|
|
|
Accounts receivable
|
|
3
|
|
|
2,312
|
|
|
87
|
|
|
Marketable securities
|
|
4(b)
|
|
|
14,845
|
|
|
-
|
|
|
Inventory
|
|
5
|
|
|
7,703
|
|
|
2,317
|
|
|
Biological assets
|
|
6
|
|
|
4,088
|
|
|
1,845
|
|
|
Promissory notes receivable
|
|
7
|
|
|
1,222
|
|
|
-
|
|
|
Loans receivable
|
|
10
|
|
|
2,096
|
|
|
-
|
|
|
Other current assets
|
|
8
|
|
|
1,544
|
|
|
736
|
|
|
|
|
|
|
|
193,606
|
|
|
5,244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
9
|
|
|
45,523
|
|
|
11,370
|
|
|
Convertible debenture
|
|
4(a)
|
|
|
11,071
|
|
|
-
|
|
|
Loans receivable
|
|
10
|
|
|
-
|
|
|
1,782
|
|
|
Derivative
|
|
4(b)
|
|
|
292
|
|
|
-
|
|
|
Investment in a joint venture
|
|
10
|
|
|
-
|
|
|
-
|
|
|
Intangible assets
|
|
12
|
|
|
31,087
|
|
|
-
|
|
|
Goodwill
|
|
12
|
|
|
41,100
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
322,679
|
|
|
18,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
21(c),
24(b)(ii)
|
|
|
8,753
|
|
|
1,686
|
|
|
Deferred revenue
|
|
|
|
|
1,421
|
|
|
28
|
|
|
Finance lease
|
|
13
|
|
|
69
|
|
|
-
|
|
|
Short term loans
|
|
14
|
|
|
-
|
|
|
6,047
|
|
|
Derivative liabilities
|
|
14(d), 15(d)
|
|
|
-
|
|
|
233
|
|
|
Contingent consideration payable
|
|
11(a)
|
|
|
13,221
|
|
|
-
|
|
|
|
|
|
|
|
23,464
|
|
|
7,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance lease
|
|
13
|
|
|
282
|
|
|
-
|
|
|
Convertible notes
|
|
15
|
|
|
63,536
|
|
|
1,281
|
|
|
Long term loans
|
|
14(b), 14(e)
|
|
|
-
|
|
|
3,159
|
|
|
Deferred gain on convertible
debenture
|
|
4(a)
|
|
|
10,206
|
|
|
-
|
|
|
Deferred gain on derivative
|
|
4(b)
|
|
|
321
|
|
|
-
|
|
|
Deferred tax liability
|
|
20
|
|
|
5,937
|
|
|
-
|
|
|
|
|
|
|
|
103,746
|
|
|
12,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
16
|
|
|
221,447
|
|
|
17,148
|
|
|
Reserves
|
|
|
|
|
25,912
|
|
|
5,730
|
|
|
Deficit
|
|
|
|
|
(28,426
|
)
|
|
(16,916
|
)
|
|
|
|
|
|
|
218,933
|
|
|
5,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
322,679
|
|
|
18,396
|
|
Nature of Operations (Note 1)
Commitments and Contingencies
(Note 22)
Subsequent Events (Notes 4(a), 7(b), 15(b) and 26)
The accompanying notes are an integral part of these
Consolidated Financial Statements.
|
AURORA CANNABIS INC.
|
|
Consolidated Statements of Comprehensive Loss
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
|
|
Notes
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
Revenue
|
|
|
|
|
18,067
|
|
|
1,439
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on changes in
fair value of biological assets
|
|
|
|
|
(7,469
|
)
|
|
(3,004
|
)
|
|
Inventory expensed to cost of sales
|
|
|
|
|
3,472
|
|
|
295
|
|
|
Production costs
|
|
|
|
|
6,008
|
|
|
1,946
|
|
|
Cost
of sales (recovery)
|
|
|
|
|
2,011
|
|
|
(763
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
16,056
|
|
|
2,202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
General and administration
|
|
17, 21(a)
|
|
|
6,813
|
|
|
3,015
|
|
|
Sales and marketing
|
|
18
|
|
|
10,270
|
|
|
1,706
|
|
|
Research and development
|
|
|
|
|
314
|
|
|
565
|
|
|
Acquisition and
project evaluation costs
|
|
|
|
|
1,551
|
|
|
-
|
|
|
Depreciation
|
|
9
|
|
|
716
|
|
|
593
|
|
|
Share-based payments
|
|
16(d)(e)
|
|
|
7,584
|
|
|
913
|
|
|
|
|
|
|
|
27,248
|
|
|
6,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
|
|
(11,192
|
)
|
|
(4,590
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
|
|
Interest and other
income
|
|
|
|
|
861
|
|
|
73
|
|
|
Finance and other costs
|
|
19
|
|
|
(6,582
|
)
|
|
(1,444
|
)
|
|
Foreign exchange
|
|
|
|
|
(215
|
)
|
|
-
|
|
|
Unrealized loss on debenture
|
|
4(a)
|
|
|
(1,135
|
)
|
|
-
|
|
|
Unrealized gain on
marketable securities
|
|
4(b)
|
|
|
1,334
|
|
|
-
|
|
|
Unrealized gain (loss) on
derivative
|
|
4(b)
|
|
|
(335
|
)
|
|
89
|
|
|
|
|
|
|
|
(6,072
|
)
|
|
(1,282
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
|
|
(17,264
|
)
|
|
(5,872
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax recovery
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
19
|
|
|
79
|
|
|
Deferred, net
|
|
|
|
|
4,277
|
|
|
70
|
|
|
|
|
|
|
|
4,296
|
|
|
149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
(12,968
|
)
|
|
(5,723
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
(loss)
|
|
|
|
|
|
|
|
|
|
|
Deferred tax
|
|
|
|
|
(885
|
)
|
|
-
|
|
|
Unrealized gain on marketable securities
|
|
4(b)
|
|
|
6,077
|
|
|
-
|
|
|
Foreign currency translation
|
|
|
|
|
(25
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
|
|
|
(7,801
|
)
|
|
(5,723
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
|
|
(0.05
|
)
|
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares outstanding
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
|
|
279,029,226
|
|
|
128,988,266
|
|
The accompanying notes are an integral part of these
Consolidated Financial Statements.
|
AURORA CANNABIS INC.
|
|
Consolidated Statements of Changes in Equity
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of
Canadian dollars, except share amounts)
|
|
|
|
|
|
|
Share Capital
|
|
|
Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligation
|
|
|
|
|
|
Compensation
|
|
|
Related
|
|
|
|
|
|
and
|
|
|
Foreign
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
|
|
|
to Issue
|
|
|
Stock
|
|
|
Options/
|
|
|
Party
|
|
|
Convertible
|
|
|
Deferred
|
|
|
Currency
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Options
|
|
|
Warrants
|
|
|
Loans
|
|
|
Notes
|
|
|
Tax
|
|
|
Translation
|
|
|
Reserves
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
#
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Balance, June 30, 2015
|
|
|
|
|
118,794,138
|
|
|
11,433
|
|
|
2,322
|
|
|
381
|
|
|
823
|
|
|
-
|
|
|
216
|
|
|
-
|
|
|
-
|
|
|
3,742
|
|
|
(11,342
|
)
|
|
3,833
|
|
|
Comprehensive loss for the period
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(5,724
|
)
|
|
(5,724
|
)
|
|
Conversion of notes
|
|
16(b)(x)
|
|
|
3,928,000
|
|
|
452
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(171
|
)
|
|
-
|
|
|
-
|
|
|
(171
|
)
|
|
-
|
|
|
281
|
|
|
Equity component of convertible
loans
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
270
|
|
|
-
|
|
|
-
|
|
|
270
|
|
|
-
|
|
|
270
|
|
|
Deferred tax on
convertible notes
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(70
|
)
|
|
-
|
|
|
-
|
|
|
(70
|
)
|
|
-
|
|
|
(70
|
)
|
|
Compensation options on convertible
notes
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
90
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
90
|
|
|
-
|
|
|
90
|
|
|
Private placement
|
|
16(b)(xiv)
|
|
|
9,091,670
|
|
|
4,819
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4,819
|
|
|
Share issue costs
|
|
|
|
|
-
|
|
|
(246
|
)
|
|
-
|
|
|
-
|
|
|
44
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
44
|
|
|
-
|
|
|
(201
|
)
|
|
Exercise of stock
options
|
|
16(b)(xi)
|
|
|
2,975,829
|
|
|
515
|
|
|
-
|
|
|
(354
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(354
|
)
|
|
-
|
|
|
161
|
|
|
Exercise of warrants
|
|
16(b)(xii)
|
|
|
564,000
|
|
|
56
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
56
|
|
|
Forfeited options
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(105
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(105
|
)
|
|
105
|
|
|
-
|
|
|
Shares issued for compensation
|
|
16(b)(v)
|
|
|
22,728
|
|
|
13
|
|
|
13
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
13
|
|
|
-
|
|
|
26
|
|
|
Shares issued for
convertible notes
|
|
15(d)
|
|
|
200,000
|
|
|
106
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
106
|
|
|
Convertible notes settled in cash
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(45
|
)
|
|
-
|
|
|
-
|
|
|
(45
|
)
|
|
45
|
|
|
-
|
|
|
Fair value
adjustment on loans
|
|
14(b)(e)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,403
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,403
|
|
|
-
|
|
|
1,403
|
|
|
Share-based payments
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
686
|
|
|
226
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
912
|
|
|
-
|
|
|
912
|
|
|
Balance, June 30, 2016
|
|
|
|
|
135,576,365
|
|
|
17,148
|
|
|
2,335
|
|
|
608
|
|
|
1,184
|
|
|
1,403
|
|
|
200
|
|
|
-
|
|
|
-
|
|
|
5,730
|
|
|
(16,916
|
)
|
|
5,962
|
|
|
Comprehensive loss for the period
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5,192
|
|
|
(25
|
)
|
|
5,167
|
|
|
(12,968
|
)
|
|
(7,801
|
)
|
|
Shares issued for
acquisitions
|
|
11
|
|
|
27,091,007
|
|
|
34,540
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
34,540
|
|
|
Shares issued for contingent
consideration
|
|
11(a)
|
|
|
2,926,103
|
|
|
7,408
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,408
|
|
|
Performance shares
|
|
16(b)(viii)
|
|
|
20,000,000
|
|
|
2,322
|
|
|
(2,322
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2,322
|
)
|
|
-
|
|
|
-
|
|
|
Transfer from derivative
liabilities
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
98
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
98
|
|
|
-
|
|
|
98
|
|
|
Private placements
|
|
16(b)(iv)(vii)
|
|
|
90,837,500
|
|
|
98,009
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
98,009
|
|
|
Share issue costs
|
|
16(b)(iv)(vii)
|
|
|
-
|
|
|
(10,913
|
)
|
|
-
|
|
|
-
|
|
|
4,631
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4,631
|
|
|
-
|
|
|
(6,282
|
)
|
|
Deferred tax on
share issue costs
|
|
|
|
|
-
|
|
|
1,846
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,846
|
|
|
Warrants issued on amendment of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
convertible notes
|
|
15(d)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
877
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
877
|
|
|
-
|
|
|
877
|
|
|
Conversion of notes
|
|
16(b)(x)
|
|
|
29,020,319
|
|
|
38,037
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(4,800
|
)
|
|
-
|
|
|
-
|
|
|
(4,800
|
)
|
|
-
|
|
|
33,237
|
|
|
Equity component of
convertible notes
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
20,587
|
|
|
-
|
|
|
-
|
|
|
20,587
|
|
|
-
|
|
|
20,587
|
|
Equity component of convertible
note
transaction costs
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(900
|
)
|
|
-
|
|
|
-
|
|
|
(900
|
)
|
|
-
|
|
|
(900
|
)
|
|
Deferred tax on
convertible notes
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(5,353
|
)
|
|
-
|
|
|
-
|
|
|
(5,353
|
)
|
|
-
|
|
|
(5,353
|
)
|
|
Shares issued for loan
|
|
14(d)
|
|
|
50,000
|
|
|
24
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
24
|
|
Reclassification
upon repayment
of related party loans
|
|
14(b)(e)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,403
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,403
|
)
|
|
1,403
|
|
|
-
|
|
|
Shares issued for compensation
|
|
16(b)(v)
|
|
|
25,510
|
|
|
13
|
|
|
(13
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(13
|
)
|
|
-
|
|
|
-
|
|
|
Exercise of
warrants
|
|
16(b)(xii)
|
|
|
54,936,306
|
|
|
28,648
|
|
|
-
|
|
|
-
|
|
|
(2,046
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2,046
|
)
|
|
-
|
|
|
26,602
|
|
|
Exercise of compensation
option/warrants
|
|
16(b)(xiii)
|
|
|
4,084,434
|
|
|
2,966
|
|
|
-
|
|
|
-
|
|
|
(1,292
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,292
|
)
|
|
-
|
|
|
1,674
|
|
|
Forfeited options
& warrants
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(23
|
)
|
|
(32
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(55
|
)
|
|
55
|
|
|
-
|
|
|
Exercise of stock options
|
|
16(b)(xi)
|
|
|
2,001,700
|
|
|
1,399
|
|
|
-
|
|
|
(578
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(578
|
)
|
|
-
|
|
|
821
|
|
|
Share-based payments
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,584
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,584
|
|
|
-
|
|
|
7,584
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2017
|
|
|
|
|
366,549,244
|
|
|
221,447
|
|
|
-
|
|
|
7,591
|
|
|
3,420
|
|
|
-
|
|
|
9,734
|
|
|
5,192
|
|
|
(25
|
)
|
|
25,912
|
|
|
(28,426
|
)
|
|
218,933
|
|
The accompanying notes are an integral part of these
Consolidated Financial Statements.
|
AURORA CANNABIS INC.
|
|
Consolidated Statements of Cash Flows
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of
Canadian dollars)
|
|
|
|
Notes
|
|
|
2017
|
|
|
2016
|
|
|
Cash provided by (used in)
Operating activities
|
|
|
|
|
$
|
|
|
$
|
|
|
Net loss
for the year
|
|
|
|
|
(12,968
|
)
|
|
(5,724
|
)
|
|
Adjustments for non-cash items
|
|
|
|
|
|
|
|
|
|
|
Change in
fair value of biological assets
|
|
|
|
|
(5,864
|
)
|
|
(3,004
|
)
|
|
Depreciation
|
|
|
|
|
1,087
|
|
|
593
|
|
|
Share-based payments
|
|
|
|
|
7,584
|
|
|
913
|
|
|
Unrealized loss on debenture
|
|
|
|
|
1,135
|
|
|
-
|
|
|
Unrealized gain on marketable securities
|
|
|
|
|
(1,334
|
)
|
|
-
|
|
|
Unrealized (gain) loss on derivatives
|
|
|
|
|
335
|
|
|
(89
|
)
|
|
Non-cash
fees and compensation
|
|
|
|
|
-
|
|
|
13
|
|
|
Accrued
interest
|
|
|
|
|
(78
|
)
|
|
68
|
|
|
Financing
fees
|
|
|
|
|
1,657
|
|
|
192
|
|
|
Accretion
expense
|
|
|
|
|
3,537
|
|
|
622
|
|
|
Interest
and other income
|
|
|
|
|
(78
|
)
|
|
-
|
|
|
Deferred
tax recovery
|
|
|
|
|
(4,277
|
)
|
|
(70
|
)
|
|
Changes in non-cash working
capital
|
|
|
|
|
|
|
|
|
|
|
GST
recoverable
|
|
|
|
|
(963
|
)
|
|
623
|
|
|
Accounts
receivable
|
|
|
|
|
(654
|
)
|
|
(81
|
)
|
|
Inventory
|
|
|
|
|
(1,679
|
)
|
|
(1,133
|
)
|
|
Other
current assets
|
|
|
|
|
(1,009
|
)
|
|
(645
|
)
|
|
Accounts
payable and accrued liabilities
|
|
|
|
|
2,610
|
|
|
922
|
|
|
Deferred
revenue
|
|
|
|
|
453
|
|
|
28
|
|
|
|
|
|
|
|
(10,506
|
)
|
|
(6,772
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
Marketable securities and derivative
|
|
|
|
|
(7,877
|
)
|
|
-
|
|
|
Convertible debenture
|
|
|
|
|
(2,000
|
)
|
|
-
|
|
|
Promissory notes receivable
|
|
|
|
|
(1,215
|
)
|
|
-
|
|
|
Purchase of property, plant and equipment
|
|
|
|
|
(25,718
|
)
|
|
(1,885
|
)
|
|
Acquisition of businesses, net of cash acquired
|
|
11
|
|
|
(6,917
|
)
|
|
-
|
|
|
Acquisition of assets, net of
cash acquired
|
|
11
|
|
|
(6,748
|
)
|
|
-
|
|
|
|
|
|
|
|
(50,475
|
)
|
|
(1,885
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
Finance lease
|
|
|
|
|
(193
|
)
|
|
-
|
|
|
Proceeds of convertible notes
|
|
|
|
|
115,000
|
|
|
800
|
|
|
Proceeds (repayment) of short term loans
|
|
|
|
|
(6,215
|
)
|
|
2,298
|
|
|
Proceeds (repayment) of long term loans
|
|
|
|
|
(4,000
|
)
|
|
982
|
|
|
Financing fees
|
|
|
|
|
(5,087
|
)
|
|
(316
|
)
|
|
Shares issued for cash, net of
share issue costs
|
|
|
|
|
120,823
|
|
|
4,835
|
|
|
|
|
|
|
|
220,328
|
|
|
8,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange on cash and cash equivalents
|
|
|
|
|
190
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash
and cash equivalents
|
|
|
|
|
159,537
|
|
|
(57
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of year
|
|
|
|
|
259
|
|
|
316
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of year
|
|
|
|
|
159,796
|
|
|
259
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
consist of:
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
|
|
159,796
|
|
|
170
|
|
|
Restricted cash
|
|
|
|
|
-
|
|
|
89
|
|
|
|
|
|
|
|
159,796
|
|
|
259
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary information:
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment in accounts payable
|
|
|
|
|
4,119
|
|
|
264
|
|
|
Depreciation in production costs
|
|
|
|
|
373
|
|
|
136
|
|
The accompanying notes are an integral part of these
Consolidated Financial Statements.
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
Aurora Cannabis Inc. (the “Company” or
“Aurora”), was incorporated under the
Business Corporations Act
(British
Columbia). The Company’s shares are listed on the Toronto Stock Exchange (the
“Exchange”) under the symbol “ACB” and on the OTCQX under the symbol “ACBFF”
The Company, through its wholly-owned
subsidiary, Aurora Cannabis Enterprises Inc., is licensed to produce and sell
medical marijuana pursuant to the
Access to Cannabis for Medical Purposes
Regulations
(“ACMPR”).
On December 9, 2014, the Company
completed the reverse take-over of Prescient Mining Corp. (the “RTO”) by way of
a Share Exchange Agreement (the “Agreement”). Pursuant to the Agreement, the
Company acquired all of the issued and outstanding shares of Aurora Marijuana
Inc. in exchange for securities of the Company.
The head office and principal address
of the Company is Suite 1500 - 1199 West Hastings Street, Vancouver, BC, Canada,
V6E 3T5. The Company’s registered and records office address is Suite 1500 -
1055 West Georgia Street, Vancouver, BC V6E 4N7.
|
2.
|
Significant Accounting
Policies
|
|
|
(a)
|
Basis of presentation
|
The consolidated financial statements
of the Company have been prepared in accordance with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards
Board (IASB) and interpretations of the IFRS Interpretations Committee (“IFRIC”)
in effect for the year ended June 30, 2017.
These consolidated financial
statements were approved and authorized for issue by the Board of Directors of
the Company on September 25, 2017.
|
|
(b)
|
Basis of consolidation
|
These consolidated financial
statements include the accounts of the Company and its wholly-owned
subsidiaries, Aurora Marijuana Inc. (“AMI”), Aurora Cannabis Enterprises Inc.
(“ACE”), 1769474 Alberta Ltd. (“1769474”), Australis Capital Inc. (“ACI”),
CanvasRx Inc. (“CanvasRx”), 10094595 Canada Inc., Peloton Pharmaceuticals Inc.
(“Peloton”) and Pedanios GmbH (“Pedanios”). All significant intercompany
balances and transactions were eliminated on consolidation.
The consolidated financial statements
have been prepared on a historical cost basis except for certain financial
instruments, biological assets, derivatives and acquisition related contingent
consideration which were measured at fair value.
|
|
(d)
|
Functional and presentation of foreign
currency
|
The consolidated financial statements
are presented in Canadian dollars unless otherwise noted. The functional
currency of Pedanios is the European Euro and the functional currency of Aurora
and its remaining subsidiaries is the Canadian dollar.
1
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
2.
|
Significant Accounting Policies
(Continued)
|
|
|
(e)
|
Foreign currency translation
|
Foreign currency transactions are
translated into Canadian dollars at exchange rates in effect on the date of the
transactions. Monetary assets and liabilities denominated in foreign currencies
at the consolidated statement of financial position date are translated to
Canadian dollars at the foreign exchange rate applicable at that date. Realized
and unrealized exchange gains and losses are recognized in the consolidated
statements of comprehensive loss.
Non-monetary assets and liabilities
that are measured in terms of historical cost in a foreign currency are
translated using the exchange rate at the date of the transaction.
The assets and liabilities of foreign
operations are translated into Canadian dollars at period end exchange rates.
Income and expenses, and cash flows of foreign operations are translated into
Canadian dollars using average exchange rates. Exchange differences resulting
from the translation of foreign operations are recognized in other comprehensive
income and accumulated in equity.
|
|
(f)
|
Cash and cash equivalents
|
Cash and cash equivalents include cash
deposits in financial institutions and other deposits that are readily
convertible into cash.
The Company measures biological assets
consisting of medical cannabis plants at fair value less cost to sell up to the
point of harvest, which becomes the basis for the cost of finished goods
inventories after harvest. Seeds are measured at fair market value.
Unrealized gains or losses arising
from the changes in fair value less cost to sell during the year are included in
the results of operations for the related year.
Inventories of harvested finished
goods and packing materials are initially valued at cost and subsequently at the
lower of cost and net realizable value. Inventories of harvested cannabis are
transferred from biological assets at their fair value less costs to sell at
harvest which becomes the deemed cost. Any subsequent post-harvest costs are
capitalized to inventory to the extent that the cost is less than net realizable
value. Net realizable value is determined as the estimated selling price in the
ordinary course of business less the estimated costs of completion and the
estimated costs necessary to make the sale. Cost is determined using the average
cost basis. Products for resale and supplies and consumables are valued at cost.
The Company reviews inventory for
obsolete, redundant and slow moving goods and any such inventory are
written-down to net realizable value.
2
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
2.
|
Significant Accounting Policies
(Continued)
|
|
|
(i)
|
Property, plant and equipment
|
Property, plant and equipment is
measured at cost less accumulated depreciation and impairment losses.
Depreciation is calculated on a straight-line basis over the estimated useful
life of the assets, except in the year of acquisition, when half of the rate is
used as follows:
|
|
Computer software and equipment
|
|
3 years
|
|
|
|
Production equipment
|
|
2 -4 years
|
|
|
|
Furniture and fixtures
|
|
5 years
|
|
|
|
Building and improvements
|
|
10 - 50 years
|
|
An asset’s residual value, useful life
and depreciation method are reviewed at each financial year-end and adjusted if
appropriate.
Gains and losses on disposal of an
item are determined by comparing the proceeds from disposal with the carrying
amount of the item and are recognized in profit or loss.
The Company capitalizes borrowing
costs on capital invested in projects under construction (Note 9). Upon
commencement of commercial operations, capitalized borrowing costs, as a portion
of the total cost of the asset, are depreciated over the estimated useful life
of the related asset.
Intangible assets are recorded at cost
less accumulated amortization and impairment losses, if any. Intangible assets
acquired in a business combination are measured at fair value at the acquisition
date. Amortization is provided on a straight-line basis over their estimated
useful lives, which do not exceed the contractual period, if any. Intangible
assets that have indefinite useful lives are not subject to amortization and are
tested annually for impairment, or more frequently if events or changes in
circumstances indicate that they might be impaired. The estimated useful lives,
residual values, and amortization methods are reviewed at each year end, and any
changes in estimates are accounted for prospectively.
Customer relationships are measured at
fair value at the time of acquisition and are amortized on a straight-line basis
over a period of 7 years.
The Health Canada License is measured
at fair value at the time of acquisition and is amortized on a straight-line
basis over the useful life of the facility or lease term.
The Pedanios licenses and permits are
classified as indefinite life intangible assets and are not amortized but are
tested for impairment on an annual basis. These licenses and permits do not
expire, as such, there is no foreseeable limit to the period over which these
assets are expected to generate future cash inflows to the Company.
Goodwill represents the excess of the
purchase price paid for the acquisition of an entity over the fair value of the
net tangible and intangible assets acquired. Goodwill is allocated to the cash
generating unit (“CGU”) or CGUs which are expected to benefit from the synergies
of the combination. The Company has determined that the goodwill associated with
all acquisitions belong to the medical cannabis segment.
3
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
2.
|
Significant Accounting Policies
(Continued)
|
Goodwill that has an indefinite useful
life are not subject to amortization and are tested annually for impairment, or
more frequently if events or changes in circumstances indicate that they might
be impaired. Other assets are tested for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be recoverable.
Impairment is determined for goodwill
by assessing if the carrying value of a CGU, including the allocated goodwill,
exceeds its recoverable amount determined as the greater of the estimated fair
value less costs to sell and the value in use. Impairment losses recognized in
respect of a CGU are first allocated to the carrying value of goodwill and any
excess is allocated to the carrying amount of assets in the CGU. Any goodwill
impairment is recorded in income in the period in which the impairment is
identified. Impairment losses on goodwill are not subsequently reversed.
|
|
(l)
|
Investment in joint ventures
|
A joint venture is a joint arrangement
whereby the parties that have joint control of the arrangement have rights to
the net assets of the arrangement. Investments in a joint venture are accounted
for using the equity method and are initially recognized at cost. The entire
carrying amount of the investment is tested for impairment annually.
The Company leases some items of
property, plant and equipment. A lease of property, plant and equipment is
classified as a capital lease if it transfers substantially all the risks and
rewards incidental to ownership to the Company. A lease of property, plant and
equipment is classified as an operating lease whenever the terms of the lease do
not transfer substantially all of the risks and rewards of ownership to the
lessee. Lease payments are recognized as an expense on a straight-line basis
over the lease term, except where another systematic basis is more
representative of the time pattern in which the economic benefits are consumed.
|
|
(n)
|
Impairment of non-financial
assets
|
The carrying amount of the Company’s
non-financial assets is reviewed at each financial reporting date to determine
whether there is any indication of impairment. If such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent of
the impairment loss. An impairment loss is recognized when the carrying amount
of an asset or its CGU exceeds its recoverable amount. Impairment losses are
recognized in profit and loss for the period.
The recoverable amount of an asset or
CGU is the greater of it’s fair value less cost to sell and value in use. In
assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects the current market
assessments of the time value of money and the risks specific to the asset. For
an asset that does not generate cash inflows largely independent of those from
other assets, the recoverable amount is determined for the cash-generating unit
to which the asset belongs.
An impairment loss is only reversed if
there is an indication that the impairment loss may no longer exist and there
has been a change in the estimates used to determine the recoverable amount,
however, not to an amount higher than the carrying amount that would have been
determined had no impairment loss been recognized in previous years.
Assets that have an indefinite useful
life are not subject to depreciation and are tested annually for impairment.
4
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
2.
|
Significant Accounting Policies
(Continued)
|
Transaction costs directly
attributable to the issuance of common shares are recognized as a deduction from
equity. The proceeds from the exercise of stock options or warrants together
with amounts previously recorded in reserves over the vesting periods are
recorded as share capital. Share capital issued for non-monetary consideration
is recorded at an amount based on fair market value of the shares on the date of
issue.
The Company has an employee stock
option plan. Equity-settled share-based payments to employees are measured at
the fair value of the stock options at the grant date and recognized in expense
over the vesting periods.
Share-based payments to non-employees
are measured at the fair value of goods or services received or the fair value
of the equity instruments issued, if it is determined the fair value of the
goods or services cannot be reliably measured, and are recorded at the date the
goods or services are received. The corresponding amount is recorded to the
share-based payment reserve.
The fair value of options is
determined using the Black–Scholes option pricing model which incorporates all
market vesting conditions. The number of options expected to vest is reviewed
and adjusted at the end of each reporting period such that the amount recognized
for services received as consideration for the equity instruments granted shall
be based on the number of equity instruments that eventually vest. Amounts
recorded for forfeited or expired unexercised options are transferred to deficit
in the year of forfeiture or expiry.
Upon the exercise of stock options,
consideration received on the exercise of these equity instruments is recorded
as share capital and the related share-based payment reserve is transferred to
share capital.
The Company calculates basic loss per
share using the weighted average number of common shares outstanding during the
year. Diluted loss per share is the same as basic loss per share, as the
issuance of shares on the exercise of stock options and share purchase warrants
is anti-dilutive.
Revenue is recognized at the fair
value consideration received or receivable. Revenue from the sale of goods is
recognized when the Company has transferred the significant risks and rewards of
ownership to the buyer and it is probable that the Company will receive the
previously agreed upon payment. Significant risks and rewards are generally
considered to be transferred when the Company has delivered the product to
customers.
|
|
(s)
|
Research and development
|
Research costs are expensed as
incurred. Development expenditures are capitalized only if development costs can
be measured reliably, the product or process is technically and commercially
feasible, future economic benefits are probable and the Company intends to and
has sufficient resources to complete the development to use or sell the asset.
To date, no development costs have been capitalized.
5
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
2.
|
Significant Accounting Policies
(Continued)
|
Tax expense recognized in profit or
loss comprises the sum of current and deferred taxes not recognized in other
comprehensive income or directly in equity.
Current tax assets and/or liabilities
comprise those claims from, or obligations to, fiscal authorities relating to
the current or prior reporting periods that are unpaid at the reporting date.
Current tax is payable on taxable profit, which differs from profit or loss in
the financial statements. Calculation of current tax is based on tax rates and
tax laws that have been enacted or substantively enacted by the end of the
reporting period.
Deferred taxes are calculated using
the liability method on temporary differences between the carrying amounts of
assets and liabilities and their tax bases. Deferred tax assets and liabilities
are calculated, without discounting, at tax rates that are expected to apply to
their respective period of realization, provided they are enacted or
substantively enacted by the end of the reporting period. Deferred tax
liabilities are always provided for in full.
Deferred tax assets are recognized to
the extent that it is probable that they will be able to be utilized against
future taxable income. Deferred tax assets and liabilities are offset only when
the Company has a right and intention to offset current tax assets and
liabilities from the same taxation authority.
Changes in deferred tax assets or
liabilities are recognized as a component of tax income or expense in profit or
loss, except where they relate to items that are recognized in other
comprehensive income or directly in equity, in which case the related deferred
tax is also recognized in other comprehensive income or equity, respectively.
|
|
(u)
|
Financial instruments
|
A financial instrument is any contract
that gives rise to a financial asset of one entity and a financial liability or
equity instrument to another entity. Financial assets and financial liabilities
are recognized on the statements of financial position at the time the Company
becomes a party to the contractual provisions of the financial instrument.
6
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
2.
|
Significant Accounting Policies
(Continued)
|
|
|
(u)
|
Financial instruments
(continued)
|
|
|
(i)
|
Initial measurement of financial assets and financial
liabilities
|
Financial assets and liabilities are
recognized at fair value upon initial recognition plus any directly attributable
transaction costs when not subsequently measured at fair value through profit or
loss. Initial measurement gains on certain investments in hybrid instruments and
warrants (underlying a unit offering) of third parties (Notes 4(a) and 4(b)(i))
were deferred due to significant level 3 volatility inputs being present in fair
value estimates. The deferred gains are recognized over the underlying term of
the warrant to which the volatility estimates related as such factor would be
considered by a market participant in pricing the assets.
|
|
(ii)
|
Subsequent measurement
|
Measurement in subsequent periods is
dependent on the classification of the financial instrument. The Company
classifies its financial instruments in the following categories: at fair value
through profit or loss, loans and receivables, held to maturity, available for
sale, and other financial liabilities.
Financial assets
|
|
(i)
|
Financial assets at fair value through profit or loss
(“FVTPL”)
|
Financial assets and liabilities at
FVTPL are either ‘held for trading’ or designated at FVTPL. Derivatives and
embedded derivatives not held for hedging purposes are also classified as “held
for trading”. These financial assets are subsequently recorded at fair value and
changes in fair value are recognized in profit or loss for the period. Directly
attributable transaction costs on acquisition are expensed as incurred.
The Company holds a convertible
debenture (Note 4(a)) investment and has elected to classify and measure the
entire hybrid contract at FVTPL. The fair value of the hybrid instrument is
represented by its value through conversion.
|
|
(ii)
|
Loans and receivables
|
Loans and receivables are
non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. Such assets are recognized initially at fair value
and subsequently on an amortized cost basis using the effective interest method,
less any impairment losses. They are included in current assets, except for
maturities greater than 12 months after the end of the reporting period, which
are classified as non-current assets.
Available-for-sale financial assets
are non-derivative financial assets that are designated as available for sale or
are not classified in any other financial asset categories. They are initially
and subsequently measured at fair value and the changes in fair value, other
than impairment losses are recognized in other comprehensive income (loss) and
presented in the fair value reserve in shareholders’ equity. When the financial
assets are sold or an impairment write-down is required, losses accumulated in
the fair value reserve recognized in shareholders’ equity are reclassified to
profit or loss.
7
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
2.
|
Significant Accounting Policies
(Continued)
|
|
|
(u)
|
Financial instruments (continued)
|
Financial assets (continued)
|
|
(iv)
|
Available for sale (continued)
|
The Company invested in a unit private
placement (Note 4(b)(i)) and elected to apply the residual method in allocating
the investment cost to the underlying common share and warrant components, first
to the share component at its fair value and the residual to the warrant
component. The resulting unrealized gain at inception on the share component was
recognized in profit and loss and subsequent changes in fair value are
recognized in other comprehensive income.
|
|
(v)
|
Held-to-maturity
|
|
|
|
|
|
|
|
Held-to-maturity investments are non-derivative financial
assets that have fixed maturities and fixed or determinable payments, and
it is the Company’s intention to hold these investments to maturity. They
are initially recorded at fair value and subsequently measured at
amortized cost.
|
|
|
|
|
|
|
|
The Company does not have any held-to-maturity financial
assets.
|
|
|
|
|
|
|
(vi)
|
Impairment of financial assets
|
|
|
|
|
|
|
|
A financial asset not carried at FVTPL is reviewed at
each reporting date to determine whether there is any indication of
impairment. A financial asset is impaired if objective evidence indicates
that a loss event has occurred after the initial recognition of the asset,
and that the loss event had a negative effect on the estimated future cash
flows of that asset that can be estimated reliably.
|
|
|
|
|
|
|
|
An impairment loss in respect of a financial asset
measured at amortized cost is calculated as the difference between its
carrying amount and the present value of the estimated future cash flows
discounted at the assets' original effective interest rate. Losses are
recognized in profit or loss with a corresponding reduction in the
financial asset, or, in the case of amounts receivable, are reflected in
an allowance account against receivables. When a subsequent event causes
the amount of impairment loss to decrease, the decrease in impairment loss
is reversed through profit or loss.
|
Financial liabilities
|
|
(i)
|
Other financial liabilities
|
|
|
|
|
|
|
|
Subsequent to initial recognition, the Company’s
financial liabilities classified as other financial liabilities are
measured at amortized cost using the effective interest method. Financial
liabilities at fair value are stated at fair value with changes being
recognized in profit and loss. The Company derecognizes a financial
liability when its contractual obligations are discharged, cancelled, or
expired.
|
8
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
2.
|
Significant Accounting Policies
(Continued)
|
|
|
(u)
|
Financial instruments (continued)
|
Financial liabilities (continued)
The Company’s derivative financial
liabilities are stated at fair value with changes recognized through profit and
loss.
|
|
(ii)
|
Compound financial instruments
|
|
|
|
|
|
|
|
The liability component of a compound financial
instrument is recognized initially at the fair value of a similar
liability that does not have an equity conversion option. The equity
component is recognized initially as the difference between the fair value
of the compound financial instrument as a whole and the fair value of the
liability component. Any directly attributable transaction costs are
allocated to the liability and equity components in proportion to their
initial carrying amounts.
|
|
|
|
|
|
|
|
Subsequent to initial recognition, the liability
component of a compound financial instrument is measured at amortized cost
using the effective interest method. The equity component of a compound
financial instrument is not remeasured subsequent to initial
recognition.
|
|
|
|
|
|
|
|
Interest and losses and gains relating to the financial
liability are recognized in profit or loss. On conversion, the financial
liability is reclassified to equity; no gain or loss is recognized on
conversion.
|
|
|
(v)
|
Significant accounting judgments, estimates and
assumptions
|
|
|
|
|
|
|
|
The preparation of the Company’s consolidated financial
statements in conformity with IFRS requires management to make judgments,
estimates, and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience
and other factors that are considered to be relevant. Actual results may
differ from these estimates.
|
|
|
|
|
|
|
|
The estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are recognized in the
period in which the estimate is revised, if the revision affects only that
period, or in the period of the revision and future periods, if the
revision affects both current and future periods.
|
|
|
|
|
|
|
|
Significant judgments, estimates and assumptions that
have the most significant effect on the amounts recognized in the
financial statements are described below.
|
Significant judgments
|
|
(i)
|
Fair value of financial instruments
|
|
|
|
|
|
|
|
The individual fair values attributed to the different
components of a financing transaction, notably investment in equity in
securities, derivative financial instruments, convertible debt and loans,
are determined using valuation techniques. The Company uses judgment to
select the methods used to make certain assumptions and in performing the
fair value calculations in order to determine (a) the values attributed to
each component of a transaction at the time of their issuance; (b) the
fair value measurements for certain instruments that require subsequent
measurement at fair value on a recurring basis; and (c) for disclosing the
fair value of financial instruments subsequently carried at amortized
cost. These valuation estimates could be significantly different because
of the use of judgment and the inherent uncertainty in estimating the fair
value of these instruments that are not quoted in an active market. The
assumptions regarding the derivative liabilities are disclosed in notes
14(d) and 15(d).
|
9
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
2.
|
Significant Accounting Policies
(Continued)
|
|
|
(v)
|
Significant accounting judgments, estimates and
assumptions (continued)
|
|
|
|
|
|
|
|
Significant judgments
(continued)
|
|
|
(ii)
|
Biological assets
|
|
|
|
|
|
|
|
Biological assets, consisting of cannabis plants and
agricultural produce consisting of cannabis, are measured at fair value
less costs to sell up to the point of harvest.
|
|
|
|
|
|
|
|
Determination of the fair values of the biological assets
and the agricultural product requires the Company to make assumptions
about how market participants assign fair values to these assets. These
assumptions primarily relate to the level of effort required to bring the
cannabis up to the point of harvest, costs to convert the harvested
cannabis to finished goods, sales price, risk of loss, expected future
yields from the cannabis plants and estimating values during the growth
cycle.
|
|
|
|
|
|
|
|
The valuation of biological assets at the point of
harvest is the cost basis for all cannabis based inventory and thus any
critical estimates and judgments related to the valuation of biological
assets are also applicable for inventory. The valuation of work-in-process
and finished goods also requires the estimate of conversion costs
incurred, which become part of the carrying amount for the inventory. The
Company must also determine if the cost of any inventory exceeds its net
realizable value, such as cases where prices have decreased, or inventory
has spoiled or has otherwise been damaged.
|
|
|
|
|
|
|
(iii)
|
Estimated useful lives and depreciation of property,
plant and equipment
|
|
|
|
|
|
|
|
Depreciation of property, plant and equipment is
dependent upon estimates of useful lives which are determined through the
exercise of judgment. The assessment of any impairment of these assets is
dependent upon estimates of recoverable amounts that take into account
factors such as economic and market conditions and the useful lives of
assets.
|
|
|
|
|
|
|
(iv)
|
Business combinations
|
|
|
|
|
|
|
|
In a business combination, all identifiable assets,
liabilities and contingent liabilities acquired are recorded at their fair
values. One of the most significant estimates relates to the determination
of the fair value of these assets and liabilities. The contingent
consideration is measured at its acquisition-date fair value and included
as part of the consideration transferred in a business combination.
Contingent consideration that is classified as equity is not remeasured at
subsequent reporting dates and its subsequent settlement is accounted for
within equity. Contingent consideration that is classified as an asset or
a liability is remeasured at subsequent reporting dates in accordance with
IAS 39, or IAS 37 Provisions, Contingent Liabilities and Contingent
Assets, as appropriate, with the corresponding gain or loss being
recognized in profit or loss. For any intangible asset identified,
depending on the type of intangible asset and the complexity of
determining its fair value, an independent valuation expert or management
may develop the fair value, using appropriate valuation techniques, which
are generally based on a forecast of the total expected future net cash
flows. The evaluations are linked closely to the assumptions made by
management regarding the future performance of the assets concerned and
any changes in the discount rate applied.
|
|
|
|
|
|
|
|
Certain fair values may be estimated at the acquisition
date pending confirmation or completion of the valuation process. Where
provisional values are used in accounting for a business combination, they
may be adjusted retrospectively in subsequent periods. However, the
measurement period will last for one year from the acquisition
date.
|
10
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
2.
|
Significant Accounting Policies
(Continued)
|
|
|
(v)
|
Significant accounting judgments, estimates and
assumptions (continued)
|
|
|
|
|
|
|
|
Significant judgments
(continued)
|
|
|
(v)
|
Goodwill impairment
|
|
|
|
|
|
|
|
The Company performs an annual test for goodwill
impairment in the fourth quarter for each of the cash generating units
(CGUs with goodwill allocated), and whenever events or circumstances make
it more likely than not that an impairment may have occurred, such as a
significant adverse change in the business climate or a decision to sell
or dispose all or a portion of a reporting unit. Determining whether an
impairment has occurred requires valuation of the respective CGU, which we
estimate using a discounted cash flow method. When available and as
appropriate, we use comparative market multiples to corroborate discounted
cash flow results. In applying this methodology, we rely on a number of
factors, including actual operating results, future business plans,
economic projections and market data.
|
|
|
|
|
|
|
|
The Company tests intangible assets with indefinite lives
annually for impairment using a fair value method such as discounted cash
flows.
|
|
|
|
|
|
|
(vi)
|
Convertible instruments
|
|
|
|
|
|
|
|
Convertible notes are compound financial instruments
which are accounted for separately by their components: a financial
liability and an equity instrument. The financial liability, which
represents the obligation to pay coupon interest on the convertible notes
in the future, is initially measured at its fair value and subsequently
measured at amortized cost. The residual amount is accounted for as an
equity instrument at issuance.
|
|
|
|
|
|
|
|
The identification of convertible notes components is
based on interpretations of the substance of the contractual arrangement
and therefore requires judgment from management. The separation of the
components affects the initial recognition of the convertible debenture at
issuance and the subsequent recognition of interest on the liability
component. The determination of the fair value of the liability is also
based on a number of assumptions, including contractual future cash flows,
discount rates and the presence of any derivative financial
instruments.
|
|
|
|
|
|
|
(vii)
|
Share-based payments
|
|
|
|
|
|
|
|
The Company uses the Black-Scholes option pricing model
to determine the fair value of stock options and warrants. In estimating
fair value, management is required to make certain assumptions and
estimates such as the expected life of options, volatility of the
Company’s future share price, risk free rate, future dividend yields and
estimated forfeitures at the initial grant date. Changes in assumptions
used to estimate fair value could result in materially different
results.
|
|
|
|
|
|
|
(viii)
|
Deferred tax assets
|
|
|
|
|
|
|
|
Deferred tax assets, including those arising from tax
loss carry-forwards, require management to assess the likelihood that the
Company will generate sufficient taxable earnings in future periods in
order to utilize recognized deferred tax assets. Assumptions about the
generation of future taxable profits depend on management’s estimates of
future cash flows. In addition, future changes in tax laws could limit the
ability of the Company to obtain tax deductions in future periods. To the
extent that future cash flows and taxable income differ significantly from
estimates, the ability of the Company to realize the net deferred tax
assets recorded at the reporting date could be
impacted.
|
11
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
2.
|
Significant Accounting Policies
(Continued)
|
|
|
(w)
|
Recent accounting pronouncements
|
|
|
|
|
|
|
|
There were no new standards effective July 1, 2016 that
had an impact on the Company’s consolidated financial statements. The
following IFRS standards have been recently issued by the IASB. The
Company is assessing the impact of these new standards on future
consolidated financial statements. Pronouncements that are not applicable
or where it has been determined do not have a significant impact to the
Company have been excluded herein.
|
|
|
(i)
|
IFRS 7 Financial instruments: Disclosure
|
|
|
|
|
|
|
|
IFRS 7
Financial instruments: Disclosure,
was
amended to require additional disclosures on transition from IAS 39 to
IFRS 9. IFRS 7 is effective on adoption of IFRS 9, which is effective for
annual periods commencing on or after January 1, 2018.
|
|
|
|
|
|
|
(ii)
|
IFRS 9, Financial Instruments
|
|
|
|
|
|
|
|
In July 2014, the IASB issued the final version of IFRS 9
Financial Instruments
, which reflects all phases of the financial
instruments project and replaces IAS 39
Financial Instruments:
Recognition and Measurement
and all previous versions of IFRS 9. The
standard introduces new requirements for classification and measurement,
impairment, and hedge accounting. IFRS 9 is effective for annual periods
beginning on or after 1 January 2018, with early application
permitted.
|
|
|
|
|
|
|
(iii)
|
IFRS 15 Revenue from Contracts with Customers
|
|
|
|
|
|
|
|
The IASB replaced IAS 18,
Revenue,
in its entirety
with IFRS 15,
Revenue from Contracts with Customers
. The standard
contains a single model that applies to contracts with customers and two
approaches to recognizing revenue: at a point in time or over time. The
model features a contract-based five-step analysis of transactions to
determine whether, how much and when revenue is recognized. New estimates
and judgmental thresholds have been introduced, which may affect the
amount and/or timing of revenue recognized. IFRS 15 is effective for
annual periods beginning on or after January 1, 2018, with early
application permitted.
|
|
|
|
|
|
|
(iv)
|
IFRS 16 Leases
|
|
|
|
|
|
|
|
In January 2016, the IASB issued IFRS 16
Leases
,
which will replace IAS 17
Leases
. This standard introduces a single
lessee accounting model and requires a lessee to recognize assets and
liabilities for all leases with a term of more than twelve months, unless
the underlying asset is of low value. A lessee is required to recognize a
right-of-use asset representing its right to use the underlying asset and
a lease liability representing its obligation to make lease payments. The
standard will be effective for annual periods beginning on or after
January 1, 2019, with earlier application permitted for entities that
apply IFRS 15
Revenue from Contracts with Customers
at or before
the date of initial adoption of IFRS 16. The extent of the impact of
adoption of the standard has not yet been
determined.
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Trade receivables
|
|
1,346
|
|
|
84
|
|
|
|
GST
recoverable
|
|
966
|
|
|
3
|
|
|
|
|
|
2,312
|
|
|
87
|
|
12
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
|
|
|
Convertible
|
|
|
Marketable
|
|
|
|
|
|
|
|
|
debenture
|
|
|
securities
|
|
|
Derivative
|
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(b)
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Investment at cost
|
|
2,000
|
|
|
7,650
|
|
|
306
|
|
|
|
Unrealized gain recognized at inception
|
|
12,564
|
|
|
1,334
|
|
|
380
|
|
|
|
Fair value at inception
|
|
14,564
|
|
|
8,984
|
|
|
686
|
|
|
|
Unrealized gain (losses) on changes in fair value
|
|
(3,493
|
)
|
|
5,861
|
|
|
(394
|
)
|
|
|
Balance, June 30, 2017
|
|
11,071
|
|
|
14,845
|
|
|
292
|
|
|
|
(a)
|
Convertible debenture
|
|
|
|
|
|
|
|
ACE signed a Memorandum of Understanding (“MOU”) with
Radient Technologies Inc. (“Radient”) dated December 13, 2016, to evaluate
an exclusive partnership for the joint development and commercialization
of standardized cannabinoid extracts.
|
|
|
|
|
|
|
|
Pursuant to the terms of the MOU, on February 13, 2017,
the Company purchased a $2,000 unsecured 10% convertible debenture of
Radient, convertible into units at $0.14 per unit. Each unit consists of
one common share and one share purchase warrant, with each warrant
exercisable into one common share at a price of $0.33 per share expiring
February 13, 2019. The debenture has a term of 2 years, is payable on
demand during the first 5 months following issuance, and is subject to a
mandatory conversion if, after 5 months from the date of issuance, (i) the
volume weighted average price (“VWAP”) of Radient’s shares is equal to or
greater than $0.40 for 10 consecutive days; or the Company and Radient
enter into an exclusivity, licensing, service or similar agreement. The
Company received a financing commission of $40.
|
|
|
|
|
|
|
|
The Company recognized an unrealized gain on the
debenture at inception of $12,564 which is being amortized over two years.
The change in fair value during the year ended June 30, 2017, resulted in
an unrealized loss of $3,493. The fair value of the debenture at June 30,
2017, was estimated by measuring the fair value of the shares receivable
on conversion at a quoted market price of $0.49 (inception - $0.61) and
the warrants receivable on conversion using the Black-Scholes pricing
model with the following assumptions: risk-free interest rate of 1.10%
(inception - $0.75%); dividend yield of 0% (inception - 0%); stock price
volatility of 99.05% (inception - 102.52%), and an expected life of 1.65
years (inception - 2 years).
|
|
|
|
|
|
|
|
During the year ended June 30, 2017, the Company received
104,167 units of Radient for its interest payment of $50. Each unit
consisted of one common share and one warrant, with each warrant
exercisable into one share of Radient at a price of $0.48 per share
expiring February 13, 2019.
|
|
|
|
|
|
|
|
At June 30, 2017, the fair value of the shares of $51 was
based on a quoted market price of $0.49 per share and the fair value of
the warrants of $25 was estimated using the Black-Scholes pricing model
with the following assumptions: risk-free interest rate of 1.10%; dividend
yield of 0%; stock price volatility of 99.05%; and an expected life of
1.62 years.
|
|
|
|
|
|
|
|
Subsequent to the year end, the Company received
14,285,714 common shares and 14,285,714 warrants of Radient pursuant to
the mandatory conversion of the debenture related to the VWAP mentioned
above. In addition, the Company received 77,540 units of Radient for its
final interest payment of $41. Each unit consisted of one common share and
one warrant, with each warrant exercisable into one common share at $0.53
per share until February 13, 2019.
|
13
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
4.
|
Investments
(Continued)
|
|
|
(b)
|
Marketable securities and
derivative
|
|
|
(i)
|
On March 9, 2017, the Company purchased 2,777,800 units
of Radient at a price of $0.45 per unit for a total cost of $1,250. Each
unit consisted of one common share and one-half of a share purchase
warrant, with each whole warrant exercisable into one common share of
Radient at a price of $0.70 per share expiring March 9, 2019.
|
|
|
|
|
|
|
|
The Company recognized an unrealized gain on marketable
securities at inception of $1,334 and an unrealized gain on derivatives at
inception of $380 related to the warrant component which is being
amortized over 2 years. The Company recognized unrealized losses on
changes in fair values of marketable securities of $944 and derivatives of
$390 during the year ended June 30, 2017.
|
|
|
|
|
|
|
|
At June 30, 2017, the fair value of the shares was based
on quoted market prices of $0.49 (inception - $0.83) and the fair value of
the warrants was estimated using the Black-Scholes pricing model with the
following assumptions: risk-free interest rate of 1.10% (inception -
$0.82%); dividend yield of 0% (inception - 0%); stock price volatility of
99.05% (inception - 101.40%); and an expected life of 1.69 years
(inception - 2 years).
|
|
|
|
|
|
|
(ii)
|
On April 25, 2017, the Company subscribed to the initial
public offering (“IPO”) of Cann Group Limited (“Cann”) on the Australian
Stock Exchange for 21,562,314 fully paid ordinary shares at a price of
A$0.30 per share for a total investment of $6,627 (A$6,469).
|
|
|
|
|
|
|
|
As at June 30, 2017, the fair market value of the shares
was $13,433 (A$13,476) based on a quoted market price of A$0.625. The
Company recognized an unrealized gain on the change in fair value of
marketable securities of $6,806 during the year ended June 30,
2017.
|
|
|
|
|
|
|
|
Biological asset
|
|
|
|
|
|
|
|
|
Capitalized
|
|
|
fair value
|
|
|
Carrying
|
|
|
|
|
|
cost
|
|
|
adjustment
|
|
|
value
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Harvested cannabis
|
|
|
|
|
|
|
|
|
|
|
|
Work-in-process
|
|
304
|
|
|
373
|
|
|
677
|
|
|
|
Finished
goods
|
|
2,332
|
|
|
2,836
|
|
|
5,168
|
|
|
|
Cannabis oils
|
|
|
|
|
|
|
|
|
|
|
|
Work-in
process
|
|
342
|
|
|
790
|
|
|
1,132
|
|
|
|
Finished goods
|
|
147
|
|
|
397
|
|
|
544
|
|
|
|
Supplies and consumables
|
|
182
|
|
|
-
|
|
|
182
|
|
|
|
Balance, June 30, 2017
|
|
3,307
|
|
|
4,396
|
|
|
7,703
|
|
14
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
|
|
|
|
|
|
Biological asset
|
|
|
|
|
|
|
|
|
Capitalized
|
|
|
fair value
|
|
|
Carrying
|
|
|
|
|
|
cost
|
|
|
adjustment
|
|
|
value
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Harvested cannabis
|
|
|
|
|
|
|
|
|
|
|
|
Work-in-process
|
|
62
|
|
|
194
|
|
|
256
|
|
|
|
Finished
goods
|
|
1,449
|
|
|
525
|
|
|
1,974
|
|
|
|
Supplies and consumables
|
|
87
|
|
|
-
|
|
|
87
|
|
|
|
Balance, June 30, 2016
|
|
1,598
|
|
|
719
|
|
|
2,317
|
|
The Company’s biological assets consist
of seeds and cannabis plants. The changes in the carrying value of biological
assets are as follows:
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Balance, beginning of year
|
|
1,845
|
|
|
25
|
|
|
|
Changes in fair value less cost to sell due
to biological transformation
|
|
22,772
|
|
|
6,197
|
|
|
|
Transferred to inventory upon harvest
|
|
(20,529
|
)
|
|
(4,377
|
)
|
|
|
Balance, end of year
|
|
4,088
|
|
|
1,845
|
|
The significant assumptions used in
determining the fair value of biological assets include:
|
|
(a)
|
Expected yield by plant;
|
|
|
(b)
|
Wastage of plants;
|
|
|
(c)
|
Duration of the production cycle;
|
|
|
(d)
|
Percentage of costs incurred as of this date compared to
the total costs expected to be incurred;
|
|
|
(e)
|
Percentage of costs incurred for each stage of plant
growth; and
|
|
|
(f)
|
Market values.
|
As of June 30, 2017, it is expected
that the Company’s biological assets will yield approximately 599,245 grams
(2016 – 227,449 grams) of medical cannabis when harvested. The Company’s
estimates are, by their nature, subject to change and differences from the
anticipated yield will be reflected in the gain or loss on biological assets in
future periods.
|
7.
|
Promissory Notes
Receivable
|
|
|
(a)
|
Pursuant to a promissory note dated June 8, 2017, the
Company advanced $750 (“Advance”) to Hempco Food and Fiber Inc.
(“Hempco”). The note is unsecured, bears interest at 8% per annum,
calculated and payable quarterly, and matures on the earliest of June 8,
2019, a demand by the Company on or after December 21, 2017, or the
completion of all or any portion of the borrower’s financing. Note
26(a).
|
|
|
|
|
|
|
(b)
|
Aggregate promissory notes to other third parties of $472
are receivable on demand, bear interest at 8% per annum, calculated
monthly and compounded annually, and are secured by general security
agreements. Subsequent to the year end, the Company advanced an additional
$233 on the same terms as the aforementioned promissory
notes.
|
15
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Advances to CanvasRx (Note
11(a))
|
|
-
|
|
|
450
|
|
|
|
Prepaid expenses
|
|
1,504
|
|
|
215
|
|
|
|
Deposits and advances
|
|
40
|
|
|
71
|
|
|
|
|
|
1,544
|
|
|
736
|
|
|
9.
|
Property, Plant and
Equipment
|
|
|
|
|
|
|
|
|
|
|
Computer
|
|
|
|
|
|
Production &
|
|
|
Finance
|
|
|
|
|
|
|
|
|
Building &
|
|
|
Construction
|
|
|
Software &
|
|
|
Furniture
|
|
|
Other
|
|
|
Lease
|
|
|
|
|
|
|
|
|
Improvements
|
|
|
in progress
|
|
|
Equipment
|
|
|
& Fixtures
|
|
|
Equipment
|
|
|
Equipment
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2015
|
|
10,269
|
|
|
-
|
|
|
343
|
|
|
39
|
|
|
439
|
|
|
-
|
|
|
11,090
|
|
|
|
Additions
|
|
562
|
|
|
-
|
|
|
101
|
|
|
70
|
|
|
581
|
|
|
-
|
|
|
1,314
|
|
|
|
Balance, June 30, 2016
|
|
10,831
|
|
|
-
|
|
|
444
|
|
|
109
|
|
|
1,020
|
|
|
-
|
|
|
12,404
|
|
|
|
Additions
|
|
6,351
|
|
|
26,571
|
|
|
461
|
|
|
183
|
|
|
1,142
|
|
|
544
|
|
|
35,252
|
|
|
|
Disposals
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(12
|
)
|
|
-
|
|
|
(12
|
)
|
|
|
Balance, June 30, 2017
|
|
17,182
|
|
|
26,571
|
|
|
905
|
|
|
292
|
|
|
2,150
|
|
|
544
|
|
|
47,644
|
|
|
|
|
|
|
|
|
|
|
|
Computer
|
|
|
|
|
|
Production &
|
|
|
Finance
|
|
|
|
|
|
|
|
|
Building &
|
|
|
Construction
|
|
|
Software &
|
|
|
Furniture
|
|
|
Other
|
|
|
Lease
|
|
|
|
|
|
|
|
|
Improvements
|
|
|
In Progress
|
|
|
Equipment
|
|
|
& Fixtures
|
|
|
Equipment
|
|
|
Equipment
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Accumulated Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2015
|
|
201
|
|
|
-
|
|
|
45
|
|
|
4
|
|
|
55
|
|
|
-
|
|
|
305
|
|
|
|
Depreciation
|
|
415
|
|
|
-
|
|
|
117
|
|
|
15
|
|
|
182
|
|
|
-
|
|
|
729
|
|
|
|
Balance, June 30, 2016
|
|
616
|
|
|
-
|
|
|
162
|
|
|
19
|
|
|
237
|
|
|
-
|
|
|
1,034
|
|
|
|
Depreciation
|
|
438
|
|
|
-
|
|
|
221
|
|
|
40
|
|
|
351
|
|
|
39
|
|
|
1,089
|
|
|
|
Disposals
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2
|
)
|
|
-
|
|
|
(2
|
)
|
|
|
Balance, June 30, 2017
|
|
1,054
|
|
|
-
|
|
|
383
|
|
|
59
|
|
|
586
|
|
|
39
|
|
|
2,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Book Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2016
|
|
10,215
|
|
|
-
|
|
|
282
|
|
|
90
|
|
|
783
|
|
|
-
|
|
|
11,370
|
|
|
|
June 30, 2017
|
|
16,128
|
|
|
26,571
|
|
|
522
|
|
|
233
|
|
|
1,564
|
|
|
505
|
|
|
45,523
|
|
The Company is constructing an 800,000
square foot production facility at the Edmonton International Airport (“EIA”).
As at June 30, 2017, costs related to the construction of this facility were
capitalized as construction in progress and not amortized. Amortization will
commence when construction is complete and the facility is available for its
intended use.
During the year ended June 30, 2017,
$1,370 in borrowing costs were capitalized to construction in progress at a
weighted average rate of 22%.
16
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
10.
|
Investment in a Joint
Venture
|
On April 7, 2015, ACI entered into a
Limited Liability Partnership Agreement with AJR Builders Group LLC and formed
Australis Holdings LLP (“AHL”), a Washington Limited Liability Partnership. Each
of ACI and AJR holds a 50% interest in AHL.
AHL purchased two parcels of land
totaling approximately 24.5 acres (the “Property”) in Whatcom county, Washington
for USD$2,300 in 2015, with the initial intention to construct a new cannabis
production and processing facility. The Company subsequently decided not to move
forward with US cannabis production and listed the land for sale.
Pursuant to a promissory note dated
April 10, 2015, the Company through ACI loaned $1,645 to AHL to fund the
purchase of the Property. The note bears interest at a rate of 5% per annum and
matures on October 31, 2017. In the event of a default, interest will be charged
at 12% per annum. The note is secured by a first mortgage on one parcel of the
Property and a second mortgage on the other title as well as a general security
agreement granting ACI security over all present and after acquired property of
AHL.
During the year ended June 30, 2017,
the Company accrued interest of $41 (2016 - $41) related to this loan.
Included in loans receivable are
advances of $360 to AHL. The advances are unsecured, non-interest bearing and
have no fixed terms of repayment.
The following table summarizes the
financial information of AHL:
|
|
(a)
|
Statement of Financial
Position:
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
US$
|
|
|
US$
|
|
|
|
Cash and cash equivalents
|
|
106
|
|
|
7
|
|
|
|
Other current assets
|
|
1
|
|
|
1
|
|
|
|
Total current assets
|
|
107
|
|
|
8
|
|
|
|
Property, plant and equipment
|
|
2,300
|
|
|
2,300
|
|
|
|
Total assets (100%)
|
|
2,407
|
|
|
2,308
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
US$
|
|
|
US$
|
|
|
|
Total current liabilities
|
|
283
|
|
|
83
|
|
|
|
Long term loans
|
|
2,415
|
|
|
2,378
|
|
|
|
Total equity
|
|
(291
|
)
|
|
(153
|
)
|
|
|
Total liabilities and equity (100%)
|
|
2,407
|
|
|
2,308
|
|
|
|
(b)
|
Statement of Loss and Comprehensive
Loss
|
|
|
Net loss and comprehensive loss (100%)
|
|
138
|
|
|
122
|
|
17
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
On August 17, 2016, the Company
completed the acquisition of all of the issued and outstanding shares of
CanvasRx pursuant to a Share Purchase Agreement (the “Agreement”) dated August
9, 2016, as amended and restated on August 16, 2016 (the “Acquisition”) for a
total consideration of $37,127. CanvasRx is a counseling and outreach service
provider with over 24 physical locations in the provinces of Ontario and
Alberta, Canada. The transaction was accounted for as a business combination.
|
|
|
|
$
|
|
|
|
Consideration
|
|
|
|
|
|
Cash paid at closing
|
|
1,575
|
|
|
|
Performance
milestones achieved related to patients
17,875,000 common shares
issued
|
|
11,440
|
|
|
|
Cash paid
|
|
1,575
|
|
|
|
Loan to CanvasRx
|
|
450
|
|
|
|
CanvasRx transaction expenses
|
|
250
|
|
|
|
Other
liabilities assumed
|
|
18
|
|
|
|
Contingent consideration
(1)
|
|
21,819
|
|
|
|
|
|
37,127
|
|
|
|
(1)
|
Contingent consideration represents the
discounted amount estimated to be paid out over a 20-month period on
achievement of future performance milestones related to new counseling
rooms opened, patient accruals and revenue targets.
|
|
|
|
|
|
|
|
This consideration may be satisfied, at the Company’s
sole discretion, in cash or common shares at a 15% discount to the market
price at the date of issuance, unless the market price of the Company’s
share is $0.47 or below, at which point the consideration is convertible
into a fixed number of shares. In any case, the issuance of the Company’s
shares should not result in former CanvasRx shareholders accumulating 50%
or more of the Company’s shares. If the consideration payments cannot be
satisfied in cash and the issuance of shares would result in the former
shareholders of CanvasRx accumulating 50% or more of the Company’s shares,
a convertible debenture will be issued.
|
|
|
|
|
|
|
|
During the year ended June 30, 2017, certain patient and
counselling room performance milestones were achieved, and the Company
paid $2,608 and issued 2,926,103 shares at $2.074 per share to the former
shareholders of CanvasRx.
|
|
|
|
|
|
|
|
Subsequent to the year end, the Company issued 3,178,177
shares at $2.135 per share for patient, counselling rooms and revenue
milestones achieved.
|
|
|
|
|
|
|
|
All common shares issued were accounted for at fair value
at the dates of issuance.
|
|
|
|
|
|
|
The purchase price was allocated as follows:
|
|
|
|
|
$
|
|
|
|
Net liabilities acquired
|
|
(797
|
)
|
|
|
Intangible asset – customer relationships
|
|
4,250
|
|
|
|
Deferred tax liability
|
|
(836
|
)
|
|
|
Goodwill
|
|
34,510
|
|
|
|
|
|
37,127
|
|
18
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
11.
|
Acquisitions
(Continued)
|
The Company is indemnified from any
tax liability arising from pre-acquisition transactions of CanvasRx through
adjustments to the purchase consideration.
Fair values of the net liabilities
acquired included the following:
|
|
|
|
$
|
|
|
|
Sales tax receivable
|
|
39
|
|
|
|
Accounts receivable
|
|
212
|
|
|
|
|
|
251
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities
|
|
109
|
|
|
|
Deferred revenue
|
|
939
|
|
|
|
|
|
1,048
|
|
|
|
|
|
(797
|
)
|
Net cash outflow on the Acquisition is
as follows:
|
|
|
|
$
|
|
|
|
Cash consideration
|
|
3,400
|
|
|
|
Add:
bank overdraft
|
|
18
|
|
|
|
|
|
3,418
|
|
Acquisition costs of $1,022 were
excluded from the consideration transferred and were recognized as an expense in
the current period.
For the year ended June 30, 2017,
CanvasRx accounted for $1,702 in net loss since August 17, 2016. This amount
included revenues of $309.
|
|
(b)
|
Peloton
|
|
|
|
|
|
|
|
On April 28, 2017, the Company, through its wholly-owned
subsidiary, 10094595 Canada Inc., acquired the net assets of Peloton, a
late-stage ACMPR applicant, out of bankruptcy protection. The Company is
completing construction of the former Peloton 40,000 square foot cannabis
production facility in Pointe Claire, Quebec. The transaction was
accounted for as an asset acquisition.
|
|
|
|
|
|
|
|
The Company acquired all of the common shares of Peloton
for a total consideration of $9,139 consisting
of:
|
|
|
|
|
$
|
|
|
|
573,707 common shares
|
|
1,486
|
|
|
|
Cash
|
|
4,562
|
|
|
|
Trustee, legal fees and other
acquisition costs
|
|
2,186
|
|
|
|
Acquisition related costs - 325,518 common shares
|
|
905
|
|
|
|
|
|
9,139
|
|
19
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
11.
|
Acquisitions
(Continued)
|
The allocation of the consideration to
the fair value of the net assets acquired at the date of acquisition is as
follows:
|
|
|
|
$
|
|
|
|
Building – construction in
progress
|
|
4,401
|
|
|
|
Office, furniture and equipment
|
|
445
|
|
|
|
Intangible asset – ACMPR license application
|
|
4,293
|
|
|
|
|
|
9,139
|
|
The total consideration is subject to
change pending settlement of all claims with the previous creditors by the
bankruptcy trustee.
In May 2017, the Company completed the
acquisition of Pedanios, a registered wholesale importer, exporter and
distributor of medical cannabis in Germany. The Company acquired all of the
issued and outstanding shares of Pedanios for a total consideration of $23,728.
The transaction was accounted for as a business combination.
|
|
|
|
$
|
|
|
|
Consideration
|
|
|
|
|
|
Cash paid at closing (€2,000)
|
|
3,019
|
|
|
|
8,316,782 common shares issued
|
|
20,709
|
|
|
|
|
|
23,728
|
|
The purchase price was allocated as
follows:
|
|
|
|
$
|
|
|
|
Net assets acquired
|
|
1,184
|
|
|
|
Intangible assets – permits and licenses
|
|
22,544
|
|
|
|
Goodwill
|
|
6,590
|
|
|
|
Deferred tax liability
|
|
(6,590
|
)
|
|
|
|
|
23,728
|
|
Fair values of the net assets acquired
included the following:
|
|
|
|
$
|
|
|
|
Cash
|
|
743
|
|
|
|
Trade receivables
|
|
358
|
|
|
|
Inventories
|
|
328
|
|
|
|
Prepaid expenses and deposits
|
|
6
|
|
|
|
Equipment
|
|
13
|
|
|
|
|
|
1,448
|
|
|
|
Accounts payables and accrued liabilities
|
|
264
|
|
|
|
|
|
1,184
|
|
20
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
11.
|
Acquisitions
(Continued)
|
Net cash outflow on the Acquisition is
as follows:
|
|
|
|
$
|
|
|
|
Cash consideration
|
|
3,019
|
|
|
|
Less: cash acquired
|
|
743
|
|
|
|
|
|
2,276
|
|
Acquisition costs of $243 were
excluded from the consideration transferred and were recognized as an expense in
the current period.
For the year ended June 30, 2017,
Pedanios accounted for $294 in net loss since May 30, 2017. This amount included
revenues of $439.
|
12.
|
Intangible Assets and
Goodwill
|
A continuity of the intangible assets
for the year ended June 30, 2017 is as follows:
|
|
|
|
Balance at
|
|
|
Additions from
|
|
|
Balance at
|
|
|
|
|
|
July 1, 2016
|
|
|
acquisitions
|
|
|
June 30, 2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships (Note 11(a))
|
|
-
|
|
|
4,250
|
|
|
4,250
|
|
|
|
Permits and licenses (Notes 11(b)(c))
|
|
-
|
|
|
26,837
|
|
|
26,837
|
|
|
|
Total
|
|
-
|
|
|
31,087
|
|
|
31,087
|
|
No amortization was recorded for
intangible assets for the year ended June 30, 2017.
A continuity of the goodwill for the
year ended June 30, 2017 is as follows:
|
|
|
|
Balance at
|
|
|
Additions from
|
|
|
Balance at
|
|
|
|
|
|
July 1, 2016
|
|
|
acquisitions
|
|
|
June 30, 2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
CanvasRx (Note 11(a))
|
|
-
|
|
|
34,510
|
|
|
34,510
|
|
|
|
Pedanios (Note 11(c))
|
|
-
|
|
|
6,590
|
|
|
6,590
|
|
|
|
Total
|
|
-
|
|
|
41,100
|
|
|
41,100
|
|
21
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
During the year ended June 30, 2017,
the Company entered into finance lease agreements related to three production
equipment transactions totaling $543, of which down payments of $169 were made.
The finance leases are repayable over a period of 4 to 5 years expiring January
2021 and December 2021.
|
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
|
Less than 1 year
|
|
108
|
|
|
|
Between 1 and 4 years
|
|
344
|
|
|
|
Total minimum lease payments
|
|
452
|
|
|
|
Less: amount representing interest at approximately 8.19% to
20.26%
|
|
(101
|
)
|
|
|
Present value of minimum
lease payments
|
|
351
|
|
|
|
Less: current portion
|
|
(69
|
)
|
|
|
|
|
282
|
|
|
14.
|
Short and Long Term
Loans
|
|
|
|
|
|
|
|
Interest per
|
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
Type of Loan
|
|
|
|
|
Annum
|
|
|
Maturity
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Short term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured term loan
|
|
(a)
|
|
|
8%
|
|
|
Aug. 27, 2015
|
|
|
-
|
|
|
457
|
|
|
|
Unsecured loans from related
parties
|
|
(b)&(e)
|
|
|
See below
|
|
|
See below
|
|
|
-
|
|
|
1,089
|
|
|
|
Secured mortgage loan
|
|
(c)
|
|
|
12%
|
|
|
October 1, 2016
January 25, 2018
|
|
|
-
|
|
|
1,656
|
|
|
|
Secured demand loan
|
|
(d)
|
|
|
19.5%
|
|
|
or on demand
|
|
|
-
|
|
|
2,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
6,047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured loans from related parties
|
|
(b)&(e)
|
|
|
See below
|
|
|
See below
|
|
|
-
|
|
|
3,159
|
|
|
|
(a)
|
Prior to the RTO, the Company entered into a loan
agreement dated June 27, 2014, as amended, in the principal amount of $500
maturing December 27, 2014. In consideration for the loan, the Company
issued 714,000 common shares (the “Shares”) to the lender. A partial
principal payment of $100 (prior to the RTO) was made towards the loan and
the loan was extended to August 27, 2015.
|
|
|
|
|
|
|
|
On November 25, 2015, a claim was commenced by the lender
in the Supreme Court of British Columbia seeking repayment of the loan
plus interest, legal costs and other relief. The Shares were in dispute as
the Company believed that it constituted interest and that the fair market
value of the Shares was approximately equivalent to the outstanding
balance of the loan. On December 2, 2015, the Company paid into court $89
pursuant to a November 27, 2015 garnishment order (“Garnished
Funds”).
|
|
|
|
|
|
|
|
On July 14, 2016, the parties agreed to settle and the
Company paid the outstanding loan plus accrued interest of $459 and legal
fees of $4. Included in this amount were the Garnished Funds released to
the lender.
|
22
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
14.
|
Short and Long Term Loans
(Continued)
|
|
|
(b)
|
The Company entered into unsecured promissory notes with
companies controlled by the CEO and the President of the Company dated
April 1, 2015, as amended, in the principal amount of $2,500. Previously,
the loans bore interest at 8% per annum and were due on demand on or
before April 1, 2016.
|
|
|
|
|
|
|
|
On October 1, 2015, the terms of these loans were amended
such that they mature on the later of: (i) the Company reporting two
consecutive cash flow positive quarters; and (ii) August 1, 2016. No
interest shall be paid on the loans until the Company reports a positive
cash flow quarter and, at such time, the loans will bear interest at 4%
per annum, compounded annually.
|
|
|
|
|
|
|
|
On February 1, 2016, the term of $1,000 of these loans
was extended to expire on the later of: (i) the Company reporting two
consecutive cash flow positive quarters; and (ii) August 1, 2017
(“Extended Loan”). As at June 30, 2016, included in reserves was a fair
value adjustment of $279 with respect to the Extended Loan and the
recognition of related party contribution related to the interest
amendment using a market interest rate of 22%.
|
|
|
|
|
|
|
|
During the year ended June 30, 2017, the loans were
repaid in full.
|
|
|
(c)
|
On September 13, 2015, 1769474 entered into a mortgage
financing (the “Mortgage”) of $1,650 on its building and related
improvements on approximately 154 acres of land located in Cremona,
Alberta (“Mortgaged Property”). The Mortgage was renewable every nine
months at a renewal fee of 1.5%, and secured by a first mortgage on the
Mortgaged Property, a general security agreement and corporate
guarantees.
|
|
|
|
|
|
|
|
During the year ended June 30, 2017, the Company paid
interest of $149 (2016 - $151). The Mortgage was repaid in full on March
28, 2017.
|
|
|
(d)
|
The Company entered into a secured demand loan agreement
dated January 22, 2016 in the principal amount of $3,000. As consideration
for the loan, the Company paid a structuring fee of $90 and legal and due
diligence fees of $30. In addition, the Company issued 300,000 warrants to
the lender exercisable into common shares of the Company at a price of
$0.55 per share expiring January 25, 2020. The Company were to pay a top
up fee if the fair value of the shares on any unexercised warrants was
less than the exercise price (i) on the maturity date; and/or (ii) on
completion of a successor entity or going private event.
|
|
|
|
|
|
|
|
In accordance with IAS 39,
Financial Instruments:
Recognition and Measurement
, the warrants were evaluated as a
derivative in nature. The warrants were valued upon initial recognition at
fair value using a Monte Carlo simulation. Subsequent to initial
recognition, the derivative was re-measured at fair value at each
reporting date. The warrants were initially valued at $106 and recorded as
a derivative liability and debt issuance cost, amortized over the term of
the loan. The warrant derivative was subsequently adjusted to fair value
at June 30, 2016 of $98. During the nine months ended March 31, 2017, all
of the warrants were exercised and $98 was reclassified from derivative
liabilities to share capital on the exercise of these warrants.
|
|
|
|
|
|
|
|
In July 2016, the Company obtained an additional loan of
$1,000. As consideration for the additional loan, the Company paid a
structuring fee of $60 and an equity fee of 50,000 common shares at a fair
value of $24. On closing, the Company paid legal and due diligence fees of
$60.
|
|
|
|
|
|
|
|
During the year ended June 30, 2017, the Company paid
interest of $260 (2016 - $243). On September 28, 2016, the Company repaid
the loan in full and paid early redemption penalty fees of
$199.
|
23
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
14.
|
Short and Long Term Loans
(Continued)
|
|
|
(e)
|
On June 26, 2015 and October 1, 2015, the Company entered
into unsecured promissory notes, as amended, in the amounts of $2,018 and
$982, respectively, with companies controlled by the CEO and the President
of the Company. The loans mature on the later of: (i) the Company
reporting two consecutive cash flow positive quarters; and (ii) August 1,
2016. No interest shall be paid on the loans until the Company reports a
positive cash flow quarter and at such time, the loans will bear interest
at 4% per annum, compounded annually. As at June 30, 2016, the Company
recognized a related party contribution with respect to the interest free
loan and recorded $210 in reserves using a market interest rate of
22%.
|
|
|
|
|
|
|
|
On December 1, 2015, the term of the loans was amended
such that they mature on the later of: (i) the Company reporting two
consecutive cash flow positive quarters; and (ii) August 1, 2017. Included
in reserves as at June 30, 2016, was a fair value of adjustment of $914
related to the loan modification calculated at a market interest rate of
22% for the rest of the extended term.
|
|
|
|
|
|
|
|
During the year ended June 30, 2017, the loans were
repaid in full.
|
|
|
|
|
Long term
|
|
|
Long term
|
|
|
Long term
|
|
|
Long term
|
|
|
|
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
Total
|
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Balance, June 30, 2015
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Issued
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,170
|
|
|
2,170
|
|
|
|
Equity portion
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(269
|
)
|
|
(269
|
)
|
|
|
Derivative liability
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(217
|
)
|
|
(217
|
)
|
|
|
Financing fees
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(437
|
)
|
|
(437
|
)
|
|
|
Accretion
|
|
-
|
|
|
-
|
|
|
-
|
|
|
34
|
|
|
34
|
|
|
|
Balance, June 30, 2016
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,281
|
|
|
1,281
|
|
|
|
Issued
|
|
75,000
|
|
|
25,000
|
|
|
15,000
|
|
|
-
|
|
|
115,000
|
|
|
|
Equity portion
|
|
(13,209
|
)
|
|
(5,271
|
)
|
|
(2,107
|
)
|
|
-
|
|
|
(20,587
|
)
|
|
|
Conversion
|
|
(122
|
)
|
|
(16,745
|
)
|
|
(12,605
|
)
|
|
(2,135
|
)
|
|
(31,607
|
)
|
|
|
Interest paid
|
|
(849
|
)
|
|
(989
|
)
|
|
(55
|
)
|
|
(2
|
)
|
|
(1,895
|
)
|
|
|
Financing fees
|
|
(2,622
|
)
|
|
(899
|
)
|
|
(606
|
)
|
|
637
|
|
|
(3,490
|
)
|
|
|
Accretion
|
|
1,094
|
|
|
1,277
|
|
|
241
|
|
|
117
|
|
|
2,729
|
|
|
|
Accrued interest
|
|
875
|
|
|
996
|
|
|
132
|
|
|
102
|
|
|
2,105
|
|
|
|
Balance, June 30, 2017
|
|
60,167
|
|
|
3,369
|
|
|
-
|
|
|
-
|
|
|
63,536
|
|
The liability component of the
convertible notes was valued using Company specific interest rates assuming no
conversion features existed. The debt component is accreted to its fair value
over the term to maturity as a non-cash interest charge and the equity component
is presented in convertible notes reserve as a separate component of
shareholders’ equity.
|
|
(a)
|
On May 2, 2017, the Company completed a private placement
of unsecured convertible debentures (the “Offering”) in the aggregate
principal amount of $75,000. The debentures bear interest at 7% per annum,
payable semi-annually and mature on May 2, 2019. The debentures are
convertible into common shares of the Company at a price of $3.29 per
share subject to a forced conversion if the VWAP of the Company’s common
shares exceeds $4.94 per share for 10 consecutive trading days. On
closing, the Company paid the agent a commission of $2,893 and legal fees
and expenses of $289.
|
|
|
|
|
|
|
|
During the year ended June 30, 2017, the Company paid
interest of $849 and issued 45,593 common shares on partial conversion of
$150 debentures. Note 16(b)(x)
|
24
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
15.
|
Convertible Notes
(Continued)
|
|
|
(b)
|
On November 1, 2016, the Company completed a brokered
private placement of unsecured convertible debentures in the aggregate
principal amount of $25,000. The debentures bear interest at 8% per annum,
payable semi-annually and mature on November 1, 2018. The principal amount
of the debentures is convertible into common shares of the Company at a
price of $2.00 per share subject to a forced conversion if the VWAP of the
Company’s common shares equals or exceeds $3.00 per share for 10
consecutive trading days. On closing, the Company paid the Agent a
commission of $1,000 and legal fees and expenses of $139.
|
|
|
|
|
|
|
|
During the year ended June 30, 2017, the Company paid
interest of $989 and issued 10,190,000 common shares on partial conversion
of $20,380 debentures. Note 16(b)(x)
|
|
|
|
|
|
|
|
Subsequent to the year end, the Company issued 50,000
common shares on partial conversion of $100 debentures.
|
|
|
|
|
|
|
(c)
|
On September 28, 2016, the Company closed a brokered
private placement of 10% unsecured convertible debentures in the aggregate
principal amount of $15,000. The debentures were convertible into common
shares of the Company at a price of $1.15 per share subject to a forced
conversion if the VWAP of the Company’s common shares equals or exceeds
$2.00 per share for 10 consecutive trading days. On closing, the Company
paid the Agent a commission of $600 and legal fees and expenses of
$105.
|
|
|
|
|
|
|
|
On October 20, 2016, the Company converted all the
debentures and accrued interest pursuant to the forced conversion related
to the VWAP mentioned above. The Company issued 13,110,184 common shares
on the conversion of $15,000 debentures and interests of $77, and paid
interest of $55 (Note 16(b)(x)).
|
|
|
|
|
|
|
(d)
|
In May 2016, the Company completed a non-brokered private
placement of 10% unsecured convertible debentures in the principal amount
of $2,050. The debentures were convertible into common shares of the
Company at a price of $0.53 per share for a period of 18 months.
|
|
|
|
|
|
|
|
The Company paid to the subscriber (i) a bonus of $120 in
convertible debentures (“Bonus Debentures”) having the same terms as the
debentures; and (ii) 200,000 common shares at a deemed price of $0.53 per
share as an incentive fee. In addition, the Company paid an advisory fee
of $164 and 309,434 compensation options at a fair value of $90. Each
compensation option was exercisable into one common share and one-half of
one share purchase warrant of the Company at an exercise price of $0.53
per share expiring two years from the date of issuance. Each whole warrant
was exercisable into one additional common share of the Company at a price
of $0.69 per share for a two-year period. In September 2016, all of the
compensation options and warrants were exercised.
|
|
|
|
|
|
|
|
The fair value of the Compensation Options at the date of
grant was estimated as $0.19 per warrant based on the following weighted
average assumptions: Stock price volatility - 87%; Risk-free interest rate
- 0.55%; Dividend yield - 0.00%; and Expected life - 2 years.
|
|
|
|
|
|
|
|
Within six months of closing of the debenture, if the
Company issued common shares in connection with a financing or a business
acquisition at a price that is 15% or more below the conversion price, the
Company would pay in cash or additional Debentures an amount equal to the
difference between the conversion price and the financing or acquisition
price (“Anti-Dilution Clause”).
|
25
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
15.
|
Convertible Notes
(Continued)
|
In accordance with IAS 39,
Financial Instruments: Recognition and Measurement
, the debentures are
considered to contain an embedded derivative relating to the Anti-Dilution
Clause. The Anti-Dilution Clause was measured at fair value upon initial
recognition using a Monte Carlo simulation and was separated from the debt
component of the debentures. The debt component of the debentures was measured
upon initial recognition, based on the present value of the cash flows
associated with the debentures. Subsequent to initial recognition, the embedded
derivative component is re-measured at fair value at each reporting date while
the debt component is accreted to the face value of the debentures using the
effective interest rate through periodic charges to finance expense over the
term of the debentures.
On July 28, 2016, the Company reached
an agreement with the debenture holders to amend certain aspects of the
Anti-Dilution Clause. As consideration for the amendment, the Company reduced
the conversion price from $0.53 to $0.40 per common share and issued an
aggregate of 2,712,500 warrants at a fair value of $877 to the debenture
holders. The warrants were exercisable into common shares of the Company at a
price of $0.55 per common share expiring August 9, 2018. In December 2016, all
of these warrants were exercised.
The fair value of the warrants at the
date of grant was estimated as $0.32 per warrant based on the following weighted
average assumptions: Stock price volatility - 87%; Risk-free interest rate -
0.49%; Dividend yield - 0.00%; and Expected life - 2 years.
In September 2016, the Company issued
an aggregate of 5,674,542 shares on the conversion of $2,050 debentures and
interests of $100 and Bonus Debentures of $120 (Note 16(b)(x)). $217 was
reclassified from derivative liabilities to share capital on the conversion of
these debentures.
|
16.
|
Share Capital and
Reserves
|
Unlimited number of common voting
shares without par value;
Unlimited number of Class “A” Shares with a par
value of $1.00 each; and
Unlimited number of Class “B” Shares with a par
value of $5.00 each.
|
|
(b)
|
Issued and outstanding
|
At June 30, 2017, there were
366,549,244 (2016 - 135,576,365) issued and fully paid common shares.
On July 13, 2016, the Company entered
into an agreement for a drawdown equity facility of up to $5,000 (the “Equity
Facility”). Under the Equity Facility, the Company may sell, on a private
placement basis, units of the Company of between $100 to $500 per tranche, at a
discount of 25% to the market price or such lesser discounts as allowed by the
Exchange, over a period of eighteen months. Each unit will consist of one common
share and one-half of one common share purchase warrant. Each whole warrant will
be exercisable into one common share at a 25% premium to the market price for a
period of 5 years from the date of issuance. To date, the Company has not drawn
down on this Equity Facility.
|
|
(i)
|
On May 26, 2017, the Company issued 8,316,782 shares at a
fair value of $20,709 pursuant to the acquisition of Pedanios. (Note
11(c))
|
|
|
|
|
|
|
(ii)
|
During the year ended June 30, 2017, the Company issued
2,926,103 common shares at a fair value of $7,408 for contingent
consideration. (Note 11(a))
|
26
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
16.
|
Share Capital and Reserves
(Continued)
|
|
|
(b)
|
Issued and outstanding
(continued)
|
|
|
(iii)
|
In April 2017, the Company issued an aggregate of 899,225
common shares with a fair value of $2,391 pursuant to the acquisition of
Peloton. (Note 11(b))
|
|
|
|
|
|
|
(iv)
|
On February 28, 2017, the Company closed a brokered
private placement of 33,337,500 units at a price of $2.25 per unit for
gross proceeds of $75,009. Each unit consisted one common share and
one-half of one common share purchase warrant of the Company. Each warrant
is exercisable into one common share at an exercise price of $3.00 per
share for a period of two years, subject to a forced exercise provision if
the Company's VWAP equals or exceeds $4.50 for 10 consecutive trading
days.
|
|
|
|
|
|
|
|
Total cash share issue costs amounted to $4,479 which
consisted of underwriters’ commissions of $4,197, underwriters’ expenses
of $95, legal fees of $121 and regulatory fees of $66. In addition, the
Company issued an aggregate of 1,865,249 compensation warrants to the
underwriters at a fair value of $2,782. The compensation warrants have the
same terms as the private placement and expire February 28, 2019. The fair
value of the compensation warrants at the date of grant was estimated at
$0.99 per warrant based on the following weighted average assumptions:
Stock price volatility - 79%; Risk-free interest rate - 0.70%; Dividend
yield - 0.00%; and Expected life - 2 years.
|
|
|
|
|
|
|
(v)
|
On August 30, 2016, the Company issued 25,510 (2016 -
22,728) common shares to an officer of the Company at a fair value of $13
(2016 - $13) pursuant to an employment agreement.
|
|
|
|
|
|
|
(vi)
|
On August 17, 2016, 17,875,000 common shares were issued
at a fair value of $11,440 pursuant to the acquisition of CanvasRx. (Note
11(a))
|
|
|
|
|
|
|
(vii)
|
In conjunction with the acquisition of CanvasRx, the
Company completed a brokered private placement of 57,500,000 subscription
receipts for aggregate gross proceeds of $23,000 (the “Offering”). Each
subscription receipt was converted into units of the Company at a price of
$0.40 per unit upon the satisfaction of the conditions precedent to the
acquisition. Each unit consisted of one common share and one-half of one
common share purchase warrant of the Company. Each whole warrant was
exercisable into one common share of the Company at an exercise price of
$0.55 per share expiring August 9, 2018. A portion of the net proceeds
from the Offering was used to satisfy the cash component of the
acquisition.
|
|
|
|
|
|
|
|
Total cash share issue costs with respect to the Offering
amounted to $1,804 which consisted of agent’s commission of $1,473,
agent’s legal, advisory fees and expenses of $219, transfer agent fees of
$16 and legal fees of $96. In addition, the Company issued aggregate
compensation warrants of 3,775,000 to the agents at a fair value of
$1,848. The compensation warrants have the same terms as the private
placement and expire August 9, 2018. The fair value of the compensation
warrants at the date of grant was estimated at $0.33 per warrant based on
the following weighted average assumptions: Stock price volatility - 79%;
Risk-free interest rate - 0.70%; Dividend yield - 0.00%; and Expected life
- 2 years.
|
|
|
|
|
|
|
(viii)
|
On August 17, 2016, 20,000,000 common shares were issued
on achievement of performance milestones pursuant to the RTO. The amount
of $2,322 was reclassified from reserves to share capital on the issuance
of these shares.
|
|
|
|
|
|
|
(ix)
|
On July 14, 2016, 50,000 common shares were issued at a
fair value of $24 for financing fees. Note 14(d)
|
|
|
|
|
|
|
(x)
|
During the year ended June 30, 2017, an aggregate of
29,020,319 (2016 - 3,928,000) common shares were issued on the conversion
of $37,580 (2016 - $491) convertible notes. $4,800 (2016 - $171) was
reclassified from reserves to share capital on the conversion of these
notes. Notes 15(a), (b), (c), and (d).
|
27
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
16.
|
Share Capital and Reserves
(Continued)
|
|
|
(b)
|
Issued and outstanding
(continued)
|
|
|
(xi)
|
During the year ended June 30, 2017, 2,001,700 stock
options (2016 - 2,975,829) were exercised for gross proceeds of $821 (2016
- $161). Non-cash compensation charges of $578 (2016 - $354) were
reclassified from reserves to share capital on the exercise of these
options.
|
|
|
|
|
|
|
(xii)
|
During the year ended June 30, 2017, 54,936,306 (2016 -
564,000) warrants were exercised for gross proceeds of $26,602 (2016 -
$56). Non-cash compensation charges of $2,046 (2016 - $nil) were
reclassified from reserves to share capital on the exercise of these
warrants.
|
|
|
|
|
|
|
(xiii)
|
During the year ended June 30, 2017, 4,084,434 (2016 -
Nil) compensation options were exercised for gross proceeds of $1,674
(2016 - $Nil). Non-cash compensation charges of $1,292 (2016 - $nil) were
reclassified from reserves to share capital on the exercise of these
compensation options.
|
|
|
|
|
|
|
(xiv)
|
During the year ended June 30, 2016, the Company closed a
non-brokered private placement consisting of 9,091,670 units at a price of
$0.53 per unit for gross proceeds of $4,819. Each unit consisted of one
common share and one common share purchase warrant. Each warrant entitled
the holder to purchase an additional common share of the company at a
price of $0.66 per common share for a period of two years. The Company
paid finders' fees of $190 and issued finders' warrants of 158,920 at a
fair value of $45. The warrants were exercisable into common shares of the
Company at a price of $0.53 per share for a period of two years. The fair
value of these warrants at the date of grant was estimated at $0.29 per
warrant based on the following weighted average assumptions: Stock price
volatility - 87%; Risk-free interest rate - 0.41%; Dividend yield - 0.00%;
and Expected life - 2 years.
|
|
|
|
|
|
|
(xv)
|
During the year ended June 30, 2016, the Company issued
an aggregate of 200,000 common shares at a fair value of $106 as incentive
fees. Note 15(d)
|
|
|
(c)
|
Escrow securities
|
|
|
|
|
|
|
|
Pursuant to an escrow agreement dated September 18, 2014,
60,000,000 common shares of the Company were deposited into escrow with
respect to the RTO. In addition, warrants at $0.02 per share expiring
December 9, 2019 and stock options at $0.001 per share expiring December
1, 2019 were also subject to the escrow agreement.
|
|
|
|
|
|
|
|
Under the escrow agreement, 10% of the escrowed common
shares were released from escrow on December 9, 2014, the date of closing
of the RTO, and 15% are to be released every nine months thereafter over a
period of 36 months. The common shares to be issued and deposited in
escrow on the exercise of warrants and options are subject to the same
schedule of release.
|
28
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
16.
|
Share Capital and Reserves
(Continued)
|
|
|
(c)
|
Escrow securities
(continued)
|
A summary of the status of the
escrowed securities outstanding follows:
|
|
|
|
Shares
|
|
|
Stock Options
|
|
|
Warrants
(1
|
)
|
|
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
|
Balance, June 30, 2015
|
|
47,887,500
|
|
|
2,400,000
|
|
|
9,000,00
|
|
|
|
Issued (Exercised)
|
|
2,400,000
|
|
|
(2,400,000
|
)
|
|
-
|
|
|
|
Released
|
|
(20,475,000
|
)
|
|
-
|
|
|
-
|
|
|
|
Balance, June 30, 2016
|
|
29,812,500
|
|
|
-
|
|
|
9,000,000
|
|
|
|
Issued
(Exercised)
|
|
20,000,000
|
|
|
-
|
|
|
(8,000,000
|
)
|
|
|
Forfeited
|
|
-
|
|
|
-
|
|
|
(1,000,000
|
)
|
|
|
Released
|
|
(36,875,000
|
)
|
|
-
|
|
|
-
|
|
|
|
Balance, June 30, 2017
|
|
12,937,500
|
|
|
-
|
|
|
-
|
|
The Company has an incentive stock
option plan, which provides that the Board of Directors of the Company may from
time to time, in its discretion, and in accordance with the Exchange
requirements, grant to directors, officers, employees and consultants,
non-transferable options to purchase common shares, provided that the number of
common shares reserved for issuance will not exceed 10% of the issued and
outstanding common shares of the Company. A summary of the status of the options
outstanding follows:
|
|
|
|
Stock
|
|
|
Weighted Average
|
|
|
|
|
|
Options
|
|
|
Exercise Price
|
|
|
|
|
|
#
|
|
|
$
|
|
|
|
Balance, June 30, 2015
|
|
4,504,000
|
|
|
0.17
|
|
|
|
Granted
|
|
4,877,500
|
|
|
0.39
|
|
|
|
Exercised
|
|
(2,975,829
|
)
|
|
0.05
|
|
|
|
Forfeited
|
|
(1,095,837
|
)
|
|
0.49
|
|
|
|
Balance, June 30, 2016
|
|
5,309,834
|
|
|
0.37
|
|
|
|
Granted
|
|
12,170,000
|
|
|
2.21
|
|
|
|
Exercised
|
|
(2,001,700
|
)
|
|
0.41
|
|
|
|
Forfeited
|
|
(244,568
|
)
|
|
0.74
|
|
|
|
Balance, June 30, 2017
|
|
15,233,566
|
|
|
1.84
|
|
29
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
16.
|
Share Capital and Reserves
(Continued)
|
|
|
(d)
|
Stock options (continued)
|
The following table summarizes the
stock options that remain outstanding as at June 30, 2017:
|
|
Exercise Price
|
|
Options Outstanding
|
|
|
|
|
|
Expiry Date
|
|
|
Options Exercisable
|
|
|
|
$
|
|
#
|
|
|
|
|
|
|
|
|
#
|
|
|
|
0.295
|
|
250,000
|
|
|
|
|
|
June 2, 2020
|
|
|
250,000
|
|
|
|
0.295
|
|
125,000
|
|
|
|
|
|
August 26, 2020
|
|
|
20,833
|
|
|
|
0.30
|
|
240,000
|
|
|
|
|
|
August 10, 2020
|
|
|
94,167
|
|
|
|
0.30
|
|
581,009
|
|
|
|
|
|
August 14, 2020
|
|
|
272,676
|
|
|
|
0.30
|
|
175,002
|
|
|
|
|
|
September 1, 2020
|
|
|
2
|
|
|
|
0.30
|
|
150,000
|
|
|
|
|
|
September 8, 2018
|
|
|
83,333
|
|
|
|
0.30
|
|
12,500
|
|
|
|
|
|
September 8, 2018
|
|
|
12,500
|
|
|
|
0.34
|
|
137,000
|
|
|
|
|
|
May 23, 2020
|
|
|
87,000
|
|
|
|
0.40
|
|
350,000
|
|
|
|
|
|
March 10, 2019
|
|
|
350,000
|
|
|
|
0.46
|
|
800,000
|
|
|
|
|
|
May 20, 2021
|
|
|
-
|
|
|
|
0.55
|
|
80,000
|
|
|
|
|
|
February 8, 2021
|
|
|
66,667
|
|
|
|
0.58
|
|
300,000
|
|
|
|
|
|
March 14, 2021
|
|
|
206,250
|
|
|
|
0.66
|
|
350,000
|
|
|
|
|
|
August 8, 2021
|
|
|
87,500
|
|
|
|
1.30
|
|
1,178,055
|
|
|
|
|
|
September 23, 2021
|
|
|
616,110
|
|
|
|
2.18
|
|
350,000
|
|
|
|
|
|
October 12, 2021
|
|
|
175,000
|
|
|
|
2.25
|
|
2,800,000
|
|
|
|
|
|
August 25, 2021
|
|
|
1,720,833
|
|
|
|
2.56
|
|
2,100,000
|
|
|
|
|
|
January 19, 2022
|
|
|
262,500
|
|
|
|
2.62
|
|
50,000
|
|
|
|
|
|
February 24, 2022
|
|
|
8,333
|
|
|
|
2.27
|
|
2,500,000
|
|
|
|
|
|
March 22, 2022
|
|
|
208,333
|
|
|
|
2.49
|
|
2,705,000
|
|
|
|
|
|
May 11, 2022
|
|
|
-
|
|
|
|
|
|
15,233,566
|
|
|
|
|
|
|
|
|
4,522,037
|
|
During the year ended June 30, 2017,
the Company recorded aggregate share-based payments of $7,584 (2016 - $687) for
all stock options granted and vested during the period.
The fair value of stock options
granted during the period was determined using the following weighted average
assumptions at the time of grant using the Black-Scholes option pricing model:
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk-Free Annual Interest
Rate
|
|
0.68%
|
|
|
0.57%
|
|
|
|
Expected Annual Dividend Yield
|
|
0%
|
|
|
0%
|
|
|
|
Expected Stock Price
Volatility
|
|
79.0%
|
|
|
87.0%
|
|
|
|
Expected Life of Options
|
|
3.03 years
|
|
|
3.75 years
|
|
|
|
Forfeiture rate
|
|
5%
|
|
|
5%
|
|
Volatility was estimated by
using the historical volatility of other companies that the Company considers
comparable that have trading history and volatility history. The expected life
in years represents the period of time that options granted are expected to be
outstanding. The risk-free rate is based on Canada government bonds with a
remaining term equal to the expected life of the options.
The weighted average fair value of
stock options granted during the year ended June 30, 2017 was $1.15 (2016 -
$0.24) per option. As at June 30, 2017, stock options outstanding have a
weighted average remaining contractual life of 4.22 years.
30
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
16.
|
Share Capital and Reserves
(Continued)
|
|
|
(e)
|
Share purchase warrants
|
Each whole warrant entitles the holder
to purchase one common share of the Company. A summary of the status of the
warrants outstanding follows:
|
|
|
|
|
|
|
Weighted average
|
|
|
|
|
|
Warrants
|
|
|
exercise price
|
|
|
|
|
|
#
|
|
|
$
|
|
|
|
Balance, June 30, 2015
|
|
20,014,000
|
|
|
0.28
|
|
|
|
Issued
|
|
9,550,590
|
|
|
0.65
|
|
|
|
Exercised
|
|
(564,000
|
)
|
|
0.10
|
|
|
|
Expired
|
|
(250,000
|
)
|
|
1.01
|
|
|
|
Balance, June 30, 2016
|
|
28,750,590
|
|
|
0.40
|
|
|
|
Issued
|
|
50,173,466
|
|
|
1.36
|
|
|
|
Forfeited
|
|
(1,000,000
|
)
|
|
0.02
|
|
|
|
Exercised
|
|
(54,936,306
|
)
|
|
0.48
|
|
|
|
Balance, June 30, 2017
|
|
22,987,750
|
|
|
2.32
|
|
During the year ended June 30, 2017,
share-based payments of $Nil (2016 - $226) were recognized related to warrants
for consulting services.
The following table summarizes the
warrants that remain outstanding as at June 30, 2017:
|
|
Exercise Price
|
|
Warrants
|
|
|
Expiry Date
|
|
|
|
$
|
|
#
|
|
|
|
|
|
|
0.50
|
|
2,360,000
|
|
|
December 9, 2017
|
|
|
|
0.55
|
|
61,500
|
|
|
August 9, 2018
|
|
|
|
0.55
|
|
3,897,500
|
|
|
August 17, 2018
|
|
|
|
3.00
|
|
16,668,750
|
|
|
February 28, 2019
|
|
|
|
|
|
22,987,750
|
|
|
|
|
|
|
(f)
|
Compensation
options/warrants
|
Each compensation option/warrant
entitles the holder to purchase one common share and one-half of one share
purchase warrant of the Company. Each whole warrant is exercisable into one
additional common share of the Company for a period of two years. A summary of
the status of the compensation options/warrants outstanding follows:
|
|
|
|
Compensation
|
|
|
Weighted average
|
|
|
|
|
|
options/warrants
|
|
|
exercise price
|
|
|
|
|
|
#
|
|
|
$
|
|
|
|
Balance, June 30, 2015
|
|
-
|
|
|
-
|
|
|
|
Issued
|
|
309,434
|
|
|
0.53
|
|
|
|
Exercised
|
|
-
|
|
|
-
|
|
|
|
Expired
|
|
-
|
|
|
-
|
|
|
|
Balance, June 30, 2016
|
|
309,434
|
|
|
0.53
|
|
|
|
Issued
|
|
5,640,249
|
|
|
1.01
|
|
|
|
Exercised
|
|
(4,084,434
|
)
|
|
0.41
|
|
|
|
Balance, June 30, 2017
|
|
1,865,249
|
|
|
2.25
|
|
31
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
17.
|
General and
Administration
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Professional fees
|
|
1,793
|
|
|
1,201
|
|
|
|
Office and administration
|
|
1,450
|
|
|
693
|
|
|
|
Wages and benefits
|
|
3,570
|
|
|
1,121
|
|
|
|
|
|
6,813
|
|
|
3,015
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Consulting fees
|
|
3,678
|
|
|
93
|
|
|
|
Branding, public and media relations, and
tradeshows
|
|
1,073
|
|
|
661
|
|
|
|
Selling and client care
expenses
|
|
4,015
|
|
|
493
|
|
|
|
Wages and benefits
|
|
1,504
|
|
|
459
|
|
|
|
|
|
10,270
|
|
|
1,706
|
|
|
19.
|
Finance and Other
Costs
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Accretion expense
|
|
3,570
|
|
|
623
|
|
|
|
Bank charges
|
|
28
|
|
|
10
|
|
|
|
Financing fees
|
|
1,692
|
|
|
192
|
|
|
|
Interest expense
|
|
1,292
|
|
|
619
|
|
|
|
|
|
6,582
|
|
|
1,444
|
|
The net tax provision differs from that
expected by applying the combined federal and provincial tax rates of 26% (2016
- 26%) to loss before income tax for the following reasons:
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Loss before tax
|
|
(17,264
|
)
|
|
(5,872
|
)
|
|
|
Combined federal and provincial rate
|
|
26%
|
|
|
26%
|
|
|
|
Expected tax recovery
|
|
(4,489
|
)
|
|
(1,527
|
)
|
|
|
Change in estimates from prior year
|
|
(205
|
)
|
|
121
|
|
|
|
Non-deductible expenses
|
|
2,294
|
|
|
138
|
|
|
|
Difference in statutory tax rate
|
|
(16
|
)
|
|
-
|
|
|
|
Effect of change in tax rates
|
|
(21
|
)
|
|
-
|
|
|
|
Changes in deferred tax benefits not recognized
|
|
(1,859
|
)
|
|
1,119
|
|
|
|
Income tax recovery
|
|
(4,296
|
)
|
|
(149
|
)
|
32
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
20.
|
Income Taxes (Continued)
|
Deferred taxes reflect the tax effects
of temporary differences between the carrying amounts of asset and liabilities
for financial reporting purposes and their tax values. Movements in deferred tax
assets (liabilities) at June 30, 2017 and 2016 are comprised of the following:
|
|
|
|
|
|
|
Deferred tax
|
|
|
Recovered
|
|
|
Recovered through
|
|
|
Recovered
|
|
|
|
|
|
|
|
|
As of
|
|
|
assets (liabilities)
|
|
|
through
|
|
|
(charged to) other
|
|
|
through
|
|
|
As of
|
|
|
|
|
|
June 30,
|
|
|
assumed from
|
|
|
(charged to)
|
|
|
comprehensive
|
|
|
(charged to)
|
|
|
June 30,
|
|
|
|
|
|
2016
|
|
|
acquisition
|
|
|
earnings
|
|
|
income
|
|
|
equity
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-capital losses
|
|
3,240
|
|
|
321
|
|
|
4,076
|
|
|
-
|
|
|
-
|
|
|
7,637
|
|
|
|
Finance costs
|
|
232
|
|
|
-
|
|
|
238
|
|
|
-
|
|
|
3,050
|
|
|
3,520
|
|
|
|
Investment tax credit
|
|
-
|
|
|
-
|
|
|
75
|
|
|
-
|
|
|
-
|
|
|
75
|
|
|
|
Total deferred tax assets
|
|
3,472
|
|
|
321
|
|
|
4,389
|
|
|
-
|
|
|
3,050
|
|
|
11,232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible debenture
|
|
(195
|
)
|
|
-
|
|
|
(226
|
)
|
|
-
|
|
|
(3,749
|
)
|
|
(4,170
|
)
|
|
|
Marketable securities
|
|
-
|
|
|
-
|
|
|
140
|
|
|
(885
|
)
|
|
-
|
|
|
(745
|
)
|
|
|
Customer relationships
|
|
-
|
|
|
(1,126
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,126
|
)
|
|
|
Property, plant and equipment
|
|
(158
|
)
|
|
(4
|
)
|
|
64
|
|
|
-
|
|
|
-
|
|
|
(98
|
)
|
|
|
License and federal permits
|
|
-
|
|
|
(6,617
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(6,617
|
)
|
|
|
Inventory
|
|
(313
|
)
|
|
-
|
|
|
(1,359
|
)
|
|
-
|
|
|
-
|
|
|
(1,672
|
)
|
|
|
Biological assets
|
|
(498
|
)
|
|
-
|
|
|
(590
|
)
|
|
-
|
|
|
-
|
|
|
(1,088
|
)
|
|
|
Total deferred tax liabilities
|
|
(1,164
|
)
|
|
(7,747
|
)
|
|
(1,971
|
)
|
|
(885
|
)
|
|
(3,749
|
)
|
|
(15,516
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
(liabilities)
|
|
2,308
|
|
|
(7,426
|
)
|
|
2,418
|
|
|
(885
|
)
|
|
(699
|
)
|
|
(4,284
|
)
|
|
|
Deferred tax assets not recognized
|
|
(2,308
|
)
|
|
-
|
|
|
1,859
|
|
|
-
|
|
|
(1,204
|
)
|
|
(1,653
|
)
|
|
|
|
|
-
|
|
|
(7,426
|
)
|
|
4,277
|
|
|
(885
|
)
|
|
(1,903
|
)
|
|
(5,937
|
)
|
|
|
|
|
|
|
|
Deferred tax
|
|
|
Recovered
|
|
|
Recovered through
|
|
|
Recovered
|
|
|
|
|
|
|
|
|
As of
|
|
|
assets (liabilities)
|
|
|
through
|
|
|
(charged to) other
|
|
|
through
|
|
|
As of
|
|
|
|
|
|
June 30,
|
|
|
assumed from
|
|
|
(charged to)
|
|
|
comprehensive
|
|
|
(charged to)
|
|
|
June 30,
|
|
|
|
|
|
2015
|
|
|
acquisition
|
|
|
earnings
|
|
|
income
|
|
|
equity
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-capital losses
|
|
1,325
|
|
|
-
|
|
|
1,915
|
|
|
-
|
|
|
-
|
|
|
3,240
|
|
|
|
Finance costs
|
|
61
|
|
|
-
|
|
|
171
|
|
|
-
|
|
|
-
|
|
|
232
|
|
|
|
Total deferred tax assets
|
|
1,386
|
|
|
-
|
|
|
2,086
|
|
|
-
|
|
|
-
|
|
|
3,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible debenture
|
|
(61
|
)
|
|
-
|
|
|
(134
|
)
|
|
-
|
|
|
-
|
|
|
(195
|
)
|
|
|
Property, plant and equipment
|
|
(136
|
)
|
|
-
|
|
|
(22
|
)
|
|
-
|
|
|
-
|
|
|
(158
|
)
|
|
|
Inventory
|
|
-
|
|
|
-
|
|
|
(313
|
)
|
|
-
|
|
|
-
|
|
|
(313
|
)
|
|
|
Biological assets
|
|
-
|
|
|
-
|
|
|
(498
|
)
|
|
-
|
|
|
-
|
|
|
(498
|
)
|
|
|
Total deferred tax liabilities
|
|
(197
|
)
|
|
-
|
|
|
(967
|
)
|
|
-
|
|
|
-
|
|
|
(1,164
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
(liabilities)
|
|
1,189
|
|
|
-
|
|
|
1,119
|
|
|
-
|
|
|
-
|
|
|
2,308
|
|
|
|
Deferred tax assets not recognized
|
|
(1,189
|
)
|
|
-
|
|
|
(1,119
|
)
|
|
-
|
|
|
-
|
|
|
(2,308
|
)
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
As of June 30, 2017, the Company has
recognized deferred tax assets of $566 and liabilities of $6,504 from its
Canadian and German entities, respectively. The Company has non-capital losses
of approximately $32,605 (2016 - $12,209) which are available for deduction
against future taxable income until years 2026 to 2036. The Company does not
recognize the benefit of $6,357 of its total non-capital losses and financing
costs as it is not probable that the benefit of these attributes will be
realized.
33
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
21.
|
Related Party
Transactions
|
The Company incurred the following
transactions with related parties during the year ended June 30, 2017:
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Consulting fees paid or
accrued to directors of ACE
|
|
211
|
|
|
300
|
|
|
|
Office, rent and administration paid or
accrued to companies owned by directors and officers and a former director
of the Company
|
|
130
|
|
|
172
|
|
|
|
Operational, administrative
and service fees paid or accrued pursuant to an agreement between CanvasRx
and a company having a director in common with the Company
|
|
3,659
|
|
|
-
|
|
|
|
Consulting fees paid to a company owned by an
officer of the Company
|
|
780
|
|
|
-
|
|
|
|
Consulting fees paid to a
company controlled by a director of the Company for scientific, research
and development services
|
|
44
|
|
|
59
|
|
|
|
Consulting fees paid to a company controlled
by a director of the Company for financial and other advisory services
|
|
57
|
|
|
20
|
|
|
|
Professional fees paid or accrued to a former officer of
the Company
|
|
-
|
|
|
3
|
|
|
|
|
|
4,881
|
|
|
554
|
|
|
|
(b)
|
Compensation of key management
personnel
|
The Company’s key management personnel
have the authority and responsibility for planning, directing and controlling
the activities of the Company and consists of the Company’s executive management
team and management directors.
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Management compensation
|
|
1,934
|
|
|
368
|
|
|
|
Directors’ fees
(1)
|
|
258
|
|
|
59
|
|
|
|
Share-based payments
(2)
|
|
6,431
|
|
|
198
|
|
|
|
|
|
8,623
|
|
|
625
|
|
|
|
(1)
|
Include meeting fees and committee chair fees.
|
|
|
(2)
|
Share-based payments are the fair value of options
granted and vested to key management personnel and directors of the
Company under the Company’s stock option plan. Note
16(d).
|
34
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
21.
|
Related Party Transactions
(Continued)
|
|
|
(c)
|
Related party balances
|
The following related party amounts
were included in (i) accounts receivable, (ii) accounts payable and accrued
liabilities, (iii) prepaid expenses and deposits, (iv) short term loans, (v)
long term loans and (vi) note receivable:
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
(i) A
company having a director in common
|
|
72
|
|
|
-
|
|
|
|
(ii) Companies controlled
by directors and officers of the Company
(1)
|
|
76
|
|
|
102
|
|
|
|
(ii)
Directors and officers and a former director and officer of the Company
(1)
|
|
565
|
|
|
36
|
|
|
|
(iii) A company having a former
director in common
|
|
-
|
|
|
2
|
|
|
|
(iv) Companies
controlled by directors and officers of the Company (Note 14(b))
|
|
-
|
|
|
1,090
|
|
|
|
(v) Companies controlled by
directors and officers of the Company (Notes 14(b) & 14(e))
|
|
-
|
|
|
3,159
|
|
|
|
(vi) A 50% owned joint venture company (Note 10)
|
|
2,096
|
|
|
1,782
|
|
|
|
(1)
|
The amounts are unsecured, non-interest bearing and have
no specific repayments term.
|
|
22.
|
Commitments and
Contingencies
|
|
|
(a)
|
Office and operating
leases
|
|
|
(i)
|
1769474 has an operating lease on lands located in
Cremona, Alberta (the “Lands”) for monthly rent payments of $5. The lease
expires on November 14, 2019, with an option to extend for an additional
five- year term. The Company has the option to purchase the Lands during
the additional term.
|
|
|
|
|
|
|
(ii)
|
The Company is committed under lease and sublease
agreements with respect to two office premises located in Vancouver,
British Columbia, expiring December 31, 2017 and June 30, 2020, and
sublease agreements with respect to clinics located across Canada expiring
between August 1, 2019 and December 1, 2023, as
follows:
|
|
|
|
|
$
|
|
|
|
2018
|
|
624
|
|
|
|
2019
|
|
717
|
|
|
|
2020
|
|
657
|
|
|
|
2021
|
|
421
|
|
|
|
2022
|
|
298
|
|
|
|
Thereafter
|
|
55
|
|
|
|
|
|
2,772
|
|
|
|
(iii)
|
The Company entered into an agreement to lease
approximately 30 acres of land at the EIA for the development of a
production facility. The lease has a term of fifteen years with monthly
rent payments of $69 for the first five years, increasing to monthly
payments of $76 and $83 in the fifth and tenth year of the lease term,
respectively. The first monthly installment is payable on or before the
earlier of (i) the date that an occupancy permit has been issued for the
facility by Leduc County, and (ii) May 1, 2018. The Company has eight
options to renew the term of the lease, each option for an additional five
years exercisable at the Company’s discretion.
|
35
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
22.
|
Commitments and Contingencies
(Continued)
|
|
|
(a)
|
Claims and litigation
|
|
|
(i)
|
In December 2016, a claim was commenced against the
Company regarding the 9,000,000 warrants at $0.02 per share issued to a
consultant prior to the RTO. These warrants were issued conditional upon
the warrant holder completing an equity financing for the Company. In
January 2016, this claim was amended to include 3,000,000 performance
warrants exercisable at $0.02 per share, issued pursuant to the RTO. These
warrants were cancelled on April 21, 2016 as the funding milestones were
not met (“Cancelled Warrants”).
|
|
|
|
|
|
|
|
The parties agreed to settle pursuant to a Settlement
Agreement and Mutual Release dated January 9, 2017 (the “Settlement”). Of
the 9,000,000 warrants, 1,000,000 were cancelled and the remaining
8,000,000 warrants were allowed to be exercised by the Company subject to
certain conditions, and the claim related to the Cancelled Warrants was
dismissed.
|
|
|
|
|
|
|
(ii)
|
The Company commenced a claim against a former director
and officer of the Company and his associates relating to breach of
contract, abuse of process and unreimbursed expenses. The former director
and associates filed various counterclaims against the Company.
|
|
|
|
|
|
|
|
Pursuant to the Settlement (Note 22(b)(i)), the parties
agreed to mutually release each of the other parties from all claims and
counterclaims.
|
|
|
|
|
|
|
(iii)
|
A certain claim in small claims court was brought against
the Company with respect to certain fees and expenses in the aggregate
amount of approximately $25. On January 19, 2017, the court ruled in favor
of the Company and dismissed the claim in its
entirety.
|
In January 2017, the Company settled
all of the above claims. As of the date hereof, management is not aware of any
material claims or possible claims against the Company.
|
23.
|
Segmented Information
|
The Company operates in two segments,
the production and sale of medical cannabis and patient counselling and outreach
service.
|
|
|
|
Medical
|
|
|
Patient
|
|
|
|
|
|
|
|
|
Cannabis
|
|
|
Counselling
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
15,922
|
|
|
2,145
|
|
|
18,067
|
|
|
|
Gross profit
|
|
13,982
|
|
|
2,074
|
|
|
16,056
|
|
|
|
Loss from operations
|
|
(9,501
|
)
|
|
(1,691
|
)
|
|
(11,192
|
)
|
|
|
Net loss
|
|
(11,266
|
)
|
|
(1,702
|
)
|
|
(12,968
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
321,644
|
|
|
1,035
|
|
|
322,679
|
|
|
|
Total liabilities
|
|
102,374
|
|
|
1,372
|
|
|
103,746
|
|
During the year ended June 30, 2016,
the Company’s operations consisted of the production and sale of medical
cannabis.
36
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
23.
|
Segmented Information
(Continued)
|
The Company generates revenue in two
geographical locations, in Canada and in Germany.
|
|
|
|
Canada
|
|
|
Germany
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
17,628
|
|
|
439
|
|
|
18,067
|
|
|
|
Gross profit
|
|
15,916
|
|
|
140
|
|
|
16,056
|
|
|
|
Loss from operations
|
|
(10,895
|
)
|
|
(297
|
)
|
|
(11,192
|
)
|
|
|
Net loss
|
|
(12,674
|
)
|
|
(294
|
)
|
|
(12,968
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
321,251
|
|
|
1,428
|
|
|
322,679
|
|
|
|
Total liabilities
|
|
96,678
|
|
|
7,068
|
|
|
103,746
|
|
During the year ended June 30, 2016,
all of the Company’s assets were located in Canada. All revenues in the year
ended June 30, 2016 were generated in Canada.
|
24.
|
Financial Instruments and Risk
Management
|
|
|
(a)
|
Fair value of financial instruments
|
|
|
|
|
|
|
|
The Company’s financial instruments consist of cash and
cash equivalents, accounts receivable, marketable securities, promissory
notes receivable, convertible debenture receivable, loans receivable,
derivative, accounts payable and accrued liabilities and convertible
notes. The carrying values of these financial instruments approximate
their fair values as at June 30, 2017.
|
|
|
|
|
|
|
|
Financial instruments recorded at fair value are
classified using a fair value hierarchy that reflects the significance of
the inputs to fair value measurements. The three levels of hierarchy
are:
|
|
|
Level 1 –
|
Unadjusted quoted prices in active markets for
identical assets or liabilities;
|
|
|
Level 2 –
|
Inputs other than quoted prices that are
observable for the asset or liability, either directly or indirectly; and
|
|
|
Level 3 –
|
Inputs for the asset or liability that are not
based on observable market data.
|
There have been no transfers between
fair value levels during the year.
37
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
24.
|
Financial Instruments and Risk Management
(Continued)
|
|
|
(a)
|
Fair value of financial instruments
(continued)
|
The following table summarizes the
Company’s financial instruments as at June 30, 2017:
|
|
|
|
Available-for-
|
|
|
|
|
|
Financial
|
|
|
Other
|
|
|
|
|
|
|
|
|
sale financial
|
|
|
Loans and
|
|
|
assets at
|
|
|
financial
|
|
|
|
|
|
|
|
|
assets
|
|
|
receivables
|
|
|
FVPTL
|
|
|
liabilities
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
-
|
|
|
159,796
|
|
|
-
|
|
|
-
|
|
|
159,796
|
|
|
|
Accounts
receivable
|
|
-
|
|
|
2,312
|
|
|
-
|
|
|
-
|
|
|
2,312
|
|
|
|
Marketable securities
|
|
14,845
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
14,845
|
|
|
|
Promissory notes
receivable
|
|
-
|
|
|
1,222
|
|
|
-
|
|
|
-
|
|
|
1,222
|
|
|
|
Loans receivable
|
|
-
|
|
|
2,096
|
|
|
-
|
|
|
-
|
|
|
2,096
|
|
|
|
Convertible
debenture
|
|
-
|
|
|
-
|
|
|
11,071
|
|
|
-
|
|
|
11,071
|
|
|
|
Derivative
|
|
-
|
|
|
-
|
|
|
292
|
|
|
-
|
|
|
292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Liabilities
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
-
|
|
|
-
|
|
|
-
|
|
|
8,753
|
|
|
8,753
|
|
|
|
Deferred revenue
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,421
|
|
|
1,421
|
|
|
|
Finance lease
|
|
-
|
|
|
-
|
|
|
-
|
|
|
351
|
|
|
351
|
|
|
|
Convertible notes
(1)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
63,536
|
|
|
63,536
|
|
|
|
(1)
|
The fair value of convertible notes includes both the
debt and equity components.
|
The following is a summary of
financial assets measured at fair value segregated based on the various levels
of inputs (Notes 4(a) and 4(b)):
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Marketable securities
|
|
14,845
|
|
|
-
|
|
|
-
|
|
|
14,845
|
|
|
|
Convertible debenture
|
|
-
|
|
|
-
|
|
|
11,071
|
|
|
11,071
|
|
|
|
Warrant derivative
|
|
-
|
|
|
-
|
|
|
292
|
|
|
292
|
|
Changes in level 3 financial assets
for the year were as follows:
|
|
|
|
Warrant
|
|
|
Convertible
|
|
|
|
|
|
Derivative
|
|
|
Debenture
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Opening balance
|
|
-
|
|
|
-
|
|
|
|
Additions
|
|
306
|
|
|
2,000
|
|
|
|
Unrealized gains at inception
deferred
|
|
380
|
|
|
12,564
|
|
|
|
Unrealized losses
|
|
(394
|
)
|
|
(3,493
|
)
|
|
|
Ending balance
|
|
292
|
|
|
11,071
|
|
38
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
24.
|
Financial Instruments and Risk Management
(Continued)
|
|
|
(a)
|
Fair value of financial instruments
(continued)
|
Changes in deferred gains on
convertible debenture and derivative measured at fair value and included in
level 3 of the fair value hierarchy were as follows:
|
|
|
|
Warrant
|
|
|
Convertible
|
|
|
|
|
|
Derivative
|
|
|
Debenture
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Opening balance
|
|
-
|
|
|
-
|
|
|
|
Unrealized gains at inception deferred
|
|
380
|
|
|
12,564
|
|
|
|
Unrealized gains amortized
|
|
(59
|
)
|
|
(2,358
|
)
|
|
|
Ending balance
|
|
321
|
|
|
10,206
|
|
The Company determines the fair value
of its derivative liabilities (Notes 14(d), 15(d)) using a Monte Carlo
simulation approach. Monte Carlo simulation approaches are a class of
computational algorithms that rely on repeated random sampling to compute their
results. The Company’s share price paths were developed using a mathematical
formula based on a stochastic process with mean reversion to a long-term trend
line incorporating current Company stock prices and stock volatility, both
observable data points. Assumptions regarding requirements for future financings
are unobservable and accordingly the derivatives are classified in Level 3 of
the fair value hierarchy.
Changes in derivative liabilities
measured at fair value and included in level 3 of the fair value hierarchy were
as follows:
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Opening balance
|
|
233
|
|
|
-
|
|
|
|
Initial recognition
|
|
-
|
|
|
323
|
|
|
|
Gain /loss on re-measurement
to fair value at period end
|
|
|
|
|
(90
|
)
|
|
|
Reclassification upon repayment of loans
|
|
(233
|
)
|
|
-
|
|
|
|
Ending balance
|
|
-
|
|
|
233
|
|
The Company’s liability for the
CanvasRx contingent consideration was measured at fair value based on
unobservable inputs, and was considered a level 3 financial instrument. The fair
value of the liability determined by this analysis was primarily driven by the
Company’s expectations of CanvasRx achieving the milestones. The expected
milestones were assessed probabilities by management which was then discounted
to present value in order to derive a fair value of the contingent
consideration. The primary inputs of the calculation were the probabilities of
achieving the milestones and a discount rate.
39
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
24.
|
Financial Instruments and Risk Management
(Continued)
|
|
|
(b)
|
Financial instruments risk
|
The Company is exposed in varying
degrees to a variety of financial instrument related risks. The Board mitigates
these risks by assessing, monitoring and approving the Company’s risk management
processes:
|
|
(i)
|
Credit risk
|
|
|
|
|
|
|
|
Credit risk is the risk of a potential loss to the
Company if a customer or third party to a financial instrument fails to
meet its contractual obligations. The Company is moderately exposed to
credit risk from its cash and cash equivalents, trade and other
receivables, convertible debenture asset and promissory notes receivable.
The risk exposure is limited to their carrying amounts at the statement of
financial position date. The risk for cash and cash equivalents is
mitigated by holding these instruments with highly rated Canadian
financial institutions. The Company does not invest in asset-backed
deposits or investments and does not expect any credit losses. The Company
periodically assesses the quality of its investments and is satisfied with
the credit rating of the financial institutions and the investment grade
of its guaranteed investment certificates. Trade and other receivables
primarily consist of trade accounts receivable and goods and services
taxes recoverable (“GST”). Credit risk from the convertible debenture
asset and promissory notes receivable arises from the possibility that
principal and/or interest due may become uncollectible. The Company
mitigates this risk by managing and monitoring the underlying business
relationships.
|
|
|
|
|
|
|
|
The Company provides credit to its customers in the
normal course of business and has established credit evaluation and
monitoring processes to mitigate credit risk, but has limited risk as the
majority of sales are transacted with credit
cards.
|
As at June 30, 2017, the Company’s
aging of receivables was approximately as follows:
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
0 – 60 days
|
|
1,534
|
|
|
-
|
|
|
|
61 –
120 days
|
|
778
|
|
|
87
|
|
|
|
|
|
2,312
|
|
|
87
|
|
Liquidity risk is the risk that the
Company will not be able to meet its financial obligations associated with
financial liabilities. The Company manages liquidity risk through the management
of its capital structure. The Company’s approach to managing liquidity is to
ensure that it will have sufficient liquidity to settle obligations and
liabilities when due.
In addition to the commitments
outlined in Note 22, the Company has the following contractual obligations:
|
|
|
|
Total
|
|
|
<1 year
|
|
|
1 - 3 years
|
|
|
3 -5 years
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Accounts payable and accrued
liabilities
|
|
8,753
|
|
|
8,753
|
|
|
-
|
|
|
-
|
|
|
|
Deferred revenue
|
|
1,421
|
|
|
1,421
|
|
|
-
|
|
|
-
|
|
|
|
Finance lease
|
|
452
|
|
|
107
|
|
|
345
|
|
|
-
|
|
|
|
Convertible notes
|
|
79,470
|
|
|
-
|
|
|
79,470
|
|
|
-
|
|
|
|
|
|
90,096
|
|
|
10,281
|
|
|
79,815
|
|
|
-
|
|
40
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
24.
|
Financial Instruments and Risk Management
(Continued)
|
|
|
(b)
|
Financial instruments risk
(continued)
|
|
|
a)
|
Currency risk
|
|
|
|
|
|
|
|
The operating results and financial position of the
Company are reported in Canadian dollars. As the Company operates in an
international environment, some of the Company’s financial instruments and
transactions are denominated in currencies other than the Canadian dollar.
The results of the Company’s operations are subject to currency
transaction and translation risks.
|
|
|
|
|
|
|
|
The Company holds cash in Canadian dollars and Euros, and
investments in Australian dollars. The Company’s main risk is associated
with fluctuations in the Euros and Australian dollars and assets and
liabilities are translated based on the foreign currency translation
policy described in Note 2.
|
|
|
|
|
|
|
|
The Company has determined that an effect of a 10%
increase or decrease in the Australian dollar and Euro against the
Canadian dollar on financial assets and liabilities, as at June 30, 2017,
including cash, marketable securities and accounts payable and accrued
liabilities denominated in Euros and Australian dollars, would result in
an increase or decrease of approximately $1,430 (2016 - $Nil) to the net
loss and comprehensive loss for the year ended June 30, 2017.
|
|
|
|
|
|
|
|
At June 30, 2017, the Company had no hedging agreements
in place with respect to foreign exchange rates. The Company has not
entered into any agreements or purchased any instruments to hedge possible
currency risks at this time.
|
|
|
|
|
|
|
b)
|
Interest rate risk
|
|
|
|
|
|
|
|
Interest rate risk is the risk that the fair value or
future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. Cash and cash equivalents bear interest
at market rates. The Company’s investments, loans receivables and
financial debt have fixed rates of interest and therefore expose the
Company to a limited interest rate fair value risk.
|
|
|
|
|
|
|
(c)
|
Price risk
|
|
|
|
|
|
|
|
Price risk is the risk of variability in fair value due
to movements in equity or market prices. The Company’s marketable
securities and investments are susceptible to price risk arising from
uncertainties about their future values. The fair value of marketable
securities is based on quoted market prices which the shares of the
investments can be exchanged for.
|
|
|
|
|
|
|
|
If the fair value of these financial assets were to
increase or decrease by 10%, the Company would incur an associated
increase or decrease in net loss and comprehensive loss of approximately
$2,823 (2016 - $Nil). See note 4 for additional details regarding the fair
value of investments and marketable securities.
|
41
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars, except share and per
share amounts)
|
|
|
|
25.
|
Capital Management
|
|
|
|
|
|
The Company’s objectives when managing capital are to
ensure that there are adequate capital resources to safeguard the
Company’s ability to continue as a going concern and maintain adequate
levels of funding to support its ongoing operations and development such
that it can continue to provide returns to shareholders and benefits for
other stakeholders.
|
|
|
|
|
|
The capital structure of the Company consists of items
included in shareholders’ equity and debt, net of cash and cash
equivalents. The Company manages its capital structure and makes
adjustments to it in light of changes in economic conditions and the risk
characteristics of the Company’s underlying assets. The Company plans to
use existing funds, as well as funds from the future sale of products to
fund operations and expansion activities.
|
|
|
|
|
|
As at June 30, 2017, the Company is not subject to
externally imposed capital requirements.
|
The following events occurred
subsequent to June 30, 2017:
|
|
(a)
|
The has Company entered into an amended and restated
subscription agreement to purchase 10,558,676 units of Hempco at $0.3075
per unit for gross proceeds of $3,247 (the “Investment”). Each unit
consists of one common share and one share purchase warrant. Each warrant
will be exercisable at a price of $0.41 per share for a period of two
years, subject to accelerated expiry if Hempco’s shares trade at or above
a VWAP of $0.65 for any 30- day period following closing of the
Investment. The closing of the private placement is subject to conditions,
including the execution of an option agreement with the majority owners of
Hempco and an investor rights agreement, TSX Venture, TSX and Hempco
disinterested shareholder approval. Upon closing, the Company will hold
approximately 23% of the share capital of Hempco on a fully diluted
basis.
|
|
|
|
|
|
|
|
On September 15, 2017, the Company and Hempco executed an
Option Agreement (the “Option”) to acquire up to an aggregate of
10,754,942 shares from the majority owners of Hempco, which, upon
exercise, would bring the Company’s total ownership interest in Hempco to
over 50.1% on a fully diluted basis. If the Company elects to exercise the
Option, the shares will be acquired in tranches, the pricing of which, is
contingent on certain performance milestones of Hempco.
|
|
|
|
|
|
|
|
On September 15, 2017, the Company and Hempco executed an
Investor Rights Agreement that will allow Aurora to nominate two directors
to the Hempco Board of Directors, require that Hempco adopt an expenditure
policy, provide for certain matters related to cannabidiol extraction from
hemp, and provide Aurora with anti- dilution protection.
|
|
|
|
|
|
|
|
The Option and the Investor Rights Agreement will become
effective on the closing of Hempco’s private placement which remains
subject to disinterested Hempco shareholder approval
|
|
|
|
|
|
|
|
In connection with the transaction, Aurora has advanced
an additional $1,500 to Hempco (the “Loan”). The Loan is secured and bears
interest at a rate of 10% per annum. The Loan and the Advance will be
repaid to the Company out of the proceeds of Hempco’s private placement.
If the private placement does not close, the Loan and Advance will mature
on December 21, 2017. (Note 7(a))
|
|
|
(b)
|
583,580 common shares were issued on the exercise of
583,580 options for gross proceeds of $563.
|
|
|
|
|
|
|
(c)
|
1,208,750 common shares were issued on the exercise of
1,208,750 warrants for gross proceeds of $545.
|
42
DEAR
SHAREHOLDERS
|
Fiscal 2017 was a year of tremendous progress and growth,
|
market in a country with 82 million people,
where there
|
|
driven by Aurora’s agility, innovation and disciplined
|
are no current domestic producers, and where
demand is
|
|
execution of our business strategy. We are now emerging
|
significantly outpacing supply. We have now
commenced
|
|
not just as a Canadian leader, but as a globally dominant
|
shipping product to Pedanios, and through this
wholly
|
|
cannabis company. This is a truly remarkable achievement
|
owned Aurora subsidiary we are also applying
for a license
|
|
considering we received our licenses to produce and sell
|
to cultivate locally. Pedanios furthermore
provides us with
|
|
cannabis some 18 months after our key competitors among
|
access to the rapidly-developing EU market,
with a potential
|
|
licensed producers. We’ve had to be faster, more innovative
|
market size of several hundred million people.
|
|
and better at seizing opportunities, to allow us to catch
up,
|
|
|
surpass, and move to the head of the pack. It has been an
|
Innovation is a key component of Aurora’s DNA,
and
|
|
incredible journey, and it’s only just starting.
|
we are leading the cannabis sector in the
integration of
|
|
|
advanced technology across all areas of our
operations.
|
|
This document provides some of the highlights of our path
|
We have significantly enhanced the customer
experience by
|
|
so far, and points the way to the future, as we continue to
|
launching the world’s first and only mobile
application for
|
|
expand in Canada and around the world.
|
the purchase of medical cannabis. We have also
invested
|
|
|
in advanced production technologies, as
evidenced by
|
|
During the 2017 fiscal year, we continued to deliver an
|
our collaboration with Radient Technologies,
and the
|
|
excellent customer experience, with widely-admired high
|
adoption of world-leading agricultural
technologies at our
|
|
quality products, substantial investments in customer
|
new facilities. We believe these investments
will deliver
|
|
care, and innovative ways to make it easy for customers
|
industry-leading production per square foot,
and ultra-low
|
|
to interact with us, through our unique mobile application
|
production costs.
|
|
and expanding same-day and next-day delivery. The result
|
|
|
has been what we believe to be the sector’s highest rate of
|
We have defined an aggressive growth strategy
and we are
|
|
patient acquisition and consistently strong revenue growth.
|
executing exceptionally well on it. This has
been possible
|
|
|
due to the continued support from our
shareholders, and,
|
|
We also continue to execute on our expansion strategy.
|
of course, the incredible dedication and hard
work of our
|
|
With Aurora Sky at Edmonton International Airport
|
people – whom we call “the A-Team”. The Aurora
Standard
|
|
and our new Pointe-Claire, Quebec facility, in addition
|
continues to be the industry benchmark, and I
look forward
|
|
to our outstanding purpose-built Mountain facility near
|
to sharing all the exciting news with you as we
reach new
|
|
Calgary, we will have the capacity we need to lead in
|
milestones on our journey, building a globally
dominant
|
|
the high-growth medical and pending adult consumer
|
cannabis company.
|
|
markets in Canada, as well to as capitalize on exceptional
|
|
|
international opportunities in Europe, Australia and other
|
|
|
emerging markets.
|
Yours faithfully,
|
|
|
Terry Booth, CEO
|
|
We are invested in Australia’s first ever licensed cannabis
|
|
|
company, and own 100% of Pedanios, Germany’s largest
|
|
|
distributor of medical cannabis. The latter is servicing a
|
|
AURORA CANNABIS INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three and
twelve month periods ended June 30, 2017
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
This Management’s Discussion and Analysis (“MD&A”) reports
on the consolidated financial condition and operating results of Aurora Cannabis
Inc. (“the Company” or “Aurora”) for the three and twelve month periods ended
June 30, 2017. The MD&A should be read in conjunction with the Company’s
audited Consolidated Financial Statements for the year ended June 30, 2017 and
notes thereto (the “Financial Statements”) which have been prepared in
accordance with International Financial Reporting Standards (“IFRS”).
The Financial Statements include the accounts of the Company
and its wholly-owned subsidiaries, Aurora Marijuana Inc. (“AMI”), Aurora
Cannabis Enterprises Inc. (“ACE”), 1769474 Alberta Ltd. (“1769474”), Australis
Capital Inc. (“ACI”), CanvasRx Inc. (“CanvasRx”), 10094595 Canada Inc., Peloton
Pharmaceuticals Inc. (“Peloton”), and Pedanios GmbH (“Pedanios”). All
significant intercompany balances and transactions have been eliminated on
consolidation.
All dollar amounts referred to in this MD&A are expressed
in thousands of Canadian dollars, except for share and per share amounts, and
where indicated otherwise.
The Company’s continuous disclosure documents including Annual
Information Forms are available on SEDAR at
www.sedar.com
.
This MD&A has been prepared as of September 25, 2017.
NON-IFRS MEASURES
The Company has included certain non-IFRS performance measures
throughout this MD&A, including cash cost of sales and cash cost to produce
dried cannabis, each as defined in this section. The Company employs these
measures internally to measure its operating and financial performance and to
assist in business decision making.
The Company believes that these non-IFRS financial measures, in
addition to conventional measures prepared in accordance with IFRS, enable
investors to evaluate the Company’s operating results, underlying performance
and future prospects in a manner similar to Aurora management.
As there are no standardized methods of calculating these
non-IFRS measures, the Company’s methods may differ from those used by others,
and accordingly, the use of these measures may not be directly comparable to
similarly titled measures used by others. Accordingly, these non-IFRS measures
are intended to provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared in accordance
with IFRS.
Cash Cost of Sales and Cash Cost to Produce Dried Cannabis
Cash cost of sales of dried cannabis is calculated by taking
the total IFRS cost of sales and removing the effect of changes in fair value of
biological assets, non-cash production costs, oil conversion costs, cost of
sales from service revenue, and purchases from other Licensed Producers
(“LP’s”), all divided by the total number of grams of dried cannabis produced in
the period.
Cash cost to produce dried cannabis is cash cost of sales less
packaging costs (post-production cost).
14
Aurora Cannabis Inc
.
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Management believes these measures provide useful information
as they measure the efficiency of production and may be a benchmark of the
Company against its competitors.
AURORA OVERVIEW
The Company is in the business of producing and distributing
medical marijuana consisting of dried cannabis and cannabis oil, pursuant to the
Access to Cannabis for Medical Purposes Regulations
(“ACMPR”). Aurora
received its license to produce and sell medical cannabis on February 17, 2015
and November 27, 2015, respectively. The Company received its license to produce
and sell cannabis oil products on February 16, 2016 and January 20, 2017,
respectively.
Aurora’s current principal market is patients who are
authorized to use medical cannabis in Canada. Under the ACMPR, Aurora sells
dried cannabis and cannabis oil, offering delivery to patients directly through
secure physical delivery services, as well as ordering services through the
phone and innovative means such as the Company’s online shop and mobile
application. Aurora currently sells dried medical cannabis at $9.00 per gram
with compassionate pricing set at $6.00 per gram and cannabis oils at $95.00 per
30 milliliter bottle with compassionate pricing set at $65.00 per 30 milliliter
bottle.
Aurora is one of Canada’s largest and fastest-growing sellers
of cannabis (flower & oils). The Company produces and distributes high
quality medical cannabis products with strong brand recognition to the Canadian
medical cannabis market, is well positioned to gain significant market share of
the expected adult usage market in Canada, and is a leader in the international
expansion of the medical cannabis market.
Aurora’s strategy and vision is to build a leading, integrated
global cannabis company through the construction of highly-efficient
purpose-built facilities that allow the Company to produce significant volumes
of low-cost, high quality cannabis, an aggressive and strategically focused
international expansion, strong brand differentiation, and industry leading
board, senior management and production teams. Aurora expects this strategy will
deliver strong and sustainable shareholder value as the Company gains and
retains significant market share of the domestic and international medical
cannabis markets, as well as the Canadian adult usage market.
The Company operates a purpose-built 55,200 square foot
production facility based in Mountain View County, Alberta with a current annual
capacity of approximately 5,400 kilograms of high quality cannabis. Aurora also
has 7.7 million square feet for land available at the Mountain View site for
potential future expansion. Alberta is an ideal production location due to low
energy, labour and tax costs.
Aurora is currently constructing two additional production
facilities in Canada:
|
|
•
|
Edmonton, Alberta: an 800,000 square foot production
facility “Aurora Sky” at the Edmonton International Airport
|
|
|
•
|
Pointe-Claire, Quebec: a 40,000 square foot production
facility on Montreal’s West Island.
|
Aurora also owns Pedanios, a leading wholesale importer,
exporter, and distributor of medical cannabis in the European Union ("EU"),
based in Germany. In addition, the Company holds approximately 9.6% of the
issued shares (12.9% on a fully-diluted basis) in the leading extraction
technology company Radient Technologies Inc. (“Radient”), based in Edmonton, and
is the cornerstone investor with a 19.9% stake in Cann Group Limited (Cann Group”), the first Australian company
licensed to conduct research on, and cultivate, medical cannabis.
Aurora Cannabis Inc.
15
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
|
The Company’s common shares trade under the symbol “ACB” on the
Toronto Stock Exchange (“TSX”) and under the symbol “ACBFF” on the United States
OTCQX Market Exchange.
Financial and Operational Highlights
|
|
|
Q4 2017
|
|
|
Q3 2017
|
|
|
Q2 2017
|
|
|
Q1 2017
|
|
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
Active registered patients
(1)
|
|
16,400
|
|
|
13,110
|
|
|
12,200
|
|
|
8,200
|
|
|
Grams sold
|
|
755,059
|
|
|
653,008
|
|
|
538,045
|
|
|
435,720
|
|
|
Grams produced
|
|
1,164,683
|
|
|
846,849
|
|
|
670,322
|
|
|
354,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In CDN $000’s unless
otherwise noted)
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Revenues
|
|
5,936
|
|
|
5,175
|
|
|
3,885
|
|
|
3,071
|
|
|
Average selling price per
gram
|
|
7.45
|
|
|
6.64
|
|
|
5.96
|
|
|
6.32
|
|
|
Cash cost of sales per gram
(2)
|
|
2.09
|
|
|
2.31
|
|
|
2.56
|
|
|
3.89
|
|
|
Cash cost to produce per gram
(2)
|
|
1.91
|
|
|
1.91
|
|
|
2.13
|
|
|
3.89
|
|
|
Cash and cash equivalents
|
|
159,796
|
|
|
111,116
|
|
|
55,846
|
|
|
23,194
|
|
|
Working capital
|
|
170,142
|
|
|
126,530
|
|
|
60,060
|
|
|
23,213
|
|
|
Investment in capital assets
|
|
19,985
|
|
|
10,464
|
|
|
4,158
|
|
|
645
|
|
|
(1)
|
As of the date hereof, the Company has over 20,000 active
and pending registered patients.
|
|
(2)
|
Cash cost of sales per gram and cash cost to produce per
gram are non- IFRS financial measures that do not have a standardized
meaning under IFRS and may not be comparable to other companies. See
definitions earlier in this document and reconciliation under “
Results
of Operations
”.
|
RECENT DEVELOPMENTS (SUBSEQUENT TO JUNE 30, 2017)
Continued Strong Patient and Revenue Growth
|
|
•
|
As of the date of this report, Aurora has surpassed
20,000 active and pending registered patients less than 21 months after
the Company’s first product sale in January 2016. Management believes this
to be the fastest rate of patient registration for a Licensed Producer
after the launch of commercial operations. Aurora has registered over
3,500 patients since the fiscal year ended June 30, 2017.
|
|
|
•
|
On July 1, 2017, Aurora increased the prices of its dried
cannabis strains from $8.00 to $9.00 per gram (from $5.00 to $6.00 per
gram for low-income patients).
|
|
|
•
|
August 2017 was a record month with gross product sales
in excess of 328,322 grams and gross revenues exceeding $3.1 million from
the sale of medicinal cannabis.
|
16
Aurora Cannabis Inc
.
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
|
|
•
|
CanvasRx remains the leading Canadian network of cannabis
counseling and outreach centres, with more than 29,000 registered
patients. Over 8,400 medical doctors across Canada have referred patients
to CanvasRx or its affiliated medical clinics. On September 12, 2017,
CanvasRx opened its first location in British Columbia, located in
Vancouver. This opening is the 25
th
CanvasRx location and the
7
th
opened in 2017.
|
Capacity Expansion
|
|
•
|
The construction of Aurora Sky at the Edmonton
International Airport in Alberta is progressing well with first harvest
expected in early 2018. At 800,000 square feet, with state-of-the-art
technology and automation, Aurora Sky is expected to produce over 100,000
kilograms annually and deliver significant economies of scale for Aurora.
Located on airport land, Aurora Sky is ideally positioned for increased
domestic and international distribution. On June 16, 2017, Aurora held an
official groundbreaking at Aurora Sky, with participation by the mayors of
Leduc County, the City of Leduc, and the Alberta Minister of Municipal
affairs, amid broad media coverage of the economic development benefits
generated by the project, valued at more than $100 million.
|
|
|
•
|
Construction upgrades are nearly complete at the
Company’s Pointe-Claire, Québec facility. The Company expects that
production at this 40,000 square foot facility will commence before the
end of 2017 with first harvest expected in early 2018.
|
Significant Advancements on International Expansion
|
|
•
|
The Company entered into a technical services agreement
with Cann Group to facilitate an exchange of information and support
across areas including the cultivation and processing of medical cannabis,
extraction and manufacturing technology, and analysis of cannabis
extracts.
|
|
|
•
|
Pedanios passed the first stage of the tender application
process to become a licensed producer of medical cannabis in Germany. The
second and final stage of the application process involves a competitive
bid proposal and contract negotiations to cultivate, process, store,
package and deliver cannabis for medical purposes in Germany. Results of
the tender process are expected before the end of 2017.
|
|
|
•
|
In August 2017, Aurora’s Mountain View facility received
EU GMP certification – the standard required by the German government for
export to that market.
|
|
|
•
|
In September 2017, the Company received all the required
permits to ship dried cannabis flower from Canada to Germany, enabling the
Company to begin supplying the German medical cannabis market through
Pedanios. On September 18, 2017, the Company shipped its first 50
kilograms of dried cannabis from its facility in Mountain View County,
Alberta, to Berlin-based Pedanios, with further ongoing shipments planned.
As of the date of this report, German import permits for additional
product have been secured, and ongoing, regular shipments are scheduled.
|
Continued Capital Markets Cadence
|
|
•
|
Graduated from the TSX Venture Exchange to the Toronto
Stock Exchange on July 24, 2017.
|
|
|
•
|
Approximately $87 million in additional gross cash
proceeds remain available from the future exercise of warrants, stock
options and compensation options/warrants.
|
Auro
ra Cannabis
Inc.
17
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Investment in Product Line Expansion
|
|
•
|
Aurora agreed to invest $3,247 in the private placement
of Hempco Food and Fiber Inc. (“Hempco”) of 10.6 million units at $0.3075
per unit. Upon closing, Aurora will own approximately 23% of the share
capital of Hempco on a fully diluted basis. In addition, the Company will
be granted an option to acquire certain shares from the majority owners of
Hempco, which, upon exercise, would bring the Company’s total ownership
interest in Hempco to over 50% on a fully diluted basis.
|
Continued Strengthening of the Senior Management Team
|
|
•
|
Aurora continued to build and strengthen its senior
management team with talented and experienced individuals to ensure the
Company has the leadership to further grow and build shareholder value
through execution of domestic and international objectives and
opportunities. In July and August 2017, the Company appointed Nilda Rivera
as VP of Finance, Nick Whitehead as VP of Market Development, Dieter
MacPherson as VP of Production, and John Barnet as Chief Cultivator.
|
Other Key Subsequent Events
|
|
•
|
The Company issued 3.18 million common shares, at a
deemed price of $2.135 per common share, to the vendors of CanvasRx in
accordance with CanvasRx achieving certain earn-out payment milestones for
the period ended June 30, 2017, as set out in the share purchase agreement
previously announced on August 10, 2016.
|
|
|
•
|
Received 14.3 million units and 0.8 million units of
Radient on conversion of $2,000 debentures and payment of final interest,
respectively.
|
|
|
•
|
Mr. Barry Fishman has resigned from the board of
directors effective September 25, 2017. Mr. Fishman will continue to
provide limited direction to the Company until a new director has been
appointed.
|
KEY DEVELOPMENTS DURING THE FOURTH QUARTER 2017
Strong Revenue and Patient Growth
|
|
•
|
Aurora generated revenues of approximately $5,936, up 15%
or approximately $ 761 from Q3 2017, including the sale of 755,059 grams
of cannabis.
|
|
|
•
|
The Company added over 3,000 patients during the fourth
quarter of 2017, representing an increase of 25% during the quarter.
|
|
|
•
|
Aurora commenced sales of cannabis oils in April 2017.
The Company has seen exceptional demand for its cannabis oil products with
oil sales now representing approximately 26% of gross revenues.
|
International Expansion
Acquisition of Pedanios – Germany and the EU
In May 2017, Aurora acquired Pedanios, a leading wholesale
importer, exporter and distributor of medical cannabis in the European Union.
The Company acquired all of the issued and outstanding shares of Pedanios for a
total consideration of $23,728 consisting of €2,000 and 8,316,782 common shares
of the Company.
18
Aurora Cannabis Inc
.
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
As the country’s largest importer, exporter, and distributor of
medical cannabis, Pedanios distributes to more than 1,500 German pharmacies, and
currently relies exclusively on imported medical cannabis products from
federally regulated producers in Canada and the Netherlands.
In July 2017, Pedanios successfully passed the first stage of
the tender application process to become a licensed producer of medical cannabis
in Germany. As a result of initial stage evaluations, the German Federal
Institute for Medicines and Medical Products (“BfArM”), has requested Pedanios’
participation in second and final stage of the application process which
involves a competitive bid proposal and contract negotiations to cultivate,
process, store, package and deliver cannabis for medical purposes in Germany.
Preparations for the organization’s tender for a domestic cultivation license
remain on track, including detailed planning for the first ever indoor cannabis
cultivation facility in Germany. Results of the tender process are expected
before the end of 2017.
In September 2017, the Company received its Export Permit
issued by Health Canada, as well as provisional import status from the German
Bundesopiumstelle (Federal Narcotics Bureau), to import medical cannabis
products into Germany through Pedanios. On September 18, 2017, the Company
shipped 50 kilograms of dried cannabis from its facility in Mountain View
County, Alberta, to Berlin-based Pedanios. This is the first quantity of product
sourced from Aurora’s Canadian cultivation base to supply the German medical
market. The Company has obtained German import permits for additional product
and further ongoing shipments are scheduled.
Upon delivery to Pedanios, the product will be distributed to a
network of more than 1,500 pharmacies across Germany, a country of more than 82
million people. Germany currently represents the largest single federally-legal
medical cannabis market in the world, and is experiencing a significant shortage
of supply. Of note, Germany is the first country in the world to cover the cost
of medical cannabis, for any therapeutic application approved by a physician,
through its national health insurance system. The market for medical cannabis in
Germany is expected to expand rapidly.
Pedanios is also actively progressing discussions regarding
entry into other European jurisdictions.
Cornerstone Investment in Cann Group IPO – Australia
On May 2, 2017, Aurora participated in Cann Group Limited’s
initial public offering on the Australian Stock Exchange (ASX: CAN) for A$6.5
million, and now holds 19.9% of the shares issued and outstanding in Australia’s
first licensed cannabis company.
Cann Group is building a world-class business focused on
breeding, cultivating and manufacturing medical cannabis for sale and use within
Australia.
Cann Group was issued Australia’s first medical cannabis
cultivation license in March 2017, in addition to Australia’s first medical
cannabis research license in February 2017. The company has also been issued
permits that facilitate the establishment of breeding plants for propagation
purposes; a research program being undertaken with Australia’s Federal research
agency, the Commonwealth Scientific and Industrial Research Organization
(“CSIRO”), to develop unique cannabis extracts; and the supply of plant material
for manufacturing into medical cannabis products for patient use.
Aurora Cannabis Inc.
1
9
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
On July 18, 2017, Aurora entered into a technical services
agreement with Cann Group, which covers the period until the end of 2022, to
facilitate an exchange of information and support across areas including the
cultivation and processing of medical cannabis, extraction and manufacturing
technology, and analysis of cannabis extracts.
Cann Group successfully
completed the harvest of its first cultivation cycle of medicinal cannabis at
the company’s southern facility in Victoria. Cann Group is producing medicinal
cannabis for manufacturing into a final product that can be accessed by patients
via clinical trials, or through the TGA’s Authorized Prescriber or Special
Access Scheme.
Cann Group completed a licensing and distribution agreement
with CannaKorp, Inc. to import and sell the Cannacloud vaporizing device and to
produce medical cannabis pods to be used with it. The vaporizing system will be
sold as an open platform for licensed medicinal cannabis cultivators looking to
have their cannabis available via a vaporization device.
Domestic Expansion
On April 28, 2017, the Company completed the acquisition of
Peloton, a late-stage ACMPR applicant out of bankruptcy protection, including a
40,000-square foot cannabis production facility in Pointe-Claire, Quebec. The
Company is completing construction and development of the facility which will
feature selected new technologies that will also be employed at Aurora Sky.
Production is expected to begin by the end of 2017. At full capacity, the
facility is expected to be capable of producing up to 3,900 kilograms of high
quality cannabis per year. The Company acquired Peloton for a total
consideration of $9,139 consisting of $4,562 in cash, 573,707 common shares of
the Company and acquisition related costs of $3,091. The total consideration is
subject to change pending settlement of all claims with previous creditors by
the bankruptcy trustee.
Strategic Investment in Hempco
Subsequent to June 30, 2017, the Company entered into a
subscription agreement to purchase 10,558,676 units of Hempco at $0.3075 per
unit for gross proceeds of $3,247 (the “Investment”). Each unit will consist of
one common share and one share purchase warrant. Each warrant will be
exercisable at a price of $0.41 per share for a period of two years, subject to
accelerated expiry if Hempco’s shares trade above a VWAP of $0.65 for any 30-day
period following closing of the Investment. The subscription agreement provides
that closing of Hempco’s private placement is subject to conditions, including
the execution of an option agreement with the majority owners of Hempco and an
investor rights agreement, TSX Venture, TSX and Hempco disinterested shareholder
approval. Upon closing, the Company will hold approximately 23% of the share
capital of Hempco on a fully-diluted basis.
On September 15, 2017, the Company and Hempco executed an
Option Agreement (the “Option”) to acquire up to an aggregate of 10,754,942
shares from the majority owners of Hempco, which, upon exercise, would bring the
Company’s total ownership interest in Hempco to over 50% on a fully diluted
basis. If the Company elects to exercise the Option, the shares will be acquired
in tranches, the pricing of which, is contingent on certain performance
milestones of Hempco.
On September 15, 2017, the Company and Hempco executed an
Investor Rights Agreement that will allow Aurora to nominate two directors to
the Hempco Board of Directors, require that Hempco adopt an expenditure policy, provide for certain matters related to
cannabidiol extraction from hemp, and provide Aurora with anti-dilution
protection.
20
Aurora Cannabis Inc
.
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
The Option and Investor Rights Agreement will become effective
on the closing of Hempco’s private placement which remains subject to
disinterested Hempco shareholder approval.
Hempco will be calling an extraordinary meeting of its
shareholders for the purpose of asking them to approve the change of control
that will result from completion of the Private Placement transaction.
Although the Investor Rights Agreement will not take effect
until the closing of the Private Placement, Hempco has signed an undertaking,
effective immediately, to use reasonable efforts to appoint the two Aurora
nominees to the Hempco Board immediately, that it will use reasonable efforts to
find a suitable candidate to be the new Chief Executive Officer of Hempco, with
the goal of having the new candidate in place as soon as reasonably possible,
that Hempco will adopt an expenditure policy, and that funds previously advanced
by Aurora will be used to develop the Hempco facility in Nisku, Alberta, and for
the settlement of certain Hempco payables. As of the date of this MD&A, the
Hempco Board of Directors has appointed Mr. Allan Cleiren, Aurora’s Chief
Operating Officer, and Mr. Steve Dobler, Aurora’s President and Director, as
directors of Hempco.
Hempco is one of the world's largest industrial producers of
hemp and hemp products, and currently offers three primary product lines: (1)
bulk and packaged food products (e.g. hemp protein powder, hemp seeds or hearts,
hemp oil etc.); (2) hemp fibre; and (3) nutraceuticals. Hempco's line of
packaged foods are sold under the brand "Planet Hemp" and are distributed
globally in seven countries.
Industrial hemp grown under contract to Hempco contains
efficient extractable quantities of cannabidiol, (CBD) a compound shown through
a growing body of anecdotal and scientific evidence to have considerable medical
benefits in symptom management.
Aurora anticipates, based on recommendation by the Federal Task
Force on Cannabis Legalization, that the regulations currently preventing
industrial hemp producers from harvesting leaves, flowers and buds, which
contain CBDs will be revised to allow for the processing of CBDs. Cannabidiol
does not have any intoxicating effects such as those caused by
tetrahydrocannabinol (THC).
The market for CBDs in the form of capsules, oils, and topicals
is expected to show significant growth, and Aurora considers the proposed
transaction with Hempco to be a strategic initiative to enable market share
dominance in this attractive segment.
Through its relationship with Radient, the Company has access
to an efficient, cost-effective, high-throughput methodology of producing
CBD-based products at large scale, thus providing the Company with a
considerable competitive advantage in addressing this growing market when CBD
extraction from hemp is allowed.
Aurora Cannabis Inc.
2
1
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Strategic Relationship with Radient Technologies Inc.
On June 5, 2017, Aurora and Radient successfully completed
their joint venture research activity and confirmed the effectiveness of
Radient’s Map
TM
technology and associated continuous flow design for
extracting cannabinoids from dried cannabis.
Based on the positive results of the study, Radient and Aurora
have agreed to negotiate an exclusive development and commercialization
agreement for the use of Radient’s technology, and to continue the exclusive
joint venture for additional scientific research and development of cannabis and
hemp products.
Strengthened Capital Position
Aurora significantly strengthened its balance sheet and
liquidity position during the fourth quarter of 2017 with $76,687 in new
financing as follows:
|
|
•
|
$75 Million Bought Deal Convertible Debentures: On May 2,
2017, the Company closed its bought deal private placement of unsecured
convertible debentures in the aggregate principal amount of $75,000. The
debentures bear interest at 7% per annum, payable semi-annually and mature
on May 2, 2019. The debentures are convertible into common shares of the
Company at a price of $3.29 per share, at the option of the holder,
subject to a forced conversion if the volume weighted average price of the
Company’s common shares exceeds $4.94 per share for 10 consecutive trading
days. During the year ended June 30, 2017, the Company issued 45,593
common shares on the partial conversion of $150 principal amount of these
debentures.
|
|
|
•
|
$1.6 Million on Exercise of Securities: During the three
months ended June 30, 2017, the Company raised $1,687 on the exercise of
warrants, options and compensation options.
|
|
|
•
|
During the quarter, the Company also converted
approximately $18,521 of convertible notes into common shares.
|
For the year ended June 30, 2017, Aurora raised $213,009 in
equity and convertible debt financings to provide the capital necessary to
execute the Company’s aggressive domestic and international growth strategies.
Continued Strengthening of the Senior Management Team
During the fourth quarter of 2017, Aurora appointed Glen Ibbott
as Chief Financial Officer, Allan Cleiren as Chief Operating Officer, Debra
Wilson as Vice President of Human Resources, and Andrea Paine as Director of
Quebec Affairs, each of whom has significant leadership experience in growth
oriented organizations.
22
Aurora Cannabis Inc
.
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
SELECTED ANNUAL INFORMATION
|
|
|
June 30, 2017
|
|
|
June 30, 2016
|
|
|
June 30, 2015
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Total Revenue
|
|
18,067
|
|
|
1,439
|
|
|
-
|
|
|
Net loss
|
|
(12,968
|
)
|
|
(5,723
|
)
|
|
(9,518
|
)
|
|
Net loss per share – basic
and diluted
|
|
(0.05
|
)
|
|
(0.04
|
)
|
|
(0.12
|
)
|
|
Total assets
|
|
322,679
|
|
|
18,396
|
|
|
13,527
|
|
|
Total non- current financial
liabilities
|
|
63,818
|
|
|
4,440
|
|
|
2,292
|
|
|
Cash
dividends per -share
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
The Company commenced commercial operations in February 2015
and began generating revenues from the sale of medical cannabis in January
2016.
The Company operates in two segments, the production and sale
of medical cannabis and patient counselling and outreach services. Patient
counselling became a segment on the completion of the acquisition of CanvasRx on
August 17, 2016. Revenue is generated in two geographical locations, in Canada
and in Germany. Germany became a geographical segment on the completion of the
acquisition of Pedanios GmbH on May 30, 2017.
Net loss has increased from the previous year due to greater
expenditures relating to the increase in production at its Mountain View County
facility, expansion of its client care centre and related sales costs resulting
directly from registration of new patients, scale-up in preparation for pending
adult consumer legalization, as well as acquisition and due diligence
expenditures relating to the Company’s domestic and international expansion
strategy.
The increase in total assets during the year was primarily due
to increases in cash and cash equivalents generated from debt and equity
financings, biological assets and inventory as the Company ramped up production,
property, plant and equipment related to the construction of Aurora Sky and the
Company’s Pointe-Claire facility as well as new strategic investments in
business and asset acquisitions.
Non-current financial liabilities increased from the previous
year primarily due to the $75,000 convertible debenture financing completed in
May 2017.
Aurora Cannabis Inc.
2
3
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
SUMMARY OF QUARTERLY RESULTS
The following table presents selected financial information
from continuing operations for the most recent eight quarters:
|
|
|
|
|
|
|
|
|
Earnings (Loss)
|
|
|
Quarter ended
|
|
Revenue
|
|
|
Net Income (Loss)
|
|
|
per share
|
|
|
(In CDN $000s)
|
|
$
|
|
|
$
|
|
|
$
|
|
|
June 30, 2017
|
|
5,936
|
|
|
(4,816
|
)
|
|
(0.01
|
)
|
|
March 31, 2017
|
|
5,175
|
|
|
139
|
|
|
-
|
|
|
December 31, 2016
|
|
3,885
|
|
|
(2,678
|
)
|
|
(0.01
|
)
|
|
September 30, 2016
|
|
3,071
|
|
|
(5,613
|
)
|
|
(0.03
|
)
|
|
June 30, 2016
|
|
1,220
|
|
|
(7,474
|
)
|
|
(0.05
|
)
|
|
March 31, 2016
|
|
219
|
|
|
2,527
|
|
|
0.02
|
|
|
December 31, 2015
|
|
-
|
|
|
593
|
|
|
-
|
|
|
September 30, 2015
|
|
-
|
|
|
(1,369
|
)
|
|
(0.01
|
)
|
The net loss for the quarter ended June 30, 2017 was primarily
attributable to the unrealized loss on debentures, increased finance costs
relating to debentures, share-based payments, acquisition and project evaluation
costs, and increased expenditures due to scaling up operations.
The net income for the quarter ended March 31, 2017 was
primarily attributable to the unrealized gain on the changes in fair value of
biological assets and unrealized gain on debenture and marketable
securities.
The net losses for the quarters ended September 30, 2016 and
June 30, 2016 were primarily due to a decrease in unrealized gain on changes in
fair value of biological assets and increased expenditures due to increased
corporate activities related to scaling up of its operations, the acquisition of
CanvasRx and various equity and debt financings.
The net income for the quarters ended March 31, 2016 and
December 31, 2015 was primarily attributable to the unrealized gain on the
changes in fair value of biological assets.
RESULTS OF OPERATIONS
During the twelve months ended June 30, 2017, the Company
continued to advance its aggressive business and operating strategies that
included increased operational and production efficiencies realized from the
Mountain View production facility, the construction of its Aurora Sky and
Pointe-Claire facilities, continued registration and servicing of new and
existing patients, increasing production to meet current and anticipated
increases in product demand, strategic acquisitions and investment opportunities
and several financing transactions resulting in equity and debt offerings.
During the prior year, the Company commenced commercial
operations and focused its efforts on launching its product, revamping its
website, registering patients, strengthening board governance through the
appointment of independent directors, hiring key employees to advance its
business operations and raising capital through equity and debt financings to
fund business operations.
24
Aurora Cannabis Inc
.
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grams of
|
|
|
Average Net
|
|
|
|
|
Sales
|
|
|
|
|
|
Net Sales
|
|
|
Service
|
|
|
Total
|
|
|
Cannabis
|
|
|
Selling Price
|
|
|
Quarter ended
|
|
Revenue
(1)
|
|
|
Discounts
|
|
|
Revenue
|
|
|
Revenue
|
|
|
Revenue
|
|
|
Sold
|
|
|
per Gram
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
#
|
|
|
$
|
|
|
June 30, 2017
|
|
6,979
|
|
|
(1,352
|
)
|
|
5,627
|
|
|
309
|
|
|
5,936
|
|
|
755,059
|
|
|
7.45
|
|
|
March 31, 2017
|
|
5,342
|
|
|
(1,006
|
)
|
|
4,336
|
|
|
839
|
|
|
5,175
|
|
|
653,008
|
|
|
6.64
|
|
|
December 31, 2016
|
|
4,044
|
|
|
(837
|
)
|
|
3,207
|
|
|
678
|
|
|
3,885
|
|
|
538,045
|
|
|
5.96
|
|
|
September 30, 2016
|
|
3,483
|
|
|
(731
|
)
|
|
2,752
|
|
|
319
|
|
|
3,071
|
|
|
435,720
|
|
|
6.32
|
|
|
June 30, 2016
|
|
1,604
|
|
|
(384
|
)
|
|
1,220
|
|
|
-
|
|
|
1,220
|
|
|
200,310
|
|
|
6.09
|
|
|
March 31, 2016
|
|
311
|
|
|
(92
|
)
|
|
219
|
|
|
-
|
|
|
219
|
|
|
56,770
|
|
|
3.86
|
|
|
December 31, 2015
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
September 30, 2015
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1)
|
Sales revenue is from the sale of cannabis products, net
of returns and allowances.
|
Revenues for the three months ended June 30, 2017 were $5,936
as compared to $1,220 in the three months ended 2016. The increase in revenues
during the fourth quarter was primarily due to continued increase in patients as
well as an increase in the average selling price per gram of medical cannabis.
In addition, the Company generated additional revenues from its subsidiaries,
CanvasRx and Pedanios, related to patient counselling and outreach services and
wholesale distribution of medical cannabis to pharmacies in Germany
respectively. Revenues for the fourth quarter consisted of the sale of dried
medical cannabis and cannabis oils of $5,627 and patient counselling and
outreach services of $309. Of the total $5,936 revenues in the fourth quarter,
$439 was generated in Germany and $5,497 was generated in Canada. Total product
sold for the period was 755,059 grams of dried cannabis and cannabis oils at an
average net selling price of $7.45 per gram (200,310 grams of dried cannabis in
the fourth quarter of 2016 at an average selling price of $6.09 per gram).
Revenues for the twelve months ended June 30, 2017 were $18,067
as compared to $1,439 in the twelve months ended 2016. The increase in revenues
during the year was primarily due to patient growth and the increase in the
average selling price per gram of medical cannabis. The Company also generated
additional revenues related to patient and counselling and wholesale
distribution of medical cannabis in Germany.
Revenues for the year consisted of the sale of dried medical
cannabis and cannabis oils of $15,922 and patient counselling and outreach
services of $2,145. Of the total $18,067 revenues in the year, $439 was
generated in Germany and $17,628 was generated in Canada. Total product sold for
the year was 2,381,832 grams of dried cannabis and cannabis oils at an average
selling price of $6.68 per gram.
Aurora Cannabis Inc.
2
5
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Aurora has a compassionate pricing program that helps
low-income households and patients on provincial or federal assistance programs
have access to its medical cannabis. Aurora’s dried medical cannabis are
currently priced at $9.00 per gram with compassionate pricing set at $6.00 per
gram, and cannabis oils at $95.00 per 30 milliliter bottle with compassionate
pricing set at $65.00 per 30 milliliter bottle. During the year ended June 30,
2017, approximately 30% of registered patients purchased medical cannabis
through the compassionate pricing program (2016 – 23%). For the three months
ended June 30, 2017, approximately 37% of registered patients purchased medical
cannabis through the compassionate pricing program (2016 – 25%).
The Company received its license from Health Canada to sell
medical cannabis under the ACMPR on November 27, 2015 and generated its first
product sale on January 5, 2016. In January 2017, the Company obtained its
cannabis oil sales license and commenced the sale of cannabis oils in April
2017.
From the commencement of sales in January 2016 to August 31,
2017, the Company has sold a total of 3,263,161 grams of medical cannabis at an
average selling price of $6.89 per gram.
Cost of Sales
Included in cost of sales for the three and twelve months ended
June 30, 2017, were the unrealized gains on changes in fair value of biological
assets of $3,230 and $7,469 respectively, inventory expensed of $1,314 and
$3,472 respectively, and production costs of $2,006 and $6,008 respectively.
Included in cost of sales for the three and twelve months ended
June 30, 2016, were the unrealized loss on changes in fair value of biological
assets of $4,024 and unrealized gains of $3,004 respectively, inventory expensed
of $185 and $295 respectively, and production costs of $1,220 and $1,946
respectively.
The increase in production costs and inventory expensed to cost
of sales during the three and twelve months ended June 30, 2017 was largely
attributable to increases in production and production yields during the
periods. For the same periods in the prior year, the Company was in the early
stages of production as it commenced commercial operations in January 2016.
Biological assets consist of cannabis plants at various
pre-harvest stages of growth which are recorded at fair value less costs to sell
at the point of harvest. Cost to sell are primarily related to shipping costs.
At harvest, the biological assets are transferred to inventory at their fair
value which becomes the deemed cost for inventory. Inventory is later expensed
to cost of sales when sold and offset against the unrealized gain on biological
assets. Production costs are expensed through cost of sales.
26
Aurora Cannabis Inc
.
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Cash Cost of Sales
The Company calculates cash cost of sales of dried cannabis, on
a total and per gram basis, as follows:
|
Unaudited Non-IFRS Measure
|
|
Year end
|
|
|
Three months
ended
|
|
|
(In CDN $000’s, except gram amounts)
|
|
Jun 30 ‘17
|
|
|
Jun 30 ‘17
|
|
|
Mar 31 ‘17
|
|
|
Dec 31’16
|
|
|
Sep 30 ‘16
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Cost of sales (recovery) per
IFRS
|
|
2,011
|
|
|
90
|
|
|
(587
|
)
|
|
(476
|
)
|
|
2,984
|
|
|
Add (less):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in fair
value of biological assets
|
|
7,469
|
|
|
3,230
|
|
|
2,620
|
|
|
2,881
|
|
|
(1,262
|
)
|
|
Inventory expensed to cost of
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales on service
revenue
|
|
(71
|
)
|
|
(31
|
)
|
|
(40
|
)
|
|
6
|
|
|
(6
|
)
|
|
Cost of sales
on products purchased from other Licensed Producers
|
|
(1,422
|
)
|
|
(337
|
)
|
|
(206
|
)
|
|
(611
|
)
|
|
(268
|
)
|
|
Production costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil conversion
costs
|
|
(140
|
)
|
|
(403
|
)
|
|
263
|
|
|
-
|
|
|
-
|
|
|
Depreciation
|
|
(352
|
)
|
|
(111
|
)
|
|
(92
|
)
|
|
(81
|
)
|
|
(68
|
)
|
|
Total cash cost of sales of dried cannabis
|
|
7,495
|
|
|
2,438
|
|
|
1,958
|
|
|
1,719
|
|
|
1,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grams produced in the period
|
|
3,036,829
|
|
|
1,164,683
|
|
|
846,849
|
|
|
670,322
|
|
|
354,975
|
|
|
Cost of sales per gram of dried cannabis
|
|
$2.47
|
|
|
$2.09
|
|
|
$2.31
|
|
|
$2.56
|
|
|
$3.89
|
|
Cash Cost to Produce Dried Cannabis
The Company calculates cash cost to produce, on a total and per
gram basis, of dried cannabis as follows:
|
Unaudited Non-IFRS Measure
|
|
Year end
|
|
|
Three months
ended
|
|
|
(In CDN $000’s, except gram amounts)
|
|
Jun 30 ‘17
|
|
|
Jun 30 ‘17
|
|
|
Mar 31 ‘17
|
|
|
Dec 31’16
|
|
|
Sep 30 ‘16
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Cash cost of sales of dried
cannabis
|
|
7,495
|
|
|
2,438
|
|
|
1,958
|
|
|
1,719
|
|
|
1,380
|
|
|
Less: packaging costs
|
|
(846
|
)
|
|
(219
|
)
|
|
(336
|
)
|
|
(291
|
)
|
|
-
|
|
|
Total cash cost to produce dried cannabis
|
|
6,649
|
|
|
2,219
|
|
|
1,622
|
|
|
1,428
|
|
|
1,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grams produced in the period
|
|
3,036,829
|
|
|
1,164,683
|
|
|
846,849
|
|
|
670,322
|
|
|
354,975
|
|
|
Cash
cost to produce per gram of dried cannabis
|
|
$2.19
|
|
|
$1.91
|
|
|
$1.91
|
|
|
$2.13
|
|
|
$3.89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grams of dried cannabis sold in the period
|
|
2,336,928
|
|
|
710,155
|
|
|
653,008
|
|
|
538,045
|
|
|
435,720
|
|
|
Cash cost of dried cannabis sold in the period
|
|
$5,768
|
|
|
$1,487
|
|
|
$1,509
|
|
|
$1,379
|
|
|
$1,695
|
|
Aurora began selling medical dried cannabis and cannabis oils
in January 2016 and April 2017, respectively. The continuing decrease in the
cash cost to produce per gram from quarter to quarter was due to increased
production yields, resulting in more efficient allocation of costs and overhead.
Total production costs are expected to increase in the next year as the Company
completes construction and begins producing cannabis at its new facilities in Alberta and in Quebec. However, per
gram production costs are expected to decrease materially as the efficiencies
from automation, scale and yield expertise are realized in the new Aurora
facilities.
Aurora Cannabis Inc.
2
7
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Gross Profit
Gross profit was $5,846 and $16,056 for the three and twelve
months ended June 30, 2017, respectively compared to $4,209 gross loss and
$2,202 gross profit for the three and twelve months ended June 30, 2016,
respectively. The gross profit during the periods was partially attributable to
the net effect of changes in fair value of biological assets.
Gross profit for the three months ended June 30, 2017 increased
by 1% or $83 as compared to the previous quarter, from $5,763 for the three
months ended March 31, 2017 to $5,846 for the three months ended June 30, 2017.
The increase in gross profit resulted from a gain on the effect of changes in
fair value of biological assets, offset by a 63% increase in production costs
(mainly wages) and inventory expensed to cost of sales as a result of scaling up
of production.
General and Administration
|
|
|
Three months ended
June 30,
|
|
|
Twelve months ended
June 30,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Professional fees
|
|
(712
|
)
|
|
507
|
|
|
1,793
|
|
|
1,201
|
|
|
Office and administration
|
|
795
|
|
|
133
|
|
|
1,450
|
|
|
693
|
|
|
Wages and benefits
|
|
1,914
|
|
|
440
|
|
|
3,570
|
|
|
1,121
|
|
|
|
|
1,997
|
|
|
1,080
|
|
|
6,813
|
|
|
3,015
|
|
General and administration costs increased by $917 and $3,798
for the three and twelve months ended June 30, 2017, respectively. The over-all
increase was primarily attributable to increases in corporate and general
administrative activities of the Company as it scaled up its business
operations, completed various equity and debt financings, as well as other costs
incurred related to ongoing negotiations for additional financings and
investment opportunities. In the prior periods, the Company commenced its
business operations as it transitioned to a fully licensed producer.
Professional fees decreased by $1,219 and increased by $592
during the three and twelve months ended June 30, 2017, respectively. The
overall increase for the year resulted from various legal, regulatory, advisory
and other fees as the Company completed various transactions related loans and
investments, debt and equity financings and due diligence activities, and
entered into various consulting contracts, employment agreements, and other
business contracts to support its increasing business operations. The Company
also incurred legal fees related to litigations, mediation and/or arbitration.
The Company settled all outstanding claims during the year. As of the date
hereof, management is not aware of any material claims or possible claims
against the Company. Regulatory fees increased as a result of the transfer of
the Company’s listing from the Canadian Securities Exchange to the TSX Venture
Exchange and from the OTCQB to the OTCQX as well as various acquisitions and
financings completed during the year. The decrease in the fourth quarter was primarily due to a
reclassification of professional fees relating to acquisition and project
evaluation costs which is separately disclosed on the consolidated statement of
comprehensive loss.
28
Aurora Cannabis Inc
.
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Wages and benefits increased by $1,474 and $2,449 during the
three and twelve months ended June 30, 2017, respectively. The increase during
the year was primarily due to hiring of an aggregate of 25 (2016 - 9) staff in
the finance, corporate and human resources (HR) departments. During the fourth
quarter, the Company accrued management and employee bonuses, and hired a total
of 3 in finance and HR (2016 - nil). Additionally, management compensation
increased as the Company strengthened its management team with the hiring of new
a CFO and COO to achieve its growth objectives and execute its aggressive
domestic and international expansions strategy.
Acquisition and Project Evaluation Costs
Acquisition and project evaluation costs increased by $1,551
and $1,551 during the three and twelve months ended June 30, 2017, respectively.
The Company incurred legal, consulting and advisory fees relating to business
acquisitions, investments and due diligence activities as part of its domestic
and international expansion. These costs were reclassified from professional
fees during the fourth quarter.
Sales and Marketing
|
|
|
Three months ended
|
|
|
Twelve months ended
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Consulting fees
|
|
1,297
|
|
|
58
|
|
|
3,678
|
|
|
93
|
|
|
Branding, public and media relations, and
tradeshows
|
|
353
|
|
|
205
|
|
|
1,073
|
|
|
661
|
|
|
Selling and client care
expenses
|
|
1,376
|
|
|
382
|
|
|
4,015
|
|
|
493
|
|
|
Wages and benefits
|
|
580
|
|
|
213
|
|
|
1,504
|
|
|
459
|
|
|
|
|
3,606
|
|
|
858
|
|
|
10,270
|
|
|
1,706
|
|
Consulting fees increased by $1,239 and $3,585 during the three
and twelve months ended June 30, 2017, respectively. The increase was primarily
attributable to service fees paid during the three and twelve months ended June
30, 2017 of $1,290 and $3,659, respectively to Canadian Cannabis Clinics
pursuant to an agreement to provide operational, administrative and consulting
services to CanvasRx. No such expense was incurred in the prior periods. Since
the acquisition of CanvasRx in August 2016, the Company has increased its number
of active and pending registered patients from approximately 5,000 to over
20,000, of which, 7,000 are CanvasRx patients that have registered with Aurora.
Selling and client care expenses increased by $994 and $3,522
during the three and twelve months ended June 30, 2017, respectively. Selling
expenses consist of shipping costs, sales fees and commissions and payment
processing fees. Client care expenses relate to patient registrations and
maintenance, and consist of rent, utilities, and office expenses for the client
care centre. The increase in selling and client care expenses is directly
related to the increase in sales during the periods and the expansion of the
client care centre. Selling and client care expenses in the prior periods
represent less than six months of costs as the Company commenced sales of
medical cannabis in January 2016.
Aurora Cannabis Inc.
2
9
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Wages and benefits increased by $367 and $1,045 during the
three and twelve months ended June 30, 2017, respectively, as during the year,
the Company strengthened its senior management team and hired a total of 44
(2016 – 17) staff mainly in client care as well as other personnel in
compliance, Information Technology (IT), public affairs and marketing. During
the fourth quarter, the Company hired a total of 14 (2016 - 11) in client care,
compliance, IT and marketing. The increase in personnel in the client care
centre is required to support the increase in patient volume during the periods.
Since the beginning of commercial operations in January 2016, the Company has
acquired approximately 16,400 active registered patients as of June 30,
2017.
Research and Development
Research and development costs for the three and twelve months
ended June 30, 2017 were $123 and $314, respectively compared to $250 and $565
for the three and twelve months ended June 30, 2016, respectively. During the
year, research and development included the continued development of the
cannabis grow process, method development for extraction of cannabis oils,
packaging improvements, and process validations related to laboratory
procedures. Research and development costs were higher in the prior year
primarily due to the experimental research and development of cannabis oils in
preparation for commercialization, in addition to expenditures relating to the
research, development and documentation of the cannabis grow process and
genetics of various cannabis strains.
Share-based Payments
The Company recorded share-based payments of $2,062 for
2,705,000 stock options granted and vested during three months ended June 30,
2017 and $7,584 for 12,170,000 stock options granted and vested during twelve
months ended June 30, 2017.
During the three and twelve months ended June 30, 2016, the
Company recorded share-based payments of $203 and $913, respectively for stock
options and warrants granted and vested. 1,250,000 and 4,877,500 options were
granted during the three and twelve months ended June 30, 2016, respectively.
Finance and Other Costs
Finance and other costs were $459 and $6,582 during the three
and twelve months ended June 30, 2017, respectively compared to $938 and $1,444
for the three and twelve months ended June 30, 2016, respectively.
During the three months ended June 30, 2017, included in
finance and other costs were financing fees, accretion and interest charges from
aggregate unsecured convertible debentures of $115,000 raised during the period.
Of these debentures, $35,530 were converted into 23,345,777 common shares during
the period.
During the twelve months ended June 30, 2017, accretion of $905
was accelerated related to a prepayment of $4,000 interest free long-term
related party loans. In addition, financing fees of $681 were fully amortized
and a prepayment interest fee of $253 was paid as a result of a prepayment of
$4,000 in short-term loans.
30
Aurora Cannabis Inc
.
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Financing fees related to the fair value of 2,712,500 warrants
of $877 was recognized as financing fees. These warrants were issued as
consideration to the amendment of the terms of certain convertible debentures.
The Company repaid aggregate loans of $10,215 during the twelve months ended
June 30, 2017. During the three and twelve months ended June 30, 2016, finance
and other costs mainly consisted of interest and accretion expenses on the
$2,500 and $3,000 related party loans which bore interest at 4%, a $3,000
secured loan which bore interest at 19.5%, and a $1,650 secured loan which bore
interest at 12%.
Other Income (Expenses)
The Company recorded an unrealized loss on debenture of $3,138
and $1,135 during the three and twelve months ended June 30, 2017, respectively
related to a fair value change on its investment of $2,000 convertible debenture
during the year. The Company initially recorded an unrealized gain at inception
on the debenture of $12,564 which is being amortized over two years.
The Company recorded an unrealized gain on marketable
securities at inception of $1 and $1,334, and an unrealized loss on derivative
of $153 and $335 during the three and twelve months ended June 30, 2017,
respectively related to its investment during the year in a private placement of
2,777,800 units. Each unit consisted of one common share and one-half of a share
purchase warrant. In addition, the Company recorded in other comprehensive
income an unrealized gain on marketable securities of $6,077 and $6,077 during
the three and twelve months ended June 30, 2017, respectively related to the
change in fair value of the share component of the units.
Please see note 4 to the Company’s consolidated financial
statements for a full disclosure on the investments.
Income Tax Recovery
During the twelve months ended June 30, 2017, the Company
recorded a deferred tax recovery of $4,277 primarily related to convertible
debenture financings of $115,000 and the CanvasRx and Pedanios acquisitions
during the year.
The current tax recoveries for the current and prior periods
related to SR&ED claims.
LIQUIDITY AND CAPITAL RESOURCES
During the twelve months ended June 30, 2017, the Company
generated revenues of $18,067 from operations, and financed its current
operations, growth initiatives, and met its capital requirements through debt
and equity financings. The Company’s objectives when managing its liquidity and
capital resources are to generate sufficient cash to fund the Company’s
operating and working capital requirements.
Working capital as of June 30, 2017 was $170,142 as compared to
a deficiency of $2,750 at June 30, 2016. The increase in working capital of
$172,892 was largely attributable to the increase in cash and cash equivalents
of $159,626 generated from debt and equity financings, new investments in
securities of $14,845 and increases in biological assets and inventory of $7,629
partially offset by an increase in accounts payable of $7,067 due to production
facility construction and contingent consideration payable of $13,221 related to
performance milestones of a subsidiary.
Aurora Cannabis Inc.
3
1
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Marketable securities of $14,845 at June 30, 2017 mainly
consisted of 21,562,314 common shares in an Australian publicly traded medical
cannabis company at a market price of A$0.625 per share. The Company also holds
2,777,800 common shares in a Canadian publicly traded company.
Inventory at June 30, 2017 was $7,703 (2016 - $2,317) which
consisted of dried cannabis of $5,845 (2016 - $2,230), cannabis oils of $1,676
(2016 - $Nil) and supplies and consumables of $182 (2016 - $87). The increase in
inventory resulted from increased production of dried cannabis and the addition
of cannabis oils. As at June 30, 2017, included in inventory was a provision of
$1,630 (2016 - $785) to reduce inventory to net realizable value. The adjustment
to net realizable value took into account the compassionate pricing for
qualifying low income patients of $5.00 per gram of dried cannabis. Dried
medical cannabis was sold at $8.00 per gram since commencement of sales, and
increased to $9.00 per gram in July 2017, with compassionate pricing at $6.00
per gram. The Company commenced sales of cannabis oils in April 2017, which are
currently priced at $95.00 per 30 milliliter bottle with compassionate pricing
at $65.00 per 30 milliliter bottle.
Biological assets at June 30, 2017 were to $4,088 (2016 -
$1,845). At June 30, 2017, the Company expected that the biological assets which
consisted of plants at various stages of growth would yield approximately
599,245 grams (2016 – 227,449 grams) of medical cannabis when harvested.
Biological assets increased during the year as a result of higher yields.
The Company’s long term assets mainly consisted of property,
plant and equipment of $45,523, of which $11,662 related to the existing
production facility in Alberta and $26,571 related to the ongoing construction
of the Aurora Sky facility, convertible notes receivable of $11,071, as well as
goodwill of $41,100 and intangible assets of $31,087 relating to business and
asset acquisitions in the year.
Net cash and cash equivalents on hand increased from $259 as at
June 30, 2016 to $159,796 as at June 30, 2017. The increase in cash and cash
equivalents resulted mainly from net cash generated from financing activities of
$220,328 offset by net cash used for operations of $10,506, and investments and
capital expenditures of $50,475.
During the twelve months ended June 30, 2017, the Company
significantly strengthened its balance sheet and liquidity position with
approximately $213,009 in new equity and debt financings. The Company
anticipates that it has sufficient liquidity and capital resources to meet all
of its planned expenditures for the next twelve months.
Operating Activities
For the twelve months ended June 30, 2017, cash flows used for
operating activities were $10,506 compared to $6,772 for the twelve months ended
June 30, 2016. During the twelve months ended June 30, 2017, cash flows used for
operations resulted primarily from cash inflows from adjusted gross profit of
$8,587 offset by cash flows used for operating expenses of $15,563 and finance
and other costs of $2,288 and cash outflows of $1,242 related to changes in
non-cash working capital.
32
Aurora Cannabis Inc
.
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
|
Investing Activities
For the year ended June 30, 2017, the Company had net cash
outflows related to investing activities of $50,475 as compared to $1,885 for
the year ended June 30, 2016. Cash used in investing activities during the year
included the following:
|
|
•
|
construction of the new Aurora Sky facility of
$22,873, and the purchase of production equipment, computers and
furniture, and building improvements of $2,845;
|
|
|
•
|
investments in a private placement of $7,877
and a convertible debenture of $2,000;
|
|
|
•
|
a promissory note receivable of $1,215;
|
|
|
•
|
acquisition of CanvasRx for net consideration
and earn out cash payments of $4,641;
|
|
|
•
|
acquisition of Pedanios of $3,019 offset by
cash balance assumed of $743; and
|
|
|
•
|
acquisition of Peloton of $6,748.
|
Investing activities during the prior year consisted mainly of
the purchases of production equipment, computers and furniture, and website
design and development.
Financing Activities
Net cash flows provided by financing activities for the year
ended June 30, 2017 were $220,328 compared to $8,600 for the year ended June 30,
2016. During the year, the Company raised aggregate net cash proceeds of
$230,796 as follows:
|
|
•
|
private placement of units for gross proceeds of $98,009
less share issue costs of $6,282;
|
|
|
•
|
unsecured convertible debentures in the principal amount
of $115,000 less financing fees of $5,027; and
|
|
|
•
|
exercise of warrants and options for net proceeds of
$29,096.
|
The above financing proceeds were offset by finance lease
payments of $193 and repayments of loans totaling $10,215 consisting of related
party loans of $5,756 and third party loans of $4,459.
For the year ended June 30, 2016, the Company raised aggregate
net cash of $12,517 from short and long term loans, private placements,
unsecured convertible debentures and from the exercise of options and warrants.
The proceeds were offset by financing fees paid on debentures of $316 and
repayments of loans totaling $2,352 consisting of related party loans of $510,
related party advances of $842 and a third party secured loan of $1,000.
Capital Resource Measures
The Company’s major capital expenditures in fiscal 2017 mainly
consist of the construction of its 800,000 square foot highly-automated
greenhouse in Alberta, Canada. See “
Capacity Expansion
”. The Company
believes it has sufficient cash and resources to fund the Company’s operations,
meet its currently planned growth and fund development and expansion activities
for the next fiscal year.
Aurora Cannabis Inc.
3
3
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Contractual Obligations
As of June 30, 2017, the Company had the following financial
commitments:
|
|
|
|
|
|
Less than
|
|
|
|
|
|
After
|
|
|
Contractual Obligation
|
|
Total
|
|
|
1 year
|
|
|
1 to 3 years
|
|
|
3 years
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Finance lease
|
|
452
|
|
|
107
|
|
|
345
|
|
|
-
|
|
|
Operating lease
|
|
143
|
|
|
60
|
|
|
83
|
|
|
-
|
|
|
Convertible notes
|
|
79,470
|
|
|
-
|
|
|
79,470
|
|
|
-
|
|
|
Office lease
|
|
2,772
|
|
|
624
|
|
|
1,374
|
|
|
774
|
|
|
Total
|
|
82,837
|
|
|
791
|
|
|
81,272
|
|
|
774
|
|
Investment in Australis Holdings LLP
Each of ACI and its joint venture partner, AJR Builders Group
LLC (“AJR”), holds a 50% interest in Australis Holdings LLP (“AHL”), a
Washington Limited Liability Partnership.
AHL purchased two parcels of land totaling approximately 24.5
acres (the “Property”) in Whatcom county, Washington for USD$2,300,000 in 2015
with the initial intention to construct a new cannabis production and processing
facility. The Company subsequently decided not to move forward with US medical
cannabis production. This property is currently for sale.
Pursuant to a promissory note dated April 10, 2015, the Company
through ACI loaned CAD$1,645 to AHL to fund the purchase of the Property. The
note bears interest at a rate of 5% per annum and matures on October 31, 2017.
In the event of a default, interest will be charged at 12% per annum. The note
is secured by a first mortgage on one parcel of the Property and a second
mortgage on the other title as well as a general security agreement granting ACI
security over all present and after acquired property of AHL.
OFF-BALANCE SHEET ARRANGEMENTS
As at the date of this MD&A, the Company had no material
off-balance sheet arrangements that have, or are reasonably likely to have, a
current or future effect on the financial performance or financial condition of
the Company.
34
Aurora Cannabis Inc
.
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
TRANSACTIONS WITH RELATED PARTIES
Related Party Transactions
The Company entered into certain transactions with related
parties during the years ended June 30, 2017 and 2016 as follows:
Goods and Services
|
Name and Relationship to Company
|
Transaction
|
Twelve months ended
|
|
|
|
|
June 30,
|
|
|
|
2017
|
2016
|
|
|
|
$
|
$
|
|
Delcon Industries Ltd, a company controlled by Dale
Lesack, a director of ACE
|
Consulting fees
|
150
|
150
|
Consulting fees paid for services as
Production Facilitator.
|
|
Evolve Concrete, a company controlled by Chris
Mayerson, a director of ACE
|
Consulting fees
|
61
|
150
|
|
Consulting fees paid for services as part-
time (full-time in the prior year) Cultivator of the Company.
|
|
Canadian Cannabis Clinics (“CCC”), a company in
which Joseph del Moral, is a common director
|
Service fees
|
3,659
|
-
|
|
CCC provides operational, administrative and consulting services to
CanvasRx.
|
|
Superior Safety Codes (“Superior”), a company
controlled by Terry Booth, CEO and Steve Dobler, President of the Company
|
Rent, accounting and administration
|
130
|
157
|
Rent for corporate offices in
Edmonton and Calgary as well as accounting and administrative support at
these offices pursuant to an Administrative Services and Office Space
Agreement dated January 1, 2016.
|
|
Belot Business Consulting Corp, a company controlled
by Neil Belot, Chief Global Business Development Office
|
Consulting fees
|
780
|
-
|
Consulting fees paid related to the
CanvasRx acquisition.
|
|
748086 Alberta Ltd., a company controlled by Jason
Dyck, a director of the Company
|
Consulting fees
|
44
|
59
|
Consulting fees related to
Scientific Research and Development Services.
|
8115966 Canada Inc. (“8115966”), a company
controlled by
Michael Singer, a director of the Company
|
Consulting fees
|
57
|
20
|
|
Consulting fees for financial and other
advisory services pursuant to a consulting agreement effective April 18,
2016 with 8115966.
|
Aurora Cannabis Inc.
3
5
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
|
Key Management Personnel
|
Name and Relationship to Company
|
Transaction
|
Twelve months ended
|
|
|
|
|
June 30,
|
|
(In CDN $000s)
|
|
2017
|
2016
|
|
|
|
$
|
$
|
|
Lola Ventures Inc. (“Lola”), a private company controlled by
Terry Booth, CEO
|
Management fees
|
288
|
125
|
Effective January 1, 2017, the Company entered into
an employment agreement with Mr. Booth.
|
|
1771472 Alberta Ltd. (“1771472”), a private company controlled
by Steve Dobler, President
|
Management fees
|
200
|
75
|
|
Effective January 1, 2017, the Company entered into
an employment agreement with Mr. Dobler.
|
|
Branson Corporate Services Inc. (“Branson”), a company
providing financial advisory services to the Company
|
Management fees
|
163
|
-
|
|
The Company entered into a management services
agreement with Branson dated June 24, 2016, which includes the services of
the Company’s former CFO, Amy Stephenson; Adam Szweras, a director of the
Company, has a 24.5% indirect interest in Branson, through a family trust
for the benefit of his minor children.
|
During the year ended June 30, 2017, additional compensation to
key management personnel of $7,972 (2016 - $425) was paid or accrued through
wages and short-term benefits of $1,283 (2016 - $168), director’s fees of $258
(2016 – $59) and share-based compensation of $6,431 (2016 - $198).
Related Party Balances
As at June 30, 2017, the following related party amounts were
included in (a) accounts receivable, (b) accounts payable and accrued
liabilities, (c) prepaid expenses and deposits, (d) short term loans, (e) long
term loans, (f) note receivable:
|
|
2017
|
2016
|
|
|
$
|
$
|
|
(a) Accounts receivable
|
|
|
|
A
company with common directors
|
72
|
-
|
|
|
|
|
|
(b) Accounts payable and accrued liabilities
(1)
|
|
|
|
Companies controlled by directors and officers of the Company
|
76
|
102
|
|
Directors of the Company
|
-
|
36
|
|
Officers
of the Company
|
565
|
-
|
|
|
|
|
|
(c) Prepaid expenses and deposits
|
|
|
|
Avarone
|
-
|
2
|
|
|
|
|
|
(d) Short-term loans
|
|
|
|
Lola Ventures Inc. (“Lola”)
|
-
|
540
|
|
1771472 Alberta Ltd. (“1771472”)
|
-
|
550
|
|
|
-
|
1,090
|
|
(e) Long-term loans
|
|
|
|
Lola
|
-
|
1,579
|
|
1771472
|
-
|
1,579
|
|
|
-
|
3,158
|
|
(f) Note receivable
|
|
|
|
Australis
Holdings LLP
|
2,096
|
1,782
|
|
(1)
|
The amounts are unsecured, non-interest bearing and have
no specific repayment terms.
|
36
Aurora Cannabis Inc
.
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
CRITICAL ACCOUNTING ESTIMATES
The preparation of the Company’s Financial Statements in
conformity with IFRS requires management to make judgments, estimates, and
assumptions about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognized in the period in
which the estimate is revised, if the revision affects only that period, or in
the period of the revision and future periods, if the revision affects both
current and future periods.
Significant judgments, estimates and assumptions that have the
most significant effect on the amounts recognized in the Financial Statements
are described below.
Fair value measurements of financial instruments
The individual fair values attributed to the different
components of a financing transaction, notably investment in equity in
securities, derivative financial instruments, convertible debt and loans, are
determined using valuation techniques. The Company uses judgment to select the
methods used to make certain assumptions and in performing the fair value
calculations in order to determine (a) the values attributed to each component
of a transaction at the time of their issuance; (b) the fair value measurements
for certain instruments that require subsequent measurement at fair value on a
recurring basis; and (c) for disclosing the fair value of financial instruments
subsequently carried at amortized cost. These valuation estimates could be
significantly different because of the use of judgment and the inherent
uncertainty in estimating the fair value of these instruments that are not
quoted in an active market. The assumptions regarding the derivative liabilities
are disclosed in notes 14(d) and 15(d) to the Consolidated Financial Statements.
Aurora Cannabis Inc.
3
7
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Biological assets
Biological assets, consisting of cannabis plants and
agricultural produce consisting of cannabis, are measured at fair value less
costs to sell up to the point of harvest.
Determination of the fair values of the biological assets and
the agricultural product requires the Company to make assumptions about how
market participants assign fair values to these assets. These assumptions
primarily relate to the level of effort required to bring the cannabis up to the
point of harvest, costs to convert the harvested cannabis to finished goods,
sales price, risk of loss, expected future yields from the cannabis plants and
estimating values during the growth cycle.
The valuation of biological assets at the point of harvest is
the cost basis for all cannabis based inventory and thus any critical estimates
and judgments related to the valuation of biological assets are also applicable
for inventory. The valuation of work-in-process and finished goods also requires
the estimate of conversion costs incurred, which become part of the carrying
amount for the inventory. The Company must also determine if the cost of any
inventory exceeds its net realizable value, such as cases where prices have
decreased, or inventory has spoiled or has otherwise been damaged.
Estimated useful lives and depreciation of property,
plant and equipment
Depreciation of property, plant and equipment is dependent upon
estimates of useful lives which are determined through the exercise of judgment.
The assessment of any impairment of these assets is dependent upon estimates of
recoverable amounts that take into account factors such as economic and market
conditions and the useful lives of assets.
Business combinations
In a business combination, all identifiable assets, liabilities
and contingent liabilities acquired are recorded at their fair values. One of
the most significant estimates relates to the determination of the fair value of
these assets and liabilities. For any intangible asset identified, depending on
the type of intangible asset and the complexity of determining its fair value,
an independent valuation expert or management may develop the fair value, using
appropriate valuation techniques, which are generally based on a forecast of the
total expected future net cash flows. The evaluations are linked closely to the
assumptions made by management regarding the future performance of the assets
concerned and any changes in the discount rate applied. All acquisitions have
been accounted for using the acquisition method.
Certain fair values may be estimated at the acquisition date
pending confirmation or completion of the valuation process. Where provisional
values are used in accounting for a business combination, they may be adjusted
retrospectively in subsequent periods. However, the measurement period will last
for one year from the acquisition date.
Goodwill impairment
The Company performs an annual test for goodwill impairment in
the fourth quarter for each of the cash generating units (CGUs), and whenever
events or circumstances make it more likely than not that an impairment may have
occurred, such as a significant adverse change in the business climate or a
decision to sell or dispose all or a portion of a reporting unit.
Determining whether an impairment has occurred requires valuation of the
respective CGU, which we estimate using a discounted cash flow method. When
available and as appropriate, we use comparative market multiples to corroborate
discounted cash flow results. In applying this methodology, we rely on a number
of factors, including actual operating results, future business plans, economic
projections and market data.
38
Aurora Cannabis Inc
.
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
The Company tests intangible assets with indefinite lives
annually for impairment using a fair value method such as discounted cash flows.
Convertible instruments
Convertible notes are compound financial instruments which are
accounted for separately by their components: a financial liability and an
equity instrument. The financial liability, which represents the obligation to
pay coupon interest on the convertible notes in the future, is initially
measured at its fair value and subsequently measured at amortized cost. The
residual amount is accounted for as an equity instrument at issuance.
The identification of convertible notes components is based on
interpretations of the substance of the contractual arrangement and therefore
requires judgment from management. The separation of the components affects the
initial recognition of the convertible debenture at issuance and the subsequent
recognition of interest on the liability component. The determination of the
fair value of the liability is also based on a number of assumptions, including
contractual future cash flows, discount rates and the presence of any derivative
financial instruments.
Share-based payments
The Company uses the Black-Scholes option pricing model to
determine the fair value of stock options and warrants. In estimating fair
value, management is required to make certain assumptions and estimates such as
the expected life of options, volatility of the Company’s future share price,
risk free rate, future dividend yields and estimated forfeitures at the initial
grant date. Changes in assumptions used to estimate fair value could result in
materially different results.
Deferred tax assets
Deferred tax assets, including those arising from tax loss
carry-forwards, require management to assess the likelihood that the Company
will generate sufficient taxable earnings in future periods in order to utilize
recognized deferred tax assets. Assumptions about the generation of future
taxable profits depend on management’s estimates of future cash flows. In
addition, future changes in tax laws could limit the ability of the Company to
obtain tax deductions in future periods. To the extent that future cash flows
and taxable income differ significantly from estimates, the ability of the
Company to realize the net deferred tax assets recorded at the reporting date
could be impacted.
Aurora Cannabis Inc.
3
9
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
NEW ACCOUNTING PRONOUNCEMENTS
There were no new standards effective July 1, 2016 that had an
impact on the Company’s Financial Statements. The following IFRS standards have
been recently issued by the IASB. Pronouncements that are not applicable or
where it has been determined do not have a significant impact to the Company
have been excluded herein.
IFRS 7 Financial instruments: Disclosure
IFRS 7
Financial instruments: Disclosure,
was amended to
require additional disclosures on transition from IAS 39 to IFRS 9. IFRS 7 is
effective on adoption of IFRS 9, which is effective for annual periods
commencing on or after January 1, 2018.
IFRS 9 Financial instruments
In July 2014, the IASB issued the final version of IFRS 9
Financial Instruments
which reflects all phases of the financial
instruments project and replaces IAS 39
Financial Instruments:
Recognition and Measurement
and all previous versions of IFRS 9. The
standard introduces new requirements for classification and measurement,
impairment, and hedge accounting. IFRS 9 is effective for annual periods
beginning on or after 1 January 2018, with early application permitted.
IFRS 15 Revenue from contracts with Customers
The IASB replaced IAS 18,
Revenue,
in its entirety with
IFRS 15,
Revenue from contracts with Customers
. The standard contains a
single model that applies to contracts with customers and two approaches to
recognizing revenue: at a point in time or over time. The model features a
contract-based five-step analysis of transactions to determine whether, how much
and when revenue is recognized. New estimates and judgmental thresholds have
been introduced, which may affect the amount and/or timing of revenue
recognized. IFRS 15 is effective for annual periods beginning on January 1,
2017, with early application permitted.
IFRS 16 Leases
In January 2016, the IASB issued IFRS 16
Leases
, which
will replace IAS 17
Leases
. This standard introduces a single lessee
accounting model and requires a lessee to recognize assets and liabilities for
all leases with a term of more than twelve months, unless the underlying asset
is of low value. A lessee is required to recognize a right-of-use asset
representing its right to use the underlying asset and a lease liability
representing its obligation to make lease payments. The standard will be
effective for annual periods beginning on or after January 1, 2019, with earlier
application permitted for entities that apply IFRS 15
Revenue from Contracts
with Customers
at or before the date of initial adoption of IFRS 16. The
extent of the impact of adoption of the standard has not yet been determined.
40
Aurora Cannabis Inc
.
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
|
(a)
|
Fair Value of Financial
Instruments
|
The Company’s financial instruments
consist of cash and cash equivalents, accounts receivable, promissory notes
receivable, accounts payable and accrued liabilities. The carrying values of
these financial instruments approximate their fair values as at June 30,
2017.
IFRS requires disclosures about the
inputs to fair value measurements, including their classification within a
hierarchy that prioritizes the inputs to fair value measurement. The three
levels of hierarchy are:
|
|
Level
|
1 –
|
Unadjusted quoted prices in active markets for
identical assets or liabilities;
|
|
|
Level
|
2 –
|
Inputs other than quoted prices that are
observable for the asset or liability, either directly or
indirectly; and
|
|
|
Level
|
3 –
|
Inputs for the asset or liability that are not
based on observable market data.
|
There have been no transfers between
fair value levels during the period.
The following table summarizes the
Company’s financial instruments as at June 30, 2017:
|
|
|
|
|
|
|
|
|
|
Financial
|
|
|
Other
|
|
|
|
|
|
|
|
|
Available-for-sale
|
|
|
Loans and
|
|
|
assets at
|
|
|
financial
|
|
|
|
|
|
|
|
|
financial assets
|
|
|
receivables
|
|
|
FVPTL
|
|
|
liabilities
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
-
|
|
|
159,796
|
|
|
-
|
|
|
-
|
|
|
159,796
|
|
|
|
Accounts
receivable
|
|
-
|
|
|
2,312
|
|
|
-
|
|
|
-
|
|
|
2,312
|
|
|
|
Marketable securities
|
|
14,845
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
14,845
|
|
|
|
Promissory notes
|
|
-
|
|
|
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
receivable
|
|
|
|
|
1,222
|
|
|
|
|
|
|
|
|
1,222
|
|
|
|
Loans receivable
|
|
-
|
|
|
2,096
|
|
|
-
|
|
|
-
|
|
|
2,096
|
|
|
|
Convertible debenture
|
|
-
|
|
|
-
|
|
|
11,071
|
|
|
-
|
|
|
11,071
|
|
|
|
Derivative
|
|
-
|
|
|
-
|
|
|
292
|
|
|
-
|
|
|
292
|
|
|
|
Financial Liabilities
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
-
|
|
|
-
|
|
|
-
|
|
|
8,753
|
|
|
8,753
|
|
|
|
Deferred revenue
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,421
|
|
|
1,421
|
|
|
|
Finance lease
|
|
-
|
|
|
-
|
|
|
-
|
|
|
351
|
|
|
351
|
|
|
|
Convertible notes
(1)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
63,536
|
|
|
63,536
|
|
|
|
(1)
|
The fair value of convertible notes includes both the
debt and equity components.
|
Aurora Cannabis Inc.
4
1
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
The following is a summary of financial
assets measured at fair value segregated based on the various levels of inputs:
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Marketable securities
|
|
14,845
|
|
|
-
|
|
|
-
|
|
|
14,845
|
|
|
|
Convertible debenture
|
|
-
|
|
|
-
|
|
|
11,071
|
|
|
11,071
|
|
|
|
Warrant derivative
|
|
-
|
|
|
-
|
|
|
292
|
|
|
292
|
|
Changes in level 3 financial assets for
the year were as follows:
|
|
|
|
Warrant
|
|
|
Convertible
|
|
|
|
|
|
derivative
|
|
|
Debenture
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Opening balance
|
|
-
|
|
|
-
|
|
|
|
Additions
|
|
306
|
|
|
2,000
|
|
|
|
Unrealized gains at inception
deferred
|
|
380
|
|
|
12,564
|
|
|
|
Unrealized losses
|
|
(394
|
)
|
|
(3,493
|
)
|
|
|
Ending balance
|
|
292
|
|
|
11,071
|
|
Changes in deferred gains on
convertible debenture and derivative measured at fair value and included in
level 3 of the fair value hierarchy were as follows:
|
|
|
|
Warrant
|
|
|
Convertible
|
|
|
|
|
|
derivative
|
|
|
Debenture
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Opening balance
|
|
-
|
|
|
-
|
|
|
|
Unrealized gains at inception deferred
|
|
380
|
|
|
12,564
|
|
|
|
Unrealized gains amortized
|
|
(59
|
)
|
|
(2,358
|
)
|
|
|
Ending balance
|
|
321
|
|
|
10,206
|
|
Changes in derivative liabilities
measured at fair value and included in level 3 of the fair value hierarchy were
as follows:
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Opening balance
|
|
233
|
|
|
-
|
|
|
|
Initial recognition
|
|
|
|
|
323
|
|
|
|
Reclassification upon
repayment of loans
|
|
(233
|
)
|
|
-
|
|
|
|
Gain
/ loss on re-measurement to fair value at period end
|
|
-
|
|
|
(90
|
)
|
|
|
Ending balance
|
|
-
|
|
|
233
|
|
The Company’s liability for the CanvasRx contingent
consideration was measured at fair value based on unobservable inputs, and was
considered a level 3 financial instrument. The fair value of the liability determined by this analysis was primarily driven by the
Company’s expectations of CanvasRx achieving the milestones. The expected
milestones were assessed probabilities by management which was then discounted
to present value in order to derive a fair value of the contingent
consideration. The primary inputs of the calculation were the probabilities of
achieving the milestones and a discount rate.
42
Aurora Cannabis Inc
.
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
|
(b)
|
Financial Instruments Risk
|
The Company is exposed in varying
degrees to a variety of financial instrument related to risks. The Board
mitigates these risks by assessing, monitoring and approving the Company’s risk
management processes:
|
|
(i)
|
Credit Risk
|
|
|
|
|
|
|
|
Credit risk is the risk of a potential loss to the
Company if a customer or third party to a financial instrument fails to
meet its contractual obligations. The Company is moderately exposed to
credit risk from its cash and cash equivalents, trade and other
receivables, convertible debenture asset, and promissory notes receivable.
The risk exposure is limited to their carrying amounts at the statement of
financial position date. The risk is for cash and cash equivalents is
mitigated by holding these instruments with highly rated Canadian
financial institutions. The Company does not invest in asset-backed
deposits or investments and does not expect any credit losses. The Company
periodically assesses the quality of its investments and is satisfied with
the credit rating of the financial institutions and the investment grade
of its guaranteed investment certificates. Trade and other receivables
primarily consist of trade accounts receivable and goods and services
taxes recoverable (“GST”). Credit risk from the convertible debenture
asset and promissory notes receivable arises from the possibility that
principal and/or interest due may become uncollectible. The Company
mitigates this risk by managing and monitoring the underlying business
relationships.
|
|
|
|
|
|
|
|
The Company provides credit to its customers in the
normal course of business and has established credit evaluation and
monitoring processes to mitigate credit risk, but has limited risk as the
majority of sales are transacted with credit cards.
|
|
|
|
|
|
|
|
As at June 30, 2017, the Company’s aging of receivables
was approximately as follows:
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
0 – 60 days
|
|
1,534
|
|
|
-
|
|
|
|
61 –
120 days
|
|
778
|
|
|
87
|
|
|
|
|
|
2,312
|
|
|
87
|
|
Aurora Cannabis Inc.
4
3
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Liquidity risk is the risk that the
Company will not be able to meet its financial obligations associated with
financial liabilities. The Company manages liquidity risk through the management
of its capital structure. The Company’s approach to managing liquidity is to
ensure that it will have sufficient liquidity to settle obligations and
liabilities when due.
In addition to the commitments
outlined in Note 22 to the Company’s Financial Statements, the Company has the
following contractual obligations:
|
|
|
|
Total
|
|
|
<1 year
|
|
|
1 - 3 years
|
|
|
3 -5 years
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Accounts payable and accrued
liabilities
|
|
8,753
|
|
|
8,753
|
|
|
-
|
|
|
-
|
|
|
|
Deferred revenues
|
|
1,421
|
|
|
1,421
|
|
|
-
|
|
|
-
|
|
|
|
Finance lease
|
|
452
|
|
|
107
|
|
|
345
|
|
|
-
|
|
|
|
Convertible notes
|
|
79,470
|
|
|
-
|
|
|
79,470
|
|
|
-
|
|
|
|
|
|
90,096
|
|
|
10,281
|
|
|
79,815
|
|
|
-
|
|
The operating results and financial
position of the Company are reported in Canadian dollars. As the Company
operates in an international environment, some of the Company’s financial
instruments and transactions are denominated in currencies other than the
Canadian dollar. The results of the Company’s operations are subject to currency
transaction and translation risks.
The Company holds cash in Canadian
dollars and Euros, and investments in Australian dollars. The Company’s main
risk is associated with fluctuations in Euros and Australian dollars and assets
and liabilities are translated based on the foreign currency translation policy
described in Note 2 of the Financial Statements.
The Company has determined that an
effect of a 10% increase or decrease in the Australian dollar and Euro against
the Canadian dollar on financial assets and liabilities, as at June 30, 2017,
including cash, marketable securities and accounts payable and accrued
liabilities denominated in Euros and Australian dollars, would result in an
increase or decrease of approximately $1,430 (2016 - $Nil) to the net loss and
comprehensive loss for the year ended June 30, 2017.
At June 30, 2017, the Company had no
hedging agreements in place with respect to foreign exchange rates. The Company
has not entered into any agreements or purchased any instruments to hedge
possible currency risks at this time.
44
Aurora Cannabis Inc
.
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
|
|
b)
|
Interest rate risk
|
|
|
|
|
|
|
|
Interest rate risk is the risk that the fair value or
future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. Cash and cash equivalents bear interest
at market rates. The Company’s short-term loan and convertible loans are
either non- interest bearing or have fixed rates of interest and expose
the Company to a limited interest rate risk.
|
|
|
|
|
|
|
c)
|
Price risk
|
|
|
|
|
|
|
|
Price risk is the risk of variability in fair value due
to movements in equity or market prices. The Company’s marketable
securities and investments are susceptible to price risk arising from
uncertainties about their future values. The fair value of marketable
securities is based on quoted market prices which the shares of the
investments can be exchanged for.
|
|
|
|
|
|
|
|
If the fair value of these financial assets were to
increase or decrease by 10%, the Company would incur an associated
increase or decrease in net loss and comprehensive loss of approximately
$2,823 (2016 - $Nil). See Note 4 of the Financial Statements for
additional details regarding the fair value of investments and marketable
securities.
|
SUMMARY OF OUTSTANDING SHARE DATA
As of the date of this MD&A, the Company had the following
securities issued and outstanding:
|
Securities
(1)
|
|
September 25, 2017
|
|
|
|
|
#
|
|
|
Issued and outstanding shares
|
|
371,569,751
|
|
|
Options
|
|
15,586,150
|
|
|
Warrants
|
|
21,779,000
|
|
|
Compensation warrants
|
|
1,865,249
|
|
|
Convertible debentures
|
|
25,010,760
|
|
|
(1)
|
See the Company’s Financial Statements for a detailed
description of these securities.
|
OUTLOOK
To achieve the Company’s vision and short-term goals, Aurora is
expediting the completion of Aurora Sky, its major facility expansion at the
Edmonton International Airport and of its facility in Pointe-Claire, Québec. The
Company is currently executing an aggressive Canadian and international
expansion, as evidenced by the April 2017 acquisition of Peloton in Québec, May
2017 acquisition of Pedanios in Germany, and lead participation in the May 2017
Cann Group IPO in Australia. The Company is also actively pursuing further
domestic and international opportunities. Aurora is continuing to accelerate its
penetration of the Canadian medical cannabis market and leverage its Health
Canada sales license for derivative products. If, as expected, the Canadian
federal government passes legislation legalizing the adult consumer use of
cannabis, the Company is building organizational and production capacity to
capture a share of the adult use market. Most recently, Aurora strengthened its
senior management team with the appointment of a new CFO and COO as well as four Vice
Presidents in finance, production, market development and human resources.
Aurora Cannabis Inc.
4
5
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
INTERNAL CONTROLS OVER FINANCIAL REPORTING
In accordance with National Instrument 52-109
Certification
of Disclosure in Issuers’ Annual and Interim Filings,
management is
responsible for establishing and maintaining adequate Disclosure Controls and
Procedures (“DCP”) and Internal Control Over Financial Reporting (“ICFR”). On
July 24, 2017, the Company commenced trading on the TSX, graduating from the TSX
Venture Exchange. The Company’s CEO and CFO will be required to file
certifications relating to DCP and ICFR for the Company in connection with its
interim and annual filings, commencing with the six months ended December 31,
2017, the second reporting period after the Company became a non-venture issuer
on the TSX.
FORWARD-LOOKING STATEMENTS
This MD&A may contain “forward-looking information” within
the meaning of Canadian securities legislation (“forward-looking statements”).
These forward-looking statements are made as of the date of this MD&A and
Company does not intend, and does not assume any obligation, to update these
forward-looking statements, except as required under applicable securities
legislation. Forward-looking statements relate to future events or future
performance and reflect Company management’s expectations or beliefs regarding
future events. In certain cases, forward-looking statements can be identified by
the use of words such as “plans”, “expects” or “does not expect”, “is expected”,
“budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or
“does not anticipate”, or “believes”, or variations of such words and phrases or
statements that certain actions, events or results “may”, “could”, “would”,
“might” or “will be taken”, “occur” or “be achieved” or the negative of these
terms or comparable terminology. In this document, certain forward-looking
statements are identified by words including “may”, “future”, “expected”,
“intends” and “estimates”. By their very nature forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by the forward-looking statements. The Company provides no assurance
that forward-looking statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward-looking
statements.
Certain forward-looking statements in this MD&A include,
but are not limited to the following:
|
|
•
|
the construction of Aurora Sky, its associated costs, and
receipt of licenses from Health Canada to produce and sell medical
cannabis from this facility;
|
|
|
•
|
the completion of construction of its facility in Quebec
and receipt of Health Canada licenses;
|
|
|
•
|
investments and capital expenditures;
|
|
|
•
|
its expectations regarding production capacity and
production yields; and
|
|
|
•
|
product sales expectation and corresponding forecasted
increase in revenues.
|
46
Aurora Cannabis Inc
.
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Twelve Month Periods Ended June 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
The above and other aspects of the Company’s anticipated future
operations are forward-looking in nature and, as a result, are subject to
certain risks and uncertainties. Although the Company believes that the
expectations reflected in these forward-looking statements are reasonable, undue
reliance should not be placed on them as actual results may differ materially
from the forward-looking statements. Such forward-looking statements are
estimates reflecting the Company's best judgment based upon current information
and involve a number of risks and uncertainties, and there can be no assurance
that other factors will not affect the accuracy of such forward-looking
statements. Such factors include but are not limited to the Company’s ability to
obtain the necessary financing and the general impact of financial market
conditions, the yield from marijuana growing operations, product demand, changes
in prices of required commodities, competition, government regulations and other
risks as set out under “Risk Factors” in the Company’s Annual Information Form
dated September 25, 2017 filed on SEDAR.
Aurora Cannabis Inc.
4
7
|
BOARD OF
DIRECTORS
|
Terry Booth
|
Joseph del Moral
|
|
|
|
|
Dr. Jason Dyck
|
Michael Singer
|
|
|
|
|
Steve Dobler
|
Adam Szweras
|
|
|
|
|
Barry Fishman
|
|
|
Capital Summary
|
September 25, 2017
|
|
TSX listed, ticker
symbol
|
ACB
|
|
Securities
|
|
|
|
|
|
Issued &
Outstanding Shares
|
371,569,751
|
|
Warrants
|
15,586,150
|
|
Options
|
21,779,000
|
|
Compensation
options
|
1,865,249
|
|
Convertible
debentures shares reserved for issuance
|
25,010,760
|
|
Fully Diluted
|
435,810,910
|
|
CONTACT
|
|
|
|
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
|
|
|
Executive Vice President
|
NATIONAL Equicom
|
|
|
|
|
+1 (905) 864 5525
|
+1 (416) 848 1397
|
|
|
|
|
cam@auroramj.com
|
mlakmaaker@national.ca
|
|
|
|
|
|
|
|
|
|
AURORA CANNABIS INC.
ANNUAL INFORMATION FORM
For the Financial Year Ended June 30, 2017
Dated September 25, 2017
TABLE OF CONTENTS
- 2 -
ANNUAL INFORMATION FORM
In this Annual Information Form, unless otherwise noted or the
context indicates otherwise, the “Company”, “Aurora”, “we”, “us” and “our” refer
to Aurora Cannabis Inc. and its subsidiaries.
All financial information in this Annual Information Form is
prepared in Canadian dollars, unless otherwise indicated, and using
International Financial Reporting Standards as issued by the International
Accounting Standards Board. The information contained herein is dated as of
September 25, 2017, unless otherwise stated.
FORWARD-LOOKING STATEMENTS
This Annual Information Form contains certain statements which
may constitute “forward-looking information” and “forward-looking statements”
within the meaning of Canadian securities law requirements (collectively,
“
forward-looking statements
”). These forward-looking statements are made
as of the date of this Annual Information Form and the Company does not intend,
and does not assume any obligation, to update these forward-looking statements,
except as required under applicable securities legislation. Forward-looking
statements relate to future events or future performance and reflect Company
management’s expectations or beliefs regarding future events. In certain cases,
forward-looking statements can be identified by the use of words such as
“plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”,
“estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or
“believes”, or variations of such words and phrases or statements that certain
actions, events or results “may”, “could”, “would”, “might” or “will be taken”,
“occur” or “be achieved” or the negative of these terms or comparable
terminology. In this document, certain forward-looking statements are identified
by words including “may”, “future”, “expected”, “intends” and “estimates”. By
their very nature forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by the forward-looking
statements. The Company provides no assurance that forward-looking statements
will prove to be accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly, readers
should not place undue reliance on forward-looking statements. Certain
forward-looking statements in this Annual Information Form include, but are not
limited to the following:
|
|
•
|
the construction of Aurora Sky, it’s associated
costs, and receipt of licenses from Health Canada to produce and sell
medical cannabis from this facility;
|
|
|
•
|
the completion of construction at the Company’s
facility in Quebec, and receipt of Health Canada licenses;
|
|
|
•
|
investments and capital expenditures;
|
|
|
•
|
its expectations regarding production capacity
and production yields; and
|
|
|
•
|
the expected demand for products and
corresponding forecasted increase in revenues.
|
The above and other aspects of the Company’s anticipated future
operations are forward-looking in nature and, as a result, are subject to
certain risks and uncertainties. Although the Company believes that the
expectations reflected in these forward-looking statements are reasonable, undue
reliance should not be placed on them as actual results may differ materially
from the forward-looking statements. Such forward-looking statements are
estimates reflecting the Company's best judgment based upon current information
and involve a number of risks and uncertainties, and there can be no assurance
that other factors will not affect the accuracy of such forward-looking
statements. Such factors include but are not limited to the Company’s ability to
obtain the necessary financing and the general impact of financial market
conditions, the yield from marijuana growing operations, product demand, changes
in prices of required commodities, competition, government regulations and other
risks as set out under “Risk Factors” below.
- 3 -
GLOSSARY OF TERMS
The following is a glossary of certain terms used in this
Annual Information Form.
“
1769474
” means 1769474 Alberta Ltd., a wholly owned
subsidiary of AMI;
“
ACE
” means Aurora Cannabis Enterprises Inc., a wholly
owned subsidiary of AMI;
“
ACI
” means Australis Capital Inc., a wholly owned
subsidiary of AMI;
“
ACMPR
” means
Access to Cannabis for Medical Purposes
Regulations
;
“
AHL
” means Australis Holdings LLP, a company organized
as a limited liability partnership with AJR, of which Aurora holds a 50%
interest;
“
AIF
” means this annual information form of the Company
dated September 25, 2017 for the year ended June 30, 2017;
“
AJR
” means AJR Builders Group LLC, Aurora’s joint
venture participant in AHL;
“
AMI
” means Aurora Marijuana Inc., a wholly owned
subsidiary of the Company;
“AMG”
means Arzneimittelgesetz, the German Medicinal
Products Act;
“Anandia”
means Anandia Labs Inc.;
“App”
means the Company’s mobile application for the
purchase of medical cannabis;
“
Aurora
” or the “
Company
” means Aurora Cannabis
Inc., the parent company, and its subsidiaries;
“
BCBCA
” means the
Business Corporations Act
(British Columbia);
“
Board
” means the Board of Directors of the Company;
“
BtMG
” means Betäubungsmittelgesetz, the German Narcotic
Drugs Act;
“Cann Group”
means Cann Group Limited;
“
CanvasRx
” means CanvasRx Inc., a wholly owned
subsidiary of the Company, acquired on August 17, 2016;
“
Common Shares
” means common shares in the capital of
the Company;
“
CSE
” means the Canadian Securities Exchange;
“FMV”
means fair market value;
“Form 51-102F4”
means a Business Acquisition Report
filed pursuant to a significant acquisition as required under Part 8 of NI
51-102;
- 4 -
“
Health Canada
” is the Canadian federal department
responsible for health;
“Hempco”
means Hempco Food and Fiber Inc.;
“IPO”
means initial public offering;
“
Licenses
” or each a “
License
”, means the
licenses to produce and sell dried medical cannabis received by ACE from Health
Canada on February 17, 2015 and November 27, 2015 respectively, and the licenses
to produce and sell cannabis oils received by ACE from Health Canada on February
16, 2016 and January 20, 2017;
“
Licensed Producer
” has the meaning ascribed to such
term in the ACMPR;
“MOU”
means Memorandum of Understanding;
“
MNP
” means MNP LLP, the auditors of the Company;
“NI 51-102”
means National Instrument 51-102 Continuous
Disclosure Obligations;
“NI 52-110”
means National Instrument 52-110 Audit
Committees;
“Pedanios”
means Pedanios GmbH, a wholly owned
subsidiary of the Company, acquired on May 30, 2017;
“Peloton”
means Peloton Pharmaceuticals Inc., a wholly
owned subsidiary of the Company acquired on April 28, 2017;
“Prescient”
means Prescient Mining Corp., the acquiree
in the RTO;
“Radient”
means Radient Technologies Inc.;
“
RTO
” means the reverse takeover of Prescient by AMI,
completed on December 9, 2014;
“TSX”
means the Toronto Stock Exchange;
“
TSXV
” means the TSX Venture Exchange; and
“
VWAP
” means volume weighted average price
.
- 5 -
CORPORATE STRUCTURE
Name, Address, and Incorporation
Aurora Cannabis Inc. was incorporated under the
Business
Corporations Act
(British Columbia) on December 21, 2006 as Milk Capital
Corp. On September 3, 2010, the Company changed its name to Prescient Mining
Corp. Effective October 2, 2014, the Company changed its name to its present
name, Aurora Cannabis Inc.
The head office of the Company is located at Suite 1500, 1199
West Hastings Street, Vancouver, British Columbia, V6E 3T5. The registered
office of the Company is located at Suite 1500, 1055 West Georgia Street,
Vancouver, British Columbia, V6E 4N7.
The Company’s Common Shares are listed on the TSX under the
trading symbol “ACB” and on the OTCQX under the symbol “ACBFF”. The Company is a
reporting issuer in Canada in the Provinces of British Columbia, Alberta,
Ontario and Quebec.
The Company, through its wholly-owned subsidiary, ACE, is in
the business of producing medical cannabis in Canada and distributing medical
cannabis locally and in Germany pursuant to the ACMPR.
Through its wholly owned subsidiary, Pedanios, the Company is
also a licensed pharmaceutical wholesaler and licensed narcotics dealer of
medical marijuana in Germany and the European Union pursuant to section 52a of
the Medicinal Products Act, Arzneimittelgesetz (“AMG”), and section 3 of the
German Narcotic Drugs Act, Betäubungsmittelgesetz (“BtMG), respectively. See
“
General Development of the Business – Acquisitions – Pedanios GmbH
”.
Intercorporate Relationships
As of the date of this AIF, the Company operates its business
through its eight wholly owned subsidiaries.
Aurora Marijuana Inc., a holding company, was incorporated
under the
Business Corporations Act
(Alberta) on September 5, 2013.
Aurora Cannabis Enterprises Inc., a Licensed Producer, was
incorporated under the
Business Corporations Act
(Alberta) on June 17,
2013.
1769474 Alberta Ltd., a holding company and the entity that
leases the lands for the production facilities of the Company, was incorporated
under the
Business Corporations Act
(Alberta) on August 30, 2013.
Australis Capital Inc. was incorporated under the
Business
Corporations Act
(Alberta) on February 6, 2016. Through ACI, the Company has
a 50% interest in a joint venture organized as a Limited Liability Partnership
with AJR named Australis Holdings LLP in the State of Washington, United States
of America.
CanvasRx Inc., a counseling and outreach service provider, was
incorporated under the
Business Corporations Act
(Ontario) on March 7,
2013, amalgamated with CanvasRx Holdings Inc., and continued as CanvasRx Inc. on
August 16, 2016. CanvasRx was acquired by the Company on August 17, 2016.
10094595 Canada Inc., a holding company, was incorporated under
the
Business Corporations Act
(British Columbia) on February 7, 2017.
- 6 -
Peloton Pharmaceuticals Inc., a late-stage ACMPR applicant out
of bankruptcy protection, was incorporated under the
Canada Business
Corporations Act
on July 4, 2013, and was acquired by the Company on April
28, 2017.
Pedanios GmbH, a limited liability company under German law, is
a registered wholesale importer, exporter and distributor of medical cannabis in
Germany and was acquired by the Company on May 30, 2017.
The following chart illustrates the corporate structure and
percentage of control for each subsidiary:
- 7 -
GENERAL DEVELOPMENT OF THE BUSINESS
Three-Year History
Reverse Takeover
On December 9, 2014, the Company completed the acquisition of
AMI pursuant to a Share Exchange Agreement dated September 9, 2014 as amended by
agreements on September 10, 2014 and October 30, 2014, whereby Prescient
acquired all the issued and outstanding securities of AMI in consideration for
securities of the Company. The transaction constituted a RTO of Prescient by
AMI. As part of the acquisition, Prescient changed its name to Aurora Cannabis
Inc. and the Company transitioned from the business of acquiring and exploring
mineral properties to the business of producing and distributing medical
marijuana pursuant to the ACMPR.
Capital Markets
On October 5, 2016, Aurora listed its Common Shares on the
TSXV, after delisting such Common Shares from the CSE.
On March 30, 2017, the Company’s Common Shares commenced
trading on the OTCQX Best Market, operated by OTC Markets Group, after delisting
such Common Shares on the OTCQB. Aurora’s Common Shares continued to trade under
the ticker symbol “ACBFF”.
On July 24, 2017, the Company’s Common Shares commenced trading
on the TSX and delisted from the TSXV effective July 21, 2017. Aurora’s Common
Shares continued to trade under the symbol “ACB”.
Licenses
On February 17, 2015 and November 27, 2015, ACE received its
Licenses to produce and sell dried medical cannabis respectively. The Licenses
qualify Aurora as a Licensed Producer, and are fundamental to the operation of
the business of the Company. On January 4, 2016, ACE generated its first sale of
dried cannabis products.
On February 16, 2016, ACE received its license to produce
cannabis oil products, and on January 20, 2017, ACE received its license to sell
cannabis oil products to registered patients under the ACMPR. On April 19, 2017,
the Company generated its first sale of cannabis oil products.
On June 16, 2017, the Company obtained from Health Canada a
two-year renewal of Aurora’s license to produce and sell dried cannabis and
cannabis oils at the Company’s production facility in Mountain View County near
Cremona, Alberta.
Pedanios received its licenses as a pharmaceutical wholesaler
and narcotics dealer of medical marijuana on July 23, 2015 and March 10, 2017,
respectively.
Production Facilities
Mountain View County
In April 2015, the Company completed the construction of a
custom 55,200 square foot indoor growing, production and distribution facility
located in Mountain View County near Cremona, Alberta. The facility is an office
and plant production building of pharmaceutical production grade quality with
hydroponic greenhouse high pressure sodium lighting and nutrient delivery
equipment which is capable of producing over 5,400 kilograms of medical cannabis
per year.
- 8 -
The facility cost approximately $11.6 million as of June 30,
2017. MNP LLP conducted a valuation of the Company’s facility in accordance with
Canadian Uniform Standards of Professional Appraisal Practice propagated by the
Appraisal Institute of Canada and determined that as of March 1, 2015, the fair
market value (“
FMV
”) of the Facility, which includes the land that has
yet to be acquired (FMV of $750,000), building, site improvements, fixture and
equipment, to be between $11.6 million and $12.6 million.
On September 6, 2016, the Company completed a substantial
upgrade and expansion of the facility’s mother room, with the addition of
full-spectrum LED and HID lighting and an automated irrigation system that can
deliver cultivar-specific nutrient formulas. The improvements effectively double
the room’s plant capacity and further strengthens Aurora’s commitment to full
lifecycle plant health and quality.
The Company also established an on-site laboratory and
installed an analytical equipment which includes ultra-performance liquid
chromatography, inductively coupled plasma-mass spectrometry and gas
chromatography mass spectrometry. The laboratory saves Aurora substantial time
and money by allowing the Company to perform Health Canada-mandated testing
in-house. The facility ensures that testing methodologies are applied
consistently and accurately from batch to batch. Additionally, the on-site
laboratory accelerated releases of new batches of Aurora products by quality
control to registered patients, shortening time to market and increasing sales
capacity as the Company scaled up production capacity.
In August 2017, the facility received EU GMP certification -
the standard required by the German government for export to that market. On
September 18, 2017, the Company began exporting dried medicinal cannabis flower
to Germany.
Aurora Sky
In November, 2016, the Company commenced construction of its
new flagship 800,000 square foot hybrid greenhouse at Edmonton International
Airport. Site supervision, co-ordination and general contracting have been
awarded to Dawson Wallace Construction and David Robinson Construction, who are
supported on-site on a daily basis by the Company’s international engineering,
construction and supply partners PB Techniek B.V., Kubo Greenhouse Projects
B.V., Hawe Systems International B.V. and Verkade.
Construction is progressing well with more than 200,000 square
feet of steel frame erected with glass installed as of June 30, 2017. As of the
date of this AIF, over 290,000 square feet of structure has been erected, 80% of
which has its specialty glass fully installed and many sub-systems have been
delivered to the site. Of a total of 17 planned growing bays, six have been
erected, with two out of three vegetative rooms standing. Deep services (water
and gas) are 70% complete, while the electrical ring is nearly half complete.
Construction of the water reservoir has been completed, which will hold 17,000
m
3
of water, equivalent to nearly 7 Olympic-sized swimming pools.
The Aurora Sky facility is required to satisfy the rapidly
increasing demand for medical cannabis under the ACMPR - which reached 167,754
registered patients to the end of March 31, 2017
1
, and is growing at
a pace of approximately 11% per month, as well as the projected future adult
non-medical market once the Canadian government legalizes the consumer use of
marijuana. Upon completion of the entire expansion, the Company will have the
capacity to produce approximately 100,000 kilograms of cannabis per year.
|
____________________________________
|
|
1
Most recent available data per
https://www.canada.ca/en/health-canada/services/drugs-health-products/medical-use-
marijuana/licensed-producers/market-data.html
|
- 9 -
Aurora’s new facility will be the largest yet constructed in
the Canadian cannabis sector, and management believes it will represent the most
advanced, automated cannabis production facility in the world. Production at
Aurora Sky is expected to commence late in calendar 2017 with first harvest
expected in early 2018.
On June 16, 2017, Aurora held an official groundbreaking at
Aurora Sky, with participation by the mayors of Leduc County, the City of Leduc,
and the Alberta Minister of Municipal affairs, amid broad media coverage of the
economic development benefits generated by the project, valued at more than $100
million.
Pointe-Claire, Quebec
On April 28, 2017, through the acquisition of Peloton, the
Company acquired a 40,000 square foot cannabis production facility in
Pointe-Claire, Quebec, which received a ready-to-build letter from Health Canada
in 2014. The Company estimates that as of the date of acquisition, construction
at Pointe-Claire was approximately 80% complete. As of the date of this AIF,
construction upgrades are nearly complete. Internal design and construction have
been conducted specifically to ensure the facility meets Good Manufacturing
Practices (GMP) standards. The Aurora cultivation team has validated breeding
and selection for approximately a dozen new strains of cannabis to be grown at
the Pointe-Claire facility which will further enhance the Company’s market
offering to patients. Production is expected to commence before the end of 2017
with first harvest expected in early 2018. At full capacity, the facility is
expected to have a capacity of producing up to 3,900 kilograms of cannabis
annually.
Debt and Equity Financings
On August 29, 2014, the Company raised $1,500,000 by way of
unsecured, non-interest bearing, 5 year convertible notes with companies
controlled by the CEO and the President of the Company. The notes were
convertible into Common Shares at a price of $0.125 per share. During the
financial year ended June 30, 2015, $1,009,000 of the notes were converted into
Common Shares of the Company and the remaining $491,000 were converted in
September 2015.
On November 24, 2014, the Company raised $1,000,000 by way of a
secured, 1 year convertible debenture bearing interest at 8% per annum,
convertible into Common Shares at a price of $1.01 per Common Share. On December
24, 2015, the debenture was repaid in full.
On December 1, 2014, the Company raised $250,000 by way of a
secured 1 year convertible debenture bearing interest at 8% per annum,
convertible into Common Shares at a price of $1.01 per Common Share. On January
8, 2016, the debenture was repaid in full.
On April 1, 2015, the Company entered into unsecured promissory
notes with companies controlled by the CEO and the President of the Company, as
amended, in the principal amount of $2,500,000. Previously, the loans bore
interest at 8% per annum, compounded annually, and principal and accrued
interests were due on demand on or before April 1, 2016. The terms of these
loans were subsequently amended such that they mature on the later of: (i) the
Company reporting two consecutive cash flow positive quarters; and (ii) August
1, 2017. No interest was to be paid on the loans until the Company reported a
positive cash flow quarter and, at such time, the loans would bear interest at
4% per annum, compounded annually. On August 18, 2016, the loans were repaid in
full.
On April 4, 2015, the Company obtained a $1,000,000 secured
demand loan. The proceeds from this loan were advanced to AHL through ACI by way
of a secured promissory note to fund the purchase of the Washington property as
described in “
General Development of the Business – Investments – Joint
Venture with AJR”
. On September 30, 2015, this loan was repaid in full.
- 10 -
On June 26, 2015 and October 1, 2015, the Company entered into
unsecured promissory notes, as amended, in the aggregate amount $3,000,000, with
companies controlled by the CEO and the President of the Company. The loans
mature on the later of: (i) the Company reporting two consecutive cash flow
positive quarters; and (ii) August 1, 2017. No interest was to be paid on the
loans until the Company reports a positive cash flow quarter and at such time,
the loans bore interest at 4% per annum, compounded annually. During the year
ended June 30, 2017, the loans were repaid in full.
On September 13, 2015, 1769474 entered into a mortgage
financing of $1,650,000 on its production facility building and related
improvements which is situated on approximately 154 acres of land in Mountain
View County near Cremona, Alberta. The mortgage was renewable every six months
and bore interest at a rate of 12% per annum. On March 28, 2017, the mortgage
was repaid in full.
On December 31, 2015 and January 19, 2016, the Company closed
two tranches of a non-brokered private placement of 9,091,670 units at $0.53 per
unit for aggregate gross proceeds of $4,818,585. Each unit consisted of one
Common Share and one Common Share purchase warrant, entitling the holder to
purchase an additional Common Share at a price of $0.66 per share for a period
of two years, subject to acceleration if the Company’s Common Shares trade above
$1.25 for 10 consecutive trading days. On October 4, 2016, the Company elected
to accelerate the expiry of 5,658,479 Common Share purchase warrants and 112,300
finder warrants as the closing price of the Common Shares exceeded $1.25 for ten
consecutive trading days. Any warrants that were unexercised after the
accelerated expiry date, November 11, 2016, were cancelled.
On January 22, 2016, the Company entered into a 2-year secured
demand loan agreement in the principal amount of $3,000,000, at a rate of 19.5%
per annum. In July 2016, the Company obtained an additional $1,000,000 loan. On
September 28, 2016, the loans were repaid in full.
In May 2016, the Company closed two tranches of a 10% unsecured
convertible debenture financing for gross aggregate proceeds of $2,050,000. The
debentures were convertible into Common Shares of the Company at a price of
$0.53 per Common Share for a period of 18 months, subject to acceleration if the
closing price of the Common Shares was equal to or above $1.25 for 10
consecutive trading days. On July 28, 2016, the conversion price was reduced to
$0.40 per Common Share as consideration for the amendment of the debentures. In
September 2016, the debentures were converted into 5,674,542 Common Shares of
the Company.
On July 13, 2016, the Company entered into an agreement for a
drawdown equity facility of up to $5,000,000, pursuant to which the Company
shall sell, on a private placement basis, units of the Company of between
$100,000 to $500,000 per tranche, at a discount of 25% to the market price or
such lesser discounts as allowed by the stock exchange on which the Company is
listed, over a period of 18 months from the date of the agreement. Each unit
will consist of one Common Share and one-half of one Common Share purchase
warrant. Each whole Common Share purchase warrant will be exercisable into one
Common Share at a 25% premium to the market price of the Common Shares for a
period of five years from the date of issuance. To date, the Company has not
drawn down on the facility.
In conjunction with the CanvasRx acquisition on August 17,
2016, the Company closed a brokered private placement of 57,500,000 subscription
receipts for gross proceeds of $23,000,000. Each subscription receipt was
converted into units of the Company at a price of $0.40 per unit upon the
satisfaction of the conditions precedent to the acquisition. Each unit consisted
of one Common Share and one-half of one Common Share purchase warrant, with each
whole warrant entitling the holder to purchase an additional Common Share at an
exercise price of $0.55 per Common Share, expiring August 9, 2018. A portion of
the proceeds from this private placement was used to satisfy the cash component
of the CanvasRx acquisition.
- 11 -
On September 28, 2016, the Company closed a brokered private
placement of 10% unsecured 18-month convertible debentures in the aggregate
principal amount of $15,000,000, convertible into Common Shares of the Company
at a price of $1.15 per share. The debentures were subject to a forced
conversion provision if the VWAP of the Company’s Common Shares equaled or
exceeded $2.00 per share for 10 consecutive trading days. On October 18, 2016,
$10,000,000 of the principal amount of the debentures were converted and the
Company issued 8,695,652 Common Shares. On October 20, 2016, the Company elected
to exercise its right to convert the remaining $5,000,000 principal amount of
debentures and accrued interests as the VWAP of the Common Shares for 10
consecutive days equaled $2.15.
On November 1, 2016, the Company closed a brokered private
placement of 8% unsecured two year convertible debentures in the aggregate
principal amount of $25,000,000, convertible into Common Shares at a price of
$2.00 per share, subject to a forced conversion if the VWAP of the Common Shares
equals or exceeds $3.00 per share for 10 consecutive trading days. As of June
30, 2017, the Company has issued 10,190,000 Common Shares on partial conversion
of these debentures.
On February 28, 2017, the Company closed a bought deal private
placement with a syndicate of investment dealers led by Canaccord Genuity Corp.
and including Cormark Securities Inc., Eight Capital, Mackie Research Capital
Corporation and GMP Securities LP for gross proceeds of $75,009,375. The Company
issued 33,337,500 units at a price of $2.25 per unit and each unit was comprised
of one Common Share and one-half Common Share purchase warrant. Each whole
warrant is exercisable into one Common Share at an exercise price of $3.00 per
Common Share for a period of two years, subject to adjustment in certain events
and acceleration if the VWAP of the Common Shares equals or exceeds $4.50 for 10
consecutive trading days.
On May 2, 2017, the Company completed a private placement of 7%
unsecured two year convertible debentures in the aggregate principal amount of
$75,000,000, convertible into Common Shares at a price of $3.29 per share,
subject to a forced conversion if the VWAP of the Common Shares equals or
exceeds $4.94 per share for 10 consecutive trading days. As of June 30, 2017,
the Company has issued 45,593 Common Shares on partial conversion of these
debentures.
Acquisitions
CanvasRx Inc.
On August 17, 2016, the Company completed the acquisition of
all of the issued and outstanding shares of CanvasRx pursuant to a Share
Purchase Agreement dated August 9, 2016, as amended and restated on August 16,
2016, for a total consideration of $37 million. The total consideration is
conditional upon the satisfaction of future performance related milestones tied
to patients, counselling locations and certain revenue milestones over a
three-year period. The contingent consideration may be satisfied, at the
Company’s sole discretion, in cash or Common Shares at a 15% discount to the
market price at the date of issuance, unless the market price of the Company’s
shares is $0.47 or below, at which point the consideration is convertible into a
fixed number of shares. In any case, the issuance of the Company’s shares should
not result in former CanvasRx shareholders accumulating 50% or more of the
Company’s shares. If the consideration payments cannot be satisfied in cash and
the issuance of shares would result in the former shareholders of CanvasRx
accumulating 50% or more of the Company’s shares, a convertible debenture will
be issued. Pursuant to Part 8 of NI 51-102 and the Company has filed a Form
51-102F4 in respect of the acquisition.
- 12 -
During the year ended June 30, 2017, certain patient and
counselling room performance milestones were achieved, and the Company paid
$2,608,078 and issued 2,926,103 shares at a deemed price of $2.074 per share to
the former shareholders of CanvasRx. Subsequent to year end, the Company issued
3,178,177 shares at a deemed price of $2.135 per share for patient, counselling
rooms and revenue milestones achieved.
See
“Description of the Business – Products and
Services”
for further details on CanvasRx’ services.
Peloton Pharmaceuticals Inc.
On April 28, 2017, the Company completed the acquisition of
Peloton, a late-stage ACMPR applicant, out of bankruptcy protection. Under the
terms of the acquisition, the Company provided a total investment pool of
approximately $7 million in cash for distribution to the creditors subject to:
(i) the creditors’ election to receive payments in cash, shares or a combination
thereof; and (ii) post-closing adjustments. Total consideration paid for the
acquisition was $9.1 million, consisting of $4.5 million in cash, 573,707 Common
Shares of the Company, and $3 million in acquisition related costs. Total
consideration paid is subject to change pending the settlement of all claims by
previous creditors. Peloton is constructing a 40,000-square-foot cannabis
production facility in Pointe-Claire, Quebec. For further details on
construction at the Pointe-Claire facility, see
“General Development of the
Business – Production Facilities – Pointe-Claire, Quebec”
. Pursuant to Part
8 of NI 51-102, this acquisition did not constitute a significant acquisition
and Form 51-102F4 was not required to be filed.
Pedanios GmbH
In May 2017, Aurora acquired Pedanios, a leading wholesale
importer, exporter and distributor of medical cannabis in the European Union.
The Company acquired all of the issued and outstanding shares of Pedanios for a
total consideration of $23.7 million consisting of €2,000,000 and 8,316,782
Common Shares of the Company. Of the 8,316,782 Common Shares issued, 3,421,756
Common Shares of Aurora were issued to holders of Class B securities of Pedanios
at a deemed price of $2.14 per share, and 4,895,026 Common Shares of Aurora were
issued to holders of Class A Common Shares of Pedanios which are held by the two
founders/managing directors of Pedanios who will continue to run the company.
17% of the 4,895,026 Common Shares of Aurora issued to holders of Class A Common
Shares of Pedanios will become free trading 4 months from closing, with the
balance becoming unrestricted in equal installments on a quarterly basis over 27
months, commencing February 2018. Pursuant to Part 8 of NI 51-102, this
acquisition did not constitute a significant acquisition and Form 51-102F4 was
not required to be filed.
Pedanios holds all relevant licenses and permits and has been
importing, exporting and distributing cannabis for medical purposes since
December 2015 into and within the European Union. Pedanios distributes to more
than 1,500 German pharmacies and currently relies exclusively on imported
medical cannabis products from federally regulated producers in Canada and the
Netherlands.
In July 2017, Pedanios successfully passed the first stage of
the tender application process to become a licensed producer of medical cannabis
in Germany. As a result of initial stage evaluations, the German Federal
Institute for Medicines and Medical Products (“BfArM”), has requested Pedanios’
participation in the second and final stage of the application process which
involves a competitive bid proposal and contract negotiations to cultivate,
process, store, package and deliver cannabis for medical purposes in Germany.
Results of the tender process are expected before the end of 2017.
In September 2017, the Company received its Export Permit
issued by Health Canada, as well as provisional import status from the German
Bundesopiumstelle (Federal Narcotics Bureau), to import medical cannabis
products into Germany through Pedanios. On September 18, 2017, the Company
shipped 50 kilograms of dried cannabis from its facility in Mountain View
County, Alberta, to Berlin-based Pedanios. This is the first quantity of product sourced from Aurora’s Canadian cultivation
base to supply the German medical market, with further ongoing shipments
planned.
- 13 -
Upon delivery to Pedanios, the product will be distributed to a
network of more than 1,500 pharmacies across Germany, a country of more than 82
million people. Germany currently represents the largest single federally-legal
medical cannabis market in the world, and is experiencing a significant shortage
of supply. Of note, Germany is the first county in the world to cover the cost
of medical cannabis, for any therapeutic application approved by a physician,
through its national health insurance system. The market for medical cannabis in
Germany is expected to expand rapidly. Dr. Franjo Grotenhermen, leading cannabis
physician and managing director of the International Association for Cannabinoid
Medicines, anticipates the number of patients using medical cannabis in Germany
to grow from several thousand today, to approaching a million in the coming
years
2
.
Investments
Joint Venture with AJR
On April 7, 2015, the Company entered into a Limited Liability
Partnership Agreement with AJR and formed AHL, a Washington Limited Liability
Partnership. The Company and AJR each hold 50% of the issued and outstanding
securities in AHL. In 2015, AHL purchased two parcels of land totaling 24.5
acres in Whatcom county, Washington for US$2,300,000 to construct a new
marijuana production and processing facility. The Company has subsequently
decided not to move forward with US cannabis production and listed the land for
sale.
Investment in Cann Group
On May 2, 2017, the Company commenced its international
expansion strategy and subscribed to the IPO of Cann Group on the Australian
Stock Exchange (ASX: CAN) as the cornerstone investor, securing a 19.9% stake in
Cann Group. The company subscribed for 21,562,314 fully paid ordinary shares at
a price of A$0.30 per share for a total investment of $6,627,177 (A$6,468,694),
representing approximately 47% of the IPO.
Cann Group was issued Australia’s first medical cannabis
cultivation license in March 2017, in addition to Australia’s first medical
cannabis research license in February 2017. The company has also been issued
with permits that facilitate the establishment of breeding plants for
propagation purposes; a research program being undertaken with Australia’s
Federal research agency, the Commonwealth Scientific and Industrial Research
Organization (“CSIRO”), to develop unique cannabis extracts; and the supply of
plant material for manufacturing into medical cannabis products for patient use.
Cann Group is building a world-class business focused on breeding, cultivating
and manufacturing medical cannabis for sale and use within Australia.
On July 18, 2017, Aurora entered into a technical services
agreement with Cann Group, which covers the period until the end of 2022, to
facilitate an exchange of information and support across areas including the
cultivation and processing of medical cannabis, extraction and manufacturing
technology, and analysis of cannabis extracts.
Cann Group successfully completed the harvest of its first
cultivation cycle of medicinal cannabis at the company’s southern facility in
Victoria. Cann Group is producing medicinal cannabis for manufacturing into a
final product that can be accessed by patients via clinical trials, or through
the Australia’s Therapeutic Goods Administration’s Authorized Prescriber or
Special Access Scheme.
|
__________________________________
|
|
2
Source:
https://www.tagesschau.de/inland/cannabis-137.html, March 3, 2017
|
- 14 -
Cann Group completed a licensing and distribution agreement
with CannaKorp, Inc. to import and sell the Cannacloud vaporizing device and to
produce medical cannabis pods to be used with it. The vaporizing system will be
sold as an open platform for licensed medicinal cannabis cultivators looking to
have their cannabis available via a vaporization device.
Joint Venture Research with Radient
On December 14, 2016, Radient and Aurora executed a MOU to
evaluate an exclusive partnership for the Canadian market with regard to the
joint development and commercialization of standardized cannabinoid
extracts.
Pursuant to the MOU, on February 13, 2017, the Company
completed its investment in Radient by way of a $2,000,000 unsecured 10%
convertible debenture, convertible into units at $0.14 per unit. Each unit
consisted of one common share and one share purchase warrant of Radient. Each
warrant is exercisable into one common share of Radient at an exercise price of
$0.33 per share for a period of two years. The debenture has a term of 2 years,
is payable on demand during the first 5 months following issuance, and is
subject to a mandatory conversion if, after 5 months from the date of issuance,
(i) the VWAP of Radient’s shares is equal to or greater than $0.40 for 10
consecutive days; or (ii) the Company and Radient enter into an exclusivity,
licensing, service or similar agreement.
During the year ended June 30, 2017, the Company received
104,167 units of Radient in exchange for an interest payment of $50,000 relating
to the convertible debenture. Each interest unit consisted of one common share
and one warrant, with each warrant exercisable into one share of Radient at a
price of $0.48 per share expiring February 13, 2019.
On March 9, 2017, the Company participated in Radient’s private
placement of units for a total investment of $1,250,010. Each unit consisted of
one common share and one-half share purchase warrant of Radient at a price of
$0.45 per unit. Each whole warrant is exercisable into one common share of
Radient at $0.70 per share for a period of two years.
On July 28, 2017, the Company received 14,285,714 units of
Radient pursuant to the mandatory conversion related to the VWAP on the
debenture. In addition, the Company received 77,540 units of Radient in exchange
for its final interest payment of $41,096. Each unit consisted of one common
share and one warrant, with each warrant exercisable into one common share at
$0.53 per share until February 13, 2019.
On June 5, 2017, Aurora and Radient successfully completed
their joint venture research activity and confirmed the effectiveness of
Radient’s Map
TM
technology and associated continuous flow design for
extracting cannabinoids from dried cannabis. Based on the positive results of
the study, Radient and Aurora have agreed to negotiate an exclusive development
and commercialization agreement for the use of Radient’s technology, and to
continue the exclusive joint venture for additional scientific research and
development of cannabis and hemp products.
Radient’s Map
TM
technology enables precise control
of temperature and extraction time of continuously flowing material, both of
which affect purity and extract profile. This careful control of extraction
parameters and product quality is something that is impossible to achieve at a
large scale using conventional methods. Extremely high (quantitative) recovery
of available cannabinoids is possible in extraction times that are shaved from
hours to minutes.
- 15 -
Investment in Hempco
Subsequent to June 30, 2017, the Company entered into a
subscription agreement to purchase 10,558,676 units of Hempco at $0.3075 per
unit for gross proceeds of $3,246,793 (the “Investment”). Each unit will consist
of one common share and one share purchase warrant. Each warrant will be
exercisable at a price of $0.41 per share for a period of two years, subject to
accelerated expiry if Hempco’s shares trade above a VWAP of $0.65 for any 30-day
period following closing of the Investment. The subscription agreement provides
that closing of Hempco’s private placement is subject to conditions, including
the execution of an option agreement with the majority owners of Hempco and an
investor rights agreement, TSX Venture, TSX and Hempco disinterested shareholder
approval. Upon closing, the Company will hold approximately 23% of the share
capital of Hempco on a fully diluted basis.
On September 15, 2017, the Company and Hempco executed the
Option Agreement (the “Option”) to acquire up to an aggregate of 10,754,942
shares from the majority owners of Hempco, which, upon exercise, would bring the
Company’s total ownership interest in Hempco to over 50% on a fully diluted
basis. If the Company elects to exercise the Option, the shares will be acquired
in tranches, the pricing of which, is contingent on certain performance
milestones of Hempco. The Option will become effective on the closing of
Hempco’s private placement which remains subject to disinterested Hempco
shareholder approval.
On September 15, 2017, the Company and Hempco executed the
Investor Rights Agreement that will allow Aurora to nominate two directors to
the Hempco Board of Directors, require that Hempco adopt an expenditure policy,
provide for certain matters related to cannabidiol extraction from hemp, and
provide Aurora with anti-dilution protection. The Investor Rights Agreement will
become effective on the closing of Hempco’s private placement which remains
subject to disinterested Hempco shareholder approval.
Although the Investor Rights Agreement will not take effect
until the closing of the Private Placement, Hempco has signed an undertaking,
effective immediately, to use reasonable efforts to appoint the two Aurora
nominees to the Hempco Board immediately, that it will use reasonable efforts to
find a suitable candidate to be the new Chief Executive Officer of Hempco, with
the goal of having the new candidate in place as soon as reasonably possible,
that Hempco will adopt an expenditure policy, and that funds previously advanced
by Aurora will be used to develop the Hempco facility in Nisku, Alberta, and
settle certain Hempco payables. As of the date of this AIF, the Hempco Board of
Directors has appointed Mr. Allan Cleiren, Aurora’s Chief Operating Officer, and
Mr. Steve Dobler, Aurora’s President and Director, as directors of Hempco.
Hempco is one of the world's largest industrial producers of
hemp and hemp products, and currently offers three primary product lines:(1)
bulk and packaged food products (e.g. hemp protein powder, hemp seeds or hearts,
hemp oil, etc.); (2) hemp fibre; and (3) nutraceuticals. Hempco's line of
packaged foods are sold under the brand "Planet Hemp" and are distributed
globally in seven countries.
Industrial hemp grown under contract to Hempco contains
efficient extractable quantities of cannabidiol (CBD), a compound shown through
a growing body of anecdotal and scientific evidence to have considerable medical
benefits in symptom management.
Aurora anticipates, based on recommendation by the Federal Task
Force on Cannabis Legalization, that the regulations preventing industrial hemp
producers from harvesting leaves, flowers and buds, which contain CBDs will be
revised to allow for the processing of CBDs. Cannabidiol does not have any
intoxicating effects such as those caused by tetrahydrocannabinol (THC).
The market for CBDs in the form of capsules, oils, and topicals
is expected to show significant growth, and Aurora considers the proposed
transaction with Hempco to be a strategic initiative to enable market share
dominance in this attractive segment.
- 16 -
Through its relationship with Radient, the Company has access
to an efficient, cost-effective, high-throughput methodology of producing
CBD-based products at large scale, thus providing the Company with a direct
channel and considerable competitive advantage in addressing this growing market
when CBD extraction from hemp is allowed.
Senior Management and Board Changes
Aurora continued to build and strengthen its management team
with talented and experienced individuals to ensure the Company has the
leadership to further build shareholder value through execution of domestic and
international objectives and opportunities.
In May 2017, Aurora appointed Glen Ibbott as Chief Financial
Officer and Allan Cleiren as Chief Operating Officer.
In June 2017, the Company appointed Debra Wilson as VP of Human
Resources.
In August 2017, the Company appointed Nilda Rivera as VP of
Finance, Nick Whitehead as VP of Market Development, Dieter MacPherson as VP of
Production, and John Barnet as Chief Cultivator.
Barry Fishman has resigned from the Board of Directors
effective September 25, 2017. Mr. Fishman will continue to provide limited
direction to the Company until a new director has been appointed.
Operations
Same-day Delivery
In May 2016, the Company launched a same-day delivery of
medical cannabis to clients in Calgary, Edmonton and surrounding communities.
More than 75% of Aurora patients in the Metro Calgary area are receiving their
product orders within 24 hours, through same-day delivery and
subsequently-introduced overnight/next-day delivery.
Mobile Application
On September 12, 2016, the Company announced the launch of the
world’s first App allowing for the purchase of legal medical cannabis. The
feature-rich App, which was an immediate success, runs on both Apple and Android
platforms, and uses data encryption between Aurora’s server and consumer
devices, to ensure security and patient privacy.
On March 1, 2017, Aurora unveiled the second generation of its
popular mobile application, incorporating a number of enhanced features to
provide a significantly upgraded user experience to new and existing clients of
the Company. Coupled with Aurora’s industry-leading same-day and next-day
delivery services, the App further expands the Company’s e-commerce strategy, a
key differentiator in the legal cannabis market. The next generation App, which
includes an updated look and feel, enables the Company to communicate directly
with clients via real-time push notifications for new product releases, send
automated text reminders for upcoming account renewals, and introduces clients
to a new message center with personalized Aurora Newsfeed. Registered clients
can conveniently scroll through high resolution images, view product
descriptions and cannabinoid profiles, and view account and prescription
details. Payment methods can be added and removed, answers to frequently asked
questions (FAQs) easily accessed, and clients can place orders and choose from
multiple courier options. The App allows clients to complete orders in seconds,
from any location, via their phone or tablet device, and also integrates Canada
Post and Purolator Application Programming Interfaces (APIs) to allow for
real-time tracking of shipments from directly within the App.
- 17 -
Organigram Recall
On January 16, 2017, the Company announced a voluntary recall
of products purchased from Organigram, an unrelated Licensed Producer, that
contained a pesticide not currently registered for use on medical cannabis under
the Pest Control Products Act. This recall is defined by Health Canada as a Type
II recall, a situation in which the use of, or exposure to, a product may cause
temporary adverse health consequences or where the probability of serious
adverse health consequences is remote. The Company has proactively and
diligently contacted all clients affected by the recall. Organigram fully
reimbursed the Company as follows: aggregate cash payments of $834,835,
constituting a full refund of $384,835 for product returned and a reimbursement
of $450,000, fully covering Aurora’s costs incurred via extension of purchase
credits by Aurora to its affected clients. The Company no longer purchases any
further products from Organigram.
Product Testing Disclosure
On March 9, 2017, the Company introduced the cannabis
industry’s most comprehensive product testing disclosure process. The purpose of
the new protocol is to provide clients with secure knowledge that every Aurora
product available for purchase has been certified by an independent third-party
laboratory as having passed testing for the widest possible range of potential
contaminants. The new system, developed in partnership with Anandia provides a
certification link for each product featured on Aurora’s menu, both through the
Company’s website and through its one-of-a-kind mobile application. Clicking the
link will take clients to a product-specific webpage, providing a simplified
Certificate of Analysis indicating that the product in question has been
analyzed with accuracy for potency, and passed Anandia’s rigorous testing
procedures for the presence of contaminants.
DESCRIPTION OF THE BUSINESS
General
Summary
The Company, through the following wholly-owned subsidiaries,
produces and distributes medical cannabis:
ACE, the Company’s wholly-owned Canadian subsidiary, is in the
business of producing and distributing medical cannabis in Canada pursuant to
the AMPR. Aurora has specific strains of marijuana that are able to treat
various ailments in a variety of patients, including strains that appeal to
discerning patients with high tolerances and large daily consumption amounts.
Aurora distributes orders through secured courier services. Same-day delivery
and overnight/next-day delivery is offered to patients residing in Calgary,
Edmonton and surrounding communities. In September 2017, ACE began exporting
medical cannabis to Germany.
Pedanios, the Company’s wholly-owned German subsidiary, is in
the business of importing, exporting and distributing wholesale medical cannabis
in the European Union. Pedanios is a licensed pharmaceutical wholesaler and
licensed narcotics dealer of medical marijuana pursuant to section 52a of the
AMG and section 3 of the BtMG, respectively. Pedanios distributes orders through
secured courier services and offers next-day delivery.
The Company is also a 19.9% shareholder of Cann Group, the
first Australian company licensed to conduct research on and cultivate medical
cannabis. See
“General Development of the Business – Investments – Investment
in Cann Group”
.
- 18 -
Aurora’s strategy and vision is to build a leading, integrated
global cannabis company through the construction of highly-efficient
purpose-built facilities that allow the Company to produce significant volumes
of low-cost, high quality cannabis, an aggressive and strategically focused
international expansion, strong brand differentiation, and industry leading
board, management and production teams. Aurora expects this strategy will
deliver strong shareholder value as the Company gains and retains significant
market share of the domestic and international medical cannabis markets, as well
as the Canadian adult usage market.
To achieve the Company’s vision and short-term goals, Aurora is
expediting the completion of Aurora Sky, its major facility expansion at the
Edmonton International Airport and of its production facility in Pointe-Claire,
Québec. The Company is currently executing an aggressive Canadian and
international expansion, as evidenced by the April 2017 acquisition of Peloton
in Québec, May 2017 acquisition of Pedanios in Germany, and lead participation
in the May 2017 Cann Group IPO in Australia. The Company is also actively
pursuing further domestic and international opportunities. Aurora is continuing
to accelerate its penetration of the Canadian medical cannabis market and
leverage its Health Canada sales license for derivative products. If, as
expected, the Canadian federal government passes legislation legalizing the
adult consumer use of cannabis, the Company is building organizational and
production capacity to capture a share of the adult use market. Most recently,
Aurora strengthened its senior management team with the appointment of a new CFO
and COO as well as four Vice Presidents in finance, production, market
development and human resources.
Products and Services
Aurora’s principal market is patients who use medical cannabis
in Canada. The Company has currently reached over 20,000 active and pending
registered patients in less than 2 years after initiating product sales in
January 2016, which management believes to be the fastest rate of patient
registration for a Licensed Producer after the launch of commercial operations.
Aurora currently sells dried medical cannabis at $9 per gram with compassionate
pricing set at $6 per gram and cannabis oils at $95 per 30 millilitre bottle
with compassionate pricing set at $65 per 30 millilitre bottle.
Registered patients can order products through the Company’s
online shop, mobile application, or by phoning its client care center. In May
2016, the Company became the first Licensed Producer to offer same-day delivery
of medical cannabis. The Company launched same-day delivery of medical cannabis
to clients in Calgary and Edmonton metropolitan areas which allows Aurora
patients in these areas to receive their product orders within 24 hours, through
same-day delivery and subsequently-introduced overnight/next-day delivery.
The Company operates in two segments, the production and sale
of medical cannabis and patient counseling and outreach services.
|
|
|
Medical
|
|
|
Patient
|
|
|
|
|
|
|
|
Cannabis
|
|
|
Counselling
|
|
|
Total
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
Year ended June 30, 2017
|
|
15,922,075
|
|
|
2,144,843
|
|
|
18,066,918
|
|
|
Year ended June 30, 2016
|
|
1,439,271
|
|
|
-
|
|
|
1,439,271
|
|
Patient counselling became a segment on the completion of the
acquisition of CanvasRx on August 17, 2016. During the three and twelve months
ended June 30, 2017, the Company generated revenues of $308,619 and $2,144,843,
respectively, from the patient counseling segment, and $5,627,111 and
$15,922,075, respectively, from the sale of medical cannabis.
- 19 -
The Company generates revenue in two geographical locations, in
Canada and in Germany.
|
|
|
Canada
|
|
|
Germany
|
|
|
Total
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
Year ended June 30, 2017
|
|
17,628,283
|
|
|
438,635
|
|
|
18,066,918
|
|
|
Year ended June 30, 2016
|
|
1,439,271
|
|
|
-
|
|
|
1,439,271
|
|
Germany became a geographical segment on the completion of the
acquisition of Pedanios on May 30, 2017. During the three and twelve months
ended June 30, 2017, the Company generated revenues of $438,635 and $438,635
respectively in Germany, and $5,497,095 and $17,628,283 respectively in Canada.
The Mountain View facility operates in accordance with the
ACMPR requirements, including in relation to the security requirements. The
ACMPR requires production sites be indoors and not in a private dwelling, and
further sets out physical security requirements. Health Canada conducts ad hoc,
unscheduled site inspections of Licensed Producers. As of the date hereof, there
are no outstanding inspection issues with Health Canada.
On August 17, 2016, Aurora acquired CanvasRx, a counseling and
outreach service provider that helps patients learn about how to safely and
effectively use medical cannabis, select a strain from the hundreds available in
Canada and register with their choice of licensed producer. CanvasRx has 24
physical locations in Ontario and Alberta, and is the largest medical cannabis
counseling and outreach service in Canada. On September 12, 2017, CanvasRx
opened its first location in British Columbia. Located in Vancouver, the newest
center will represent the 25
th
CanvasRx location and the
7
th
location opened in 2017. Over 8,400 medical doctors across Canada
have referred patients to CanvasRx or its affiliated medical clinics. CanvasRx
has now helped more than 29,000 Canadian patients access medical cannabis, and
has assisted more than 7,000 patients in registering with Aurora.
CanvasRx plays an important role in the ongoing education of
physicians interested in learning more about medical cannabis and the procedures
under applicable regulations to obtain cannabis. The acquisition of CanvasRx
increases Aurora’s presence in the medical cannabis sector, provides Aurora with
access to valuable aggregate data on patient use of medical cannabis, as well as
the ability to jointly develop new services for patients, and tailor its product
line to offer an industry-leading and demand matching selection of products and
strains tailored to the needs of patients.
Specialized Skill and Knowledge
All aspects of the Company’s business require specialized
skills and knowledge. Such skills and knowledge include the areas of cultivation
and growing of medical marijuana, and specifically the unique indoor
agricultural skills required for the cultivation of marijuana in accordance with
the ACMPR requirements.
Aurora’s experienced growing team and quality assurance team
are focused on generating the highest quality and most consistent product that
meets and exceeds Health Canada expectations. The Company has established strict
regulatory compliance, a high level of quality assurance, and testing protocols
to maintain customer satisfaction. In addition, Aurora has a system that
provides additional certainty regarding the purity and safety of the cannabis it
produces and sells.
Management is composed of individuals who have extensive
expertise in the medical marijuana industry and are complemented by a strong
Board. See “
Directors and Officers
”.
- 20 -
Competitive Conditions
As of the date of this AIF, Health Canada has issued a total of
59 licenses to companies on its list of Licensed Producers. Additional
information on the current list of Licensed Producers can be found on Health
Canada’s website at:
https://www.canada.ca/en/health-canada/services/drugs-health-products/medical-use-marijuana/licensed-producers/authorized-licensed-producers-medical-purposes.html.
Due to the nature of the regulatory regime, Aurora anticipates
increases in the level of competition in the medical marijuana industry as new
competitors enter the market. The principal aspects of competition are
anticipated to be the price and quality of the cultivated marijuana, as well as
the service provided to patients.
Employees
As of June 30, 2017, the Company had approximately 171
employees (2016 – 79 employees). As of the date of this AIF, the Company has
approximately 190 employees.
Risk Factors
This section discusses factors relating to the business of
Company that should be considered by both existing and potential investors. The
information in this section is intended to serve as an overview and should not
be considered comprehensive and the Company may face risks and uncertainties not
discussed in this section, or not currently known to us, or that we deem to be
immaterial. All risks to the Company’s business have the potential to influence
its operations in a materially adverse manner.
Reliance on Licensing
The ability of Aurora to continue its business of growth,
storage and distribution of medical marijuana is dependent on the good standing
of all licenses, including the licenses to produce and sell cannabis oil
products, and adherence to all regulatory requirements related to such
activities. Any failure to comply with the terms of the licenses, or to renew
the licenses after their expiry dates, would have a material adverse impact on
the financial condition and operations of the business of the Company. Although
the Company believes that it will meet the requirements of the ACMPR for future
extensions or renewals of the licenses, there can be no assurance that Health
Canada will extend or renew the licenses, or if extended or renewed, that they
will be extended or renewed on the same or similar terms. Should Health Canada
not extend or renew the licenses or should they renew the licenses on different
terms, the business, financial condition and operating results of the Company
would be materially adversely affected.
Change in Law, Regulations and Guidelines
Aurora’s business is subject to a variety of laws, regulations
and guidelines relating to marketing, acquisition, manufacture, management,
transportation, storage, sale and disposal of medical marijuana but also laws
and regulations relating to health and safety, the conduct of operations and the
protection of the environment. Changes to such laws, regulations and guidelines
may cause adverse effects to the Company’s operations.
On February 24, 2016, the Federal Court released its decision
in the case of Allard et al v. Canada, declaring that the MMPR, as it was
drafted, was unconstitutional in violation of the plaintiffs’ rights under
section 7 of the Charter of Rights and Freedoms. On August 24, 2016, the ACMPR
came into force, replacing the MMPR as the regulations governing Canada’s
medical cannabis regime which permits patients to produce a limited amount of
cannabis for their own medical purposes or to designate a person to produce a
limited amount of cannabis. The ACMPR could potentially decrease the size of the
market for the Company’s business, and potentially materially and adversely
affect the Company’s business, its results of operations and financial
condition.
- 21 -
Regulatory Risk
Achievement of the Company’s business objectives are
contingent, in part, upon compliance with the regulatory requirements, including
those imposed by Health Canada, enacted by these government authorities and
obtaining all regulatory approvals, where necessary, for the sale of its
products. Aurora cannot predict the time required to secure all appropriate
regulatory approvals for its products, or the extent of testing and
documentation that may be required by government authorities. Any delays in
obtaining, or failure to obtain regulatory approvals would significantly delay
the development of markets and products and could have a material adverse effect
on the Company’s business, results of operation and financial condition.
Limited Operating History and No Assurance of Profitability
Aurora Marijuana Inc., which prior to the completion of the RTO
was the entity in which Aurora’s business was organized, was incorporated in
2013, and the business of the Company began operations in 2015, and started
generating revenues from the sale of medical cannabis in January 2016. The
Company is subject to all of the business risks and uncertainties associated
with any early-stage enterprise, including under-capitalization, cash shortages,
limitation with respect to personnel, financial and other resources, and lack of
revenues.
The Company has incurred operating losses in recent periods.
The Company may not be able to achieve or maintain profitability and may
continue to incur significant losses in the future. In addition, the Company
expects to continue to increase operating expenses as it implements initiatives
to grow its business. If the Company’s revenues do not increase to offset these
expected increases in costs and operating expenses, the Company will not be
profitable. There is no assurance that the Company will be successful in
achieving a return on shareholders’ investments and the likelihood of success
must be considered in light of the early stage of operations.
Unfavourable Publicity or Consumer Perception
The success of the medical marijuana industry may be
significantly influenced by the public’s perception of marijuana’s medicinal
applications. Medical marijuana is a controversial topic, and there is no
guarantee that future scientific research, publicity, regulations, medical
opinion and public opinion relating to medical marijuana will be favourable. The
medical marijuana industry is an early-stage business that is constantly
evolving with no guarantee of viability. The market for medical marijuana is
uncertain, and any adverse or negative publicity, scientific research, limiting
regulations, medical opinion and public opinion relating to the consumption of
medical marijuana may have a material adverse effect on our operational results,
consumer base and financial results.
Competition
The market for the Company’s products does appear to be
sizeable and Health Canada has only issued a limited number of licenses under
the ACMPR to produce and sell medical marijuana. As a result, the Company
expects significant competition from other companies due to the recent nature of
the ACMPR regime. A large number of companies appear to be applying for
production licenses, some of which may have significantly greater financial,
technical, marketing and other resources, may be able to devote greater
resources to the development, promotion, sale and support of their products and
services, and may have more extensive customer bases and broader customer
relationships.
Should the size of the medical marijuana market increase as
projected the demand for products will increase as well, and in order for the
Company to be competitive it will need to invest significantly in research and
development, marketing, production expansion, new client identification, and
client support. If the Company is not successful in achieving sufficient resources to invest
in these areas, the Company’s ability to compete in the market may be adversely
affected, which could materially and adversely affect the Company’s business,
its financial conditions and operations.
- 22 -
Realization of Growth Targets
Aurora’s ability to continue production of marijuana, at the
same pace as of the date of this AIF or at all, is affected by a number of
factors, including plant design errors, non-performance by third party
contractors, increases in materials or labour costs, construction performance
falling below expected levels of output or efficiency, environmental pollution,
contractor or operator errors, breakdowns, aging or failure of equipment or
processes, labour disputes, as well as factors specifically related to indoor
agricultural practices, such as reliance on provision of energy and utilities to
the facility, and potential impacts of major incidents or catastrophic events on
the facility, such as fires, explosions, earthquakes or storms.
Uninsured or Uninsurable Risk
The Company may be subject to liability for risks against which
it cannot insure or against which the Company may elect not to insure due to the
high cost of insurance premiums or other factors. The payment of any such
liabilities would reduce the funds available for the Company’s normal business
activities. Payment of liabilities for which the Company does not carry
insurance may have a material adverse effect on the Company’s financial position
and operations.
Key Personnel
The Company’s success will depend on its directors’ and
officers’ ability to develop and execute on the Company’s business strategies
and manage its ongoing operations, and on the Company’s ability to attract and
retain key quality assurance, scientific, sales, public relations and marketing
staff or consultants now that production and selling operations have begun. The
loss of any key personnel or the inability to find and retain new key persons
could have a material adverse effect on the Company’s business. Competition for
qualified technical, sales and marketing staff, as well as officers and
directors can be intense and no assurance can be provided that the Company will
be able to attract or retain key personnel in the future, which may adversely
impact the Company’s operations.
Conflict of Interest
Certain of the Company’s directors and officers are also
directors and officers in other companies. Situations may arise in connection
with potential acquisitions or opportunities where the other interests of these
directors and officers conflict with or diverge from the Company interests. In
accordance with the BCBCA, directors who have a material interest in any person
who is a party to a material contract or a proposed material contract are
required, subject to certain exceptions, to disclose that interest and generally
abstain from voting on any resolution to approve the contract.
Litigation
The Company may become party to litigation, mediation and/or
arbitration from time to time in the ordinary course of business which could
adversely affect its business. Monitoring and defending against legal actions,
whether or not meritorious, can be time-consuming, divert management’s attention
and resources and cause the Company to incur significant expenses. In addition,
legal fees and costs incurred in connection with such activities may be
significant and we could, in the future, be subject to judgments or enter into
settlements of claims for significant monetary damages. While the Company has
insurance that may cover the costs and awards of certain types of litigation,
the amount of insurance may not be sufficient to cover any costs or awards. Substantial litigation costs or an adverse result in
any litigation may adversely impact the Company’s business, operating results or
financial condition.
- 23 -
Agricultural Operations
Since the Company’s business will revolve mainly around the
growth of medical marijuana, an agricultural product, the risks inherent with
agricultural businesses will apply. Such risks may include disease and insect
pests, among others. Although the Company expects to grow its product in a
climate controlled, monitored, indoor location, there is no guarantee that
changes in outside weather and climate will not adversely affect production.
Further, any rise in energy costs may have a material adverse effect on the
Company’s ability to produce medical marijuana.
Transportation Disruptions
The Company will depend on fast, cost-effective and efficient
courier services to distribute its product. Any prolonged disruption of this
courier service could have an adverse effect on the financial condition and
results of operations of the Company. Rising costs associated with the courier
service used by the Company to ship its products may also adversely impact the
business of the Company and its ability to operate profitably.
Fluctuating Prices of Raw Materials
The Company’s revenues are in a large part derived from the
production, sale and distribution of marijuana. The price of production, sale
and distribution of marijuana will fluctuate widely due to how young the
marijuana industry is and is affected by numerous factors beyond the Company’s
control including international, economic and political trends, expectations of
inflation, currency exchange fluctuations, interest rates, global or regional
consumptive patterns, speculative activities and increased production due to new
production and distribution developments and improved production and
distribution methods. The effect of these factors on the price of product
produced by the Company and, therefore, the economic viability of any of the
Company’s business, cannot accurately be predicted.
Environmental and Employee Health and Safety Regulations
The Company’s operations are subject to environmental and
safety laws and regulations concerning, among other things, emissions and
discharges to water, air and land; the handling and disposal of hazardous and
non-hazardous materials and wastes, and employee health and safety. The Company
will incur ongoing costs and obligations related to compliance with
environmental and employee health and safety matters. Failure to obtain an
Environmental Compliance Approval or otherwise comply with environmental and
safety laws and regulations may result in additional costs for corrective
measures, penalties or in restrictions on our manufacturing operations. In
addition, changes in environmental, employee health and safety or other laws,
more vigorous enforcement thereof or other unanticipated events could require
extensive changes to the Company’s operations or give rise to material
liabilities, which could have a material adverse effect on the business, results
of operations and financial condition of the Company.
Intellectual Property
The success of the Company’s business depends in part on its
ability to protect its ideas and technology. Aurora has no patented technology
at this time nor has it applied to register any patents. AMI has applied to
register the trademark “AURORA” and has received an approval notice from the
Canadian Intellectual Property Office. CanvasRx has registered a trademark for
“CanvasRx”. Even if the Company moves to protect its technology with trademarks,
patents, copyrights or by other means, Aurora is not assured that competitors
will not develop similar technology, business methods or that Aurora will be
able to exercise its legal rights. Other countries may not protect intellectual
property rights to the same standards as does Canada. Actions taken to protect
or preserve intellectual property rights may require significant financial and
other resources such that said actions have a meaningfully impact our ability to
successfully grow our business.
- 24 -
Political and Economic Instability
The Company may be affected by possible political or economic
instability. The risks include, but are not limited to, terrorism, military
repression, extreme fluctuations in currency exchange rates and high rates of
inflation. Changes in medicine and agriculture development or investment
policies or shifts in political attitude in certain countries may adversely
affect the Company’s business. Operations may be affected in varying degrees by
government regulations with respect to restrictions on production, distribution,
price controls, export controls, income taxes, expropriation of property,
maintenance of assets, environmental legislation, land use, land claims of local
people and water use. The effect of these factors cannot be accurately
predicted.
Facility Expansion
The construction of the Company’s Aurora Sky and Quebec
facilities is subject to various potential problems and uncertainties, and may
be delayed or adversely affected by a number of factors beyond its control,
including the failure to obtain regulatory approvals, permits, delays in the
delivery or installation of equipment by our suppliers, difficulties in
integrating new equipment with its existing facilities, shortages in materials
or labor, defects in design or construction, diversion of management resources,
or insufficient funding or other resource constraints. Moreover, actual costs
for construction may exceed the Company’s budgets. As a result of construction
delays, cost overruns, changes in market circumstances or other factors, the
Company may not be able to achieve the intended economic benefits from the
construction of the new facilities, which in turn may materially and adversely
affect its business, prospects, financial condition and results of operations.
The expansion also requires Health Canada approvals. There is
no guarantee that Health Canada will approve the contemplated expansion in a
timely fashion, nor is there any guarantee that the expansion will be completed
in its currently proposed form, if at all. The failure of the Company to
successfully execute its expansion strategy (including receiving the expected
Health Canada approvals in a timely fashion) could adversely affect the
business, financial condition and results of operations of the Company.
Market Risk for Securities
The market price for the Common Shares of the Company could be
subject to wide fluctuations. Factors such as commodity prices, government
regulation, interest rates, share price movements of peer companies and
competitors, as well as overall market movements, may have a significant impact
on the market price of the Company. The stock market has from time to time
experienced extreme price and volume fluctuations, which have often been
unrelated to the operating performance of particular companies.
- 25 -
Global Economy Risk
An economic downturn of global capital markets has been shown
to make the raising of capital by equity or debt financing more difficult. The
Company will be dependent upon the capital markets to raise additional financing
in the future, while it establishes a user base for its products. As such, the
Company is subject to liquidity risks in meeting its development and future
operating cost requirements in instances where cash positions are unable to be
maintained or appropriate financing is unavailable. These factors may impact the
Company’s ability to raise equity or obtain loans and other credit facilities in
the future and on terms favorable to the Company and its management. If
uncertain market conditions persist, the Company’s ability to raise capital
could be jeopardized, which could have an adverse impact on the Company’s
operations and the trading price of the Company’s shares on the Exchange.
Dividend Risk
The Company has not paid dividends in the past and does not
anticipate paying dividends in the near future. The Company expects to retain
its earnings to finance further growth and, when appropriate, retire debt.
Volatile Market Price for Company Common Shares
The market price for Common Shares may be volatile and subject
to wide fluctuations in response to numerous factors, many of which are beyond
the Company's control, including the following:
|
|
•
|
actual or anticipated fluctuations in the
Company's quarterly results of operations;
|
|
|
|
|
|
|
•
|
recommendations by securities research
analysts;
|
|
|
|
|
|
|
•
|
changes in the economic performance or market
valuations of companies in the industry in which the Company operates;
|
|
|
|
|
|
|
•
|
addition or departure of the Company's
executive officers and other key personnel;
|
|
|
|
|
|
|
•
|
release or expiration of transfer restrictions
on outstanding Company Common Shares;
|
|
|
|
|
|
|
•
|
sales or perceived sales of additional Company
Common Shares;
|
|
|
|
|
|
|
•
|
operating and financial performance that vary
from the expectations of management, securities analysts and investors;
|
|
|
|
|
|
|
•
|
regulatory changes affecting the Company's
industry generally and its business and operations;
|
|
|
|
|
|
|
•
|
announcements of developments and other
material events by the Company or its competitors;
|
|
|
|
|
|
|
•
|
fluctuations to the costs of vital production
materials and services;
|
|
|
|
|
|
|
•
|
changes in global financial markets and global
economies and general market conditions, such as interest rates and
pharmaceutical product price volatility;
|
|
|
|
|
|
|
•
|
significant acquisitions or business
combinations, strategic partnerships, joint ventures or capital
commitments by or involving the Company or its competitors;
|
|
|
|
|
|
|
•
|
operating and share price performance of other
companies that investors deem comparable to the Company or from a lack of
market comparable companies; and
|
|
|
|
|
|
|
•
|
news reports relating to trends, concerns,
technological or competitive developments, regulatory changes and other
related issues in the Company's industry or target markets.
|
Financial markets have recently experienced significant price
and volume fluctuations that have particularly affected the market prices of
equity securities of companies and that have often been unrelated to the
operating performance, underlying asset values or prospects of such companies.
Such volatility has been particularly evident with regards to the share prices
of medical cannabis companies that are public issuers in Canada. Accordingly, the market price of Company Common Shares
may decline even if the Company's operating results, underlying asset values or
prospects have not changed. Additionally, these factors, as well as other
related factors, may cause decreases in asset values that are lasting and not
temporary, which may result in impairment losses. There can be no assurance that
continuing fluctuations in share price and volume will not occur. If such
increased levels of volatility and market turmoil continue, the Company's
operations could be adversely impacted and the trading price of Company Common
Shares may be materially adversely affected.
- 26 -
Holding Company Status
The Company is a holding company and essentially all of its
operating assets are the capital stock of its subsidiaries. As a result,
investors in the Company are subject to the risks attributable to its
subsidiaries. As a holding company, the Company conducts substantially all of
its business through its subsidiaries, which generate substantially all of its
revenues. Consequently, the Company’s cash flows and ability to complete current
or desirable future enhancement opportunities are dependent on the earnings of
its subsidiaries and the distribution of those earnings to the Company. The
ability of these entities to pay dividends and other distributions will depend
on their operating results and will be subject to applicable laws and
regulations which require that solvency and capital standards be maintained by
such companies and contractual restrictions contained in the instruments
governing their debt. In the event of a bankruptcy, liquidation or
reorganization of any of the Company's subsidiaries, holders of indebtedness and
trade creditors will generally be entitled to payment of their claims from the
assets of those subsidiaries before any assets are made available for
distribution to the Company.
DIVIDENDS AND DISTRIBUTIONS
Aurora has not declared nor paid any cash dividends on any of
its issued shares since its inception. Other than requirements imposed under
applicable corporate law, there are no other restrictions on the Company’s
ability to pay dividends under the Company’s constating documents. The Company
has not paid any dividends on the Common Shares since its incorporation. The
Company has no present intention of paying dividends on the Common Shares, as it
anticipates that all available funds will be invested to finance the growth of
its business and, when appropriate, retire debt.
DESCRIPTION OF CAPITAL STRUCTURE
The Company’s authorized share capital consists of an unlimited
number of Common Shares without par value, an unlimited number of Class A shares
with a par value of $1.00 each; and an unlimited number of Class B shares with a
par value of $5.00 each.
As at June 30, 2017, the issued share capital consisted of
366,549,244 Common Shares. No class A Shares or Class B Shares were issued or
outstanding.
Common Shares
Each Common Share carries the right to attend and vote at all
general meetings of shareholders. Holders of Common Shares are entitled to
receive on a pro rata basis such dividends, if any, as and when declared by the
Board at its discretion from funds legally available for the payment of
dividends and upon the liquidation, dissolution or winding up of the Company are
entitled to receive on a pro rata basis the net assets of the Company after
payment of debts and other liabilities, in each case subject to the rights,
privileges, restrictions and conditions attaching to any other series or class
of shares ranking senior in priority to or on a pro rata basis with the holders
of Common Shares with respect to dividends or liquidation. The Common Shares do
not carry any pre-emptive, subscription, redemption or
conversion rights, nor do they contain any sinking or purchase fund provisions.
- 27 -
Class A Shares
Class A shares may be issued from time to time in one or more
series, and the directors may fix from time to time before such issue the number
of Class A shares of each series and the designation, rights and restrictions
attached thereto including any voting rights, dividend rights, redemption,
purchase or conversion rights, sinking fund or other provisions. The Class A
shares rank in priority over Common Shares and any other shares ranking by their
terms junior to the Class A shares as to dividends and return of capital upon
liquidation, dissolution or winding up of the Company or any other return of
capital or distribution of the assets of the Company.
Class B Shares
Class B shares may be issued from time to time in one or more
series, and the directors may fix from time to time before such issue the number
of Class B shares of each series and the designation, rights and privileges
attached thereto including any voting rights, dividend rights, redemption,
purchase or conversion rights, sinking fund or other provisions. The Class B
shares rank in priority over Common Shares and any other shares ranking by their
terms junior to the Class B shares as to dividends and return of capital upon
liquidation, dissolution or winding up of the Company or any other return of
capital or distribution of the assets of the Company.
As of the date of this AIF, there are 371,569,751 Common Shares
issued and outstanding (435,810,910 fully-diluted). No class A Shares or Class B
Shares are issued or outstanding.
The dilutive securities are summarized as follows:
|
Security Type
|
Common Shares
Issuable (#)
|
Exercise price
(average) ($)
|
Cash proceeds or debt
reduction if exercised
($)
|
|
Warrants
(1)
|
21,779,000
|
2.42
|
52,728,888
|
|
Stock Options
|
15,586,150
|
1.93
|
30,059,075
|
|
Compensation Warrants
(2)
|
1,865,249
|
2.25
|
4,196,810
|
|
Convertible Debentures
|
25,010,760
|
3.17
|
79,370,000
|
|
|
64,241,159
|
|
166,354,773
|
Notes:
|
(1)
|
Details of warrants outstanding: (i) 1,760,000
common share purchase warrants exercisable at a price of $0.50 until
December 9, 2017; (ii) 61,500 common share purchase warrants exercisable
at a price of $0.55 until August 9, 2018; (iii) 3,288,750 common share
purchase warrants exercisable at a price of $0.55 until August 17, 2018;
and (iv) 16,668,750 common share purchase warrants exercisable at a price
of $3.00 until February 28, 2019.
|
|
(2)
|
Representing units consisting of one common
share and one-half of one warrant exercisable at a price of $2.25 per
unit. Each whole warrant is exercisable into one common share at a price
of $3.00 per share.
|
- 28 -
MARKET FOR SECURITIES
Trading Price and Volume
Up to October 4, 2016, the Common Shares were traded on the CSE
under the trading symbol “ACB”. On October 5, 2016, the Company de-listed from
the CSE and began trading on the TSXV under the trading symbol “ACB”. On July
24, 2017, the Company graduated from the TSXV to the TSX and continues to trade
under the symbol “ACB”. The table below summarizes the range and volume of
trading prices for each of the months stated:
|
Month
|
Price Range ($)
|
Total Volume (#)
|
|
High
|
Low
|
|
CSE
|
|
July 2016
|
0.490
|
0.400
|
8,425,548
|
|
August 2016
|
1.160
|
0.435
|
38,175,663
|
|
September 2016
|
1.460
|
0.830
|
43,934,653
|
|
October 1 – 4, 2016
|
1.590
|
1.410
|
7,964,655
|
|
TSX-V
|
|
October 5 – 31, 2016
|
2.440
|
1.690
|
74,920,780
|
|
November 2016
|
3.950
|
1.560
|
150,482,185
|
|
December 2016
|
2.780
|
1.960
|
131,697,678
|
|
January 2017
|
2.720
|
2.250
|
64,680,586
|
|
February 2017
|
2.840
|
2.250
|
53,890,550
|
|
March 2017
|
2.680
|
2.210
|
58,114,893
|
|
April 2017
|
3.480
|
2.500
|
100,405,379
|
|
May 2017
|
2.770
|
2.340
|
32,060,901
|
|
June 2017
|
2.340
|
1.900
|
42,396,846
|
|
July 1 – 23, 2017
|
2.595
|
2.050
|
19,818,643
|
|
TSX
|
|
July 24 – 31, 2017
|
2.820
|
2.630
|
12,868,225
|
|
August 2017
|
2.710
|
2.350
|
18,947,860
|
|
September 1 – 25, 2017
|
2.870
|
2.490
|
25,868,725
|
- 29 -
Prior Sales
During the year ended June 30, 2017, the Company issued the
following securities, which are convertible into Common Shares but are not
listed or quoted on a marketplace:
|
Date of Issuance
|
Security
|
Number of Securities
|
Issue/Exercise Price
Per Security ($)
|
|
August 8, 2016
|
Stock options
|
350,000
(1)
|
0.66
|
|
September 23, 2016
|
Stock options
|
1,315,000
(2)
|
1.30
|
|
October 12, 2016
|
Stock options
|
350,000
(3)
|
2.18
|
|
October 29, 2016
|
Stock options
|
2,800,000
(4)
|
2.25
|
|
January 19, 2017
|
Stock options
|
2,100,000
(3)
|
2.56
|
|
February 24, 2017
|
Stock options
|
50,000
(3)
|
2.62
|
|
March 22, 2017
|
Stock options
|
2,500,000
(3)
|
2.27
|
|
May 11, 2017
|
Stock options
|
2,705,000
(3)
|
2.49
|
|
August 9, 2016
|
Warrants
|
2,712,500
(5)
|
0.55
|
|
August 17, 2016
|
Warrants
|
28,750,000
(6)
|
0.55
|
|
September 20, 2016
|
Warrants
|
22,641
(5)
|
0.69
|
|
September 21, 2016
|
Warrants
|
8,301
(5)
|
0.69
|
|
September 30, 2016
|
Warrants
|
123,774
(5)
|
0.69
|
|
October 4, 2016
|
Warrants
|
655,000
(5)
|
0.55
|
|
November 10, 2016
|
Warrants
|
61,500
(7)
|
0.55
|
|
December 12, 2016
|
Warrants
|
500,000
(5)
|
0.55
|
|
December 14, 2016
|
Warrants
|
246,000
(5)
|
0.55
|
|
January 17, 2017
|
Warrants
|
425,000
(5)
|
0.55
|
|
February 28, 2017
|
Warrants
|
16,668,750
(8)
|
3.00
|
|
August 9, 2016
|
Compensation options
|
3,775,000
(9)
|
0.40
|
|
February 28, 2017
|
Compensation options
|
1,865,249
(10)
|
2.25
|
|
November 1, 2016
|
Convertible debentures
|
12,500,000
(11)
|
2.00
|
|
May 2, 2017
|
Convertible debentures
|
22,796,353
(12)
|
3.29
|
Notes:
|
(1)
|
Of these options, 233,334 remain outstanding as at the
date hereof.
|
|
(2)
|
Of these options, 1,154,405 remain outstanding as at the
date hereof.
|
|
(3)
|
All of these options remain outstanding as at the date
hereof.
|
|
(4)
|
Of these options, 2,450,000 remain outstanding as of the
date hereof
|
|
(5)
|
All of these warrants were exercised during the year
ended June 30, 2017.
|
|
(6)
|
Of these warrants, 3,288,750 remain outstanding as of the
date hereof.
|
|
(7)
|
Of these warrants, 61,500 remain outstanding as of the
date hereof.
|
|
(8)
|
Of these warrants, 16,668,750 remain outstanding as of
the date hereof.
|
|
(9)
|
All of these compensation options were exercised during
the year ended June 30, 2017.
|
|
(10)
|
Of these compensation options, 1,865,249 remain
outstanding as of the date hereof.
|
|
(11)
|
As of the date hereof, $4,520,000 principal amount of
these debenture are convertible into Common Shares.
|
|
(12)
|
As of the date hereof, $74,850,000 principal amount of
these debenture are convertible into Common
Shares.
|
- 30 -
Subsequent to the financial year ended June 30, 2017, the
Company issued the following securities convertible into Common Shares but are
not listed or quoted on a marketplace:
|
Date of Issuance
|
Security
|
Number of Securities
|
Issue/Exercise Price
Per
Security ($)
|
|
August 8, 2017
|
Stock options
|
1,305,000
(1)
|
2.39
|
|
Notes:
|
|
(1)
|
All of these options remain outstanding as at the date
hereof.
|
ESCROWED SECURITIES
The following table includes the balance of escrowed securities
as at June 30, 2017:
|
Designation of Class
|
Number of Securities held in Escrow
(1)
|
Percentage of Class
(2)
|
|
Common Shares
|
12,937,500
|
3.5%
|
|
Options
|
Nil
|
Nil
|
|
Warrants
|
Nil
|
Nil
|
As of the date of this AIF, there were 12,937,500 Common Shares
held in escrow.
|
Notes:
|
|
(1)
|
Pursuant to an escrow agreement dated September 18, 2014,
entered into by certain shareholders, Computershare Investor Services
Inc., and the Company in connection with the RTO, certain security holders
were required to submit their securities to escrow, of which warrants,
stock options, and 60,000,000 Common Shares were submitted, with 10% of
such securities were released on December 9, 2014, and 15% were to be
released every six months thereafter over a period of thirty-six months.
Any convertible securities exercised while in escrow will have the
underlying Common Shares issued and deposited in escrow on the same
schedule of release.
|
|
(2)
|
Based on 366,549,244 Common Shares issued and outstanding
as at June 30, 2017.
|
DIRECTORS AND OFFICERS
Name, Occupation and Security Holding
The following table sets forth information regarding our
directors and executive officers. Each of the directors is elected to hold
office until the next annual meeting of the Company or until a successor is duly
elected or appointed. The next annual meeting of the Company is scheduled to be
held on November 13, 2017.
- 31 -
Name, Province or
State
and Country of
Residence
|
Positions
with
the Company
|
Date of
Appointment
|
Principal Occupation
Within the Past
Five Years
(1)
|
|
Terry Booth
(4)
Edmonton, Alberta,
Canada
|
Chief Executive
Officer and
Director
|
December 9, 2014
|
President and part owner of Superior Safety
Codes Inc.
|
|
Steve Dobler
(3)
Calgary, Alberta, Canada
|
President and
Director
|
December 9, 2014
|
Professional Engineer; Vice President and part owner of
Superior Safety Codes Inc.; President of ICC Enterprises Corp. since May
2002.
|
|
Jason Dyck
(4)
Sherwood Park, Alberta,
Canada
|
Director
|
March 9, 2015
|
Professor, Department of Pediatrics, University of
Alberta since July 1999; and Vice-President, Metabolic Modulators Research
Ltd. since July 1999.
|
|
Adam K. Szweras
(2)
(3) (4)
Toronto, Ontario,
Canada
|
Director
|
August 10, 2015
|
Barrister & Solicitor; Partner at Fogler, Rubinoff
LLP since February 2006; and Chairman of Foundation Markets Inc. since
December 2005.
|
|
Michael Singer
(2)
(3) (4)
Montreal, Quebec,
Canada
|
Director
|
May 20, 2016
|
Chartered Professional Accountant (CPA, CGA), Consultant
and Entrepreneur; CFO of Clementia Pharmaceuticals Inc. since May 2015;
CFO of Bedrocan Cannabis Corp. from May 2014 to June 2015; and CFO of
Thallion Pharmaceuticals Inc. from March 2007 to August 2013.
|
|
Barry Fishman
Toronto, Ontario,
Canada
|
Director
|
October 11, 2016
|
Certified Public Accountant; CEO & Director of Merus
Labs from September 2014 to August 2017; and CEO of Teva Canada Limited
from June 2008 to December 2013.
|
|
Joseph del Moral
Toronto, Ontario,
Canada
|
Director
|
October 1, 2016
|
CEO of 2425451 Ontario Inc. also known as Canadian
Cannabis Clinics since 2014; and Director of 2179321 Ontario Inc. also
known as Newten Home Comfort from January 2007 to December 2013.
|
|
Glen Ibbott
Vancouver, British
Columbia, Canada
|
CFO
|
May 8, 2017
|
Chartered Professional Accountant (CPA, CA) and Certified
Public Accountant; CFO of QLT Inc. from January 2015 to April 2017; Vice
President of Finance of Nordion Inc. August 2010 to Dec 2014.
|
- 32 -
|
Allan Cleiren
Edmonton, Alberta,
Canada
|
COO
|
May 22, 2017
|
Chartered Professional Accountant (CPA, CA); COO of
Jardine Lloyd Thompson Canada Inc. from June 2016 to June 2017; Executive
Vice-President of Universal Rail Systems Inc., from April 2012 to February
2016.
|
|
Cameron Battley
Toronto, Ontario, Canada
|
Executive Vice- President
|
November 7, 2016
|
President of Health Strategy Group Inc. from January 1998
to March 2016.
|
|
Neil Belot
Vancouver, British
Columbia, Canada
|
Chief Global
Business
Development
Officer
|
March 21, 2017
|
Chief Brand Officer at Aurora from September 8, 2015 to
March 20, 2017; Executive Director of Canadian Medical Cannabis Industry
Association from November 2014 to September 2015; Gas Portfolio &
Energy Services Manager of Housing Services Corp. from September 2012 to
September 2014.
|
|
Nilda Rivera
Vancouver, British
Columbia, Canada
|
Vice President, Finance
Corporate Secretary
|
August 1, 2017
September 8, 2015
|
Controller of Aurora from August 2015 to July 31, 2017;
CFO of Avarone Metals Inc. from June 2010 to August 2015.
|
|
Debra Wilson
Edmonton, Alberta,
Canada
|
Vice President
Human
Resources
|
June 22, 2017
|
Instructor at Northern Alberta Institute of Technology,
August 2016 to July 2017; Director of HR of Universal Rail from October
2013 to March 2016; VP of HR & OD of Alberta Pensions Services from
January 2011 to October 2016.
|
|
Nick Whitehead
Vancouver, British
Columbia, Canada
|
Vice President
Market
Development
|
August 1, 2017
|
Manager of Public Affairs at Aurora from January 2016 to
July 2017; Director of Organizing for Sensible BC Campaign January 2013 to
January 2016; Junior Transportation Planner at McCormick- Rankin
Corporation May 2012 to September 2012.
|
|
Dieter MacPherson
Cochrane, Alberta,
Canada
|
Vice President
Production
|
August 1, 2017
|
Manager of Production at Aurora from February 2017 to
July 31, 2017; General Manager at Trees Dispensary from February 2015 to
January 2017; Executive Director at Victoria Cannabis Buyers Club from
March 2013 to February 2015; Shift Manager at Victoria Cannabis Buyers
Club from January 2012 to March 2013.
|
|
Notes:
|
|
(1)
|
The information as to the principal occupation, business
or employment is not within the knowledge of the Company and has been
furnished by the respective director.
|
|
(2)
|
Member of the Audit Committee
|
|
(3)
|
Member of the Compensation Committee
|
|
(4)
|
Member of the Nominating and Corporate Governance
Committee
|
- 33 -
As of the date of the AIF, our directors and executive
officers, as a group, beneficially owned, directly or indirectly, or exercised
control or direction over 35,251,173 Common Shares, representing approximately
9.5% of the issued and outstanding Common Shares. The statement as to the number
of Common Shares beneficially owned directly or indirectly, or over which
control or direction is exercised by the directors and executive officers of the
Company as a group is based upon information furnished by the directors and
executive officers.
Cease Trade Orders, Bankruptcies, Penalties or Sanctions
Except as disclosed below, no director or executive officer of
the Company is, as at the date of this AIF, or has been within 10 years before
the date of this AIF, a director, chief executive officer or chief financial
officer of any company (including the Company), that:
|
|
(a)
|
was subject to a cease trade order, an order similar to a
cease trade order, or an order that denied the relevant company access to
any exemption under securities legislation, that was in effect for a
period of more than 30 consecutive days, that was issued while the
director or executive officer was acting in the capacity as director,
chief executive officer or chief financial officer, or
|
|
|
|
|
|
|
(b)
|
was subject to a cease trade order, an order similar to a
cease trade order, or an order that denied the relevant company access to
any exemption under securities legislation, that was in effect for a
period of more than 30 consecutive days, that was issued after the
director or executive officer ceased to be a director, chief executive
officer or chief financial officer and which resulted from an event that
occurred while that person was acting in the capacity as director, chief
executive officer or chief financial officer.
|
Adam Szweras was a director and secretary of Bassett Media
Group Corp. (“Bassett”), a TSX-V listed company, until March 16, 2010. Bassett
has been subject to a cease trade order since June 16, 2010 due to not filing
its financial statements and management’s discussion and analysis pursuant to NI
51-102.
No director or executive officer of the Company, nor a
shareholder holding a sufficient number of securities of the Company to affect
materially the control of the Company:
|
|
(a)
|
is, as at the date of this AIF, or has been within 10
years before the date of this AIF, a director or executive officer of any
company (including the Company) that, while that person was acting in that
capacity, or within a year of that person ceasing to act in that capacity,
became bankrupt, made a proposal under any legislation relating to
bankruptcy or insolvency or was subject to or instituted any proceedings,
arrangement or compromise with creditors or had a receiver, receiver
manager or trustee appointed to hold its assets; or
|
|
|
|
|
|
|
(b)
|
has, within 10 years before the date of this AIF, become
bankrupt, made a proposal under any legislation relating to bankruptcy or
insolvency, or become subject to or instituted any proceedings,
arrangement or compromise with creditors, or had a receiver, receiver
manager or trustee appointed to hold the assets of the proposed
director.
|
No director or executive officer of the Company has been
subject to:
|
|
(a)
|
any penalties or sanctions imposed by a court relating to
securities legislation or by a securities regulatory authority or has
entered into a settlement agreement with a securities regulatory
authority; or
|
- 34 -
|
|
(b)
|
any other penalties or sanctions imposed by a court or
regulatory body that would likely be considered important to a reasonable
security holder in deciding whether to vote for a proposed
director.
|
Conflicts of Interest
The Company’s directors and officers may serve as directors or
officers, or may be associated with, other reporting companies, or have
significant shareholdings in other public companies. To the extent that such
other companies may participate in business or asset acquisitions, dispositions,
or ventures in which the Company may participate, the directors and officers of
the Company may have a conflict of interest in negotiating and concluding terms
respecting the transaction. If a conflict of interest arises, the Company will
follow the provisions of the BCBCA dealing with conflict of interest. These
provisions state that where a director has such a conflict, that director must,
at a meeting of the Company’s directors, disclose his or her interest and
refrain from voting on the matter unless otherwise permitted by the BCBCA. In
accordance with the laws of the Province of British Columbia, the directors and
officers of the Company are required to act honestly, in good faith, and the
best interest of the Company.
LEGAL PROCEEDINGS
During the financial year ended June 30, 2017, other than as
described below, there are no legal proceedings to which the Company is a party
to or to which any of its property is subject outside of the ordinary course of
the Company’s business, and no such proceedings are known to the Company to be
contemplated.
In December 2016, a claim was commenced against the Company by
Cannavest Capital Corp. in the Supreme Court of British Columbia regarding
9,000,000 warrants at $0.02 per Common Share issued to a consultant prior to the
RTO. These warrants were issued conditional upon the warrant holder completing
an equity financing for the Company. In January 2016, this claim was amended to
include 3,000,000 performance warrants exercisable at $0.02 per share, issued
pursuant to the RTO. These warrants were cancelled on April 21, 2016 as the
funding milestones were not met. The parties agreed to settle pursuant to a
Settlement Agreement and Mutual Release dated January 9, 2017. Of the 9,000,000
warrants, 1,000,000 were cancelled and the remaining 8,000,000 warrants were
allowed to be exercised by the Company subject to certain conditions, and the
claim related to the 3,000,000 cancelled warrants was dismissed.
On February 25, 2016, the Company commenced a claim in the
Supreme Court of British Columbia against Marc Levy, Alissa Davida Levy,
Cornerstone Global Partners Inc., Acorn Associates S.A., Avarone Metals Inc.,
and Hudson Capital Corp. relating to breach of contract, abuse of process and
unreimbursed expenses. The former director and associates have filed various
counterclaims against the Company. The parties settled their disputes by way of
a Settlement Agreement and Mutual Release dated January 9, 2017, whereby each of
the parties agreed to mutually release each of the other parties from all claims
and counterclaims.
On January 25, 2016, Westarm Industries Ltd. brought a claim
against the Company in the Provincial Court of British Columbia (small claims
court) with respect to certain fees and expenses of $25,000. On January 19,
2017, the court ruled in favor of the Company and dismissed the claim in its
entirety.
In January 2017, the Company settled all of the above claims.
As of the date hereof, management is not aware of any material claims or
possible claims against the Company.
- 35 -
INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
Other than as disclosed elsewhere in this AIF and in the
consolidated financial statements of the Company for the year ended June 30,
2017, to the best of the Company’s knowledge, none of the directors or executive
officers of the Company, or any shareholders who beneficially own, control or
direct, directly or indirectly, more than 10% of the Company’s outstanding
Common Shares, or any known associates or affiliates of such persons, had any
material interests, direct or indirect, in any transaction within the three most
recently completed financial years or during the current year that has
materially affected or is reasonably expected to materially affect the Company.
TRANSFER AGENT AND REGISTRARS
The Company’s Registrar and Transfer Agent is Computershare
Investor Services Inc., located at 510 Burrard Street, 2
nd
Floor,
Vancouver, British Columbia V6C 3B9.
MATERIAL CONTRACTS
Except for contracts entered into in the ordinary course of
business, the only contracts entered into by the Company during the 12-month
period ended June 30, 2017 which are material or entered into before the
12-month period ended June 30, 2017, but are still in effect and which are
required to be filed with Canadian securities regulatory authorities in
accordance with Section 12.2 of National Instrument 51-102 – Continuous
Disclosure Obligations are the following:
|
|
(a)
|
the drawdown equity facility agreement dated July 13,
2016 (see “General Development of the Business – Debt and Equity
Financings”);
|
|
|
|
|
|
|
(b)
|
the acquisition of CanvasRx Inc. on August 17, 2016 (see
“General Development of the Business – Acquisitions”);
|
|
|
|
|
|
|
(c)
|
the acquisition of Peloton Pharmaceuticals Inc. on April
28, 2017 (see “General Development of the Business –
Acquisitions”);
|
|
|
|
|
|
|
(d)
|
the acquisition of Pedanios GmbH on May 30, 2017 (see
“General Development of the Business – Acquisitions”); and
|
|
|
|
|
|
|
(e)
|
the investment in Hempco (see “General Development of the
Business – Investments”);
|
|
|
|
|
|
|
(f)
|
the MOU and joint venture research agreement with Radient
(see “General Development of the Business –
Investments”);
|
- 36 -
INTEREST OF EXPERTS
Name of Experts
The following are the persons or companies who were named as
having prepared or certified a statement, report or valuation in this AIF either
directly or in a document incorporated by reference and whose profession or
business gives authority to the statement, report or valuation made by the
person or company:
MNP LLP, the Company’s independent auditors, has prepared an
independent audit report dated September 25, 2017 in respect of the Company’s
audited consolidated financial statements for the years ended June 30, 2017 and
2016.
Interests of Experts
MNP LLP, auditors of the Company, have confirmed that they are
independent of the Company within the meaning of the ‘Rules of Professional
Conduct’ of the Chartered Professional Accountants of British Columbia.
AUDIT COMMITTEE
The Company’s audit committee has various responsibilities as
set forth in NI 52-110 made under securities legislation, concerning
constitution of its audit committee and its relationship with its independent
auditor and among such responsibilities being a requirement that the audit
committee establish a written charter that sets out its responsibilities.
Composition of the Audit Committee
At the present time, the Company’s Audit Committee is composed
of the following members:
|
Member
|
Independent/Not
Independent
(1)
|
Financially Literate/
Not
Financially
Literate
(2)
|
Relevant Education and
Experience
|
|
Michael Singer,
Chair
|
Independent
|
Financially Literate
|
Mr. Singer is a CPA. He is currently CFO of Clementia
Pharmaceutials Inc, a public company listed on the NASDAQ. He previously
served as a director, CFO and audit committee member for other publicly
traded companies.
|
|
Adam Szweras
|
Independent
|
Financially Literate
|
Mr. Szweras, LLB, is a partner at Fogler, Rubinoff LLP.
He is currently chairman of a merchant bank and serves as a director
and/or officer and audit committee member for other publicly traded
companies.
|
- 37 -
|
Notes:
|
|
(1)
|
A member of an audit committee is independent if the
member has no direct or indirect material relationship with the Company
that could, in the view of the Board, reasonably interfere with the
exercise of a member’s independent judgment.
|
|
(2)
|
An individual is financially literate if he has the
ability to read and understand a set of financial statements that present
a breadth of complexity of accounting issues that are generally comparable
to the breadth and complexity of the issues that can reasonably be
expected to be raised by the Company’s financial
statements.
|
Audit Committee Charter
A copy of the charter of the audit committee is available as
Schedule “A” to this AIF.
Audit Committee Oversight
The Audit Committee has not made any recommendations to the
Board to nominate or compensate any auditor other than MNP.
Reliance on Certain Exemptions
At no time has the Company relied on an exemption from NI
52-110, in whole or in part, granted under Part 8 of NI 52-110.
Pre-Approval Policies and Procedures
The Audit Committee has not adopted specific policies and
procedures for the engagement of non-audit services, other than as set out in
the audit committee charter.
External Auditor Service Fees (By Category)
The Audit Committee has reviewed the nature and amount of the
audit services provided by MNP to the Company to ensure auditor independence.
The aggregate fees billed by the Company’s external auditor during the financial
years ended June 30, 2017 and June 30, 2016 were as follows:
|
Financial Period
Ending
|
Audit Fees ($)
(1)
|
Audit Related Fees
($)
(2)
|
Tax Fees ($)
(3)
|
All Other Fees ($)
(4)
|
|
2017
(5)
|
86,000
|
73,268
|
6,688
|
7,610
|
|
2016
|
79,759
|
Nil
|
22,644
|
47,652
|
|
(1)
|
“Audit Fees” includes fees for the performance of the
annual audit and for accounting consultations on matters reflected in the
financial statements.
|
|
(2)
|
“Audit-Related Fees” includes fees for assurance and
related services that are related to the performance of the review of the
financial statements including fees for Annual Information Form and
“earn-in” audit work and are not reported under (1).
|
|
(3)
|
“Tax Fees” includes fees for tax compliance, tax planning
and tax advice.
|
|
(4)
|
“All Other Fees” includes fees on consultations on
acquisition related matters.
|
|
(5)
|
2017 external auditor fees are estimates as the final
invoices have not yet been received.
|
- 38 -
ADDITIONAL INFORMATION
Additional information relating to the Company is available
under the Company’s profile on SEDAR at www.sedar.com.
Additional information, including directors’ and officers’
remuneration and indebtedness, principal holders of the Company’s securities,
and securities authorized for issuance under the Company’s equity compensation
plans, as applicable, is contained in the Company’s Management Information
Circular for its most recent Annual General Meeting.
Additional financial information is provided in the Company’s
Audited Consolidated Financial Statements and Management’s Discussion and
Analysis for the year ended June 30, 2017 which may be obtained upon request
from Aurora’s head office, or may be viewed on the Company’s website
(www.auroramj.com) or on the SEDAR website (www.sedar.com).
- 39 -
SCHEDULE “A”
AUDIT COMMITTEE CHARTER
Article 1 – Mandate and Responsibilities
The Audit Committee is appointed by the Board to oversee the
accounting and financial reporting process of the Company and audits of the
financial statements of the Company. The Audit Committee’s primary duties and
responsibilities are to:
|
|
(a)
|
recommend to the Board the external auditor to be
nominated for the purpose of preparing or issuing an auditor’s report or
performing other audit, review or attest services for the
Company;
|
|
|
|
|
|
|
(b)
|
recommend to the Board the compensation of the external
auditor;
|
|
|
|
|
|
|
(c)
|
oversee the work of the external auditor engaged for the
purpose of preparing or issuing an auditor’s report or performing other
audit, review or attest services for the Company, including the resolution
of disagreements between management and the external auditor regarding
financial reporting;
|
|
|
|
|
|
|
(d)
|
pre-approve all non-audit services to be provided to the
Company or its subsidiaries by the Company’s external auditor;
|
|
|
|
|
|
|
(e)
|
review the Company’s financial statements, MD&A and
annual and interim earnings press releases before the Company publicly
discloses this information;
|
|
|
|
|
|
|
(f)
|
be satisfied that adequate procedures are in place for
the review of all other public disclosure of financial information
extracted or derived from the Company’s financial statements, and to
periodically assess the adequacy of those procedures;
|
|
|
|
|
|
|
(g)
|
establish procedures for:
|
|
|
(i)
|
the receipt, retention and treatment of complaints
received by the Company regarding accounting, internal accounting controls
or auditing matters; and
|
|
|
|
|
|
|
(ii)
|
the confidential, anonymous submission by employees of
the Company of concerns regarding questionable accounting or auditing
matters; and
|
|
|
(h)
|
review and approve the Company’s hiring policies
regarding partners, employees and former partners and employees of the
present and former external auditor of the
Company.
|
The Board and management will ensure that the Audit Committee
has adequate funding to fulfill its duties and responsibilities.
- 40 -
Article 2 – Pre-Approval of Non-Audit Services
The Audit Committee may delegate to one or more of its members
the authority to pre-approve non-audit services to be provided to the Company or
its subsidiaries by the Company’s external auditor. The pre-approval of
non-audit services must be presented to the Audit Committee at its first
scheduled meeting following such pre-approval.
The Audit Committee may satisfy its duty to pre-approve
non-audit services by adopting specific policies and procedures for the
engagement of the non-audit services, provided the policies and procedures are
detailed as to the particular service, the Audit Committee is informed of each
non-audit service and the procedures do not include delegation of the Audit
Committee’s responsibilities to management.
Article 3 – External Advisors
The Audit Committee has the authority to conduct any
investigation appropriate to fulfilling its responsibilities, and it has direct
access to the external auditors as well as anyone in the organization. The Audit
Committee has the ability to retain, at the Company’s expense, special legal,
accounting or other consultants or experts it deems necessary in the performance
of its duties.
Article 4 – External Auditors
The external auditors are ultimately accountable to the Audit
Committee and the Board, as representatives of the shareholders. The external
auditors will report directly to the Audit Committee. The Audit Committee will:
|
|
(a)
|
review the independence and performance of the external
auditors and annually recommend to the Board the nomination of the
external auditors or approve any discharge of external auditors when
circumstances warrant;
|
|
|
|
|
|
|
(b)
|
approve the fees and other significant compensation to be
paid to the external auditors;
|
|
|
|
|
|
|
(c)
|
on an annual basis, review and discuss with the external
auditors all significant relationships they have with the Company that
could impair the external auditors’ independence;
|
|
|
|
|
|
|
(d)
|
review the external auditors’ audit plan to see that it
is sufficiently detailed and covers any significant areas of concern that
the Audit Committee may have;
|
|
|
|
|
|
|
(e)
|
before or after the financial statements are issued,
discuss certain matters required to be communicated to audit committees in
accordance with the standards established by the Canadian Institute of
Chartered Accountants;
|
|
|
|
|
|
|
(f)
|
consider the external auditors’ judgments about the
quality and appropriateness of the Company’s accounting principles as
applied in the Company’s financial reporting;
|
|
|
|
|
|
|
(g)
|
resolve any disagreements between management and the
external auditors regarding financial reporting;
|
|
|
|
|
|
|
(h)
|
approve in advance all audit services and any
non-prohibited non-audit services to be undertaken by the external
auditors for the Company; and
|
- 41 -
|
|
(i)
|
receive from the external auditors timely reports
of:
|
|
|
(i)
|
all critical accounting policies and practises to be
used;
|
|
|
|
|
|
|
(ii)
|
all alternative treatments of financial information
within generally accepted accounting principles that have been discussed
with management, ramifications of the use of such alternative disclosures
and treatments and the treatment preferred by the external auditors;
and
|
|
|
|
|
|
|
(iii)
|
other material written communications between the
external auditors and management.
|
Article 5 – Legal Compliance
On at least an annual basis, the Audit Committee will review
with the Company’s legal counsel any legal matters that could have a significant
impact on the organization’s financial statements, the Company’s compliance with
applicable laws and regulations and inquiries received from regulators or
governmental agencies.
Article 6 - Complaints
Individuals are strongly encouraged to approach a member of the
Audit Committee with any complaints or concerns regarding accounting, internal
accounting controls or auditing matters. The Audit Committee will from time to
time establish procedures for the submission, receipt and treatment of such
complaints and concerns. In all cases the Audit Committee will conduct a prompt,
thorough and fair examination, document the situation and, if appropriate,
recommend to the Board appropriate corrective action.
To the extent practicable, all complaints will be kept
confidential. The Company will not condone any retaliation for a complaint made
in good faith.
- 42 -
Form 52-109F1 – IPO/RTO
Certification of Annual
Filings Following
an Initial Public Offering, Reverse Takeover
or
Becoming a Non-Venture Issuer
I, Terry Booth, Chief Executive Officer of Aurora Cannabis
Inc., certify the following:
|
1.
|
Review:
I have reviewed the AIF, if any,
annual financial statements and annual MD&A, including, for greater
certainty, all documents and information that are incorporated by
reference in the AIF (together, the “annual filings”) of Aurora Cannabis
Inc. (the “issuer”) for the financial year ended
June 30,
2017.
|
|
|
|
|
2.
|
No misrepresentations:
Based on my
knowledge, having exercised reasonable diligence, the annual filings do
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated or that is necessary to make a
statement not misleading in light of the circumstances under which it was
made, for the period covered by the annual filings.
|
|
|
|
|
3.
|
Fair presentation:
Based on my knowledge,
having exercised reasonable diligence, the annual financial statements
together with the other financial information included in the annual
filings fairly present in all material respects the financial condition,
financial performance and cash flows of the issuer, as of the date of and
for the periods presented in the annual
filings.
|
|
Date: September 26, 2017
|
|
|
|
|
|
(signed)
Terry
Booth
|
|
|
Terry Booth
|
|
|
Chief Executive Officer
|
|
|
NOTE TO READER
|
|
|
|
In contrast to the usual certificate required for
non-venture issuers under National Instrument 52-109
Certification of
Disclosure
in Issuers’ Annual and Interim Filings
(NI 52-109),
namely, Form 52-109F1, this Form 52-109F1 – IPO/RTO does not include
representations relating to the establishment and maintenance of
disclosure controls and procedures (DC&P) and internal control over
financial reporting (ICFR), as defined in NI 52-109. In particular, the
certifying officers filing this certificate are not making any
representations relating to the establishment and maintenance of
|
|
|
|
i)
|
controls and other procedures designed to provide
reasonable assurance that information required to be disclosed by the
issuer in its annual filings, interim filings or other reports filed or
submitted under securities legislation is recorded, processed, summarized
and reported within the time periods specified in securities legislation;
and
|
|
|
|
|
ii)
|
a process to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with the issuer’s GAAP.
|
|
|
|
The issuer’s certifying officers are responsible for
ensuring that processes are in place to provide them with sufficient
knowledge to support the representations they are making in this
certificate.
|
|
|
|
Investors should be aware that inherent limitations on
the ability of certifying officers of an issuer to design and implement on
a cost effective basis DC&P and ICFR as defined in NI 52-109 in the
first financial period following
|
|
|
|
•
|
completion of the issuer’s initial public offering in the
circumstances described in s. 4.3 of NI 52-109;
|
|
•
|
completion of a reverse takeover in the circumstances
described in s. 4.4 of NI 52-109; or
|
|
•
|
the issuer becoming a non-venture issuer in the
circumstances described in s. 4.5 of NI 52-109;
|
1
|
may result in additional risks to the quality,
reliability, transparency and timeliness of interim and annual filings and
other reports provided under securities legislation.
|
2
Form 52-109F1 – IPO/RTO
Certification of Annual
Filings Following
an Initial Public Offering, Reverse Takeover
or
Becoming a Non-Venture Issuer
I, Glen Ibbott, Chief Financial Officer of Aurora Cannabis
Inc., certify the following:
|
1.
|
Review:
I have reviewed the AIF, if any,
annual financial statements and annual MD&A, including, for greater
certainty, all documents and information that are incorporated by
reference in the AIF (together, the “annual filings”) of Aurora Cannabis
Inc. (the “issuer”) for the financial year ended
June 30,
2017.
|
|
|
|
|
2.
|
No misrepresentations:
Based on my
knowledge, having exercised reasonable diligence, the annual filings do
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated or that is necessary to make a
statement not misleading in light of the circumstances under which it was
made, for the period covered by the annual filings.
|
|
|
|
|
3.
|
Fair presentation:
Based on my knowledge,
having exercised reasonable diligence, the annual financial statements
together with the other financial information included in the annual
filings fairly present in all material respects the financial condition,
financial performance and cash flows of the issuer, as of the date of and
for the periods presented in the annual
filings.
|
|
Date: September 26, 2017
|
|
|
|
|
|
(signed)
Glen
Ibbott
|
|
|
Glen Ibbott
|
|
|
Chief Financial Officer
|
|
|
NOTE TO READER
|
|
|
|
In contrast to the usual certificate required for
non-venture issuers under National Instrument 52-109
Certification of
Disclosure
in Issuers’ Annual and Interim Filings
(NI 52-109),
namely, Form 52-109F1, this Form 52-109F1 – IPO/RTO does not include
representations relating to the establishment and maintenance of
disclosure controls and procedures (DC&P) and internal control over
financial reporting (ICFR), as defined in NI 52-109. In particular, the
certifying officers filing this certificate are not making any
representations relating to the establishment and maintenance of
|
|
|
|
i)
|
controls and other procedures designed to provide
reasonable assurance that information required to be disclosed by the
issuer in its annual filings, interim filings or other reports filed or
submitted under securities legislation is recorded, processed, summarized
and reported within the time periods specified in securities legislation;
and
|
|
|
|
|
ii)
|
a process to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with the issuer’s GAAP.
|
|
|
|
The issuer’s certifying officers are responsible for
ensuring that processes are in place to provide them with sufficient
knowledge to support the representations they are making in this
certificate.
|
|
|
|
Investors should be aware that inherent limitations on
the ability of certifying officers of an issuer to design and implement on
a cost effective basis DC&P and ICFR as defined in NI 52-109 in the
first financial period following
|
|
|
|
•
|
completion of the issuer’s initial public offering in the
circumstances described in s. 4.3 of NI 52-109;
|
|
•
|
completion of a reverse takeover in the circumstances
described in s. 4.4 of NI 52-109; or
|
|
•
|
the issuer becoming a non-venture issuer in the
circumstances described in s. 4.5 of NI 52-109;
|
1
|
may result in additional risks to the quality,
reliability, transparency and timeliness of interim and annual filings and
other reports provided under securities legislation.
|
2
|
EX-1.22 23 exhibit1-22.htm EXHIBIT 1.22
|
|
|
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver,
BC V6E 3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
September 26, 2017
A news release issued on September 26,
2017 at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. announced Q4 and
full financial year 2017 results.
Full Description of
Material Change
Aurora Cannabis Inc. today announced
its financial and operational results for the fourth quarter and full financial
year ended June 30, 2017. See attached news release dated September 26, 2017.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive Officer
Mobile: (780) 722 - 8889
Email: terry@auroramj.com
DATED September 26, 2017.
Page | 2
|
September 26,
2017
|
TSX:ACB
|
Aurora Announces Q4 and Full Financial Year 2017
Results
Continued Strong Patient and Revenue Growth
Domestic and
International Expansion Accelerates
Vancouver, BC – September 26, 2017 –
Aurora Cannabis
Inc. (the “Company” or “Aurora”) (TSX: ACB) (OTCQX: ACBFF) (Frankfurt: 21P; WKN:
A1C4WM) today announced its financial and operational results for the fourth
quarter and full financial year ended June 30, 2017.
Q4 2017 Financial and Operational Highlights
|
•
|
Recorded $5.9 million in revenues, reflecting
growth in patient numbers and an increase in the average price per gram of
product sold, which now includes high margin cannabis oils.
|
|
|
|
|
•
|
Continued to progress on schedule and on budget
with the construction of the Company’s Aurora Sky facility.
|
|
|
|
|
•
|
Completed the acquisition of Pedanios GmbH, Germany’s
largest distributor of cannabis. This acquisition provides access to the
single largest federally-legal medical cannabis market in the world, as
well as a gateway to the rapidly- developing EU market. Increasing
momentum in the EU towards the adoption of medical cannabis legislation
has the potential to create a market of several hundred million people.
|
|
|
|
|
•
|
Completed the acquisition of Peloton
Pharmaceuticals, a 40,000 square foot facility, which Aurora currently is
completing, with first harvest anticipated shortly after calendar-year
end.
|
|
|
|
|
•
|
Completed its cornerstone investment in the IPO
of Cann Group Limited, Australia’s first licensed cannabis company, and
now holds a 19.9% ownership stake.
|
|
|
|
|
•
|
Announced its intention to make a strategic
investment in Hempco Food and Fiber Inc, providing further product
differentiation and access to a potential source of low-cost raw CBD
material for extraction.
|
|
|
|
|
•
|
Reported positive results on its research joint venture
with Radient Technologies Inc. (“Radient”) on the use of Radient’s
innovative, proprietary technology for the extraction of cannabinoids from
dried cannabis – validating the technology’s high efficiency and
significantly enhanced throughput compared to standard extraction
technologies.
|
|
|
|
|
•
|
Strengthened its senior management team with
the appointments of Allan Cleiren as COO, Glen Ibbott as CFO, Debra
Wilson, PhD as VP of Human Resources, and Andrea Paine as Director of
Quebec Affairs.
|
|
|
|
|
•
|
Strengthened its balance sheet with $76.7
million in new financing
|
Page | 3
|
|
o
|
$75 Million Bought Deal Convertible Debentures
|
|
|
o
|
$1.6 Million on Exercise of Securities
|
|
|
|
Q4 2017
|
|
|
Q3 2017
|
|
|
Change
|
|
|
Q4 2016
|
|
|
|
|
#
|
|
|
#
|
|
|
%
|
|
|
#
|
|
|
Active registered patients
(1)
|
|
16,400
|
|
|
13,110
|
|
|
25.1%
|
|
|
4,500
|
|
|
Grams sold
|
|
755,059
|
|
|
653,008
|
|
|
15.6%
|
|
|
200,310
|
|
|
Grams produced
|
|
1,164,683
|
|
|
846,849
|
|
|
37.5%
|
|
|
182,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In CDN $000’s unless
otherwise noted)
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Revenues
|
|
5,936
|
|
|
5,175
|
|
|
14.7%
|
|
|
1,220
|
|
|
Average selling price per
gram
|
|
7.45
|
|
|
6.64
|
|
|
12.2%
|
|
|
6.09
|
|
|
Cash cost of sales per gram
(2)
|
|
2.09
|
|
|
2.31
|
|
|
-9.5%
|
|
|
7.35
|
|
|
Cash cost to produce per gram
(2)
|
|
1.91
|
|
|
1.91
|
|
|
-
|
|
|
6.98
|
|
|
Cash
and cash equivalents
|
|
159,796
|
|
|
111,116
|
|
|
43.8%
|
|
|
259
|
|
|
(1)
|
As of the date hereof, the Company has over 20,000 active
and pending registered patients.
|
|
|
|
|
(2)
|
Cash cost of sales per gram and cash cost to produce per
gram are non-IFRS financial measures that do not have a standardized
meaning under IFRS and may not be comparable to other companies. See
definitions at the end of this document.
|
Developments subsequent to the quarter
Continued Strong Patient and Revenue Growth
|
|
•
|
Aurora registered over 3,500 patients since
fiscal year end, and as of the date of this release, the Company has
surpassed 20,000 active and pending registered patients.
|
|
|
|
|
|
|
•
|
August 2017 was a record month with gross
product sales in excess of 328,322 grams, and gross revenues exceeding
$3.1 million from the sale of medical cannabis.
|
|
|
|
|
|
|
•
|
CanvasRx, which now operates 25 facilities nationwide,
remains the leading Canadian network of cannabis counseling and outreach
centres, with more than 29,000 registered patients. Over 8,400 medical
doctors across Canada have referred patients to CanvasRx or its affiliated
medical clinics.
|
Capacity Expansion
|
|
•
|
The construction of the Aurora Sky facility at the
Edmonton International Airport in Alberta is progressing well. At 800,000
square feet, with modern technology and automation, Aurora Sky is expected
to produce over 100,000 kilograms annually and deliver significant
economies of scale for Aurora. Located on Edmonton International Airport
land, with access to ample power, Aurora Sky is ideally positioned for
increased domestic and international distribution. To date, over 290,000
square feet of structure has been erected, 80% of which has its specialty
glass installed and many sub-systems have been delivered to the site. The
Company anticipates the planting of cannabis in the first completed bays
before the end of calendar 2017, with the first harvest in early 2018, and
full completion of the construction project by mid-2018.
|
Page | 4
|
|
•
|
Construction upgrades are nearly complete at the
Company’s Pointe-Claire, Quebec Facility. The Company expects that
planting of cannabis at this 40,000 square foot facility will commence
before the end of calendar 2017 with the first harvest early in 2018.
|
Significant International Expansion Advancement
|
|
•
|
Having received all necessary permits, Aurora commenced
shipping of cannabis products produced at its Mountain Facility to its
wholly owned German subsidiary Pedanios. A first shipment of 50kg was
completed in mid-September, with further regular shipments planned.
Germany, with over 82 million people is currently the largest single
federally-legal medical cannabis market in the world, and is experiencing
a significant shortage of supply. Pedanios also provides access to the
potentially very substantial developing EU market.
|
|
|
|
|
|
|
•
|
Pedanios passed the first stage of the tender application
process to become a licensed producer of medical cannabis in Germany and
has entered the second and final stage of the application process. Results
of the tender process are expected before the end of 2017.
|
|
|
|
|
|
|
•
|
The Company entered into a technical services agreement
with Australia’s first licensed cannabis company, Cann Group, in which the
Company holds a 19.9% stake. Cann Group announced its first harvest of
cannabis, and signed a distribution agreement with CannaKorp to import and
sell CannaKorp’s proprietary vaporizing system.
|
Continued Capital Markets Progress
|
|
•
|
Graduated from TSX Venture Exchange to Toronto
Stock Exchange (TSX) on July 24, 2017.
|
|
|
|
|
|
|
•
|
Approximately $87 million in additional gross
cash proceeds remain available from the future exercise of warrants, stock
options and compensation options/warrants.
|
Other Key Subsequent Events
|
|
•
|
Aurora agreed to invest $3.2 million in the private
placement of Hempco Food and Fiber Inc. (“Hempco”), subject to Hempco
receiving shareholder approval. The Company will also be granted an option
to acquire shares from Hempco’s current majority shareholders. Completion
of the private placement and exercise of the option would result in Aurora
owning greater than 50% of Hempco on a fully diluted basis.
|
|
|
|
|
|
|
•
|
Through its strategic investment in Hempco, the Company
is able to differentiate its product offering, as well as gain access to a
substantial source of low-cost raw CBD material for extraction, contingent
upon anticipated regulation changes.
|
|
|
|
|
|
|
•
|
Aurora continued to strengthen its senior management team
to ensure the Company has the leadership to continue executing on its
aggressive national and international expansion strategy, with new hires
and promotions into key roles including VP Finance, VP Market Development,
VP Production, and Chief Cultivator.
|
|
|
|
|
|
|
•
|
The Company received 14.3 million units and 0.8 million
units of Radient on conversion of $2.0 million debentures and payment of
final interest, respectively. The companies continue to work on a final
collaboration agreement for the commercialization and utilization of
Radient’s proprietary extraction technology, which was shown in
collaborative research to decrease throughput time for cannabis extraction
from up to six hours to five minutes, while terpene profiles being
preserved.
|
Page | 5
|
|
•
|
Barry Fishman resigned from the board of
directors effective September 25, 2017. Mr. Fishman will continue
to provide limited guidance to the Company until a new director has
been appointed.
|
Management commentary
“Aurora’s story has been defined by agility, innovation and
disciplined execution, achieving unprecedented growth in customers, revenue and
shareholder value, and consistently validating our aggressive business strategy
to build a globally dominant cannabis company,” said Terry Booth, CEO. “Aurora
is powering ahead on multiple fronts with domestic and international expansion
through intelligent vertical and horizontal integration, and successfully
implementing advanced technologies into all areas of operation. In addition, our
balance sheet and capital market strength, along with our global reputation for
high quality and rigorous regulatory compliance, allow us to capitalize on
opportunities available to very few other companies worldwide.”
“Construction of Aurora Sky, the world’s largest capacity and
most technologically advanced cannabis production facility, remains on track for
planting in the first bays before year-end, and our Quebec facility is nearly
complete with the first planting anticipated before year-end,” added Mr. Booth.
“Acquiring Pedanios, Germany’s largest medical cannabis distributor, now
servicing over 1,500 pharmacies in a market with more than 82 million people, is
a transformative strategic transaction, especially as this creates a gateway to
the rapidly-developing EU market, with a potential size of several hundred
million people. Other strategic initiatives, such as our collaborations with and
investments in Australia’s Cann Group, and Canadian companies Radient and
Hempco, deliver further competitive advantages and provide additional avenues to
pursue growth. Simply put, Aurora is now ideally positioned to be the growth
leader in the Canadian medical and adult consumer markets, and in multiple
markets opening up around the world.”
Financial review Q4 2017
A comprehensive discussion of Aurora’s financials and
operations are provided in the Company’s Management Discussion & Analysis
and Financial Statements to be filed with SEDAR today and will be published on
www.sedar.com.
Revenues
Revenues for the fourth quarter ended June 30, 2017 were $5.9
million, as compared to $1.2 million for the same quarter in the prior year,
attributable primarily to patient growth, as well as an increase in the average
selling price per gram of medical cannabis. The Company also generated
additional revenues from its subsidiaries, CanvasRx and Pedanios.
Sales of dried medical cannabis and cannabis oils contributed
$5.6 million to revenues, of which $0.4 million (7.1%) was generated in Germany
and $5.2 million in Canada. Patient counselling and outreach services
contributed $0.3 million in Q4 2017, which reflects a $0.5 million reduction for
a year-end audit adjustment related to counselling revenues recognized on a
cash, rather than deferred, basis during the fiscal year 2017.
Page | 6
Total product sold for the period was 755,059 grams of dried
cannabis and cannabis oils at an average net selling price of $7.45 per gram, as
compared to 200,310 grams of dried cannabis in the fourth quarter of 2016 at an
average selling price of $6.09 per gram.
Cost of sales
Included in cost of sales for the three months ended June 30,
2017, were the unrealized gains on changes in fair value of biological assets of
$3.2 million, inventory expensed of $1.3 million, and production costs of $2.0
million. Total cash costs of sales for the quarter were $2.4 million. On a total
of 1,164,683 grams of dried cannabis produced during this period, the cash cost
of sales per gram of dried cannabis came in at $2.09, down from the average for
fiscal 2017 of $2.47 per gram, and the cash cost to produce per gram of dried
cannabis was $1.91, down from the average for fiscal 2017 of $2.19 per gram.
Gross Profit
Gross profit for the quarter came in at $5.8 million, compared
to a $4.2 million loss for the three months ended June 30, 2016. The gross
profit during the period was partially attributable to the net effect of changes
in fair value of biological assets.
General & Administrative Costs
General and administration costs increased by $0.9 million to
$2.0 million for the quarter as compared to Q4 2016, attributable primarily to
increases in corporate and general administrative activities as the Company
scaled up its business operations, completed various equity and debt financings,
as well as other costs incurred related to ongoing negotiations for additional
financings and investment opportunities.
Sales & Marketing
Sales and marketing costs were $3.6 million in Q4 2017, an
increase of $2.7 million over Q4 2016. The increase was largely attributable to
increases in consulting fees, selling costs and wages. Consulting fees increased
by $1.2 million, primarily attributable to service fees paid to Canadian
Cannabis Clinics pursuant to an agreement to provide operational, administrative
and consulting services to CanvasRx. No such expense was incurred in the prior
period. Selling and client care expenses increased by $1.0 million, directly
related to the increase in sales volume during the period.
Net Loss
The $4.8 million net loss for the quarter ended June 30, 2017
was primarily attributable to the unrealized non-cash loss on debentures,
increased finance costs relating to debentures, share-based payments,
acquisition and project evaluation costs, as well as a reflection of the
Company’s continued execution of its growth strategy, resulting in increased
expenditures due to its scaling up of operations.
Page | 7
Liquidity and Capital Resources
Strengthened Capital Position
Aurora significantly strengthened its balance sheet and
liquidity position during the fourth quarter of 2017 with $76.6 million in new
financing as follows:
|
|
•
|
$75 million Convertible Debentures: On May 2, 2017, the
Company closed a $75 million bought deal private placement of unsecured
convertible debentures. The debentures bear interest at 7% per annum and
mature on May 2, 2019. The debentures are convertible into common shares
at a price of $3.29 per share, at the option of the holder, subject to a
forced conversion if the volume weighted average price of the Company’s
common shares exceeds $4.94 per share for 10 consecutive trading days.
|
|
|
|
|
|
|
•
|
$1.6 million on exercise of securities: During
the three months ended June 30, 2017, the Company raised $1.6 million on
the exercise of warrants, options and compensation options.
|
|
|
|
|
|
|
•
|
During the quarter, the Company also converted
approximately $18.5 million of convertible notes into common shares.
|
For the year ended June 30, 2017, Aurora raised $213 million in
equity and convertible debt financings to provide the capital necessary to
execute the Company’s aggressive domestic and international growth strategies.
Details of the capital initiatives described above can be found
in the Company’s filings on www.sedar.com
Cash Position, Cash Flows, and Working Capital
Net cash and cash equivalents on hand increased from $0.3
million as at June 30, 2016 to $159.8 million as at June 30, 2017, resulting
mainly from net cash generated from financing activities of $220.3 million,
offset partially by net cash used for operations of $10.5 million and
investments and capital expenditures of $50.5 million.
Working capital as of June 30, 2017 was $170.1 million, as
compared to a deficiency of $2.8 million at June 30, 2016. The increase was
largely attributable to the increase in cash and cash equivalents of $159.6
million generated from debt and equity financings, new investments in securities
of $14.8 million, and increases in biological assets and inventory of $7.6
million, partially offset by an increase in accounts payable of $7.1 million due
to production facility construction and contingent consideration payable of
$13.2 million related to performance milestones of a subsidiary.
The Company anticipates that it has sufficient liquidity and
capital resources to meet all of its currently planned expenditures for the next
twelve months.
Page | 8
Financial Review Financial Year 2017
Revenues for the year ended June 30, 2017 came in at $18.1
million, as compared to $1.4 million for the prior year, attributable to growing
sales of dried cannabis products and cannabis extracts (oils), as well as
increased revenues from the Company’s subsidiary CanvasRx and contributions from
its newly acquired German subsidiary Pedanios. Total product sold for the year
was 2,381,832 grams of dried cannabis and cannabis oils at an average selling
price of $6.68 per gram. The increase in revenues also reflects an increase in
the average price per gram of product sold.
Since commencement of sales of product in January 2016 to
August 31, 2017, the Company has sold a total of 3,263,161 grams of medical
cannabis at an average selling price of $6.89 per gram.
Gross profit of $16.1 million was recorded for the full year
2017, as compared to $2.2 million for the prior financial year. The gross profit
during the periods was partially attributable to the net effect of changes in
fair value of biological assets.
General and Administrative expense increased by $3.8 million
for the year as compared to 2016, attributable to the overall increase in
corporate and general administrative activities as Aurora scaled up its business
operations, completed various equity and debt financings, as well as other costs
incurred related to ongoing negotiations for additional financings and
investment opportunities.
Acquisition and project evaluation costs increased by $1.5
million during the period, attributable to legal, consulting and advisory fees
relating to business acquisitions, investments and due diligence activities as
part of its domestic and international expansion. These costs were reclassified
from professional fees during the fourth quarter.
Sales and Marketing expense increased by $8.6 million,
attributable primarily due to increases in service fees, selling and client care
expenses and finance and other related costs.
Service fees of $3.7 million were paid to Canadian Cannabis
Clinics pursuant to an agreement to provide operational, administrative and
consulting services to CanvasRx. No such expense was incurred in the prior
periods. Since the acquisition of CanvasRx in August 2016, the Company has
increased its number of active and pending registered patients from
approximately 5,000 to over 20,000, of which approximately 7,000 are CanvasRx
patients that have registered with Aurora.
Selling and client care expenses increased by $3.5 million,
directly related to the increase in sales during the year and the expansion of
the client care centre.
Finance and other costs for the year were $6.6 million, as
compared to $1.4 million for 2016.
Page | 9
Net loss of $13.0 million was recorded, as compared to $5.7
million for the prior year. The increase from the previous year was attributable
to greater expenditures relating to the increase in production at the Company’s
Mountain View County facility, expansion of its client care centre and related
sales costs resulting directly from registration of new patients, as well as
acquisition and due diligence expenditures relating to the Company’s domestic
and international expansion strategy.
Outstanding Share Data
As of the date of the MD&A, the Company had the following
securities issued and outstanding:
|
|
Securities
|
|
September 25, 2017
|
|
|
|
|
|
#
|
|
|
|
Issued and outstanding shares
|
|
371,569,751
|
|
|
|
Options
|
|
15,586,150
|
|
|
|
Warrants
|
|
21,779,000
|
|
|
|
Compensation warrants
|
|
1,865,249
|
|
|
|
Convertible debentures
|
|
25,010,760
|
|
Outlook
Aurora’s business strategy is to:
Continue accelerating its penetration of the Canadian medical
cannabis market, leverage its Health Canada sales license for derivative
products (cannabis oils), expedite the completion of the Aurora’s Pointe-Claire
facility in Quebec, and complete the Aurora Sky facility in Alberta for
additional production capacity. Upgrades are also being undertaken to the
Company’s first facility in Cremona, Alberta, to further enhance production.
In preparation for the anticipated mid-2018 Canadian federal
legalization of adult consumer use of cannabis, the Company is building
organizational and production capacity to capture a share of the adult use
market.
Innovation and integration of technology are key components in
Aurora’s growth strategy. Going forward, Aurora will continue to leverage new
technologies, aimed at:
|
|
•
|
Improving the customer experience, e.g. via
further enhancements to Aurora’s unique mobile application - the world’s
only mobile app for ordering legal medical cannabis;
|
|
|
|
|
|
|
•
|
Delivering industry-leading per square foot
production capacity, while reducing operational expenses at its production
facilities, and
|
|
|
|
|
|
|
•
|
Substantially increasing the production of
cannabis concentrates through the Company’s collaboration with Radient.
|
The Company is also focusing on delivering further product
differentiation, including through Aurora’s intended strategic investment in
Hempco.
Page | 10
Finally, the Company is executing a significant international
expansion, as evidenced by the lead participation in the May 2017 Cann Group IPO
in Australia, and the May 2017 acquisition of Pedanios, Germany’s largest
distributor of medical cannabis. The Company is actively pursuing further
international opportunities.
Non-IFRS Financial Measures
The Company has included the following non-IFRS performance
measures in this press release:
|
|
•
|
Cash cost of sales per gram of dried cannabis is
calculated by taking the total IFRS cost of sales and removing the effect
of changes in fair value of biological assets, non-cash production costs,
oil conversion costs, cost of sales from service revenue and purchases
from other Licensed Producers, all divided by the total number of grams of
dried cannabis produced in the period. Cash cost to produce dried cannabis
is calculated by further removing packaging costs.
|
|
|
|
|
|
|
•
|
Adjusted gross profit has been adjusted from
IFRS by removing the non-cash unrealized gains on fair value of biological
assets.
|
About Aurora
Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s
Access to Cannabis for Medical Purposes Regulations (“ACMPR”). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as Aurora Mountain, is currently constructing a
second 800,000 square foot production facility, known as “Aurora Sky”, at the
Edmonton International Airport, and has acquired, and is undertaking completion
of a third 40,000 square foot production facility in Pointe-Claire, Quebec, on
Montreal’s West Island.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in a leading extraction technology
company, Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber Inc. for an
ownership stake exceeding 50.0% . Furthermore, Aurora is the cornerstone
investor with a 19.9% stake in Cann Group Limited, the first Australian company
licensed to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union ("EU"), based in Germany. Aurora’s common shares
trade on TSX under the symbol “ACB”.
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
###
Page | 11
|
Further information:
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
NATIONAL Equicom
|
|
+1.905.864.5525
|
mlakmaaker@national.ca
|
|
cam@auroramj.com
|
+1.416.848.1397
|
|
www.auroramj.com
|
|
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
(“forward-looking statements”). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward- looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release.
###
Page | 12
|
AURORA CANNABIS INC.
|
|
Consolidated Statements of Financial Position
|
|
June 30, 2017 and 2016
|
|
(In thousands of Canadian dollars)
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
$
|
|
|
$
|
|
|
Assets
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
159,796
|
|
|
170
|
|
|
Restricted cash
|
|
-
|
|
|
89
|
|
|
Accounts receivable
|
|
2,312
|
|
|
87
|
|
|
Marketable securities
|
|
14,845
|
|
|
-
|
|
|
Inventory
|
|
7,703
|
|
|
2,317
|
|
|
Biological assets
|
|
4,088
|
|
|
1,845
|
|
|
Promissory notes
receivable
|
|
1,222
|
|
|
-
|
|
|
Loans receivable
|
|
2,096
|
|
|
-
|
|
|
Other current assets
|
|
1,544
|
|
|
736
|
|
|
|
|
193,606
|
|
|
5,244
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
45,523
|
|
|
11,370
|
|
|
Convertible debenture
|
|
11,071
|
|
|
-
|
|
|
Loans receivable
|
|
-
|
|
|
1,782
|
|
|
Derivative
|
|
292
|
|
|
-
|
|
|
Investment in a joint venture
|
|
-
|
|
|
-
|
|
|
Intangible assets
|
|
31,087
|
|
|
-
|
|
|
Goodwill
|
|
41,100
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
322,679
|
|
|
18,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
Accounts payable
and accrued liabilities
|
|
8,753
|
|
|
1,686
|
|
|
Deferred revenue
|
|
1,421
|
|
|
28
|
|
|
Finance lease
|
|
69
|
|
|
-
|
|
|
Short term loans
|
|
-
|
|
|
6,047
|
|
|
Derivative
liabilities
|
|
-
|
|
|
233
|
|
|
Contingent consideration payable
|
|
13,221
|
|
|
-
|
|
|
|
|
23,464
|
|
|
7,994
|
|
|
|
|
|
|
|
|
|
|
Finance lease
|
|
282
|
|
|
-
|
|
|
Convertible notes
|
|
63,536
|
|
|
1,281
|
|
|
Long term loans
|
|
-
|
|
|
3,159
|
|
|
Deferred gain on convertible debenture
|
|
10,206
|
|
|
-
|
|
|
Deferred gain on derivative
|
|
321
|
|
|
-
|
|
|
Deferred tax liability
|
|
5,937
|
|
|
-
|
|
|
|
|
103,746
|
|
|
12,434
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
Share capital
|
|
221,447
|
|
|
17,148
|
|
|
Reserves
|
|
25,912
|
|
|
5,730
|
|
|
Deficit
|
|
(28,426
|
)
|
|
(16,916
|
)
|
|
|
|
218,933
|
|
|
5,962
|
|
|
|
|
|
|
|
|
|
|
|
|
322,679
|
|
|
18,396
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
$
|
|
|
$
|
|
|
Revenue
|
|
18,067
|
|
|
1,439
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on changes in
fair value of biological assets
|
|
(7,469
|
)
|
|
(3,004
|
)
|
|
Inventory expensed to cost of sales
|
|
3,472
|
|
|
295
|
|
|
Production costs
|
|
6,008
|
|
|
1,946
|
|
|
Cost
of sales (recovery)
|
|
2,011
|
|
|
(763
|
)
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
16,056
|
|
|
2,202
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
General and
administration
|
|
6,813
|
|
|
3,015
|
|
|
Sales and marketing
|
|
10,270
|
|
|
1,706
|
|
|
Research and
development
|
|
314
|
|
|
565
|
|
|
Acquisition and project
evaluation costs
|
|
1,551
|
|
|
-
|
|
|
Depreciation
|
|
716
|
|
|
593
|
|
|
Share-based payments
|
|
7,584
|
|
|
913
|
|
|
|
|
27,248
|
|
|
6,792
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
(11,192
|
)
|
|
(4,590
|
)
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
Interest and other income
|
|
861
|
|
|
73
|
|
|
Finance and
other costs
|
|
(6,582
|
)
|
|
(1,444
|
)
|
|
Foreign exchange
|
|
(215
|
)
|
|
-
|
|
|
Unrealized loss
on debenture
|
|
(1,135
|
)
|
|
-
|
|
|
Unrealized gain on marketable
securities
|
|
1,334
|
|
|
-
|
|
|
Unrealized gain (loss) on derivative
|
|
(335
|
)
|
|
89
|
|
|
|
|
(6,072
|
)
|
|
(1,282
|
)
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
(17,264
|
)
|
|
(5,872
|
)
|
|
|
|
|
|
|
|
|
|
Income tax recovery
|
|
|
|
|
|
|
|
Current
|
|
19
|
|
|
79
|
|
|
Deferred, net
|
|
4,277
|
|
|
70
|
|
|
|
|
4,296
|
|
|
149
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
(12,968
|
)
|
|
(5,723
|
)
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
(loss)
|
|
|
|
|
|
|
|
Deferred tax
|
|
(885
|
)
|
|
-
|
|
|
Unrealized gain
on marketable securities
|
|
6,077
|
|
|
-
|
|
|
Foreign currency translation
|
|
(25
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
(7,801
|
)
|
|
(5,723
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share
|
|
|
|
|
|
|
|
Basic and diluted
|
|
(0.05
|
)
|
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares
outstanding
|
|
|
|
|
|
|
|
Basic and diluted
|
|
279,029,226
|
|
|
128,988,266
|
|
|
EX-1.23 24 exhibit1-23.htm EXHIBIT 1.23
|
|
|
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver,
BC V6E 3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
September 28, 2017
A news release issued on September
28, 2017 at Vancouver, British Columbia relating to the material change
described herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. and Namaste
Technologies Inc. (“Namaste”) announced strategic hardware supply agreement
Full Description of Material
Change
Aurora Cannabis Inc. and Namaste today
announced that the companies have signed an exclusive hardware supply agreement
for the Canadian market. Pursuant to the agreement, Aurora, through its website
and mobile app, will offer a specially curated selection of industry-leading
vaporizers, which will be sourced from Namaste.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive Officer
Mobile: (780) 722 - 8889
Email: terry@auroramj.com
DATED September 28, 2017.
|
|
|
|
September 28, 2017
|
TSX:ACB
|
Aurora
Cannabis and Namaste Announce Strategic Hardware Supply
Agreement
Expands Product Offering for Aurora, Market Reach for
Namaste
Vancouver, BC – September 28, 2017 – Aurora Cannabis Inc.
(“Aurora” or the “Company”) (TSX: ACB) (OTCQX: ACBFF) (Frankfurt: 21P; WKN:
A1C4WM) and Namaste Technologies Inc. (“Namaste”) (CSE: N) (FRANKFURT: M5BQ)
(OTCMKTS: NXTTF) today announced that the companies have signed an exclusive
hardware supply agreement for the Canadian market. Pursuant to the agreement,
Aurora, through its website and mobile app, will offer a specially curated
selection of industry-leading vaporizers, which will be sourced from Namaste.
Under the terms of the agreement, Namaste will establish a
direct inventory feed to both Aurora’s online shop and its mobile app, providing
Aurora customers with access to a range of medical grade vaporizers and other
innovative products that are supplied through Namaste’s platform.
Namaste will be providing these products to Aurora customers
via next day delivery across Canada, and same day delivery to customers in the
Greater Toronto Area, which has a population of nearly 6.5 million people.
Namaste will also provide Aurora with back-office support, including the
handling of returns and warranty claims.
“This partnership is great for our clients and for Aurora, as
it significantly broadens our product offering to customers, while requiring no
capital outlay on our part,” said Terry Booth, CEO of Aurora. “The global
cannabis markets are showing increasing momentum towards smoke-free options, and
we are excited to meet this growing demand by offering a preferred selection of
Namaste-sourced vaporizers that meet the Aurora Standard. Furthermore, offering
a broader selection of high-quality ancillary products is an important element
in our strategy to position Aurora for the adult consumer market, strengthening
our brand in preparation for legalization in 2018.”
Sean Dollinger, President and CEO of Namaste, said, “We believe
that this agreement, the first of its kind for us, will dramatically increase
our market reach in Canada and be accretive in nature. The Aurora Standard
continues to set the benchmark for product quality and customer service, and
Aurora has created one of the strongest brands in the global cannabis sector. We
anticipate generating further traction for our best-in-class product offering,
and we intend to leverage this model through securing similar agreements in
other countries around the world.”
The global legal marijuana industry is rapidly becoming a
multi-billion-dollar market, and Namaste aims to capture significant market
share in the ancillary hardware segment of the sector. Through strategic
partnerships with leading companies such as Aurora, Namaste, which year to date
has already shipped in excess of 100,000 units, expects to expand its reach and
increase its market share.
About Aurora
Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s
Access to Cannabis for Medical Purposes Regulations (“ACMPR”). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as “Aurora Mountain”, is currently constructing a
second 800,000 square foot production facility, known as “Aurora Sky”, at the
Edmonton International Airport, and has acquired, and is undertaking completion
of a third 40,000 square foot production facility in Pointe-Claire, Quebec, on
Montreal’s West Island.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. Aurora’s common shares trade
on TSX under the symbol “ACB”.
About Namaste
Namaste Technologies Inc. is an emerging leader in vaporizer
and accessories space. Namaste has 26 ecommerce retail stores in 20 countries,
offers the largest range of brand name vaporizers products on the market and is
actively manufacturing and launching multiple unique proprietary products for
retail and wholesale distribution. Namaste is currently focused on expanding its
product offering, acquisitions and strategic partnerships, and entering new
markets globally.
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
###
Further information:
|
For Aurora
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
NATIONAL Equicom
|
|
+1.905.864.5525
|
mlakmaaker@national.ca
|
|
cam@auroramj.com
|
+1.416.848.1397
|
|
www.auroramj.com
|
|
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
(“forward-looking statements”). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward- looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release.
|
EX-1.24 25 exhibit1-24.htm EXHIBIT 1.24
|
|
|
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver,
BC V6E 3T5
Telephone: (604) 362-5207
A news release issued on September 29,
2017 at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. grants restricted
share units (“RSUs”) and stock options (“Options”).
Full Description of Material
Change
Aurora Cannabis Inc today announced
the grant of options and RSUs to directors and officers of the Company. See
attached news release dated September 29, 2017.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive Officer
Mobile: (780) 722 - 8889
Email: terry@auroramj.com
DATED September 29, 2017.
|
September 29,
2017
|
TSX:ACB
|
Aurora Grants Restricted Share Units and
Options
Vancouver, BC – September 29, 2017
– Aurora
Cannabis Inc. (“Aurora” or the “Company”) (TSX: ACB) (OTCQX: ACBFF) (Frankfurt:
21P; WKN: A1C4WM) today announced the grant of stock options (“Options”) and
restricted share units (“RSUs”) to directors and officers of the Company.
Options to purchase 1,900,000 common shares were granted
pursuant to the Company's Stock Option Plan, exercisable at a price of $2.76 per
common share for a term of 5 years, of which 525,000 vest over 12 months and
1,375,000 vest over 36 months, in equal quarterly installments.
In addition, subject to approval of the RSU Plan by the TSX and
ratification by disinterested shareholders at the Annual and Special General
meeting (the “AGM”) of the Company on November 13, 2017, 2,007,110 RSUs were
awarded, of which 525,000 vest over 12 months and 1,375,000 vest over 36 months,
in equal quarterly installments, and 107,110 vest immediately.
A description of the RSU Plan and the awards made under such
plan will be set out in the Management Information Circular of the Company which
will be mailed to shareholders and filed on SEDAR in connection with the AGM.
About Aurora
Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s
Access to Cannabis for Medical Purposes Regulations (“ACMPR”). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as “Aurora Mountain”, is currently constructing a
second 800,000 square foot production facility, known as “Aurora Sky”, at the
Edmonton International Airport, and has acquired, and is undertaking completion
of a third 40,000 square foot production facility in Pointe-Claire, Quebec, on
Montreal’s West Island.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. Aurora’s common shares trade
on TSX under the symbol “ACB”.
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
###
Further information:
|
For Aurora
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
NATIONAL Equicom
|
|
+1.905.864.5525
|
mlakmaaker@national.ca
|
|
cam@auroramj.com
|
+1.416.848.1397
|
|
www.auroramj.com
|
|
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
(“forward-looking statements”). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward- looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release.
|
EX-1.25 26 exhibit1-25.htm EXHIBIT 1.25
|
|
|
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver,
BC V6E 3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
October 02, 2017
A news release issued on October 02,
2017 at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis acquires BC Northern
Lights Enterprises Ltd. (“BCNL”) and Urban Cultivator Inc. (“Urban Cultivator”).
Full Description of
Material Change
Aurora Cannabis Inc. announced that
the Company has completed the acquisition of 100% of both BC Northern Lights
Enterprises Ltd. and Urban Cultivator Inc., leading companies, respectively, in
the production and sale of proprietary systems for the safe, efficient and
high-yield indoor cultivation of cannabis, and in state-of- the-art indoor
gardening appliances for the cultivation of organic microgreens, vegetables and
herbs in home kitchens.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive Officer
Mobile: (780) 722 - 8889
Email: terry@auroramj.com
DATED October 02, 2017.
Aurora Cannabis Acquires BC Northern Lights and Urban
Cultivator
Transactions Represent Strategic Move to Support
Expanding Home Grow Market
Vancouver, BC – October 2, 2017
– Aurora
Cannabis Inc. (“Aurora” or the “Company”) (TSX: ACB) (OTCQX: ACBFF) (Frankfurt:
21P; WKN: A1C4WM) today announced that the Company has completed the acquisition
of 100% of both BC Northern Lights Enterprises Ltd. (“BCNL”) and Urban
Cultivator Inc. (“Urban Cultivator”), leading companies, respectively, in the
production and sale of proprietary systems for the safe, efficient and
high-yield indoor cultivation of cannabis, and in state-of-the-art indoor
gardening appliances for the cultivation of organic microgreens, vegetables and
herbs in home kitchens.
BCNL and Urban Cultivator, which have been operating for 16
years and 7 years, respectively, are each growing strongly and, combined, are
tracking to generate more than $5 million in revenues in their current fiscal
year, ending October 31, 2017.
Neil Belot, Chief Global Business Development Officer said,
“These transactions are an important step in Aurora’s strategy to serve the home
gardening market in Canada for patients who choose to grow their own medical
cannabis, and ultimately for adult consumers who choose to grow their own after
Canada’s federal government legalizes adult usage, which is anticipated by July,
2018. For over a decade, BC Northern Lights products have been widely recognized
as the gold standard for home cannabis production, and we look forward to
integrating our offerings to deliver a truly unique and full service customer
experience.”
As at August 21, 2017 10,547 Canadians were registered to grow
either their own cannabis or as designated growers for others (source: Health
Canada in response to questions from Lift.co). The number of home cannabis
cultivators is expected to grow as a result of continued processing of
applications by Health Canada, with further expansion anticipated subsequent to
legalization of cannabis for adult use, with a proposed limit of four plants per
household. While the ultimate number of home growers is anticipated to be
limited relative to the overall size of the market, it represents very
significant upside potential for BCNL to grow its customer base and market
share.
“These acquisitions add an excellent range of proprietary
products to our expanding portfolio of customer offerings that meet the Aurora
Standard, and position us extremely well to capitalize on the opportunity in a
distinct and rapidly-growing segment of the market,” said Terry Booth, CEO. “We
have always advocated for people’s ability to make their own choices and are
very supportive of the Supreme Court’s Allard decision, which confirmed
patients’ rights to grow their own medical cannabis. Similarly, we believe that,
after implementation of consumer legalization in Canada, individuals who choose
to grow their own cannabis should have access to cultivation solutions that are
in controlled environments, safe, and can produce high-yielding, high quality
cannabis.”
Mr. Booth added, “BCNL indoor grow systems produce consistent,
predictable, and repeatable yields, while at the same time reducing the labour
intensity normally associated with home growing. We believe the systems’
CSA-approved design, safety features, and odorless operation will generate
strong resonance with our target markets, and securely address potential
concerns among municipal governments. We are very pleased that both co-founders,
Tarren and Linnea Wolfe, have agreed to stay on with Aurora and help drive our
expansion strategy in the home grow market.”
“We are delighted to now be part of the Aurora family,” said
Tarren Wolfe, co-founder of BCNL and Urban Cultivator. “This will enable us to
address a much larger audience of people who have been empowered by the Allard
decision to operate a home garden, and are seeking access to the equipment,
genetics, and educational support services to do so. In teaming up with Aurora,
we will work with an industry-leading team of cannabis branding specialists and
sales and marketing professionals to bring BCNL to the next level. In addition,
Aurora’s Licensed Producer status means the Company will soon be able to provide
a fully integrated package, including starter materials such as clones, offering
one-stop shopping for people who choose to grow their own cannabis at home.”
Consideration
The total consideration in exchange for the acquisition of BCNL
and Urban Cultivator is $3.85 million payable in cash on closing, subject to
customary working capital adjustments; $0.5 million of Aurora common shares and
share purchase warrants issued on closing; and up to a further $4 million of
future consideration based on the achievement of certain pre-established EBITDA
performance milestones related to BCNL and Urban Cultivator operations.
About BC Northern Lights
Founded in 2001 and with over 10,000 units sold, BCNL is a
leader in developing, manufacturing and marketing self-contained indoor
hydroponic grow systems. BCNL’s offerings include grow boxes and cultivation
consumables such as lights, carbon filters, grow medium and specialized
nutrients, as well as seven days per week support for its customers. The nature
of BCNL’s systems enables year-long, consistently high yields of cannabis within
a safe, efficient, and discrete environment. BCNL’s multi-award winning systems
provide for discreet and odorless operations. Professionally engineered, BCNL’s
products provide the highest level of safety, addressing one of the key concerns
neighbours living in the vicinity of home growers may have, particularly in
multi-dwelling settings. www.bcnorthernlights.com
About Urban Cultivator
Urban Cultivator offers self-contained, indoor grow systems for
vegetables, microgreens and herbs, for both the home and professional kitchen
markets. The equipment’s easy to operate hydroponic systems provide
best-in-class indoor cultivation environments for the production of fresh
foodstuffs. Urban Cultivator has attracted a number of high-profile customers
and partners, and is generating growing commercial momentum.
www.urbancultivator.net
About Aurora
Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s
Access to Cannabis for Medical Purposes Regulations (“ACMPR”). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as “Aurora Mountain”, is currently constructing a
second 800,000 square foot production facility, known as “Aurora Sky”, at the
Edmonton International Airport, and has acquired, and is undertaking completion
of a third 40,000 square foot production facility in Pointe-Claire, Quebec, on
Montreal’s West Island.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. Aurora’s common shares trade
on TSX under the symbol “ACB”.
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
###
Further information:
|
For Aurora
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
NATIONAL Equicom
|
|
+1.905.864.5525
|
mlakmaaker@national.ca
|
|
cam@auroramj.com
|
+1.416.848.1397
|
|
www.auroramj.com
|
|
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
(“forward-looking statements”). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward- looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release.
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver, BC V6E
3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
October 05, 2017
A news release issued on October 05,
2017 at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. launches the
Aurora Envoy
TM
, a patent-pending live plant transporter to target
home grow market
Full Description of Material
Change
Aurora Cannabis Inc. today is pleased
to announce that the Company will be launching its proprietary and
patent-pending live plant transporter, the Aurora Envoy
TM
. The
Company filed its patent application on August 31, 2017, providing Aurora with
the opportunity to pursue patent protection in over 150 countries.
|
Item 5.
|
Full Description of Material
Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice
President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive
Officer
Mobile: (780) 722 - 8889
Email:
terry@auroramj.com
DATED October 05, 2017.
Aurora Cannabis Launches the Aurora
Envoy
TM
A Patent-Pending Live Plant Transporter to Target Home Grow
Market
Vancouver, BC – October 5, 2017
– Aurora Cannabis Inc.
(“Aurora” or the “Company”) (TSX: ACB) (OTCQX: ACBFF) (Frankfurt: 21P; WKN:
A1C4WM) today is pleased to announce that the Company will be launching its
proprietary and patent-pending live plant transporter, the Aurora Envoy
TM
(“Envoy”). The Company filed its patent application on August 31, 2017,
providing Aurora with the opportunity to pursue patent protection in over 150
countries.
The Aurora Envoy
TM
possesses several novel and
inventive features that promote the health, vigor and vegetative growth of live
plant cuttings during shipment, leading to high transplant success rates and an
exceptional customer experience.
Neil Belot, Chief Global Business Development Officer for
Aurora, added, “Our team looked at all available options on the market. We were
unable to find one that met the Aurora Standard, and consequently we developed
our own. Following months of thorough testing and design iterations, we are
proud to say that no other comparable product on the market today offers the
same level of technological sophistication as the Aurora Envoy
TM
. We
employ one of the best and brightest industrial designers in this industry, and
with the support of our exceptional team, we have once again set a new standard
for the cannabis industry.”
The Aurora Envoy
TM
, which is anticipated to launch
commercially in the coming months, incorporates several key innovative features
including:
|
•
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Child-proof and tamper evident design;
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•
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Long-lasting internal power source (+200
hours);
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•
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Four powerful light emitting diodes optimized
for vegetative plant growth;
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•
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Opaque textured white-matte interior finish for
increased reflection and even light distribution;
|
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•
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Breathable container design for effective air
exchange and improved plant health, and
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•
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Wide-mouth design to eliminate potential
condensation issues.
|
“The Envoy brings together our guiding principle of
patients-first with our ongoing support of peoples’ ability to make the choice
to grow at home,” said Terry Booth, CEO. “The Envoy is therefore the perfect
complement to our home garden offering through BC Northern Lights, which we
recently acquired. Enabling people to grow at home, to achieve higher success
rates and produce exceptional yields while effectively addressing all of the issues previously raised by
the public and municipal governments, is a huge step forward in helping to build
this important segment of the cannabis industry.”
Aurora intends to wholesale the Envoy on a worldwide basis, and
has designed the manufacturing process in a way that enables cannabis producers
and other plant producers to customize the Envoy with their own branding.
About Aurora
Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s
Access to Cannabis for Medical Purposes Regulations (“ACMPR”). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as “Aurora Mountain”, is currently constructing a
second 800,000 square foot production facility, known as “Aurora Sky”, at the
Edmonton International Airport, and has acquired, and is undertaking completion
of a third 40,000 square foot production facility in Pointe-Claire, Quebec, on
Montreal’s West Island.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offer further
differentiation through the acquisition of BC Northern Lights Ltd. And Urban
Cultivator Inc., industry leaders in the production and sale of proprietary
systems for the safe, efficient and high-yield indoor cultivation of cannabis,
and in state-of-the-art indoor gardening appliances for the cultivation of
organic microgreens, vegetables and herbs in home kitchens. Aurora’s common
shares trade on TSX under the symbol “ACB”.
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
###
|
Further information:
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For Aurora
|
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Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
NATIONAL Equicom
|
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+1.905.864.5525
|
mlakmaaker@national.ca
|
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cam@auroramj.com
|
+1.416.848.1397
|
|
www.auroramj.com
|
|
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
(“forward-looking statements”). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
AURORA CANNABIS INC.
1500 – 1199 West Hastings
Street
Vancouver, British Columbia Canada V6E 3T5
Telephone: 1-844-601-2448
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Notice of Annual General and Special Meeting
of Shareholders
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and
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Information Circular
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Place:
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Renaissance Edmonton International Hotel
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Cartier Room
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4236 – 36 Street E
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Nisku, AB T9E 0V4 Canada
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Time:
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10 o’clock am (Mountain Time)
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Date of Meeting:
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Monday, November 13, 2017
|
AURORA CANNABIS INC.
1500 – 1199 West Hastings Street
Vancouver, British Columbia Canada V5E 3T5
Tel: 1-844-601-2448
NOTICE OF ANNUAL GENERAL AND SPECIAL MEETING OF
SHAREHOLDERS
NOTICE IS HEREBY GIVEN
that the Annual General and
Special Meeting of Shareholders of
Aurora Cannabis Inc.
(the “Company”)
will be held at the Renaissance Edmonton International Hotel, Cartier Room, 4236
– 36 Street E., Nisku, Alberta T9E 0V4, on
Monday, November 13, 2017
, at
the hour of 10 o’clock am (Mountain Time), for the following purposes:
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1.
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To table the audited financial statements of the Company
for the two fiscal years ended June 30, 2016 and June 30, 2017 (with
comparative statements relating to each of the respective fiscal periods)
together with the report of the Auditors and the management’s discussion
and analysis thereon;
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2.
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To fix the number of directors to be elected at
seven;
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3.
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To elect Directors for the ensuing year;
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4.
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To appoint the Auditors of the Company for the ensuing
year and authorize the Directors to fix their remuneration;
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5.
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To consider and, if deemed appropriate, to pass with or
without variation, a non-binding advisory resolution on executive
compensation, as detailed in the Information Circular
.
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6.
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To consider, and if thought advisable, pass an ordinary
resolution that approves the adoption of the Company’s Fixed Restricted
Share Unit Plan together with approval to certain Restricted Share Unit
awards as detailed in the Information Circular.
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7.
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To consider, and if thought advisable, pass an ordinary
resolution to the adoption of a new form 10% “rolling” share option plan
and to authorize the grant of all currently available and unallocated
option entitlements issuable under the new form share option plan, until
November 13, 2020 as detailed in the Information
Circular.
|
An Information Circular accompanies this Notice. The
Information Circular contains details of matters to be considered at the
Meeting. No other matters are contemplated, however any permitted amendment to,
or variation of, any matter identified in this Notice may properly be considered
at the Meeting. The Meeting may also consider the transaction of such other
business as may properly come before the Meeting or any adjournment thereof.
Shareholders of record on the Company’s books at the close of
business on September 29, 2017 are entitled to attend and vote at the Meeting or
at any postponement or adjournment thereof. Each common share is entitled to one
vote.
The audited financial statements of the Company for the two
fiscal years ended June 30, 2017 and June 30, 2016, together with the report of
the Auditors and the management’s discussion and analysis thereon are available
on
www.sedar.com
and copies of these documents will also be available at
the Meeting.
Registered shareholders who are unable to attend the Meeting
in person and who wish to ensure that their shares will be voted at the Meeting
are requested to complete, date and sign the enclosed form of proxy, or another
suitable form of proxy and deliver it in accordance with the instructions set
out in the form of proxy and in the Information Circular.
Non-registered shareholders who plan to attend the Meeting
must follow the instructions set out in the form of proxy or voting instruction
form to ensure that their shares will be voted at the Meeting. If you hold your
shares in a brokerage account, you are not a registered shareholder.
DATED at Vancouver, British Columbia, October 2, 2017
BY ORDER OF THE BOARD OF DIRECTORS
(signed)
“Terry Booth”
Chief Executive Officer
AURORA CANNABIS INC. INC
1500 – 1199 West Hastings
Street
Vancouver, British Columbia Canada V5E 3T5
Tel: 1-844-601-2448
INFORMATION CIRCULAR
(Containing information as at September 29, 2017 unless
indicated otherwise)
SOLICITATION OF PROXIES
This Information Circular is furnished in connection with the
solicitation of proxies by the management of
Aurora Cannabis Inc.
(the
“Company”) for use at the Annual General Meeting of Shareholders of the Company
(and any adjournment thereof) to be held at 10 o’clock am (Mountain Time) on
Monday, November 13, 2017 (the “Meeting”) at the place and for the purposes set
forth in the accompanying Notice of Meeting. While it is expected that the
solicitation will be primarily by mail, proxies may be solicited personally or
by telephone by the regular employees of the Company at nominal cost. All costs
of solicitation by management will be borne by the Company.
GENERAL PROXY INFORMATION
Solicitation of Proxies
The solicitation of proxies will be primarily by mail, but
proxies may be solicited personally or by telephone by directors, officers and
regular employees of the Company. The Company will bear all costs of this
solicitation. We have arranged for intermediaries to forward the meeting
materials to beneficial owners of the Common Shares held of record by those
intermediaries and we may reimburse the intermediaries for their reasonable fees
and disbursements in that regard.
Notice-and-Access
In November 2012, the Canadian Securities Administrators
announced the adoption of regulatory amendments to securities laws governing the
delivery of proxy-related materials by public companies. Public companies are
now permitted to advise their shareholders of the availability of all
proxy-related materials on an easily-accessible website, rather than mailing
copies of the materials.
The Company has elected to use the notice and access procedure
(“
Notice and Access
”) under National Instrument 51-102 –
Continuous
Disclosure Obligations
and National Instrument 54-101 –
Communication
with Beneficial Owners of Securities of a Reporting Issuer
(“
NI
54-101
”), for the delivery of meeting materials to shareholders for the
Annual General and Special Meeting to be held on Monday, November 13, 2017 (the
“
Meeting
”). Under the provisions of Notice and Access, shareholders will
receive a notice (“
Notice and Access Notice
”) containing information on
how they can access the Company’s Notice of Meeting and Information Circular
(the “
Meeting Materials
”) electronically instead of receiving a printed
copy or how to receive a printed copy of the Meeting Materials. Together with
the Notice and Access Notice, shareholders will receive a proxy
(“
Proxy
”), in the case of registered shareholders, enabling them to vote
at the Meeting. The Meeting Materials for the Meeting will be posted on the
Company’s website at
https://auroramj.com/investors
as of October 6,
2017, and will remain on the website for one year. The Meeting Materials will
also be available on the Company’s SEDAR corporate profile at www.sedar.com as
of October 6, 2017.
All registered and beneficial shareholders will receive a
Notice and Access Notice.
Appointment of Proxyholders
The individuals named in the accompanying form of proxy (the
“Proxy”) are officers and/or directors of the Company
. If you are a
shareholder entitled to vote at the Meeting, you have the right to appoint a
person or company other than
any of the persons designated in the Proxy, who need not be
a shareholder, to attend and act for you and on your behalf at the Meeting. You
may do so either by inserting the name of that other person in the blank space
provided in the Proxy or by completing and delivering another suitable form of
proxy.
- 2 -
Voting by Proxyholder
The persons named in the Proxy will vote or withhold from
voting the Common Shares represented thereby in accordance with your
instructions on any ballot that may be called for. If you specify a choice with
respect to any matter to be acted upon, your Common Shares will be voted
accordingly. The Proxy confers discretionary authority on the persons named
therein with respect to:
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(a)
|
each matter or group of matters identified therein for
which a choice is not specified, other than the appointment of an auditor
and the election of directors;
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(b)
|
any amendment to or variation of any matter identified
therein; and
|
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(c)
|
any other matter that properly comes before the
Meeting.
|
In respect of a matter for which a choice is not specified
in the Proxy, the persons named in the Proxy will vote the Common Shares
represented by the Proxy for the approval of such matter.
Registered Shareholders
Registered Shareholders may wish to vote by proxy whether or
not they are able to attend the Meeting in person. Registered shareholders may
choose one of the following options to submit their proxy:
|
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(a)
|
completing, dating and signing the enclosed form of proxy
and returning it to the Company’s transfer agent, Computershare Trust
Company of Canada (“Computershare”), by fax within North America at 1-
866-249-7775, outside North America at (416) 263-9524, or by mail to the
8
th
Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1 or
by hand delivery at 3
rd
Floor, 510 Burrard Street, Vancouver,
British Columbia, Canada V6C 3B9;
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(b)
|
use a touch-tone phone to transmit voting choices to a
toll-free number. Registered shareholders must follow the instructions of
the voice response system and refer to the enclosed proxy form for the
toll-free number, the holder’s account number and the control number;
or
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(c)
|
use the internet through the website of the Company’s
transfer agent at
www.investorvote.com
. Registered Shareholders
must follow the instructions that appear on the screen and refer to the
enclosed proxy form for the holder’s account number and the control
number.
|
In all cases the Registered Shareholder must ensure the proxy
is received at least 48 hours (excluding Saturdays, Sundays and statutory
holidays) before the Meeting, or the adjournment thereof, at which the proxy is
to be used.
Beneficial Shareholders
The following information is of significant importance to
shareholders who do not hold Common Shares in their own name
. Beneficial
Shareholders should note that the only proxies that can be recognized and acted
upon at the Meeting are those deposited by registered shareholders (those whose
names appear on the records of the Company as the registered holders of Common
Shares) or as set out in the following disclosure.
If Common Shares are listed in an account statement provided to
a shareholder by a broker, then in almost all cases those Common Shares will not
be registered in the shareholder’s name on the records of the Company. Such
Common Shares will more likely be registered under the names of the
shareholder’s broker or an agent of that broker. In Canada, the vast majority of
such Common Shares are registered under the name of CDS & Co. (the
registration name for The Canadian Depository for Securities Limited, which acts
as nominee for many Canadian brokerage firms), and in the United States (the
“U.S.”), under the name of Cede & Co. as nominee for The Depository Trust
Company (which acts as depositary for many U.S. brokerage firms and custodian
banks).
Intermediaries are required to seek voting instructions from
Beneficial Shareholders in advance of shareholder meetings. Every intermediary
has its own mailing procedures and provides its own return instructions to
clients.
You should carefully follow the instructions of your broker or
intermediary in order to ensure that your Common Shares are voted at the
Meeting.
- 3 -
The form of proxy supplied to you by your broker will be
similar to the Proxy provided to registered shareholders by the Company.
However, its purpose is limited to instructing the intermediary on how to vote
your Common Shares on your behalf. Most brokers now delegate responsibility for
obtaining instructions from clients to Broadridge Financial Solutions, Inc.
(“Broadridge”) in Canada and in the United States. Broadridge mails a voting
instruction form (a “VIF”) in lieu of a Proxy provided by the Company. The VIF
will name the same persons as the Company’s Proxy to represent your Common
Shares at the Meeting. You have the right to appoint a person (who need not be a
Beneficial Shareholder of the Company), other than any of the persons designated
in the VIF to represent your Common Shares at the Meeting and that person may be
you. To exercise this right, insert the name of the desired representative
(which may be you), in the blank space provided in the VIF. The completed VIF
must then be returned to Broadridge by mail or facsimile or given to Broadridge
by phone or over the internet, in accordance with Broadridge’s instructions.
Broadridge then tabulates the results of all instructions received and provides
appropriate instructions respecting voting of Common Shares to be represented at
the Meeting.
If you receive a VIF from Broadridge, the VIF must be completed
and returned to Broadridge, in accordance with Broadridge’s instructions, well
in advance of the Meeting in order to have the Common Shares voted at the
Meeting, or to have an alternate representative duly appointed to attend the
Meeting and vote your Common Shares.
Notice to United States Shareholders
The solicitation of proxies is not subject to the requirements
of Section 14(a) of the U.S. Exchange Act by virtue of an exemption applicable
to proxy solicitations by foreign private issuers as defined in Rule 3b-4 of the
U.S. Exchange Act. Accordingly, this Information Circular has been prepared in
accordance with applicable Canadian disclosure requirements. Residents of the
United States should be aware that such requirements differ from those of the
United States applicable to proxy statements under the U.S. Exchange Act.
This document does not address any income tax consequences of
the disposition of the Company shares by shareholders. Shareholders in a
jurisdiction outside of Canada should be aware that the disposition of shares by
them may have tax consequences both in those jurisdictions and in Canada, and
are urged to consult their tax advisors with respect to their particular
circumstances and the tax considerations applicable to them.
Any information concerning any properties and operations of the
Company has been prepared in accordance with Canadian standards under applicable
Canadian securities laws, and may not be comparable to similar information for
United States companies.
Financial statements included or incorporated by reference
herein have been prepared in accordance with International Financial Reporting
Standards, as issued by the International Accounting Standards Board, and are
subject to auditing and auditor independence standards in Canada, and reconciled
to accounting principles generally accepted in the United States. Such
consequences for the Company Shareholders who are resident in, or citizens of,
the United States may not be described fully in this Information Circular.
The enforcement by the Company Shareholders of civil
liabilities under the United States federal securities laws may be affected
adversely by the fact that the Company is incorporated or organized under the
laws of a foreign country, that some or all of their officers and directors and
the experts named herein are residents of a foreign country and that the major
assets of the Company are located outside the United States.
Revocation of Proxies
In addition to revocation in any other manner permitted by law,
a registered shareholder who has given a proxy may revoke it by:
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(a)
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executing a proxy bearing a later date or by executing a
valid notice of revocation, either of the foregoing to be executed by the
registered shareholder or the registered shareholder’s authorized attorney
in writing, or, if the shareholder is a corporation, under its corporate
seal by an officer or attorney duly authorized, and by delivering the
proxy bearing a later date to Computershare, at any time up to and
including the last business day that precedes the day of the Meeting or,
if the Meeting is adjourned, the last business day that precedes any
reconvening thereof, or to the chairman of the Meeting on the day of the
Meeting or any reconvening thereof, or in any other manner provided by
law; or
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(b)
|
personally attending the Meeting and voting the
registered shareholder’s Common Shares.
|
A revocation of a proxy will not affect a matter on which a
vote is taken before the revocation.
- 4 -
INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE
ACTED UPON
No director or executive officer of the Company, nor any person
who has held such a position since the beginning of the last completed financial
year end of the Company, nor any proposed nominee for election as a director of
the Company, \nor any associate or affiliate of the foregoing persons, has any
substantial or material interest, direct or indirect, by way of beneficial
ownership of securities or otherwise, in any matter to be acted on at the
Meeting other than the election of directors, the appointment of the auditor,
and as otherwise set out herein.
VOTING SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES
The board of directors (the “Board”) of the Company has fixed
September 29, 2017 as the record date (the “Record Date”) for determination of
persons entitled to receive notice of the Meeting. Only shareholders of record
at the close of business on the Record Date who either attend the Meeting
personally or complete, sign and deliver a form of proxy in the manner and
subject to the provisions described above will be entitled to vote or to have
their Common Shares voted at the Meeting.
The Company graduated from the TSX Venture Exchange (“TSXV”) to
the Toronto Stock Exchange (the “TSE”) effective July 24, 2017, and its Common
Shares are listed for trading under the TSE stock symbol ACB. The Company is
also listed on the OTCQX under stock symbol ACBFF and on the Frankfurt Exchange
under stock symbol 21P;WKN:A1C4WM).
On August 17, 2016, the Company’s wholly owned subsidiary,
Aurora Marijuana Inc., acquired all of the issued and outstanding shares of
CanvasRx Inc. (
“CanvasRx”
) pursuant to the terms of a Share Purchase
Agreement dated August 9, 2016, as amended and restated on August 16, 2016.
As of September 29, 2017, there were 371,820,751 Common Shares
issued and outstanding, each carrying the right to one vote. No group of
shareholders has the right to elect a specified number of directors, nor are
there cumulative or similar voting rights attached to the Common Shares.
The Company is authorized to issue an unlimited number of
Common Shares without par value.
The Company is also authorized to issue an unlimited number of
Class A Shares with a par value of Cdn$1.00 each and is also authorized to issue
an unlimited number of Class B Shares with a par value of Cdn $5.00 each. There
were no Class A or Class B Shares issued and outstanding at September 29, 2017
record date.
Class A Shares
Class A shares may be issued from time to time in one or more
series, and the directors may fix from time to time before such issue the number
of Class A shares of each series and the designation, rights and restrictions
attached thereto including any voting rights, dividend rights, redemption,
purchase or conversion rights, sinking fund or other provisions. The Class A
shares rank in priority over Common Shares and any other shares ranking by their
terms junior to the Class A shares as to dividends and return of capital upon
liquidation, dissolution or winding up of the Company or any other return of
capital or distribution of the assets of the Company.
Class B Shares
Class B shares may be issued from time to time in one or more
series, and the directors may fix from time to time before such issue the number
of Class B shares of each series and the designation, rights and privileges
attached thereto including any voting rights, dividend rights, redemption,
purchase or conversion rights, sinking fund or other provisions. The Class B
shares rank in priority over Common Shares and any other shares ranking by their
terms junior to the Class B shares as to dividends and return of capital upon
liquidation, dissolution or winding up of the Company or any other return of
capital or distribution of the assets of the Company.
As of September 29, 2017, 5,355,000 Common Shares of the
following directors and officers of the Company were held in escrow pursuant to
an escrow agreement dated September 18, 2014. These shares will be fully
released from escrow on December 9, 2017.
|
Name of Shareholder
|
Number of Escrow
Shares Held
|
|
Terry Booth
|
2,452,500
|
|
Steve Dobler
|
2,902,500
|
To the knowledge of the directors and executive officers of the
Company, there were no persons/companies who beneficially owned, directly or
indirectly, or exercised control or direction over, Common Shares carrying more
than 10% of the voting rights attached to all outstanding Common Shares of the
Company as at September 29, 2017.
- 5 -
The following documents filed with the securities commissions
or similar authority in the Provinces of British Columbia, Alberta, Ontario and
Quebec are specifically incorporated in this Information Circular:
|
|
•
|
The Company’s audited financial statements for the two
fiscal years ended June 30, 2017 and June 30, 2016; the reports of the
auditor’s thereon, and the related management’s discussion and analysis;
|
|
|
•
|
The Company’s Audit Committee Charter attached as
Schedule “A” to the Company’s Annual Information Form dated September 25,
2017 for fiscal year ended June 30, 2017;
|
|
|
•
|
The Company’s Code of Ethics; and
|
|
|
•
|
Advance Notice Provisions contained in the Company’s
Articles.
|
Appointments and Resignations of Directors and Officers
|
•
|
Effective August 4, 2016, Amy Stephenson
assumed the role of Interim Chief Financial Officer and effective August
2, 2016, John Bean resigned as Chief Financial Officer
|
|
|
|
|
•
|
Effective October 1, 2016, Joseph del Moral was
appointed as a director
|
|
|
|
|
•
|
Effective October 11, 2016, Barry Fishman was
appointed as a director
|
|
|
|
|
•
|
Effective November 7, 2016, Cameron Battley was
appointed Executive Vice President
|
|
|
|
|
•
|
Effective November 29, 2016, Michael Singer was
appointed Chairman of the Board
|
|
|
|
|
•
|
Effective March 21, 2017, Neil Belot was
appointed Chief Global Business Development Officer
|
|
|
|
|
•
|
Effective May 8, 2017:
|
Chuck Rifici resigned as a director
Glen Ibbott was appointed Chief
Financial Officer, replacing Amy Stephenson who remained a consultant in an
advisory capacity until August 9, 2017
Allan Cleiren was appointed Chief
Operating Officer
|
•
|
Effective June 22, 2017, Debra Wilson was
appointed Vice President, Human Resources
|
|
|
|
|
•
|
Effective August 1, 2017:
|
|
|
|
|
|
Nilda Rivera, Corporate Secretary, was
appointed Vice President, Finance
|
|
|
|
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|
Nick Whitehead was appointed Vice President,
Market Development
|
|
|
|
|
|
Dieter MacPherson was appointed Vice President,
Production
|
|
|
|
|
•
|
Effective September 25, 2017, Barry Fishman
resigned as a director
|
FINANCIAL STATEMENTS
The audited consolidated financial statements of the Company
for each of the two fiscal years ended June 30, 2017 and June 30, 2016, with the
reports of the auditor thereon, and the related Management Discussion and
Analysis will be tabled at the Meeting and will be available at the Meeting.
These documents are also available on the Company’s SEDAR website at
www.sedar.com
. Additional information relating to these documents may be
obtained by a shareholder upon request without charge from the Company at Suite
1500 – 1199 West Hastings Street, Vancouver, British Columbia, Canada V6E 3T5,
Tel.: 1-844-601-2448.
ELECTION OF DIRECTORS
There are currently six directors of the Company. Shareholders
are being asked at the Meeting to fix the number of directors at seven.
The term of office of each of the current directors will end at
the conclusion of the Meeting. Unless the director’s office is vacated earlier
in accordance with the provisions of the
Business Corporations Act
(British Columbia), each director elected will hold office until the conclusion
of the next annual general meeting of the Company, or if no director is then
elected, until a successor is elected. The following disclosure sets out the
names of management’s nominees for election as directors, all major offices and
positions with the Company or any of its significant affiliates each now holds,
each nominee’s principal occupation, business or employment (for the five
preceding years), the period of time during which each has been a director and
the number of Common Shares of the Company beneficially owned by each, directly
or indirectly, or over which each exercised control or direction, as at
September 29, 2017:
- 6 -
Name, Country of
Residence
and Present
Office Held
|
Present Principal
Occupation,
Business or Employment (Within
the Past
Five Years for proposed
Directors)
(1)
|
Date Elected or
Appointed
|
Number of Shares
Held
(2)
|
Michael Singer
(7)(8))(9)
Quebec,
Canada
Chairman of the Board and
Director
|
Chartered Professional Accountant,
Consultant and Entrepreneur; currently
CFO and Corporate Secretary
of Clementia
Pharmaceuticals Inc. since May 2015;
previously CFO
of Bedrocan Cannabis
Corp. from May 2014 until June 2015; and
CFO
of Thallion Pharmaceuticals Inc. from
March 2006 until August 2013.
|
Director:
May 20, 2016
Chairman of the
Board:
November 29, 2016
|
180,579
(3)
|
Terry Booth
Alberta, Canada
Chief Executive Officer
and
Director
|
President and part owner of Superior
Safety
Codes Inc.
|
Director and Officer:
December 9, 2014
|
12,234,282
(4)
|
Steve Dobler
(8)
Alberta, Canada
President and Director
|
Professional Engineer; Vice President
and
part owner of Superior Safety Codes
Inc.; President of ICC Enterprises
Corp.
since May 2002.
|
Director and Officer:
December 9, 2014
|
15,090,348
(5)
|
Jason Dyck
(9)
Alberta, Canada
Director
|
Professor, Department of Pediatrics,
University of Alberta since July 1999;
and Vice-President,
Metabolic Modulators
Research Ltd. since July 1999.
|
March 10, 2015
|
2,431,155
(6)
|
Adam Szweras
(7)(8)(9)
Ontario, Canada
Director
|
Barrister & Solicitor; Partner, Fogler,
Rubinoff LLP since 2006; Chairman of
Foundation Markets Inc. since
December 2005.
|
August 10, 2015
|
Nil
|
Joseph del Moral
Ontario, Canada
Director
|
CEO of 2425451 Ontario Inc. also known
as
Canadian Cannabis Clinics since 2014;
and Director of 2179321 Ontario
Inc. also
known as Newten Home Comfort from
January 2007 to
December 2013.
|
October 1, 2016
|
2,310,200
|
- 7 -
Name, Country of
Residence
and Present
Office Held
|
Present Principal
Occupation,
Business or Employment (Within
the Past
Five Years for proposed
Directors)
(1)
|
Date Elected or
Appointed
|
Number of Shares
Held
(2)
|
Diane Jang
British Columbia, Canada
Nominee
Director
|
Business Consultant; President,
Sunrise Soya Foods Inc. (from
October 2015 to December 2016;
General Manager, Dairy
Alternatives,
Earth’s Own Food Company Inc.
from May 2008 to 2015;
General
Manager, International, SoyaWorld
Inc. from 2006 to 2008;
Director of Sales,
SoyaWorld Inc., from 1998 to 2006;
Sales and
Marketing Manager, Sunrise
Soya Foods, from 1992 to 1998.
|
Nominee
|
Nil
|
Notes:
|
(1)
|
The information as to the principal occupation, business
or employment is not within the knowledge of the Company and has been
furnished by the respective director.
|
|
(2)
|
The information as to the number of Common Shares of the
Company beneficially owned or over which a director exercises control or
direction, directly or indirectly, and not being within the knowledge of
the Company, has been furnished by the respective directors individually
or from insider reports filed by the respective nominees and publicly
available through SEDI at
www.sedi.ca
.
|
|
(3)
|
Of these shares, 59,250 are owned by 8115966 Canada Inc.,
a private company owned by Mr. Singer.
|
|
(4)
|
Of these shares, 11,987,782 are owned by Lola Ventures
Inc. and 120,000 by Chinuke Investments Ltd., private companies owned and
controlled by Mr. Booth.
|
|
(5)
|
These shares are owned by 1771472 Alberta Ltd., a private
company wholly-owned and controlled by Mr. Dobler.
|
|
(6)
|
Of these shares, 2,106,715 are owned by 748086 Alberta
Ltd., a private company wholly-owned and controlled by Mr. Dyck.
|
|
(7)
|
Member of the Audit Committee.
|
|
(8)
|
Member of the Compensation Committee.
|
|
(9)
|
Member of the Nominating and Corporate Governance
Committee.
|
None of the proposed nominees for election as a director of the
Company are proposed for election pursuant to any arrangement or understanding
between the nominee and any other person, except the directors and senior
officers of the Company acting solely in such capacity.
A shareholder can vote for all of the above nominees, vote for
some of the above nominees and withhold for other of the above nominees, or
withhold for all of the above nominees.
Unless otherwise instructed, the
named proxyholders will vote FOR the election of each of the proposed nominees
set forth above as directors of the Company. At the Meeting the above persons
will be nominated for election as director as well as any person nominated
pursuant to the Advance Notice Provision (see below). Only persons nominated by
management pursuant to this Information Circular or pursuant to the Advance
Notice Provision will be considered valid director nominees eligible for
election at the Meeting.
Cease Trade Orders, Bankruptcies, Penalties and Sanctions
Except as disclosed below, no proposed director is, as at the
date of this Information Circular, or has been, within the last 10 years before
the date of this Information Circular, a director, or executive officer of any
company (including the Company) that was:
|
|
(a)
|
subject to a cease trade order, an order similar to a
cease trade order or an order that denied the relevant company access to
any exemption under securities legislation that was in effect for a period
of more than 30 consecutive days, that was issued while the proposed
director was acting in the capacity as director, chief executive officer
or chief financial officer; or
|
|
|
|
|
|
|
(b)
|
subject to a cease trade order, an order similar to a
cease trade order or an order that denied the relevant company access to
any exemption under securities legislation that was in effect for a period
of more than 30 consecutive days, that was issued after the proposed
director ceased to be a director, chief executive
officer or chief financial officer and which resulted from an event
that occurred while that person was acting in the capacity as director, chief
executive officer or chief financial officer.
|
- 8 -
Adam Szweras was a director and secretary of Bassett Media
Group Corp. (“Bassett”), a TSX-V listed company, until March 16, 2010. Bassett
has been subject to a cease trade order since June 16, 2010 due to not filing
its financial statements and management’s discussion and analysis pursuant to NI
51-102.
Adam Szweras was appointed as a director for Mahdia Gold
Corp.’s (“Mahdia”) on April 14, 2016. Mahdia was a Canadian Securities Exchange
listed company until February 4, 2016. Mahdia has been subject to a cease trade
order since March 13, 2015, due to not filing its financial statements and
management’s discussion and analysis pursuant to NI 51-102.
No proposed director is, as at the date of this Information
Circular, or has been, within 10 years before the date of this Information
Circular, a director or executive officer of any company (including the Company)
that:
|
|
(a)
|
while that person was acting in that capacity, or within
a year of ceasing to act in that capacity, became bankrupt, made a
proposal under any legislation relating to bankruptcy or insolvency, or
was subject to or instituted any proceedings, arrangement, or compromise
with creditors, or had a receiver, receiver manager or trustee appointed
to hold its assets; or
|
|
|
|
|
|
|
(b)
|
became bankrupt, made a proposal under any legislation
relating to bankruptcy or insolvency, or become subject to or instituted
any proceedings, arrangement or compromise with creditors, or had a
receiver, receiver manager, or trustee appointed to hold the assets of the
proposed director.
|
No proposed director has been subject to:
|
|
(a)
|
any penalties or sanctions imposed by a court relating to
securities legislation or by a securities regulatory authority or has
entered into a settlement agreement with a securities regulatory
authority; or
|
|
|
|
|
|
|
(b)
|
any other penalties or sanctions imposed by a court or
regulatory body that would likely be considered important to a reasonable
Shareholder in deciding whether to vote for a proposed
director.
|
Director Biographies
Michael Singer, Director
On May 20, 2016, the Company appointed Michael Singer to the
Board of Directors. Mr. Singer, who was nominated as Chairman of the Board on
November 29, 2016, sits as an independent Director and has extensive financial
management, capital markets and corporate governance experience in the
pharmaceutical and medical cannabis industries. He is a Chartered Professional
Accountant (CPA, CGA) and is currently the Chief Financial Officer of NASDAQ
listed Clementia Pharmaceuticals Inc., a Montreal based clinical stage
biopharmaceutical company. From May 2014 until June 2015, he was Chief Financial
Officer of Bedrocan Cannabis Corp. Mr. Singer has held numerous independent
director roles in Canadian public health care companies, and also previously
served as CFO and Corporate Secretary for TSX-V listed Thallion Pharmaceuticals
Inc., until the company’s successful cash sale to BELLUS Health Inc. in July
2013. Mr. Singer holds a Graduate Diploma in Public Accounting from McGill
University and a Bachelor of Commerce from Concordia University.
Terry Booth, Chief Executive Officer and Director
Mr. Booth co-founded the Company in 2013 when the Canadian
federal government created a new regulatory regime for the national medical
cannabis system. Investing $2.5 million of his own capital in start-up funding,
he secured a 160-acre parcel of land in the foothills of the Rocky Mountains,
and designed and built the Company’s first advanced cannabis production
facility. Mr. Booth has assembled a diverse and highly skilled team of experts
from a broad range of disciplines to execute on the Company’s business strategy
and vision to build the world’s foremost cannabis company. Prior to founding
Aurora, Mr. Booth has been in the industrial permitting and governmental
regulatory sector for over 20 years. An entrepreneur and Alberta business
leader, Mr. Booth has served as President/CEO of six other highly successful
businesses, one of which, Superior Safety Codes Inc, has received many awards
including one of Canada’s top 50 fastest-growing companies. Mr. Booth is a
strong supporter of many charitable organizations dedicated to ending family
violence and violence against women, including the “Walk a Mile in Her Shoes”
campaign, Kids Up Front, WINGS and WIN House.
- 9 -
Steve Dobler, President and Director
Mr. Dobler has worked closely with Mr. Booth in the permitting
space for over 20 years and was co-founder of the Company. Mr. Dobler holds a
Bachelor of Science in Engineering from the University of Alberta and is a
Professional Engineer with previous public company experience. He has held
numerous executive positions in successful private and public Canadian companies
over the past 25 years where he was responsible for the implementation of
project management, strategies, and overseeing all facets of various operations.
He has been involved in numerous private company acquisitions, integrations,
operations and successful exits.
Dr. Jason Dyck, Director
On March 10, 2015, the Company appointed Dr. Jason Dyck, PhD,
to its Board. Dr. Dyck obtained his PhD and Bachelor of Science from the
University of Alberta and is a distinguished research scientist in the
Department of Pediatrics at the University of Alberta. Dr. Dyck currently
directs the University of Alberta Cardiovascular Research Centre and co-directs
the pan-Alberta program known as Alberta HEART. Not only is Dr. Dyck an
outstanding research scientist and a leader in his field but he also has
extensive experience in drug discovery and commercialization. He co-founded a
successful University of Alberta spin-off company, currently holds more than 100
patents and has numerous collaborations with large pharmaceutical companies. His
accomplishments in academic research, drug discovery and product/technology
commercialization have contributed to Dr. Dyck being recognized as one of
Canada's Top 40 under 40 (awarded by the Caldwell Partners in 2007), which is
"presented to exceptional Canadians under the age of 40 who are outstanding
leaders in their chosen fields and who are shaping our country's future".
Adam Szweras, Director
Mr. Szweras is a securities law partner with Fogler, Rubinoff
LLP in Toronto and Chairman of the Foundation Markets Group, a Toronto based
Merchant Bank and brokerage firm. His law practice focuses on financings and
going public transactions, and in his banking practice, he works closely to
build, invest in, and develop emerging business. Adam represents and sits on the
boards of several mid-market public companies and assists companies in listing
on the TSE, the TSXV, and the Canadian Securities Exchange. He has a particular
expertise with cross border mid-market transactions and often acts as a
strategic advisor to his clients. Mr. Szweras works with public and private
companies active in marijuana markets in Canada and the US as well as companies
with businesses in energy transmission, oil and gas and alternative energy,
technology, and food producers. Mr. Szweras has experience in representing
clients in Canada and the US as well as South America, China and South Asia. Mr.
Szweras both joined Fogler, Rubinoff LLP and founded the Foundation Markets
Group in 2006. He was called to the Ontario Bar in 1996 and has authored
numerous papers and articles relating to Canadian and foreign securities and
corporate law.
Joseph del Moral, Director
Joseph del Moral was appointed to the Board effective October
1, 2016. Mr. del Moral is a co-founder and CEO of Canadian Cannabis Clinics
(CCC), as well as a co-founder of CanvasRx, Canada's leading cannabis outreach
and counselling service provider, where he served as Chief Executive Officer
until its acquisition by Aurora. Prior to his pioneering work in the cannabis
industry, Mr. del Moral held several senior positions in the energy industry,
including as founder of Newten Home Comfort, before its acquisition by Just
Energy in 2010. Mr. del Moral holds a B.Comm in Finance from McGill University.
Nominee Director Biography
Diane Jang, Nominee
Diane Jang is a nominee director at the Meeting. Ms. Jang is a
business consultant, specializing in strategic planning for sustainable success,
growth and profitability for companies. With over 27 years of business
experience in the Consumer Packaged Goods industry, she has a proven track
record in strategic planning, increasing profitability and leading companies to
become market leaders in their industries. Previously, Ms. Jang led successful
companies as President at Sunrise Soya Foods and General Manager at Earth’s Own
Food Co Inc., and also serves as a Director of Big Sisters of BC Lower Mainland.
Ms. Jang holds a Bachelor of Business Administration from Simon Fraser
University.
- 10 -
Advance Notice Provision
At the Company’s annual general and special meeting held on
March 17, 2014, the Company’s shareholders approved the alteration of the
Company’s articles for the purpose of adopting advance notice provisions (the
“
Advance Notice Provision
”). The Advance Notice Provision provides for
advance notice to the Company in circumstances where nominations of persons for
election to the Board are made by shareholders of the Company other than
pursuant to (i) a requisition of a meeting made pursuant to the provisions of
the
Business Corporations Act
(British Columbia) or (ii) a shareholder
proposal made pursuant to the provisions of the
Business Corporations Act
(British Columbia).
The purpose of the Advance Notice Provision is to foster a
variety of interests of the shareholders and the Company by ensuring that all
shareholders - including those participating in a meeting by proxy rather than
in person - receive adequate notice of the nominations to be considered at a
meeting and can thereby exercise their voting rights in an informed manner.
Among other things, the Advance Notice Provision fixes a deadline by which
holders of Common Shares must submit director nominations to the Company prior
to any annual or special meeting of shareholders and sets forth the minimum
information that a shareholder must include in the notice to the Company for the
notice to be in proper written form.
The Advance Notice Provision also requires all proposed
director nominees to deliver a written representation and agreement that such
candidate for nomination, if elected as a director of the Company, will comply
with all applicable corporate governance, conflict of interest, confidentiality,
share ownership, majority voting and insider trading policies and other policies
and guidelines of the Company applicable to directors and in effect during such
person’s term in office as a director.
The foregoing is merely a summary of the Advance Notice
Provision, is not comprehensive and is qualified by the full text of such
provision in the Company’s Altered Articles, which is available under the
Company’s profile on SEDAR at
www.sedar.com
.
The Company did not receive notice of a nomination in
compliance with the Advance Notice Provision, and as such, any nominations other
than nominations by or at the direction of the Board or an authorized officer of
the Company will be disregarded at the Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT EACH
SHAREHOLDER VOTE “FOR” THE ELECTION OF THE ABOVE NOMINEES AS DIRECTORS.
Majority Voting Policy
The Company has adopted a majority voting policy (the
“
Majority Voting Policy
”) that applies to the election of directors.
Under the Majority Voting Policy, a director who is elected with more votes
withheld than cast in favour of his or her election will be required to tender
his or her resignation to the Chairman of the Board. The resignation will be
effective when accepted by the Board and the nominee director will not
participate in any committee or Board meetings or deliberations on this matter.
The Majority Voting Policy does not apply in circumstances involving contested
director elections.
The Nominating and Corporate Governance Committee will consider
the resignation and make a recommendation to the Board on whether the
resignation should be accepted. In considering the recommendation of the
Corporate Governance Committee, the Board will consider the factors taken into
account by the committee and such additional information and factors that the
Board considers to be relevant. The Board expects that resignations will be
accepted unless there are extenuating circumstances that warrant a contrary
decision.
The Board will announce its decision (including the reasons for
not accepting any resignation) by way of a news release within 90 days of the
date of the meeting at which the election occurred and provide a copy of the
news release to the TSE. If the resignation is accepted, subject to any
applicable law, the Board may leave the resultant vacancy unfilled until the
next annual general meeting, fill the vacancy through the appointment of a new
director, or call a special meeting of shareholders at which there will be
presented one or more nominees to fill any vacancy or vacancies.
A copy of the Majority Voting Policy can be viewed on the
Company’s website as part of the 2017 Meeting Materials at
https://auroramj.com/investors
.
- 11 -
APPOINTMENT OF AUDITOR
MNP LLP, Chartered Professional Accountants, Suite 2200 – MPP
Tower, 1021 West Hastings Street, Vancouver, British Columbia, will be nominated
at the Meeting for re-appointment as auditor of the Company. MNP LLP, Chartered
Professional Accountants, were first appointed auditor on May 25, 2015.
AUDIT COMMITTEE AND RELATIONSHIP WITH AUDITOR
The purpose of the Audit Committee is to assist the Board in
fulfilling its oversight responsibilities by reviewing the financial
information, which will be provided to the shareholders and the public, the
systems of corporate controls, which management and the Board have established,
and overseeing the audit process. It has general responsibility to oversee
internal controls, accounting and auditing activities and legal compliance of
the Company. The Audit Committee also is mandated to review and approve all
material related party transactions.
The Company’s Audit Committee Charter is attached as Schedule
“A” to the Company’s Annual Information Form dated September 25, 2017 for fiscal
year ended June 30, 2017 which is available on the Company’s SEDAR website at
www.sedar.com
. The Company’s Audit Committee members during the fiscal
year ended June 30, 2017 were: Michael Singer (Chair), Adam Szweras and Barry
Fishman. Mr. Fishman resigned as a director of the Company on September 25,
2017. The Board will appoint a third independent member of the Audit Committee
following the annual general and special meeting notwithstanding composition.
All members of this Committee are independent directors. National Instrument
52-110 of the Canadian Securities Administrators requires the Company to
disclose annually certain information concerning the constitution of its Audit
Committee and its relationship with its independent auditor. See sections in the
Company’s Annual Information Form for the fiscal year ended June 30, 2017, which
contains information about the Company’s Audit Committee and information
containing the Company’s relationship with its auditor, MNP LLP.
OTHER COMMITTEES OF THE BOARD
The Company also has a Nominating and Corporate Governance
Committee and a Compensation Committee, described below:
Nominating and Corporate Governance Committee
For the fiscal year ended June 30, 2017, the members of the
Company’s Nominating and Corporate Governance Committee were: Jason Dyck
(Chair), Adam Szweras, Michael Singer and Barry Fishman. Barry Fishman resigned
as a director of the Company on September 25, 2017. The Company adopted a
Nominating and Corporate Governance charter. The Nominating and Corporate
Governance Committee is responsible for screening nominees to the Board. The
Nominating and Corporate Governance Committee annually assesses the skills and
qualifications of directors and nominees to ensure the members of the board of
directors have the skills and qualifications appropriate to the current needs of
the Company. This Committee meets as required to review and make recommendations
to the board of directors on all direct and indirect compensation, benefits and
perquisites for senior management and directors of the Company.
This year the board has decided that seven directors are to be
elected. The Company’s goal is to assemble a board with the appropriate
background, knowledge, skills and diversity to effectively carry out its duties,
oversee the Company’s strategy and business affairs and foster a climate that
allows the board to constructively guide and challenge management.
Key attributes
The Company expects all board members to be financially
literate, independent minded and team players. The Nominating and Corporate
Governance Committee also considers the below factors when assessing potential
candidates:
|
•
|
the board’s overall mix of skills and experience
|
|
•
|
how actively the candidates participate in meetings and
develop an understanding of our business
|
|
•
|
their character, integrity, judgment and record of
achievement
|
|
•
|
diversity (including gender, aboriginal heritage, age,
sexual orientation and geographic representation)
|
All of the current directors of the Company are independent,
with the exception of Terry Booth (Chief Executive Officer), Steve Dobler
(President) and Joseph del Moral (Chief Executive Officer of CanvaRx).
- 12 -
Each of the nominated directors is eligible to serve as a
director and has expressed their willingness to do so. Directors who are elected
will serve until the end of the next annual meeting, or until a successor is
elected or appointed.
See “Director Biographies/Nominee Biography” above for more
information about the Board.
Compensation Committee
For the fiscal year ended June 30, 2017, the members of the
Compensation Committee were: Adam Szweras (Chair), Michael Singer, Steve Dobler
and Barry Fishman. Mr. Fishman resigned as a director of the Company on
September 25, 2017. Michael Singer and Adam Szweras are independent members of
this Committee. Steve Dobler is not independent (President of the Company). The
Company has adopted a Compensation Committee Charter. The Compensation Committee
conducts reviews with regard to the directors’ and the Chief Executive Officer’s
compensation once a year. To make its recommendation on directors’ and the Chief
Executive Officer’s compensation, this Committee takes into account the types of
compensation and the amounts paid to directors and Chief Executive Officers of
comparable publicly traded Canadian companies. Members of the Compensation
Committee do not currently receive any remuneration for acting in such capacity.
The Company also has in place a Disclosure Confidentiality and
Insider Trading Policy, a Securities Trading and Reporting Policy, and Whistle
Blower Policy
.
CORPORATE GOVERNANCE
The Board believes that good corporate governance improves
corporate performance and benefits all shareholders. The Canadian Securities
Administrators (the “CSA”) have adopted National Policy 58-201 Corporate
Governance Guidelines, which provides non-prescriptive guidelines on corporate
governance practices for reporting issuers such as the Company. In addition, the
CSA has implemented National Instrument 58-101F2 Disclosure of Corporate
Governance Practices, which prescribes certain disclosure by the Company of its
corporate governance practices. A complete description of corporate governance
is set out in the Statement of Corporate Governance Practices attached as
Schedule A to this Information Circular.
The Company recognizes the benefits of having a diverse Board,
and seeks to increase diversity at the Board level. The Company does not
maintain quotas or targets regarding gender representation on the Board or in
executive officer positions. All Board appointments will be made based on merit,
in the context of the skills, experience, independence, knowledge and other
qualities which the Board as a whole requires to be effective, with due regard
for the benefits of diversity (including the level of representation of women on
the Board). As at the date hereof, the Company has three senior officers who are
female. The Company recruits, manages and promotes on the basis of an
individual’s competence, qualification, experience and performance, regardless
of gender, age, ethnic origin, religion, sexual orientation or disability or
other aspects of diversity in executive officer positions.
The Board’s mandate expressly encourages a diversity of
background skills and experience and personal characteristics among the
directors. As a result, while neither a written policy nor targets relating to
the identification and nomination of female directors have been adopted to date
and the emphasis in filling Board vacancies is on finding the best qualified
candidates given the needs and circumstances of the Board, a nominee’s diversity
will be considered favourably in the identification and selection process.
The Board has not adopted any policies that specifically
address the appointment of women to executive officers positions. The Board
believes that executive officer appointments should be made on the basis of the
skills, knowledge, experience and character of individual candidates and the
requirements of management at the time. The Company believes that considering
the broadest group of individuals is required to provide the leadership needed
to achieve the Company’s business objectives; however, due to the relatively
small size of the Company’s executive leadership, the representation of women in
executive officer positions has not been considered when making executive
officer appointments and the Company has not adopted targets regarding the
representation of women in executive officer positions for the reasons stated
above.
COMPENSATION OF EXECUTIVE OFFICERS
The Board has assessed the Company’s compensation plans for its
executive officers to ensure alignment with the Company’s business plan and to
evaluate the potential risks associated with those plans and programs. The Board
has concluded that the compensation policies and practices do not
create any risks that are reasonably likely to have a material adverse effect on
the Company. The Board considers the risks associated with executive
compensation and corporate incentive plans when designing and reviewing such
plans and programs.
- 13 -
The Company has not adopted a policy restricting its executive
officers or directors from purchasing financial instruments that are designed to
hedge or offset a decrease in market value of equity securities granted as
compensation or held, directly or indirectly, by its executive officers or
directors. To the knowledge of the Company, none of the executive officers or
directors have purchased such financial instruments.
COMPENSATION DISCUSSION AND ANALYSIS
This section provides the Company’s approach to executive
compensation by outlining the processes and decisions supporting the
determination of the amounts which the Company paid to its Chief Executive
Officer, Chief Financial Officer and its three other most highly compensated
executives during the financial year ended June 30, 2017 (the “NEOs”). While
this discussion relates to the NEOs, the other executives of the Company
participate in the same plans and are subject to a similar process.
The Compensation Committee assists the Board in discharging the
Board’s oversight responsibilities relating to the compensation and retention of
Executive Officers. The Compensation Committee’s responsibilities include, but
are not limited to:
|
|
•
|
Setting policies for Executive Officers’
remuneration;
|
|
|
|
|
|
|
•
|
Reviewing and approving and then recommending
to the Board salary, bonus, and other benefits, direct or indirect, and
any change-of-control packages of the Chief Executive Officer;
|
|
|
|
|
|
|
•
|
Considering the recommendations of the Chief
Executive Officer and setting the terms and conditions of employment
including, approving the salary, bonus, and other benefits, direct or
indirect, and any change-of- control packages, of the Executive Officers
of the Company; and
|
|
|
|
|
|
|
•
|
Overseeing the administration of the Company’s
compensation plans, including share option plans (the “Share Option
Plan”), and such other compensation plans or structures as are adopted by
the Company from time to time.
|
|
|
|
|
|
|
•
|
Approve employment agreements for Executive
Officers.
|
The Compensation Committee makes recommendations to the Board
regarding (a) Executive Officers’ base salary, annual bonus awards and share
option grants; (b) annual and long-term quantitative goals and the annual
qualitative goals for the Executive Officers; and (c) participation in the Share
Option Plan and amendments to the Share Option Plan, as necessary.
The following executive compensation principles guide the
Compensation Committee in fulfilling its roles and responsibilities in the
design and ongoing administration of the Company’s executive compensation
program:
|
|
•
|
Compensation levels and opportunities must be market
competitive to attract and retain qualified and experienced executives,
while being fair and reasonable to shareholders;
|
|
|
|
|
|
|
•
|
Compensation must incorporate an appropriate balance of
short and long-term rewards; and
|
|
|
|
|
|
|
•
|
Compensation programs must align executives’ long-term
financial interests with those of shareholders by providing equity-based
incentives.
|
The Company does not have formal benchmarks for assessing and
setting executive compensation, however, the Company reviews compensation
programs of companies in its peer group to ensure that executive compensation is
within the parameters of companies of a similar size and in the same industry.
Levels of compensation are also established and maintained with the intent of
attracting and retaining superior quality employees while ensuring that the
levels are not contrary to the interests of shareholders.
The Company’s general executive compensation philosophy is to,
whenever possible, pay its Executive Officers “base” compensation in the form of
salaries that are competitive in comparison to those earned by executive
officers holding comparable positions with other Canadian publicly traded
entities similar to the Company while at the same time providing its Executive
Officers with the opportunity to earn above average “total” compensation through
the potential attainment of annual incentive bonuses and through the Share
Option Plan and other equity-based compensation structures as may be approved by
the Company’s shareholders.
- 14 -
The Company’s executive compensation program is designed to
encourage, compensate and reward employees on the basis of individual and
corporate performance, both in the short and the long term. For NEOs, the
compensation program is designed to provide a larger portion of variable
incentives tied to corporate performance. NEO compensation includes base salary
and benefits, bonuses and Share options. Salaries are a base level of
compensation designed to attract and retain executive offices with the
appropriate skills and experience. Bonuses are designed to reward NEOs for the
achievement of short term corporate objective and individual contribution
towards achieving those objectives, while option grants through the Company’s
Share Option Plan was designed to provide incentives to increase shareholder
value over the longer-term and thereby better align executive compensation with
the interests of shareholders.
Each element of executive compensation is carefully considered
by the Compensation Committee to ensure that the there is the right mix of
short-term and long-term incentives for the purposes of achieving the Companies
goals and objectives.
Base Salary
Salaries paid to the NEOs in 2017 and 2016 are reflected in the
“Summary Compensation Table” below. An NEO’s base salary is intended to
remunerate the NEO for discharging job responsibilities and reflects the
executive’s performance over time. Individual salary adjustments take into
account performance contributions in connection with their specific duties. The
base salaries for NEOs are set out in their employment agreements, the terms of
which are described below. The base salary of each executive officer is
determined by the Board based on an assessment by the Compensation Committee of
his or her sustained performance and consideration of competitive compensation
levels for the markets in which the Company operates. In making its
recommendations to the Board, the Compensation Committee also considers the
particular skills and experience of the individual. A final determination on
executive compensation, including salary, is made by the Board in its sole
discretion based on the recommendations of the Compensation Committee and its
knowledge of the industry and geographic markets in which the Company operates.
The Compensation Committee does not use any type of quantitative formula to
determine the base salary level of any of the NEOs.
Base salaries are reviewed annually to ensure that they
properly reflect a balance of market conditions, the levels of responsibilities
and accountability of each individual, their unique experience, skills and
capability and level of sustained performance.
Option Based Awards
The Share option component of Executive Officers’ compensation
is intended to advance the interests of the Company by encouraging the
directors, officers, employees and consultants of the Company to remain
associated with the Company and providing them with additional incentive in
their efforts on behalf of the Company in the conduct of its affairs. Grants
under the Share Option Plan are intended to provide long term awards linked
directly to the market value performance of the Company’s shares. The
Compensation Committee reviews management’s recommendations and itself
recommends to the Board. Share options are granted according to the specific
level of responsibility of the particular executive and the number of options
for each level of responsibility is determined by the Compensation
Committee.
The number of outstanding options is considered by the
Compensation Committee when determining the number of options to be granted in
any particular year due to the limited number of options which are available for
grant under the Share Option Plan.
Refer to heading “PARTICULARS OF MATTERS TO BE ACTED UPON –
Adoption of New Form 10% “Rolling” Share Option Plan/Unallocated Option
Entitlements” below.
Annual Incentives
The Compensation Committee believes that incentive compensation
motivates individual performance to maximize shareholder value and aligns
executive officer performance with the Company’s objectives and shareholder
interests.
The Board has approved a bonus plan that is meant to increase
corporate performance, profitability and shareholder value. Under the plan, cash
payments are made when predetermined operational and financial targets are met.
In addition, the Compensation Committee factors into the bonus its assessment of
each executive officer’s respective contribution to this achievement.
For the fiscal year 2018, the Board approved a management bonus
plan (the “Management Bonus Plan”) composed of corporate, divisional and
individual measures and based on a percentage of base salary determined by the
position level. The CEO has a Target percentage incentive level of 75%. Other
NEOs have a Target percentage incentive level of 50%.
- 15 -
In recognition of senior management’s superior performance in
2017, the bonus payouts for the CEO and President were paid as per their
employment agreements (35% and 30% respectively) with additional amounts awarded
in restricted share units (40% and 20% respectively). The payouts for all other
NEOs were made 50% in cash and 50% in RSUs, subject to shareholder approval of
the RSU plan.
There were no bonuses awarded in respect of the fiscal year
ended June 30, 2016.
PERFORMANCE GRAPH
The following graph compares the total cumulative return to a
shareholder who invested $100 in Common Shares of the Company on June 30, 2012,
with the cumulative total return of the TSXV Composite Index as at the June 30
year end date of the Company for each year following June 30, 2012.
|
Notes:
|
|
(1)
|
At June 30, 2012 the Company, then known as “Prescient
Mining Corp.” was trading on the TSXV under the stock symbol
“PMC”.
|
|
(2)
|
The Company moved the listing of its Common Shares to the
Canadian Securities Exchange (the “CSE”) effective May 31, 2014, trading
under the stock symbol “PMC”.
|
|
(3)
|
On October 2, 2014, the Company changed its name to
Aurora Cannabis Inc. (“Aurora”) and effective October 4, 2016, the Company
de-listed its Common Shares from the CSE.
|
|
(4)
|
Effective market opening October 5, 2016, the Common
Shares commenced trading on the TSXV under the stock symbol
“ACB”.
|
|
(5)
|
Effective July 24, 2017, the Common Shares commenced
trading on the TSE under the stock symbol “ACB”. For continuity, the ACB
stock symbol shown in the graph also represents the Company’s former
symbol PMC.
|
As described in this Information Circular, the compensation
policy for the Company’s directors and NEOs is primarily tied to financial
performance of the business and not specifically to Common Share performance.
The performance criteria is based on the Company’s relative Shareholder return
as compared to a peer index. See “Statement of Executive Compensation” contained
herein.
STATEMENT OF EXECUTIVE COMPENSATION
General Provisions
In this section “Named Executive Officer” means
(a) the Chief Executive Officer (or an individual who acted in
a similar capacity) (the “CEO”);
(b) the Chief Financial Officer (or an individual who acted in
a similar capacity) (the “CFO”);
(c) each of the Company’s three other most highly compensated
executive officers, or the three most highly compensated individuals acting in a
similar capacity (except those whose total salary and bonus does not exceed
$150,000) at the end of that financial year; and
(d) each individual who would be an Named Executive Officer
under paragraph (c) but for the fact that the individual was neither an
executive officer of the company, nor acting in a similar capacity, at the end
of that financial year.
During the fiscal year ended June 30, 2017, the Named Executive
Officers (the “NEOs”) of the Company were Terry Booth, Chief Executive Officer,
Steve Dobler, President, Glen Ibbott, Chief Financial Officer, Amy Stephenson,
Former Chief Financial Officer, John Bean, Former Chief Financial
Officer, Cameron Battley, Executive Vice President, Allan Cleiren, Chief
Operating Officer, and Neil Belot, Chief Global Business Development
Officer.
- 16 -
The NEOs during the fiscal year ended June 30, 2016 were Terry
Booth, Chief Executive Officer, Steve Dobler, President, and John Bean, Chief
Financial Officer.
Summary Compensation Table
The table below is a summary of the compensation received by
the NEOs for the last three fiscal years ended June 30, 2017, June 30, 2016 and
June 30, 2015.
Name
and
principal
position
|
Year
|
Salary
($)
|
Share-
based
awards
(1
)
($)
|
Option-
based
awards
(2)
($)
|
Non-equity incentive
plan compensation
|
Pension
value
($)
|
All Other
Compensation
($)
|
Total
Compensation
($)
|
Annual
incentive
plan
(3)
($)
|
Long-term
incentive
plans
($)
|
Terry Booth,
CEO and
Director
(4)
|
2017
|
62,692
|
130,000
|
1,854,167
(5
)
|
113,750
|
Nil
|
Nil
|
287,500
(6)
|
2,444,359
|
|
2016
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
125,000
(6)
|
125,000
|
|
2015
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Steve Dobler,
President and
Director
(7)
|
2017
|
58,636
|
50,000
|
1,854,167
(8
)
|
75,000
|
Nil
|
Nil
|
200,000
(9)
|
2,237,803
|
|
2016
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
75,000
(9)
|
75,000
|
|
2015
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Glen Ibbott,
CFO
(10)
|
2017
|
37,500
|
10,417
|
1,648,462
|
10,417
|
Nil
|
Nil
|
Nil
|
1,685,962
|
|
2016
|
N/A
|
N/A
|
NA
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|
2015
|
N/A
|
N/A
|
NA
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Amy Stephenson,
Former
CFO
(11)
|
2017
|
Nil
|
Nil
|
58,944
|
Nil
|
Nil
|
Nil
|
163,250
(12)
|
222,194
|
|
2016
|
N/A
|
N/A
|
NA
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|
2015
|
N/A
|
N/A
|
NA
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
John Bean,
Former CFO and
Director
(13)
|
2017
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
9,900
(14)
|
9,900
|
|
2016
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
43,200
(14)
|
43,200
|
|
2015
|
Nil
|
Nil
|
79,205
|
Nil
|
Nil
|
Nil
|
16,200
(14)
|
95,405
|
Cameron Battley,
Executive
VP
(15)
|
2017
|
200,000
|
50,000
|
589,356
|
50,000
|
Nil
|
Nil
|
Nil
|
889,536
|
|
2016
|
N/A
|
N/A
|
NA
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|
2015
|
N/A
|
N/A
|
NA
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Allan Cleiren,
Chief Operating
Officer
(16)
|
2017
|
20,192
|
5,209
|
1,482,945
|
5,209
|
Nil
|
Nil
|
Nil
|
1,508,346
|
|
2016
|
N/A
|
N/A
|
NA
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|
2015
|
N/A
|
N/A
|
NA
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Neil Belot, Chief Global
Business
Development
Officer
(17)
|
2017
|
172,000
|
50,000
|
654,840
|
50,000
|
Nil
|
Nil
|
779,746
(18)
|
1,706,586
|
|
2016
|
N/A
|
N/A
|
NA
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|
2015
|
N/A
|
N/A
|
NA
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Notes:
|
(1)
|
The share-based awards were bonuses accrued during the
year ended June 30, 2017 and consist of the Proposed RSUs. The fair value
of the share-based awards was based on the closing price of $2.76 on
September 28, 2017, and is subject to shareholder approval. Refer to
heading “PARTICULARS OF MATTERS TO BE ACTED UPON – Fixed Restricted Share
Unit Plan/Restricted Share Unit Awards” below.
|
|
(2)
|
Options are valued using the Black-Scholes option pricing
model as described in the Company’s audited financial statements for the
years ended June 30, 2017 and 2016. These amounts represent the fair value
of the Options at the date of grant.
|
|
(3)
|
Non-equity annual incentive plan compensation consists of
accrued bonuses for the year.
|
|
(4)
|
Mr. Booth was appointed Chief Executive Officer on
December 9, 2014. Mr. Booth does not receive any compensation for his role
as a Director.
|
|
(5)
|
Stock options were granted to Lola Ventures Inc., a
private company controlled by Mr. Booth.
|
|
(6)
|
Management fees paid to Lola Ventures Inc., a private
company controlled by Mr. Booth.
|
|
(7)
|
Mr. Dobler was appointed President on December 9, 2014.
Mr. Dobler does not receive any compensation for his role as a
Director.
|
- 17 -
|
(8)
|
Stock options were granted to 1771472 Alberta Ltd., a
private company controlled by Mr. Dobler.
|
|
(9)
|
Management fees paid to 1771472 Alberta Ltd., a private
company controlled by Mr. Dobler.
|
|
(10)
|
Mr. Ibbott was appointed Chief Financial Officer on May
8, 2017.
|
|
(11)
|
Ms. Stephenson was appointed Interim Chief Financial
Officer on August 4, 2016 and ceased to be CFO effective May 8, 2017. Ms.
Stephenson provided transition consulting services until August 9,
2017.
|
|
(12)
|
CFO service fees paid to Branson Corporate Services Inc.
Adam Szweras, a director of the Company, has a 24.5% indirect interest in
Branson, through a family trust for the benefit of his minor
children.
|
|
(13)
|
Mr. Bean was appointed Chief Financial Officer on
December 9, 2014 and ceased to be CFO effective August 2, 2016.
|
|
(14)
|
CFO management fees paid to InSpire Consulting Services
Ltd., a company controlled by Mr. Bean.
|
|
(15)
|
Mr. Battley was appointed Executive Vice President on
November 7, 2016.
|
|
(16)
|
Mr. Cleiren was appointed Chief Operating Officer
effective May 8, 2017.
|
|
(17)
|
Mr. Belot was appointed Chief Global Business Development
Officer on March 21, 2017.
|
|
(18)
|
Consulting fees related to the CanvasRx
acquisition.
|
Compensation Oversight
The Compensation Committee considers the compensation including
grants of equity-based compensation to directors and officers of the Company and
makes recommendations to the Board for consideration.
INCENTIVE PLAN AWARDS
During fiscal 2017, the Company granted 9,775,000 options at a
fair value of $11,926,056. These options are exercisable at between $0.66 to
$2.56 per share and expire between August 2021 to May 2022. These options are
subject to certain vesting conditions over three years from the date of grant,
based on years of service and share price appreciation. The Company also accrued
bonuses for 107,110 share-based awards under the Proposed RSU Plan with a fair
value of $295,626.
During fiscal 2016, the Company granted 2,100,000 options at a
fair value of $540,277. These options are exercisable at between $0.30 to $0.46
per share, with 137,500 options vesting in 2016, and 683,333 options vesting in
2017. The options expire between August 2020 and May 2021.
The Company records compensation expense for the fair value of
the stock options granted under its incentive share option plan using the
Black-Scholes option pricing model. This model determines the fair value of
stock options granted and amortizes it to earnings over the vesting period.
Incentive Plan Awards – Option-based Awards for the fiscal
year ended June 30, 2017
The following table sets out all option-based and share-based
awards outstanding at fiscal year ended June 30, 2017, for each NEO.
|
Name
|
Option-based Awards
|
Share-Based Awards
|
Number of
securities
underlying
unexercised
options
(#)
|
Option
exercise
price
($)
|
Option
expiration
date
m – d – y
|
Value
of
unexercised
in-the-
money
options
(1)
($)
|
Number of
Shares or
units of
Shares
that
have
not
vested
(#)
|
Market or
payout value
of
share-
based
awards
that
have not
vested
($)
|
Market or
payout value
of
vested
share
based awards
not paid out
or
distributed
(2)
($)
|
Terry Booth
CEO and Director
|
350,000
|
2.250
|
08-25-2021
|
N/A
|
N/A
|
N/A
|
130,000
|
|
1,250,000
(3)
|
2.270
|
03-22-2022
|
N/A
|
N/A
|
N/A
|
N/A
|
Steve Dobler
President and
Director
|
350,000
|
2.250
|
08-25-2021
|
N/A
|
N/A
|
N/A
|
50,000
|
|
1,250,000
(4)
|
2.270
|
03-22-2022
|
N/A
|
N/A
|
N/A
|
N/A
|
Glen Ibbott
CFO
|
1,250,000
|
2.490
|
05-11-2022
|
N/A
|
N/A
|
N/A
|
10,417
|
Amy Stephenson,
Former
CFO
(5)
|
87,499
|
0.660
|
05-09-2018
|
131,249
|
N/A
|
N/A
|
N/A
|
- 18 -
|
Name
|
Option-based Awards
|
Share-Based Awards
|
Number
of
securities
underlying
unexercised
options
(#)
|
Option
exercise
price
($)
|
Option
expiration
date
m – d – y
|
Value
of
unexercised
in-the-
money
options
(1)
($)
|
Number
of
Shares or
units of
Shares that
have not
vested
(#)
|
Market
or
payout value
of share-
based
awards
that
have not
vested
($)
|
Market
or
payout value
of
vested share
based
awards
not paid out
or
distributed
(2)
($)
|
John Bean
Former CFO and
Director
(6)
|
200,000
(6)
|
0.295
|
09-02-2017
|
373,000
|
N/A
|
N/A
|
N/A
|
Cameron Battley
Executive VP
|
300,000
|
0.580
|
03-14-2021
|
474,000
|
N/A
|
N/A
|
50,000
|
|
450,000
|
2.560
|
01-19-2022
|
N/A
|
N/A
|
N/A
|
N/A
|
Allan Cleiren
Chief Operating
Officer
|
1,000,000
|
2.490
|
05-11-2022
|
N/A
|
N/A
|
N/A
|
5,209
|
Neil Belot
Chief Global
Business Development
Officer
|
125,000
|
0.295
|
08-26-2020
|
233,125
|
N/A
|
N/A
|
50,000
|
|
500,000
|
2.56
|
01-19-2022
|
N/A
|
N/A
|
N/A
|
N/A
|
|
Notes:
|
|
(1)
|
The value of in-the-money value stock options was based
on the closing price of $2.16 on June 30, 2017.
|
|
(2)
|
The share-based awards were bonuses accrued during the
year ended June 30, 2017 and consist of the Proposed RSUs. The fair value
of the share-based awards was based on the closing price of $2.76 on
September 28, 2017, and is subject to shareholder approval. Refer to
heading “PARTICULARS OF MATTERS TO BE ACTED UPON – Fixed Restricted Share
Unit Plan/Restricted Share Unit Awards” below.
|
|
(3)
|
Stock options were granted to Lola Ventures Inc., a
private company controlled by Terry Booth.
|
|
(4)
|
Stock options were granted to 1771472 Alberta Ltd., a
private company controlled by Steve Dobler.
|
|
(5)
|
Amy Stephenson ceased to be CFO of the Company effective
May 8, 2017.
|
|
(6)
|
John Bean ceased to be CFO of the Company effective
August 2, 2016. The Company agreed to extend the term of Mr. Bean’s
options to September 2, 2017.
|
Incentive Plan Awards – Option-based Awards for the fiscal
year ended June 30, 2016
The following table sets out all option-based and share-based
awards outstanding at fiscal year ended June 30, 2016, for each NEO. The Company
did not grant share-based awards during the fiscal year ended June 30, 2016.
|
Name
|
Option-based Awards
|
Share-Based Awards
|
Number
of
securities
underlying
unexercised
options
(#)
|
Option
exercise
price
($)
|
Option
expiration
date
m – d – y
|
Value
of
unexercised
in-the-money
options
(1)
($)
|
Number
of
Shares or
units of
Shares
that
have
not
vested
(#)
|
Market
or
payout value
of share-
based
awards
that
have not
vested
($)
|
Market
or
payout value
of
vested share
based
awards
not paid out
or
distributed
(2)
($)
|
Terry Booth
CEO and Director
|
Nil
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Steve Dobler
President and
Director
|
Nil
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
John Bean, Former
CFO and
Director
(2)
|
300,000
|
0.295
|
06-02-2020
|
52,500
|
N/A
|
N/A
|
N/A
|
|
Notes:
|
|
(1)
|
The value of in-the-money value stock options was based
on the closing price of $0.47 on June 30, 2016.
|
|
(2)
|
John Bean ceased to be CFO of the Company effective
August 2, 2016.
|
- 19 -
Incentive Plan Awards – Value Vested or Earned for th fiscal
year ended June 30, 2017
The following table sets out all incentive plan values vested
(or earned) during the fiscal year ended June 30, 2017, for each NEO:
|
Named Executive
Officer
|
Option-based awards –
Value vested during
the
year
(1)
($)
|
Share-based awards –
Value vested during
the
year
(2)
($)
|
Non-equity incentive plan
compensation –
Value earned
during the year
(2)
($)
|
Terry Booth
CEO and Director
|
97,125
|
130,000
|
113,750
|
Steve Dobler
President and Director
|
97,125
|
50,000
|
75,000
|
Glen Ibbott
CFO
|
Nil
|
10,417
|
10,417
|
Amy Stephenson
Former CFO
(3)
|
78,021
|
Nil
|
Nil
|
John Bean
Former CFO and
Director
(4)
|
Nil
|
Nil
|
Nil
|
Cameron Battley
Executive VP
|
15,750
|
50,000
|
50,000
|
Allan Cleiren
Chief Operating Officer
|
Nil
|
5,209
|
5,209
|
Neil Belot
Chief Global Business
Development Officer
|
15,750
|
50,000
|
50,000
|
|
Notes:
|
|
(1)
|
The value of vested stock options that would have been
realized if exercised on the vesting date is determined by the difference
between the market price of the underlying securities and the exercise
price of the options on the vesting date.
|
|
(2)
|
Comprised of bonuses for the year and share-based awards
consisted of RSU’s which are subject to shareholder approval. Refer to
heading “PARTICULARS OF MATTERS TO BE ACTED UPON – Fixed Restricted Share
Unit Plan/Restricted Share Unit Awards” below.
|
|
(3)
|
Amy Stephenson ceased to be CFO of the Company effective
May 8, 2017.
|
|
(4)
|
John Bean ceased to be CFO of the Company effective
August 2, 2016.
|
Incentive Plan Awards – Value Vested or Earned for the
fiscal year ended June 30, 2016
The following table sets out all incentive plan values vested
(or earned) during the fiscal year ended June 30, 2016, for each NEO:
|
Named Executive
Officer
|
Option-based awards –
Value vested during
the
year
(1)
($)
|
Share-based awards –
Value vested during
the
year
($)
|
Non-equity incentive plan
compensation –
Value earned
during the year
($)
|
Terry Booth
CEO and Director
|
Nil
|
N/A
|
N/A
|
Steve Dobler
President and Director
|
Nil
|
N/A
|
N/A
|
John Bean
Former CFO and Director
(2)
|
Nil
|
N/A
|
N/A
|
|
Notes:
|
|
(1)
|
The value of vested stock options that would have been
realized if exercised on the vesting date is determined by the difference
between the market price of the underlying securities and the exercise
price of the options on the vesting date.
|
|
(2)
|
John Bean ceased to be CFO of the Company effective
August 2, 2016.
|
Pension Plan Benefits
The Company has no pension plans that provide for payments or
benefits at, following, or in connection with the retirement of the Named
Executive Officers.
- 20 -
Directors’ and Officers’ Liability Insurance
The Company maintains an insurance policy with respect to
directors’ and officers’ liability covering directors and officers of the
Company and its subsidiaries as a group. The policy provides coverage to an
annual limit of $30,000,000. The annual premium for the policy period is
$101,200. The Company’s coverage under the policy is for a period of 12 months
until June 1, 2018, with terms and premiums to be established at each renewal.
Employment Agreements, Termination and Change in Control
Benefits
The Company currently has employment agreements with each of
its NEOs as follows:
Terry Booth – Chief Executive Officer
The Company entered into an employment agreement with Mr. Terry
Booth effective January 1, 2017 which provides for his annual base salary of
$325,000, four weeks’ annual vacation, participation in bonus plans and
restricted share unit plans, bonuses of up to a maximum of 35% of the annual
base salary, to be approved by the Compensation Committee, and eligibility to
participate in the Company’s standard benefit plans. The Company may terminate
the employment without cause by providing Mr. Booth reasonable and adequate
notice, or salary in lieu of notice of twelve months’ base salary plus one
additional month per year of service, calculated on a pro-rata basis, with this
calculation commencing as of July 1, 2013 to a maximum of 24 months’ notice or
base salary in lieu thereof. No change of control provisions were included in
Mr. Booth’s employment agreement. On September 25, 2017, the Board approved a
Management Bonus Plan with an increase to Mr. Booth’s bonus target to 75% of his
base salary.
Steve Dobler - President
The Company entered into an employment agreement with Mr. Steve
Dobler effective January 1, 2017 which provides for his annual base salary of
$250,000, four weeks’ annual vacation, participation in bonus plans and
restricted share unit plans, bonuses of up to a maximum of 30% of the annual
base salary, to be approved by the Compensation Committee, and eligibility to
participate in the Company’s standard benefit plans. The Company may terminate
the employment agreement without cause by providing Mr. Dobler reasonable and
adequate, or salary in lieu of notice of nine months’ base salary plus one
additional month per year of service, calculated on a pro-rata basis, with this
calculation commencing as of July 1, 2013 to a maximum of 18 months’ notice or
base salary in lieu thereof. No change of control provisions were included in
Mr. Dobler’s employment agreement. On September 25, 2017, the Board approved a
Management Bonus Plan with an increase to Mr. Dobler’s bonus target to 50% of
his base salary.
Glen Ibbott – Chief Financial Officer
The Company entered into an employment agreement with Mr. Glen
Ibbott effective May 8, 2017 which provides for his annual base salary of
$250,000, four weeks’ annual vacation, 1,250,000 stock options vesting quarterly
over three years with a life of five years, participation in bonus plans and
restricted share unit plans, reimbursement of professional association fees and
eligibility to participate in the Company’s standard benefit plans. The Company
may terminate the employment agreement without cause by providing Mr. Ibbott
reasonable and adequate notice, or salary in lieu of notice of six months’ base
salary plus one additional month per year of service, calculated on a pro-rata
basis, to a maximum of 12 months. No change of control provisions were included
in Mr. Ibbott’s employment agreement. On September 25, 2017, the Board approved
a Management Bonus Plan with Mr. Ibbott’s bonus target of 50% of his base
salary.
Cam Battley, Executive Vice President
The Company entered into an employment agreement with Mr.
Cameron Battley for the position of Senior Vice President effective March 14,
2016, which provides for his annual base salary of $200,000, four weeks’ annual
vacation, 300,000 stock options with 50,000 options vesting immediately and the
remainder to be vested evenly on a quarterly basis over two years, a signing
bonus of $25,000 in shares and eligibility to participate in the Company’s
standard benefit plans. Effective November 7, 2016, Mr. Battley was promoted to
Executive Vice President and his annual salary increased to $250,000 effective
August 1, 2017. No termination without cause and change of control provisions
were included in Mr. Battley’s employment agreement. On September 25, 2017, the
Board approved a Management Bonus Plan with Mr. Battley’s bonus target of 50% of
his base salary.
Allan Cleiren, Chief Operating Officer
The Company entered into an employment agreement with Mr. Allan
Cleiren effective May 22, 2017 which provides for his annual base salary of
$250,000, four weeks’ annual vacation, 1,000,000 stock options vesting quarterly
over four years with a life of five years, participation in bonus plans and
restricted share unit plans, reimbursement of professional association fees and
eligibility to participate in the Company’s standard benefit plans. The Company
may terminate the employment agreement without cause by providing Mr. Cleiren
reasonable and adequate notice, or salary in lieu of notice of six months’ base
salary plus one additional month per year of service, calculated on a pro-rata
basis, to a maximum of 12 months. No change of control provisions were included
in Mr. Cleiren’s employment agreement. On September 25, 2017, the Board approved
a Management Bonus Plan with Mr. Cleiren’s bonus target of 50% of his base
salary.
- 21 -
Neil Belot, Chief Global Development Officer
The Company entered into an employment agreement with Mr. Neil
Belot for the position of Chief Brand Officer effective September 8, 2015 which
provides for his annual base salary of $120,000, increasing to an annual base
salary of $144,000 on January 1, 2016, four weeks’ annual vacation and
eligibility to participate in the Company’s standard benefit plans. Effective
January 1, 2017, Mr. Belot’s salary increased to $165,000. Effective March 21,
2017, Mr. Belot was promoted to Chief Global Development Officer and his annual
salary increased to $250,000. No termination without cause and change of control
provisions were included in Mr. Belot’s employment agreement. On September 25,
2017, the Board approved a Management Bonus Plan with Mr. Belot’s bonus target
of 50% of his base salary.
Except as outlined above, there are no other contracts,
agreements, plans or arrangements that provide for payments to any of the NEOs
at, following or in connection with any termination (whether voluntary,
involuntary or constructive), resignation, retirement, a change in control of
the Company or a change in an NEO’s responsibilities.
DIRECTOR COMPENSATION
Director Compensation Table
Non-employee directors of the Company are paid the following
fees in their capacities as directors:
|
Fees
|
Amount ($)
|
|
Board chair retainer (monthly)
|
7,500
|
|
Board retainer (monthly)
|
1,500
|
|
Board meeting fees (per meeting attended)
|
1,500
|
|
Committee meeting fees (per meeting
attended)
|
1,000
|
Fiscal year ended June 30, 2017
The following table sets forth the compensation provided to the
non-employee directors of the Company during the fiscal year ended June 30,
2017.
|
Name of Director
|
Fees
earned
($)
|
Share-
based
awards
($)
|
Option-
based
awards
(1)
($)
|
Non-equity
incentive plan
compensation
($)
|
Pension
Value
($)
|
All
other
compensation
($)
|
Total
($)
|
|
Adam Szweras
|
46,500
|
Nil
|
401,893
|
Nil
|
Nil
|
Nil
|
448,393
|
|
Barry Fishman
(2)
|
29,500
|
Nil
|
791,451
|
Nil
|
Nil
|
Nil
|
820,951
|
|
Chuck Rifici
(3)
|
38,500
|
Nil
|
401,893
|
Nil
|
Nil
|
Nil
|
440,393
|
|
Jason Dyck
(4)
|
39,000
|
Nil
|
1,056,733
(4)
|
Nil
|
Nil
|
43,500
(4)
|
1,139,233
|
|
Joseph del Moral
|
Nil
|
Nil
|
401,893
|
Nil
|
Nil
|
Nil
|
401,893
|
|
Michael Singer
(5)
|
104,750
|
Nil
|
401,893
|
Nil
|
Nil
|
56,912
(5)
|
563,555
|
|
Notes:
|
|
(1)
|
Options are valued using the Black-Scholes option pricing
model as described in the Company’s audited financial statements for the
years ended June 30, 2017 and 2016. These amounts represent the fair value
of the Options at the date of grant.
|
|
(2)
|
Barry Fishman resigned as a director effective September
25, 2017.
|
|
(3)
|
Chuck Rifici resigned as a director effective May 8,
2017.
|
|
(4)
|
Consulting fees for research and development services
paid to 748086 Alberta Ltd., a company controlled by Jason Dyck. Stock
options were also issued to 748086 Alberta Ltd.
|
|
(5)
|
Michael Singer is the Chairman of the Board. Other
compensation consisted of financial advisory service fees paid to 8115966
Canada Inc., a company controlled by Michael
Singer.
|
- 22 -
Incentive Plan Awards – Option-based Awards for the fiscal
year ended June 30, 2017
The following table sets out all option-based awards
outstanding at fiscal year ended June 30, 2017, for each non-employee director.
|
Name
|
Option-based Awards
|
Share-Based Awards
|
Number of
securities
underlying
unexercised
options
(#)
|
Option
exercise
price
($)
|
Option
expiration
date
(m - d - y)
|
Value of
unexercised
in-the-money
options
(1)
($)
|
Number of
shares or units
of shares that
have not
vested
(#)
|
Market or
payout value
of
share-based
awards that
have
not vested
($)
|
Market or
payout
value
of vested
share based
awards not
paid
out or
distributed
($)
|
|
Adam Szweras
|
240,000
|
0.30
|
08-10-2020
|
446,400
|
N/A
|
N/A
|
N/A
|
|
350,000
|
2.25
|
08-25-2021
|
N/A
|
N/A
|
N/A
|
N/A
|
|
Barry
Fishman
(2)
|
350,000
|
2.18
|
10-12-2021
|
N/A
|
N/A
|
N/A
|
N/A
|
|
350,000
|
2.25
|
10-11-2021
|
N/A
|
N/A
|
N/A
|
N/A
|
|
Chuck Rifici
(3)
|
175,002
|
0.30
|
09-01-2020
|
325,504
|
N/A
|
N/A
|
N/A
|
|
350,000
|
2.25
|
08-25-2021
|
N/A
|
N/A
|
N/A
|
N/A
|
|
Jason Dyck
(4)
|
350,000
|
0.40
|
03-10-2019
|
616,000
|
N/A
|
N/A
|
N/A
|
|
350,000
|
2.25
|
08-25-2021
|
N/A
|
N/A
|
N/A
|
N/A
|
|
500,000
|
2.56
|
01-19-2022
|
N/A
|
N/A
|
N/A
|
N/A
|
|
Joseph del Moral
|
350,000
|
2.25
|
10-01-2021
|
N/A
|
N/A
|
N/A
|
N/A
|
|
Michael Singer
|
800,000
|
0.46
|
05-20-2021
|
1,360,000
|
N/A
|
N/A
|
N/A
|
|
350,000
|
2.25
|
08-25-2021
|
N/A
|
N/A
|
N/A
|
N/A
|
|
Notes:
|
|
(1)
|
The value of in-the-money value stock options was based
on the closing price of $2.16 on June 30, 2017.
|
|
(2)
|
Barry Fishman resigned as a director effective September
25, 2017.
|
|
(3)
|
Chuck Rifici resigned as a director effective May 8,
2017.
|
|
(4)
|
Stock options granted to Jason Dyck were issued to 748086
Alberta Ltd., a company controlled by Jason Dyck.
|
Incentive Plan Awards – Value Vested or Earned for the
fiscal year ended June 30, 2017
The following table sets out all incentive plan values vested
(or earned) during the fiscal year ended June 30, 2017, for each non-employee
director:
|
Name
|
Option-based awards –
Value vested during
the
year
(1)
($)
|
Share-based awards –
Value vested during the
year
($)
|
Non-equity incentive plan
compensation –
Value earned
during the year
($)
|
|
Adam Szweras
|
289,917
|
N/A
|
N/A
|
|
Barry Fishman
(2)
|
199,500
|
N/A
|
N/A
|
|
Chuck Rifici
(3)
|
305,083
|
N/A
|
N/A
|
|
Jason Dyck
|
301,438
|
N/A
|
N/A
|
|
Joseph del Moral
|
97,125
|
N/A
|
N/A
|
|
Michael Singer
|
817,125
|
N/A
|
N/A
|
|
Notes:
|
|
(1)
|
The value of vested stock options that would have been
realized if exercised on the vesting date is determined by the difference
between the market price of the underlying securities and the exercise
price of the options on the vesting date.
|
|
(2)
|
Barry Fishman resigned as a director effective September
25, 2017.
|
|
(3)
|
Chuck Rifici resigned as a director effective May 8,
2017.
|
- 23 -
Fiscal year ended June 30, 2016
The following table sets forth the compensation provided to the
non-employee directors of the Company during the fiscal year ended June 30,
2016.
|
Name of Director
|
Fees
earned
($)
|
Share-
based
awards
($)
|
Option-
based
awards
(1)
($)
|
Non-equity
incentive plan
compensation
($)
|
Pension
Value
($)
|
All other
compensation
($)
|
Total
($)
|
|
Adam Szweras
|
25,500
|
Nil
|
65,115
|
Nil
|
Nil
|
Nil
|
90,615
|
|
Chuck Rifici
(2)
|
24,500
|
Nil
|
59,449
|
Nil
|
Nil
|
Nil
|
83,949
|
|
Jason Dyck
|
9,500
(2)
|
Nil
|
Nil
|
Nil
|
Nil
|
59,338
(3)
|
68,838
|
|
Michael Singer
|
Nil
|
Nil
|
388,105
|
Nil
|
Nil
|
19,521
(4)
|
407,626
|
|
Notes:
|
|
(1)
|
Options were valued using the Black-Scholes option
pricing model as described in the Company’s audited financial statements
for the years ended June 30, 2017 and 2016. These amounts represent the
fair value of the Options at the date of grant.
|
|
(2)
|
Chuck Rifici resigned as a director effective May 8,
2017.
|
|
(3)
|
Consulting fees related to research and development paid
to 748086 Alberta Ltd., a company controlled by Jason Dyck.
|
|
(4)
|
Financial advisory fees paid to 8115966 Canada Inc., a
company controlled by Michael Singer.
|
Incentive Plan Awards – Option-based Awards for the fiscal
year ended June 30, 2016
The following table sets out all option-based awards
outstanding at fiscal year ended June 30, 2016, for each non-employee director.
Name
|
Option-based Awards
|
Share-Based Awards
|
Number of
securities
underlying
unexercised
options
(#)
|
Option
exercise
price
($)
|
Option
expiration
date
(m - d - y)
|
Value of
unexercised
in-the-money
options
(1)
($)
|
Number of
shares or
units
of
shares
that
have not
vested
(#)
|
Market or
payout value
of share-
based
awards
that have
not
vested
($)
|
Market or
payout value
of vested
share
based
awards
not
paid out
or
distributed
(3)
($)
|
|
Adam Szweras
|
350,000
|
0.30
|
08-10-2020
|
59,500
|
N/A
|
N/A
|
N/A
|
|
Chuck Rifici
(2)
|
350,000
|
0.30
|
09-01-2020
|
59,500
|
N/A
|
N/A
|
N/A
|
|
Jason Dyck
(3)
|
350,000
|
0.40
|
03-10-2019
|
24,500
|
N/A
|
N/A
|
N/A
|
|
Michael Singer
|
1,250,000
|
0.46
|
05-20-2021
|
12,500
|
N/A
|
N/A
|
N/A
|
|
Notes:
|
|
(1)
|
The value of in-the-money value stock options was based
on the closing price of $0.47 on June 30, 2016.
|
|
(2)
|
Chuck Rifici resigned as a director effective May 8,
2017.
|
|
(3)
|
Stock options issued to 748086 Alberta Ltd., a company
controlled by Jason Dyck.
|
Incentive Plan Awards – Value Vested or Earned for the
fiscal year ended June 30, 2016
The following table sets out all incentive plan values vested
(or earned) during the fiscal year ended June 30, 2016, for each non-employee
director:
|
Named
|
Option-based awards –
Value vested during
the
year
(1)
($)
|
Share-based awards –
Value vested during the
year
($)
|
Non-equity incentive plan
compensation –
Value earned
during the year
($)
|
|
Adam Szweras
|
24,792
|
N/A
|
N/A
|
|
Chuck Rifici
(2)
|
26,833
|
N/A
|
N/A
|
|
Jason Dyck
|
19,250
|
N/A
|
N/A
|
|
Michael Singer
|
Nil
|
N/A
|
N/A
|
|
Notes:
|
|
(1)
|
The value of vested stock options that would have been
realized if exercised on the vesting date is determined by the difference
between the market price of the underlying securities and the exercise
price of the options on the vesting date.
|
|
(2)
|
Chuck Rifici resigned as a director effective May 8,
2017.
|
- 24 -
2007 Venture Issuer form of Share Option Plan
The Company’s current 10% “rolling” share option plan is a
venture issuer share option plan that was established by the Board on June 22,
2007. A description of this share option plan is referenced to in the Company’s
Information Circular dated July 22, 2016 for its Annual General Meeting held on
August 25, 2016.
The Company graduated from the TSXV to the TSE on July 24,
2017. On September 25, 2017, the Board adopted a new form 10% “rolling” share
option plan under TSE policies in replacement of the Company’s venture issuer
form of share option plan referenced above. Refer to heading “PARTICULARS OF
MATTERS TO BE ACTED UPON - Adoption of New Form 10% “Rolling” Share Option
Plan/Unallocated Option Entitlements” below.
Employee Share Purchase Plan
The Board resolved on September 25, 2017, the adoption of an
employee share purchase plan (the “ESPP”). The ESPP was established to encourage
employee share ownership. The Company is of the view that it is in the best
interests of the Company to have the interests of its employees aligned with the
shareholders of the Company and provide employees with the opportunity to
participate in the growth of the Company.
Key Features of the ESPP
Any individual who is an Employee shall be eligible to enrol
and become a Participant in the ESPP at any time after that Employee has
completed six months of continuous service on a full-time basis or 20 hours per
week for three months on a part-time basis with any Employer.
Eligible employees of the Company may elect to participate in
the ESPP by contributing at least 1%, but no more than 10% of their gross pay,
provided, however, that in no event shall a Participant’s payroll deductions in
any calendar year exceed CDN$10,500 as defined in the ESPP. The Company will
contribute $1.00 for every $2.00 contributed by that Participant. The funds so
provided will be used to purchase shares of the Company on the open market at
prevailing market prices. These combined contributions are held in trust by the
ESPP Adminstrator, Solium Capital Inc., and used to purchase Common Shares
through the facilities of the TSE on a regular basis. No Common Shares are
issued from treasury in respect of the ESPP. The ESPP provides that all Common
Shares held in the personal account of a Participant shall at all times be
vested immediately in order to increase the overall attractiveness of the
program to employees with the goal of increasing overall enrolment and
participation. All expenses related to the purchase of Common Shares under the
ESPP are paid by the Company, while all expenses related to the sale of Common
Shares from the ESPP are paid by the Participants. Pursuant to its terms, the
Company may amend or terminate the ESPP at any time.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION
PLANS
Equity Compensation Plan Information
The following table sets out equity compensation plan
information at fiscal year ended June 30, 2017:
|
Plan Category
|
Number of
securities to
be issued upon exercise
of
outstanding
options,
under
equity
compensation plans
(a)
|
Weighted-average
exercise
price of
outstanding options
(b)
|
Number of
securities remaining
available for future issuance
under
equity compensation plans
(excluding securities reflected
in
column (a))
(c)
|
Equity Compensation Plans
Approved by Shareholders –
Share Option Plan
|
15,233,566
(1)
|
1.84
|
21,421,358
(2)(3)
|
Equity compensation plans not
approved by
securityholders –
|
None
|
N/A
|
N/A
|
|
Total
|
15,233,566
(1)
|
1.84
|
21,421,358
(2)(3)
|
|
Notes:
|
|
(1)
|
The outstanding options are governed by the Company’s
Share Option Plan.
|
|
(2)
|
Represents the aggregate number of shares remaining
available for issuance under the Company’s Share Option Plan at the fiscal
year ended June 30, 2017, less the number of Common Shares issuable upon
the exercise of outstanding Options.
|
- 25 -
|
(3)
|
The Company has an incentive share option plan, which
provides that the Board may from time to time, in its discretion, and in
accordance with Exchange requirements, grant non-transferable options to
purchase Common Shares, provided that the number of Common Shares reserved
for issuance will not exceed 10% of the issued and outstanding Common
Shares of the Company. At fiscal year ended June 30, 2017, the Company had
366,549,244 Common Shares issued and outstanding.
|
The following table sets out equity compensation plan
information at fiscal year ended June 30, 2016:
|
Plan Category
|
Number of
securities to
be
issued upon exercise
of
outstanding
options,
under
equity
compensation plans
(a)
|
Weighted-average
exercise
price of
outstanding
options
(b)
|
Number of
securities remaining
available for future issuance
under
equity compensation plans
(excluding securities reflected
in
column (a))
(c)
(1)
|
Equity Compensation Plans
Approved by Shareholders –
Share Option Plan
|
5,309,834
(1)
|
0.37
|
8,247,802
(2)(3)
|
Equity compensation plans not
approved by
securityholders –
|
None
|
N/A
|
N/A
|
|
Total
|
5,309,834
(1)
|
0.37
|
8,247,802
(2)(3)
|
|
Notes:
|
|
(1)
|
The outstanding options are governed by the Company’s
Share Option Plan.
|
|
(2)
|
Represents the aggregate number of shares remaining
available for issuance under the Company’s Share Option Plan at the fiscal
year ended June 30, 2016, less the number of Common Shares issuable upon
the exercise of outstanding Options.
|
|
(3)
|
The Company has an incentive share option plan, which
provides that the Board may from time to time, in its discretion, and in
accordance with Exchange requirements, grant non-transferable options to
purchase Common Shares, provided that the number of Common Shares reserved
for issuance will not exceed 10% of the issued and outstanding Common
Shares of the Company. At fiscal year ended June 30, 2016, the Company had
135,576,365 Common Shares issued and outstanding.
|
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
At no time during the Company’s last completed financial year,
was any director, executive officer, employee, proposed management nominee for
election as a director of the Company nor any associate of any such director,
executive officer, or proposed management nominee of the Company or any former
director, executive officer or employee of the Company or any of its
subsidiaries, indebted to the Company or any of its subsidiaries or indebted to
another entity where such indebtedness is or has been the subject of a
guarantee, support agreement, letter of credit or other similar arrangement or
understanding provided by the Company or any of its subsidiaries, other than
routine indebtedness.
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
This Information Circular, including the disclosure below,
briefly describes (and, where practicable, states the approximate amount) of any
material interest, direct or indirect, of any informed person of the Company,
any proposed director of the Company, or any associate or affiliate of any
informed person or proposed director, in any transaction since the commencement
of the Company’s most recently completed financial year or in any proposed
transaction which has materially affected or would materially affect the Company
or any of its subsidiaries.
During the fiscal year ended June 30, 2017, the Company paid to
key management personnel that have authority and responsibility for planning,
directing and controlling the activities of the Company, directly and
indirectly. As of June 30, 2017, the Company’s key management personnel
consisted of the Company’s directors and senior management (Chief Executive
Officer, President, Chief Financial Officer, Executive Vice President, Chief
Operating Officer, Chief Global Business Development Officer, and Corporate
Secretary). The Company incurred fees and expenses in the normal course of
operations in connection with the key management and directors. Details are as
follows:
|
|
a)
|
Management fees and wages of $1,934,170 (2016:
$368,200);
|
|
|
b)
|
Director fees of $258,250 (2016: $59,500);
|
|
|
c)
|
Consulting fees of $4,880,372 (2016: $553,918);
and
|
|
|
d)
|
Share-based compensation of $6,413,046 (2016:
$197,892);
|
- 26 -
Reverse Take Over Performance Shares
Pursuant to the reverse takeover on December 9, 2014, the
Company issued 20,000,000 Common Shares on the achievement of performance
milestones. Lola Ventures Inc., a company controlled by Terry Booth, received
5,450,000 shares, 1771472 Alberta Ltd., a company controlled by Steve Dobler,
received 6,450,000 shares, Chinuke Investments Ltd., a company controlled by
Terry Booth, received 80,000 shares, Dale Lesack, a director of the Company’s
wholly owned subsidiary, Aurora Cannabis Enterprises Inc., received 1,000,000
shares and Chris Mayerson, a director of Aurora Cannabis Enterprises Inc.,
received 1,000,000 shares.
CanvasRx Acquisition and Earn Out Payments
On August 17, 2016, the Company completed the acquisition of
all of the issued and outstanding shares of CanvasRx pursuant to a Share
Purchase Agreement dated August 9, 2016, as amended and restated on August 16,
2016 for a total consideration of $37,127 (the “Acquisition”). CanvasRx is a
counselling and outreach service provider with over 24 physical locations in the
provinces of Ontario and Alberta, Canada.
Pursuant to Acquisition, the Company may pay up to $26,750,000
upon achievement of future performance milestones related to new counseling
rooms opened, patient accruals and revenue targets, over a period of three years
from the date of closing (Earn-out Payments). The Earn-out Payments may be
satisfied, at the Company’s sole discretion, in cash or Common Shares at a 15%
discount to the market price at the date of issuance, unless the market price of
the Company’s shares is $0.47 or below, at which point the Earn-out Payments are
convertible into a fixed number of shares. In any case, the issuance of the
Company’s’ shares should not result in former CanvasRx shareholders accumulating
50% or more of the Company’s shares. If the Earn-out payments cannot be
satisfied in cash and the issuance of shares would result in the former
shareholders of CanvasRx accumulating 50% or more of the Company’s shares, a
convertible debenture will be issued. During the year ended June 30, 2017,
2360203 Ontario Limited, a company where Joseph del Moral holds a 50% interest,
was issued 755,999 shares for the achievement of performance milestones.
The Company paid Belot Business Consulting Corp., a company
controlled by Neil Belot, an officer of the Company, aggregate consulting fees
of $779,746 related to the Acquisition and Earn-out Payments.
Brokered Private Placements
In conjunction with the CanvasRx acquisition on August 17,
2016, the Company closed a brokered private placement of 57,500,000 subscription
receipts for aggregate gross proceeds of $23,000,000. Each subscription receipt
(“Receipts”) was converted into units of the Company at a price of $0.40 per
unit upon the satisfaction of the conditions precedent to the acquisition. Each
unit consisted of one common share and one-half of one common share purchase
warrant of the Company. Each whole warrant was exercisable into one common share
of the Company at an exercise price of $0.55 per share expiring August 9, 2018.
Lola Ventures Inc., a company controlled by Terry Booth, subscribed for
2,038,500 Receipts, 1771472 Alberta Ltd., a company controlled by Steve Dobler,
subscribed for 2,486,000 Receipts, 8115966 Canada Inc., a company controlled by
Michael Singer, subscribed for 37,500 Receipts, and Michael Singer subscribed
for 25,000 Receipts.
On February 28, 2017, the Company closed a private placement of
33,337,500 units at a price of $2.25 per unit for gross proceeds of $75,009,375.
Each unit consisted of one common share and one-half of one common share
purchase warrant of the Company. Each whole warrant is exercisable into one
common share a $3.00 per share for a period of two years, subject to a forced
exercise provision if the Company’s volume weighted average price equals or
exceeds $4.50 for 10 consecutive trading days. Belot Business Consulting Corp.,
a company controlled by Neil Belot, subscribed for 135,000 units, Lola Ventures
Inc., a private company controlled by Terry Booth, subscribed for 224,600 units,
Chuck Rifici Holdings Inc., a private company controlled by Chuck Rifici,
subscribed for 223,000 units and Christopher Mayerson, a director of the
Company’s wholly owned subsidiary, Aurora Cannabis Enterprises Inc., subscribed
for 150,000 units.
Convertible Debentures
On September 28, 2016, the Company closed a brokered private
placement of a two year, 10% unsecured convertible debentures in the aggregate
principal amount of $15,000,000. The debentures were convertible into Common
Shares of the Company at $1.15 per share subject to a forced conversion if the
volume weighted average price of the Company’s Common Shares equals or exceeds
$2.00 per share for 10 consecutive days. 8115966 Canada Inc., a company
controlled by Michael Singer, subscribed for a principal amount of $15,000 and
Michael Singer subscribed for a principal amount $10,000. On November 30, 2016,
8115966 Canada Inc. received 13,243 shares and Michael Singer received 8,829
shares (principal and interest) on the mandatory conversion of the debenture.
On November 1, 2016, the Company completed a brokered private
placement of a two year, 8% unsecured convertible debentures in the aggregate
principal amount of $25,000,000. The debentures were convertible into Common
Shares of the Company at a price of $2.00 per share subject to a forced
conversion if the volume weighted average price of the Company’s Common Shares
equals or exceeds $3.00 per share for 10 consecutive trading days. 748086
Alberta Ltd., a company controlled by Jason Dyck, subscribed for a principal
amount $100,000, and Jason Dyck subscribed for a principal amount $100,000.
- 27 -
On May 2, 2017, the Company completed a private placement of a
two year, 7% unsecured convertible debentures in the aggregate principal amount
of $75,000,000. The debentures are convertible into Common Shares of the Company
at a price of $3.29 per share subject to a forced conversion if the volume
weighted average price of the Company’s Common Shares exceeds $4.94 per share
for 10 consecutive trading days. Christopher Mayerson, a director of the
Company’s wholly owned subsidiary, Aurora Cannabis Enterprises Inc. subscribed
for a principal amount $150,000.
MANAGEMENT CONTRACTS
Except as set out herein, there are no management functions of
the Company which are to any substantial degree performed by a person or company
other than the directors or executive officers of the Company.
PARTICULARS OF MATTERS TO BE ACTED UPON
|
A.
|
Advisory Vote on Executive
Compensation
|
It is the Company’s belief that its shareholders should have
the opportunity to fully understand the objectives, philosophy and principles
the Board has used in its approach to executive compensation decisions and to
have an advisory vote on the Board’s approach to executive compensation.
Although an annual vote by shareholders on our compensation
practices is not mandatory in Canada, we believe it is an essential part of good
governance and enhances shareholder engagement by giving the shareholders a
formal opportunity to provide their views on the disclosed objectives of the
executive compensation plans and on the plans themselves. While shareholders
will provide their collective “say on pay”, the Board remains fully responsible
for their compensation decision and are not relieved of their responsibilities.
Because the say on pay resolution is an advisory vote, the results are
non-binding; however, the Board and Compensation Committee will take the results
of the vote into account when considering future compensation policies,
procedures and decisions.
For additional information regarding the Company’s approach to
executive, shareholders should review the section “Compensation Discussion and
Analysis” in this Information Circular.
The Board recognizes that say on pay is an evolving area in
Canada and globally, and will continue to review this policy annually to ensure
that it is effective in achieving its goals.
Shareholders are being asked at the Meeting to consider and
approve the following ordinary resolution:
“
BE IT RESOLVED
that
on
an advisory basis, and not to diminish the role and responsibilities of the
Board of Directors, the Shareholders accept the Board’s approach to executive
compensation disclosed in the Company’s Information Circular dated October 2,
2017 delivered in advance of the annual general and special meeting of
shareholders held on November 13, 2017.”
To pass, the resolution must be approved
by a simple majority of votes cast at the meeting (50% plus one vote) to approve
the non-binding advisory resolution on the Company’s approach to executive
compensation.
The management proxyholders intend to vote FOR the advisory
resolution approving our approach to executive compensation, except in relation
to Common Shares held by a Shareholder who instructs otherwise.
|
B.
|
Adoption of Fixed Restricted Share Unit
Plan/Restricted Share Unit Awards
|
On September 25, 2017, the Board approved and ratified the
adoption by the Company of a fixed restricted share unit plan (the “
Fixed RSU
Plan
”). The RSU Plan was designed to provide certain directors, officers and
other key employees of the Company and its related entities with the opportunity
to acquire restricted share units ("
RSUs
") of the Company in order to
enable them to participate in the long-term success of the Company and to
promote a greater alignment of their interests with the interests of the
Shareholders. The Board (or such other committee the Board may appoint) is
responsible for administering the RSU Plan.
The RSU Plan allows the Company to grant RSUs, under and
subject to the terms and conditions of the RSU Plan, which may be exercised to
purchase up to a maximum of 10,000,000 Shares. The aggregate maximum number of
Common Shares that may be reserved for issuance under the RSU Plan is
10,000,000, representing 2.69% of the issued and outstanding Common Shares at September 25, 2017. Pending shareholder
approval to the RSU Plan and shareholder approval to the total of 2,127,128 RSU
grants issued on September 29, 2017, a total of 7,872,872 RSUs are available for
grant under the RSU Plan, representing 2.12% of the issued and outstanding
Common Shares at September 25, 2017.
- 28 -
At the Meeting, Shareholders will be asked to consider and, if
deemed advisable, to approve the following ordinary resolution of shareholders
to consider, and if deemed advisable, to approve the adoption of the Fixed
Restricted Share Unit Plan. A copy of the Fixed Restricted Share Unit Plan is
attached to this Information Circular as Schedule D.
The following is a summary of the RSU Plan.
Capitalized
terms used but not defined in this section of the Information Circular shall
have the meanings ascribed thereto in the RSU Plan.
Benefits of the RSU Plan
The RSU Plan is designed to be a long term incentive for the
directors, officers and other key employees of the Company
(“
Participants
”) to provide for the acquisition of Common Shares by
Participants for the purpose of advancing the interests of the Company through
the motivation, attraction and retention of employees, directors and consultants
of the Company and its designated affiliates and to secure for the Company and
the shareholders of the Company the benefits inherent in the ownership of Common
Shares by key employees, consultants and directors of the Company and its
designated affiliates the opportunity offered to them to acquire a proprietary
interest in the Company.
Nature and Administration of the RSU Plan
All Participants (as defined in the RSU Plan) of the Company
and its related entities are eligible to participate in the RSU Plan (as "
RSU
Plan Participants
"), though the Company reserves the right to restrict
eligibility or otherwise limit the number of persons eligible for participation
in the RSU Plan at any time. Eligibility to participate in the RSU Plan does not
confer upon any person a right to receive an award of RSUs. The RSU Plan shall
be administered by the Directors or a committee appointed by the Board who will
administer the RSU Plan and who can, from time to time, award RSUs to RSU Plan
Participants (the “Committee”). RSUs will be credited to an account maintained
for each RSU Plan Participant on the books of the Company as of the award date.
The number of RSUs to be credited to each RSU Plan Participant's account shall
be determined at the discretion of the Board and pursuant to the terms of the
RSU Plan.
Maximum Number of Shares
The maximum number of Common Shares made available for the RSU
Plan shall not exceed 10,000,000 Common Shares, subject to adjustments pursuant
the RSU Plan. The aggregate number of Common Shares issuable to Insiders
pursuant to RSUs granted and all other security based compensation arrangements,
at any time, shall not exceed 10% of the total number of Common Shares then
outstanding. The aggregate number of Common Shares issued to Insiders pursuant
to RSUs and all other security based compensation arrangements, within a one
year period, shall not exceed 10% of the total number of Common Shares then
outstanding. The number of Common Shares then outstanding shall mean the number
of Common Shares outstanding on a non-diluted basis immediately prior to the
proposed grant of the applicable RSUs.
Restricted Period
The restricted period is subject to the discretion of the Board
of Directors.
Payment of Dividends
In the event a cash dividend is paid to shareholders of the
Company on the Common Shares while an RSU is outstanding, the Committee may, in
its sole discretion, elect to credit each RSU Plan Participant with additional
RSUs. In such case, the number of additional RSUs will be equal to the aggregate
amount of dividends that would have been paid to the RSU Plan Participant if the
RSUs in the RSU Plan Participant’s account on the record date had been Common
Shares divided by the Market Price (as such term is defined in the TSE Company
Manual) of a Common Shares on the date on which dividends were paid by the
Company. If the foregoing shall result in a fractional RSU, the fraction shall
be disregarded.
Death or Disability of Participant
Subject to any provisions with respect to vesting of RSUs in an
RSU Plan Participant’s employment agreement with the Company, in the event of
the total disability or death of an RSU Plan Participant, any RSUs held by the
RSU Plan Participant shall vest immediately and the Company shall issue RSUs to
the RSU Plan Participant or legal personal representatives of the RSU Plan
Participant forthwith in full satisfaction thereof.
“Restricted Period”
(defined in the RSU Plan)
means any period of time during which an RSU is not vested and the RSU Plan
Participant holding such RSU remains ineligible to receive Restricted Share
Units (defined in the RSU Plan) as determined by the Committee in its absolute
discretion, however, such period of time may be reduced or eliminated from time to time and at any time and for any reason as determined
by the Committee, including but not limited to circumstances involving death or
disability of an RSU Plan Participant.
- 29 -
Retirement or Termination during Restricted Period
Subject to any provisions with respect to vesting of RSUs in an
RSU Plan Participant’s employment agreement with the Company, in the event of
the Retirement or Termination of an RSU Plan Participant during the Restricted
Period, any Restricted Share Units held by the Participant shall immediately
terminate and be of no further force or effect, provided that the Committee has
the absolute discretion to waive such termination.
Retirement or Termination after Restricted Period
Subject to any provisions with respect to vesting of RSUs in an
RSU Plan Participant’s employment agreement with the Company, in the event of
the Retirement or Termination of the RSU Plan Participant following the
Restricted Period and prior to the Deferred Payment Date (defined in the RSU
Plan as the date after the Restricted Period which is the earlier of (i) the
date to which the RSU Plan Participant has elected to defer receipt of
Restricted Share Units in accordance with the RSU Plan; and (ii) the RSU Plan
Participant’s Termination or Retirement Date) the RSU Plan Participant shall be
entitled to receive and the Company shall issue forthwith Restricted Shares in
satisfaction of the RSUs then held by the RSU Plan Participant.
Adjustments
In the event there is any change in the Common Shares, whether
by reason of a stock dividend, consolidation, subdivision, reclassification or
otherwise, an appropriate adjustment shall be made by the Committee in:
|
|
(a)
|
the number of Common Shares available under the RSU Plan;
and
|
|
|
|
|
|
|
(b)
|
the number of Common Shares subject to any outstanding
RSUs.
|
If the foregoing adjustment shall result in a fractional Common
Share, the fraction shall be disregarded. All such adjustments shall be
conclusive, final and binding for all purposes of the RSU Plan.
Change of Control
Subject to any provisions with respect to vesting of RSUs in an
RSU Plan Participant’s employment agreement with the Company, in the event of a
Change of Control, all RSUs outstanding shall vest or be deemed to have vested
immediately prior to the Change of Control and be forthwith settled by the
issuance of applicable Restricted Shares notwithstanding the Restricted Period
and any applicable Deferred Payment Date.
Non-Assignable
The RSUs are non-assignable.
Amendment or Termination of RSU Plan
The Committee may from time to time in the absolute discretion
of the Committee (without shareholder approval) amend, modify and change the
provisions of the RSU Plan, including, without limitation:
|
|
(i)
|
amendments of a house keeping nature; and
|
|
|
|
|
|
|
(ii)
|
changes to the Restricted Period of any
RSU.
|
However, other than as set out above, any amendment,
modification or change to the provisions of the RSUP Plan which would:
|
|
(a)
|
materially increase the benefits of the holder under the
RSU Plan to the detriment of the Company and its shareholders;
|
|
|
|
|
|
|
(b)
|
increase the maximum number of Common Shares, which may
be issued pursuant to the RSU Plan;
|
|
|
|
|
|
|
(c)
|
reduce the range of amendments requiring shareholder
approval contemplated in this Section;
|
|
|
|
|
|
|
(d)
|
permit RSUs to be transferred other than for normal
estate settlement purposes;
|
|
|
|
|
|
|
(e)
|
change insider participation limits and the director
limits which would result in shareholder approval to be required on a
disinterested basis; or
|
|
|
|
|
|
|
(f)
|
materially modify the requirements as to eligibility for
participation in the RSU Plan;
|
- 30 -
shall only be effective upon such amendment, modification or
change being approved by the shareholders of the Company. In addition, any such
amendment, modification or change of any provision of the RSU Plan shall be
subject to the approval, if required, by any regulatory authority having
jurisdiction over the securities of the Company.
The RSU Plan herein shall become effective on the date on which
it is approved by the shareholders. The RSU Plan shall remain in effect until it
is terminated by the Directors.
Prior to the date of this Information Circular, the Company
granted RSUs to insiders, employees and consultants, which grants are subject to
shareholder approval.
Proposed Restricted Share Unit Awards
|
Name
|
Position
|
Insider Y/N
|
Proposed Awards
Granted
on
September 29, 2017
(1)
|
Vesting on receipt of
Shareholder Approval
|
|
Jason Dyck
|
Director
|
Yes
|
175,000
|
Quarterly Vesting over 12 months
|
|
Michael Singer
|
Director
|
Yes
|
175,000
|
Quarterly Vesting over 12 months
|
|
Adam Szweras
|
Director
|
Yes
|
175,000
|
Quarterly Vesting over 12 months
|
|
Terry Booth
|
Director and Chief
Executive Officer
|
Yes
|
250,000
47,101
|
Quarterly Vesting over 36 months
Immediate
|
|
Steve Dobler
|
Director and President
|
Yes
|
175,000
18,116
|
Quarterly Vesting over 36 months
Immediate
|
|
Glen Ibbott
|
Chief Financial Officer
|
Yes
|
175,000
3,774
|
Quarterly Vesting over 36 months
Immediate
|
|
Cameron Battley
|
Executive Vice President
|
Yes
|
175,000
18,116
|
Quarterly Vesting over 36 months
Immediate
|
|
Neil Belot
|
Chief Global
Development Officer
|
Yes
|
175,000
18,116
|
Quarterly Vesting over 36 months
Immediate
|
|
Allan Cleiren
|
Chief Operating Officer
|
Yes
|
175,000
1,887
|
Quarterly Vesting over 36 months
Immediate
|
|
Nilda Rivera
|
Vice President, Finance
|
Yes
|
50,000
|
Quarterly Vesting over 36 months
|
|
Debra Wilson
|
Vice President, HR
|
Yes
|
50,000
|
Quarterly Vesting over 36 months
|
|
Nick Whitehead
|
Vice President, Market
Development
|
Yes
|
50,000
|
Quarterly Vesting over 36 months
|
|
Dieter MacPherson
|
Vice Present,
Production
|
Yes
|
50,000
|
Quarterly Vesting over 36 months
|
- 31 -
|
Name
|
Position
|
Insider Y/N
|
Proposed Awards
Granted
on
September 29, 2017
(1)
|
Vesting on receipt of
Shareholder Approval
|
|
Joseph
del Moral
|
Director and Chief
Executive Officer of
CanvasRx
|
Yes
|
50,000
|
Quarterly Vesting over 36 months
|
|
|
Employees
|
No
|
20,018
|
Immediate
|
|
|
Consultants
|
No
|
100,000
|
Quarterly Vesting over 36 months
|
|
TOTAL
|
|
|
2,127,128
|
|
Total RSU Grants to Insiders: 2,007,110
Total RSU Grants to Employees and Consultants: 120,018
Note:
(1)
)
The proposed total 2,127,128
Restricted Share Units would be awarded based on the closing price on September
28, 2017 of $2.76 and would vest on receipt of shareholder approval.
The TSE has conditionally accepted the RSU Plan and the grant
of the pre-approval RSUs, subject to shareholder approval.
Ordinary Resolution Approval of the Fixed Restricted Share
Unit Plan/Restricted Share Unit Awards
“Be it RESOLVED that:
|
|
1.
|
the RSU Plan, in the form attached as Schedule C to the
Company’s Information Circular dated October 2, 2017, reviewed by the
board of directors (the “Board”), be and is hereby approved and
adopted;
|
|
|
|
|
|
|
2.
|
the effective date of the RSU Plan shall be September 25,
2017;
|
|
|
|
|
|
|
3.
|
subject to all required regulatory approvals, including
the approval of the TSE and shareholder approval, the RSU Plan be
approved, and that the RSU Plan be forthwith adopted and implemented by
the Company, with such further deletions, additions and other amendments
as are required by any securities regulatory authority or which are not
substantive in nature and the Chief Executive Officer of the Company deems
necessary or desirable;
|
|
|
|
|
|
|
4.
|
the Board (or such other committee the Board may
appoint), be and is hereby appointed to be the Administrator under the RSU
Plan and such appointment to be effective until revoked by resolution of
the Board;
|
|
|
|
|
|
|
5.
|
the Company be and is hereby authorized to grant RSUs
under and subject to the terms and conditions of the RSU Plan, which may
be exercised to purchase up to a maximum of 10,000,000 Shares;
|
|
|
|
|
|
|
6.
|
the maximum number of Shares issuable to insiders of the
Company under security-based compensation arrangements, including the
Company’s 10% “rolling” Share Option Plan at any time cannot exceed 10%
without disinterested shareholder approval;
|
|
|
|
|
|
|
7.
|
the issuance of 2,127,128 Restricted Share Units (“RSUs”)
to directors, officers and employees of the Company as detailed in the
Information Circular dated October 2, 2017, be and are hereby authorized,
confirmed and approved, subject to final regulatory approval;
|
|
|
|
|
|
|
8.
|
the Board (or such other committee the Board may appoint)
be and is hereby authorized and directed to execute on behalf of the
Company, the form of restricted share unit grant letter as referenced to
in the RSU Plan, providing for the grant of RSUs to Eligible Persons under
the RSU Plan;
|
|
|
|
|
|
|
9.
|
the Company is hereby authorized to allot and issue as
fully paid and non-assessable that number of Shares specified in the
restricted share unit grant letter of RSUs granted to Eligible Persons;
AND THAT any two authorized persons of the Company be authorized to
execute such treasury order or treasury orders as may be necessary to
effect the said issuance of Shares; and
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- 32 -
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10.
|
any one or more of the directors and officers of the
Company be authorized to perform all such acts, deeds and things and
execute, under seal of the Company or otherwise, all such documents as may
be required to give effect to this resolution.”
|
To pass, the resolution must be approved by a simple majority
of votes cast at the meeting (50% plus one vote) to approve the Fixed Restricted
Share Unit Plan.
Proxies received in favour of management will be voted for
the approval of a resolution of shareholders regarding the approval of the RSU
Plan and the issuance of RSUs, unless a shareholder has specified in the proxy
that such shares are to be voted against such resolution. The issuance of the
RSUs requires approval by a majority of shareholders.
|
C.
|
Adoption of New form 10% Rolling Share Option
Plan/Unallocated Option Entitlements
|
Effective on July 24, 2017, the Company Common Shares commenced
trading on the TSE. The Company’s current share option plan is a 10% “rolling”
share option plan in accordance with provisions of a venture exchange issuer.
As a result of the TSE Company Manual pertaining to security
based compensation arrangements, on September 25, 2017 the Board adopted a new
10% “rolling” share option plan to conform to the TSE Company Manual and to
consolidate all outstanding stock options from its current share option plan.
On September 25, 2017, the Board adopted a “rolling maximum” or
“evergreen” plan which fixed a maximum number of shares issuable thereunder as a
percentage of the issued and outstanding securities of an issuer. The Company’s
new form “rolling” share option plan is dated for reference September 25, 2017
(the “2017 Plan”). A “rolling” plan is a share option plan which does not have a
fixed number of securities issuable. The 2017 Plan was established to provide
incentives to increase individual performance and shareholder value, and to
assist with the retention of employees. Information as to the number of Options
outstanding is included under the heading “Equity Compensation Plan Information”
in this Information Circular.
The 2017 Plan has been filed with the TSE and is conditionally
approved subject to shareholder approval.
At September 25, 2017, under the Company current share option
plan (referred to herein as the “Old Plan”), a total of 15,586,150 stock options
have been granted and are outstanding. The Company will not be granting further
stock options under the Old Plan. The 2017 Plan will be the sole share option
plan utilized by the Company for security based compensation and long term
incentive.
A total of 15,586,150 stock options outstanding under the Old
Plan will be transferred over to the Company’s 2017 Plan (which represents 4,19%
of the 371,569,751 issued and outstanding share capital at September 25, 2017).
Following shareholder approval to the 2017 Plan, the Old Plan will cease to
exist, and those outstanding stock options which have been granted prior to the
implementation of the 2017 Plan shall, for the purpose of calculating the number
of stock options that may be granted under the 2017 Plan, be treated as options
granted under the 2017 Plan. The aggregate maximum number of Common Shares that
may be reserved for issuance under the 2017 Plan is 10% of the issued and
outstanding Common Shares. Pending shareholder approval to the Restricted Share
Unit Plan and the total 2,127,128 RSUs granted on September 29, 2017, a total of
19,443,697 stock options are available for grant under the 2017 Plan,
representing 5.23% of the issued and outstanding Common Shares at September 25,
2017.
At the Meeting, the Shareholders will be asked to consider and,
if deemed advisable, to approve by ordinary resolution, the adoption of the 2017
Plan. A copy of the 2017 Plan is attached to this Information Circular as
Schedule E.
Summary of Material Terms of the 2017 Share Option Plan
The following is a summary of material terms of the 2017
Plan.
Eligible Persons
. Options may be granted to
directors, officers, employees or consultants of the Company or any of its
subsidiaries as determined by the Board as being eligible for participation in
the 2017 Plan (a “
Eligible Person
”).
- 33 -
Restriction on Option Grants to Insiders
. The
2017 Plan is subject to restrictions that:
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(a)
|
the number of Common Shares issued to Insiders as a group
pursuant to Options granted under the 2017 Plan, when combined with Common
Shares issued to Insiders under all the Company’s other Share Compensation
Arrangements shall not exceed 2% of the issued Common Shares within any 12
month period;
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(b)
|
the number of Common Shares issuable to Insiders at any
time as a group under the 2017 Plan, when combined with Common Shares
issuable to Insiders under all the Company’s other Share Compensation
Arrangements, shall not exceed 10% of the Company’s issued Common Shares;
and
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(c)
|
no exercise price of an Option granted to an Insider may
be reduced nor an extension to the term of an Option granted to an Insider
extended without further approval of the disinterested shareholders of the
Company.
|
Plan Administrator
. The Board (“Plan
Administrator”) is authorized to interpret the Plan from time to time and to
adopt, amend and rescind rules and regulations for carrying out the Plan. The
interpretation and construction of any provision of the Plan by the Board shall
be final and conclusive. Administration of the Plan shall be the responsibility
of the appropriate officers of the Company and all costs in respect thereof
shall be paid by the Company.
Maximum Number of Shares Issuable
. The number of
Common Shares issuable under the 2017 Plan, together with all of the Company’s
other previously established or proposed share compensation arrangements, may
not exceed 10% of the total number of issued and outstanding Common Shares. In
addition to this 10% cap,
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(a)
|
The aggregate number of Common Shares issuable upon the
exercise of all Options granted under the Plan and under all other Share
Compensation Arrangement (pre-existing or otherwise) shall not exceed 10%
of the issued and outstanding Common Shares as at the date of grant of
each Option under the 2017 Plan. If any Option granted hereunder shall
expire, terminate for any reason in accordance with the terms of the 2017
Plan or be exercised, Common Shares subject thereto shall again be
available for the purpose of the 2017 Plan.
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(b)
|
The aggregate number of Common Shares which may be
issuable at any time pursuant to the 2017 Plan or any other Share
Compensation Arrangement (pre-existing or otherwise) to Insiders shall not
exceed 10% of the Common Shares then outstanding.
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(c)
|
The aggregate number of Common Shares which may be issued
pursuant to the 2017 Plan or any other Share Compensation Arrangement
(pre-existing or otherwise) to Insiders within a one-year period shall not
exceed 10% of the Common Shares then outstanding.
|
Exercise Price
. The exercise price per Common
Share shall be determined by the Board at the time the Option is granted, but,
in any event, shall not be less than the closing price of the Common Shares on
the Exchange ending on the Trading Day immediately preceding the grant date of
the Option.
Vesting of Options
. Options granted pursuant to
the 2017 Plan shall vest and become exercisable by an Optionee at such time or
times as may be determined by the Board, and may be made subject to performance
conditions as the Board may determine at the time of granting such Options.
Term of Options
. Subject to the blackout
provisions described below, the Option Period shall be determined by the Board
at the time of granting the Options provided, however, that the Option Period
must not extend beyond five years from the grant date of the Option.
Termination of Options
. Subject to any provisions
with respect to vesting of Options in an Optionee’s employment agreement with
the Company, if an Optionee ceases to be an Eligible Person, other than as a
result of termination for cause, any Option held by such Optionee at the date
such person ceases to be an Eligible Person shall be exercisable only to the
extent that the Optionee is entitled to exercise the Option on such date and
only for 90 days thereafter (or such longer period as may be prescribed by law
or as may be determined by the Board in its sole discretion) or prior to the
expiration of the Option Period in respect thereof, whichever is sooner. Subject
to the provisions with respect to vesting of Options in an Optionee’s employment
agreement with the Company, in the case of an Optionee being terminated for
cause, the Option shall immediately terminate and shall no longer be exercisable
as of the date of such termination, subject to the Board determining otherwise.
Notwithstanding the foregoing, when an Optionee ceases to be an Eligible Person,
the Board has discretion to accelerate the vesting of his/her Options and/or
allow such Options to continue for a period beyond 90 days, except however, that
such Options may not be extended beyond the expiry of their original Option
Period.
- 34 -
In the case of an Optionee who is being dismissed from
employment or service for cause, or whose services are terminated for cause,
such Optionee’s Options, whether or not vested at the date of dismissal will
immediately terminate without right to exercise same.
Assignability or Transferability of Options
.
Options are not assignable or transferable other than by will or by the
applicable laws of descent, except to a Holding Company of the Optionee or by a
Holding Company to the Optionee, with the consent of the Company. During the
lifetime of an Optionee, all Options may only be exercised by the Optionee or
such Holding Company.
Black-Out Period
. In the event that the expiry of
an Option Period falls within, or within two (2) Trading Days after the end of,
a trading blackout period imposed by or on the Company (the “
Blackout
Period
”), the expiry date of such Option Period shall be automatically
extended to the close of the 10th Trading Day following the end of the Blackout
Period.
Amendment, Modification or Termination of the 2017
Plan.
Subject to the requisite regulatory approvals, and shareholder
approval as prescribed under the 2017 Plan and any applicable rules of the TSE,
the Board may, from time to time, amend or revise the terms of the 2017 Plan
(including Options granted thereunder) or may discontinue the New Share Option
Plan at any time provided however that no such amendment may, without the
consent of the Optionee, in any manner materially adversely affect his rights
under any Option theretofore granted under the 2017 Plan.
(a) The Board may, subject to receipt
of requisite shareholder and regulatory approval, make the following amendments
to the 2017 Plan (including Options granted thereunder):
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(i)
|
any amendment to the 2017 Plan including, without
limitation, any amendment to the percentage of securities reserved and
issuable under the 2017 Plan;
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(ii)
|
any change to the definition of “Eligible Persons” that
would have the potential of narrowing or broadening or increasing Insider
participation;
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(iii)
|
the addition of any form of financial
assistance;
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(iv)
|
any amendment to a financial assistance provision that is
more favourable to Eligible Persons;
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(v)
|
the addition of deferred or restricted share unit or any
other provision which results in Eligible Persons receiving securities
while no cash consideration is received by the Company;
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(vi)
|
any amendment to the 2017 Plan to permit Options to be
transferred or assigned other than for normal estate settlement
purposes;
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(vii)
|
any amendment that reduces the exercise price or permits
the cancellation and re- issuance of Options;
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(viii)
|
any amendment that extends Options beyond the original
Option Period of such Options;
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(ix)
|
any other amendments that may lead to significant or
unreasonable dilution in the Company’s outstanding securities;
and
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(x)
|
any reduction to the range of amendments requiring
shareholder approval contemplated in this Section or any other amendments
to the 2017 Plan;
|
(b) The Board may, subject to receipt
of requisite regulatory approval, where required, in its sole discretion
(without shareholder approval), make all other amendments to the 2017 Plan
(including Options granted thereunder) that are not of the type contemplated in
the 2017 Plan above, including, without limitation:
|
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(i)
|
amendments which are of a typographical, grammatical,
clerical or of a housekeeping nature;
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(ii)
|
the addition of or a change to vesting provisions of a
security or the 2017 Plan;
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(iii)
|
the addition of a cashless exercise feature;
and
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(iv)
|
a change to the termination provisions of a security or
the Plan that does not entail an extension beyond the original Option
Period.
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(c) Notwithstanding the provisions of
the 2017 Plan, the Company shall additionally obtain requisite shareholder
approval in respect of amendments to the 2017 Plan that are contemplated
pursuant to the 2017 Plan to the extent such approval is required by any
applicable law or regulations.
- 35 -
Under the policies of the TSE, listed companies are required to
have “rolling” share option plans approved or re-approved by shareholders every
three years, including the approval of all unallocated Options, rights or other
entitlements, and to have amendments (as specified in the plan terms)
approved.
The text of the ordinary resolution to confirm and ratify, with
or without amendment, the adoption of the 2017 Plan is as follows:
BE IT RESOLVED AS AN ORDINARY
RESOLUTION THAT
:
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1)
|
the Company’s “rolling” share option plan attached as
Schedule D (the “2017 Plan”) to the Company’s Information Circular dated
October 2, 2017, reviewed by the board of directors (the “Board”), be and
is hereby approved and adopted;
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2)
|
the effective date of the 2017 Plan shall be September
25, 2017;
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3)
|
subject to all required regulatory approvals, including
the approval of the TSE and shareholder approval, the 2017 Plan be
approved, and that the 2017 Plan be forthwith adopted and implemented by
the Company, with such further deletions, additions and other amendments
as are required by any securities regulatory authority or which are not
substantive in nature and the Chief Executive Officer of the Company deems
necessary or desirable;
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4)
|
the Board (or such other committee the Board may
appoint), be and is hereby appointed to be the Administrator under the
2017 Plan and such appointment to be effective until revoked by resolution
of the Board;
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5)
|
the outstanding Common Shares of the Company that have
been granted prior to the implementation of the 2 0 1 7 Plan under the
Company’s O l d P l a n , shall, for the purpose of calculating the number
of stock options that may be granted under the 2017 Plan, be treated as
options granted under the 2017 Plan;
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6)
|
the Company have the ability to grant Options under the
2017 Plan on a 10% of the issued Common Shares rolling basis;
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7)
|
the maximum number of Shares issuable to insiders of the
Company under security-based compensation arrangements, including the
Company’s Fixed Restricted Share Unit Plan at any time cannot exceed 10%
without disinterested shareholder approval;
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8)
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the directors and officers of the Company be authorized
and directed to perform all acts and deeds and things and execute, under
seal of the Company, or otherwise; all such documents, agreements and
other writings as may be required to give effect to the true intent of
these resolutions;
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9)
|
the directors of the Company are hereby authorized to
make such other amendments to the 2017 Plan as the directors of the
Company may, in their sole discretion, determine are necessary, desirable
or useful, without limiting the generality thereof, from time to time, to
make amendments to the 2017 Plan without approval of or further authority
from the shareholders; and
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10)
|
all currently available and unallocated Options issuable
pursuant to the 2017 Plan are hereby approved and authorized for grant
until November 13, 2020.
|
To pass, the resolution must be approved by a simple majority
of votes cast at the meeting (50% plus one vote) to approve the 2017 Plan.
Unless otherwise instructed, the persons named in the
enclosed form of proxy intend to vote IN FAVOUR OF the adoption of the ordinary
resolution authorizing the approval of the 2017 Plan.
ADDITIONAL INFORMATION
Additional information regarding the Company and its business
activities is available on the SEDAR website located at
www.sedar.com
under “Company Profiles – Aurora Cannabis Inc.”. The Company’s financial
information is provided in the Company’s comparative financial statements and
related management discussion and analysis for its most recently completed
financial year and may be viewed on the SEDAR website at the location noted
above. Shareholders of the Company may request copies of the Company’s financial
statements and related management discussion and analysis by contacting the Company at Suite 1500 - 1199 West Hastings
Street, Vancouver, British Columbia, Canada V6E 3T5 or toll free at
1-844-601-2448 (within Canada and the US).
- 36 -
OTHER MATTERS
The Board is not aware of any other matters which it
anticipates will come before the Meeting as of the date of mailing of this
Information Circular.
The contents of this Information Circular and its distribution
to shareholders has been approved by the Board.
DATED
at Vancouver,
British Columbia, October 2, 2017.
BY ORDER OF THE BOARD OF DIRECTORS
(signed)
“Terry Booth”
Terry Booth
Chief Executive Officer
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NI 58-101
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Corporate Governance Practices
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2.
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Board Mandate
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Disclose the text of the board’s written mandate. If the board
does not have a written mandate, describe how the board delineates its
role and responsibilities.
|
The Board of Directors oversees the
management of the business and affairs of the Company. The Board has a
written charter that outlines its duties and responsibilities. The Board
is responsible for, amongst other things, overseeing the
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•
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Strategic planning process
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•
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Identification of principal business
opportunities
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•
|
Identification of management of risks, and
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•
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Internal controls and management information
systems
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The full text of the Company’s Board
Mandate is attached as Schedule B to this Information
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Circular. The Board discharges its
responsibilities directly and through its committees which currently
consists of the Audit Committee, the Nominating and Corporate Governance
Committee and the Compensation Committee.
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3.
|
Position Descriptions
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(a)
|
Disclose whether or not the board has developed written position
descriptions for the chair and the chair of each board committee. If the
board has not developed written position descriptions for the chair and/or
the chair of each board committee, briefly describe how the board
delineates the role and responsibilities of each such position.
|
The Board has not yet developed
written position descriptions for the following:
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•
|
Chairman of the Board
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•
|
Committee Chairs
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The Company’s Audit Committee Charter
(attached to the Company’s Annual Information Form dated September 25,
2017 for the fiscal year ended June 30, 2017) further specifies the role
of the Audit Committee.
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(b)
|
Disclose whether or not the board and CEO have developed a
written position description for the CEO. If the board and CEO have not
developed such a position description, briefly describe how the board
delineates the role and responsibilities of the CEO.
|
The Company has one CEO. Effective
January 1, 2017, the Company entered into an agreement to retain Terry
Booth as the CEO. Prior to January 1, 2017, Terry Booth provided CEO
services on a consulting basis through Lola Ventures Inc., a private
company controlled by Terry Booth. The Company has not developed a written
position description for this position.
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4.
|
Orientation and Continuing Education
|
The Company provides to all
new directors, a corporate governance package that includes, a "Directors
Binder" containing company by-laws, corporate governance statement,
committees and terms of references, director compensation, insider trading
policy, meeting schedule, contact lists for directors and senior
management, copies of the most recent annual report, proxy circular,
annual information form, press releases, investment analyst reports,
meeting minutes, quarterly financial statements and budgets.
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(a)
|
Briefly describe what measures the board takes to orient new
directors regarding
|
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(i)
|
the role of the board, its committees and its directors, and
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(ii)
|
the nature and operation of the issuer’s business.
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The Company does not maintain a
continuing education program for its directors. The board is comprised of
seasoned, experienced business professionals who, in most cases, possess
previous experience as directors of a company. The Nominating and
Corporate Governance Committee is responsible for updating the directors
on changes in corporate governance.
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(b)
|
Briefly describe what measures, if any, the board takes to
provide continuing education for its directors. If the board does not
provide continuing education, describe how the board ensures that its
directors maintain the skill and knowledge necessary to meet their
obligations as directors.
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5.
|
Ethical Business Conduct
|
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(a)
|
Disclose whether or not the board has adopted a written code for
the directors, officers and employees. If the board has adopted a written
code:
|
The Company has adopted a formal Code
of Business Conduct and Ethics for directors, officers and employees as
contemplated by NI 58-101.
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(i)
|
disclose how a person or company may obtain a copy of the
code;
|
The Company’s Code of Business
Conduct is available on the SEDAR website at
www.sedar.com.
|
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NI 58-101
|
Corporate Governance Practices
|
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(ii)
|
describe how the board monitors compliance with
its code, or if the board does not monitor compliance, explain whether and
how the board satisfies itself regarding compliance with its code; and
|
The
Board monitors compliance in various ways. The Nominating and Corporate
Governance Committee meets with management and with its auditors as needed
to,
inter alia
, review compliance issues, including compliance
with the Company’s policies and procedures. The Nominating and Corporate
Governance Committee’s mandate includes ensuring compliance by the
Company’s directors, officers, employees, agents and representatives with
internal policies and procedures.
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(iii)
|
provide a cross-reference to any material
change report filed since the beginning of the issuer’s most recently
completed financial year that pertains to any conduct of a director or
executive officer that constitutes a departure from the code.
|
The
Company has not filed any material change report that pertains to any
conduct of a director or executive officer that constitutes a departure
from the code.
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(b)
|
Describe any steps the board takes to
ensure directors exercise independent judgement in considering
transactions and agreements in respect of which a director or executive
officer has a material interest.
|
In the
ordinary course of business, the Company enters into transactions with
which the director may have a relationship. If any such transactions are
brought before the Board for discussion or approval, the director declares
a conflict of interest and withdraws from any discussion or vote on the
transaction.
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The Company’s Nominating and Corporate Governance Committee also
monitors compliance with the internal policies and procedures of the
Company.
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(c)
|
Describe any other steps the board
takes to encourage and promote a culture of ethical business conduct.
|
The
Company prepares training modules for employees, officers and directors in
respect of compliance with the Company’s policies and procedures. The
Company has a Corporate Manual which is provided to employees at the
commencement of employment and annually thereafter, each employee reviews
and provides written acknowledgement of adherence to the policies
contained within the Manual which includes policies on Code of Conduct,
Confidentiality, Conflict of Interest and Non-Disclosure.
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The
Company also has a Whistle Blower Policy which supports maintaining the
highest possible ethical standards in our business practices, promotes a
climate of openness and accountability and encourages employees to come
forward in good faith to disclose genuine concerns and to detect,
forestall the continuation of, and prevent any violations of the Company’s
internal policies and procedures. Employees may raise any concerns about
accounting matters, internal accounting controls, auditing matters, or
related questionable practices. Employees have several avenues to report
their concerns through management or the Chair of the Audit Committee.
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The Nominating and Corporate Governance Committee consists of a
majority of independent directors under the National Policy 58-201
Corporate Governance Guidelines and is responsible for proposing to the
full board new nominees to the board. See “Other Board Committees”.
Directors are elected by the shareholders at each annual meeting to serve
for a term expiring on the date of the following annual meeting.
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6.
|
Nomination of Directors
|
|
(a)
|
Describe the process by which the
board identifies new candidates for board nomination.
|
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(b)
|
Disclose whether or not the board has
a nominating committee composed entirely of independent directors. If the
board does not have a nominating committee composed entirely of
independent directors, describe what steps the board takes to encourage an
objective nomination process.
|
The
Nominating and Corporate Governance Committee is composed of a majority of
independent directors. The Committee Chair is an independent director. The
Board encourages an objective nominating process for new directors by open
discussion at Board meetings, and review of candidates by the independent
members of the committee.
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(c)
|
If the board has a nominating
committee, describe the responsibilities, powers and operation of the
nominating committee.
|
The
Nominating and Corporate Governance Committee consists of a majority of
independent directors and is responsible for proposing to the full board
new nominees to the Board. See “Other Board Committees”.
|
|
|
NI 58-101
|
Corporate Governance Practices
|
|
|
|
|
|
7.
|
Compensation
|
The
Board reviews directors' compensation annually and considers the current
compensation to be appropriate for the responsibilities and risks assumed
by the directors.
|
|
(a)
|
Describe the process by which the board
determines the compensation for the issuer’s directors and officers.
|
|
|
|
|
|
|
(b)
|
Disclose whether or not the board has a
compensation committee composed entirely of independent directors. If the
board does not have a compensation committee composed entirely of
independent directors, describe what steps the board takes to ensure an
objective process for determining such compensation.
|
The
Board has a Compensation Committee that is composed of a majority of
independent directors. On an annual basis, the board reviews management
compensation having regard to market factors and industry comparable
compensation.
|
|
|
|
|
|
|
|
|
|
(c)
|
If the board has a compensation committee,
describe the responsibilities, powers and operation of the compensation
committee.
|
See
“Other Board Committees.”
|
|
|
|
|
|
|
|
|
|
8.
|
Other Board Committees
|
|
|
|
|
|
|
|
If the board has standing committees other than
the audit, compensation and nominating committees, identify the committees
and describe their function.
|
Other
than the Audit Committee, the Nominating and Corporate Governance
Committee and the Compensation Committee, there are no other committees of
the Company.
|
|
|
|
|
|
|
|
|
|
9.
|
Assessments
|
|
|
|
|
|
|
|
Disclose whether or not the board, its
committees and individual directors are regularly assessed with respect to
their effectiveness and contribution. If assessments are regularly
conducted, describe the process used for the assessments. If assessments
are not regularly conducted, describe how the board satisfies itself that
the board, its committees, and its individual directors are performing
effectively.
|
The
Board has delegated on-going assessment of the board, its committees and
individual directors to the Nominating and Corporate Governance Committee,
which reports its findings to the Board. No formal annual assessment is
presently conducted.
|
|
|
|
|
|
|
|
|
|
10.
|
Director Term Limits and Other
Mechanisms of
Board Renewal
|
|
|
|
|
|
|
|
Disclose whether or not the issuer has adopted
term limits for the directors on its board or other mechanisms of board
renewal and, if so, include a description of those director term limits or
other mechanisms of board renewal. If the issuer has not adopted director
term limits or other mechanisms of board renewal, disclose why it has not
done so.
|
The
Board does not limit the time a director can serve. Imposing a term limit
means it may lose the contributions of longer serving directors who have
developed a deep knowledge and understanding of the Company over time. The
Company considers the benefits of regular renewal in the context of the
needs of the Board at the time.
|
|
NI 58-101
|
Corporate Governance Practices
|
|
|
|
|
|
|
11.
|
Policies regarding the
Representation of
Women on the Board
|
|
|
(a)
|
|
Disclose whether the issuer has adopted a
written policy relating to the identification and nomination of women
directors. If the issuer has not adopted such a policy, disclose why it
has not done so.
|
The
Board has not adopted any policies that address the identification and
nomination of directors in regard to Board diversity. The Company is
committed to nominating highly qualified individuals to fulfill director
roles. The Board believes that a diverse and inclusive environment that
values a variety of backgrounds, skills and experience will best ensure
that Board members provide the necessary range of perspectives, experience
and expertise required to provide leadership needed to achieve the
Company’s business objectives, without reference to their age or gender of
the Company.
|
|
(b)
|
If an issuer has adopted a policy
referred to in (a), disclose the following in respect of the policy:
|
|
|
|
(i)
|
a short summary of its objectives and key
provisions,
|
|
|
|
(ii)
|
the measures taken to ensure that the policy
has been effectively implemented,
|
|
|
|
(iii)
|
annual and cumulative progress by the issuer in
achieving the objectives of the policy, and
|
|
|
|
(iv)
|
whether and, if so, how the board or its
nominating committee measures the effectiveness of the policy
|
|
|
|
|
|
|
|
|
|
|
|
|
12.
|
Consideration of the
Representation of Women in
the Director Identification and
Selection Process
|
|
|
|
|
|
|
|
Disclose whether and, if so, how the board or
nominating committee considers the level of representation of women on the
board in identifying and nominating candidates for election or re-election
to the board. If the issuer does not consider the level of representation
of women on the board in identifying and nominating candidates for
election or re-election on the board, disclose the issuer’s reasons for
not doing so.
|
The
Company does not specifically focus on the level of representation of
women on the Board in identifying nominees, but does consider gender as
one of many diversity factors. The Company assesses the knowledge and
skills personal qualities or professional experiences of a director
nominee in light of the current skills on the Board. The Company takes
measures to identify and recruit a well-qualified group of candidates who
will complement the other board members and improve the effectiveness of
the Board, as a whole.
|
|
|
|
|
|
|
|
|
|
|
|
13.
|
Consideration Given to the Representation of Women in Executive Officer Appointments
|
|
|
|
|
|
|
|
|
Disclose whether and, if so, how the issuer
considers the level of representation of women in executive officer
positions when making executive officer appointments. If the issuer does
not consider the level of representation of women in executive offer
positions when making executive officer appointments, disclose the
issuer’s reasons for not doing so.
|
The
Company does not specifically focus on the level of representation of
women in executive officer positions in identifying candidates for those
positions, but considers the same diversity factors applied to the
selection of nominees for the Board. The Company’s commitment to the level
of representation of women in executive officer positions is not
considered when making executive officer appointments. The Board takes
into account a candidate’s knowledge, qualifications and expertise, with
diversity factors such as gender, age, cultural background and other
personal characteristics.
|
|
NI 58-101
|
Corporate Governance Practices
|
|
|
|
|
|
|
14.
|
Issuer’s Targets Regarding the
Representation of
Women on the Board and in Executive Officer
Positions
|
|
|
|
|
|
|
|
(a)
|
Disclose whether the issuer has
adopted a target regarding women on the issuer’s board. If the issuer has
not adopted a target, disclose why it has not done so.
|
The
Board and the Company have not established or imposed quotas or targets
regarding for the appointment of women to the Board or to executive
officer positions. Instead of establishing firm targets, the Board and the
Company prefer to consider gender as one of a number of factors in
selecting candidates.
|
|
(b)
|
Disclose whether the issuer has
adopted a target regarding women in executive officer positions of the
issuer. If the issuer has not adopted a target, disclose why it has not
done so.
|
|
|
(c)
|
If the issuer has adopted a target,
disclose:
|
|
|
|
(i)
|
the target, and
|
|
|
|
(ii)
|
the annual and cumulative progress of the
issuer in achieving the target.
|
|
|
|
|
|
|
|
|
|
|
|
|
15.
|
Number of Women on the Board and
in Executive
Officer Positions
|
|
|
|
|
|
|
(a)
|
Disclose the number and proportion
(in percentage terms) of directors on the issuer’s board who are women .
|
See
heading “ELECTION OF DIRECTORS” in the Information Circular as to the
nomination of Diane Jang as a Director of the Company. Currently, two
women serve in executive officer positions at the Company.
|
|
(b)
|
Disclose the number and proportion
(in percentage terms) of executive officers of the issuer, including all
major subsidiaries of the issuer, who are women.
|
|
SCHEDULE B
AURORA CANNABIS INC. (the "Company")
BOARD MANDATE
|
Article 1.
|
Introduction to the Board’s Mandate
|
The Company is committed to providing clear leadership and
vision to its directors, officers and employees. In furtherance of this
commitment and in recognition of the Board’s responsibility for the stewardship
of the Company, the Board of Directors (the "Board") has adopted this Board
mandate (the "Mandate"). The principles set out in this Mandate define the
parameters for the implementation and achievement of corporate goals and
objectives. This Mandate requires compliance from each Director in letter and
spirit. Each Director will execute his/her duties as a member of the Board in
accordance with the terms contained in this Mandate.
|
Article 2.
|
Composition and Functioning of the Board
|
|
(A)
|
COMPOSITION OF THE BOARD
|
The Board will be composed of a majority of independent
directors. "Independent" will have the meaning given to it under applicable
securities legislation and stock exchange policy. Generally, an independent
director is one that does not have any direct or indirect material relationship
with the Company that could reasonably be expected to affect his or her
independent judgment.
|
(B)
|
INDEPENDENT DIRECTORS
|
"Independent director" means a person other than an executive
officer or employee of the company. No director qualifies as independent unless
the issuer's board of directors affirmatively determines that the director does
not have a relationship that would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director. The following is a
non-exclusive list of persons who shall not be considered independent:
|
|
a.
|
a director who is, or during the past three years was,
employed by the company, other than prior employment as an interim
executive officer (provided the interim employment did not last longer
than one year);
|
|
|
|
|
|
|
b.
|
a director who accepted or has an immediate family member
who accepted any compensation from the company in excess of $75,000 during
any period of twelve consecutive months within the three years preceding
the determination of independence, other than the
following:
|
|
|
(i)
|
compensation for board or board committee
service,
|
|
|
|
|
|
|
(ii)
|
compensation paid to an immediate family member who is an
employee (other than an executive officer) of the company,
|
|
|
|
|
|
|
(iii)
|
compensation received for former service as an interim
executive officer (provided the interim employment did not last longer
than one year), or
|
|
|
|
|
|
|
(iv)
|
benefits under a tax-qualified retirement plan, or
non-discretionary compensation;
|
|
|
c.
|
a director who is an immediate family member of an
individual who is, or at any time during the past three years was,
employed by the company as an executive officer;
|
|
|
|
|
|
|
d.
|
a director who is, or has an immediate family member who
is, a partner in, or a controlling shareholder or an executive officer of,
any organization to which the company made, or from which the company
received, payments (other than those arising solely from investments in
the company's securities or payments under non-discretionary charitable
contribution matching programs) that exceed 5% of the organization's
consolidated gross revenues for that year, or $200,000, whichever is more,
in any of the most recent three fiscal years;
|
|
|
|
|
|
|
e.
|
a director who is, or has an immediate family member who
is, employed as an executive officer of another entity where at any time
during the most recent three fiscal years any of the issuer's executive
officers serve on the compensation committee of such other
entity;
|
|
|
|
|
|
|
f.
|
a director who is, or has an immediate family member who
is, a current partner of the company's outside
auditor, or was a partner or employee of the company's outside auditor
who worked on the company's audit at any time during any of the past three
years; or
|
- 2 -
|
|
g.
|
a director who owns or controls 10% or more of a class of
the Company’s securities or is able to affect materially the control of
the Company (either alone or acting in concert with
others).
|
|
(C)
|
ESTABLISHMENT OF BOARD
AGENDA
|
The Chairman of the Board will establish an agenda for each
Board meeting. Each Director is encouraged to suggest items of business for the
agenda. The Chairman will act as the effective leader of the Board and ensure
that the Board’s agenda will enable the Board to successfully carry out its
duties.
|
(D)
|
BOARD MATERIALS AND
PRESENTATIONS
|
Except where not appropriate or impractical, the Company will
provide Directors with materials relating to agenda items and presentations in
advance of Board meetings.
|
(E)
|
MEETINGS OF INDEPENDENT
DIRECTORS
|
Meetings of the independent Directors will typically occur
before or after a regularly scheduled Board meeting. In addition, meetings of
the independent directors may be held as need requires or circumstances dictate.
In any event, the independent directors will meet at least twice annually
without non-independent directors or other members of management present.
|
(F)
|
MANAGEMENT ATTENDANCE AT BOARD
MEETINGS
|
The Board welcomes the regular attendance of senior management
of the Company at each Board meeting. The Chairman or the Chief Executive
Officer (the "CEO") may, with the concurrence of the Board, include independent
advisors as attendees on an "as required" basis. In addition, the Board
encourages Directors to, from time to time, bring managers into Board meetings
who: (a) can provide additional insight into the items being discussed because
of personal involvement in these areas, and/or (b) are managers with future
potential that the senior management believes should be given exposure to the
Board.
|
(G)
|
BOARD ACCESS TO MANAGEMENT
|
Directors will have access, as necessary, to all members of
management and employees of the Company.
|
(H)
|
DIRECT BOARD ACCESS TO INDEPENDENT
ADVISORS
|
Directors will have access, as necessary or appropriate, to
independent advisors.
|
(I)
|
EVALUATING BOARD
PERFORMANCE
|
Each year the Board of Directors will conduct annual
self-assessments to determine whether it, the directors and the committees are
performing effectively. The Nominating and Corporate Governance Committee is
responsible for seeking comments from all Directors and reporting to the full
Board the collective assessment of the Board’s performance as well as the
performance of the committees and individual directors. Assessments of the Board
and its committees will consider the mandate and committee charter, as the case
maybe. Assessments of individual directors will consider the position
description and skills and competencies applicable to that individual. The full
Board will discuss the assessment reports to determine what, if any, action
should be taken to improve performance.
|
Article 3.
|
Functioning of Committees
|
|
(A)
|
-
COMMITTEE
STRUCTURE
|
The Board will have the following standing Committees: the
Audit Committee, the Compensation Committee and the Nominating and Corporate
Governance Committee. Except as limited by law or regulation, the Board may form
a new committee or disband an existing Committee as provided in the Articles or
By-Laws of the Company. Each Committee will have a written charter that is
periodically reviewed and updated as necessary. The committee chairs will report
the results and recommendations of their meetings to the full Board
at the next meeting of the Board following each meeting of the respective
committees.
- 3 -
|
(B)
|
COMMITTEE PERFORMANCE
REVIEW
|
The Chairman of the Board and Chief Executive Officer should
regularly consult with committee chairs to obtain their insights and to optimize
committee performance. In accordance with applicable listing standards, each
committee will conduct an annual performance review of its effectiveness.
The Board, in consultation with the Nominating and Corporate
Governance Committee, will define the criteria that all proposed candidates for
election to the Board will possess. The character of the proposed candidate must
be consistent with the values and guiding principles contained in this Mandate.
All Board members will be expected to:
|
|
a.
|
develop and maintain an understanding of the Company’s
operations, strategies and industry within which the Company
operates;
|
|
|
|
|
|
|
b.
|
develop and maintain an understanding of the regulatory,
legislative, business, social and political environment within which the
Company operates;
|
|
|
|
|
|
|
c.
|
develop and maintain familiarity with the officers and
senior management of the Company;
|
|
|
|
|
|
|
d.
|
attend board and, if applicable, committee meetings
regularly;
|
|
|
|
|
|
|
e.
|
read advance materials prior to board or committee
meetings;
|
|
|
|
|
|
|
f.
|
participate fully and actively in the discussions of the
board and any committee to which the individual belongs;
|
|
|
|
|
|
|
g.
|
if absent from a meeting, keep up-to-date on discussions
missed;
|
|
|
|
|
|
|
h.
|
devote the necessary time and attention to Company issues
in order to make informed decisions;
|
|
|
|
|
|
|
i.
|
if requested, participate on board committees;
|
|
|
|
|
|
|
j.
|
remain knowledgeable of the written mandate of the board
and the charter of the committee or committees of which the director is a
member; and
|
|
|
|
|
|
|
k.
|
participate in continuing director
education.
|
|
Article 5.
|
Chairman of the Board and the Chief
Executive Officer
|
The Chairman of the Board and the CEO are two separate
positions, but both positions may be held by the same person.
The Chairman of the Board will be elected from the members of
Board. At time of election, the candidate must have served on the Board for a
period of one year, or such other period as the Board may consider appropriate
in the circumstances. The candidate will have demonstrated during his/her
service on the Board that he/she supports the Board mandate, is an independent
thinker, has the leadership qualities to lead the Board and has earned the
respect and loyalty from the majority of the Directors through open and honest
communication at all times.
The performance of the CEO will be evaluated on an annual basis
by the Compensation Committee based on written objective criteria established by
the Compensation Committee, which will include reference to the financial
performance of the Company, establishment and implementation of strategies,
achievement of Company goals and objectives, adherence to the principles of
candor honesty and loyalty expected from a person in the position of CEO of a
publicly traded company.
- 4 -
The compensation of the CEO will be determined by the Board’s
Compensation Committee and the Committee may take into account advice from
independent compensation consultants as it may deem appropriate. The
compensation of the CEO will be linked with the financial performance of the
Company, the implementation of strategies and the achievement of the Company
goals and objectives.
The CEO will on a regular basis review succession planning with
the Nominating and Corporate Governance Committee.
|
Article 6.
|
Position Descriptions
|
The Board will develop clear position descriptions for the
Chairman of the Board, the chair of each committee and the CEO. The Board will
ensure that the CEO position description delineates the responsibilities of
management. In consultation with the Compensation Committee, the Board will
develop the corporate goals and objectives that the CEO is responsible for
meeting.
|
Article 7.
|
Orientation and Continuing Education
|
The Board will ensure that all new directors receive a
comprehensive orientation which will include education regarding the role of the
Board and its committees, the expectations of individual directors and the
nature and operation of the Company’s business. The Board will ensure that
directors are provided with continuing education opportunities to enhance their
skills and abilities and understanding of the Company’s business.
|
Article 8.
|
Strategic Planning
|
The Board will adopt a strategic plan and, on an annual basis,
re-evaluate the strategic plan. The Board may in the exercise of its strategic
planning function utilize Company resources to the extent required and also rely
on such independent strategic advisors as the Board deems appropriate.
The strategic plan will include at least the following:
|
|
a.
|
an evaluation of the opportunities and risks of the
business of the Company;
|
|
|
|
|
|
|
b.
|
an analysis of the industry, including consideration of
its dominant economic features, strength of competitors and competitive
forces, changes in the competitive structure and changes in the business
environment. Consideration must also be given to the reasons for
strengthening and weakening of competitive forces, anticipation of the
strategic moves of competitors and key success factors for the achievement
of the Company’s goals and objectives. Strategic planning must involve an
analysis of the attractiveness of the industry and the ability to increase
profitability in the industry;
|
|
|
|
|
|
|
c.
|
an analysis of the Company’s own position including the
influence and competitive factors relating to suppliers, customers,
substitute products, competitors, new and emerging competition and
existing rivalry between competitors. Consideration must be given to
determine the effectiveness of the existing strategy, the Company’s
strengths, weaknesses, opportunities and threats, the pricing policies and
the Company’s cost structures. In addition, the Company’s competitive
position relative to its major competitors must be considered and
strategic challenges must be identified; and
|
|
|
|
|
|
|
d.
|
Consideration whether there is room for improvement of
the present strategic position.
|
Since business risks are an ongoing threat to the Company, it
is not sufficient to analyze risks on an annual basis when the strategic
position of the company is determined. The Board will implement a policy for
assessing the business risks in each area of the Company on an ongoing basis,
which must include a critical risk assessment of the Company’s supply chain,
technology, operations, sales and marketing, distribution and customer service.
The Board will establish a procedure for the identification and assessment of
the risks and the development and implementation of the mechanisms, processes
and procedures for assessing and, if necessary, changing current practices and
ensure effective implementation of risk avoidance measures and systems.
- 5 -
|
Article 10.
|
Succession Planning
|
The Board will develop a policy for the appointment, training
and performance monitoring of senior management personnel. The policy will also
include the identification of successors of senior management, the development,
training and mentoring of the selected successors and implement the appropriate
retention initiatives and reward schemes to ensure that chosen successors remain
loyal to the Company.
|
Article 11.
|
Communication Policy
|
The Board will develop a policy that outlines the reporting
requirements, procedures and practices required under applicable securities laws
and stock exchange rules. In addition, the communication policy will define the
guidelines for communication with employees, the media, shareholders, creditors,
political interest groups and government. The Communication Policy will ensure
that the Company’s strategic information is dealt with in compliance with all
statutes, regulations, bylaws, ordinances and other applicable legislation.
|
Article 12.
|
Internal Controls and Management Information
Systems
|
The Board will, in conjunction with the Company’s Auditors or
other external advisors, establish a policy to ensure that sufficient internal
controls exist to monitor the financial performance of the Company, its separate
divisions and departments. The Board will ensure that management implements:
|
|
a.
|
information systems that are capable of providing
accurate reports relating to efficiency, productivity, cost and
profitability;
|
|
|
|
|
|
|
b.
|
internal controls relating to accounting, controlling and
finance; and
|
|
|
|
|
|
|
c.
|
a management operating system to assist with forecasting,
planning, work assignment, follow-up and verification, feedback, reporting
evaluation and continuous improvement.
|
The Audit Committee will utilize such available information to
report to the Board.
|
Article 13.
|
Reporting of Concerns
|
All stakeholders, including creditors, shareholders and
employees, will be entitled to communicate any concerns about the Company’s
conduct or other matters directly to the Chairman of the Board.
|
Article 14.
|
Majority Voting Policy
|
Any director nominee who is elected to the Board in an
uncontested director election in circumstances where the number of votes
withheld against such director exceeds the number of votes cast in his or her
favor (an “Affected Director”) shall submit to the Chairman of the Nominating
and Corporate Governance Committee (with a copy to the Secretary of the Company)
a written resignation promptly after the shareholder meeting at which the
election occurred. Such resignation shall take effect if accepted in accordance
with this Article 15.
The Nominating and Corporate Governance Committee of the Board
shall consider the Affected Director’s resignation. Unless there are
extraordinary circumstances, whether relating to the composition of the Board,
the voting results or otherwise having regard to the best interests of the
Company, the Nominating and Corporate Governance Committee shall recommend that
the independent directors of the Board accept the Affected Director’s
resignation, effective no more than 90 days following the shareholder meeting at
which the election occurred. The Company shall promptly disclose in a press
release the determination made by the independent directors including, if
applicable, the reasons for rejecting an Affected Director’sresignation.
An Affected Director will not participate in the recommendation
of the Nominating and Corporate Governance Committee or the determination made
by the independent directors of the Board. If a quorum of the Nominating and
Corporate Governance Committee cannot be obtained due to the service on the
Nominating and Corporate Governance Committee of one or more Affected Directors, the unaffected
independent directors shall consider the resignation and make the determination.
- 6 -
If the independent directors accept the resignation of the
Affected Director, they may (subject to applicable law):
|
|
a.
|
leave the vacancy unfilled until the next annual meeting
of the Company
|
|
|
|
|
|
|
b.
|
fill the vacancy through the appointment of a new
director (other than the Affected Director); or
|
|
|
|
|
|
|
c.
|
call a special meeting of shareholders at which a
director nominee (other than the Affected Director) will be proposed for
election by shareholders.
|
For greater certainty, this majority voting policy does not
apply in any case where the number of individuals nominated for election exceeds
the number of directors to be elected, including as a result of a proxy contest.
|
(B)
|
DISCLOSURE OF DETAILED VOTING
RESULTS
|
Promptly after a shareholders’ meeting, the Company shall
publicly disclose the number and percentage of votes cast For and Withheld
against any director, as well as those cast For and Against each other matter
voted upon by shareholders.
This Mandate may be amended by the Company’s Board, subject to
the disclosure and other provisions of the applicable corporate and securities
legislation and stock exchange rules.
SCHEDULE C
AURORA CANNABIS INC.
RESTRICTED SHARE UNIT PLAN
September 25, 2017
ARTICLE ONE
DEFINITIONS AND INTERPRETATION
Section 1.01
Definitions:
For purposes of
the Restricted Share Unit Plan, unless such word or term is otherwise defined
herein or the context in which such word or term is used herein otherwise
requires, the following words and terms with the initial letter or letters
thereof capitalized shall have the following meanings:
|
|
(a)
|
“Act” means the
Business Corporations Act
(British
Columbia) or its successor, as amended from time to time.
|
|
|
|
|
|
|
(b)
|
“Affiliate” means any corporation that is an affiliate of
the Company as defined in National Instrument 45-106 –
Prospectus and
Registration Exemptions
, as may be amended from time to
time.
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(c)
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“Associate” with any person or corporation is as defined
in the Securities Act.
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(d)
|
“Blackout Period” has the meaning ascribed thereto in
Section 3.04
.
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(e)
|
“Board” means the Board of Directors of the Company, or
any committee thereof appointed in accordance with this Plan.
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(f)
|
“Change of Control” means the occurrence of any one or
more of the following events:
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(i)
|
a consolidation, merger, amalgamation, arrangement or
other reorganization or acquisition involving the Company or any of its
Affiliates and another corporation or other entity, as a result of which
the holders of Common Shares prior to the completion of the transaction
hold less than 50% of the outstanding shares of the successor corporation
after completion of the transaction;
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(ii)
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the sale, lease, exchange or other disposition, in a
single transaction or a series of related transactions, of all or
substantially all of the assets, rights or properties of the Company and
its subsidiaries on a consolidated basis to any other person or entity,
other than transactions among the Company and its subsidiaries;
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(iii)
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a resolution is adopted to wind-up, dissolve or liquidate
the Company;
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- 1 -
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(iv)
|
any person, entity or group of persons or entities acting
jointly or in concert (an “
Acquiro
r”) acquires, or acquires control
(including, without limitation, the right to vote or direct the voting)
of, Voting Securities of the Company which, when added to the Voting
Securities owned of record or beneficially by the Acquiror or which the
Acquiror controls, would entitle the Acquiror and/or Associates and/or
Affiliates of the Acquiror, to cast or to direct the casting of 50% or
more of the votes attached to all of the Company’s outstanding Voting
Securities which may be cast to elect directors of the Company or the
successor corporation (regardless of whether a meeting has been called to
elect directors); or
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(v)
|
as a result of or in connection with: (A) a contested
election of directors; or (B) a consolidation, merger, amalgamation,
arrangement or other reorganization or acquisitions involving the Company
or any of its Affiliates and another corporation or other entity (a
“
Transaction
”), fewer than 50% of the directors of the Company or
the successor corporation are persons who were directors of the Company
immediately prior to the Transaction.
|
For the purposes of the foregoing
definition of Change of Control, “Voting Securities” means Common Shares and any
other shares entitled to vote for the election of directors and, for the
purposes of calculating the number of securities of the Company owned or
controlled by the Acquiror, it shall include any security, whether or not issued
by the Company, which are not shares entitled to vote for the election of
directors but are convertible into or exchangeable for shares which are entitled
to vote for the election of directors including any options or rights to
purchase such shares or securities.
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(g)
|
“Committee” means the Directors or if the Directors so
determine in accordance with Section 2.03 of the Restricted Share Unit
Plan, the committee of the Directors authorized to administer the
Restricted Share Unit Plan which may include any compensation committee of
the Directors.
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(h)
|
“Common Shares” shall mean the common shares in the
capital of the Company.
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(i)
|
“Company” means Aurora Cannabis Inc., a corporation
existing under the Act.
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(j)
|
“Deferred Payment Date” for a Participant means the date
after the Restricted Period which is the earlier of (i) the date to which
the Participant has elected to defer receipt of Restricted Shares in
accordance with Section 3.05 of this Restricted Share Unit Plan; and (ii)
the Participant’s Termination or Retirement Date.
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(k)
|
“Designated Affiliate” means the subsidiaries of the
Company designated by the Committee for purposes of the Restricted Share
Unit Plan from time to time.
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(l)
|
“Directors” means the board of directors of the Company
from time to time.
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- 2 -
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(m)
|
“Eligible Consultants” shall mean consultants as defined
under section 2.22 of
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National Instrument 45-106 Prospectus and Registration
Exemptions
or any successor provisions thereto.
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(n)
|
“Eligible Directors” means the Directors and the
directors of any Designated Affiliate of the Company from time to
time.
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(o)
|
“Eligible Employees” means employees, including officers,
whether Directors or not, and including both full-time and part-time
employees, of the Company or any Designated Affiliate of the
Company.
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(p)
|
“Insider” has the meaning ascribed thereto in the TSE
Company Manual.
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(q)
|
“Participant” means each Eligible Director, Eligible
Consultant, and Eligible Employee to whom Restricted Share Units are
granted.
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(r)
|
“Restricted Period” means any period of time during which
a Restricted Share Unit is not vested and the Participant holding such
Restricted Share Unit remains ineligible to receive Restricted Shares as
determined by the Committee in its absolute discretion, however, such
period of time may be reduced or eliminated from time to time and at any
time and for any reason as determined by the Committee, including but not
limited to circumstances involving death or disability of a
Participant.
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(s)
|
“Restricted Share Unit Plan” means the restricted share
unit plan described in Article Three hereof.
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(t)
|
“Restricted Share Units” has such meaning as ascribed to
such term in Section 3.02 of this Restricted Share Unit Plan.
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(u)
|
“Restricted Share Unit Grant Letter” has such meaning as
ascribed in Section 3.03 of this Restricted Share Unit Plan.
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(v)
|
“Restricted Shares” means the Common Shares issuable in
satisfaction of Restricted Share Units.
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(w)
|
“Retirement” in respect of a Participant means the
Participant ceasing to be an Eligible Employee, Eligible Director or
Eligible Consultant after attaining a stipulated age in accordance with
the Company’s normal retirement policy or earlier with the Company’s
consent.
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(x)
|
“Retirement Date” means the date that a Participant
ceases to be an Eligible Employee, Eligible Director or Eligible
Consultant due to the Retirement of the
Participant.
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- 3 -
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(y)
|
“Stock Exchange” means, the Toronto Stock Exchange or, if
the Common Shares are not listed on the Toronto Stock Exchange, the
principal stock exchange on which the Common Shares are listed as
determined by the Board.
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(z)
|
“Termination” means: (i) in the case of an Eligible
Employee, the termination of the employment of the Eligible Employee with
or without cause by the Company or a Designated Affiliate or cessation of
employment of the Eligible Employee with the Company or a Designated
Affiliate as a result of resignation or otherwise other than the
Retirement of the Eligible Employee; (ii) in the case of an Eligible
Director, the removal of or failure to re-elect the Eligible Director as a
director of the Company or a Designated Affiliate; (iii) in the case of an
Eligible Consultant, the termination of the services of the Eligible
Consultant by the Company or a Designated Affiliate.
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(aa)
|
“Trading Day” means a day on which the Stock Exchange is
open for trading and on which the Common Shares have not been
halted.
|
Section 1.02
Headings
: The headings of all
articles, Sections, and paragraphs in the Restricted Share Unit Plan are
inserted for convenience of reference only and shall not affect the construction
or interpretation of the Restricted Share Unit Plan.
Section 1.03
Context, Construction
: Whenever
the singular or masculine are used in the Restricted Share Unit Plan, the same
shall be construed as being the plural or feminine or neuter or vice versa where
the context so requires.
Section 1.04
References to this Restricted Share
Unit Plan
: The words “hereto”, “herein”, “hereby”, “hereunder”, “hereof” and
similar expressions mean or refer to the Restricted Share Unit Plan as a whole
and not to any particular article, Section, paragraph or other part hereof.
Section 1.05
Canadian Funds
: Unless
otherwise specifically provided, all references to dollar amounts in the
Restricted Share Unit Plan are references to lawful money of Canada.
ARTICLE TWO
PURPOSE AND ADMINISTRATION OF THE RESTRICTED SHARE UNIT PLAN
Section 2.01
Purpose of the Restricted Share
Unit Plan
: The Restricted Share Unit Plan provides for the acquisition of
Common Shares by Participants for the purpose of advancing the interests of the
Company through the motivation, attraction and retention of employees, directors
and consultants of the Company and its Designated Affiliates and to secure for
the Company and the shareholders of the Company the benefits inherent in the
ownership of Common Shares by key employees, consultants and directors of the
Company and its Designated Affiliates it being generally recognized that
restricted share plans aid in attracting, retaining and encouraging employees,
consultants and directors due to the opportunity offered to them to acquire a
proprietary interest in the Company.
- 4 -
Section 2.02
Administration of the Restricted
Share Unit Plan
: The Restricted Share Unit Plan shall be administered by the
Committee and the Committee shall have full authority to administer the
Restricted Share Unit Plan including the authority to interpret and construe any
provision of the Restricted Share Unit Plan and to adopt, amend and rescind such
rules and regulations for administering the Restricted Share Unit Plan as the
Committee may deem necessary in order to comply with the requirements of the
Restricted Share Unit Plan. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and conclusive
and shall be binding on the Participants and the Company. No member of the
Committee shall be personally liable for any action taken or determination or
interpretation made in good faith in connection with the Restricted Share Unit
Plan and all members of the Committee shall, in addition to their rights as
Directors, be fully protected, indemnified and held harmless by the Company with
respect to any such action taken or determination or interpretation made. The
appropriate officers of the Company are hereby authorized and empowered to do
all things and execute and deliver all instruments, undertakings and
applications and writings as they, in their absolute discretion, consider
necessary for the implementation of the Restricted Share Unit Plan and of the
rules and regulations established for administering the Restricted Share Unit
Plan. All costs incurred in connection with the Restricted Share Unit Plan shall
be for the account of the Company.
Section 2.03
Delegation to Committee
: All of
the powers exercisable hereunder by the Directors may, to the extent permitted
by applicable law and as determined by resolution of the Directors, be exercised
by a committee of the Directors comprised of not less than three (3) Directors,
including any compensation committee of the Directors.
Section 2.04
Record Keeping
: The Company
shall maintain a register in which shall be recorded:
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(a)
|
the name and address of each Participant in the
Restricted Share Unit Plan;
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(b)
|
the number of Restricted Share Units granted to each
Participant under the Restricted Share Unit Plan; and
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(c)
|
the number of Restricted Shares issued to each
Participant under the Restricted Share Unit Plan.
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Section 2.05
Determination of Participants and
Participation
: The Committee shall from time to time determine the
Participants who may participate in the Restricted Share Unit Plan. The
Committee shall from time to time determine the Participants to whom Restricted
Share Units shall be granted and the provisions and restrictions with respect to
such grant(s), all such determinations to be made in accordance with the terms
and conditions of the Restricted Share Unit Plan, and the Committee may take
into consideration the present and potential contributions of and the services
rendered by the particular Participant to the success of the Company and any
other factors which the Committee deems appropriate and relevant.
Section 2.06
Maximum Number of Shares
: The
maximum number of Common Shares made available for the Restricted Share Unit
Plan shall not exceed 10,000,000 Common Shares, subject to adjustments pursuant
to Section 5.06. The aggregate number of Common Shares issuable to Insiders pursuant to Restricted Share Units granted and all
other security based compensation arrangements, at any time, shall not exceed
10% of the total number of Common Shares then outstanding. The aggregate number
of Common Shares issued to Insiders pursuant to Restricted Share Units and all
other security based compensation arrangements, within a one year period, shall
not exceed 10% of the total number of Common Shares then outstanding. For
purposes of this Section 2.06, the number of Common Shares then outstanding
shall mean the number of Common Shares outstanding on a non-diluted basis
immediately prior to the proposed grant of the applicable Restricted Share
Units.
- 5 -
ARTICLE THREE
RESTRICTED SHARE PLAN
Section 3.01
Restricted Share Unit Plan
: A
Restricted Share Unit Plan is hereby established for Eligible Employees,
Eligible Directors and Eligible Consultants.
Section 3.02
Participants
: The Committee
shall have the right to grant, in its sole and absolute discretion, to any
Participant, rights (“
Restricted Share Units
”) to acquire from the
Company any number of fully paid and non-assessable Common Shares as a
discretionary payment in consideration of past services to the Company or as an
incentive for future services, subject to this Restricted Share Unit Plan and
with such provisions and restrictions as the Committee may determine. Each
Restricted Share Unit entitles the holder to receive one Common Share without
payment of additional consideration, at the end of the Restricted Period or, if
applicable, at a later Deferred Payment Date, if any, in satisfaction of the
holder’s entitlement under the Restricted Share Unit, without any further action
on the part of the holder of the Restricted Share Unit in accordance with this
Article Three.
Section 3.03
Restricted Share Unit Grant
Letter
: Each grant of a Restricted Share Unit under the Restricted Share
Unit Plan shall be evidenced by a Restricted Share Unit grant letter (a
“
Restricted Share Unit Grant Letter
”) issued to the Participant by the
Company in consideration for past and/or future services. Such Restricted Share
Unit Grant Letter shall be subject to all applicable terms and conditions of the
Restricted Share Unit Plan and may be subject to any other terms and conditions
(including without limitation any recoupment, reimbursement or claw-back
compensation policy as may be adopted by the Directors from time to time) which
are not inconsistent with the Restricted Share Unit Plan and which the Committee
deems appropriate for inclusion in a Restricted Share Unit Grant Letter. The
provisions of Restricted Share Unit Grant Letters issued under the Restricted
Share Unit Plan need not be identical.
Section 3.04
Restricted Period
: In
connection with the grant of Restricted Share Units to a Participant, the
Committee shall determine the Restricted Period applicable to such Restricted
Share Units, and such Restricted Period shall be reflected in the Restricted
Share Unit Grant Letter evidencing such grant. In addition, at the sole
discretion of the Committee, at the time of grant, the Restricted Share Units
may be subject to performance conditions to be achieved by the Company or a
class of Participants or by a particular Participant on an individual basis,
within a Restricted Period, for such Restricted Share Units to entitle the
holder thereof to receive the underlying Restricted Shares. Upon the expiry of
the applicable Restricted Period (or on the Deferred Payment Date, as applicable), a Restricted Share Unit shall be
automatically settled and the underlying Restricted Share shall be issued to the
holder of such Restricted Share Unit, which Restricted Share Unit shall then be
cancelled.
- 6 -
Notwithstanding the foregoing, in the event that the expiry of
the applicable Restricted Period (or on the Deferred Payment Date, as
applicable), falls within, or within two (2) Trading Days after the end of, a
trading blackout period imposed by or on the Company (the “Blackout Period”),
the expiry date of such Restricted Period (or on the Deferred Payment Date, as
applicable), shall be automatically extended to the close of the 10th Trading
Day following the end of the Blackout Period.
Section 3.05
Deferred Payment Date
:
Participants who are residents of Canada for the purposes of the
Income Tax
Act
(Canada) and not subject to the provisions of the
Internal Revenue
Code
(United States) may elect to defer to receive all or any part of their
Restricted Shares until a Deferred Payment Date. Any other Participants may not
elect a Deferred Payment Date.
Section 3.06
Election of Deferred Payment
Date
: Qualifying Participants who elect to set a Deferred Payment Date must
give the Company written notice of the Deferred Payment Date not later than
sixty (60) days prior to the expiration of the Restricted Period. For certainty,
Participants shall not be permitted to give any such notice after the day which
is sixty (60) days prior to the expiration of the Restricted Period and a notice
once given may not be changed or revoked.
Section 3.07
Retirement or Termination during
Restricted Period
: Subject to any provisions with respect to vesting of
Restricted Share Units in a Participant’s employment agreement with the Company,
in the event of the Retirement or Termination of a Participant during the
Restricted Period, any Restricted Share Units held by the Participant shall
immediately terminate and be of no further force or effect, provided that the
Committee has the absolute discretion to waive such termination.
Section 3.08
Retirement or Termination after
Restricted Period
: Subject to any provisions with respect to vesting of
Restricted Share Units in a Participant’s employment agreement with the Company,
in the event of the Retirement or Termination of the Participant following the
Restricted Period and prior to the Deferred Payment Date, the Participant shall
be entitled to receive and the Company shall issue forthwith Restricted Shares
in satisfaction of the Restricted Share Units then held by the Participant.
Section 3.09
Payment of Dividends
: In the
event a cash dividend is paid to shareholders of the Company on the Common
Shares while a Restricted Share Unit is outstanding, the Committee may, in its
sole discretion, elect to credit each Participant with additional Restricted
Share Units. In such case, the number of additional Restricted Share Units will
be equal to the aggregate amount of dividends that would have been paid to the
Participant if the Restricted Share Units in the Participant’s account on the
record date had been Common Shares divided by the Market Price (as such term is
defined in the TSE Company Manual) of a Common Shares on the date on which
dividends were paid by the Company. If the foregoing shall result in a
fractional Restricted Share Unit, the fraction shall be disregarded.
- 7 -
Section 3.10
Death or Disability of
Participant
: Subject to any provisions with respect to vesting of Restricted
Share Units in an Participant’s employment agreement with the Company, in the
event of the total disability or death of a Participant, any Restricted Share
Units held by the Participant shall vest immediately and the Company shall issue
Restricted Shares to the Participant or legal personal representatives of the
Participant forthwith in full satisfaction thereof.
Section 3.11
Change of Control
: Subject to
any provisions with respect to vesting of Restricted Share Units in an
Participant’s employment agreement with the Company, in the event of a Change of
Control, all Restricted Share Units outstanding shall vest or be deemed to have
vested immediately prior to the Change of Control and be forthwith settled by
the issuance of applicable Restricted Shares notwithstanding the Restricted
Period and any applicable Deferred Payment Date.
Section 3.12
Necessary Approvals
: The
Restricted Share Unit Plan shall be subject to the approval of the shareholders
of the Company to be given by a resolution passed at a meeting of the
shareholders of the Company or by a written resolution of all of the
shareholders of the Company in accordance with the Act and acceptance by the
Stock Exchange or any regulatory authority having jurisdiction over the
securities of the Company.
ARTICLE FOUR
WITHHOLDING
Section 4.01
Withholding Taxes
: The Company
or any Designated Affiliate of the Company may take such steps as are considered
necessary or appropriate for the withholding of any taxes or other amounts which
the Company or any Designated Affiliate of the Company is required by any law or
regulation of any governmental authority whatsoever to withhold in connection
with any Restricted Share Unit, Restricted Share or cash payment equivalent to a
dividend, including, without limiting the generality of the foregoing, the
withholding of all or any portion of any payment or the withholding of the issue
of Restricted Shares to be issued under the Restricted Share Unit Plan, until
such time as the Participant has paid the Company or any Designated Affiliate of
the Company for any amount which the Company or Designated Affiliate of the
Company is required to withhold by law with respect to such taxes or other
amounts. Without limitation to the foregoing, the Committee may adopt
administrative rules under the Plan, which provide for the automatic sale of
Restricted Shares (or a portion thereof) in the market upon the issuance of such
shares under the Restricted Share Unit Plan as agent for the Optionee to satisfy
withholding obligations under the Plan. The Participant consents to such sale
and grants to the Company an irrevocable power of attorney to effect the sale of
such Restricted Shares issuable and acknowledges and agrees that the Company
does not accept responsibility for the price obtained on the sale of such shares
issuable under the Restricted Share Unit Plan.
ARTICLE FIVE
GENERAL
- 8 -
Section 5.01
Term of the Restricted Share Unit
Plan
: The Restricted Share Unit Plan herein shall become effective on the
date on which it is approved by the shareholders. The Restricted Share Unit Plan
shall remain in effect until it is terminated by the Directors.
Section 5.02
Amendment of Restricted Share Unit
Plan
: The Committee may from time to time in the absolute discretion of the
Committee (without shareholder approval) amend, modify and change the provisions
of the Restricted Share Unit Plan, including, without limitation:
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(i)
|
amendments of a house keeping nature; and
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(ii)
|
changes to the Restricted Period of any Restricted Share
Unit.
|
However, other than as set out above, any amendment,
modification or change to the provisions of the Restricted Share Unit Plan which
would:
|
|
(a)
|
materially increase the benefits of the holder under the
Restricted Share Unit Plan to the detriment of the Company and its
shareholders;
|
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(b)
|
increase the maximum number of Common Shares, other than
by virtue of Sections 5.06 and 5.08 of the Restricted Share Unit Plan,
which may be issued pursuant to the Restricted Share Unit Plan;
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(c)
|
reduce the range of amendments requiring shareholder
approval contemplated in this Section;
|
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(d)
|
permit Restricted Share Units to be transferred other
than for normal estate settlement purposes;
|
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(e)
|
change insider participation limits and the director
limits in Section 2.06 which would result in shareholder approval to be
required on a disinterested basis; or
|
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(f)
|
materially modify the requirements as to eligibility for
participation in the Restricted Share Unit Plan;
|
shall only be effective upon such amendment, modification or
change being approved by the shareholders of the Company. In addition, any such
amendment, modification or change of any provision of the Restricted Share Unit
Plan shall be subject to the approval, if required, by any regulatory authority
having jurisdiction over the securities of the Company.
Section 5.03
Non-Assignable
: Except as
otherwise may be expressly provided for under this Restricted Share Unit Plan or
pursuant to a will or by the laws of descent and distribution, no Restricted
Share Unit and no other right or interest of a Participant is assignable or
transferable.
Section 5.04
Rights as a Shareholder
: No
holder of any Restricted Share Units shall have any rights as a shareholder of
the Company by virtue of holding Restricted Share Units. Except as provided for
in Section 3.09 and subject to Section 5.06, no holder of any Restricted Share
Units shall be entitled to receive, and no adjustment shall be made
for, any dividends, distributions or any other rights declared for shareholders
of the Company.
- 9 -
Section 5.05
No Contract of Employment
:
Nothing contained in the Restricted Share Unit Plan shall confer or be deemed to
confer upon any Participant the right to continue in the employment of, or to
provide services to, the Company or any Designated Affiliate nor interfere or be
deemed to interfere in any way with any right of the Company or any Designated
Affiliate to discharge any Participant at any time for any reason whatsoever,
with or without cause. Participation in the Restricted Share Unit Plan by a
Participant shall be voluntary, but unless a Participant informs the Company in
writing, each Participant agrees to be bound by the terms of this Restricted
Share Unit Plan and any applicable Restricted Share Unit Grant Letter with
respect to Restricted Share Units granted to such Participant.
Section 5.06
Adjustment in Number of Shares
Subject to the Restricted Share Unit Plan
: In the event there is any change
in the Common Shares, whether by reason of a stock dividend, consolidation,
subdivision, reclassification or otherwise, an appropriate adjustment shall be
made by the Committee in:
|
|
(a)
|
the number of Common Shares available under the
Restricted Share Unit Plan; and
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(b)
|
the number of Common Shares subject to any outstanding
Restricted Share Units.
|
If the foregoing adjustment shall result in a fractional Common
Share, the fraction shall be disregarded. All such adjustments shall be
conclusive, final and binding for all purposes of the Restricted Share Unit
Plan.
Section 5.07
No Representation or Warranty
:
The Company makes no representation or warranty as to the future market value of
any Common Shares issued in accordance with the provisions of the Restricted
Share Unit Plan.
Section 5.08
Compliance with Applicable Law
:
If any provision of the Restricted Share Unit Plan or any Restricted Share Unit
contravenes any law or any order, policy, by-law or regulation of any regulatory
body having jurisdiction, then such provision shall be deemed to be amended to
the extent necessary to bring such provision into compliance therewith.
Section 5.09
Interpretation
: This Restricted
Share Unit Plan shall be governed by and construed in accordance with the laws
of the Province of British Columbia and the laws of Canada applicable therein.
- 10 -
SCHEDULE D
AURORA CANNABIS INC.
SHARE OPTION PLAN
ARTICLE I
INTRODUCTION
The purpose of the Share Option Plan is to secure for Aurora
Cannabis Inc. (the “Company”) and its shareholders the benefits of incentives
inherent in the share ownership by the directors, employees and consultants of
the Company and its Subsidiaries who, in the judgment of the board of directors
of the Company, will be largely responsible for its future growth and success.
It is generally recognized that a stock option plan of the nature provided for
herein aids in retaining and encouraging employees and directors of exceptional
ability because of the opportunity offered to them to acquire a proprietary
interest in the Company.
(a) “
Affiliate
” means any
corporation that is an affiliate of the Company as defined in National
Instrument 45-106 –
Prospectus and Registration Exemptions
, as may be
amended from time to time.
(b) “
Associate
” with any person
or corporation is as defined in the Securities Act.
(c) “
Board
” means the board of
directors of the Company, or any committee of the board of directors to which
the duties of the board of directors hereunder are delegated.
(d) “
Blackout Period
” has the
meaning ascribed thereto in Section 2.6.
(e) “
Change of Control
” means
the occurrence of any one or more of the following events:
|
|
(i)
|
a consolidation, merger, amalgamation, arrangement or
other reorganization or acquisition involving the Company or any of its
Affiliates and another corporation or other entity, as a result of which
the holders of Common Shares immediately prior to the completion of the
transaction hold less than 50% of the outstanding shares of the successor
corporation immediately after completion of the transaction;
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(ii)
|
the sale, lease, exchange or other disposition, in a
single transaction or a series of related transactions, of all or
substantially all of the assets, rights or properties of the Company and
its Subsidiaries on a consolidated basis to any other person or entity,
other than transactions among the Company and its Subsidiaries;
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(iii)
|
a resolution is adopted to wind-up, dissolve or liquidate
the Company;
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(iv)
|
any person, entity or group of persons or entities acting
jointly or in concert (an “
Acquiror
”) acquires, or acquires control
(including, without limitation, the right to vote or direct the voting)
of, Voting Securities of the Company which, when added to the Voting Securities owned of record or beneficially
by the Acquiror or which the Acquiror controls, would entitle the Acquiror
and/or Associates and/or Affiliates of the Acquiror, to cast or to direct the
casting of 50% or more of the votes attached to all of the Company’s outstanding
Voting Securities which may be cast to elect directors of the Company or the
successor corporation (regardless of whether a meeting has been called to elect
directors); or
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- 1 -
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(v)
|
as a result of or in connection with: (A) a contested
election of directors; or (B) a consolidation, merger, amalgamation,
arrangement or other reorganization or acquisitions involving the Company
or any of its Affiliates and another corporation or other entity (a
“
Transaction
”), fewer than 50% of the directors of the Company or
the successor corporation are persons who were directors of the Company
immediately prior to the Transaction.
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For the purposes of the foregoing
definition of Change of Control, “Voting Securities” means Common Shares and any
other shares entitled to vote for the election of directors and, for the
purposes of calculating the number of securities of the Company owned or
controlled by the Acquiror, it shall include any security, whether or not issued
by the Company, which are not shares entitled to vote for the election of
directors but are convertible into or exchangeable for shares which are entitled
to vote for the election of directors including any options or rights to
purchase such shares or securities.
(f) “
Common
Shares
” means
the common shares in the capital of the Company.
(g) “
Consultant
” has the meaning
ascribed to such term under section 2.22 of National Instrument 45-106
–
Prospectus and Registration Exemptions
or any successor provisions thereto.
(h) “
Company
” means Aurora
Cannabis Inc., a corporation existing under the
Business Corporations Act
(British Columbia).
(i) “
Director
” means a director
of the Company or any of its Subsidiaries.
(j) “
Disability
” means any
disability with respect to an Optionee which the Board, in its sole and
unfettered discretion, considers likely to prevent permanently the Optionee
from:
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(i)
|
being employed or engaged by the Company, its
Subsidiaries or another employer, in a position the same as or similar to
that in which he was last employed or engaged by the Company or its
Subsidiaries; or
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(ii)
|
acting as a director or officer of the Company or its
Subsidiaries.
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(k) “
Eligible Person
” means any
employee, officer, Director or Consultant of the Company or any of its
Subsidiaries.
(l) “
Exchange
” means the Toronto
Stock Exchange or, if the Common Shares are not listed on the Toronto Stock
Exchange, the principal stock exchange on which the Common Shares are listed as
determined by the Board.
- 2 -
(m) “
Holding Company
” means a
company of which the Optionee holds the majority of the voting securities.
(n) “
Insider
” has the meaning
ascribed thereto in the TSE Company Manual.
(o) “
Option
” shall mean an
option granted under the terms of the Plan.
(p) “
Option Commitment
” means
the notice of grant of an Option delivered by the Company hereunder to an
Optionee and substantially in the form of Exhibit A hereto.
(q) “
Option Period
” shall mean
the period during which an Option may be exercised.
(r) “
Optionee
” shall mean an
Eligible Person to whom an Option has been granted under the terms of the Plan.
(s) “
Plan
” means this Share
Option Plan established and operated pursuant to Article II hereof.
(t) “
Securities Act
” means the
Securities Act
(British Columbia) amended from time to time.
(u) “
Share Compensation
Arrangement
” means the Plan described herein and any other security based
compensation arrangements implemented by the Company including stock options,
other stock option plans, employee stock purchase plans, share distribution
plans, stock appreciation rights, restricted share unit plans or any other
compensation or incentive mechanism involving the issuance or potential issuance
of Common Shares of the Company.
(v) “
Subsidiary
” has the meaning
ascribed thereto in the Securities Act.
(w) “
Trading Day
” means a day on
which the Exchange is open for trading and on which the Common Shares have not
been halted.
(x) “
TSE
” means the Toronto
Stock Exchange and any successor thereto; and
(y) “
TSE
Policies”
means
the rules and policies of the TSE as amended from time to time.
ARTICLE II
STOCK OPTION PLAN
Options to purchase Common Shares may be granted hereunder to
Eligible Persons.
- 3 -
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2.2
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Determination of Option
Recipients
|
The Board or as the Board may delegate to the Compensation
Committee shall make all necessary or desirable determinations regarding the
granting of Options to Eligible Persons and may take into consideration the past
and potential contributions of a particular Eligible Person to the success of
the Company and any other factors that it may deem proper and relevant.
The exercise price per Common Share shall be determined by the
Board at the time the Option is granted, but, in any event, shall not be less
than the closing price of the Common Shares on the Exchange ending on the
Trading Day immediately preceding the grant date of the Option.
The Board may, at any time, authorize the granting of Options
to such Eligible Persons as it may select for the number of Common Shares that
it shall designate, subject to the provisions of the Plan. The grant date of an
Option shall be the date the Board approves such grant or a later effective date
of grant, if so determined by the Board at the time of approving the grant of
such Option. No Option is intended to qualify as an “incentive stock option” as
described in Section 422 of the
Internal Revenue Code
(United States).
Each Option granted to an Optionee shall be evidenced by an
Option Commitment detailing the terms of the Option and, upon delivery of the
Option Commitment to the Optionee by the Company, the Optionee shall have the
right to purchase the Common Shares underlying the Option at the exercise price
set out therein, subject to any provisions as to the vesting of the Option and
the other terms of the Plan.
The Option Period shall be determined by the Board at the time
of granting the Options provided, however, that the Option Period must not
extend beyond five years from the grant date of the Option.
Notwithstanding the foregoing, in the event that the expiry of
an Option Period falls within, or within two (2) Trading Days after the end of,
a trading blackout period imposed by or on the Company (the “
Blackout
Period
”), the expiry date of such Option Period shall be automatically
extended to the close of the 10th Trading Day following the end of the Blackout
Period.
Options granted pursuant to the Plan shall vest and become
exercisable by an Optionee at such time or times as may be determined by the
Board, and may be made subject to performance conditions as the Board may
determine at the time of granting such Options.
- 4 -
Subject to any provisions of the Plan, an Option may be
exercised from time to time by delivery to the Company of a written notice of
exercise specifying the number of Common Shares with respect to which the Option
is being exercised and accompanied by payment in full of the exercise price of
the Common Shares to be purchased and any amount required to be withheld for tax
purposes. At the discretion of the Chief Financial Officer, a declaration of
residency may also be required from an Optionee prior to the issuance of Common
Shares. Certificates for such Common Shares shall be issued and delivered to the
Optionee within a reasonable time following the receipt of such notice and
payment. Unless otherwise determined by the Board, the Company shall not offer
financial assistance regarding the exercise of an Option and any such financial
assistance will require shareholder approval.
If Options are surrendered, terminated or expire without being
exercised in whole or in part, new Options may be granted covering the Common
Shares not purchased under such lapsed Options.
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2.10
|
Death or Disability of
Optionee
|
If an Optionee ceases to be an Eligible Person due to death or
Disability, any Option held by the Optionee at the date of death or Disability
shall be exercisable by the Optionee or the Optionee’s legal heirs or personal
representatives, as applicable. All such Options shall be exercisable only to
the extent that the Optionee was entitled to exercise the Option at the date of
death or Disability and only for 12 months after the date of death or Disability
or prior to the expiration of the Option Period in respect thereof, whichever is
sooner, subject to the Board determining otherwise in its own discretion upon
the grant of such Options or after the occurrence of such death or Disability.
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2.11
|
Termination of Employment or Ceasing to be an Eligible
Person
|
Subject to any provisions with respect to vesting of Options in
an Optionee’s employment agreement with the Company, if an Optionee ceases to be
an Eligible Person, other than as a result of termination for cause, any Option
held by such Optionee at the date such person ceases to be an Eligible Person
shall be exercisable only to the extent that the Optionee is entitled to
exercise the Option on such date and only for 90 days thereafter (or such longer
period as may be prescribed by law or as may be determined by the Board in its
sole discretion) or prior to the expiration of the Option Period in respect
thereof, whichever is sooner. Subject to the provisions with respect to vesting
of Options in an Optionee’s employment agreement with the Company, in the case
of an Optionee being terminated for cause, the Option shall immediately
terminate and shall no longer be exercisable as of the date of such termination,
subject to the Board determining otherwise. Notwithstanding the foregoing, when
an Optionee ceases to be an Eligible Person, the Board has discretion to
accelerate the vesting of his/her Options and/or allow such Options to continue
for a period beyond 90 days, except however, that such Options may not be
extended beyond the expiry of their original Option Period.
- 5 -
In the case of an Optionee who is being dismissed from
employment or service for cause, or whose services are terminated for cause,
such Optionee’s Options, whether or not vested at the date of dismissal will
immediately terminate without right to exercise same.
|
2.12
|
Effect of Take-Over Bid
|
If a bona fide offer (the “
Offer
”) for Common Shares is
made to shareholders generally or to a class of shareholders that would include
the Optionee, which Offer, if accepted in whole or in part, would result in the
offeror (the “
Offeror
”) exercising control over the Company within the
meaning of the Securities Act, then the Company shall, as soon as practicable
following receipt of the Offer, notify each Optionee of the full particulars of
the Offer. The Board will have the sole discretion to amend, abridge or
otherwise eliminate any vesting schedule so that notwithstanding the other terms
of this Plan, such otherwise unvested Option may be conditionally exercised in
whole or in part by the Optionee and the underlying Common Shares may be
conditionally issued so (and only so) as to permit the Optionee to tender the
Common Shares received in connection with the exercise (the “
Optioned
Shares
”) pursuant to the Offer. If:
(a) the Offer is not complied with
within the time specified therein;
(b) the Optionee does not tender the
Optioned Shares pursuant to the Offer; or
(c) all of the Optioned Shares tendered
by the Optionee pursuant to the Offer are not taken up and paid for by the
Offeror in respect thereof;
then at the discretion of the Board, the Options shall be
deemed not to have been exercised and the Optioned Shares or, in the case of
clause (c) above, the Optioned Shares that are not taken up and paid for, shall
be deemed not to have been issued and shall be reinstated as authorized but
unissued Common Shares and the terms of the Option as set forth in this Plan and
the Option Commitment shall again apply to the Option. If any Optioned Shares
are returned to the Company under this Section, the Company shall refund,
subject to Company’s obligations under applicable tax law, the exercise price to
the Optionee for such Optioned Shares.
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2.13
|
Effect of a Change of
Control
|
Subject to the terms of an Optionee’s employment agreement with
respect to a Change of Control of the Company, and unless otherwise determined
by the Board prior to such Change of Control, if a Change of Control occurs, all
Options then outstanding shall automatically vest, so that, notwithstanding the
other terms of this Plan, such Options may be exercised in whole or in part by
the Optionee and upon the exercise of an Option under the Plan and, subject to
applicable tax withholding requirements, the holder thereof shall be entitled to
receive any securities, property or cash (or a combination thereof) which the
Optionee would have received upon such Change of Control, if the Optionee had
exercised his Option immediately prior to the applicable record date or event,
as applicable, and the exercise price shall be adjusted, as applicable, by the
Board, unless the Board otherwise determines the basis upon which such Option
shall be exercisable, and any such adjustments shall be binding for all purposes
of the Plan.
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2.14
|
Adjustment in Common
Shares
|
- 6 -
If there is any change in the Common Shares through or by means
of a declaration of stock dividends of Common Shares or consolidations,
subdivisions or reclassifications of Common Shares, or otherwise, the number of
Common Shares, subject to any Option, and the exercise price thereof and the
maximum number of Common Shares that may be issued under the Plan in accordance
with Section 3.1(a) shall be adjusted appropriately by the Board, subject to any
applicable rules of the Exchange, and such adjustment shall be effective and
binding for all purposes of the Plan. An adjustment under Section 2.13 or 2.14
(the “
Adjustment Provisions
”) will take effect at the time of the event
that gives rise to the adjustment, and the Adjustment Provisions are cumulative.
The Company will not be required to issue fractional Common Shares in
satisfaction of its obligations hereunder. Any fractional interest in a Common
Share that would, except for this provision, be deliverable upon the exercise of
an Option will be cancelled and not be deliverable by the Company. If any
questions arise at any time with respect to the exercise price or number of
Common Shares deliverable upon exercise of an Option in connection with any of
the events set out in Sections 2.12, 2.13 or 2.14, such questions will be
conclusively determined by the Company’s auditors, or, if they decline to so
act, any other firm of Chartered Accountants that the Company may designate and
who will have access to all appropriate records, and such determination will be
binding upon the Company and all Optionees.
ARTICLE III
GENERAL
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3.1
|
Maximum Number of Shares
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(a) The aggregate number of Common
Shares issuable upon the exercise of all Options granted under the Plan and
under all other Share Compensation Arrangement (pre-existing or otherwise) shall
not exceed 10% of the issued and outstanding Common Shares as at the date of
grant of each Option under the Plan. If any Option granted hereunder shall
expire, terminate for any reason in accordance with the terms of the Plan or be
exercised, Common Shares subject thereto shall again be available for the
purpose of the Plan.
(b) The aggregate number of Common
Shares which may be issuable at any time pursuant to this Plan or any other
Share Compensation Arrangement (pre-existing or otherwise) to Insiders shall not
exceed 10% of the Common Shares then outstanding.
(c) The aggregate number of Common
Shares which may be issued pursuant to this Plan or any other Share Compensation
Arrangement (pre-existing or otherwise) to Insiders within a one-year period
shall not exceed 10% of the Common Shares then outstanding.
Options are not assignable or transferable other than by will
or by the applicable laws of descent, except to a Holding Company of the
Optionee or by a Holding Company to the Optionee, with the consent of the
Company. During the lifetime of an Optionee, all Options may only be exercised
by the Optionee or such Holding Company.
- 7 -
Nothing contained in the Plan shall confer upon any Optionee
any right with respect to employment or continuance of employment with the
Company or any Subsidiary, or interfere in any way with the right of the
Company, or any Subsidiary, to terminate the Optionee’s employment at any time.
Participation in the Plan by an Optionee is voluntary.
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3.4
|
No Shareholder Rights
|
An Optionee shall not have any rights as a shareholder of the
Company with respect to any of the Common Shares covered by an Option until the
Optionee exercises such Option in accordance with the terms of the Plan and the
issuance of the Common Shares by the Company.
The Company shall maintain a register in which shall be
recorded the name and address of each Optionee, the number of Options granted to
an Optionee, the details thereof and the number of Options outstanding.
The Plan shall be effective only upon the approval of both the
Board and the shareholders of the Company by ordinary resolution. The obligation
of the Company to sell and deliver Common Shares in accordance with the Plan is
subject to the approval of any governmental authority having jurisdiction or any
stock exchanges on which the Common Shares are listed for trading that may be
required in connection with the authorization, issuance or sale of such Common
Shares by the Company. If any Common Shares cannot be issued to any Optionee for
any reason whatsoever including, without limitation, the failure to obtain such
approval, then the obligation of the Company to issue such Common Shares shall
terminate and any exercise price paid by an Optionee to the Company shall be
returned to the Optionee.
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3.7
|
Administration of the Plan
|
The Board is authorized to interpret the Plan from time to time
and to adopt, amend and rescind rules and regulations for carrying out the Plan.
The interpretation and construction of any provision of the Plan by the Board
shall be final and conclusive. Administration of the Plan shall be the
responsibility of the appropriate officers of the Company and all costs in
respect thereof shall be paid by the Company.
The Company shall have the power and the right to deduct or
withhold, or require an Optionee to remit to the Company, the required amount to
satisfy federal, provincial, territorial or foreign taxes, required by law or
regulation to be deducted or withheld with respect to any taxable event arising
as a result of the Plan, including the grant or exercise of any Option. With
respect to any required withholding, the Company shall have the irrevocable
right to, and the Optionee consents to, the Company setting off any amounts
required to be withheld, in whole or in part, against amounts otherwise owing by the Company to the Optionee (whether arising
pursuant to the Optionee’s relationship as a director, officer, employee or
consultant of the Company or otherwise), or may make such other arrangements
that are satisfactory to the Optionee and the Company. In addition, the Company
may elect, in its sole discretion, to satisfy the withholding requirement, in
whole or in part, by withholding such number of Common Shares issuable upon
exercise of the Options as it determines are required to be sold by the Company,
as agent for the Optionee, to satisfy any withholding obligations net of selling
costs. The Optionee consents to such sale and grants to the Company an
irrevocable power of attorney to effect the sale of such Common Shares issuable
upon exercise of the Options and acknowledges and agrees that the Company does
not accept responsibility for the price obtained on the sale of such Common
Shares issuable upon exercise of the Options.
- 8 -
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3.9
|
Restrictions on Option Grants to
Insiders
|
The Plan is subject to restrictions that:
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(a)
|
the number of Common Shares issued to Insiders as a group
pursuant to Options granted under the Plan, when combined with Common
Shares issued to Insiders under all the Company’s other Share Compensation
Arrangements shall not exceed 2% of the issued Common Shares within any 12
month period;
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(b)
|
the number of Common Shares issuable to Insiders at any
time as a group under the Plan, when combined with Common Shares issuable
to Insiders under all the Company’s other Share Compensation Arrangements,
shall not exceed 10% of the Company’s issued Common Shares; and
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(c)
|
no exercise price of an Option granted to an Insider may
be reduced nor an extension to the term of an Option granted to an Insider
extended without further approval of the disinterested shareholders of the
Company.
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3.10
|
Amendment, Modification or Termination of
Plan
|
Subject to the requisite regulatory approvals, and shareholder
approval as prescribed under subparagraph 3.9 (a) below and any applicable rules
of the Exchange, the Board may, from time to time, amend or revise the terms of
the Plan (including Options granted thereunder) or may discontinue the Plan at
any time provided however that no such amendment may, without the consent of the
Optionee, in any manner materially adversely affect his rights under any Option
theretofore granted under the Plan.
(a) The Board may, subject to receipt
of requisite shareholder and regulatory approval, make the following amendments
to the Plan (including Options granted thereunder):
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(i)
|
any amendment to Section 3.1 including, without
limitation, any amendment to the percentage of securities reserved and
issuasblw under the Plan;
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(ii)
|
any change to the definition of “Eligible Persons” that
would have the potential of narrowing or broadening or increasing Insider
participation;
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(iii)
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the addition of any form of financial
assistance;
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(iv)
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any amendment to a financial assistance provision that is
more favourable to Eligible Persons;
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- 9 -
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(v)
|
the addition of deferred or restricted share unit or any
other provision which results in Eligible Persons receiving securities
while no cash consideration is received by the Company;
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(vi)
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any amendment to Section 3.2 to permit Options to be
transferred or assigned other than for normal estate settlement
purposes;
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(vii)
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any amendment that reduces the exercise price or permits
the cancellation and re- issuance of Options;
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(viii)
|
any amendment that extends Options beyond the original
Option Period of such Options;
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(ix)
|
any other amendments that may lead to significant or
unreasonable dilution in the Company’s outstanding securities;
and
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(x)
|
any reduction to the range of amendments requiring
shareholder approval contemplated in this Section or any other amendments
to this Section 3.10;
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(b) The Board may, subject to receipt
of requisite regulatory approval, where required, in its sole discretion
(without shareholder approval), make all other amendments to the Plan (including
Options granted thereunder) that are not of the type contemplated in
subparagraph 3.9 (a) above, including, without limitation:
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(i)
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amendments which are of a typographical, grammatical,
clerical or of a housekeeping nature;
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(ii)
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the addition of or a change to vesting provisions of a
security or the Plan;
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(iii)
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the addition of a cashless exercise feature;
and
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(iv)
|
a change to the termination provisions of a security or
the Plan that does not entail an extension beyond the original Option
Period.
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(c) Notwithstanding the provisions of
subparagraph 3.9 (b), the Company shall additionally obtain requisite
shareholder approval in respect of amendments to the Plan that are contemplated
pursuant to subparagraph 3.9 (b) to the extent such approval is required by any
applicable law or regulations.
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3.11
|
No Representation or
Warranty
|
The Company makes no representation or warranty as to the
future market value of any Common Shares issued in accordance with the
provisions of the Plan.
The Plan will be governed by and construed in accordance with
the laws of the Province of British Columbia and the laws of Canada applicable
therein.
- 10 -
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3.13
|
Compliance with Applicable
Law
|
If any provision of the Plan or any agreement entered into
pursuant to the Plan contravenes any law or any order, policy, by-law or
regulation of any regulatory body or stock exchange having authority over the
Company or the Plan then such provision shall be deemed to be amended to the
extent required to bring such provision into compliance therewith.
Approved by the Board on September 25, 2017 and by the
shareholders of the Company on •, 2017.
- 11 -
EXHIBIT A
AURORA CANNABIS INC.
SHARE
OPTION PLAN
OPTION COMMITMENT
Notice is hereby given that, effective this _____day of
________________(the “Effective Date”), Aurora Cannabis Inc. (the “Company”) has
granted to ________________, an option (the “Option”) to acquire
____________Common Shares in the capital of the Company on or prior to 5:00 p.m.
Vancouver time on the _____day of ________________(the “Expiry Date”) at an
exercise price of Cdn. $ ______per Common Shares.
The Option shall vest and become exercisable in accordance with
the following schedule:
•
The grant of the Option evidenced hereby is made subject to the
terms and conditions of the Company’s Share Option Plan (the “Share Option
Plan”), the terms and conditions of which are hereby incorporated herein and
consented to by the undersigned Optionee.
To exercise your Option, deliver to the Company either (i) a
written notice specifying the number of Common Shares you wish to acquire,
together with a certified cheque or bank draft payable to the Company for the
aggregate exercise price; or (ii) written notice of exercise by cashless option
specifying the number of Common Shares with respect to which the Option is being
exercised by cashless option. At the discretion of the Company a declaration of
residence may also be requested prior to the issuance of any Common Shares. Upon
receipt by the Company of requisite documents and payments, the Company’s
transfer agent will then issue a certificate for the Common Shares so acquired
as soon as practicable thereafter.
The undersigned Optionee hereby authorizes the Company to
withhold any remuneration payable to the undersigned for the purposes of paying
any taxes required to be deducted or withheld as a result of the undersigned’s
participation in the Share Option Plan.
The Company and the Optionee represent that the Optionee under
the terms and conditions of the Plan is a bona fide Eligible Person (as defined
in the Plan), entitled to receive Options under TSE Policies.
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AURORA CANNABIS INC.
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OPTIONEE
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Authorized Signatory
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Name:
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- 12 -
THIS PAGE INTENTIONALLY LEFT BLANK
AURORA CANNABIS INC.
1500 – 1199 West Hastings Street
Vancouver, British Columbia Canada V5E 3T5
Tel: 1-844-601-2448
NOTICE OF ANNUAL GENERAL AND SPECIAL MEETING OF
SHAREHOLDERS
NOTICE IS HEREBY GIVEN
that the Annual General and
Special Meeting of Shareholders of
Aurora Cannabis Inc.
(the “Company”)
will be held at the Renaissance Edmonton International Hotel, Cartier Room, 4236
– 36 Street E., Nisku, Alberta T9E 0V4, on
Monday, November 13, 2017
, at
the hour of 10 o’clock am (Mountain Time), for the following purposes:
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1.
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To table the audited financial statements of the Company
for the two fiscal years ended June 30, 2016 and June 30, 2017 (with
comparative statements relating to each of the respective fiscal periods)
together with the report of the Auditors and the management’s discussion
and analysis thereon;
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2.
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To fix the number of directors to be elected at
seven;
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3.
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To elect Directors for the ensuing year;
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4.
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To appoint the Auditors of the Company for the ensuing
year and authorize the Directors to fix their remuneration;
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5.
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To consider and, if deemed appropriate, to pass with or
without variation, a non-binding advisory resolution on executive
compensation, as detailed in the Information Circular
.
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6.
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To consider, and if thought advisable, pass an ordinary
resolution that approves the adoption of the Company’s Fixed Restricted
Share Unit Plan together with approval to certain Restricted Share Unit
awards as detailed in the Information Circular.
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7.
|
To consider, and if thought advisable, pass an ordinary
resolution to the adoption of a new form 10% “rolling” share option plan
and to authorize the grant of all currently available and unallocated
option entitlements issuable under the new form share option plan, until
November 13, 2020 as detailed in the Information
Circular.
|
An Information Circular accompanies this Notice. The
Information Circular contains details of matters to be considered at the
Meeting. No other matters are contemplated, however any permitted amendment to,
or variation of, any matter identified in this Notice may properly be considered
at the Meeting. The Meeting may also consider the transaction of such other
business as may properly come before the Meeting or any adjournment thereof.
Shareholders of record on the Company’s books at the close of
business on September 29, 2017 are entitled to attend and vote at the Meeting or
at any postponement or adjournment thereof. Each common share is entitled to one
vote.
The audited financial statements of the Company for the two
fiscal years ended June 30, 2017 and June 30, 2016, together with the report of
the Auditors and the management’s discussion and analysis thereon are available
on
www.sedar.com
and copies of these documents will also be available at
the Meeting.
Registered shareholders who are unable to attend the Meeting
in person and who wish to ensure that their shares will be voted at the Meeting
are requested to complete, date and sign the enclosed form of proxy, or another
suitable form of proxy and deliver it in accordance with the instructions set
out in the form of proxy and in the Information Circular.
Non-registered shareholders who plan to attend the Meeting
must follow the instructions set out in the form of proxy or voting instruction
form to ensure that their shares will be voted at the Meeting. If you hold your
shares in a brokerage account, you are not a registered shareholder.
DATED at Vancouver, British Columbia, October 2, 2017
BY ORDER OF THE BOARD OF DIRECTORS
(signed)
“Terry Booth”
Chief Executive Officer
|
EX-1.27 28 exhibit1-27.htm EXHIBIT 1.27
|
|
|
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings
Street
Vancouver, BC V6E 3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
October 10, 2017
A news release issued on October 10,
2017 at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. announces $50
million bought deal financing.
Full Description of Material
Change
Aurora Cannabis Inc. entered into an
agreement with a syndicate of underwriters led by Canaccord Genuity Corp.
(collectively, the “Underwriters”), pursuant to which the Underwriters have
agreed to purchase, on a bought deal basis, 16,700,000 units of the Company (the
“Units”), at a price of $3.00 per Unit (the “Offering Price”), for aggregate
gross proceeds to Aurora of $50,100,000 (the “Offering”).
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice
President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive
Officer
Mobile: (780) 722 - 8889
Email:
terry@auroramj.com
DATED October 10, 2017.
|
October 10, 2017
|
TSX:
ACB
|
Not for dissemination in the United States or through U.S.
newswire services
Aurora Cannabis Announces $50 Million Bought Deal
Financing
Post-Financing Cash Position in Excess of $175
Million
Fueling Continued Aggressive Global Expansion
Vancouver, BC – October 10, 2017
– Aurora Cannabis Inc.
(the “Company” or “Aurora” or the “Issuer”) (TSX: ACB) (OTCQX: ACBFF)
(Frankfurt: 21P; WKN: A1C4WM) announced today that it has entered into an
agreement with a syndicate of underwriters led by Canaccord Genuity Corp.
(collectively, the “Underwriters”), pursuant to which the Underwriters have
agreed to purchase, on a bought deal basis, 16,700,000 units of the Company (the
“Units”), at a price of $3.00 per Unit (the “Offering Price”), for aggregate
gross proceeds to Aurora of $50,100,000 (the “Offering”).
Each Unit will be comprised of one common share of the Company
(a "Common Share") and one common share purchase warrant (a "Warrant"). Each
Warrant will be exercisable to acquire one common share (a "Warrant Share") for
a period of 3 years following the closing date of the Offering at an exercise
price of $4.00 per Warrant Share, subject to adjustment in certain events.
Aurora has also granted the Underwriters an option (the
“Over-Allotment Option”) to purchase up to 2,505,000 additional Units of the
Company on the same terms as the Offering. If the Over-Allotment Option is
exercised in full, the aggregate gross proceeds of the Offering will be
$57,615,000.
Net proceeds from the Offering will be used primarily towards
the Company's strategic growth initiatives including continued domestic and
international expansion, and for general working capital purposes.
“This financing ensures that we have the financial horsepower
we need to keep going at full throttle, and continue seizing and capitalizing on
attractive growth opportunities in Canada and around the world,” said Terry
Booth, CEO. “With Aurora’s excellent balance sheet and what we believe is the
strongest cash position in the industry, we are ideally positioned to further
accelerate our aggressive growth strategy, further expand production capacity,
and enter multiple new international markets. Aurora will continue to push the
pace, with agility, innovation and disciplined execution, and set the benchmark
as a globally dominant cannabis company.”
The Offering is in the form of a bought deal public offering
(i) in each of the provinces of Canada (other than Quebec), (ii) in the United
States only to Qualified Institutional Buyers (within the meaning of Rule 144A),
and in each case in compliance with the securities laws of the applicable states
of the United States, to investors that the Underwriters have reasonable grounds
to believe and do believe are Qualified Institutional Buyers, and (iii) outside
Canada and the United States on a basis which does not require the qualification
or registration of any of the Common Shares, Warrants, Warrant Shares of the
Issuer.
Closing of the Offering is expected to occur on or about
November 2, 2017 and is subject to certain conditions including, but not limited
to, the receipt of all necessary regulatory and stock exchange approvals,
including the approval of the Toronto Stock Exchange and the applicable
securities regulatory authorities.
The securities being offered have not been, nor will they be,
registered under the United States Securities Act of 1933, as amended, and may
not be offered or sold in the United States or to, or for the account or benefit
of, U.S. persons absent registration or an applicable exemption from the
registration requirements. This press release shall not constitute an offer to
sell or the solicitation of an offer to buy nor shall there be any sale of the
securities in any State in which such offer, solicitation or sale would be
unlawful.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", is currently constructing a
second 800,000 square foot production facility, known as "Aurora Sky", at the
Edmonton International Airport, and has acquired, and is undertaking completion
of a third 40,000 square foot production facility in Pointe-Claire, Quebec, on
Montreal's West Island.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of- the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
###
|
Further information:
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
NATIONAL Equicom
|
|
+1.905.864.5525
|
mlakmaaker@national.ca
|
|
cam@auroramj.com
|
+1.416.848.1397
|
|
www.auroramj.com
|
|
This news release contains certain "forward-looking statements"
within the meaning of such statements under applicable securities law.
Forward-looking statements are frequently characterized by words such as "plan",
"continue", "expect", "project", "intend", "believe", "anticipate", "estimate",
"may", "will", "potential", "proposed" and other similar words, or statements
that certain events or conditions "may" or "will" occur. These statements are
only predictions. Various assumptions were used in drawing the conclusions or
making the projections contained in the forward-looking statements throughout
this news release. Forward-looking statements include, but are not limited to,
the successful completion of the Offering and the use of proceeds of the
Offering and the Company’s intention to continue international and domestic
expansion. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
expressly required by applicable law. A more complete discussion of the risks
and uncertainties facing the Company appears in the Company’s Annual Information
Form and continuous disclosure filings, which are available at
www.sedar.com.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release
.
|
EX-1.28 29 exhibit1-28.htm EXHIBIT 1.28
|
|
|
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings
Street
Vancouver, BC V6E 3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
October 10, 2017
A news release issued on October 10,
2017 at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. announces upsize
of previously announced bought deal financing to $60 million.
Full Description of Material
Change
Aurora Cannabis Inc. has entered into
a revised agreement with a syndicate of underwriters led by Canaccord Genuity
Corp. to increase the size of its previously announced bought deal financing to
$60 million aggregate gross proceeds, representing 20,000,000 units of the
Company, at a price of $3.00 per Unit.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice
President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive
Officer
Mobile: (780) 722 - 8889
Email:
terry@auroramj.com
DATED October 10, 2017.
|
October 10, 2017
|
TSX:
ACB
|
Not for dissemination in the United States or through U.S.
newswire services
Aurora Cannabis Announces Upsize of Previously Announced
Bought Deal Financing to$60 Million
Vancouver, BC – October 10, 2017
– Aurora Cannabis Inc.
(the “Company” or “Aurora” or the “Issuer”) (TSX: ACB) (OTCQX: ACBFF)
(Frankfurt: 21P; WKN: A1C4WM) has entered into a revised agreement with a
syndicate of underwriters led by Canaccord Genuity Corp. (collectively, the
“Underwriters”), to increase the size of its previously announced bought deal
financing to $60 million aggregate gross proceeds (the “Offering”), representing
20,000,000 units of the Company (the “Units”), at a price of $3.00 per Unit (the
“Offering Price”).
Each Unit will be comprised of one common share of the Company
(a "Common Share") and one common share purchase warrant (a "Warrant"). Each
Warrant will be exercisable to acquire one common share (a "Warrant Share") for
a period of 3 years following the closing date of the Offering at an exercise
price of $4.00 per Warrant Share, subject to adjustment in certain events.
Aurora has also granted the Underwriters an option (the
“Over-Allotment Option”) to purchase up to 3,000,000 additional Units of the
Company on the same terms as the Offering. If the Over-Allotment Option is
exercised in full, the aggregate gross proceeds of the Offering will be
$69,000,000.
Net proceeds from the Offering will be used primarily towards
the Company's strategic growth initiatives including continued domestic and
international expansion, and for general working capital purposes.
The Offering is in the form of a bought deal public offering
(i) in each of the provinces of Canada (other than Quebec), (ii) in the United
States only to Qualified Institutional Buyers (within the meaning of Rule 144A),
and in each case in compliance with the securities laws of the applicable states
of the United States, to investors that the Underwriters have reasonable grounds
to believe and do believe are Qualified Institutional Buyers, and (iii) outside
Canada and the United States on a basis which does not require the qualification
or registration of any of the Common Shares, Warrants, Warrant Shares of the
Issuer.
Closing of the Offering is expected to occur on or about
November 2, 2017 and is subject to certain conditions including, but not limited
to, the receipt of all necessary regulatory and stock exchange approvals,
including the approval of the Toronto Stock Exchange and the applicable
securities regulatory authorities.
The securities being offered have not been, nor will they be,
registered under the United States Securities Act of 1933, as amended, and may
not be offered or sold in the United States or to, or for the account or benefit
of, U.S. persons absent registration or an applicable exemption from the
registration requirements. This press release shall not constitute an offer to
sell or the solicitation of an offer to buy nor shall there be any sale of the
securities in any State in which such offer, solicitation or sale would be
unlawful.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", is currently constructing a
second 800,000 square foot production facility, known as "Aurora Sky", at the
Edmonton International Airport, and has acquired, and is undertaking completion
of a third 40,000 square foot production facility in Pointe-Claire, Quebec, on
Montreal's West Island.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of- the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
###
|
Further information:
|
|
|
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
NATIONAL Equicom
|
|
+1.905.864.5525
|
mlakmaaker@national.ca
|
|
cam@auroramj.com
|
+1.416.848.1397
|
|
www.auroramj.com
|
|
This news release contains certain "forward-looking statements"
within the meaning of such statements under applicable securities law.
Forward-looking statements are frequently characterized by words such as "plan",
"continue", "expect", "project", "intend", "believe", "anticipate", "estimate",
"may", "will", "potential", "proposed" and other similar words, or statements
that certain events or conditions "may" or "will" occur. These statements are
only predictions. Various assumptions were used in drawing the conclusions or
making the projections contained in the forward-looking statements throughout
this news release. Forward-looking statements include, but are not limited to,
the successful completion of the Offering and the use of proceeds of the
Offering and the Company’s intention to continue international and domestic
expansion. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
expressly required by applicable law. A more complete discussion of the risks
and uncertainties facing the Company appears in the Company’s Annual Information
Form and continuous disclosure filings, which are available at
www.sedar.com.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release
.
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver, BC V6E
3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
October 10, 2017
A news release issued on October 10,
2017 at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. announces upsize
of previously announced bought deal financing to $60 million.
Full Description of Material
Change
Aurora Cannabis Inc. has entered into
a revised agreement with a syndicate of underwriters led by Canaccord Genuity
Corp. to increase the size of its previously announced bought deal financing to
$60 million aggregate gross proceeds, representing 20,000,000 units of the
Company, at a price of $3.00 per Unit.
|
Item 5.
|
Full Description of Material
Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice
President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive
Officer
Mobile: (780) 722 - 8889
Email:
terry@auroramj.com
DATED October 10, 2017.
|
October 10, 2017
|
TSX: ACB
|
Not for dissemination in the United States or through U.S.
newswire services
Aurora Cannabis Announces Upsize of Previously Announced
Bought Deal Financing to $60 Million
Vancouver, BC – October 10, 2017 –
Aurora Cannabis Inc.
(the “Company” or “Aurora” or the “Issuer”) (TSX: ACB) (OTCQX: ACBFF)
(Frankfurt: 21P; WKN: A1C4WM) has entered into a revised agreement with a
syndicate of underwriters led by Canaccord Genuity Corp. (collectively, the
“Underwriters”), to increase the size of its previously announced bought deal
financing to $60 million aggregate gross proceeds (the “Offering”), representing
20,000,000 units of the Company (the “Units”), at a price of $3.00 per Unit (the
“Offering Price”).
Each Unit will be comprised of one common share of the Company
(a "Common Share") and one common share purchase warrant (a "Warrant"). Each
Warrant will be exercisable to acquire one common share (a "Warrant Share") for
a period of 3 years following the closing date of the Offering at an exercise
price of $4.00 per Warrant Share, subject to adjustment in certain events.
Aurora has also granted the Underwriters an option (the
“Over-Allotment Option”) to purchase up to 3,000,000 additional Units of the
Company on the same terms as the Offering. If the Over-Allotment Option is
exercised in full, the aggregate gross proceeds of the Offering will be
$69,000,000.
Net proceeds from the Offering will be used primarily towards
the Company's strategic growth initiatives including continued domestic and
international expansion, and for general working capital purposes.
The Offering is in the form of a bought deal public offering
(i) in each of the provinces of Canada (other than Quebec), (ii) in the United
States only to Qualified Institutional Buyers (within the meaning of Rule 144A),
and in each case in compliance with the securities laws of the applicable states
of the United States, to investors that the Underwriters have reasonable grounds
to believe and do believe are Qualified Institutional Buyers, and (iii) outside
Canada and the United States on a basis which does not require the qualification
or registration of any of the Common Shares, Warrants, Warrant Shares of the
Issuer.
Closing of the Offering is expected to occur on or about
November 2, 2017 and is subject to certain conditions including, but not limited
to, the receipt of all necessary regulatory and stock exchange approvals,
including the approval of the Toronto Stock Exchange and the applicable
securities regulatory authorities.
The securities being offered have not been, nor will they be,
registered under the United States
Securities Act of 1933
, as amended,
and may not be offered or sold in the United States or to, or for the account or
benefit of, U.S. persons absent registration or an applicable exemption from the
registration requirements. This press release shall not constitute an offer to
sell or the solicitation of an offer to buy nor shall there be any sale of the
securities in any State in which such offer, solicitation or sale would be
unlawful.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", is currently constructing a
second 800,000 square foot production facility, known as "Aurora Sky", at the
Edmonton International Airport, and has acquired, and is undertaking completion
of a third 40,000 square foot production facility in Pointe-Claire, Quebec, on
Montreal's West Island.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
###
|
Further information:
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
NATIONAL Equicom
|
|
+1.905.864.5525
|
mlakmaaker@national.ca
|
|
cam@auroramj.com
|
+1.416.848.1397
|
|
www.auroramj.com
|
|
This news release contains certain "forward-looking
statements" within the meaning of such statements under applicable securities
law. Forward-looking statements are frequently characterized by words such as
"plan", "continue", "expect", "project", "intend", "believe", "anticipate",
"estimate", "may", "will", "potential", "proposed" and other similar words, or
statements that certain events or conditions "may" or "will" occur. These
statements are only predictions. Various assumptions were used in drawing the
conclusions or making the projections contained in the forward-looking
statements throughout this news release. Forward-looking statements include, but
are not limited to, the successful completion of the Offering and the use of
proceeds of the Offering and the Company’s intention to continue international
and domestic expansion. Forward-looking statements are based on the opinions and
estimates of management at the date the statements are made, and are subject to
a variety of risks and uncertainties and other factors that could cause actual
events or results to differ materially from those projected in the
forward-looking statements. The Company is under no obligation, and expressly
disclaims any intention or obligation, to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
except as expressly required by applicable law. A more complete discussion of
the risks and uncertainties facing the Company appears in the Company’s Annual
Information Form and continuous disclosure filings, which are available at
www.sedar.com
.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
|
EX-1.29 30 exhibit1-29.htm EXHIBIT 1.29
|
|
|
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver, BC V6E
3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
October 16, 2017
A news release issued on October 16,
2017 at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. announces $6
million private placement.
Full Description of Material
Change
Aurora Cannabis Inc. today announced
that further to the Company’s previously announced $60 million bought deal
financing, as announced and upsized on October 10, 2017 (the “Bought Deal”), the
Company has agreed to a one-time special accommodation for the benefit of its
underwriters due to very significant demand for the Bought Deal, to proceed with
a concurrent, non-commissioned, non- brokered private placement of up to
2,000,000 units of the Company (the “Units”) at a price of $3.00 per Unit (the
“Offering”).
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice
President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive
Officer
Mobile: (780) 722 - 8889
Email:
terry@auroramj.com
DATED October 16, 2017.
|
October 16, 2017
|
TSX:
ACB
|
Not for dissemination in the United States or through U.S.
newswire services
Aurora Cannabis Announces $6 Million Private
Placement
Special Underwriters Accommodation due to Significant Demand
Bought Deal
No commissions payable
Vancouver, BC – October 16, 2017 –
Aurora Cannabis Inc.
(the “Company” or “Aurora” or the “Issuer”) (TSX: ACB) (OTCQX: ACBFF)
(Frankfurt: 21P; WKN: A1C4WM) today announced that further to the Company’s
previously announced $60 million bought deal financing, as announced and upsized
on October 10, 2017 (the “Bought Deal”), the Company has agreed to a one-time
special accommodation for the benefit of its underwriters due to very
significant demand for the Bought Deal, to proceed with a concurrent, non-
commissioned, non-brokered private placement of up to 2,000,000 units of the
Company (the “Units”) at a price of $3.00 per Unit (the “Offering”).
Each Unit, free of any commission to Aurora, will be comprised
of one common share of the Company (a "Common Share") and one common share
purchase warrant (a "Warrant"). Each Warrant will be exercisable to acquire one
common share (a "Warrant Share") for a period of 3 years following the closing
date of the Offering at an exercise price of $4.00 per Warrant Share, subject to
adjustment in certain events.
If the Offering is subscribed for in full, it will provide
Aurora with net proceeds of $6,000,000 due to the special and onetime commission
free accommodation reached with its underwriters. The Common Shares and Warrants
shall be subject to a 4 month hold period. Closing of the Offering is
anticipated to occur at the same time as the closing of the Bought Deal, which
is expected on or about November 2, 2017, and is subject to certain conditions,
including, but not limited to, the receipt of all necessary regulatory and stock
exchange approvals, including the approval of the Toronto Stock Exchange and the
applicable securities regulatory authorities.
The securities being offered have not been, nor will they be,
registered under the United States Securities Act of 1933, as amended, and may
not be offered or sold in the United States or to, or for the account or benefit
of, U.S. persons absent registration or an applicable exemption from the
registration requirements. This press release shall not constitute an offer to
sell or the solicitation of an offer to buy nor shall there be any sale of the
securities in any State in which such offer, solicitation or sale would be
unlawful.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", is currently constructing a
second 800,000 square foot production facility, known as "Aurora Sky", at the
Edmonton International Airport, and has acquired, and is undertaking completion
of a third 40,000 square foot production facility in Pointe-Claire, Quebec, on
Montreal's West Island.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of- the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
###
|
Further information:
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
NATIONAL Equicom
|
|
+1.905.864.5525
|
mlakmaaker@national.ca
|
|
cam@auroramj.com
|
+1.416.848.1397
|
|
www.auroramj.com
|
|
This news release contains certain "forward-looking statements"
within the meaning of such statements under applicable securities law.
Forward-looking statements are frequently characterized by words such as "plan",
"continue", "expect", "project", "intend", "believe", "anticipate", "estimate",
"may", "will", "potential", "proposed" and other similar words, or statements
that certain events or conditions "may" or "will" occur. These statements are
only predictions. Various assumptions were used in drawing the conclusions or
making the projections contained in the forward-looking statements throughout
this news release. Forward-looking statements include, but are not limited to,
the successful completion of the Offering and the use of proceeds of the
Offering and the Company’s intention to continue international and domestic
expansion. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
expressly required by applicable law. A more complete discussion of the risks
and uncertainties facing the Company appears in the Company’s Annual Information
Form and continuous disclosure filings, which are available at
www.sedar.com.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release
.
BRITISH COLUMBIA
ALBERTA
ONTARIO
QUEBEC
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver, BC V6E
3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
July 31, 2017
A news release issued on July 31, 2017
at Vancouver, British Columbia relating to the material change described herein
was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Radient Technologies Inc. (“Radient”
or the “Corporation”) Announces Conversion of Aurora Cannabis Inc. (“Aurora”)
Debenture.
Full Description of Material
Change
The convertible debenture issued to
Aurora on February 13, 2017, has been converted into 14,285,714 units of Radient
(the “Conversion Units”) pursuant to the acceleration provisions contained
therein. Each Conversion Unit consists of one common share and one common share
purchase warrant exercisable prior to February 13, 2019 for one additional
common share of Radient at an exercise price of $0.33 per warrant.
Radient will also make the final
interest payment of $41,096 to Aurora through the issuance of additional 77,540
units to Aurora (the "Interest Units"). Each Interest Unit consists of one
common share and one common share purchase warrant exercisable prior to February
13, 2019 for one additional common share of Radient at an exercise price of
$0.53 per warrant. The issuance of the Interest Units to Aurora is subject to
final approval of the TSX Venture Exchange.
- 2 -
|
Item 5.
|
Full Description of Material
Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice
President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Corporate
Secretary
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive
Officer
Mobile: (780) 722 - 8889
Email:
terry@auroramj.com
DATED July 31, 2017.
- 3 -
|
|
|
|
|
|
|
|
July 31, 2017
|
TSX: ACB
|
TSXV: RTI
|
|
|
|
|
|
|
|
|
Radient Technologies Announces Conversion of Aurora Cannabis
Debenture
EDMONTON, ALBERTA & VANCOUVER, B.C., July 31, 2017 -
Radient Technologies Inc. (“Radient” or the “Corporation”) (TSXV: RTI) and
Aurora Cannabis Inc. (“Aurora”) (TSX: ACB) are pleased to announce that the
convertible debenture issued to Aurora on February 13, 2017, has been converted
into 14,285,714 units of Radient (the “Conversion Units”) pursuant to the
acceleration provisions contained therein. Each Conversion Unit consists of one
common share and one common share purchase warrant exercisable prior to February
13, 2019 for one additional common share of Radient at an exercise price of
$0.33 per warrant.
Radient will also make the final interest payment of $41,096 to
Aurora through the issuance of additional 77,540 units to Aurora (the "Interest
Units"). Each Interest Unit consists of one common share and one common share
purchase warrant exercisable prior to February 13, 2019 for one additional
common share of Radient at an exercise price of $0.53 per warrant. The issuance
of the Interest Units to Aurora is subject to final approval of the TSX Venture
Exchange.
Early Warning Disclosure
Radient has been advised by Aurora that prior to the conversion
of the convertible debenture Aurora held 2,777,800 common shares and 2,777,800
purchase warrants. Radient has been further advised by Aurora that after giving
effect to the conversion, Aurora holds 17,245,221 common shares and 17,245,221
share purchase warrants of Radient representing approximately 9.6% of the issued
and outstanding common shares, and 17.5% of the issued and outstanding common
shares on a partially diluted basis.
Aurora acquired the securities for investment purposes. Aurora
will evaluate its investment in Radient from time to time and may, based on such
evaluation, market conditions and other circumstances, increase or decrease
shareholdings as circumstances require through market transactions, private
agreements, or otherwise. A copy of the Early Warning report will be filed by
Aurora in connection with the acquisition and will be available on Radient’s
SEDAR profile. In order to obtain a copy of the early warning report, please
contact Nilda Rivera, Aurora’s Controller, at telephone number: 604-362-5207.
Aurora’s registered office is located at 1500 - 1199 West Hastings St.
Vancouver, British Columbia, V6E 3T5.
About Radient
Radient extracts natural compounds from a range of biological
materials using its proprietary MAP
TM
natural product extraction
technology platform which provides superior customer outcomes in terms of
ingredient purity, yield, and cost. From its initial 20,000 square foot
manufacturing plant in Edmonton, Alberta, Radient serves market leaders in
industries that include pharmaceutical, food, beverage, natural health, personal
care and biofuel markets. Visit
www.radientinc.com
for more information.
- 4 -
About Aurora
Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s
Access to Cannabis for Medical Purposes Regulations
(“ACMPR”). The
Company operates a 55,200 square foot, state-of-the-art production facility in
Mountain View County, Alberta, and is currently constructing a second 800,000
square foot production facility, known as “Aurora Sky”, at the Edmonton
International Airport, and has acquired, and is undertaking completion of, a
third 40,000 square foot production facility in Pointe-Claire, Quebec, on
Montreal’s West Island. Aurora also recently acquired Pedanios GmbH, a leading
wholesale importer, exporter, and distributor of medical cannabis in the
European Union (“EU”), based in Berlin, Germany. In addition, the company is the
cornerstone investor with a 19.9% stake in Cann Group Limited, the only
Australian company licensed to conduct research on and cultivate medical
cannabis, Aurora’s common shares trade on the TSX under the symbol “ACB”. Visit
www.auroramj.com
for more information.
On behalf of the Board of Directors,
RADIENT TECHNOLOGIES
INC.
Denis Taschuk, CEO
AURORA CANNABIS INC.
Terry Booth, CEO
Further Information:
For Radient:
Denis Taschuk, Chief Executive Officer,
dtaschuk@radientinc.com, (780) 465-1318
Mike Cabigon, Chief Operating Officer,
mcabigon@radientinc.com, (780) 465-1318
|
For Aurora:
|
|
|
|
|
|
|
|
Cam Battley
|
|
Marc Lakmaaker
|
|
Executive Vice President
|
|
NATIONAL Equicom
|
|
+1.905.864.5525
|
|
+1.416.848.1397
|
|
cam@auroramj.com
|
|
mlakmaaker@national.ca
|
Information set forth in this news release contains
forward-looking information and statements that are based on assumptions as of
the date of this news release. These statements reflect management’s current
estimates, beliefs, intentions and expectations. They are not guarantees of
future performance. The terms and phrases "goal", "commitment", "guidance",
"expects", "would", "will", "continuing", "drive", "believes", "indicate", "look
forward", "grow", "outlook", "forecasts", “intend”, and similar terms and
phrases are intended to identify these forward-looking statements. The
Corporation cautions that all forward looking information and statements are
inherently uncertain and that actual performance may be affected by a number of
material factors, many of which are beyond the Corporation’s control. Such
factors include, among other things: risks and uncertainties relating to the
Corporation’s ability to complete the proposed shares for debt transaction.
Accordingly, actual and future events, conditions and results may differ
materially from the estimates, beliefs, intentions and expectations expressed or
implied in the forward looking information. Except as required under applicable
securities legislation, the Corporation undertakes no obligation to publicly
update or revise forward-looking information.
- 5 -
Neither TSX nor TSX Venture Exchange nor their Regulation
Services Providers (as that term is defined in the policies of the respective
Exchanges) accepts responsibility for the adequacy or accuracy of this release.
|
EX-1.30 31 exhibit1-30.htm EXHIBIT 1.30
|
|
|
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
"
)
1500 – 1199 West Hastings
Street
Vancouver, BC V6E 3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
October 23, 2017
A news release issued on October 23,
2017 at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. and Radient
Technologies Inc. (“Radient”) announced extension towards finalizing agreement.
Full Description of Material
Change
Aurora Cannabis Inc. and Radient
Technologies today announced that further to the companies’ joint press release
of June 5, 2017, both parties have agreed to a 17-day extension, through
November 6, 2017, on the 140-day term under which Aurora was granted certain
exclusive rights to negotiate with Radient in respect to the acquisition of
certain exclusive rights to use Radient's technology and processes, as further
set out in the original memorandum of understanding, dated December 13, 2016.
Good progress has been made towards finalizing the agreement, and both parties
have agreed that the inclusion in the negotiations of certain additional items
warrants an extension to the original 140-day term.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice
President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive
Officer
Mobile: (780) 722 - 8889
Email:
terry@auroramj.com
DATED October 23, 2017.
|
|
|
|
|
|
|
|
October 23, 2017
|
TSX:ACB
|
TSXV: RTI
|
Aurora Cannabis and Radient Technologies Announce
Extension
Towards Finalizing Agreement
VANCOUVER, B.C & EDMONTON, ALBERTA, October 23, 2017 -
Aurora Cannabis Inc. (“Aurora”) (TSX: ACB) and Radient Technologies Inc.
(“Radient”) (TSXV: RTI) (collectively “the Corporations”), today announced that
further to the companies’ joint press release of June 5, 2017, both parties have
agreed to a 17-day extension, through November 6, 2017, on the 140-day term
under which Aurora was granted certain exclusive rights to negotiate with
Radient in respect to the acquisition of certain exclusive rights to use
Radient's technology and processes, as further set out in the original
memorandum of understanding, dated December 13, 2016. Good progress has been
made towards finalizing the agreement, and both parties have agreed that the
inclusion in the negotiations of certain additional items warrants an extension
to the original 140-day term.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). Aurora operates a
55,200 square foot, state-of-the-art production facility in Mountain View
County, Alberta, known as "Aurora Mountain", is currently constructing a second
800,000 square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport, and has acquired, and is undertaking completion of a
third 40,000 square foot production facility in Pointe-Claire, Quebec, on
Montreal's West Island.
In addition, Aurora holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. Aurora offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the- art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB". Visit www.auroramj.com for more information.
About Radient
Radient extracts natural compounds from a range of biological
materials using its proprietary MAP
TM
natural product extraction
technology platform which provides superior customer outcomes in terms of
ingredient purity, yield, and cost. From its initial 20,000 square foot
manufacturing plant in Edmonton, Alberta, Radient serves market leaders in
industries that include pharmaceutical, food, beverage, natural health, personal
care and biofuel markets. Visit www.radientinc.com for more information.
On behalf of the Board of Directors,
RADIENT TECHNOLOGIES
INC.
Denis Taschuk, CEO
AURORA CANNABIS INC.
Terry Booth, CEO
Further Information:
|
For Aurora:
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
NATIONAL Equicom
|
|
+1.905.864.5525
|
+1.416.848.1397
|
|
cam@auroramj.com
|
mlakmaaker@national.ca
|
|
|
|
|
For Radient:
|
|
|
|
|
|
Denis Taschuk
|
Mike Cabigon
|
|
Chief Executive Officer
|
Chief Operating Officer
|
|
+1.780.465.1318
|
+1.780.465.1318
|
|
dtaschuk@radientinc.com
|
mcabigon@radientinc.com
|
Information set forth in this news release contains
forward-looking information and statements that are based on assumptions as of
the date of this news release. These statements reflect management’s current
estimates, beliefs, intentions and expectations. They are not guarantees of
future performance. The terms and phrases "goal", "commitment", "guidance",
"expects", "would", "will", "continuing", "drive", "believes", "indicate", "look
forward", "grow", "outlook", "forecasts", “intend”, and similar terms and
phrases are intended to identify these forward-looking statements. The
Corporations caution that all forward looking information and statements are
inherently uncertain and that actual performance may be affected by a number of
material factors, many of which are beyond the Corporations’ control. Such
factors include, among other things: risks and uncertainties relating to the
Corporations’ ability to finalize the terms of the proposed agreement.
Accordingly, actual and future events, conditions and results may differ
materially from the estimates, beliefs, intentions and expectations expressed or
implied in the forward looking information. Except as required under applicable
securities legislation, the Corporations undertake no obligation to publicly
update or revise forward-looking information.
Neither TSX nor TSX Venture Exchange nor their Regulation
Services Providers (as that term is defined in the policies of the respective
Exchanges) accepts responsibility for the adequacy or accuracy of this
release
.
Aurora Receives Cultivation License for Pointe-Claire,
Quebec Site
"Aurora Vie" is Province's Second Licensed Cannabis
Production Facility
TSX: ACB
VANCOUVER, Oct. 30, 2017 /CNW/ - Aurora Cannabis Inc. (the
"Company" or "Aurora") (TSX: ACB) (OTCQX: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
today announced that the Company's 40,000 square foot, yield-optimized indoor
production facility in Pointe-Claire, Quebec has received its cultivation
license from Health Canada. The newly licensed facility, to be known as "Aurora
Vie", makes Aurora only the second licensed producer in Quebec, Canada's second
most populous province, with more than 8.2 million people.
Aurora Vie was acquired in April, 2017 for $7 million, at which
time it was approximately 80% complete. The facility has since been completed,
with approximately $3 million in configuration and technology upgrades
specifically designed to meet European Union (EU) Good Manufacturing Practices
(GMP) certification standards. Aurora Vie has a projected cultivation capacity
of approximately 4,000 kg of high quality cannabis per year, and features many
cultivation and automation technologies the Company will also be implementing at
its 800,000 square foot Aurora Sky facility under construction at Edmonton
International Airport.
"We acquired Aurora Vie, completed construction with major
upgrades, and achieved our production license in less than 6 months, which is
absolutely remarkable," said Terry Booth, CEO. "That's testament to the strength
of our team, our agility and our disciplined execution. Aurora Vie itself is
testament to our innovation. We are incredibly proud of our commitment to,
investment in, and growth strategy for our Quebec operations, and look forward
to servicing both the medical market and, once legalized, the adult consumer
market with locally cultivated high quality cannabis."
Initially, genetics
(clones) will be transferred from the Company's Aurora Mountain facility to
Aurora Vie, and the Company anticipates first harvest in the first calendar
quarter of 2018. Aurora Vie's yield-optimized design provides for tremendous
flexibility to grow a wide variety of strains, including rare but sought after
cultivars not yet on Aurora's menu. This will further expand the Company's
product offering, and strengthen its brand recognition as cultivator of choice
for high quality cannabis.
Dieter MacPherson, VP Production, added, "Aurora Vie can be
described as Indoor Purpose-Built 2.0, a truly next-generation facility,
building on the lessons learned at Aurora Mountain, and extending our leadership
in high-technology, high-efficiency, and high-quality cannabis cultivation. We
believe Aurora Vie will deliver significant improvements in harvest frequency
and yield per plant, setting new benchmarks for large-scale production. As
planned, the facility was completed utilizing materials, workflow, technologies
and design to easily and quickly obtain EU GMP certification. As a result we
anticipate applying for the necessary permits to supply the rapidly-growing
German medical cannabis market, as well as additional future European markets,
via exports from Aurora Vie through our European subsidiary Pedanios."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
On behalf of the Board of Directors,
AURORA CANNABIS
INC.
Terry Booth
CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content with multimedia:
http://www.newswire.ca/en/releases/archive/October2017/30/c8423.html
%SEDAR:
00025675E
For further information:
Cam Battley, Executive Vice
President, +1.905.864.5525, cam@auroramj.com, www.auroramj.com;
Marc Lakmaaker, NATIONAL Equicom, mlakmaaker@national.ca,
+1.416.848.1397
CO: Aurora Cannabis Inc.
CNW 07:00e 30-OCT-17
|
EX-1.31 32 exhibit1-31.htm EXHIBIT 1.31
|
|
|
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
"
)
1500 – 1199 West Hastings
Street
Vancouver, BC V6E 3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
November 2, 2017
A news release issued on November 2,
2017 at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. completes $69
million unit offering and concurrent $6 million private placement.
Full Description of Material
Change
Aurora Cannabis Inc. is pleased to
announce that, further to its news release dated October 10, 2017, it completed
its bought deal offering of 23,000,000 units ("Units") of the Company, including
the exercise, in full, of the Underwriters’ over-allotment option (the
"Offering") with a syndicate of underwriters, led by Canaccord Genuity Corp.,
including GMP Securities L.P., PI Financial Corporation, Eight Capital,
Industrial Alliance Securities Inc., Beacon Securities Limited and Mackie
Research Capital Corporation (collectively, the "Underwriters"), for gross
proceeds of $69 million. Each Unit, at a price of $3.00 per Unit, is comprised
of one common share of the Company (a "Common Share") and one common share
purchase warrant (a "Warrant"). Each Warrant will be exercisable to acquire one
common share (a "Warrant Share") for a period of three years following the date
hereof at an exercise price of $4.00 per Warrant Share, subject to adjustment in
certain events. The Warrants are listed on the TSX under symbol ACB.WT.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice
President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive
Officer
Mobile: (780) 722 - 8889
Email:
terry@auroramj.com
DATED November 2, 2017.
|
November 2, 2017
|
TSX:
ACB
|
Aurora Completes $69 Million Unit Offering and Concurrent $6
Million Private Placement
Not for Distribution to United States News Wire Services or For
Dissemination in The United States
Vancouver, BC – November 2, 2017 –
Aurora Cannabis Inc.
(the “Company” or “Aurora”) (TSX: ACB) (OTCQX: ACBFF) (Frankfurt: 21P; WKN:
A1C4WM)) is pleased to announce that, further to its news release dated October
10, 2017, it completed its bought deal offering of 23,000,000 units ("Units") of
the Company, including the exercise, in full, of the Underwriters’
over-allotment option (the "Offering") with a syndicate of underwriters, led by
Canaccord Genuity Corp., including GMP Securities L.P., PI Financial
Corporation, Eight Capital, Industrial Alliance Securities Inc., Beacon
Securities Limited and Mackie Research Capital Corporation (collectively, the
"Underwriters"), for gross proceeds of $69 million. Each Unit, at a price of
$3.00 per Unit, is comprised of one common share of the Company (a "Common
Share") and one common share purchase warrant (a "Warrant"). Each Warrant will
be exercisable to acquire one common share (a "Warrant Share") for a period of
three years following the date hereof at an exercise price of $4.00 per Warrant
Share, subject to adjustment in certain events. The Warrants are listed on the
TSX under symbol ACB.WT.
Additionally, the Company completed a concurrent private
placement of 2,000,000 Units of the Company for proceeds of $6 million, as
previously announced on October 16, 2017 (the "Private Placement"), with the
Units issued under the Private Placement having the same terms as the Units
issued under the Offering. All securities issued in connection with the Private
Placement are subject to a four month hold period expiring March 3, 2017.
The Company intends to use the net proceeds of the Offering and
the Private Placement for the Company's strategic growth initiatives including
continued domestic and international expansion.
Six insiders of the Company participated in the Offering,
directly and indirectly, in the aggregate principal amount of $1.85 million,
which constitutes a "related party transaction" within the meaning of
Multilateral Instrument 61-101 - Protection of Minority Security Holders in
Special Transactions ("MI 61-101"). The issuance to the insiders is exempt from
the formal valuation and the minority shareholder approval requirements of MI
61-101, as the fair market value of the Units issued to and the consideration
paid by such persons did not exceed 25% of the Company's market capitalization.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR").
The Company operates a 55,200 square foot, state-of-the-art
production facility in Mountain View County, Alberta, known as "Aurora
Mountain", a second 40,000 square foot high-technology production facility known
as “Aurora Vie” in Pointe-Claire, Quebec on Montreal’s West Island, and is
currently constructing an 800,000 square foot production facility, known as
"Aurora Sky", at the Edmonton International Airport.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of- the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
###
|
Further information:
|
|
|
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
NATIONAL Equicom
|
|
+1.905.864.5525
|
mlakmaaker@national.ca
|
|
cam@auroramj.com
|
+1.416.848.1397
|
|
www.auroramj.com
|
|
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
(“forward-looking statements”), including, but not limited to, statements with
respect to the use of proceeds from the Offering and the Private Placement.
Forward- looking statements are frequently characterized by words such as
"plan", "continue", "expect", "project", "intend", "believe", "anticipate",
"estimate", "may", "will", "potential", "proposed" and other similar words, or
statements that certain events or conditions "may" or "will" occur. These
statements are only predictions. Various assumptions were used in drawing the
conclusions or making the projections contained in the forward-looking
statements throughout this news release. Forward-looking statements are based on
the opinions and estimates of management at the date the statements are made,
and are subject to a variety of risks and uncertainties and other factors that
could cause actual events or results to differ materially from those projected
in the forward-looking statements. The Company is under no obligation,and
expressly disclaims any intention or obligation, to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release
.
Aurora Cannabis and Radient Technologies Sign Master
Services Agreement
Companies Also Sign Investor Rights Agreement
TSX: ACB
TSXV: RTI
VANCOUVER, Nov. 6, 2017 /CNW/ - Further to the two companies'
joint press release of October 23, 2017, Aurora Cannabis Inc. (the "Company" or
"Aurora") (TSX: ACB) (OTCQX: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)) and Radient
Technologies Inc. ("Radient") (TSXV: RTI) today announced the companies have
finalized a Master Services Agreement (the "Agreement"), pursuant to which
Radient has agreed to perform certain services for Aurora using its proprietary
MAP™ technology, as well as other technologies, as an independent contractor in
relation to the development, commercialization and supply of standardized
cannabis extracts. The Agreement has an initial term of five years, with an
option for Aurora to renew the agreement for an additional five years.
Under the terms of the agreement, Radient will provide
processing services to Aurora for the production of extracts from material
supplied by the Company, which may include both cannabis and hemp. The agreement
initially covers services delivered in Canada, Australia, and the European
Union, including Germany where Aurora's wholly owned subsidiary Pedanios is the
largest distributor of medical cannabis on the continent. Additionally, Aurora
has the right to negotiate on an exclusive basis with Radient to expand the
jurisdictions covered. Within the countries covered by the agreement, Radient
shall deliver its services under preferential terms to Aurora.
Radient applied in December, 2016 to Health Canada to obtain
Licensed Dealer status, and in February, 2017 for Licensed Producer status, and
is progressing well through the processes. Upon receipt of either license,
Radient will be able to commence production of cannabis extracts from products
supplied by Aurora or Aurora's partners.
"This agreement will enable us, in the very near future, to
dramatically accelerate the production of high-margin cannabis derivatives under
favourable terms," said Terry Booth, CEO. "The market for non-smoked derivative
cannabis products is growing at a remarkable pace, and through this agreement we
have a cost-effective and scalable means to help meet this demand - particularly
once we begin harvests in the first half of 2018 at our 100,000+ kg per annum
Aurora Sky production facility. We intend to continue our collaboration with
Radient on other R&D projects that we expect will deliver significant value
to both companies."
Denis Taschuk, CEO of Radient, added, "This agreement brings
together the industry's most technologically advanced cultivation facility,
Aurora Sky, with the industry's most advanced extraction platform, Radient's
MAP™. With a shared commitment to world-leading quality assurance and the
development of innovative products, we are excited about the benefits this
partnership will bring to our respective stakeholders."
The Master Services
Agreement includes an Investor Rights Agreement that provides Aurora with
certain rights to participate in future offerings, providing Aurora with the
option to expand its ownership in Radient up to 19.99% . Aurora also has the
right to appoint one director to the Radient Board of Directors.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
About Radient
Radient extracts natural compounds from a range of biological
materials using its proprietary MAP
TM
natural product extraction
technology platform which provides superior customer outcomes in terms of
ingredient purity, yield, and cost. From its initial 20,000 square foot
manufacturing plant in Edmonton, Alberta, Radient serves market leaders in
industries that include pharmaceutical, food, beverage, natural health, personal
care and biofuel markets. Visit
www.radientinc.com
for more information.
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth, CEO
RADIENT TECHNOLOGIES INC.
Denis Taschuk, CEO
Information set forth in this news release contains
forward-looking information and statements that are based on assumptions as of
the date of this news release. These statements reflect management's current
estimates, beliefs, intentions and expectations. They are not guarantees of
future performance. The terms and phrases "goal", "commitment", "guidance",
"expects", "would", "will", "continuing", "drive", "believes", "indicate", "look
forward", "grow", "outlook", "forecasts", "intend", and similar terms and
phrases are intended to identify these forward-looking statements. The
Corporations caution that all forward looking information and statements are
inherently uncertain and that actual performance may be affected by a number of
material factors, many of which are beyond the Corporations' control. Such
factors include, among other things: risks and uncertainties relating to the
Corporations' ability to finalize the terms of the proposed agreement.
Accordingly, actual and future events, conditions and results may differ
materially from the estimates, beliefs, intentions and expectations expressed or
implied in the forward looking information. Except as required under applicable
securities legislation, the Corporations undertake no obligation to publicly
update or revise forward-looking information.
Neither TSX nor TSX Venture
Exchange nor their Regulation Services Providers (as that term is defined in the
policies of the respective Exchanges) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/November2017/06/c1444.html
%SEDAR: 00025675E
For further information:
For Aurora: Cam Battley,
Executive Vice President, +1.905.864.5525, cam@auroramj.com; Marc Lakmaaker,
Director, Investor Relations and Corporate Development, +1.647.289.6640,
marc.lakmaaker@auroramj.com; For Radient: Denis Taschuk, Chief Executive
Officer, +1.780.465.1318, dtaschuk@radientinc.com; Mike Cabigon, Chief Operating
Officer, +1.780.465.1318, mcabigon@radientinc.com
CO: Aurora Cannabis Inc.
CNW 07:00e 06-NOV-17
|
EX-1.33 34 exhibit1-33.htm EXHIBIT 1.33
|
|
|
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (
the
"Company"
)
1500 – 1199 West Hastings Street
Vancouver, BC V6E 3T5
Telephone:
(604) 362-5207
|
Item 2.
|
Date of Material Change
|
November 6, 2017
A news release issued on November 6,
2017 at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. and Namaste
Technologies Inc. announce start of vaporizer sales through Aurora website.
Full Description of Material
Change
Aurora Cannabis Inc. and Namaste
Technologies Inc. are pleased to announce that the Companies have commenced
sales through Aurora’s website and mobile application under the Exclusive
Hardware Supply Agreement, as announced on September 28, 2017.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice
President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive
Officer
Mobile
:
(780) 722 - 8889
Email:
terry@auroramj.com
DATED November 6, 2017.
|
|
|
|
|
|
|
|
|
|
November 6, 2017
|
TSX:
ACB
|
TSX-V: N
|
Aurora Cannabis and Namaste Technologies Announce Start
of
Vaporizer Sales through Aurora Website
Vancouver, BC – November 7, 2017 -
Aurora Cannabis Inc.
(the “Company” or “Aurora”) (TSX: ACB) (OTCQX: ACBFF) (Frankfurt: 21P; WKN:
A1C4WM) and Namaste Technologies Inc. (“Namaste”) (CSE: N) (FRANKFURT: M5BQ)
(OTCMKTS: NXTTF) are pleased to announce that the Companies have commenced sales
through Aurora’s website and mobile application under the Exclusive Hardware
Supply Agreement (the “Agreement”), as announced on September 28, 2017.
Further to the Agreement, Aurora is now offering a range of
high-quality vaporizers to its medical patients through the Company’s online
platform. Commencement of sales under this agreement represents a significant
milestone for Namaste in aligning itself with one of the industry’s leading
Licensed Producers. In turn, through the collaboration, Aurora is broadening its
product offering. With over 200 orders over the first three days since the
offering going live, uptake has been impressive.
Namaste is a technology leader in the online sale of ancillary
hardware products for the cannabis market, and offers a customer experience that
meets the Aurora Standard for sales and customer service. The products offered
through Aurora’s website are carefully curated, and, combined with Namaste’s
processing and delivery capabilities, offer the best possible experience from
ordering through to consumption. The ability to offer patients non-smoked
methods to consume cannabis is of growing importance in a market featuring
evolving user preferences. Through this collaboration, Aurora is now able to
provide this growing segment of the cannabis market with a broader and more
diversified product offering, while providing expanded market reach for Namaste.
Namaste anticipates that the collaboration with Aurora will
result in additional revenues, and will continue to work with Aurora in
expanding the current product offering and adding further value to Aurora’s
medical patients.
Management Commentary
“We are very pleased with the encouraging start for sales of
Namaste-sourced products through our website and mobile application,” said Terry
Booth, CEO of Aurora. “We’re offering our clients new options and a broader
range of products, in response to customer demand. Our collaboration with
Namaste, the technology leader in this segment, ensures our patients receive the
best possible customer experience, in line with the Aurora Standard. Going
forward, we look to further enhance the offering with Namaste, positioning us
for the increasing demand we anticipate both from the rapidly-growing medical
market and, once legalized, the consumer market.”
Sean Dollinger, President and CEO of Namaste added, “We are
delighted to have commenced sales through our collaboration with Aurora, and are
excited with the initial results. We greatly value the relationship with one of
Canada’s leading producers, and are proud to offer best-in-class products and
customer support to their registered patients. We intend to expand our product
offering through Aurora, including new and innovative products, and offer an
even wider selection to our partner’s customers.”
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as “Aurora Vie” in Pointe-Claire,
Quebec on Montreal’s West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of- the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
About Namaste Technologies Inc.
Namaste is the largest online retailer for medical cannabis
delivery systems globally. Namaste distributes vaporizers and smoking
accessories through e-commerce sites in 26 countries and with 5 distribution
hubs located around the world. Namaste has majority market share in Europe and
Australia, with operations in the UK, US, Canada and Germany and has opened new
supply channels into emerging markets including Brazil, Mexico and Chile.
Namaste, through its acquisition of Cannmart Inc., a Canadian based late-stage
applicant for a medical cannabis distribution license (under the ACMPR Program)
is pursuing a new revenue vertical in online retail of medical cannabis in the
Canadian market. Namaste intends to leverage its existing database of Canadian
medical cannabis consumers, along with its expertise in e-commerce to create an
online marketplace for medical cannabis patients, offering a larger variety of
product and a better user experience.
|
On behalf of the Board of Directors
|
|
|
|
|
|
Terry Booth
|
Sean Dollinger
|
|
|
|
|
Chief Executive Officer
|
Chief Executive Officer
|
###
|
For further information
|
|
|
|
|
|
For Aurora:
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
|
|
|
Executive Vice President
|
Director, Investor Relations and
|
|
|
|
|
+1.905.864.5525
|
Corporate Development
|
|
|
|
|
cam@auroramj.com
|
+1.647.289.6640
|
|
www.auroramj.com
|
marc.lakmaaker@auroramj.com
|
|
|
|
|
For Namaste
|
|
|
Sean Dollinger
|
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
+1 (786) 389 9771
|
|
|
|
|
|
Sean@NamasteTechnologies.com
|
|
|
https://www2.namastetechnologies.com
|
|
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
(“forward-looking statements”). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward- looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. Aurora
and Namaste are under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX, nor TSX-V, nor their Regulation Services Provider
(as that term is defined in the policies of Toronto Stock Exchange and TSX
Venture Exchange) accept responsibility for the adequacy or accuracy of this
release
.
|
EX-1.32 33 exhibit1-32.htm EXHIBIT 1.32
|
|
|
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
"
)
1500 – 1199 West Hastings
Street
Vancouver, BC V6E 3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
November 6, 2017
A news release issued on November 6,
2017 at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. and Radient
Technologies Inc. sign master services agreement; companies also sign investor
rights agreement.
Full Description of Material
Change
Further to the two companies’ joint
press release of October 23, 2017, Aurora Cannabis Inc. and Radient Technologies
Inc. today announced the companies have finalized a Master Services Agreement
(the “Agreement”), pursuant to which Radient has agreed to perform certain
services for Aurora using its proprietary MAP™ technology, as well as other
technologies, as an independent contractor in relation to the development,
commercialization and supply of standardized cannabis extracts. The Agreement
has an initial term of five years, with an option for Aurora to renew the
agreement for an additional five years.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice
President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive
Officer
Mobile: (780) 722 - 8889
Email:
terry@auroramj.com
DATED November 6, 2017.
|
|
|
|
|
|
|
|
November 6, 2017
|
TSX: ACB
|
TSXV: RTI
|
|
|
|
|
|
|
|
|
Aurora Cannabis and Radient Technologies Sign Master
Services Agreement
Companies Also Sign Investor Rights
Agreement
Vancouver, BC – November 6, 2017 –
Further to the two
companies’ joint press release of October 23, 2017, Aurora Cannabis Inc. (the
“Company” or “Aurora”) (TSX: ACB) (OTCQX: ACBFF) (Frankfurt: 21P; WKN: A1C4WM))
and Radient Technologies Inc. (“Radient”) (TSXV: RTI) today announced the
companies have finalized a Master Services Agreement (the “Agreement”), pursuant
to which Radient has agreed to perform certain services for Aurora using its
proprietary MAP™ technology, as well as other technologies, as an independent
contractor in relation to the development, commercialization and supply of
standardized cannabis extracts. The Agreement has an initial term of five years,
with an option for Aurora to renew the agreement for an additional five years.
Under the terms of the agreement, Radient will provide
processing services to Aurora for the production of extracts from material
supplied by the Company, which may include both cannabis and hemp. The agreement
initially covers services delivered in Canada, Australia, and the European
Union, including Germany where Aurora’s wholly owned subsidiary Pedanios is the
largest distributor of medical cannabis on the continent. Additionally, Aurora
has the right to negotiate on an exclusive basis with Radient to expand the
jurisdictions covered. Within the countries covered by the agreement, Radient
shall deliver its services under preferential terms to Aurora.
Radient applied in December, 2016 to Health Canada to obtain
Licensed Dealer status, and in February, 2017 for Licensed Producer status, and
is progressing well through the processes. Upon receipt of either license,
Radient will be able to commence production of cannabis extracts from products
supplied by Aurora or Aurora’s partners.
“This agreement will enable us, in the very near future, to
dramatically accelerate the production of high- margin cannabis derivatives
under favourable terms,” said Terry Booth, CEO. “The market for non-smoked
derivative cannabis products is growing at a remarkable pace, and through this
agreement we have a cost- effective and scalable means to help meet this demand
- particularly once we begin harvests in the first half of 2018 at our 100,000+
kg per annum Aurora Sky production facility. We intend to continue our
collaboration with Radient on other R&D projects that we expect will deliver
significant value to both companies.”
Denis Taschuk, CEO of Radient, added, "This agreement brings
together the industry's most technologically advanced cultivation facility,
Aurora Sky, with the industry's most advanced extraction platform, Radient's
MAP™. With a shared commitment to world-leading quality assurance and the
development of innovative products, we are excited about the benefits this
partnership will bring to our respective stakeholders."
The Master Services Agreement includes an Investor Rights
Agreement that provides Aurora with certain rights to participate in future
offerings, providing Aurora with the option to expand its ownership in Radient
up to 19.99% . Aurora also has the right to appoint one director to the Radient
Board of Directors
.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as “Aurora Vie” in Pointe-Claire,
Quebec on Montreal’s West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of- the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
About Radient
Radient extracts natural compounds from a range of biological
materials using its proprietary MAP
TM
natural product extraction
technology platform which provides superior customer outcomes in terms of
ingredient purity, yield, and cost. From its initial 20,000 square foot
manufacturing plant in Edmonton, Alberta, Radient serves market leaders in
industries that include pharmaceutical, food, beverage, natural health, personal
care and biofuel markets. Visit www.radientinc.com for more information.
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth, CEO
RADIENT TECHNOLOGIES INC.
Denis Taschuk, CEO
|
Further Information:
|
|
|
|
|
|
For Aurora:
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
Director, Investor Relations and
|
|
+1.905.864.5525
|
Corporate Development
|
|
cam@auroramj.com
|
+1.647.289.6640
|
|
|
marc.lakmaaker@auroramj.com
|
|
For Radient:
|
|
|
|
|
|
|
|
|
Denis Taschuk
|
Mike Cabigon
|
|
Chief Executive Officer
|
Chief Operating Officer
|
|
+1.780.465.1318
|
+1.780.465.1318
|
|
dtaschuk@radientinc.com
|
mcabigon@radientinc.com
|
Information set forth in this news release contains
forward-looking information and statements that are based on assumptions as of
the date of this news release. These statements reflect management’s current
estimates, beliefs, intentions and expectations. They are not guarantees of
future performance. The terms and phrases "goal", "commitment", "guidance",
"expects", "would", "will", "continuing", "drive", "believes", "indicate", "look
forward", "grow", "outlook", "forecasts", “intend”, and similar terms and
phrases are intended to identify these forward-looking statements. The
Corporations caution that all forward looking information and statements are
inherently uncertain and that actual performance may be affected by a number of
material factors, many of which are beyond the Corporations’ control. Such
factors include, among other things: risks and uncertainties relating to the
Corporations’ ability to finalize the terms of the proposed agreement.
Accordingly, actual and future events, conditions and results may differ
materially from the estimates, beliefs, intentions and expectations expressed or
implied in the forward looking information. Except as required under applicable
securities legislation, the Corporations undertake no obligation to publicly
update or revise forward-looking information.
Neither TSX nor TSX Venture Exchange nor their Regulation
Services Providers (as that term is defined in the policies of the respective
Exchanges) accepts responsibility for the adequacy or accuracy of this
release
.
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver, BC V6E
3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
November 7, 2017
A news release issued on November 7,
2017 at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. announces
conversion of remaining balance of $25 Million debenture.
Full Description of Material
Change
Aurora Cannabis Inc. announced today
that the Company has elected to exercise its right under the indenture (the
“Indenture”) governing the Company’s 8.0% unsecured convertible debentures due
November 1, 2018 (the “Debentures”) to convert all of the principal amount
outstanding of the remaining Debentures and unpaid accrued interest thereon up
to December 9, 2017 into common shares of the Company (the “Common Shares”).
Pursuant to the terms of the Indenture, the Company may force the conversion of
the Debentures at the conversion price of $2.00 per Common Share when the VWAP
of the Common Shares on the Toronto Stock Exchange for 10 consecutive trading
days equals or exceeds $3.00.
|
Item 5.
|
Full Description of Material
Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice
President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive
Officer
Mobile: (780) 722 - 8889
Email:
terry@auroramj.com
DATED November 7, 2017.
|
November 7, 2017
|
TSX: ACB
|
Aurora Cannabis Announces Conversion of Remaining Balance of
$25 Million Debenture
Vancouver, BC – November 7, 2017 –
Aurora Cannabis Inc.
(the “Company” or “Aurora”) (TSX: ACB) (OTCQX: ACBFF) (Frankfurt: 21P; WKN:
A1C4WM) announced today that the Company has elected to exercise its right under
the indenture (the “Indenture”) governing the Company’s 8.0% unsecured
convertible debentures due November 1, 2018 (the “Debentures”) to convert (the
“Conversion”) all of the principal amount outstanding of the remaining
Debentures and unpaid accrued interest thereon up to December 9, 2017 into
common shares of the Company (the “Common Shares”). Pursuant to the terms of the
Indenture, the Company may force the conversion of the Debentures at the
conversion price of $2.00 per Common Share when the VWAP of the Common Shares on
the TSX Exchange (the “Exchange”) for 10 consecutive trading days equals or
exceeds $3.00.
As of close of markets November 3, 2017, the VWAP of the Common
Shares on the Exchange for 10 consecutive trading days equals $3.02. The
Conversion is scheduled to be effective December 9, 2017. Therefore, on Monday,
December 11, 2017, the estimated remaining total of $4.12 million of Debentures
outstanding will be converted into approximately 2,060,000 Common Shares, and
accrued interest will be paid.
“We are very pleased to convert these Debentures, which
provides us with additional interest savings, further strengthening our
excellent balance sheet, and is reflective of Aurora’s remarkable growth and
operational progress,” said Terry Booth, CEO.
The Company has provided the holders of the Debentures 30 days
advance written notice of its intent to exercise the Conversion.
Management Appointment
Effective immediately, Aurora has appointed Marc Lakmaaker as
Director, Investor Relations and Corporate Development. Mr. Lakmaaker joins
Aurora from NATIONAL Equicom, Canada’s largest integrated communications firm,
where he was Director, Investor Relations and head of the organization’s
CleanTech practice. Having worked with Aurora as an external consultant for the
past 18 months, and active in the cannabis space for three years, he has
extensive sector knowledge and experience. He also brings substantial
international experience, having started his career in Europe working with
global companies listed on various international exchanges, and will help Aurora
further build its global investor profile. Mr. Lakmaaker holds an MSc in
Chemical Engineering from Twente University, the Netherlands.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations
("ACMPR"). The
Company operates a 55,200 square foot, state-of-the-art production facility in
Mountain View County, Alberta, known as "Aurora Mountain", a second 40,000
square foot high-technology production facility known as “Aurora Vie” in
Pointe-Claire, Quebec on Montreal’s West Island, and is currently constructing
an 800,000 square foot production facility, known as "Aurora Sky", at the
Edmonton International Airport.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
###
|
Further information:
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
Director, Investor Relations and
|
|
+1.905.864.5525
|
Corporate Development
|
|
cam@auroramj.com
|
+1.647.289.6640
|
|
www.auroramj.com
|
marc.lakmaaker@auroramj.com
|
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
(“forward-looking statements”), including, but not limited to, statements with
respect to the use of proceeds from the Offering and the Private Placement.
Forward-looking statements are frequently characterized by words such as "plan",
"continue", "expect", "project", "intend", "believe", "anticipate", "estimate",
"may", "will", "potential", "proposed" and other similar words, or statements
that certain events or conditions "may" or "will" occur. These statements are
only
predictions. Various assumptions were used in drawing the
conclusions or making the projections contained in the forward-looking
statements throughout this news release. Forward-looking statements are based on
the opinions and estimates of management at the date the statements are made,
and are subject to a variety of risks and uncertainties and other factors that
could cause actual events or results to differ materially from those projected
in the forward-looking statements. The Company is under no obligation, and
expressly disclaims any intention or obligation, to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver, BC V6E
3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
November 7, 2017
A news release issued on November 7,
2017 at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. and Namaste
Technologies Inc. announce start of vaporizer sales through Aurora website.
Full Description of Material
Change
Aurora Cannabis Inc. and Namaste
Technologies Inc. are pleased to announce that the Companies have commenced
sales through Aurora’s website and mobile application under the Exclusive
Hardware Supply Agreement, as announced on September 28, 2017.
|
Item 5.
|
Full Description of Material
Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice
President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive
Officer
Mobile: (780) 722 - 8889
Email:
terry@auroramj.com
DATED November 7, 2017.
|
|
|
|
|
|
|
|
|
|
November 7, 2017
|
TSX:
ACB
|
TSX-V: N
|
Aurora Cannabis and Namaste Technologies Announce Start
of
Vaporizer Sales through Aurora Website
Vancouver, BC – November 7, 2017 -
Aurora Cannabis Inc.
(the “Company” or “Aurora”) (TSX: ACB) (OTCQX: ACBFF) (Frankfurt: 21P; WKN:
A1C4WM) and Namaste Technologies Inc. (“Namaste”) (CSE: N) (FRANKFURT: M5BQ)
(OTCMKTS: NXTTF) are pleased to announce that the Companies have commenced sales
through Aurora’s website and mobile application under the Exclusive Hardware
Supply Agreement (the “Agreement”), as announced on September 28, 2017.
Further to the Agreement, Aurora is now offering a range of
high-quality vaporizers to its medical patients through the Company’s online
platform. Commencement of sales under this agreement represents a significant
milestone for Namaste in aligning itself with one of the industry’s leading
Licensed Producers. In turn, through the collaboration, Aurora is broadening its
product offering. With over 200 orders over the first three days since the
offering going live, uptake has been impressive.
Namaste is a technology leader in the online sale of ancillary
hardware products for the cannabis market, and offers a customer experience that
meets the Aurora Standard for sales and customer service. The products offered
through Aurora’s website are carefully curated, and, combined with Namaste’s
processing and delivery capabilities, offer the best possible experience from
ordering through to consumption. The ability to offer patients non-smoked
methods to consume cannabis is of growing importance in a market featuring
evolving user preferences. Through this collaboration, Aurora is now able to
provide this growing segment of the cannabis market with a broader and more
diversified product offering, while providing expanded market reach for Namaste.
Namaste anticipates that the collaboration with Aurora will
result in additional revenues, and will continue to work with Aurora in
expanding the current product offering and adding further value to Aurora’s
medical patients.
Management Commentary
“We are very pleased with the encouraging start for sales of
Namaste-sourced products through our website and mobile application,” said Terry
Booth, CEO of Aurora. “We’re offering our clients new options and a broader
range of products, in response to customer demand. Our collaboration with
Namaste, the technology leader in this segment, ensures our patients receive the
best possible customer experience, in line with the Aurora Standard. Going
forward, we look to further enhance the offering with Namaste, positioning us
for the increasing demand we anticipate both from the rapidly-growing medical
market and, once legalized, the consumer market.”
Sean Dollinger, President and CEO of Namaste added, “We are
delighted to have commenced sales through our collaboration with Aurora, and are
excited with the initial results. We greatly value the relationship with one of
Canada’s leading producers, and are proud to offer best-in-class products and
customer support to their registered patients. We intend to expand our product
offering through Aurora, including new and innovative products, and offer an
even wider selection to our partner’s customers.”
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as “Aurora Vie” in Pointe-Claire,
Quebec on Montreal’s West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
About Namaste Technologies Inc.
Namaste is the largest online retailer for medical cannabis
delivery systems globally. Namaste distributes vaporizers and smoking
accessories through e-commerce sites in 26 countries and with 5 distribution
hubs located around the world. Namaste has majority market share in Europe and
Australia, with operations in the UK, US, Canada and Germany and has opened new
supply channels into emerging markets including Brazil, Mexico and Chile.
Namaste, through its acquisition of Cannmart Inc., a Canadian based late-stage
applicant for a medical cannabis distribution license (under the ACMPR Program)
is pursuing a new revenue vertical in online retail of medical cannabis in the
Canadian market. Namaste intends to leverage its existing database of Canadian
medical cannabis consumers, along with its expertise in e-commerce to create an
online marketplace for medical cannabis patients, offering a larger variety of
product and a better user experience.
|
On behalf of the Board of Directors
|
|
|
|
|
|
Terry Booth
|
Sean Dollinger
|
|
|
|
|
Chief Executive Officer
|
Chief Executive Officer
|
###
|
For further information
|
|
|
|
|
|
For Aurora:
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
|
|
|
Executive Vice President
|
Director, Investor Relations and
|
|
|
|
|
+1.905.864.5525
|
Corporate Development
|
|
|
|
|
cam@auroramj.com
|
+1.647.289.6640
|
|
www.auroramj.com
|
marc.lakmaaker@auroramj.com
|
|
|
|
|
For Namaste
|
|
|
Sean Dollinger
|
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
+1 (786) 389 9771
|
|
|
|
|
|
Sean@NamasteTechnologies.com
|
|
|
https://www2.namastetechnologies.com
|
|
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
(“forward-looking statements”). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. Aurora
and Namaste are under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX, nor TSX-V, nor their Regulation Services Provider (as that term is defined in the policies of Toronto Stock Exchange and TSX Venture Exchange) accept responsibility for the adequacy or accuracy of this release.
|
EX-1.7 8
exhibit1-7.htm EXHIBIT 1.7
|
AURORA CANNABIS INC.
Condensed Interim Consolidated Financial
Statements
(Unaudited)
For the three months ended September 30, 2017 and
2016
(In Canadian Dollars)
|
AURORA CANNABIS INC.
|
|
Condensed Interim Consolidated Statements of Financial
Position
|
|
September 30, 2017 and June 30, 2016
|
|
(Unaudited – In thousands of Canadian dollars)
|
|
|
|
|
|
Notes
|
|
|
September 30, 2017
|
|
|
June 30, 2017
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
|
127,915
|
|
|
159,796
|
|
|
Accounts receivable
|
|
3
|
|
|
3,701
|
|
|
2,312
|
|
|
Marketablesecurities
|
|
4(b)
|
|
|
34,760
|
|
|
14,845
|
|
|
Inventory
|
|
5
|
|
|
11,653
|
|
|
7,703
|
|
|
Biological
assets
|
|
6
|
|
|
6,083
|
|
|
4,088
|
|
|
Promissory notes receivable
|
|
7
|
|
|
5,250
|
|
|
1,222
|
|
|
Loans receivable
|
|
9
|
|
|
2,132
|
|
|
2,096
|
|
|
Prepaid and other current assets
|
|
|
|
|
1,742
|
|
|
1,544
|
|
|
|
|
|
|
|
193,236
|
|
|
193,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
8
|
|
|
71,385
|
|
|
45,523
|
|
|
Convertible debenture
|
|
4(a)
|
|
|
-
|
|
|
11,071
|
|
|
Derivative
|
|
4(b)
|
|
|
4,892
|
|
|
292
|
|
|
Investment in a joint venture
|
|
9
|
|
|
-
|
|
|
-
|
|
|
Intangible assets
|
|
11
|
|
|
30,670
|
|
|
31,087
|
|
|
Goodwill
|
|
11
|
|
|
47,651
|
|
|
41,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
347,834
|
|
|
322,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
19(c), 22(b)
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities
|
|
(ii)
|
|
|
12,015
|
|
|
8,753
|
|
|
Deferredrevenue
|
|
|
|
|
1,548
|
|
|
1,421
|
|
|
Finance lease
|
|
12
|
|
|
71
|
|
|
69
|
|
|
Contingent consideration payable
|
|
10(a)(d)
|
|
|
9,928
|
|
|
13,221
|
|
|
|
|
|
|
|
23,562
|
|
|
23,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance lease
|
|
12
|
|
|
263
|
|
|
282
|
|
|
Convertible notes
|
|
13
|
|
|
66,581
|
|
|
63,536
|
|
|
Deferred gain on convertible debenture
|
|
4(a)
|
|
|
-
|
|
|
10,206
|
|
|
Deferred gain on derivative
|
|
4(b)
|
|
|
3,856
|
|
|
321
|
|
|
Deferred tax liability
|
|
|
|
|
8,656
|
|
|
5,937
|
|
|
|
|
|
|
|
102,918
|
|
|
103,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
14
|
|
|
230,432
|
|
|
221,447
|
|
|
Reserves
|
|
|
|
|
39,108
|
|
|
25,912
|
|
|
Deficit
|
|
|
|
|
(24,624
|
)
|
|
(28,426
|
)
|
|
|
|
|
|
|
244,916
|
|
|
218,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
347,834
|
|
|
322,679
|
|
Nature of Operations (Note 1)
Commitments (Note
20)
Subsequent Events (Notes 10(a), 13 and 24)
The accompanying notes are an integral part of these Condensed
Interim Consolidated Financial Statements.
|
AURORA CANNABIS INC.
|
|
Condensed Interim Consolidated Statements of
Comprehensive Loss
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
|
|
Notes
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
Revenue
|
|
|
|
|
8,249
|
|
|
3,071
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized (gain) loss on
changes in fair value of biological assets
|
|
6
|
|
|
(4,611
|
)
|
|
1,262
|
|
|
Inventory expensed to cost of sales
|
|
|
|
|
1,973
|
|
|
482
|
|
|
Production costs
|
|
|
|
|
2,077
|
|
|
1,241
|
|
|
Cost
of sales (recovery)
|
|
|
|
|
(561
|
)
|
|
2,985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
8,810
|
|
|
86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
General and
administration
|
|
16, 19(a)
|
|
|
2,993
|
|
|
1,047
|
|
|
Sales and marketing
|
|
17
|
|
|
3,668
|
|
|
1,570
|
|
|
Research and
development
|
|
|
|
|
107
|
|
|
40
|
|
|
Acquisition and project evaluation
costs
|
|
|
|
|
340
|
|
|
165
|
|
|
Depreciation and
amortization
|
|
8, 11
|
|
|
634
|
|
|
159
|
|
|
Share-based payments
|
|
15(a)(b)
|
|
|
2,486
|
|
|
380
|
|
|
|
|
|
|
|
10,228
|
|
|
3,361
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
|
|
(1,418
|
)
|
|
(3,275
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
|
|
Interest and other income
|
|
|
|
|
590
|
|
|
28
|
|
|
Finance and other costs
|
|
18
|
|
|
(2,016
|
)
|
|
(3,040
|
)
|
|
Foreign exchange
|
|
|
|
|
(247
|
)
|
|
-
|
|
|
Unrealized gain on
debenture
|
|
4(a)
|
|
|
6,937
|
|
|
-
|
|
|
Unrealized gain on derivative
|
|
4(b)
|
|
|
817
|
|
|
-
|
|
|
|
|
|
|
|
6,081
|
|
|
(3,012
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes
|
|
|
|
|
4,663
|
|
|
(6,287
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax recovery (expense)
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
-
|
|
|
8
|
|
|
Deferred, net
|
|
|
|
|
(1,103
|
)
|
|
666
|
|
|
|
|
|
|
|
(1,103
|
)
|
|
674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
|
|
3,560
|
|
|
(5,613
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
Deferred tax
|
|
|
|
|
(1,632
|
)
|
|
-
|
|
|
Unrealized gain on marketable
securities
|
|
4(b)
|
|
|
12,551
|
|
|
-
|
|
|
Foreign currency translation
|
|
|
|
|
(4
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
|
|
|
14,475
|
|
|
(5,613
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
0.01
|
|
|
(0.03
|
)
|
|
Diluted
|
|
|
|
|
0.01
|
|
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares outstanding
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
368,631,600
|
|
|
183,610,213
|
|
|
Diluted
|
|
|
|
|
376,199,780
|
|
|
183,610,213
|
|
The accompanying notes are an integral part of these Condensed
Interim Consolidated Financial Statements.
|
AURORA CANNABIS INC.
|
|
Condensed Interim Consolidated Statements of Changes in
Equity
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
amounts)
|
|
|
|
|
|
|
Share Capital
|
|
|
|
|
|
|
|
|
|
|
|
Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligation
|
|
|
Share-
|
|
|
Compensation
|
|
|
Related
|
|
|
|
|
|
Fair Value
|
|
|
Foreign
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
|
|
|
to Issue
|
|
|
Based
|
|
|
Options/
|
|
|
Party
|
|
|
Convertible
|
|
|
and
|
|
|
Currency
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
Notes
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Compensation
|
|
|
Warrants
|
|
|
Loans
|
|
|
Notes
|
|
|
Deferred Tax
|
|
|
Translation
|
|
|
Reserves
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
#
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Balance, June 30, 2016
|
|
|
135,576,365
|
|
|
17,148
|
|
|
2,335
|
|
|
608
|
|
|
1,184
|
|
|
1,403
|
|
|
200
|
|
|
-
|
|
|
-
|
|
|
5,730
|
|
|
(16,916
|
)
|
|
5,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss for the
period
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(5,613
|
)
|
|
(5,613
|
)
|
|
Shares issued for acquisition
|
14(b) (xi)
|
|
17,875,000
|
|
|
11,440
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
11,440
|
|
|
Performance shares
|
14(b) (xiii)
|
|
20,000,000
|
|
|
2,322
|
|
|
(2,322
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2,322
|
)
|
|
-
|
|
|
-
|
|
|
Transfer from derivative liabilities
|
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
98
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
98
|
|
|
-
|
|
|
98
|
|
|
Private placement
|
14(b) (xii)
|
|
57,500,000
|
|
|
23,000
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
23,000
|
|
|
Share issue costs
|
|
|
-
|
|
|
(3,192
|
)
|
|
-
|
|
|
-
|
|
|
1,388
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,388
|
|
|
-
|
|
|
(1,804
|
)
|
|
Warrant issued for
convertible debenture amendment
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
877
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
877
|
|
|
-
|
|
|
877
|
|
|
Conversion of notes
|
14(b) (iii)
|
|
5,674,542
|
|
|
2,215
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(200
|
)
|
|
-
|
|
|
-
|
|
|
(200
|
)
|
|
-
|
|
|
2,015
|
|
|
Equity component of
convertible notes
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,561
|
|
|
-
|
|
|
-
|
|
|
2,561
|
|
|
-
|
|
|
2,561
|
|
|
Deferred tax on convertible notes
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(664
|
)
|
|
-
|
|
|
-
|
|
|
(664
|
)
|
|
-
|
|
|
(664
|
)
|
|
Shares issued for loan
|
14(b) (xiv)
|
|
50,000
|
|
|
24
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
24
|
|
|
Shares issued for compensation
|
14(b) (x)
|
|
25,510
|
|
|
13
|
|
|
(13
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(13
|
)
|
|
-
|
|
|
-
|
|
|
Exercise of stock options
|
14(b) (iv)
|
|
264,583
|
|
|
156
|
|
|
-
|
|
|
(72
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(72
|
)
|
|
-
|
|
|
84
|
|
|
Exercise of warrants
|
14(b) (v)
|
|
4,004,161
|
|
|
2,582
|
|
|
-
|
|
|
-
|
|
|
(117
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(117
|
)
|
|
-
|
|
|
2,465
|
|
|
Exercise of compensation
options
|
14(b) (vi)
|
|
464,150
|
|
|
361
|
|
|
-
|
|
|
-
|
|
|
(90
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(90
|
)
|
|
-
|
|
|
271
|
|
|
Forfeited options
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(21
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(21
|
)
|
|
21
|
|
|
-
|
|
|
Share-based payments
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
380
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
380
|
|
|
-
|
|
|
380
|
|
|
Balance, September 30, 2016
|
|
|
241,434,311
|
|
|
56,069
|
|
|
-
|
|
|
895
|
|
|
3,340
|
|
|
1,403
|
|
|
1,897
|
|
|
-
|
|
|
-
|
|
|
7,535
|
|
|
(22,508
|
)
|
|
41,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss for the period
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5,192
|
|
|
(25
|
)
|
|
5,167
|
|
|
(7,355
|
)
|
|
(2,188
|
)
|
|
Shares issued for
acquisitions
|
14(b) (vii)
(viii)
|
|
9,216,007
|
|
|
23,100
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
23,100
|
|
|
Shares issued for contingent consideration
|
10(a)
|
|
2,926,103
|
|
|
7,408
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,408
|
|
|
Private placements
|
14(b) (ix)
|
|
33,337,500
|
|
|
75,009
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
75,009
|
|
|
Share issue costs
|
|
|
-
|
|
|
(7,721
|
)
|
|
-
|
|
|
-
|
|
|
3,243
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3,243
|
|
|
-
|
|
|
(4,478
|
)
|
|
Deferred tax on share issue
costs
|
|
|
-
|
|
|
1,846
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,846
|
|
|
Conversion of notes
|
14(b) (iii)
|
|
23,345,777
|
|
|
35,822
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(4,600
|
)
|
|
-
|
|
|
-
|
|
|
(4,600
|
)
|
|
-
|
|
|
31,222
|
|
|
Equity component of
convertible notes
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
18,026
|
|
|
-
|
|
|
-
|
|
|
18,026
|
|
|
-
|
|
|
18,026
|
|
|
Equity component of convertible note
transaction costs
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(900
|
)
|
|
-
|
|
|
-
|
|
|
(900
|
)
|
|
-
|
|
|
(900
|
)
|
|
Deferred tax on convertible
notes
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(4,689
|
)
|
|
-
|
|
|
-
|
|
|
(4,689
|
)
|
|
-
|
|
|
(4,689
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification upon
repayment of related party loans
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,403
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,403
|
)
|
|
1,403
|
|
|
-
|
|
|
Exercise of stock options
|
14(b) (iv)
|
|
1,737,117
|
|
|
1,243
|
|
|
-
|
|
|
(506
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(506
|
)
|
|
-
|
|
|
737
|
|
|
Exercise of warrants
|
14(b) (v)
|
|
50,932,145
|
|
|
26,066
|
|
|
-
|
|
|
-
|
|
|
(1,929
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,929
|
)
|
|
-
|
|
|
24,137
|
|
|
Exercise of compensation option/warrants
|
14(b) (vi)
|
|
3,620,284
|
|
|
2,605
|
|
|
-
|
|
|
-
|
|
|
(1,202
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,202
|
)
|
|
-
|
|
|
1,403
|
|
|
Forfeited options and
warrants
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2
|
)
|
|
(32
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(34
|
)
|
|
34
|
|
|
-
|
|
|
Share-based payments
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,204
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,204
|
|
|
-
|
|
|
7,204
|
|
|
Balance, June 30, 2017
|
|
|
366,549,244
|
|
|
221,447
|
|
|
-
|
|
|
7,591
|
|
|
3,420
|
|
|
-
|
|
|
9,734
|
|
|
5,192
|
|
|
(25
|
)
|
|
25,912
|
|
|
(28,426
|
)
|
|
218,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss for the
period
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
10,919
|
|
|
(4
|
)
|
|
10,915
|
|
|
3,560
|
|
|
14,475
|
|
|
Shares issued for acquisition
|
10(d)
|
|
89,107
|
|
|
248
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
248
|
|
|
Warrants issued for
acquisition
|
10(d)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
136
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
136
|
|
|
-
|
|
|
136
|
|
|
Shares issued for contingent consideration
|
14(b) (ii)
|
|
3,178,177
|
|
|
6,785
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
6,785
|
|
|
Conversion of notes
|
14(b) (iii)
|
|
125,000
|
|
|
229
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(37
|
)
|
|
-
|
|
|
-
|
|
|
(37
|
)
|
|
-
|
|
|
192
|
|
|
Deferred tax on convertible notes
|
|
|
-
|
|
|
15
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
15
|
|
|
Exercise of stock options
|
14(b) (iv)
|
|
697,080
|
|
|
1,028
|
|
|
-
|
|
|
(402
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(402
|
)
|
|
-
|
|
|
626
|
|
|
Exercise of warrants
|
14(b) (v)
|
|
1,271,250
|
|
|
680
|
|
|
-
|
|
|
-
|
|
|
(11
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(11
|
)
|
|
-
|
|
|
669
|
|
|
Forfeited options
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(242
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(242
|
)
|
|
242
|
|
|
-
|
|
|
Share-based payments
|
15
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,837
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,837
|
|
|
-
|
|
|
2,837
|
|
|
Balance, September 30, 2017
|
|
|
371,909,858
|
|
|
230,432
|
|
|
-
|
|
|
9,784
|
|
|
3,545
|
|
|
-
|
|
|
9,697
|
|
|
16,111
|
|
|
(29
|
)
|
|
39,108
|
|
|
(24,624
|
)
|
|
244,916
|
|
The accompanying notes are an integral part of these Condensed
Interim Consolidated Financial Statements.
|
AURORA CANNABIS INC.
|
|
Condensed Interim Consolidated Statements of Cash Flows
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars)
|
|
|
|
|
Notes
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
Cash provided by (used
in)
|
|
|
|
|
|
|
|
|
Operating activities
|
|
|
|
|
|
|
|
|
Net income (loss) for
the period
|
|
|
3,560
|
|
|
(5,613
|
)
|
|
|
|
|
|
|
|
|
|
|
Adjustments for
non-cash items
|
|
|
|
|
|
|
|
|
Change in fair
value of biological assets
|
|
|
(3,881
|
)
|
|
1,262
|
|
|
Depreciation of fixed assets
|
|
|
359
|
|
|
159
|
|
|
Amortization of
intangible assets
|
|
|
417
|
|
|
-
|
|
|
Share-based payments
|
|
|
2,486
|
|
|
380
|
|
|
Unrealized gain on
debentures
|
|
|
(6,937
|
)
|
|
-
|
|
|
Unrealized gain on derivatives
|
|
|
(817
|
)
|
|
-
|
|
|
Accrued interest
and accretion expense
|
|
|
1,947
|
|
|
920
|
|
|
Financing fees
|
|
|
-
|
|
|
1,578
|
|
|
Interest and other
income
|
|
|
(59
|
)
|
|
-
|
|
|
Deferred tax recovery
|
|
|
1,103
|
|
|
(666
|
)
|
|
Changes in non-cash working capital
|
|
|
|
|
|
|
|
|
GST recoverable
|
|
|
(1,218
|
)
|
|
(13
|
)
|
|
Accounts
receivable
|
|
|
224
|
|
|
(389
|
)
|
|
Inventory
|
|
|
(1,173
|
)
|
|
(203
|
)
|
|
Prepaids and other
current assets
|
|
|
(143
|
)
|
|
494
|
|
|
Accounts payable and accrued liabilities
|
|
|
(829
|
)
|
|
(1,264
|
)
|
|
Contingent
consideration payable
|
|
|
(32
|
)
|
|
-
|
|
|
Deferred revenue
|
|
|
19
|
|
|
480
|
|
|
|
|
|
(4,974
|
)
|
|
(2,875
|
)
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
Promissory notes
receivable
|
|
|
(4,736
|
)
|
|
-
|
|
|
Purchase of property, plant and
equipment
|
|
|
(21,061
|
)
|
|
(630
|
)
|
|
Acquisition of businesses, net of cash acquired
|
10
|
|
(2,635
|
)
|
|
(3,418
|
)
|
|
|
|
|
(28,432
|
)
|
|
(4,048
|
)
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
Finance lease
|
|
|
(17
|
)
|
|
-
|
|
|
Proceeds of convertible notes
|
|
|
-
|
|
|
15,000
|
|
|
Proceeds (repayment) of
short term loans
|
|
|
-
|
|
|
(4,549
|
)
|
|
Proceeds (repayment) of long term loans
|
|
|
-
|
|
|
(4,000
|
)
|
|
Financing fees
|
|
|
-
|
|
|
(610
|
)
|
|
Shares issued for cash, net of share issue costs
|
|
|
1,296
|
|
|
24,017
|
|
|
|
|
|
1,279
|
|
|
29,858
|
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange on cash and cash equivalents
|
|
|
246
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash
and cash equivalents
|
|
|
(31,881
|
)
|
|
22,935
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
159,796
|
|
|
259
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
|
127,915
|
|
|
23,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary information:
|
|
|
|
|
|
|
|
|
Property, plant and
equipment in accounts payable
|
|
|
3,765
|
|
|
280
|
|
|
Depreciation in production costs
|
|
|
142
|
|
|
68
|
|
The accompanying notes are an integral part of these Condensed
Interim Consolidated Financial Statements.
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
Aurora Cannabis Inc. (the “Company” or
“Aurora”), was incorporated under the Business Corporations Act (British
Columbia). The Company’s shares are listed on the Toronto Stock Exchange (the
“Exchange”) under the symbol “ACB” and on the OTCQX under the symbol “ACBFF”
The Company, through its wholly-owned
subsidiary, Aurora Cannabis Enterprises Inc., is licensed to produce and sell
medical marijuana pursuant to the Access to Cannabis for Medical Purposes
Regulations (“ACMPR”).
On December 9, 2014, the Company
completed the reverse take-over of Prescient Mining Corp. (the “RTO”) by way of
a Share Exchange Agreement (the “Agreement”). Pursuant to the Agreement, the
Company acquired all of the issued and outstanding shares of Aurora Marijuana
Inc. in exchange for securities of the Company.
The head office and principal address
of the Company is Suite 1500 - 1199 West Hastings Street, Vancouver, BC, Canada,
V6E 3T5. The Company’s registered and records office address is Suite 1500 -
1055 West Georgia Street, Vancouver, BC V6E 4N7.
|
2.
|
Significant Accounting
Policies
|
|
|
(a)
|
Basis of presentation
|
|
|
|
|
|
|
|
The condensed interim consolidated financial statements
of the Company have been prepared in accordance with International
Accounting Standards 34, “Interim Financial Reporting” (“IAS 34”), using
accounting policies consistent with International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting Standards
Board (“IASB”) and interpretations of the IFRS Interpretations Committee
(“IFRIC”).
|
|
|
|
|
|
|
|
The condensed interim consolidated financial statements
do not include all of the information required for full annual financial
statements. The accounting policies and critical estimates applied by the
Company in these condensed interim consolidated financial statements are
the same as those applied in the Company’s annual consolidated financial
statements as at and for the year ended June 30, 2017.
|
|
|
|
|
|
|
|
The Company has reclassified certain immaterial items on
the comparative condensed interim consolidated statement of comprehensive
loss to conform with current period’s presentation.
|
|
|
|
|
|
|
|
These condensed interim consolidated financial statements
were approved and authorized for issue by the Board of Directors of the
Company on November 8, 2017.
|
|
|
|
|
|
|
(b)
|
Basis of consolidation
|
|
|
|
|
|
|
|
These condensed interim consolidated financial statements
include the accounts of the Company and its wholly- owned subsidiaries,
Aurora Marijuana Inc. (“AMI”), Aurora Cannabis Enterprises Inc. (“ACE”),
1769474 Alberta Ltd. (“1769474”), Australis Capital Inc. (“ACI”), CanvasRx
Inc. (“CanvasRx”), 10094595 Canada Inc., Peloton Pharmaceuticals Inc.
(“Peloton”), Pedanios GmbH (“Pedanios”), B.C. Northern Lights Enterprises
Ltd. (“BCNL”) and Urban Cultivator Inc. (“UCI”). All significant
intercompany balances and transactions were eliminated on
consolidation.
|
|
|
|
|
|
|
(c)
|
Basis of measurement
|
|
|
|
|
|
|
|
The condensed interim consolidated financial statements
have been prepared on a historical cost basis except for certain financial
instruments, biological assets, derivatives and acquisition related
contingent consideration which were measured at fair
value.
|
1
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
2.
|
Significant Accounting Policies
(Continued)
|
|
|
(d)
|
Functional and presentation of foreign currency
|
|
|
|
|
|
|
|
The condensed interim consolidated financial statements
are presented in Canadian dollars unless otherwise noted. The functional
currency of Pedanios is the European Euro and the functional currency of
Aurora and its remaining subsidiaries is the Canadian dollar.
|
|
|
|
|
|
|
(e)
|
Recentaccounting pronouncements
|
|
|
|
|
|
|
|
There were no new standards effective July 1, 2017 that
had an impact on the Company’s condensed interim consolidated financial
statements. The following IFRS standards have been recently issued by the
IASB. Pronouncements that are not applicable or where it has been
determined do not have a significant impact to the Company have been
excluded herein.
|
|
|
(i)
|
IFRS 7 Financial instruments: Disclosure
|
|
|
|
|
|
|
|
IFRS 7 Financial instruments: Disclosure, was amended to
require additional disclosures on transition from IAS 39 to IFRS 9. IFRS 7
is effective on adoption of IFRS 9, which is effective for annual periods
commencing on or after January 1, 2018. The Company is assessing the
impact of this amendment on its consolidated financial
statements.
|
|
|
|
|
|
|
(ii)
|
IFRS 9, Financial Instruments
|
|
|
|
|
|
|
|
In July 2014, the IASB issued the final version of IFRS 9
Financial Instruments, which reflects all phases of the financial
instruments project and replaces IAS 39 Financial Instruments: Recognition
and Measurement and all previous versions of IFRS 9. The standard
introduces new requirements for classification and measurement,
impairment, and hedge accounting. IFRS 9 is effective for annual periods
beginning on or after 1 January 2018, with early application permitted.
The Company is assessing the impact of this new standard on its
consolidated financial statements.
|
|
|
|
|
|
|
(iii)
|
IFRS 15 Revenue from Contracts with Customers
|
|
|
|
|
|
|
|
The IASB replaced IAS 18 Revenue, in its entirety with
IFRS 15 Revenue from Contracts with Customers. The standard contains a
single model that applies to contracts with customers and two approaches
to recognizing revenue: at a point in time or over time. The model
features a contract-based five-step analysis of transactions to determine
whether, how much and when revenue is recognized. IFRS 15 is effective for
annual periods beginning on or after January 1, 2018, with early
application permitted.
|
|
|
|
|
|
|
|
The Company intends to adopt IFRS 15 on July 1, 2018
using the modified retrospective approach where the cumulative impact of
adoption will be recognized in retained earnings as of July 1, 2018 and
comparatives will not be restated.
|
|
|
|
|
|
|
|
The Company has conducted a preliminary assessment of the
impact from this new standard. Under IFRS 15, revenue from the sale of
medicinal cannabis would be recognized at a point in time when control
over the goods have been transferred to the customer. The Company
transfers control and satisfies its performance obligation upon delivery
and acceptance by the customer, which is consistent with the Company’s
current revenue recognition policy under IAS 18.
|
2
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
2.
|
Significant Accounting Policies
(Continued)
|
|
|
(e)
|
Recent accounting pronouncements
(continued)
|
Referral revenue earned from Licensed
Producers through CanvasRx would be recognized over a period of time as the
referred patients remain active with the Licensed Producers. This is consistent
with the Company’s current revenue recognition policy under IAS 18 where revenue
is recognized on a monthly basis over a specified period of time that the
referred patient remains an active purchaser of medical cannabis with the
Licensed Producer.
Based on the Company’s preliminary
assessment, the adoption of this new standard is not expected to have a material
impact on its consolidated financial statements.
In January 2016, the IASB issued IFRS
16 Leases, which will replace IAS 17 Leases. This standard introduces a single
lessee accounting model and requires a lessee to recognize assets and
liabilities for all leases with a term of more than twelve months, unless the
underlying asset is of low value. A lessee is required to recognize a
right-of-use asset representing its right to use the underlying asset and a
lease liability representing its obligation to make lease payments. The standard
will be effective for annual periods beginning on or after January 1, 2019, with
earlier application permitted for entities that apply IFRS 15 Revenue from
Contracts with Customers at or before the date of initial adoption of IFRS 16.
The Company is assessing the impact of this new standard on its consolidated
financial statements.
|
|
|
|
September 30, 2017
|
|
|
June 30, 2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Trade receivables
|
|
1,450
|
|
|
1,346
|
|
|
|
GST
recoverable
|
|
2,251
|
|
|
966
|
|
|
|
|
|
3,701
|
|
|
2,312
|
|
|
|
|
|
Convertible
|
|
|
Marketable
|
|
|
|
|
|
|
|
|
debenture
|
|
|
securities
|
|
|
Derivative
|
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(b)
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Investment at cost
|
|
2,000
|
|
|
7,650
|
|
|
306
|
|
|
|
Unrealized gain recognized at inception
|
|
12,564
|
|
|
1,334
|
|
|
380
|
|
|
|
Fair value at inception
|
|
14,564
|
|
|
8,984
|
|
|
686
|
|
|
|
Unrealized gain (losses) on changes in fair value
|
|
(3,493
|
)
|
|
5,861
|
|
|
(394
|
)
|
|
|
Balance, June 30, 2017
|
|
11,071
|
|
|
14,845
|
|
|
292
|
|
|
|
Unrealized gain on changes in fair value
|
|
830
|
|
|
12,302
|
|
|
252
|
|
|
|
Conversion of debentures
|
|
(11,901
|
)
|
|
7,613
|
|
|
4,348
|
|
|
|
Balance, September 30, 2017
|
|
-
|
|
|
34,760
|
|
|
4,892
|
|
3
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
4.
|
Investments
(Continued)
|
ACE signed a Memorandum of
Understanding (“MOU”) with Radient Technologies Inc. (“Radient”) dated December
13, 2016, to evaluate an exclusive partnership for the joint development and
commercialization of standardized cannabinoid extracts.
Pursuant to the terms of the MOU, on
February 13, 2017, the Company purchased a $2,000 unsecured 10% convertible
debenture of Radient, convertible into units at $0.14 per unit. Each unit
consisted of one common share and one share purchase warrant, with each warrant
exercisable into one common share at a price of $0.33 per share expiring
February 13, 2019. The debenture had a term of 2 years, was receivable on demand
during the first 5 months following issuance, and was subject to a mandatory
conversion if, after 5 months from the date of issuance, (i) the volume weighted
average price (“VWAP”) of Radient’s shares is equal to or greater than $0.40 for
10 consecutive days; or the Company and Radient enter into an exclusivity,
licensing, service or similar agreement. The Company received a financing
commission of $40.
The Company recognized an unrealized
gain on the debenture at inception of $12,564 which was being amortized over two
years. The fair value of the debenture at inception was estimated by measuring
the fair value of the shares receivable on conversion at a quoted market price
of $0.61 and the warrants receivable on conversion using the Black-Scholes
pricing model with the following assumptions: risk-free interest rate of 0.75%;
dividend yield of 0%; stock price volatility of 102.52%; and an expected life of
2 years.
During the year ended June 30, 2017,
the Company received 104,167 units of Radient for its interest payment of $50
(Note 4(b)(iii)).
On July 28, 2017, the Company received
14,285,714 common shares and 14,285,714 warrants of Radient pursuant to the
mandatory conversion of the debenture related to the VWAP mentioned above.
Additionally, the Company received 77,540 units of Radient for its final
interest payment of $41 (Note 4(b)(iii)).
On conversion, the Company recognized
an unrealized gain of $830 on the debentures and fully amortized the inception
gain of $6,107 on the shares. The inception gain related to the warrants
continues to be amortized in derivatives (Note 4 (b)(iii)). The fair value of
the debenture on conversion was estimated by measuring the fair value of the
shares at a quoted market price of $0.53 and the warrants using the
Black-Scholes pricing model with the following assumptions: risk-free interest
rate of 1.31%; dividend yield of 0%; stock price volatility of 91.53%; and an
expected life of 1.57 years.
|
|
(b)
|
Marketable securities and
derivatives
|
|
|
(i)
|
On March 9, 2017, the Company purchased 2,777,800 units
of Radient at a price of $0.45 per unit for a total cost of $1,250. Each
unit consisted of one common share and one-half of a share purchase
warrant, with each whole warrant exercisable into one common share of
Radient at a price of $0.70 per share expiring March 9, 2019.
|
|
|
|
|
|
|
|
At inception, the Company recognized an unrealized gain
on marketable securities of $1,334 and an unrealized gain on derivatives
of $380 related to the warrant component which is being amortized over 2
years. During the three months ended September 30, 2017, the Company
recognized inception gain on derivatives of $48.
|
|
|
|
|
|
|
|
During the three months ended September 30, 2017, the
Company recognized unrealized gains on changes in fair values of
marketable securities of $195 (2016 - $nil) and derivatives of $11 (2016 -
$nil).
|
4
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
4.
|
Investments
(Continued)
|
|
|
(b)
|
Marketable securities and derivative
(continued)
|
At September 30, 2017, the fair value
of the shares of $1,556 (June 30, 2017 - $1,361) was based on a quoted market
price of $0.56 (June 30, 2017 - $0.49) and the fair value of the warrants of
$278 (June 30, 2017 - $267) was estimated using the Black-Scholes pricing model
with the following assumptions: risk- free interest rate of 1.51% (June 30, 2017
– 1.10%); dividend yield of 0% (June 30, 2017 - 0%); stock price volatility of
91.37% (June 30, 2017 – 99.05%); and an expected life of 1.44 years (June 30,
2017 - 1.69 years).
|
|
(ii)
|
On April 25, 2017, the Company subscribed to the initial
public offering of Cann Group Limited (“Cann Group”) on the Australian
Stock Exchange for 21,562,314 fully paid ordinary shares at a price of
A$0.30 per share for a total investment of $6,627 (A$6,469).
|
|
|
|
|
|
|
|
As at September 30, 2017, the fair market value of the
shares was $25,102 or A$25,659 (June 30, 2017 - $13,433 or A$13,476) based
on a quoted market price of A$1.19 (June 30, 2017 - A$0.625). During the
three months ended September 30, 2017, the Company recognized an
unrealized gain on the change in fair value of marketable securities of
$11,669 (2016 - $nil).
|
|
|
|
|
|
|
(iii)
|
On July 28, 2017, the Company received 14,285,714 common
shares and 14,285,714 warrants with fair values of $7,571 and $4,330,
respectively, on conversion of Radient’s debenture. (Note 4(a))
|
|
|
|
|
|
|
|
Radient also issued 104,167 and 77,540 units to the
Company for interest payments on the debenture. The units consisted of one
common share and one warrant, with each warrant exercisable into one
common share of Radient at a price of $0.48 and $0.53, respectively,
expiring February 13, 2019. (Note 4(a))
|
|
|
|
|
|
|
|
During the three months ended September 30, 2017, the
Company recognized aggregate unrealized gains on the changes in fair value
of these marketable securities of $438 (2016 - $nil) and derivatives of
$241 (2016 - $nil). At September 30, 2017, the fair value of the shares of
$8,000 was based on a quoted market price of $0.56 and the fair value of
the warrants of $4,568 was estimated using the Black-Scholes pricing model
with the following weighted average assumptions: risk-free interest rate
of 1.51%; dividend yield of 0%; stock price volatility of 91.37%; and an
expected life of 1.39 years.
|
|
|
|
|
Capitalized
|
|
|
Biological asset
|
|
|
Carrying
|
|
|
|
|
|
cost
|
|
|
fair value adjustment
|
|
|
value
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Harvested cannabis
|
|
|
|
|
|
|
|
|
|
|
|
Work-in-process
|
|
173
|
|
|
377
|
|
|
550
|
|
|
|
Finished goods
|
|
3,682
|
|
|
4,687
|
|
|
8,369
|
|
|
|
|
|
3,855
|
|
|
5,064
|
|
|
8,919
|
|
|
|
Cannabis oils
|
|
|
|
|
|
|
|
|
|
|
|
Work-in-process
|
|
111
|
|
|
1,000
|
|
|
1,111
|
|
|
|
Finished goods
|
|
39
|
|
|
397
|
|
|
436
|
|
|
|
|
|
150
|
|
|
1,397
|
|
|
1,547
|
|
|
|
Home cultivation systems
|
|
|
|
|
|
|
|
|
|
|
|
Raw materials
|
|
466
|
|
|
-
|
|
|
466
|
|
|
|
Work-in-process
|
|
413
|
|
|
-
|
|
|
413
|
|
|
|
Finished goods
|
|
11
|
|
|
-
|
|
|
11
|
|
|
|
|
|
890
|
|
|
-
|
|
|
890
|
|
|
|
Supplies and consumables
|
|
297
|
|
|
-
|
|
|
297
|
|
|
|
Balance, September 30, 2017
|
|
5,192
|
|
|
6,461
|
|
|
11,653
|
|
5
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
|
|
|
Capitalized
|
|
|
Biological asset
|
|
|
Carrying
|
|
|
|
|
|
cost
|
|
|
fair value adjustment
|
|
|
value
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Harvested cannabis
|
|
|
|
|
|
|
|
|
|
|
|
Work-in-process
|
|
304
|
|
|
373
|
|
|
677
|
|
|
|
Finished goods
|
|
2,332
|
|
|
2,836
|
|
|
5,168
|
|
|
|
|
|
2,636
|
|
|
3,209
|
|
|
5,845
|
|
|
|
Cannabis oils
|
|
|
|
|
|
|
|
|
|
|
|
Work-in process
|
|
342
|
|
|
790
|
|
|
1,132
|
|
|
|
Finished goods
|
|
147
|
|
|
397
|
|
|
544
|
|
|
|
|
|
489
|
|
|
1,187
|
|
|
1,676
|
|
|
|
Supplies and consumables
|
|
182
|
|
|
-
|
|
|
182
|
|
|
|
Balance, June 30, 2017
|
|
3,307
|
|
|
4,396
|
|
|
7,703
|
|
The Company’s biological assets consist
of seeds and cannabis plants. The changes in the carrying value of biological
assets are as follows:
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2016
|
|
1,845
|
|
|
|
Changes in fair value less cost to sell due
to biological transformation
|
|
22,772
|
|
|
|
Transferred to inventory upon harvest
|
|
(20,529
|
)
|
|
|
Balance at June 30, 2017
|
|
4,088
|
|
|
|
Changes in fair value less
cost to sell due to biological transformation
|
|
9,577
|
|
|
|
Transferred to inventory upon harvest
|
|
(7,582
|
)
|
|
|
Balance at September 30, 2017
|
|
6,083
|
|
The significant assumptions used in
determining the fair value of biological assets include:
|
|
(a)
|
Expected yield by plant;
|
|
|
(b)
|
Wastage of plants;
|
|
|
(c)
|
Duration of the production cycle;
|
|
|
(d)
|
Percentage of costs incurred as of this date compared to
the total costs expected to be incurred;
|
|
|
(e)
|
Percentage of costs incurred for each stage of plant
growth; and
|
|
|
(f)
|
Market values.
|
As of September 30, 2017, it is
expected that the Company’s biological assets will yield approximately 801,729
grams (June 30, 2017 – 599,245 grams) of medical cannabis when harvested. The
Company’s estimates are, by their nature, subject to change and differences from
the anticipated yield will be reflected in the gain or loss on biological assets
in future periods.
|
7.
|
Promissory Notes
Receivable
|
|
|
(a)
|
Pursuant to a promissory note dated June 8, 2017, the
Company advanced $750 to Hempco Food and Fiber Inc. (“Hempco”). The note
is secured, bears interest at 8% per annum and matures on the earliest of
June 8, 2019, a demand by the Company on or after December 21, 2017, or
the completion of all or any portion of Hempco’s financing. (Note 24
(a))
|
6
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
7.
|
Promissory Notes Receivable
(Continued)
|
On September 15, 2017, the Company
advanced an additional $1,500 to Hempco. The loan is secured, bears interest at
10% per annum, and matures on demand after December 21, 2017, or completion of
Hempco’s financing. Note 24(a)
|
|
(b)
|
On September 26, 2017, the Company entered into a loan
agreement in the principal amount of $3,000. The loan is secured, bears
interest at 12% per annum, and is receivable on demand after November 2,
2017.
|
|
8.
|
Property, Plant and
Equipment
|
|
|
|
|
|
|
|
|
|
|
Computer
|
|
|
|
|
|
Production &
|
|
|
Finance
|
|
|
|
|
|
|
|
|
Building &
|
|
|
Construction
|
|
|
Software &
|
|
|
Furniture
|
|
|
Other
|
|
|
Lease
|
|
|
|
|
|
|
|
|
Improvements
|
|
|
in progress
|
|
|
Equipment
|
|
|
& Fixtures
|
|
|
Equipment
|
|
|
Equipment
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2016
|
|
10,831
|
|
|
-
|
|
|
444
|
|
|
109
|
|
|
1,020
|
|
|
-
|
|
|
12,404
|
|
|
|
Additions
|
|
6,351
|
|
|
26,571
|
|
|
461
|
|
|
183
|
|
|
1,142
|
|
|
544
|
|
|
35,252
|
|
|
|
Disposals
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(12
|
)
|
|
-
|
|
|
(12
|
)
|
|
|
Balance, June 30, 2017
|
|
17,182
|
|
|
26,571
|
|
|
905
|
|
|
292
|
|
|
2,150
|
|
|
544
|
|
|
47,644
|
|
|
|
Additions
|
|
647
|
|
|
25,178
|
|
|
147
|
|
|
94
|
|
|
155
|
|
|
-
|
|
|
26,221
|
|
|
|
Foreign currency translation
|
|
-
|
|
|
-
|
|
|
4
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4
|
|
|
|
Balance, September 30, 2017
|
|
17,829
|
|
|
51,749
|
|
|
1,056
|
|
|
386
|
|
|
2,305
|
|
|
544
|
|
|
73,869
|
|
|
|
|
|
|
|
|
|
|
|
Computer
|
|
|
|
|
|
Production &
|
|
|
Finance
|
|
|
|
|
|
|
|
|
Building &
|
|
|
Construction
|
|
|
Software &
|
|
|
Furniture
|
|
|
Other
|
|
|
Lease
|
|
|
|
|
|
|
|
|
Improvements
|
|
|
In Progress
|
|
|
Equipment
|
|
|
& Fixtures
|
|
|
Equipment
|
|
|
Equipment
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Accumulated Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2016
|
|
616
|
|
|
-
|
|
|
162
|
|
|
19
|
|
|
237
|
|
|
-
|
|
|
1,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
438
|
|
|
-
|
|
|
221
|
|
|
40
|
|
|
351
|
|
|
39
|
|
|
1,089
|
|
|
|
Disposals
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2
|
)
|
|
-
|
|
|
(2
|
)
|
|
|
Balance, June 30, 2017
|
|
1,054
|
|
|
-
|
|
|
383
|
|
|
59
|
|
|
586
|
|
|
39
|
|
|
2,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
125
|
|
|
-
|
|
|
83
|
|
|
17
|
|
|
114
|
|
|
20
|
|
|
359
|
|
|
|
Foreign currency translation
|
|
-
|
|
|
-
|
|
|
4
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4
|
|
|
|
Balance, September 30, 2017
|
|
1,179
|
|
|
-
|
|
|
470
|
|
|
76
|
|
|
700
|
|
|
59
|
|
|
2,484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Book Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
16,128
|
|
|
26,571
|
|
|
522
|
|
|
233
|
|
|
1,564
|
|
|
505
|
|
|
45,523
|
|
|
|
September 30, 2017
|
|
16,650
|
|
|
51,749
|
|
|
586
|
|
|
310
|
|
|
1,605
|
|
|
485
|
|
|
71,385
|
|
The Company is constructing an 800,000 square foot production
facility at the Edmonton International Airport (“EIA”). As at September 30,
2017, costs related to the construction of this facility were capitalized as
construction in progress and not amortized. Amortization will commence when
construction is complete and the facility is available for its intended use.
During the three months ended September 30, 2017, $1,245 (2016
- $Nil) in borrowing costs were capitalized to construction in progress at a
weighted average rate of 21% (2016 - Nil%).
7
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
9.
|
Investment in a Joint
Venture
|
On April 7, 2015, ACI entered into a
Limited Liability Partnership Agreement with AJR Builders Group LLC and formed
Australis Holdings LLP (“AHL”), a Washington Limited Liability Partnership. Each
of ACI and AJR holds a 50% interest in AHL.
AHL purchased two parcels of land
totaling approximately 24.5 acres (the “Property”) in Whatcom county, Washington
for USD$2,300 in 2015, with the initial intention to construct a new cannabis
production and processing facility. The Company subsequently decided not to move
forward with US cannabis production and listed the land for sale.
Pursuant to a promissory note dated
April 10, 2015, the Company through ACI loaned $1,645 to AHL to fund the
purchase of the Property. The note bears interest at a rate of 5% per annum and
matures on October 31, 2017. In the event of a default, interest will be charged
at 12% per annum. The note is secured by a first mortgage on one parcel of the
Property and a second mortgage on the other title as well as a general security
agreement granting ACI security over all present and after acquired property of
AHL. The parties are negotiating to extend the term of the loan.
During the three months ended September
30, 2017, the Company accrued interest of $10 (2016 - $10) related to this loan.
Included in loans receivable are
advances of $385 to AHL. The advances are unsecured, non-interest bearing and
have no fixed terms of repayment.
The following table summarizes the
financial information of AHL:
|
|
(a)
|
Statement of Financial
Position:
|
|
|
|
|
September 30, 2017
|
|
|
June 30, 2017
|
|
|
|
|
|
US$
|
|
|
US$
|
|
|
|
Cash and cash equivalents
|
|
18
|
|
|
106
|
|
|
|
Other current assets
|
|
-
|
|
|
1
|
|
|
|
Total current assets
|
|
18
|
|
|
107
|
|
|
|
Property, plant and equipment
|
|
2,300
|
|
|
2,300
|
|
|
|
Total assets (100%)
|
|
2,318
|
|
|
2,407
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US$
|
|
|
US$
|
|
|
|
Total current liabilities
|
|
303
|
|
|
283
|
|
|
|
Long term loans
|
|
2,415
|
|
|
2,415
|
|
|
|
Total equity
|
|
(400
|
)
|
|
(291
|
)
|
|
|
Total liabilities and equity (100%)
|
|
2,318
|
|
|
2,407
|
|
|
|
(b)
|
Statement of Loss and Comprehensive
Loss
|
|
|
Net loss and comprehensive loss (100%)
|
|
109
|
|
|
138
|
|
8
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
On August 17, 2016, the Company
completed the acquisition of all of the issued and outstanding shares of
CanvasRx pursuant to a Share Purchase Agreement (the “Agreement”) dated August
9, 2016, as amended and restated on August 16, 2016 (the “Acquisition”) for a
total consideration of $37,127. CanvasRx is a counseling and outreach service
provider with over 24 physical locations in the provinces of Ontario and
Alberta, Canada. The transaction was accounted for as a business combination.
|
|
|
|
$
|
|
|
|
Consideration
|
|
|
|
|
|
Cash paid at closing
|
|
1,575
|
|
|
|
Performance milestones
achieved related to patients
|
|
|
|
|
|
17,875,000 common shares issued
|
|
11,440
|
|
|
|
Cash
paid
|
|
1,575
|
|
|
|
Loan to CanvasRx
|
|
450
|
|
|
|
CanvasRx transaction
expenses
|
|
250
|
|
|
|
Other liabilities assumed
|
|
18
|
|
|
|
Contingent consideration
(1)
|
|
21,819
|
|
|
|
|
|
37,127
|
|
(1)
Contingent
consideration represents the discounted amount estimated to be paid out over a
20-month period on achievement of future performance milestones related to new
counseling rooms opened, patient accruals and revenue targets.
This consideration may be satisfied,
at the Company’s sole discretion, in cash or common shares at a 15% discount to
the market price at the date of issuance, unless the market price of the
Company’s share is $0.47 or below, at which point the consideration is
convertible into a fixed number of shares. In any case, the issuance of the
Company’s shares should not result in former CanvasRx shareholders accumulating
50% or more of the Company’s shares. If the consideration payments cannot be
satisfied in cash and the issuance of shares would result in the former
shareholders of CanvasRx accumulating 50% or more of the Company’s shares, a
convertible debenture will be issued.
During the year ended June 30, 2017,
certain patient and counselling room performance milestones were achieved, and
the Company paid $2,608 and issued 2,926,103 shares at $2.074 per share to the
former shareholders of CanvasRx.
During the three months ended
September 30, 2017, the Company issued 3,178,177 shares at $2.135 per share for
patient, counselling rooms and revenue milestones achieved.
Subsequent to September 30, 2017, the
Company issued an aggregate of 1,838,116 shares at $2.65 per share for patient,
counselling rooms and revenue milestones achieved.
All common shares issued were
accounted for at fair value at the dates of issuance.
9
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
10.
|
Acquisitions
(Continued)
|
The purchase price was allocated as
follows:
|
|
|
|
$
|
|
|
|
Net liabilities
acquired
|
|
(797
|
)
|
|
|
Intangible asset – customer relationships
|
|
4,250
|
|
|
|
Deferred tax liability
|
|
(836
|
)
|
|
|
Goodwill
|
|
34,510
|
|
|
|
|
|
37,127
|
|
The Company is indemnified from any
tax liability arising from pre-acquisition transactions of CanvasRx through
adjustments to the purchase consideration.
The customer relationships are
amortized on a straight-line basis over a period of 7 years.
Fair values of the net liabilities
acquired included the following:
|
|
|
|
$
|
|
|
|
Sales tax receivable
|
|
39
|
|
|
|
Accounts receivable
|
|
212
|
|
|
|
|
|
251
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities
|
|
109
|
|
|
|
Deferred revenue
|
|
939
|
|
|
|
|
|
1,048
|
|
|
|
|
|
(797
|
)
|
Net cash outflow on the Acquisition is
as follows:
|
|
|
|
$
|
|
|
|
Cash consideration
|
|
3,400
|
|
|
|
Add:
bank overdraft
|
|
18
|
|
|
|
|
|
3,418
|
|
During the three months ended
September 30, 2017, acquisition costs of $172 (2016 - $165) related to certain
post-closing and contingent consideration costs were excluded from the
consideration transferred and were recognized as an expense in the current
period.
On April 28, 2017, the Company,
through its wholly-owned subsidiary, 10094595 Canada Inc., acquired the net
assets of Peloton, a late-stage ACMPR applicant, out of bankruptcy protection.
The Company is completing construction of the former Peloton 40,000 square foot
cannabis production facility in Pointe Claire, Quebec. The transaction was
accounted for as an asset acquisition.
10
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
10.
|
Acquisitions
(Continued)
|
The Company acquired all of the common
shares of Peloton for a total consideration of $9,139 consisting of:
|
|
|
|
$
|
|
|
|
573,707 common shares
|
|
1,486
|
|
|
|
Cash
|
|
4,562
|
|
|
|
Trustee, legal fees and other
acquisition costs
|
|
2,186
|
|
|
|
Acquisition related costs - 325,518 common shares
|
|
905
|
|
|
|
|
|
9,139
|
|
The allocation of the consideration to
the fair value of the net assets acquired at the date of acquisition is as
follows:
|
|
|
|
$
|
|
|
|
Building –
construction in progress
|
|
4,401
|
|
|
|
Office, furniture and equipment
|
|
445
|
|
|
|
Intangible asset – ACMPR license application
|
|
4,293
|
|
|
|
|
|
9,139
|
|
On October 27, 2017, Peloton received
its ACMPR license which will be amortized on a straight-line basis over the
useful life of the facility or lease term.
The total consideration is subject to
change pending settlement of all claims with the previous creditors by the
bankruptcytrustee.
In May 2017, the Company completed the
acquisition of Pedanios, a registered wholesale importer, exporter and
distributor of medical cannabis in Germany. The Company acquired all of the
issued and outstanding shares of Pedanios for a total consideration of $23,728.
The transaction was accounted for as a business combination.
|
|
|
|
$
|
|
|
|
Consideration
|
|
|
|
|
|
Cash paid at closing (€2,000)
|
|
3,019
|
|
|
|
8,316,782 common shares issued
|
|
20,709
|
|
|
|
|
|
23,728
|
|
The purchase price was allocated as
follows:
|
|
|
|
$
|
|
|
|
Net assets acquired
|
|
1,184
|
|
|
|
Intangible assets – permits and licenses
|
|
22,544
|
|
|
|
Goodwill
|
|
6,590
|
|
|
|
Deferred tax liability
|
|
(6,590
|
)
|
|
|
|
|
23,728
|
|
The permits and licenses are
classified as indefinite life intangible assets and are not amortized but are
tested for impairment on an annual basis.
11
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
10.
|
Acquisitions
(Continued)
|
Fair values of the net assets acquired
included the following:
|
|
|
|
$
|
|
|
|
Cash
|
|
743
|
|
|
|
Trade receivables
|
|
358
|
|
|
|
Inventories
|
|
328
|
|
|
|
Prepaid expenses and deposits
|
|
6
|
|
|
|
Equipment
|
|
13
|
|
|
|
|
|
1,448
|
|
|
|
Accounts payables and accrued liabilities
|
|
264
|
|
|
|
|
|
1,184
|
|
Net cash outflow on the Acquisition is
as follows:
|
|
|
|
$
|
|
|
|
Cash consideration
|
|
3,019
|
|
|
|
Less: cash acquired
|
|
743
|
|
|
|
|
|
2,276
|
|
|
|
(d)
|
BC Northern Lights and Urban Cultivator
Inc.
|
On September 29, 2017, the Company
completed the acquisition of BCNL and UCI. BCNL is in the business of production
and sale of proprietary systems for the safe, efficient and high-yield indoor
cultivation of cannabis and UCI is in the business of production and sale of
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home kitchens. The Company acquired all of
the issued and outstanding shares of BCNL and UCI for aggregate consideration of
$7,397. The transaction was accounted for as a business combination.
|
|
|
|
$
|
|
|
|
Consideration
|
|
|
|
|
|
Cash
(1)
|
|
3,850
|
|
|
|
89,107 common shares
|
|
248
|
|
|
|
89,107 warrants
(2)
|
|
136
|
|
|
|
Contingent consideration
(3)
|
|
3,163
|
|
|
|
|
|
7,397
|
|
|
|
(1)
|
Of this amount, $361 is subject to working capital
adjustments.
|
|
|
(2)
|
The warrants are exercisable at $2.8056 per share until
September 29, 2020.
|
|
|
(3)
|
Contingent consideration represents the discounted amount
estimated to be paid over a period of three years on achievement of future
performance milestones related to aggregate earnings before interest,
taxes, depreciation and amortization (“EBITDA”). The consideration may be
paid in cash or common shares.
|
The purchase price was allocated as
follows:
|
|
|
|
$
|
|
|
|
Net assets acquired
|
|
846
|
|
|
|
Goodwill
|
|
6,551
|
|
|
|
|
|
7,397
|
|
12
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
10.
|
Acquisitions
(Continued)
|
|
|
(d)
|
BC Northern Lights and Urban Cultivator Inc.
(continued)
|
Fair values of the net assets acquired
included the following:
|
|
|
|
$
|
|
|
|
Cash
|
|
138
|
|
|
|
Accounts receivable
|
|
394
|
|
|
|
Inventories
|
|
890
|
|
|
|
Prepaid expenses and deposits
|
|
55
|
|
|
|
Equipment
|
|
149
|
|
|
|
|
|
|
|
|
|
Accounts payables and accrued
liabilities
|
|
672
|
|
|
|
Deferred revenues
|
|
108
|
|
|
|
|
|
846
|
|
Net cash outflow on acquisition of
BCNL and UCI is as follows:
|
|
|
|
$
|
|
|
|
Cash consideration
|
|
3,850
|
|
|
|
Less: cash acquired
|
|
138
|
|
|
|
|
|
3,712
|
|
During the three months ended
September 30, 2017, acquisition related costs of $20 have been excluded from the
consideration transferred and have been recognized as an expense in the current
period.
Management continues to refine the
estimate of the contingent consideration and the related amounts are subject to
change. The purchase price allocation relating to the acquisition is not yet
finalized and the allocation of the price to the various assets acquired is
subject to change.
|
11.
|
Intangible Assets and
Goodwill
|
A continuity of the intangible assets
for the three months ended September 30, 2017 is as follows:
|
|
|
|
Balance at
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
June 30, 2017
|
|
|
Additions
|
|
|
Amortization
|
|
|
Sept 30, 2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships (Note 10(a))
|
|
4,250
|
|
|
-
|
|
|
417
|
|
|
3,833
|
|
|
|
Permits and licenses (Notes 10(b)(c))
|
|
26,837
|
|
|
-
|
|
|
-
|
|
|
26,837
|
|
|
|
|
|
31,087
|
|
|
-
|
|
|
417
|
|
|
30,670
|
|
A continuity of the intangible assets
for the year ended June 30, 2017 is as follows:
|
|
|
|
Balance at
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
June 30, 2016
|
|
|
Additions
|
|
|
Amortization
|
|
|
June 30, 2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships (Note 10(a))
|
|
-
|
|
|
4,250
|
|
|
-
|
|
|
4,250
|
|
|
|
Permits and licenses (Notes 10(b)(c))
|
|
-
|
|
|
26,837
|
|
|
-
|
|
|
26,837
|
|
|
|
|
|
-
|
|
|
31,087
|
|
|
-
|
|
|
31,087
|
|
13
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
11.
|
Intangible Assets and Goodwill
(Continued)
|
A continuity of the goodwill is as
follows:
|
|
|
|
CanvasRx
|
|
|
Pedanios
|
|
|
BCNL/UCI
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Balance at June 30,
2016
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Goodwill acquired from acquisitions (Notes 10(a) and
10(c) )
|
|
34,510
|
|
|
6,590
|
|
|
-
|
|
|
41 100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2017
|
|
34,510
|
|
|
6,590
|
|
|
-
|
|
|
41,100
|
|
|
|
Goodwill acquired from acquisition (Note 10(d))
|
|
-
|
|
|
-
|
|
|
6,551
|
|
|
6,551
|
|
|
|
Balance at September 30, 2017
|
|
34,510
|
|
|
6,590
|
|
|
6,551
|
|
|
47,651
|
|
During the year ended June 30, 2017,
the Company entered into finance lease agreements related to three production
equipment transactions totaling $543, of which down payments of $169 were made.
The finance leases are repayable over a period of 4 to 5 years expiring January
2021 and December 2021.
|
|
|
|
September 30, 2017
|
|
|
June 30, 2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Less than
1 year
|
|
108
|
|
|
108
|
|
|
|
Between 1 and 4 years
|
|
317
|
|
|
344
|
|
|
|
Total
minimum lease payments
|
|
425
|
|
|
452
|
|
|
|
Less: amount representing
interest at approximately 8.19% to 20.26%
|
|
(91
|
)
|
|
(101
|
)
|
|
|
Present
value of minimum lease payments
|
|
334
|
|
|
351
|
|
|
|
Less: current portion
|
|
(71
|
)
|
|
(69
|
)
|
|
|
|
|
263
|
|
|
282
|
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Balance, June 30, 2016
|
|
-
|
|
|
-
|
|
|
1,281
|
|
|
|
Issued
|
|
75,000
|
|
|
25,000
|
|
|
115,000
|
|
|
|
Equity portion
|
|
(13,209
|
)
|
|
(5,271
|
)
|
|
(20,587
|
)
|
|
|
Conversion
|
|
(122
|
)
|
|
(16,745
|
)
|
|
(31,607
|
)
|
|
|
Interest paid
|
|
(849
|
)
|
|
(989
|
)
|
|
(1,895
|
)
|
|
|
Financing fees
|
|
(2,622
|
)
|
|
(899
|
)
|
|
(3,490
|
)
|
|
|
Accretion
|
|
1,094
|
|
|
1,277
|
|
|
2,729
|
|
|
|
Accrued interest
|
|
875
|
|
|
996
|
|
|
2,105
|
|
|
|
Balance, June 30, 2017
|
|
60,167
|
|
|
3,369
|
|
|
63,536
|
|
|
|
Conversion
|
|
-
|
|
|
(192
|
)
|
|
(192
|
)
|
|
|
Interest paid
|
|
-
|
|
|
(4
|
)
|
|
(4
|
)
|
|
|
Accretion
|
|
1,707
|
|
|
133
|
|
|
1,840
|
|
|
|
Accrued interest
|
|
1,310
|
|
|
91
|
|
|
1,401
|
|
|
|
Balance, September 30, 2017
|
|
63,184
|
|
|
3,397
|
|
|
66,581
|
|
The liability component of the
convertible notes was valued using Company specific interest rates assuming no
conversion features existed. The debt component is accreted to its fair value
over the term to maturity as a non-cash interest charge and the equity component
is presented in convertible notes reserve as a separate component of
shareholders’equity.
14
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
13.
|
Convertible Notes
(Continued)
|
|
|
(a)
|
On May 2, 2017, the Company completed a private placement
of unsecured convertible debentures (the “Offering”) in the aggregate
principal amount of $75,000. The debentures bear interest at 7% per annum,
payable semi-annually and mature on May 2, 2019. The debentures are
convertible into common shares of the Company at a price of $3.29 per
share subject to a forced conversion if the VWAP of the Company’s common
shares exceeds $4.94 per share for 10 consecutive trading days. On
closing, the Company paid the agent a commission of $2,893 and legal fees
and expenses of $289.
|
|
|
|
|
|
|
|
Subsequent to September 30, 2017, the Company issued
138,296 common shares on partial conversion of $455 of these
debentures.
|
|
|
|
|
|
|
(b)
|
On November 1, 2016, the Company completed a brokered
private placement of unsecured convertible debentures in the aggregate
principal amount of $25,000. The debentures bear interest at 8% per annum,
payable semi-annually and mature on November 1, 2018. The principal amount
of the debentures is convertible into common shares of the Company at a
price of $2.00 per share subject to a forced conversion if the VWAP of the
Company’s common shares equals or exceeds $3.00 per share for 10
consecutive trading days. On closing, the Company paid the Agent a
commission of $1,000 and legal fees and expenses of $139.
|
|
|
|
|
|
|
|
During the three months ended September 30, 2017, the
Company paid interest of $4 and issued 125,000 common shares on partial
conversion of $250 debentures (2016 - $nil). Note 14(b)(iii).
|
|
|
|
|
|
|
|
Subsequent to September 30, 2017, the Company issued
152,500 common shares on partial conversion of $305 of these
debentures.
|
|
|
|
|
|
|
|
On November 6, 2017, the Company elected to exercise its
right to convert all of the principal amount outstanding of the remaining
debentures as the VWAP of its common shares for 10 consecutive days
equaled $3.02. The remaining debentures of $4,120 will be converted into
2,060,000 common shares of the Company and accrued interest will be
paid.
|
Unlimited number of common voting
shares without par value;
Unlimited number of Class “A” Shares with a par
value of $1.00 each; and
Unlimited number of Class “B” Shares with a par
value of $5.00 each.
|
|
(b)
|
Issued and outstandin
g
|
At September 30, 2017, there were
371,909,858 (June 30, 2017 – 366,549,244) issued and fully paid common shares.
On July 13, 2016, the Company entered
into an agreement for a drawdown equity facility of up to $5,000 (the “Equity
Facility”). Under the Equity Facility, the Company may sell, on a private
placement basis, units of the Company of between $100 to $500 per tranche, at a
discount of 25% to the market price or such lesser discounts as allowed by the
Exchange, over a period of eighteen months. Each unit will consist of one common
share and one-half of one common share purchase warrant. Each whole warrant will
be exercisable into one common share at a 25% premium to the market price for a
period of 5 years from the date of issuance. To date, the Company has not drawn
down on this Equity Facility.
|
|
(i)
|
On September 29, 2017, the Company issued 89,107 shares
at a fair value of $248 pursuant to the acquisition of BCNL and UCI. (Note
10(d))
|
15
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
14.
|
Share Capital
(Continued)
|
|
|
(b)
|
Issued and outstanding
(continued)
|
|
|
(ii)
|
During the three months ended September 30, 2017, the
Company issued 3,178,177 (June 30, 2017 – 2,926,103) common shares with a
fair value of $6,785 (June 30, 2017 - $7,408) for contingent
consideration. (Note 10(a))
|
|
|
|
|
|
|
(iii)
|
During the three months ended September 30, 2017, an
aggregate of 125,000 (June 30, 2017 - 29,020,319) common shares were
issued on the conversion of $250 (June 30, 2017 - $37,580) convertible
notes. $37 (June 30, 2017 - $4,800) was reclassified from reserves to
share capital on the conversion of these notes (Note 13(b)).
|
|
|
|
|
|
|
(iv)
|
During the three months ended September 30, 2017, 697,080
stock options (June 30, 2017 - 2,001,700) were exercised for gross
proceeds of $626 (June 30, 2017 - $821). Non-cash compensation charges of
$402 (June 30, 201 - $578) were reclassified from reserves to share
capital on the exercise of these options.
|
|
|
|
|
|
|
(v)
|
During the three months ended September 30, 2017,
1,271,250 (June 30, 2017 - 54,936,306) warrants were exercised for gross
proceeds of $669 (June 30, 2017 - $26,602). Non-cash compensation charges
of $11 (June 30, 2017 - $2,046) were reclassified from reserves to share
capital on the exercise of these warrants.
|
|
|
|
|
|
|
(vi)
|
During the year ended June 30, 2017, 4,084,434
compensation options were exercised for gross proceeds of $1,674. Non-cash
compensation charges of $1,292 were reclassified from reserves to share
capital on the exercise of these compensation options.
|
|
|
|
|
|
|
(vii)
|
On May 26, 2017, the Company issued 8,316,782 shares at a
fair value of $20,709 pursuant to the acquisition of Pedanios (Note
10(c)).
|
|
|
|
|
|
|
(viii)
|
In April 2017, the Company issued an aggregate of 899,225
common shares with a fair value of $2,391 pursuant to the acquisition of
Peloton. (Note 10(b))
|
|
|
|
|
|
|
(ix)
|
On February 28, 2017, the Company closed a brokered
private placement of 33,337,500 units at a price of $2.25 per unit for
gross proceeds of $75,009. Each unit consisted one common share and
one-half of one common share purchase warrant of the Company. Each warrant
is exercisable into one common share at an exercise price of $3.00 per
share for a period of two years, subject to a forced exercise provision if
the Company's VWAP equals or exceeds $4.50 for 10 consecutive trading
days.
|
|
|
|
|
|
|
|
Total cash share issue costs amounted to $4,479 which
consisted of underwriters’ commissions of $4,197, underwriters’ expenses
of $95, legal fees of $121 and regulatory fees of $66. In addition, the
Company issued an aggregate of 1,865,249 compensation warrants to the
underwriters at a fair value of $2,782. The compensation warrants have the
same terms as the private placement and expire February 28, 2019. The fair
value of the compensation warrants at the date of grant was estimated at
$0.99 per warrant based on the following weighted average assumptions:
Stock price volatility - 79%; Risk-free interest rate - 0.70%; Dividend
yield - 0.00%; and Expected life - 2 years.
|
|
|
|
|
|
|
(x)
|
On August 30, 2016, the Company issued 25,510 common
shares to an officer of the Company at a fair value of $13 pursuant to an
employment agreement.
|
|
|
|
|
|
|
(xi)
|
On August 17, 2016, 17,875,000 common shares were issued
at a fair value of $11,440 pursuant to the acquisition of CanvasRx. (Note
10(a))
|
16
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
14.
|
Share Capital
(Continued)
|
|
|
(b)
|
Issued and outstanding
(continued)
|
|
|
(xii)
|
In conjunction with the acquisition of CanvasRx, the
Company completed a brokered private placement of 57,500,000 subscription
receipts for aggregate gross proceeds of $23,000 (the “Offering”). Each
subscription receipt was converted into units of the Company at a price of
$0.40 per unit upon the satisfaction of the conditions precedent to the
acquisition. Each unit consisted of one common share and one-half of one
common share purchase warrant of the Company. Each whole warrant was
exercisable into one common share of the Company at an exercise price of
$0.55 per share expiring August 9, 2018. A portion of the net proceeds
from the Offering was used to satisfy the cash component of the
acquisition.
|
|
|
|
|
|
|
|
Total cash share issue costs with respect to the Offering
amounted to $1,804 which consisted of agent’s commission of $1,473,
agent’s legal, advisory fees and expenses of $219, transfer agent fees of
$16 and legal fees of $96. In addition, the Company issued aggregate
compensation warrants of 3,775,000 to the agents at a fair value of
$1,848. The compensation warrants have the same terms as the private
placement and expire August 9, 2018. The fair value of the compensation
warrants at the date of grant was estimated at $0.33 per warrant based on
the following weighted average assumptions: Stock price volatility - 79%;
Risk-free interest rate - 0.70%; Dividend yield - 0.00%; and Expected life
- 2 years.
|
|
|
|
|
|
|
(xiii)
|
On August 17, 2016, 20,000,000 common shares were issued
on achievement of performance milestones pursuant to the RTO. The amount
of $2,322 was reclassified from reserves to share capital on the issuance
of these shares.
|
|
|
|
|
|
|
(xiv)
|
On July 14, 2016, 50,000 common shares were issued at a
fair value of $24 for financing fees related to a loan which was settled
in the prior year.
|
Pursuant to an escrow agreement dated
September 18, 2014, 60,000,000 common shares of the Company were deposited into
escrow with respect to the RTO. In addition, warrants at $0.02 per share
expiring December 9, 2019 and stock options at $0.001 per share expiring
December 1, 2019 were also subject to the escrow agreement.
Under the escrow agreement, 10% of the
escrowed common shares were released from escrow on December 9, 2014, the date
of closing of the RTO, and 15% are to be released every nine months thereafter
over a period of 36 months. The common shares to be issued and deposited in
escrow on the exercise of warrants and options are subject to the same schedule
of release.
A summary of the status of the
escrowed securities outstanding follows:
|
|
|
|
Shares
|
|
|
Warrants
|
|
|
|
|
|
#
|
|
|
#
|
|
|
|
Balance, June 30, 2016
|
|
29,812,500
|
|
|
9,000,000
|
|
|
|
Issued (Exercised)
|
|
20,000,000
|
|
|
(8,000,000
|
)
|
|
|
Forfeited
|
|
-
|
|
|
(1,000,000
|
)
|
|
|
Released
|
|
(36,875,000
|
)
|
|
-
|
|
|
|
Balance, June 30, 2017 and September 30, 2017
|
|
12,937,500
|
|
|
-
|
|
17
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
14.
|
Share Capital
(Continued)
|
|
|
(d)
|
Share purchase warrants
|
Each whole warrant entitles the holder
to purchase one common share of the Company. A summary of the status of the
warrants outstanding follows:
|
|
|
|
|
|
|
Weighted average
|
|
|
|
|
|
Warrants
|
|
|
exercise price
|
|
|
|
|
|
#
|
|
|
$
|
|
|
|
Balance, June 30, 2016
|
|
28,750,590
|
|
|
0.40
|
|
|
|
Issued
|
|
50,173,466
|
|
|
1.36
|
|
|
|
Forfeited
|
|
(1,000,000
|
)
|
|
0.02
|
|
|
|
Exercised
|
|
(54,936,306
|
)
|
|
0.48
|
|
|
|
Balance, June 30, 2017
|
|
22,987,750
|
|
|
2.32
|
|
|
|
Issued
|
|
89,107
|
|
|
2.81
|
|
|
|
Exercised
|
|
(1,271,250
|
)
|
|
0.53
|
|
|
|
Balance, September 30, 2017
|
|
21,805,607
|
|
|
2.43
|
|
During the three months ended
September 30, 2017, the Company recorded share-based payments of $136 for
warrants issued related to the acquisition of BCNL and UCI (Note 10(d)).
The following table summarizes the
warrants that remain outstanding as at September 30, 2017:
|
|
Exercise Price
|
|
Warrants
|
|
|
Expiry Date
|
|
|
|
$
|
|
#
|
|
|
|
|
|
|
0.50
|
|
1,760,000
|
|
|
December 9, 2017
|
|
|
|
0.55
|
|
61,500
|
|
|
August 9, 2018
|
|
|
|
0.55
|
|
3,226,250
|
|
|
August 17, 2018
|
|
|
|
3.00
|
|
16,668,750
|
|
|
February 28, 2019
|
|
|
|
2.81
|
|
89,107
|
|
|
September 29, 2020
|
|
|
|
|
|
21,805,607
|
|
|
|
|
|
|
(e)
|
Compensation
options/warrants
|
Each compensation option/warrant
entitles the holder to purchase one common share and one-half of one share
purchase warrant of the Company. Each whole warrant is exercisable into one
additional common share of the Company for a period of two years. A summary of
the status of the compensation options/warrants outstanding follows:
|
|
|
|
Compensation
|
|
|
Weighted average
|
|
|
|
|
|
options/warrants
|
|
|
exercise price
|
|
|
|
|
|
#
|
|
|
$
|
|
|
|
Balance, June 30, 2016
|
|
309,434
|
|
|
0.53
|
|
|
|
Issued
|
|
5,640,249
|
|
|
1.01
|
|
|
|
Exercised
|
|
(4,084,434
|
)
|
|
0.41
|
|
|
|
Balance, June 30, 2017 and September 30, 2017
|
|
1,865,249
|
|
|
2.25
|
|
18
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
15.
|
Share-based Compensation
|
On September 25, 2017, the Board
adopted a “rolling maximum” or “evergreen” plan which fixed a maximum number of
shares issuable thereunder as 10% of the issued and outstanding securities of
the Company. The number of common shares issuable under the Company’s share
compensation arrangements including Stock Options and Restricted Stock Units,
may not exceed 10% of the total number of issued and outstanding Common
Shares.
The Company has an incentive stock
option plan, which provides that the Board of Directors may from time to time,
in its discretion, and in accordance with the Exchange requirements, grant to
directors, officers, employees and consultants, non-transferable options to
purchase common shares, provided that the number of common shares reserved for
issuance under the plan and all other share compensation arrangements of the
Company, will not exceed 10% of the issued and outstanding common shares of the
Company. A summary of the status of the options outstandingfollows:
|
|
|
|
Stock
|
|
|
Weighted Average
|
|
|
|
|
|
Options
|
|
|
Exercise Price
|
|
|
|
|
|
#
|
|
|
$
|
|
|
|
Balance, June 30, 2016
|
|
5,309,834
|
|
|
0.37
|
|
|
|
Granted
|
|
12,170,000
|
|
|
2.21
|
|
|
|
Exercised
|
|
(2,001,700
|
)
|
|
0.41
|
|
|
|
Forfeited
|
|
(244,568
|
)
|
|
0.74
|
|
|
|
Balance, June 30, 2017
|
|
15,233,566
|
|
|
1.84
|
|
|
|
Granted
|
|
4,435,000
|
|
|
2.65
|
|
|
|
Exercised
|
|
(697,080
|
)
|
|
0.90
|
|
|
|
Forfeited
|
|
(368,836
|
)
|
|
1.28
|
|
|
|
Balance, September 30, 2017
|
|
18,602,650
|
|
|
2.08
|
|
The following table summarizes the
stock options that remain outstanding as at September 30, 2017:
|
|
Exercise Price ($)
|
|
Options Outstanding (#)
|
|
|
Expiry Date
|
|
|
Options Exercisable (#)
|
|
|
|
0.295
|
|
50,000
|
|
|
June 2,
2020
|
|
|
50,000
|
|
|
|
0.295
|
|
125,000
|
|
|
August 26, 2020
|
|
|
41,667
|
|
|
|
0.30
|
|
240,000
|
|
|
August 10, 2020
|
|
|
123,333
|
|
|
|
0.30
|
|
563,511
|
|
|
August 14, 2020
|
|
|
316,844
|
|
|
|
0.30
|
|
97,400
|
|
|
September 8, 2018
|
|
|
52,956
|
|
|
|
0.30
|
|
12,500
|
|
|
September 8, 2018
|
|
|
12,500
|
|
|
|
0.34
|
|
120,000
|
|
|
May 23, 2020
|
|
|
82,500
|
|
|
|
0.40
|
|
350,000
|
|
|
March 10, 2019
|
|
|
350,000
|
|
|
|
0.46
|
|
700,000
|
|
|
May 20, 2021
|
|
|
-
|
|
|
|
0.55
|
|
80,000
|
|
|
February 8, 2021
|
|
|
80,000
|
|
|
|
0.58
|
|
300,000
|
|
|
March 14, 2021
|
|
|
237,500
|
|
|
|
0.66
|
|
233,334
|
|
|
August 8, 2021
|
|
|
-
|
|
|
|
1.30
|
|
1,140,905
|
|
|
September 23,
2021
|
|
|
792,016
|
|
|
|
2.18
|
|
350,000
|
|
|
October 12, 2021
|
|
|
262,500
|
|
|
|
2.25
|
|
2,450,000
|
|
|
August 25, 2021
|
|
|
2,187,500
|
|
|
|
2.56
|
|
2,100,000
|
|
|
January 19, 2022
|
|
|
525,000
|
|
|
|
2.62
|
|
50,000
|
|
|
February 24, 2022
|
|
|
16,667
|
|
|
|
2.27
|
|
2,500,000
|
|
|
March 22, 2022
|
|
|
416,667
|
|
|
|
2.49
|
|
2,705,000
|
|
|
May 11, 2022
|
|
|
229,167
|
|
|
|
2.39
|
|
1,305,000
|
|
|
August 8, 2022
|
|
|
-
|
|
|
|
2.76
|
|
3,130,000
|
|
|
September 29, 2022
|
|
|
-
|
|
|
|
|
|
18,602,650
|
|
|
|
|
|
5,776,817
|
|
19
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
15.
|
Share-basedCompensation(Continued)
|
|
|
(a)
|
Stock options (continued)
|
During the three months ended
September 30, 2017, the Company recorded aggregate share-based payments of
$2,475 (2016 - $380) for all stock options granted and vested during the period.
The fair value of stock options
granted during the period was determined using the following weighted average
assumptions at the time of grant using the Black-Scholes option pricing
model:
|
|
|
|
2017
|
|
|
2016
|
|
|
|
Risk-Free Annual
Interest Rate
|
|
1.43 %
|
|
|
0.52%
|
|
|
|
Expected Annual Dividend Yield
|
|
0%
|
|
|
0%
|
|
|
|
Expected Stock Price
Volatility
|
|
75.73%
|
|
|
87.0%
|
|
|
|
Expected Life of Options
|
|
2.96 years
|
|
|
2.64 years
|
|
|
|
Forfeiture rate
|
|
5%
|
|
|
5%
|
|
Volatility was estimated by using the
average historical volatility of the Company and other companies that the
Company considers comparable that have trading history and volatility history.
The expected life in years represents the period of time that options granted
are expected to be outstanding. The risk-free rate is based on Canada government
bonds with a remaining term equal to the expected life of the options.
The weighted average fair value of
stock options granted during the three months ended September 30, 2017 was $1.35
(2016 - $0.68) per option. As at September 30, 2017, stock options outstanding
have a weighted average remaining contractual life of 4.24 years.
|
|
(b)
|
Restricted Share Units
(RSUs)
|
On September 25, 2017, the Company
adopted a restricted share unit (“RSU”) plan for directors, officers, employees
and consultants of the Company (“Participants”). Under the terms of the plan,
RSU’s are issued to Participants and the shares issued vest over a period of up
to three years from the date of grant. Each RSU gives the Participant the right
to receive one common share of the Company. The Company has reserved 10,000,000
common shares for issuance under this plan. The fair market value of each RSU
granted is calculated on the date of grant based on the closing price of the
Company’s shares on the date prior to the grant, and recognized on a
straight-line basis over the vesting period.
On September 29, 2017, the Company
granted 2,127,128 RSUs to directors, officers, employees and consultants of the
Company, of which 127,128 relate to fiscal 2017 and vest immediately. The rest
of the RSUs vest annually.
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
RSUs Outstanding
|
|
RSUs Vested
|
|
|
Expiry
|
|
|
Price per Share
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
127,128
|
|
127,128
|
|
|
-
|
|
|
2.76
|
|
|
|
525,000
|
|
-
|
|
|
September 29, 2018
|
|
|
2.76
|
|
|
|
1,475,000
|
|
-
|
|
|
September 29, 2020
|
|
|
2.76
|
|
|
|
2,127,128
|
|
127,128
|
|
|
|
|
|
2.76
|
|
The RSU Plan and RSU grants thereunder
are subject to shareholder approval at the Company’s annual general meeting on
November 13, 2017.
20
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
15.
|
Share-based Compensation
(Continued)
|
|
|
(b)
|
Restricted Share Units (RSUs)
(continued)
|
During the three months ended
September 30, 2017, the Company recorded share-based payments of $11 for
2,000,000 RSUs granted and vested during the period. Share-based payments of
$351 for 127,128 RSUs were accrued during the year ended June 30, 2017.
|
|
(c)
|
Employee Share Purchase Plan
(ESPP)
|
On September 25, 2017, the Company
adopted an ESPP whereby eligible employees may contribute to the ESPP at least
1% but no more than 10% of their annual gross salary up to a maximum of $10,500,
to purchase common shares of the Company in the open market at prevailing market
prices. The Company contributes an amount equal to 50% of the employee’s
contributions which are expensed as incurred as there are no vesting
provisions.
There were no employee and employer
contributions during the three months ended September 30, 2017.
|
16.
|
General and
Administration
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Professional fees
|
|
775
|
|
|
444
|
|
|
|
Office and administration
|
|
848
|
|
|
175
|
|
|
|
Wages and benefits
|
|
1,370
|
|
|
428
|
|
|
|
|
|
2,993
|
|
|
1,047
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Consulting fees
|
|
1,442
|
|
|
481
|
|
|
|
Branding, public and media relations,
|
|
|
|
|
|
|
|
|
and tradeshows
|
|
372
|
|
|
238
|
|
|
|
Selling and client care expenses
|
|
1,308
|
|
|
630
|
|
|
|
Wages and benefits
|
|
546
|
|
|
221
|
|
|
|
|
|
3,668
|
|
|
1,570
|
|
|
18.
|
Finance and Other
Costs
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Accretion expense
|
|
1,839
|
|
|
911
|
|
|
|
Bank charges
|
|
10
|
|
|
7
|
|
|
|
Financing fees
|
|
-
|
|
|
1,578
|
|
|
|
Interest expense
|
|
167
|
|
|
544
|
|
|
|
|
|
2,016
|
|
|
3,040
|
|
21
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
19.
|
Related Party
Transactions
|
The Company incurred the following
transactions with related parties during the three months ended September 30,
2017:
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Consulting fees paid
or accrued to directors of ACE
|
|
53
|
|
|
49
|
|
|
|
Office, rent and administration paid or
accrued to companies owned by directors
and officers and a former
director of the Company
|
|
30
|
|
|
30
|
|
|
|
Operational, administrative
and service fees paid or accrued pursuant to an
agreement between
CanvasRx and a company having a director in common with the Company
|
|
1,464
|
|
|
305
|
|
|
|
Consulting fees paid to a company owned by an
officer of the Company
|
|
167
|
|
|
-
|
|
|
|
Consulting fees paid to a
company controlled by a director of the Company for
scientific,
research and development services
|
|
15
|
|
|
-
|
|
|
|
Consulting fees paid to a company controlled by a director of
the Company for
financial and other advisory services
|
|
5
|
|
|
27
|
|
|
|
|
|
1,734
|
|
|
411
|
|
|
|
(b)
|
Compensation of key management
personnel
|
The Company’s key management personnel
have the authority and responsibility for planning, directing and controlling
the activities of the Company and consists of the Company’s executive management
team and managementdirectors.
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Management compensation
|
|
485
|
|
|
167
|
|
|
|
Directors’ fees
(1)
|
|
49
|
|
|
51
|
|
|
|
Share-based payments
(2)
|
|
1,983
|
|
|
102
|
|
|
|
|
|
2,517
|
|
|
320
|
|
|
|
(1)
|
Include meeting fees and committee chair fees.
|
|
|
(2)
|
Share-based payments are the fair value of options
granted and vested to key management personnel and directors of the
Company under the Company’s stock option plan. Note
15(a).
|
|
|
(c)
|
Related party balances
|
The following related party amounts
were included in (i) accounts receivable, (ii) accounts payable and accrued
liabilities, and (iii) note receivable:
|
|
|
|
September 30,
|
|
|
June 30,
|
|
|
|
|
|
2017
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
(i) A company having a
director in common
|
|
-
|
|
|
72
|
|
|
|
(ii) Companies controlled by directors and
officers of the Company
(1)
|
|
125
|
|
|
76
|
|
|
|
(ii) Directors and officers
and a former director and officer of the Company
(1)
|
|
28
|
|
|
565
|
|
|
|
(iii) A 50% owned joint venture company (Note 9)
|
|
2,132
|
|
|
2,096
|
|
(1)
The amounts are
unsecured, non-interest bearing and have no specific repayments term.
22
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
|
(a)
|
1769474 has an operating lease on lands located in
Cremona, Alberta (the “Lands”) for monthly rent payments of $5. The lease
expires on November 14, 2019, with an option to extend for an additional
five-year term. The Company has the option to purchase the Lands during
the additional term.
|
|
|
|
|
|
|
(b)
|
The Company is committed under lease and sublease
agreements with respect to three office premises located in Vancouver,
British Columbia, expiring December 31, 2017, June 30, 2020 and December
31, 2028, office premise lease located in Berlin, Germany expiring
December 31, 2022, and sublease agreements with respect to clinics located
across Canada expiring between August 1, 2019 and December 1, 2023, as
follows:
|
|
|
|
|
$
|
|
|
|
2018
|
|
1,106
|
|
|
|
2019
|
|
1,305
|
|
|
|
2020
|
|
1,194
|
|
|
|
2021
|
|
987
|
|
|
|
2022
|
|
859
|
|
|
|
Thereafter
|
|
3,304
|
|
|
|
|
|
8,755
|
|
|
|
(c)
|
The Company entered into an agreement to lease
approximately 30 acres of land at the EIA for the development of a
production facility. The lease has a term of fifteen years with monthly
rent payments of $69 for the first five years, increasing to monthly
payments of $76 and $83 in the fifth and tenth year of the lease term,
respectively. The first monthly installment is payable on or before the
earlier of (i) the date that an occupancy permit has been issued for the
facility by Leduc County, and (ii) May 1, 2018. The Company has eight
options to renew the term of the lease, each option for an additional five
years exercisable at the Company’s discretion.
|
|
21.
|
Segmented Information
|
The Company operates primarily in two
segments, the production and sale of medical cannabis, and patient counselling
and outreach service.
|
|
|
|
Medical
|
|
|
Patient
|
|
|
|
|
|
|
|
|
Cannabis
|
|
|
Counselling
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Three months ended September
30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
7,315
|
|
|
934
|
|
|
8,249
|
|
|
|
Gross profit
|
|
7,906
|
|
|
904
|
|
|
8,810
|
|
|
|
Loss from operations
|
|
(817
|
)
|
|
(601
|
)
|
|
(1,418
|
)
|
|
|
Net income (loss)
|
|
4,399
|
|
|
(839
|
)
|
|
3,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September
30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
2,752
|
|
|
319
|
|
|
3,071
|
|
|
|
Gross profit (loss)
|
|
(227
|
)
|
|
313
|
|
|
86
|
|
|
|
Loss from operations
|
|
(3,107
|
)
|
|
(168
|
)
|
|
(3,275
|
)
|
|
|
Net loss
|
|
(5,893
|
)
|
|
280
|
|
|
(5,613
|
)
|
23
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
21.
|
SegmentedInformation(Continued)
|
|
|
|
|
Medical
|
|
|
Patient
|
|
|
|
|
|
|
|
|
|
|
|
Cannabis
|
|
|
Counselling
|
|
|
Other
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
As at September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
346,276
|
|
|
777
|
|
|
781
|
|
|
347,834
|
|
|
|
Total liabilities
|
|
100,038
|
|
|
2,099
|
|
|
781
|
|
|
102,918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
321,644
|
|
|
1,035
|
|
|
-
|
|
|
322,679
|
|
|
|
Total liabilities
|
|
102,374
|
|
|
1,372
|
|
|
-
|
|
|
103,746
|
|
The Company generates revenue in two
geographical locations, in Canada and in Germany.
|
|
|
|
Canada
|
|
|
Germany
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Three months ended
September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
7,014
|
|
|
1,235
|
|
|
8,249
|
|
|
|
Gross profit
|
|
8,454
|
|
|
356
|
|
|
8,810
|
|
|
|
Income (loss) from operations
|
|
(1,426
|
)
|
|
8
|
|
|
(1,418
|
)
|
|
|
Net income
|
|
3,549
|
|
|
11
|
|
|
3,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
346,392
|
|
|
1,442
|
|
|
347,834
|
|
|
|
Total liabilities
|
|
95,759
|
|
|
7,159
|
|
|
102,918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
321,251
|
|
|
1,428
|
|
|
322,679
|
|
|
|
Total liabilities
|
|
96,678
|
|
|
7,068
|
|
|
103,746
|
|
All revenues during the three months
ended September 30, 2016 were generated in Canada.
|
22.
|
Financial Instruments and Risk
Management
|
|
|
(a)
|
Fair value of financial
instruments
|
The Company’s financial instruments
consist of cash and cash equivalents, accounts receivable, marketable
securities, promissory notes receivable, convertible debenture receivable, loans
receivable, derivative, accounts payable and accrued liabilities and convertible
notes. The carrying values of these financial instruments approximate their fair
values as at September 30, 2017.
Financial instruments recorded at fair
value are classified using a fair value hierarchy that reflects the significance
of the inputs to fair value measurements. The three levels of hierarchy are:
Level 1 – Unadjusted quoted prices in
active markets for identical assets or liabilities;
Level 2 – Inputs other
than quoted prices that are observable for the asset or liability, either
directly or indirectly; and
Level 3 – Inputs for the asset or liability that
are not based on observable market data.
There have been no transfers between
fair value levels during the period.
24
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
22.
|
Financial Instruments and Risk Management
(Continued)
|
|
|
(a)
|
Fair value of financial instruments
(continued)
|
The following table summarizes the
Company’s financial instruments as at September 30, 2017:
|
|
|
|
Available-for-
|
|
|
|
|
|
Financial
|
|
|
Other
|
|
|
|
|
|
|
|
|
sale financial
|
|
|
Loans and
|
|
|
assets at
|
|
|
financial
|
|
|
|
|
|
|
|
|
assets
|
|
|
receivables
|
|
|
FVPTL
|
|
|
liabilities
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
-
|
|
|
127,915
|
|
|
-
|
|
|
-
|
|
|
127,915
|
|
|
|
Accounts receivable
|
|
-
|
|
|
3,701
|
|
|
-
|
|
|
-
|
|
|
3,701
|
|
|
|
Marketable securities
|
|
34,760
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
34,760
|
|
|
|
Promissory notes
receivable
|
|
-
|
|
|
5,250
|
|
|
-
|
|
|
-
|
|
|
5,250
|
|
|
|
Loans receivable
|
|
-
|
|
|
2,132
|
|
|
-
|
|
|
-
|
|
|
2,132
|
|
|
|
Derivative
|
|
-
|
|
|
-
|
|
|
4,892
|
|
|
-
|
|
|
4,892
|
|
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
-
|
|
|
-
|
|
|
-
|
|
|
12,015
|
|
|
12,015
|
|
|
|
Deferred revenue
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,548
|
|
|
1,548
|
|
|
|
Finance lease
|
|
-
|
|
|
-
|
|
|
-
|
|
|
334
|
|
|
334
|
|
|
|
Convertible notes
(1)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
66,581
|
|
|
66,581
|
|
(1)
The fair value of
convertible notes includes both the debt and equity components.
The following is a summary of
financial assets measured at fair value segregated based on the various levels
of inputs (Note 4(b)):
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Marketable securities
|
|
34,760
|
|
|
-
|
|
|
-
|
|
|
34,760
|
|
|
|
Warrant derivative
|
|
-
|
|
|
-
|
|
|
4,892
|
|
|
4,892
|
|
Changes in level 3 financial assets
for the period were as follows:
|
|
|
|
Warrant
|
|
|
Convertible
|
|
|
|
|
|
Derivative
|
|
|
Debenture
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Opening balance
|
|
292
|
|
|
11,071
|
|
|
|
Unrealized gain
|
|
252
|
|
|
830
|
|
|
|
Conversion of debenture
|
|
4,348
|
|
|
(11,901
|
)
|
|
|
Ending balance
|
|
4,892
|
|
|
-
|
|
Changes in deferred gains on
convertible debenture and derivative measured at fair value and included in
level 3 of the fair value hierarchy were as follows:
|
|
|
|
Warrant
|
|
|
Convertible
|
|
|
|
|
|
Derivative
|
|
|
Debenture
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Opening balance
|
|
321
|
|
|
10,206
|
|
|
|
Conversion of debenture
|
|
4,099
|
|
|
(4,099
|
)
|
|
|
Unrealized gains amortized
|
|
(564
|
)
|
|
(6,107
|
)
|
|
|
Ending balance
|
|
3,856
|
|
|
-
|
|
25
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
22.
|
Financial Instruments and Risk Management
(Continued)
|
|
|
(a)
|
Fair value of financial instruments
(continued)
|
|
|
|
|
|
|
|
The Company’s liability for the CanvasRx contingent
consideration was measured at fair value based on unobservable inputs, and
was considered a level 3 financial instrument. The fair value of the
liability determined by this analysis was primarily driven by the
Company’s expectations of CanvasRx achieving the milestones. The expected
milestones were assessed probabilities by management which was then
discounted to present value in order to derive a fair value of the
contingent consideration. The primary inputs of the calculation were the
probabilities of achieving the milestones and a discount rate.
|
|
|
|
|
|
|
(b)
|
Financial instruments risk
|
|
|
|
|
|
|
|
The Company is exposed in varying degrees to a variety of
financial instrument related risks. The Board mitigates these risks by
assessing, monitoring and approving the Company’s risk management
processes:
|
|
|
(i)
|
Credit risk
|
|
|
|
|
|
|
|
Credit risk is the risk of a potential loss to the
Company if a customer or third party to a financial instrument fails to
meet its contractual obligations. The Company is moderately exposed to
credit risk from its cash and cash equivalents, trade and other
receivables, convertible debenture asset and promissory notes receivable.
The risk exposure is limited to their carrying amounts at the statement of
financial position date. The risk for cash and cash equivalents is
mitigated by holding these instruments with highly rated Canadian
financial institutions. The Company does not invest in asset-backed
deposits or investments and does not expect any credit losses. The Company
periodically assesses the quality of its investments and is satisfied with
the credit rating of the financial institutions and the investment grade
of its guaranteed investment certificates. Trade and other receivables
primarily consist of trade accounts receivable and goods and services
taxes recoverable (“GST”). Credit risk from the convertible debenture
asset and promissory notes receivable arises from the possibility that
principal and/or interest due may become uncollectible. The Company
mitigates this risk by managing and monitoring the underlying business
relationships.
|
|
|
|
|
|
|
|
The Company provides credit to its customers in the
normal course of business and has established credit evaluation and
monitoring processes to mitigate credit risk, but has limited risk as the
majority of sales are transacted with credit cards.
|
|
|
|
|
|
|
|
As at September 30, 2017, the Company’s aging of
receivables was approximately as follows:
|
|
|
|
|
September 30,
|
|
|
June 30,
|
|
|
|
|
|
2017
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
0 – 60 days
|
|
1,973
|
|
|
1,534
|
|
|
|
61 – 120 days
|
|
1,728
|
|
|
778
|
|
|
|
|
|
3,701
|
|
|
2,312
|
|
Liquidity risk is the risk that the
Company will not be able to meet its financial obligations associated with
financial liabilities. The Company manages liquidity risk through the management
of its capital structure. The Company’s approach to managing liquidity is to
ensure that it will have sufficient liquidity to settle obligations and
liabilities when due.
26
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
22.
|
Financial Instruments and Risk Management
(Continued)
|
|
|
(b)
|
Financial instruments risk
(continued)
|
|
|
(ii)
|
Liquidity risk (continued)
|
In addition to the commitments
outlined in Note 20, the Company has the following contractual obligations:
|
|
|
|
Total
|
|
|
<1 year
|
|
|
1 - 3 years
|
|
|
3 -5 years
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Accounts payable and accrued
liabilities
|
|
12,015
|
|
|
12,015
|
|
|
-
|
|
|
-
|
|
|
|
Deferred revenue
|
|
1,548
|
|
|
1,548
|
|
|
-
|
|
|
-
|
|
|
|
Finance lease
|
|
424
|
|
|
107
|
|
|
317
|
|
|
-
|
|
|
|
Convertible notes
|
|
79,220
|
|
|
-
|
|
|
79,220
|
|
|
-
|
|
|
|
|
|
93,207
|
|
|
13,670
|
|
|
79,537
|
|
|
-
|
|
|
|
a)
|
Currency risk
|
|
|
|
|
|
|
|
The operating results and financial position of the
Company are reported in Canadian dollars. As the Company operates in an
international environment, some of the Company’s financial instruments and
transactions are denominated in currencies other than the Canadian dollar.
The results of the Company’s operations are subject to currency
transaction and translation risks.
|
|
|
|
|
|
|
|
The Company holds cash in Canadian dollars and Euros, and
investments in Australian dollars. The Company’s main risk is associated
with fluctuations in the Euros and Australian dollars and assets and
liabilities are translated based on the foreign currency translation
policy.
|
|
|
|
|
|
|
|
The Company has determined that an effect of a 10%
increase or decrease in the Australian dollar and Euro against the
Canadian dollar on financial assets and liabilities, as at September 30,
2017, including cash, marketable securities and accounts payable and
accrued liabilities denominated in Euros and Australian dollars, would
result in an increase or decrease of approximately $2,598 (2016 - $Nil) to
the net loss and comprehensive loss for the three months ended September
30, 2017.
|
|
|
|
|
|
|
|
At September 30, 2017, the Company had no hedging
agreements in place with respect to foreign exchange rates. The Company
has not entered into any agreements or purchased any instruments to hedge
possible currency risks at this time.
|
|
|
|
|
|
|
b)
|
Interest rate risk
|
|
|
|
|
|
|
|
Interest rate risk is the risk that the fair value or
future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. Cash and cash equivalents bear interest
at market rates. The Company’s investments, loans receivables and
financial debt have fixed rates of interest and therefore expose the
Company to a limited interest rate fair value
risk.
|
27
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
22.
|
Financial Instruments and Risk Management
(Continued)
|
|
|
(b)
|
Financial instruments risk
(continued)
|
|
|
(iii)
|
Market risk
(continued)
|
Price risk is the risk of variability
in fair value due to movements in equity or market prices. The Company’s
marketable securities and investments are susceptible to price risk arising from
uncertainties about their future values. The fair value of marketable securities
is based on quoted market prices which the shares of the investments can be
exchanged for.
If the fair value of these financial
assets were to increase or decrease by 10%, the Company would incur an
associated increase or decrease in net loss and comprehensive loss of
approximately $4,225 (2016 - $Nil). See note 4 for additional details regarding
the fair value of investments and marketable securities.
The Company’s objectives when managing
capital are to ensure that there are adequate capital resources to safeguard the
Company’s ability to continue as a going concern and maintain adequate levels of
funding to support its ongoing operations and development such that it can
continue to provide returns to shareholders and benefits for other stakeholders.
The capital structure of the Company
consists of items included in shareholders’ equity and debt, net of cash and
cash equivalents. The Company manages its capital structure and makes
adjustments to it in light of changes in economic conditions and the risk
characteristics of the Company’s underlying assets. The Company plans to use
existing funds, as well as funds from the future sale of products to fund
operations and expansion activities.
As at September 30, 2017, the Company
is not subject to externally imposed capital requirements.
The following events occurred
subsequent to September 30, 2017:
|
|
(a)
|
The Company entered into a subscription agreement, as
amended and restated, to purchase 10,558,676 units of Hempco at $0.3075
per unit for gross proceeds of $3,247. Each unit consists of one common
share and one warrant exercisable at a price of $0.41 per share for a
period of two years, subject to accelerated expiry if Hempco’s shares
trade at or above a VWAP of $0.65 for any 30-day period following closing
of the Investment. The closing of the private placement is subject to the
execution of an option agreement with the majority owners of Hempco and an
investor rights agreement, regulatory approval and disinterested
shareholder approval. Upon closing, the Company will hold approximately
23% of the share capital of Hempco on a fully diluted basis.
|
|
|
|
|
|
|
|
On September 15, 2017, the Company and Hempco executed an
option agreement (the “Option”) to acquire up to 10,754,942 shares from
the majority owners of Hempco, which upon exercise, would bring the
Company’s total ownership interest in Hempco to over 50.1% on a fully
diluted basis. If the Company elects to exercise the Option, the shares
will be acquired in tranches, the pricing of which, is contingent on
achievement of certain performance milestones of
Hempco.
|
28
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
24.
|
Subsequent Events
(Continued)
|
On September 15, 2017, the Company and
Hempco executed an Investor Rights Agreement (the “Rights Agreement”) that will
allow Aurora to nominate two directors to the Hempco Board of Directors, require
that Hempco adopt an expenditure policy, provide for certain matters related to
cannabidiol extraction from hemp, and provide Aurora with anti-dilution
protection. Pursuant to the Rights Agreement, the COO and President of Aurora
were appointed to the board of directors of Hempco.
In connection with the transaction,
the Company advanced an aggregate of $2,250 to Hempco. These loans will be
repaid from the proceeds of Hempco’s private placement. If the private placement
does not close, the loans will mature on December 21, 2017. (Note 7(a))
|
|
(b)
|
On November 2, 2017, the Company closed a bought deal
financing of 23,000,000 units with a syndicate of underwriters (the
“Underwriters”), which included the full exercise of the 3,000,000
Over-Allotment Option, at a price of $3.00 per unit for total gross
proceeds of $69,000 (the “Offering”). Each unit consists of one common
share and one share purchase warrant exercisable into one common share at
a price of $4.00 per share for a period of three years, subject to
adjustments in certain events.
|
|
|
|
|
|
|
|
Pursuant to the Underwriting Agreement, the Company
agreed to pay the underwriters a fee equal to 6% of the gross proceeds of
the Offering and the Over-Allotment Option subject to a reduced fee of 3%
for units sold to certain purchasers designated by the Company (the
“President’s List”). In addition, the Company agreed to issue to the
Underwriters compensation options equal to 6% of the Offering (3% to
President’s List) and Over- Allotment Option sold, at an exercise price of
$3.00 per share for a period of 3 years from the date of closing of the
Offering.
|
|
|
|
|
|
|
|
Additionally, the Company completed a concurrent private
placement of 2,000,000 units at $3.00 per unit for gross proceeds of
$6,000, having the same terms as the Offering.
|
|
|
(c)
|
92,580 common shares were issued on the exercise of
92,580 stock options for gross proceeds of $140.
|
|
|
|
|
|
|
(d)
|
1,712,350 common shares were issued on the exercise of
1,712,350 warrants for gross proceeds of $1,113.
|
|
|
|
|
|
|
(e)
|
1,165,781 common shares were issued on the exercise of
1,165,781 compensation warrants for gross proceeds of
$2,623.
|
29
AURORA CANNABIS INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three-month
period ended September 30, 2017
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
This Management’s Discussion and Analysis (“MD&A”) reports
on the consolidated financial condition and operating results of Aurora Cannabis
Inc. (“the Company” or “Aurora”) for the three-month period ended September 30,
2017, and has been prepared pursuant to the MD&A disclosure requirements
under National Instrument 51-102 - Continuous Disclosure Obligations (“NI
51-102”) of the Canadian Securities Administrators. The Company’s continuous
disclosure documents are available on SEDAR at
www.sedar.com
.
The MD&A should be read in conjunction with the Company’s
unaudited Condensed Interim Consolidated Financial Statements for the
three-month period ended September 30, 2017 and notes thereto (the “Interim
Financial Statements”) and the audited consolidated financial statements for the
year ended June 30, 2017 and the related annual MD&A.
The Interim Financial Statements were prepared in accordance
with IAS 34 Interim Financial Reporting of the International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting Standards Board
(“IASB”) and interpretations of the IFRS Interpretations Committee (“IFRIC”),
and include the accounts of the Company and its wholly-owned subsidiaries,
Aurora Marijuana Inc. (“AMI”), Aurora Cannabis Enterprises Inc. (“ACE”), 1769474
Alberta Ltd. (“1769474”), Australis Capital Inc. (“ACI”), CanvasRx Inc.
(“CanvasRx”), 10094595 Canada Inc., Peloton Pharmaceuticals Inc. (“Peloton”),
Pedanios GmbH (“Pedanios”), B.C. Northern Lights Enterprises Ltd. (“BCNL”) and
Urban Cultivator Inc. (“UCI”).
All dollar amounts referred to in this MD&A are expressed
in thousands of Canadian dollars, except for share and per share amounts, and
where indicated otherwise.
This MD&A has been prepared as of November 8, 2017.
NON-IFRS MEASURES
The Company has included certain non-IFRS performance measures
throughout this MD&A, including cash cost of sales and cash cost to produce
dried cannabis, each as defined in this section. The Company employs these
measures internally to measure its operating and financial performance and to
assist in business decision making.
The Company believes that these non-IFRS financial measures, in
addition to conventional measures prepared in accordance with IFRS, enable
investors to evaluate the Company’s operating results, underlying performance
and future prospects in a manner similar to Aurora management.
As there are no standardized methods of calculating these
non-IFRS measures, the Company’s methods may differ from those used by others,
and accordingly, the use of these measures may not be directly comparable to
similarly titled measures used by others. Accordingly, these non-IFRS measures
are intended to provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared in accordance
with IFRS.
_________________
Cash Cost of Sales and Cash Cost to Produce Dried
Cannabis
Cash cost of sales of dried cannabis produced is calculated by
taking the total IFRS cost of sales and removing the effect of changes in fair
value of biological assets, non-cash production costs, oil conversion costs,
cost of sales from service revenue, and purchases from other Licensed Producers,
all divided by the total number of grams of dried cannabis produced in the
period.
Cash cost to produce dried cannabis is cash cost of sales of
dried cannabis produced less packaging costs (post-production cost).
Management believes these measures provide useful information
as they measure the efficiency of production and may be a benchmark of the
Company against its competitors.
2
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
COMPANY OVERVIEW
Aurora’s principal business is the production and distribution
of medical cannabis in Canada and Germany. The Company produces and distributes
dried medical cannabis and cannabis oils in Canada pursuant to the
Access to Cannabis for Medical Purposes Regulations
(“ACMPR”), and
distributes wholesale medical cannabis in the European Union pursuant to the
German Medicinal Products Act and German Narcotic Drugs Act.
On September 29, 2017, the Company acquired BCNL and UCI,
leading companies in the production and sale of proprietary systems for the
indoor cultivation of cannabis, organic microgreens, vegetables and herbs. The
acquisition represents an important step to serve patients who choose to grow
their own cannabis and ultimately, the adult recreational market in Canada upon
the anticipated legalization in July 2018, as well as provides differentiation
into the rapidly growing healthy lifestyle-driven urban garden market.
Aurora’s strategy and vision is to build a leading, integrated
global cannabis company through the construction of highly-efficient
purpose-built facilities that allow the Company to produce significant volumes
of low-cost, high quality cannabis, aggressive and strategically focused
international expansion, strong brand differentiation, and industry leading
board, senior management and production teams. Aurora expects that this strategy
will deliver strong and sustainable shareholder value as the Company gains and
retains significant market share of the domestic and international medical
cannabis markets as well as the Canadian adult usage market once legalized.
The Company operates a purpose-built 55,200 square foot
production facility based in Mountain View County, Alberta with a current annual
capacity of approximately 4,800 kilograms of high-quality cannabis. Aurora also
has 7.7 million square feet of land available at the Mountain View site for
potential future expansion. Alberta is an ideal production location due to low
energy, labor and tax costs.
Aurora has completed an additional facility in Pointe-Claire,
Quebec, named Aurora Vie. This is a 40,000 square foot, state-of-the-art next
generation purpose-built cannabis facility that is anticipated to produce
approximately 4,000 kg per annum of high-quality cannabis at full capacity.
Aurora Vie was granted a Health Canada production license on October 27, 2017.
The Company is also currently constructing an 800,000 square
foot production facility, “Aurora Sky”, at the Edmonton International Airport in
Alberta. Management anticipates Aurora Sky, once completed, to be the world’s
most technologically advanced cannabis facility in the world, utilizing
state-of-the-art cultivation technologies that have previously not been
integrated into one single facility. At full capacity, the Company anticipates
Aurora Sky to produce in excess of 100,000 kg per annum of high-quality cannabis
at low cost due to technology-driven efficiencies.
The Company’s common shares trade under the symbol “ACB” on the
Toronto Stock Exchange (“TSX”) and under the symbol “ACBFF” on the United States
OTCQX Market Exchange.
3
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Agility, Innovation, Execution and Expansion
Building a Globally Dominant Cannabis Company
Aurora continued to execute its aggressive plan to build a
leading, integrated global cannabis company.
During the three months ended September 30, 2017, the Company
achieved record revenues, registered patients, grams sold, selling price per
gram, as well as began exports to the German market. Aurora also continued to
realize lower costs per gram for the production of cannabis.
In the first quarter of 2018, and in the subsequent period up
to the date of this MD&A, construction of the world-leading Aurora Sky
facility progressed on schedule, while the Company completed and was granted a
cultivation license for its Aurora Vie facility in Quebec. Aurora raised
significant additional financial resources, acquired key strategic assets,
expanded its business line through BCNL and UCI, and continued to strengthen its
talented, world-class production and corporate team.
Financial and Operational Highlights
|
|
|
Q1 2018
|
|
|
Q4 2017
|
|
|
Q3 2017
|
|
|
Q2 2017
|
|
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
Active registered patients
(1)
|
|
19,280
|
|
|
16,400
|
|
|
13,110
|
|
|
12,200
|
|
|
Grams sold
|
|
889,965
|
|
|
755,059
|
|
|
653,008
|
|
|
538,045
|
|
|
Grams produced
(2)
|
|
1,009,585
|
|
|
1,164,683
|
|
|
846,849
|
|
|
670,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In CDN $000’s unless
otherwise noted)
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Revenues
|
|
8,249
|
|
|
5,936
|
|
|
5,175
|
|
|
3,885
|
|
|
Average net selling price per
gram
|
|
8.22
|
|
|
7.45
|
|
|
6.64
|
|
|
5.96
|
|
|
Cash cost of sales per gram
(3)
|
|
1.92
|
|
|
2.09
|
|
|
2.31
|
|
|
2.56
|
|
|
Cash cost to produce per gram
(3)
|
|
1.73
|
|
|
1.91
|
|
|
1.91
|
|
|
2.13
|
|
|
Cash and cash equivalents
(4)
|
|
127,915
|
|
|
159,796
|
|
|
111,116
|
|
|
55,846
|
|
|
Working capital
|
|
169,674
|
|
|
170,142
|
|
|
126,530
|
|
|
60,060
|
|
|
Investment in capital assets
|
|
26,221
|
|
|
19,985
|
|
|
10,464
|
|
|
4,158
|
|
|
(1)
|
As of the date hereof, the Company has over 20,000 active
registered patients.
|
|
(2)
|
Grams produced in the first quarter 2018 decreased due to
lower yielding strains being harvested at certain times in the period
compared to higher yielding strains in prior periods. Additionally, the
Mountain View facility has reached optimal production capacity in the
quarter.
|
|
(3)
|
Cash cost of sales per gram and cash cost to produce per
gram are non-IFRS financial measures that do not have a standardized
meaning under IFRS and may not be comparable to other companies. See
definitions earlier in this document and reconciliation under “
Results
of Operations
”.
|
|
(4)
|
As of the date hereof, the Company has approximately
$185,000 in cash and cash equivalents.
|
4
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
RECENT DEVELOPMENTS (SUBSEQUENT TO SEPTEMBER 30, 2017)
Continued Strong Patient and Revenue Growth
|
|
•
|
Aurora registered over 3,500 patients since last fiscal
year end, and as of the date of this report, the Company has surpassed
20,000 active registered patients less than 2 years after the Company’s
first product sale in January 2016. Management believes this to be the
fastest rate of patient registration for a Licensed Producer after the
launch of commercial operations.
|
|
|
•
|
CanvasRx, which now operates 25 facilities nationwide,
remains the leading Canadian network of cannabis counseling and outreach
centres, with more than 31,900 registered patients. Over 8,900 medical
doctors across Canada have referred patients to CanvasRx or its affiliated
medical clinics.
|
Capacity Expansion
|
|
•
|
The construction of the Aurora Sky facility at the
Edmonton International Airport in Alberta is progressing well. At 800,000
square feet, with modern technology and automation, Aurora Sky is expected
to produce over 100,000 kilograms annually and deliver significant
economies of scale for Aurora. Located on Edmonton International Airport
land, with access to ample power, Aurora Sky is ideally positioned for
increased domestic and international distribution. To date, over 400,000
square feet of structure has been erected, 80% of which has its specialty
glass installed, and many sub-systems have been delivered to the site. The
Company anticipates the first bays to be completed and ready for planting
before the end of calendar 2017, with the first harvest in the first half
of 2018, and full completion of the construction project by mid-2018.
|
|
|
•
|
Completed the construction upgrades at and received the
cultivation license from Health Canada for the Company’s 40,000 square
foot purpose-built indoor facility, Aurora Vie, in Pointe-Claire, Quebec
in six months, reflecting the Company’s agility, capabilities and speed of
execution. The Company anticipates shipping genetics shortly and first
harvest in the first quarter of calendar 2018.
|
Expanding International Operations
|
|
•
|
Exports to Germany in September 2017 have
passed the country’s lab testing requirements for quality control, and
were delivered to pharmacies, beginning in October 2017. Revenues from
exports to Germany will be recognized beginning in Aurora’s second fiscal
quarter. The Company continues to export ongoing, regular shipments of
dried cannabis flower from Canada to Germany.
|
Financings
|
|
•
|
On November 2, 2017, the Company closed a bought deal
financing of 23,000,000 units with a syndicate of underwriters led by
Canaccord Genuity Corp. (collectively, the “Underwriters”) which included
the full exercise of the Underwriters’ 3,000,000 Over-Allotment Option, at
a price of $3.00 per unit for aggregate gross proceeds of $69,000. Each
unit consists of one common share and one common share purchase warrant of
the Company. Each warrant is exercisable to acquire one common share at an
exercise price of $4.00 per share for a period of 3 years following the
closing date of the offering, subject to adjustments in certain events.
Concurrent with the bought deal financing, the Company
closed a non-brokered private placement of 2,000,000 units at $3.00 per
unit for gross proceeds of $6,000. Each unit is comprised of one common
share and one common share purchase warrant exercisable at $4.00 for a
period of 3 years.
Proceeds from the above financings will help position the
Company to further accelerate its aggressive growth strategy in both domestic
and international markets.
|
5
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
|
|
•
|
On November 6, 2017, the Company elected to exercise its
right to convert all of the principal amount of the remaining 8%
convertible debentures as the volume weighted average price of its common
shares for 10 consecutive days equaled $3.02. The remaining debentures of
$4,120 will be converted into 2,060,000 common shares of the Company and
accrued interest will be paid.
|
|
|
•
|
Approximately $200 million in additional gross
cash proceeds remain available from the future exercise of warrants, stock
options and compensation options/warrants.
|
Strategic Relationship with Radient Technologies Inc.
|
|
•
|
In November, Aurora and Radient announced that they had
finalized a Master Services Agreement, pursuant to which Radient will
perform certain services for Aurora using its Map
TM
technology,
as well as other technologies, for the development, commercialization and
supply of standardized cannabis extracts, which may be derived from both
cannabis and hemp. The agreement initially covers services delivered in
Canada, Australia, and the European Union, but may be expanded to
additional territories. Within the countries covered by the agreement,
Radient shall deliver its services under preferential terms to Aurora.
Radient has applied with Health Canada to obtain Licensed Dealer and
Licensed Producer status, and is progressing well through the processes.
Upon receipt of either license, Radient will be able to commence
production of cannabis extracts. The Company expects that this agreement
will enable Aurora to accelerate the production of high-margin cannabis
derivatives under favourable terms.
|
|
|
•
|
On June 5, 2017, Aurora and Radient successfully
completed their joint venture research activity and confirmed the
effectiveness of Radient’s proprietary Map
TM
technology and
associated continuous flow design for extracting cannabinoids from dried
cannabis.
|
Product Line Expansion
|
|
•
|
On October 5, 2017, the Company announced the launch of
its proprietary and patent-pending live plant transporter, the Aurora
Envoy
TM
(“Envoy”). The Company filed its patent application on
August 31, 2017, providing Aurora with the opportunity to pursue patent
protection in over 150 countries. The Envoy possesses several features
that promote the health, vigor and vegetative growth of live plant
cuttings during shipment, leading to high transplant success rates. Aurora
intends to wholesale the Envoy on a global basis, and has designed the
manufacturing process in a way that enables cannabis producers and other
plant producers to customize the Envoy with their own branding. The Envoy
is anticipated to launch commercially in the coming months.
|
|
|
•
|
In October 2017, the Company commenced vaporizer sales
through Aurora’s website and mobile application pursuant to the exclusive
hardware supply agreement with Namaste Technologies Inc. (“Namaste”), with
over 200 orders in the first three days of commencement of sales.
|
Management Team Expansion
|
|
•
|
On October 30, 2017, the Company announced the
appointment of Mr. Darryl Vleeming as Chief Information Officer, a newly
created position, reflecting Aurora’s vision and commitment to
incorporating technological innovation across all corporate functions.
|
6
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
|
|
•
|
On November 7, 2017, the Company appointed Mr. Marc
Lakmaaker as Director of Investor Relations and Corporate Development. Mr.
Lakmaaker has extensive sector knowledge and substantial international
experience, and will help Aurora further build its global investor
profile.
|
KEY DEVELOPMENTS DURING THE FIRST QUARTER 2018
Strong Revenue and Patient Growth
|
|
•
|
Aurora generated revenues of approximately
$8,249, up 39% or approximately $2,313 from Q4 2017, including the sale of
889,965 grams of cannabis, up 18% from Q4 2017.
|
|
|
•
|
On July 1, 2017, Aurora increased the prices of
its dried cannabis strains from $8.00 to $9.00 per gram (from $5.00 to
$6.00 per gram for low-income patients).
|
|
|
•
|
The impact of higher prices for dried cannabis,
a 95% increase in gram equivalent sales of oils, and growth in
international sales resulted in a 10% increase in average selling price
per gram compared to Q4 2017. The Company also added approximately 2,880
active registered patients during the first quarter of 2018, representing
an increase of 18% during the quarter.
|
|
|
•
|
On September 12, 2017, CanvasRx opened its
first location in British Columbia, located in Vancouver. This opening is
the 25
th
CanvasRx location and the 7
th
opened in
2017.
|
Significant Advancements on International Expansion
|
|
•
|
The Company entered into a technical services agreement
with Cann Group Limited (“Cann Group”) to facilitate an exchange of
information and support across areas including the cultivation and
processing of medical cannabis, extraction and manufacturing technology,
and analysis of cannabis extracts. Cann Group is building a world-class
business focused on breeding, cultivating and manufacturing medical
cannabis for sale and use within Australia. Aurora holds a 19.9% interest
in Cann Group.
|
|
|
•
|
Pedanios passed the first stage of the tender application
process to become a licensed producer of medical cannabis in Germany. The
second and final stage of the application process involves a competitive
bid proposal and contract negotiations to cultivate, process, store,
package and deliver cannabis for medical purposes in Germany. Results of
the tender process are expected in March 2018.
|
|
|
•
|
The Company’s Mountain View facility meets EU
GMP certification standards, required by the German government for export
to that market, and anticipates receiving the certification shortly.
|
|
|
•
|
In September 2017, the Company received its export permit
issued by Health Canada, as well as provisional import status from the
German Bundesopiumstelle (Federal Narcotics Bureau), to import medical
cannabis products into Germany through Pedanios where it will be
distributed to a network of more than 1,700 pharmacies across the country.
Germany currently represents the largest single federally-legal medical
cannabis market in the world, and is experiencing a significant shortage
of supply. On September 18, 2017, the Company shipped the first 50
kilograms of dried cannabis from its facility in Mountain View County,
Alberta, to Berlin-based Pedanios. This is the first quantity of product
sourced from Aurora’s Canadian cultivation base to supply the German
medical market, with further ongoing shipments continuing to occur.
|
7
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Strategic Investment in Hempco
In September 2017, the Company entered into a subscription
agreement to purchase 10,558,676 units of Hempco at $0.3075 per unit (the
“Investment”), each unit consisting of one common share and one share purchase
warrant (exercisable at $0.41 per share). Upon closing, the Company will hold
approximately 23% of the share capital of Hempco on a fully-diluted basis.
On September 15, 2017, the Company and Hempco executed an
Option Agreement (the “Option”) to acquire up to an aggregate of 10,754,942
shares from the majority owners of Hempco, which, upon exercise, would bring the
Company’s total ownership interest in Hempco to over 50% on a fully diluted
basis.
Completion of the Option and Investment will become effective
on the closing of Hempco’s private placement which remains subject to
disinterested Hempco shareholder approval. Results of the shareholder meeting is
expected on November 9, 2017.
Management anticipates that Hempco will provide further product
differentiation for the Company, as well as, subject to regulatory changes
anticipated for 2018, provide substantial supply of low-cost raw material for
the extraction of CBD.
Product Line Expansion
Acquisition of BCNL and UCI
On September 29, 2017, the Company completed the acquisition of
BCNL and UCI, leading companies, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home kitchens. The
Company acquired all of the issued and outstanding shares of BCNL and UCI for a
total consideration, including future performance based milestones, of $7,397.
Pursuant to the acquisition agreement, the Company may pay up to $4,000 upon
achievement of future performance milestones related to earnings before
interest, taxes, depreciation and amortization (“EBITDA”) until October 31,
2020.
The acquisition of BCNL and UCI is an important step in the
Company’s strategy to serve the home gardening market in Canada for patients who
choose to grow their own medical cannabis, and ultimately for adult consumers
who choose to grow their own cannabis after the Canadian federal government
legalizes adult usage, which is anticipated by July 2018. As at August 31, 2017,
10,547 Canadians were registered to grow either their own cannabis or as
designated growers for others
1
. The number of home cannabis
cultivators is expected to grow as a result of continued processing of
applications by Health Canada. While the ultimate number of home growers is
anticipated to be limited relative to the overall size of the market, it
represents very significant upside potential for BCNL to grow its customer base
and market share.
_____________________________________
1
Source:
Health Canada response to Lift News:
https://news.lift.co/10000-canadians-authorized-to-grow-their-own-medical-cannabis/
8
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
BCNL’s products have been widely recognized as the gold
standard for home cannabis production. The indoor growing systems produce
consistent, predictable, and repeatable yields, while at the same time reducing
the labor intensity normally associated with home growing. The systems’
CSA-approved design, safety features, and odorless operation is expected to
generate strong resonance with the Company’s target markets, and securely
address potential concerns among municipal governments.
Urban acquisition of UCI provides differentiation into a
non-cannabis market, addressing the healthy lifestyle segment of the urban
gardening market. UC’s products have been endorsed by celebrities, such as
Martha Stewart, based on the quality of design and operation, as well as the
lifestyle changes the products allow for.
The acquisition of BCNL and UCI will allow the Company to
provide a fully integrated package, including starter materials such as clones,
offering one-stop shopping for people who choose to grow their own cannabis at
home.
Supply Agreement with Namaste
On September 26, 2017, the Company entered into an exclusive
hardware supply agreement for the Canadian market with Namaste. Pursuant to the
agreement, Aurora, through its website and mobile application, will offer a
specially curated selection of industry-leading vaporizers, which will be
sourced from Namaste. Namaste will be providing these products to Aurora’s
customers via next day delivery across Canada, and same day delivery to
customers in the Greater Toronto Area, which has a population of nearly 6.5
million people. Namaste will also provide Aurora with back-office support,
including the handling of returns and warranty claims. With the increasing
momentum towards smoke-free options in the cannabis market, the Company will be
able to meet this growing demand by offering a preferred selection of
Namaste-sourced vaporizers that meet the Aurora Standard. This product line
expansion is an important step in our strategy to position the Company for the
adult consumer market in preparation for legalization in 2018.
Strengthened Capital Position
Aurora strengthened its balance sheet and liquidity position
during the first quarter of 2018 with $1.5 million in new financings as
follows:
|
|
•
|
During the three months ended September 30,
2017, the Company raised $1.30 million through the exercise of warrants,
options and compensation options.
|
|
|
•
|
During the quarter, the Company also converted
approximately $0.25 million of convertible notes into common shares.
|
|
|
•
|
Approximately $96 million in additional gross
cash proceeds remain available from the future exercise of warrants, stock
options and compensation options/warrants.
|
9
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Strengthening of the Senior Management Team
During the first quarter of 2018, Aurora strengthened its
senior management team with talented and experienced individuals to ensure the
Company has the leadership to further grow and build shareholder value through
execution of domestic and international objectives and opportunities. In July
and August 2017, the Company appointed Nilda Rivera as VP of Finance, Nick
Whitehead as VP of Market Development, Dieter MacPherson as VP of Production,
and John Barnet as Chief Cultivator.
Other Key Developments
|
|
•
|
On July 24, 2017, the company graduated from
the TSX Venture Exchange to the Toronto Stock Exchange.
|
|
|
•
|
The Company issued 3,178,177 common shares during the
period ended September 30, 2017, at a deemed price of $2.135 per common
share, to the vendors of CanvasRx in accordance with CanvasRx achieving
certain earn-out payment milestones, as set out in the share purchase
agreement previously announced on August 10, 2016.
|
|
|
•
|
The Company received 14,285,714 units and
77,540 units of Radient on conversion of $2,000 debentures and payment of
final interest, respectively.
|
|
|
•
|
Mr. Barry Fishman has resigned from the board
of directors effective September 25, 2017. Mr. Fishman will continue to
provide limited direction to the Company until a new director has been
appointed.
|
SUMMARY OF QUARTERLY RESULTS
The following table presents selected financial information
from continuing operations for the most recent eight quarters:
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
|
|
|
|
|
|
Net Income
|
|
|
Earnings (Loss) per
|
|
|
Quarter ended
|
|
Revenue
|
|
|
(Loss)
|
|
|
Share
|
|
|
(In CDN $000s)
|
|
$
|
|
|
$
|
|
|
$
|
|
|
September 30, 2017
|
|
8,249
|
|
|
3,560
|
|
|
0.01
|
|
|
June 30, 2017
|
|
5,936
|
|
|
(4,816
|
)
|
|
(0.01
|
)
|
|
March 31, 2017
|
|
5,175
|
|
|
139
|
|
|
-
|
|
|
December 31, 2016
|
|
3,885
|
|
|
(2,678
|
)
|
|
(0.01
|
)
|
|
September 30, 2016
|
|
3,071
|
|
|
(5,613
|
)
|
|
(0.03
|
)
|
|
June 30, 2016
|
|
1,220
|
|
|
(7,474
|
)
|
|
(0.05
|
)
|
|
March 31, 2016
|
|
219
|
|
|
2,527
|
|
|
0.02
|
|
|
December 31, 2015
|
|
-
|
|
|
593
|
|
|
-
|
|
10
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
The net income for the quarter ended September 30, 2017 was
primarily attributable to increased revenues and to the unrealized gain on
convertible debentures. For the three months ended September 30, 2017, 15% of
the Company’s revenue was generated from sales in Germany through the Company’s
wholly-owned subsidiary Pedanios.
The net loss for the quarter ended June 30, 2017 was primarily
attributable to the unrealized loss on convertible debenture investments,
increased finance costs relating to convertible debenture payables, share-based
payments, acquisition and project evaluation costs, and increased expenditures
due to scaling up operations.
The net income for the quarter ended March 31, 2017 was
primarily attributable to the unrealized gain on the changes in fair value of
biological assets and unrealized gain on debenture and marketable
securities.
The net losses for the quarters ended September 30, 2016 and
June 30, 2016 were primarily due to a decrease in unrealized gain on changes in
fair value of biological assets and increased expenditures due to increased
corporate activities related to scaling up of its operations, the acquisition of
CanvasRx and various equity and debt financings.
The net income for the quarters ended March 31, 2016 was
primarily attributable to the unrealized gain on the changes in fair value of
biological assets.
RESULTS OF OPERATIONS
During the three months ended September 30, 2017, the Company
continued to advance its aggressive business and operating strategies that
included increased operational and production efficiencies realized from the
Mountain View production facility, the construction of its Aurora Sky and
Pointe-Claire facilities, continued registration and servicing of new and
existing patients, increasing plants in production to meet current and
anticipated increases in product demand, and strategic acquisitions and
investment opportunities.
During the prior period, the Company continued its efforts and
operational spending on the registration of new patients, increasing production
to meet anticipated increase in product demand and closing various equity and
debt financings.
Revenues
|
|
|
Sep 30,
|
|
|
Jun 30,
|
|
|
Mar 31,
|
|
|
Dec 31,
|
|
|
Sep 30,
|
|
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue
(1)
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Canadian dried cannabis
|
|
4,641
|
|
|
4,384
|
|
|
4,336
|
|
|
3,207
|
|
|
2,752
|
|
|
Canadian cannabis oils
|
|
1,439
|
|
|
804
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Germany dried cannabis
|
|
1,235
|
|
|
439
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Service revenue
|
|
934
|
|
|
309
|
|
|
839
|
|
|
678
|
|
|
319
|
|
|
Total consolidated net revenue
|
|
8,249
|
|
|
5,936
|
|
|
5,175
|
|
|
3,885
|
|
|
3,071
|
|
11
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
|
Grams sold
|
|
#
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
Dried cannabis
|
|
802,250
|
|
|
710,155
|
|
|
653,008
|
|
|
538,045
|
|
|
435,720
|
|
|
Cannabis oils (gram equivalent)
|
|
87,715
|
|
|
44,904
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Total consolidated grams sold
|
|
889,965
|
|
|
755,059
|
|
|
653,008
|
|
|
538,045
|
|
|
435,720
|
|
|
Average net selling price per
gram sold
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Dried cannabis
|
|
7.32
|
|
|
6.79
|
|
|
6.64
|
|
|
5.96
|
|
|
6.32
|
|
|
Cannabis oils (per gram equivalent)
|
|
16.41
|
|
|
17.91
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Total consolidated average selling price per gram sold
|
|
8.22
|
|
|
7.45
|
|
|
6.64
|
|
|
5.96
|
|
|
6.32
|
|
|
(1)
|
Net revenue is comprised of gross revenue net of
discounts, returns and allowances.
|
Revenues for the three months ended September 30, 2017 were
$8,249 as compared to $3,071 in the three months ended 2016. The increase in
revenues during the first quarter was primarily due to the continued increase in
the number of registered patients as well as an increase in the average net
selling price per gram of medical cannabis. In addition, the Company generated
additional revenues from its subsidiaries, CanvasRx and Pedanios, related to
patient counselling and outreach services and wholesale distribution of medical
cannabis to pharmacies in Germany respectively. The three months ended September
30, 2017 is the first full quarter of Pedanios revenues that have been
consolidated with the Company.
Revenues increased by $2,313 compared to the quarter ended June
30, 2017. The increase was primarily attributable to a 181% and 79% increase in
sales from Pedanios and cannabis oils, respectively. Service revenue from
CanvasRx also increased compared to the immediately preceding quarter due to
recognizing revenues that were previously deferred.
During the three months ended September 30, 2017, the Company
granted a total of $1,489 (2016 - $731) discounts on cannabis sales. The
Company’s discounts consist of a $50 credit offered to each new Aurora patient
and a compassionate pricing offered to low-income households and patients. The
compassionate pricing program helps low-income households and patients on
provincial or federal assistance programs have access to the Company’s medical
cannabis. Aurora’s dried medical cannabis are currently priced at $9.00 per gram
with compassionate pricing set at $6.00 per gram, and cannabis oils at $95.00
per 30 milliliter bottle with compassionate pricing set at $65.00 per 30
milliliter bottle. During the three months ended September 30, 2017,
approximately 48% of registered patients purchased medical cannabis through the
compassionate pricing program (2016 – 25%).
The Company received its license from Health Canada to sell
medical cannabis under the ACMPR on November 27, 2015 and generated its first
product sale on January 5, 2016. In January 2017, the Company obtained its
cannabis oil sales license and commenced the sale of cannabis oils in April
2017.
From the commencement of sales in January 2016 to September 30,
2017, the Company has sold a total of 3,528,877 grams of medical cannabis at an
average net selling price of $6.99 per gram.
12
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Cost of Sales
Included in cost of sales for the three months ended September
30, 2017 were the unrealized gains on changes in fair value of biological assets
of $4,611 (2016 - unrealized loss $1,262), inventory expensed of $1,973 (2016 -
$482), and production costs of $2,077 (2016 - $1,241).
The increase in production costs and inventory expensed to cost
of sales during the three months ended September 30, 2017 was largely
attributable to increases in production and production yields during the period.
The Company produced 1,009,585 grams of cannabis in the first quarter 2017
compared to 354,975 grams produced in the same period 2016, an increase of 184%
or 654,610 grams.
Biological assets consist of cannabis plants at various
pre-harvest stages of growth which are recorded at fair value less costs to sell
at the point of harvest. Cost to sell are primarily related to shipping costs.
At harvest, the biological assets are transferred to inventory at their fair
value which becomes the deemed cost for inventory. Inventory is later expensed
to cost of sales when sold and offset against the unrealized gain on biological
assets. Production costs are expensed through cost of sales.
Cash Cost of Sales of Dried Cannabis Produced
The Company calculates cash cost of sales of dried cannabis
produced, on a total and per gram basis, as follows:
|
Unaudited Non-IFRS Measure
|
|
Three months
ended
|
|
|
(In CDN $000’s, except gram amounts)
|
|
Sep 30 ‘17
|
|
|
Jun 30 ‘17
|
|
|
Mar 31 ‘17
|
|
|
Dec 31’16
|
|
|
Sep 30 ‘16
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Cost of sales (recovery) per
IFRS
|
|
(561
|
)
|
|
90
|
|
|
(587
|
)
|
|
(476
|
)
|
|
2,984
|
|
|
Add (less):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in fair
value of biological assets
|
|
4,611
|
|
|
3,230
|
|
|
2,620
|
|
|
2,881
|
|
|
(1,262
|
)
|
|
Inventory expensed to cost of
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales on service revenue
|
|
(29
|
)
|
|
(31
|
)
|
|
(40
|
)
|
|
6
|
|
|
(6
|
)
|
|
Cost
of sales on products purchased from other Licensed Producers
|
|
(1,090
|
)
|
|
(337
|
)
|
|
(206
|
)
|
|
(611
|
)
|
|
(268
|
)
|
|
Production
costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
conversion costs
|
|
(866
|
)
|
|
(403
|
)
|
|
263
|
|
|
-
|
|
|
-
|
|
|
Depreciation
|
|
(125
|
)
|
|
(111
|
)
|
|
(92
|
)
|
|
(81
|
)
|
|
(68
|
)
|
|
Total cash cost of sales of dried cannabis produced
|
|
1,940
|
|
|
2,438
|
|
|
1,958
|
|
|
1,719
|
|
|
1,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grams produced in the period
|
|
1,009,585
|
|
|
1,164,683
|
|
|
846,849
|
|
|
670,322
|
|
|
354,975
|
|
|
Cash cost of sales per gram of dried cannabis produced
|
$
|
1.92
|
|
$
|
2.09
|
|
$
|
2.31
|
|
$
|
2.56
|
|
$
|
3.89
|
|
13
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Cash Cost to Produce Dried Cannabis
The Company calculates cash cost to produce dried cannabis, on
a total and per gram basis, as follows:
|
Unaudited Non-IFRS Measure
|
|
Three months
ended
|
|
|
(In CDN $000’s, except gram amounts)
|
|
Sep 30 ‘17
|
|
|
Jun 30 ‘17
|
|
|
Mar 31 ‘17
|
|
|
Dec 31’16
|
|
|
Sep 30 ‘16
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Cash cost of sales of dried
cannabis produced
|
|
1,940
|
|
|
2,438
|
|
|
1,958
|
|
|
1,719
|
|
|
1,380
|
|
|
Less: packaging costs
|
|
(195
|
)
|
|
(219
|
)
|
|
(336
|
)
|
|
(291
|
)
|
|
-
|
|
|
Total cash cost to produce dried cannabis
|
|
1,745
|
|
|
2,219
|
|
|
1,622
|
|
|
1,428
|
|
|
1,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grams produced in the period
|
|
1,009,585
|
|
|
1,164,683
|
|
|
846,849
|
|
|
670,322
|
|
|
354,975
|
|
|
Cash
cost to produce per gram of dried cannabis
|
$
|
1.73
|
|
$
|
1.91
|
|
$
|
1.91
|
|
$
|
2.13
|
|
$
|
3.89
|
|
Aurora began selling medical dried cannabis and cannabis oils
in January 2016 and April 2017, respectively. The continuing decrease in the
cash cost to produce per gram from quarter to quarter was due to increased
production yields, resulting in more efficient allocation of costs and overhead.
Total production costs are expected to increase in the next year as the Company
completes construction and begins producing cannabis at its new facilities in
Alberta and in Quebec. However, per gram production costs are expected to
decrease materially as the efficiencies from automation, scale and yield
expertise are realized in the new Aurora facilities.
Total grams produced decreased by 155,098, from 1,164,683 grams
in the three months ended June 30, 2017 to 1,009,585 grams in the three months
ended September 30, 2017. The cultivation of lower yielding but high demand
strains during the quarter resulted in slightly lower grams of product harvested
as compared to the preceding quarter. During the first quarter of 2018, the
Mountain View facility reached optimal production capacity and production yields
are expected to remain relatively consistent until production begins in the new
Aurora facilities.
Gross Profit
Gross profit was $8,810 for the three months ended September
30, 2017 compared to $86 for the three months ended September 30, 2016. The
increase was attributable to the gain on the effect of changes in fair value of
biological assets in addition to an increase of $5,178 in revenues as the number
of active registered patients increased from 8,200 at September 30, 2016 to
19,280 at September 30, 2017. In addition, the Company generated $1,235 of
revenues in Germany through the sale of medical Cannabis by Pedanios.
Gross profit increased by 51% or $2,964 for the three months
ended September 30, 2017 as compared to the previous quarter, from $5,846 for
the three months ended June 30, 2017 to $8,810 for the three months ended
September 30, 2017. The increase in gross profit resulted from a 43% increase in
the gain on the effect of changes in fair value of biological assets and a 39%
increase in revenues, offset by a 22% increase in production costs (mainly
wages) and inventory expensed to cost of sales as a result of scaling up of
production.
14
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
General and Administration
|
|
|
Three months ended
|
|
|
|
|
September 30,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
$
|
|
|
$
|
|
|
Professional fees
|
|
775
|
|
|
444
|
|
|
Office and administration
|
|
848
|
|
|
175
|
|
|
Wages and benefits
|
|
1,370
|
|
|
428
|
|
|
|
|
2,993
|
|
|
1,047
|
|
The over-all increase in general and administration costs by
$1,946 for the three months ended September 30, 2017 was primarily attributable
to increases in corporate and general administrative activities of the Company
as it scaled up its business operations in both Canada and Germany, as well as
other costs incurred related to ongoing negotiations for additional financings
and investment opportunities. In the prior period, the Company began to expand
operations with the acquisition of CanvasRx and closed equity and debt
financings.
Professional fees increased by $331 during the three months
ended September 30, 2017. The increase resulted from various legal, regulatory,
advisory and other fees as the Company conducted due diligence activities and
entered into various consulting contracts, employment agreements, and other
business contracts to support its increasing business operations. Regulatory
fees increased as a result of the transfer of the Company’s listing from the TSX
Venture Exchange to the TSX.
Office and administration increased by $673 during the three
months ended September 30, 2017, as a result of an increase in travel expenses
related to management and employee travels between the Company’s offices and
facilities located in Vancouver, Mountain View County, Edmonton, Pointe-Claire,
Quebec, Toronto and Germany. Travel costs were also incurred as the Company
evaluated potential projects and conducted due diligence activities as part of
the Company’s aggressive expansion strategy. There was also an increase in
insurance premiums as the Company increased coverage consistent with the
increase in operations.
Wages and benefits increased by $942 during the three months
ended September 30, 2017. The increase during the period was primarily due to
hiring of an aggregate of 28 employees since September 30, 2016 in the finance,
corporate and human resources (HR) departments. During the three months ended
September 30, 2017, the Company hired a total of 12 corporate general and
administrative employees (2016 - 4). Additionally, management compensation
increased as compared to 2016 as the Company strengthened its management team
with the hiring of several senior executives to achieve its growth objectives
and execute its aggressive domestic and international expansions strategy.
15
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Sales and Marketing
|
|
|
Three months ended
|
|
|
|
|
September 30,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
$
|
|
|
$
|
|
|
Consulting fees
|
|
1,442
|
|
|
481
|
|
|
Branding, public and media relations, and
tradeshows
|
|
372
|
|
|
238
|
|
|
Selling and client care
expenses
|
|
1,308
|
|
|
630
|
|
|
Wages and benefits
|
|
546
|
|
|
221
|
|
|
|
|
3,668
|
|
|
1,570
|
|
Consulting fees increased by $961 during the three months ended
September 30, 2017. The increase was primarily attributable to service fees
accrued and paid to Canadian Cannabis Clinics (“CCC”) pursuant to an agreement
to provide operational, administrative and consulting services to CanvasRx. The
Company incurred $1,464 in fees to CCC during the three months ended September
30, 2017 compared to $305 in 2016. The increase in fees to CCC was a direct
result of increased CanvasRx operations. CanvasRx revenues have increased from
$319 for the three months ended September 30, 2016 to $934 for the three months
ended September 30, 2017. Since the acquisition of CanvasRx in August 2016,
8,504 CanvasRx patients have registered with the Company as of September 30,
2017.
Selling and client care expenses increased by $678 during the
three months ended September 30, 2017. Selling expenses consist of shipping
costs, sales fees and commissions and payment processing fees. Client care
expenses relate to patient registrations and maintenance, and consist of rent,
utilities, and office expenses for the client care centre. The increase in
selling and client care expenses is directly related to the increase in sales
during the periods and the expansion of the client care centre.
Wages and benefits increased by $325 during the three months
ended September 30, 2017 as the Company hired a total of 32 sales and marketing
employees since September 30, 2016. During the three months ended September 30,
2017, the Company hired a total of 12 sales and marketing employees (2016 – 24)
mainly in client care, compliance, public affairs and marketing. The increase in
personnel in the client care centre is required to support the increase in
patient volume during the periods.
Research and Development
Research and development costs for the three months ended
September 30, 2017 was $107 compared to $40 for the three months ended September
30, 2016. During the period, expenses included the development of Aurora
Envoy
TM
and designing the related manufacturing process, as well as
the continued development of packaging improvements and equipment.
16
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Acquisition and Project Evaluation Costs
Acquisition and project evaluation costs increased by $175 from
$165 during the three months ended September 30, 2016 to $340 for the three
months ended September 30, 2017. The Company incurred legal, consulting and
advisory fees relating to business acquisitions and due diligence activities as
part of its aggressive domestic and international expansion strategy.
Depreciation and Amortization
Depreciation and amortization were $634 and $159 for the three
months ended September 30, 2017 and 2016, respectively. The increase in
depreciation and amortization of $475 was mainly from the amortization of
intangible assets of $417 related to customer relationships from the acquisition
of CanvasRx in the prior year. No amortization of intangible assets was recorded
in the prior period.
Share-based Payments
The Company recorded share-based payment expense of $2,486 for
4,435,000 stock options and 2,000,000 Restricted Share Units granted and vested
during three months ended September 30, 2017, compared to $380 for 1,665,000
stock options granted and vested during three months ended September 30, 2016.
Share-based payments of $351 for the remaining 127,128 Restricted Share Units
granted on September 29, 2017 and vested immediately were recognized in the year
ended June 30, 2017.
Finance and Other Costs
Finance and other costs were $2,016 during the three months
ended September 30, 2017 compared to $3,040 for the three months ended September
30, 2016.
During the three months ended September 30, 2017, included in
finance and other costs were $1,996 accretion and interest charges from the
November 2016 and May 2017 convertible debentures. Of these debentures, $250
were converted into 125,000 common shares during the period. As of September 30,
2017, $79,220 principal balance remain outstanding on these debentures with an
interest rate between 7% and 8%.
During the three months ended September 30, 2016, included in
finance and other costs were $911 accretion expense, $1,578 finance charges,
$544 interest expense, and $7 bank service charges. As a result of prepayments
of $4,000 short-term loans and $4,000 interest free long-term related party
loans, the Company recognized $905 in accelerated accretion expense, $681
accelerated amortization of financing fees, and paid a prepayment interest
penalty of $253. Additionally, 2,712,500 warrants were issued with a fair value
of $877 for the amendment of convertible debentures which was recognized as
financing fees.
Other Income (Expenses)
The Company recorded an unrealized gain on its debenture of
$6,937 during the three months ended September 30, 2017 related to a fair value
change on its investment of $2,000 in convertible debentures. $830 of the
unrealized gain was attributable to the fair value change and $6,107 related to
the accelerated amortization of the deferred inception gain upon conversion of
the convertible debenture.
17
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
The Company also recorded an unrealized gain on derivatives of
$817 during the three months ended September 30, 2017 related to warrants held
in a Canadian publicly traded company.
Additionally, the Company recorded in other comprehensive
income an unrealized gain on marketable securities of $12,551 during the three
months ended September 30, 2017, of which $11,918 is attributable to the
investment of 21,562,314 shares in an Australian publicly traded medical
cannabis company.
Please see Note 4 to the Company’s Interim Financial Statements
for additional details on the investments.
Income Tax Recovery
During the three months ended September 30, 2017, the Company
recorded a deferred tax expense of $1,103 primarily related to the increase in
fair value of marketable securities, as well as the increase in carrying value
of inventory and biological assets.
During the three months ended September 30, 2016, the Company
recorded a deferred tax recovery of $666 related to the issuance of $15,000
convertible debentures and recovered taxes of $8 related to SR&ED claims.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended September 30, 2017, the Company
generated revenues of $8,249 from operations, and financed its current
operations, growth initiatives, and met its capital requirements from prior
year’s debt and equity financings. The Company’s objectives when managing its
liquidity and capital resources are to generate sufficient cash to fund the
Company’s operating and working capital requirements.
Working capital as of September 30, 2017 was $169,674 as
compared to $170,142 at June 30, 2017. The decrease in working capital of $468
was largely attributable to the decrease in cash and cash equivalents of $31,881
and a $3,262 increase in accounts payable due to production facility
construction, offset by a $19,915 increase in the fair value of marketable
securities, $5,945 increase in biological assets and inventory, $4,028 increase
in promissory notes receivable, and a $3,293 decrease in contingent
consideration payable related to performance milestones of a subsidiary.
Marketable securities of $34,760 at September 30, 2017
primarily consisted of 21,562,314 common shares in an Australian publicly traded
medical cannabis company at a market price of A$1.19 per share. The Company also
holds 17,245,221 common shares in a Canadian publicly traded company.
Inventory at September 30, 2017 was $11,653 (June 30, 2017 -
$7,703) which consisted of dried cannabis of $8,919 (June 30, 2017 - $5,845),
cannabis oils of $1,547 (June 30, 2017 - $1,676), home cultivation systems of
$890 (June 30, 2017 - $nil) and supplies and consumables of $297 (June 30, 2017
- $182). The increase in inventory mainly resulted from increased production of
dried cannabis and purchases from other Licensed Producers to supplement the
Company’s inventory to meet patient demand in Canada and Germany. As at
September 30, 2017, included in inventory was a provision of $1,365 (June 30,
2017 - $1,630) to reduce inventory to net realizable value. The adjustment to
net realizable value took into account the compassionate pricing for qualifying
low income patients of $6.00 per gram of dried cannabis.
18
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Biological assets at September 30, 2017 were $6,083 (June 30,
2017 - $4,088). At September 30, 2017, the Company expected that the biological
assets which consisted of plants at various stages of growth would yield
approximately 801,729 grams (June 30, 2017 – 599,245 grams) of medical cannabis
when harvested. Biological assets increased during the period as a result of an
increase in number of plants in production, higher yields, as well as an
increase in fair value.
The Company’s long term assets mainly consisted of property,
plant and equipment of $71,385, of which $11,892 related to the existing
Mountain View facility in Alberta, $51,749 related to the ongoing construction
of the Aurora Sky facility, and $4,639 related to the ongoing construction of
the Pointe-Claire facility. Additional long term assets include goodwill of
$47,651 and intangible assets of $30,670 relating to business and asset
acquisitions.
Net cash and cash equivalents on hand decreased from $159,796
as at June 30, 2017 to $127,915 as at September 30, 2017. The decrease in cash
and cash equivalents resulted mainly from net cash generated from financing
activities of $1,279, offset by net cash used for operations of $4,974,
investments and capital expenditures of $28,432, and adjusted by $246 from the
effect of foreign exchange on cash flows.
During the three months ended September 30, 2017, the Company
strengthened its balance sheet and liquidity position with approximately $1,545
from the exercise of stock options and warrants as well as the conversion of
$250 convertible debentures into common shares. The Company anticipates that it
has sufficient funds to cover future operating cash flows and to complete the
construction of both the Aurora Sky and Pointe-Claire facilities based on the
current capital resources available.
On November 2, 2017, to support the Company’s aggressive growth
strategy, the Company raised aggregate gross proceeds of $75,000 through a
bought deal financing of 20,000,000 units at $3.00 per unit plus an
Over-Allotment option to the underwriters of 3,000,000 units and a concurrent
non-brokered private placement of 2,000,000 units having the same terms as the
bought deal financing. The proceeds from the financings will be used towards the
Company’s strategic growth initiatives for domestic and international
expansion.
The Company anticipates that it will have sufficient liquidity
and capital resources to meet all of its planned expenditures for the next
twelve months.
Operating Activities
For the three months ended September 30, 2017, cash flows used
for operating activities were $4,974 compared to $2,875 for the three months
ended September 30, 2016. During the three months ended September 30, 2017, cash
flows used for operations resulted primarily from cash inflows of $4,199 from
gross profit adjusted for the gain on change in fair value of biological assets,
offset by cash flows used for operating expenses of $5,998, finance and other
costs of $23 and cash outflows of $3,152 related to changes in non-cash working
capital.
19
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Investing Activities
For the three months ended September 30, 2017, the Company had
net cash outflows related to investing activities of $28,432 as compared to
$4,048 for the three months ended September 30, 2016. Cash used in investing
activities during the period included the following:
|
|
•
|
construction of the new Aurora Sky facility of
$15,966, and the purchase of production equipment, computers and
furniture, and building improvements of $5,095;
|
|
|
•
|
secured loans and advances of $4,736; and
|
|
|
•
|
acquisition of BCNL and UCI of $2,635, net of
cash balance assumed.
|
Investing activities during the prior period consisted mainly
of the acquisition of CanvasRx for net consideration of $3,418 and the purchase
of production equipment, computers and furniture, and building improvements of
$630.
Financing Activities
Net cash flows provided by financing activities for the three
months ended September 30, 2017 were $1,279 compared to $29,858 for the three
months ended September 30, 2016. During the three months ended, the Company
raised aggregate net cash proceeds of $1,296 from the exercise of warrants and
options, offset by finance lease payments of $17.
For the three months ended September 30, 2016, the Company
raised aggregate net cash of $39,017 from private placements, unsecured
convertible debentures and from the exercise of options and warrants. The
proceeds were offset by financing fees paid on debentures of $610 and repayments
of loans totaling $8,549 consisting of related party loans of $4,090, a third
party unsecured loan of $459 and a third party secured loan of $4,000.
Capital Resource Measures
The Company’s major capital expenditures during the three
months ended September 30, 2017 mainly consisted of the construction of its
800,000 square foot highly-automated greenhouse in Alberta, Canada. See
“
Capacity Expansion
”. The Company believes it has sufficient cash and
resources to fund the Company’s operations and complete construction for both
its Aurora Sky and Pointe-Claire facilities for the next fiscal year.
20
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Contractual Obligations
In addition to the commitments outlined in Note 20 to the
Company’s Interim Financial Statements, the Company had the following
contractual obligations as of September 30, 2017:
|
|
|
|
|
|
Less than
|
|
|
|
|
|
After
|
|
|
Contractual Obligations
|
|
Total
|
|
|
1 year
|
|
|
1 to 3 years
|
|
|
3 years
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Accounts payable and
accrued liabilities
|
|
12,015
|
|
|
12,015
|
|
|
-
|
|
|
-
|
|
|
Deferred revenues
|
|
1,548
|
|
|
1,548
|
|
|
-
|
|
|
-
|
|
|
Finance lease
|
|
424
|
|
|
107
|
|
|
317
|
|
|
-
|
|
|
Operating lease
|
|
128
|
|
|
60
|
|
|
68
|
|
|
-
|
|
|
Convertible notes
|
|
79,220
|
|
|
-
|
|
|
79,220
|
|
|
-
|
|
|
Office lease
|
|
8,755
|
|
|
1,106
|
|
|
2,499
|
|
|
5,150
|
|
|
Total
|
|
102,090
|
|
|
14,836
|
|
|
82,104
|
|
|
5,150
|
|
Investment in Australis Holdings LLP
Each of the Company’s wholly-owned subsidiary, ACI and its
joint venture partner, AJR Builders Group LLC (“AJR”), holds a 50% interest in
Australis Holdings LLP (“AHL”), a Washington Limited Liability Partnership.
AHL purchased two parcels of land totaling approximately 24.5
acres (the “Property”) in Whatcom county, Washington for USD$2,300,000 in 2015
with the initial intention to construct a new cannabis production and processing
facility. The Company subsequently decided not to move forward with US medical
cannabis production. This property is currently for sale.
Pursuant to a promissory note dated April 10, 2015, the Company
through ACI loaned CAD$1,645 to AHL to fund the purchase of the Property. The
note bears interest at a rate of 5% per annum and matures on October 31, 2017.
In the event of a default, interest will be charged at 12% per annum. The note
is secured by a first mortgage on one parcel of the Property and a second
mortgage on the other title as well as a general security agreement granting ACI
security over all present and after acquired property of AHL. The parties are
negotiating to extend the term of the loan.
OFF-BALANCE SHEET ARRANGEMENTS
As at the date of this MD&A, the Company had no material
off-balance sheet arrangements that have, or are reasonably likely to have, a
current or future effect on the financial performance or financial condition of
the Company.
21
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
TRANSACTIONS WITH RELATED PARTIES
Related Party Transactions
The Company entered into certain transactions with related
parties during the three months ended September 30, 2017 and 2016 as follows:
Goods and Services
|
|
|
Three months
ended
|
As at
|
Sep 30,
2017
$
|
Sep 30,
2016
$
|
Sep 30,
2017
$
|
Jun 30,
2017
$
|
|
Name and Relationship to Company
|
Transaction
|
Related Party
Transactions
|
Balance Payable
(Receivable)
(1)
|
Delcon Industries Ltd, a company controlled
by Dale Lesack, a director of ACE
|
Consulting fees
|
38
|
38
|
16
|
14
|
|
Consulting fees were paid for services
as Production Facilitator.
|
Evolve Concrete, a company controlled by
Chris Mayerson, a director of ACE
|
Consulting fees
|
15
|
11
|
6
|
7
|
|
Consulting fees paid for services as
part-time (full-time in the prior year) Cultivator of the Company.
|
Canadian Cannabis Clinics (“CCC”), a
company
where Joseph del Moral, is a
common director
|
Service fees
|
1,464
|
305
|
73
|
(72)
|
|
CCC provides operational,
administrative and consulting services to CanvasRx.
|
Superior Safety Codes (“Superior”), a
company controlled by Terry Booth, CEO and
Steve Dobler, President
of the Company
|
Rent, accounting and administration
|
30
|
30
|
21
|
39
|
Rent for corporate offices in Edmonton
and Calgary as well as accounting and administrative support at these
offices
pursuant to an Administrative Services and Office Space
Agreement dated January 1, 2016.
|
Belot Business Consulting Corp, a company
controlled by Neil Belot, Chief Global
Business Development Office
|
Consulting fees
|
167
|
-
|
-
|
-
|
|
Consulting fees paid related to the
CanvasRx acquisition.
|
748086 Alberta Ltd., a company controlled
by
Jason Dyck, a director of the Company
|
Consulting fees
|
15
|
-
|
5
|
5
|
|
Consulting fees related to scientific research
and development Services.
|
8115966 Canada Inc. (“8115966”), a
company
controlled by Michael Singer, a
director of the Company
|
Consulting fees
|
5
|
27
|
4
|
-
|
Consulting fees for
financial and other advisory services pursuant to a consulting agreement
effective April 18,
2016 with 8115966.
|
|
(1)
|
The amounts are unsecured, non-interest bearing and have
no specific repayment terms.
|
22
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Key Management Compensation
The Company’s key management personnel have the authority and
responsibility for planning, directing and controlling the activities of the
Company and consists of the Company’s Directors, CEO, President, CFO, COO, EVP,
Chief Global Business Development Officer and Vice Presidents.
|
|
|
2017
|
|
|
2016
|
|
|
|
|
$
|
|
|
$
|
|
|
Management compensation
|
|
485
|
|
|
167
|
|
|
Directors’ fees
(1)
|
|
49
|
|
|
51
|
|
|
Share-based payments
(2)
|
|
1,983
|
|
|
102
|
|
|
|
|
2,517
|
|
|
320
|
|
|
(1)
|
Include meeting fees and committee chair fees.
|
|
(2)
|
Share-based payments are the fair value of options
granted and vested to key management personnel and directors of the
Company under the Company’s stock option plan.
|
Related Party Balances
As of September 30, 2017, $28 remains payable for directors’
fees (June 30, 2017 – $576 accrued and payable to officers for compensation).
The amounts are unsecured, non-interest bearing and have no specific repayment
terms.
The Company also has a note receivable from AHL with a balance
of $2,132 at September 30, 2017 (June 30, 2017 - $2,096). The note bears
interest at 5% per annum and matures on October 31, 2017. In the event of
default, interest will be charged at 12% per annum. The note is secured by a
first mortgage on one parcel of AHL’s properties, and a second mortgage on the
other title as well as a general security agreement granting ACI security over
all present and after acquired property of AHL. The parties are negotiating to
extend the term of the loan.
CRITICAL ACCOUNTING ESTIMATES
The preparation of the Company’s Financial Statements in
conformity with IFRS requires management to make judgments, estimates, and
assumptions about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
23
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognized in the period in
which the estimate is revised, if the revision affects only that period, or in
the period of the revision and future periods, if the revision affects both
current and future periods.
Significant judgments, estimates and assumptions that have the
most significant effect on the amounts recognized in the Financial Statements
are described below.
Fair value measurements of financial instruments
The individual fair values attributed to the different
components of a financing transaction, notably investment in equity in
securities, derivative financial instruments, convertible debt and loans, are
determined using valuation techniques. The Company uses judgment to select the
methods used to make certain assumptions and in performing the fair value
calculations in order to determine (a) the values attributed to each component
of a transaction at the time of their issuance; (b) the fair value measurements
for certain instruments that require subsequent measurement at fair value on a
recurring basis; and (c) for disclosing the fair value of financial instruments
subsequently carried at amortized cost. These valuation estimates could be
significantly different because of the use of judgment and the inherent
uncertainty in estimating the fair value of these instruments that are not
quoted in an active market.
Biological assets
Biological assets, consisting of cannabis plants and
agricultural produce consisting of cannabis, are measured at fair value less
costs to sell up to the point of harvest.
Determination of the fair values of the biological assets and
the agricultural product requires the Company to make assumptions about how
market participants assign fair values to these assets. These assumptions
primarily relate to the level of effort required to bring the cannabis up to the
point of harvest, costs to convert the harvested cannabis to finished goods,
sales price, risk of loss, expected future yields from the cannabis plants and
estimating values during the growth cycle.
The valuation of biological assets at the point of harvest is
the cost basis for all cannabis based inventory and thus any critical estimates
and judgments related to the valuation of biological assets are also applicable
for inventory. The valuation of work-in-process and finished goods also requires
the estimate of conversion costs incurred, which become part of the carrying
amount for the inventory. The Company must also determine if the cost of any
inventory exceeds its net realizable value, such as cases where prices have
decreased, or inventory has spoiled or has otherwise been damaged.
Estimated useful lives and depreciation of property,
plant and equipment
Depreciation of property, plant and equipment is dependent upon
estimates of useful lives which are determined through the exercise of judgment.
The assessment of any impairment of these assets is dependent upon estimates of
recoverable amounts that take into account factors such as economic and market
conditions and the useful lives of assets.
24
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Business combinations
In a business combination, all identifiable assets, liabilities
and contingent liabilities acquired are recorded at their fair values. One of
the most significant estimates relates to the determination of the fair value of
these assets and liabilities. For any intangible asset identified, depending on
the type of intangible asset and the complexity of determining its fair value,
an independent valuation expert or management may develop the fair value, using
appropriate valuation techniques, which are generally based on a forecast of the
total expected future net cash flows. The evaluations are linked closely to the
assumptions made by management regarding the future performance of the assets
concerned and any changes in the discount rate applied. All acquisitions have
been accounted for using the acquisition method.
Certain fair values may be estimated at the acquisition date
pending confirmation or completion of the valuation process. Where provisional
values are used in accounting for a business combination, they may be adjusted
retrospectively in subsequent periods. However, the measurement period will last
for one year from the acquisition date.
Goodwill impairment
The Company performs an annual test for goodwill impairment in
the fourth quarter for each of the cash generating units (CGUs), and whenever
events or circumstances make it more likely than not that an impairment may have
occurred, such as a significant adverse change in the business climate or a
decision to sell or dispose all or a portion of a reporting unit. Determining
whether an impairment has occurred requires valuation of the respective CGU,
which we estimate using a discounted cash flow method. When available and as
appropriate, we use comparative market multiples to corroborate discounted cash
flow results. In applying this methodology, we rely on a number of factors,
including actual operating results, future business plans, economic projections
and market data. The Company tests intangible assets with indefinite lives
annually for impairment using a fair value method such as discounted cash flows.
Convertible instruments
Convertible notes are compound financial instruments which are
accounted for separately by their components: a financial liability and an
equity instrument. The financial liability, which represents the obligation to
pay coupon interest on the convertible notes in the future, is initially
measured at its fair value and subsequently measured at amortized cost. The
residual amount is accounted for as an equity instrument at issuance.
The identification of convertible notes components is based on
interpretations of the substance of the contractual arrangement and therefore
requires judgment from management. The separation of the components affects the
initial recognition of the convertible debenture at issuance and the subsequent
recognition of interest on the liability component. The determination of the
fair value of the liability is also based on a number of assumptions, including
contractual future cash flows, discount rates and the presence of any derivative
financial instruments.
25
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
Share-based payments
The Company uses the Black-Scholes option pricing model to
determine the fair value of stock options and warrants. In estimating fair
value, management is required to make certain assumptions and estimates such as
the expected life of options, volatility of the Company’s future share price,
risk free rate, future dividend yields and estimated forfeitures at the initial
grant date. Changes in assumptions used to estimate fair value could result in
materially different results.
Deferred tax assets
Deferred tax assets, including those arising from tax loss
carry-forwards, require management to assess the likelihood that the Company
will generate sufficient taxable earnings in future periods in order to utilize
recognized deferred tax assets. Assumptions about the generation of future
taxable profits depend on management’s estimates of future cash flows. In
addition, future changes in tax laws could limit the ability of the Company to
obtain tax deductions in future periods. To the extent that future cash flows
and taxable income differ significantly from estimates, the ability of the
Company to realize the net deferred tax assets recorded at the reporting date
could be impacted.
NEW ACCOUNTING PRONOUNCEMENTS
Please see Note 2(e),
Recent Accounting Pronouncements,
to the Company’s Interim Financial Statements for a full disclosure on its
changes in accounting policies including initial adoption.
FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS
Please see Note 22,
Financial Instruments and Risk
Management
, to the Company’s Interim Financial Statements for a full
discussion of its financial instruments and risk management.
SUMMARY OF OUTSTANDING SHARE DATA
As of the date of this MD&A, the Company had the following
securities issued and outstanding:
|
Securities
(1)
|
|
November 8, 2017
|
|
|
|
|
#
|
|
|
Issued and outstanding shares
|
|
375,421,933
|
|
|
Options
|
|
18,510,070
|
|
|
Warrants
|
|
47,427,237
|
|
|
Compensation warrants
|
|
699,468
|
|
|
Restricted share units
|
|
2,127,128
|
|
|
Convertible debentures
|
|
24,644,962
|
|
|
(1)
|
See the Company’s Interim Financial Statements for a
detailed description of these securities.
|
26
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
OUTLOOK
While production capacity at our Mountain View facility in
Cremona is nearly fully optimized, we anticipate further expansion from the
first calendar quarter of 2018 onwards with first harvest at Aurora Vie,
followed in subsequent quarters by harvest from the first completed bays at
Aurora Sky. Until such time, revenue growth will largely be a function of
increased shipments to our European subsidiary, Pedanios, which will start
contributing from Q2 onwards, growth of cannabis oil production and sales,
increased product availability through strategic wholesale supply relationships,
and consolidation of our recent acquisitions BCNL and UCI.
Aurora’s business strategy is to continue accelerating its
penetration of the Canadian medical cannabis market, leverage its Health Canada
sales license for derivative products (cannabis oils), commence cultivation at
its Aurora Vie facility in Quebec, and complete the Aurora Sky facility in
Alberta for additional production capacity. Upgrades are also being undertaken
to the Company’s first facility in Cremona, Alberta, to further enhance
production.
In preparation for the anticipated mid-2018 Canadian federal
legalization of adult consumer use of cannabis, the Company is building
organizational and production capacity to capture a share of the adult use
market.
Innovation and integration of technology are key components in
Aurora’s growth strategy. Going forward, Aurora will continue to leverage new
technologies aimed at:
|
|
•
|
Improving the customer experience, e.g. via
further enhancements to Aurora’s unique mobile application - the world’s
only mobile app for ordering legal medical cannabis;
|
|
|
•
|
Delivering industry-leading per square foot
production capacity, while reducing operational expenses at its production
facilities; and
|
|
|
•
|
Substantially increasing the production of
cannabis concentrates through the Company’s collaboration with Radient.
|
The Company is also focusing on delivering further product
differentiation through Aurora’s intended strategic investment in Hempco, its
partnership with Namaste, and the acquisition of homegrow and urban garden
companies, BCNL and UCI.
Finally, the Company is executing a significant international
expansion as evidenced by the lead participation in the May 2017 Cann Group IPO
in Australia and the May 2017 acquisition of Pedanios, Germany’s largest
distributor of medical cannabis. The Company is actively pursuing further
international opportunities.
INTERNAL CONTROLS OVER FINANCIAL REPORTING
In accordance with National Instrument 52-109
Certification
of Disclosure in Issuers’ Annual and Interim Filings,
management is
responsible for establishing and maintaining adequate Disclosure Controls and
Procedures (“DCP”) and Internal Control Over Financial Reporting (“ICFR”). On
July 24, 2017, the Company commenced trading on the TSX, graduating from the TSX
Venture Exchange. The Company’s CEO and CFO will be required to file
certifications relating to DCP and ICFR for the Company in connection with its
interim and annual filings, commencing with the six months ended December 31, 2017, the second reporting period after the
Company became a non-venture issuer on the TSX.
27
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three-Month Period Ended September 30, 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts, and where otherwise
noted)
|
FORWARD-LOOKING STATEMENTS
This MD&A may contain “forward-looking information” within
the meaning of Canadian securities legislation (“forward-looking statements”).
These forward-looking statements are made as of the date of this MD&A and
Company does not intend, and does not assume any obligation, to update these
forward-looking statements, except as required under applicable securities
legislation. Forward-looking statements relate to future events or future
performance and reflect Company management’s expectations or beliefs regarding
future events. In certain cases, forward-looking statements can be identified by
the use of words such as “plans”, “expects” or “does not expect”, “is expected”,
“budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or
“does not anticipate”, or “believes”, or variations of such words and phrases or
statements that certain actions, events or results “may”, “could”, “would”,
“might” or “will be taken”, “occur” or “be achieved” or the negative of these
terms or comparable terminology. In this document, certain forward-looking
statements are identified by words including “may”, “future”, “expected”,
“intends” and “estimates”. By their very nature forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by the forward-looking statements. The Company provides no assurance
that forward-looking statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward-looking
statements.
Certain forward-looking statements in this MD&A include,
but are not limited to the following:
|
|
•
|
the construction of Aurora Sky, its associated
costs, and receipt of licenses from Health Canada to produce and sell
medical cannabis from this facility;
|
|
|
•
|
the completion of construction of its facility
in Quebec and receipt of Health Canada licenses;
|
|
|
•
|
investments and capital expenditures;
|
|
|
•
|
its expectations regarding production capacity
and production yields; and
|
|
|
•
|
product sales expectation and corresponding
forecasted increase in revenues.
|
The above and other aspects of the Company’s anticipated future
operations are forward-looking in nature and, as a result, are subject to
certain risks and uncertainties. Although the Company believes that the
expectations reflected in these forward-looking statements are reasonable, undue
reliance should not be placed on them as actual results may differ materially
from the forward-looking statements. Such forward-looking statements are
estimates reflecting the Company's best judgment based upon current information
and involve a number of risks and uncertainties, and there can be no assurance
that other factors will not affect the accuracy of such forward-looking
statements. Such factors include but are not limited to the Company’s ability to
obtain the necessary financing and the general impact of financial market
conditions, the yield from marijuana growing operations, product demand, changes
in prices of required commodities, competition, government regulations and other
risks as set out under “Risk Factors” in the Company’s Annual Information Form
dated September 25, 2017 filed on SEDAR.
28
Form 52-109F2 – IPO/RTO
Certification of
Interim Filings Following
an Initial Public Offering, Reverse
Takeover or
Becoming a Non-Venture Issuer
I, Terry Booth, Chief Executive Officer of Aurora Cannabis
Inc., certify the following:
|
1.
|
Review:
I have reviewed the interim
financial report and interim MD&A (together, the “interim filings”) of
Aurora Cannabis Inc. (the “issuer”) for the interim period ended September
30, 2017.
|
|
|
|
|
2.
|
No misrepresentations:
Based on my
knowledge, having exercised reasonable diligence, the interim filings do
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated or that is necessary to make a
statement not misleading in light of the circumstances under which it was
made, with respect to the period covered by the interim filings.
|
|
|
|
|
3.
|
Fair presentation:
Based on my knowledge,
having exercised reasonable diligence, the interim financial report
together with the other financial information included in the interim
filings fairly present in all material respects the financial condition,
financial performance and cash flows of the issuer, as of the date of and
for the periods presented in the interim filings.
|
Date:
November 9, 2017
(signed) Terry Booth
Terry Booth
Chief Executive
Officer
|
NOTE TO READER
|
|
|
|
In contrast to the usual certificate required for
non-venture issuers under National Instrument 52-109
Certification of
Disclosure
in Issuers’ Annual and Interim Filings
(NI 52-109),
namely, Form 52-109F2, this Form 52-109F2 – IPO/RTO does not include
representations relating to the establishment and maintenance of
disclosure controls and procedures (DC&P) and internal control over
financial reporting (ICFR), as defined in NI 52-109. In particular, the
certifying officers filing this certificate are not making any
representations relating to the establishment and maintenance of
|
|
|
|
i)
|
controls and other procedures designed to provide
reasonable assurance that information required to be disclosed by the
issuer in its annual filings, interim filings or other reports filed or
submitted under securities legislation is recorded, processed, summarized
and reported within the time periods specified in securities legislation;
and
|
|
|
|
|
ii)
|
a process to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with the issuer’s GAAP.
|
|
|
|
The issuer’s certifying officers are responsible for
ensuring that processes are in place to provide them with sufficient
knowledge to support the representations they are making in this
certificate.
|
|
|
|
Investors should be aware that inherent limitations on
the ability of certifying officers of an issuer to design and implement on
a cost effective basis DC&P and ICFR as defined in NI 52-109 in the
first financial period following
|
|
|
|
•
|
completion of the issuer’s initial public offering in the
circumstances described in s. 5.3 of NI 52-109;
|
|
•
|
completion of a reverse takeover in the circumstances
described in s. 5.4 of NI 52-109; or
|
|
•
|
the issuer becoming a non-venture issuer in the
circumstances described in s. 5.5 of NI 52-109;
|
1
|
may result in additional risks to the quality,
reliability, transparency and timeliness of interim and annual filings and
other reports provided under securities legislation.
|
2
Form 52-109F2 – IPO/RTO
Certification of
Interim Filings Following
an Initial Public Offering, Reverse
Takeover or
Becoming a Non-Venture Issuer
I, Glen Ibbott, Chief Financial Officer of Aurora Cannabis
Inc., certify the following:
|
1.
|
Review:
I have reviewed the interim
financial report and interim MD&A (together, the “interim filings”) of
Aurora Cannabis Inc. (the “issuer”) for the interim period ended September
30, 2017.
|
|
|
|
|
2.
|
No misrepresentations:
Based on my
knowledge, having exercised reasonable diligence, the interim filings do
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated or that is necessary to make a
statement not misleading in light of the circumstances under which it was
made, with respect to the period covered by the interim filings.
|
|
|
|
|
3.
|
Fair presentation:
Based on my knowledge,
having exercised reasonable diligence, the interim financial report
together with the other financial information included in the interim
filings fairly present in all material respects the financial condition,
financial performance and cash flows of the issuer, as of the date of and
for the periods presented in the interim filings.
|
Date:
November 9, 2017
(signed) Glen Ibbott
Glen Ibbott
Chief Financial
Officer
|
NOTE TO READER
|
|
|
|
In contrast to the usual certificate required for
non-venture issuers under National Instrument 52-109
Certification of
Disclosure
in Issuers’ Annual and Interim Filings
(NI 52-109),
namely, Form 52-109F2, this Form 52-109F2 – IPO/RTO does not include
representations relating to the establishment and maintenance of
disclosure controls and procedures (DC&P) and internal control over
financial reporting (ICFR), as defined in NI 52-109. In particular, the
certifying officers filing this certificate are not making any
representations relating to the establishment and maintenance of
|
|
|
|
i)
|
controls and other procedures designed to provide
reasonable assurance that information required to be disclosed by the
issuer in its annual filings, interim filings or other reports filed or
submitted under securities legislation is recorded, processed, summarized
and reported within the time periods specified in securities legislation;
and
|
|
|
|
|
ii)
|
a process to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with the issuer’s GAAP.
|
|
|
|
The issuer’s certifying officers are responsible for
ensuring that processes are in place to provide them with sufficient
knowledge to support the representations they are making in this
certificate.
|
|
|
|
Investors should be aware that inherent limitations on
the ability of certifying officers of an issuer to design and implement on
a cost effective basis DC&P and ICFR as defined in NI 52-109 in the
first financial period following
|
|
|
|
•
|
completion of the issuer’s initial public offering in the
circumstances described in s. 5.3 of NI 52-109;
|
|
•
|
completion of a reverse takeover in the circumstances
described in s. 5.4 of NI 52-109; or
|
|
•
|
the issuer becoming a non-venture issuer in the
circumstances described in s. 5.5 of NI 52-109;
|
|
may result in additional risks to the quality,
reliability, transparency and timeliness of interim and annual filings and
other reports provided under securities legislation.
|
2
|
EX-1.35 36 exhibit1-35.htm EXHIBIT 1.35
|
|
|
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the "Company")
1500 – 1199 West Hastings Street
Vancouver, BC V6E 3T5
Telephone: (604)
362-5207
|
Item 2.
|
Date of Material Change
|
November 9, 2017
A news release issued on November 9,
2017 at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. announces Q1
fiscal 2018 results.
Full Description of Material
Change
Aurora Cannabis Inc. today announced
its financial and operational results for the first quarter of fiscal 2018,
ended September 30, 2017.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
1
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive Officer
Mobile: (780) 722 - 8889
Email: terry@auroramj.com
DATED November 9, 2017.
2
Aurora Announces Q1 Fiscal 2018 Results
Continued
Strong Revenue Growth, Executing on Differentiation and Expansion
Strategy
Vancouver, BC – November 9, 2017 – Aurora Cannabis Inc. (the
“Company” or “Aurora”) (TSX: ACB) (OTCQX: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
today announced its financial and operational results for the first quarter of
fiscal 2018, ended September 30, 2017.
Q1 2018 Financial and Operational Highlights
|
|
|
Q1 2018
|
|
|
Q4 2017
|
|
|
Change
|
|
|
Q1 2017
|
|
|
|
|
#
|
|
|
#
|
|
|
%
|
|
|
#
|
|
|
Active registered patients
(1)
|
|
19,280
|
|
|
16,400
|
|
|
17.6%
|
|
|
8,200
|
|
|
Grams sold
|
|
889,965
|
|
|
755,059
|
|
|
17.9%
|
|
|
435,720
|
|
|
Grams produced
(2)
|
|
1,009,585
|
|
|
1,164,683
|
|
|
-13.3%
|
|
|
354,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In CDN $000’s unless
otherwise noted)
|
|
$
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
Revenues
|
|
8,249
|
|
|
5,936
|
|
|
39.0%
|
|
|
3,071
|
|
|
Average selling price per
gram
|
|
8.22
|
|
|
7.45
|
|
|
10.3%
|
|
|
6.32
|
|
|
Cash cost of sales per gram
(3)
|
|
1.92
|
|
|
2.09
|
|
|
-8.1%
|
|
|
-
|
|
|
Cash cost to produce per gram
(3)
|
|
1.73
|
|
|
1.91
|
|
|
-9.4%
|
|
|
-
|
|
|
Cash
and cash equivalents
|
|
127,915
|
|
|
159,796
|
|
|
|
|
|
23,194
|
|
|
|
(1)
|
As of the date hereof, the Company has over 20,000 active
registered patients.
|
|
|
|
|
|
|
(2)
|
Grams produced in the first quarter 2018 decreased due
lower yielding strains being harvested in the period compared to
higher-yielding strains in prior periods. Additionally, the Mountain View
facility has reached optimal production capacity in the quarter.
|
|
|
|
|
|
|
(3)
|
Cash cost of sales per gram and cash cost to produce per
gram are non-IFRS financial measures that do not have a standardized
meaning under IFRS and may not be comparable to other companies. See
definitions at the end of this document.
|
Continued Strong Patient and Revenue Growth
|
•
|
Recorded $8.2 million in revenues, up 169% from
Q1 2017 and up 39% sequentially from Q4 2017.
|
Revenues were generated as follows:
|
|
o
|
Dried cannabis sold in Canada
|
$4.7 million;
|
|
|
o
|
Cannabis oils sold in Canada
|
$1.4 million;
|
|
|
o
|
Dried cannabis sold in Germany
|
$1.2 million, and
|
|
|
o
|
Service revenues
|
$0.9 million.
|
3
|
•
|
Sold 889,965 gram equivalent of cannabis, up
18% from Q4 2017, consisting of:
|
|
|
o
|
Dried cannabis:
|
802,250 grams, and
|
|
|
o
|
Cannabis oils:
|
87,715 gram equivalent.
|
|
•
|
Added approximately 2,880 active registered
patients during the quarter, an 18% increase.
|
|
|
|
|
•
|
Increased the prices for its dried cannabis
strains from $8.00 to $9.00 per gram (from $5.00 to $6.00 per gram for
low-income patients).
|
Capacity Expansion
|
•
|
Continued to progress on schedule and on budget
with the construction of the 800,000 square foot Aurora Sky facility.
|
|
|
|
|
•
|
The Company’s subsidiary Pedanios passed the
first stage of the tender application process to become a licensed
producer of medical cannabis in Germany. Results of the tender process are
expected March 2018.
|
|
|
|
|
•
|
The Company’s Mountain View facility meets EU
GMP certification standards, required by the German government for export
to that market, and anticipates receiving the certification shortly.
|
|
|
|
|
•
|
Received its export permit issued by Health Canada, as
well as provisional import status from the German Bundesopiumstelle
(Federal Narcotics Bureau), to import medical cannabis products into
Germany through Pedanios, which currently distributes cannabis to 1,700
pharmacies.
|
Product Line Expansion
|
•
|
Entered into a subscription and an option
agreement with Hempco and Hempco founders, which, upon exercise, would
bring the Company’s total ownership interest in Hempco to over 50% on a
fully diluted basis.
|
|
|
|
|
•
|
Completed the acquisition of BC Northern Lights and Urban
Cultivator, leading companies, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor
cultivation of cannabis, and in state-of-the-art indoor gardening
appliances for the cultivation of organic microgreens, vegetables and
herbs in home kitchens.
|
|
|
|
|
•
|
Entered into a technical services agreement
with Cann Group Limited of Australia (19.9% owned).
|
|
|
|
|
•
|
Entered into an exclusive hardware supply agreement for
the Canadian market with Namaste Technologies Inc. (“Namaste”) whereby
Aurora, through its website and mobile application, offers a specially
curated selection of industry-leading vaporizers sourced through Namaste.
|
Financings
|
•
|
Strengthened the balance sheet and liquidity position
during the first quarter of 2018 with $1.5 million in new financings via
the exercise of warrants, options and compensation options, as well as the
conversion of convertible notes into common shares.
|
|
|
|
|
•
|
Approximately $96 million in additional gross
cash proceeds remain available from the future exercise of warrants, stock
options and compensation options/warrants.
|
|
|
|
|
•
|
The Company received 14,285,714 units and
77,540 units of Radient on conversion of $2.0 million in debentures and
payment of final interest, respectively.
|
4
Management Team Expansion and Director Change
|
•
|
Strengthened its senior management team to ensure the
Company has the leadership to further grow and build shareholder value
through execution of domestic and international objectives and
opportunities. In July and August 2017, the Company appointed VPs in
Finance, Market Development, and Production, as well as a Chief
Cultivator.
|
|
|
|
|
•
|
Graduated from the TSX Venture Exchange to the
Toronto Stock Exchange in July.
|
|
|
|
|
•
|
Mr. Barry Fishman resigned from the board of
directors effective September 25, 2017.
|
Developments subsequent to the quarter
Continued Strong Patient and Revenue Growth
|
|
•
|
Aurora registered over 3,500 patients since
fiscal year end, and as of the date of this release, the Company has
surpassed 20,000 active registered patients.
|
|
|
|
|
|
|
•
|
CanvasRx, which now operates 25 facilities nationwide,
remains the leading Canadian network of cannabis counseling and outreach
centres, with more than 31,900 registered patients. Over 8,900 medical
doctors across Canada have referred patients to CanvasRx or its affiliated
medical clinics.
|
Capacity Expansion
|
|
•
|
The construction of the Aurora Sky facility at the
Edmonton International Airport in Alberta is progressing well. At 800,000
square feet, with modern technology and automation, Aurora Sky is expected
to produce over 100,000 kilograms annually and deliver significant
economies of scale for Aurora. Located on Edmonton International Airport
land, with access to ample power, Aurora Sky is ideally positioned for
increased domestic and international distribution. To date, over 400,000
square feet of structure has been erected, 80% of which has its specialty
glass installed, and many sub-systems have been delivered to the site. The
Company anticipates the first bays to be completed and ready for planting
before the end of calendar 2017, with the first harvest in the first half
of 2018, and full completion of the construction project by mid-2018.
|
|
|
|
|
|
|
•
|
Completed the construction upgrades at and received the
cultivation license from Health Canada for the Company’s 40,000 square
foot purpose-built indoor facility, Aurora Vie, in Pointe-Claire, Quebec
in six months, reflecting the Company’s agility, capabilities and speed of
execution. The Company anticipates shipping genetics shortly and first
harvest in Q1 of calendar 2018.
|
Expanding International Operations
|
|
•
|
Exports to Germany in September 2017 have passed the
country’s lab testing requirements for quality control, and were delivered
to pharmacies in October 2017. Revenues from exports to Germany will be
recorded beginning in Aurora’s Q2 2018. The Company continues to export
ongoing, regular shipments of dried cannabis flower from Canada to
Germany.
|
Financings
|
|
•
|
Completed a bought deal and a private placement for gross
proceeds of $75 million. Units in both placements were priced at $3.00,
and consisted of one share and one common share purchase warrant (priced
at $4 for a period of three years following closing).
|
|
|
|
|
|
|
•
|
Pro-forma cash balance of $185 million
providing substantial firepower to continue fueling expansion strategy.
|
5
|
|
•
|
Approximately $200 million in additional gross
cash proceeds remain exercise of warrants, stock options and compensation
options/warrants. available from the future
|
Strategic Relationship with Radient Technologies
Inc.
|
|
•
|
In November, Aurora and Radient announced that they had
finalized a Master Services Agreement, pursuant to which Radient will
perform certain services for Aurora using its Map
TM
technology,
as well as other technologies, for the development, commercialization and
supply of standardized cannabis extracts, which may be derived from both
cannabis and hemp. The agreement initially covers services delivered in
Canada, Australia, and the European Union, but may be expanded to
additional territories. Within the countries covered by the agreement,
Radient shall deliver its services under preferential terms to Aurora.
Radient has applied with Health Canada to obtain Licensed Dealer and
Licensed Producer status, and is progressing well through the processes.
Upon receipt of either license, Radient will be able to commence
production of cannabis extracts. The Company expects that this agreement
will enable Aurora to accelerate the production of high-margin cannabis
derivatives under favourable terms.
|
|
|
|
|
|
|
•
|
On June 5, 2017, Aurora and Radient successfully
completed their joint venture research activity and confirmed the
effectiveness of Radient’s Map
TM
technology and associated
continuous flow design for extracting cannabinoids from dried cannabis.
|
Product Line Expansion
|
|
•
|
Aurora announced the launch of its proprietary and
patent-pending live plant transporter, the Aurora Envoy
TM
(“Envoy”), which possesses several features that promote the health,
vigor and vegetative growth of live plant cuttings during shipment,
leading to increased transplant success rates. The Envoy is anticipated to
launch commercially in the coming months and targets the home garden
market.
|
Management Team Expansion
|
|
•
|
On October 30, the Company announced the appointment of
Mr. Darryl Vleeming as its Chief Information Officer, a newly created
position, reflecting Aurora’s vision and commitment to incorporating
technological innovation across all corporate functions.
|
Management commentary
“Aurora is performing brilliantly, with powerful domestic and
international revenue growth, record harvests, decreasing per-gram production
costs, industry-leading integration of technology, and exceptional execution,
which is testament to the outstanding team we’ve assembled,” said Terry Booth,
CEO. “In just six months, we acquired our next-generation Aurora Vie facility,
completed it with major upgrades, and received our production license, nearly
doubling our production capacity. At Aurora Sky, we’re building what by mid-2018
will be the world’s largest capacity production facility, and we’re doing it at
an amazing pace. We’ve made smart acquisitions, established ourselves as a
partner of choice for strategic alliances, and expanded our product offering to
customers. I’m absolutely delighted with the A-Team’s performance.
6
Being exceptionally well capitalized, our balance sheet
provides the fuel needed to maintain a very high pace for footprint and product
offering expansion. The agility and execution track record of our team translate
into strong confidence in our ability to create significant further shareholder
value going forward as we aggressively pursue domestic, international and
product line growth.”
Financial review Q1 2018
A comprehensive discussion of Aurora’s financials and
operations are provided in the Company’s Management Discussion & Analysis
and Financial Statements to be filed with SEDAR today and will be published on
www.sedar.com.
Revenues
|
|
|
|
Sep 30,
|
|
|
Jun 30,
|
|
|
Sep 30,
|
|
|
|
|
|
2017
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Canadian dried cannabis
|
|
4,641
|
|
|
4,384
|
|
|
2,752
|
|
|
|
Canadian cannabis oils
|
|
1,439
|
|
|
804
|
|
|
-
|
|
|
|
Germany dried cannabis
|
|
1,235
|
|
|
439
|
|
|
-
|
|
|
|
Service revenue
|
|
934
|
|
|
309
|
|
|
319
|
|
|
|
Total consolidated net revenue
|
|
8,249
|
|
|
5,936
|
|
|
3,071
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grams sold
|
|
#
|
|
|
#
|
|
|
#
|
|
|
|
Dried cannabis
|
|
802,250
|
|
|
710,155
|
|
|
435,720
|
|
|
|
Cannabis oils (gram equivalent)
|
|
87,715
|
|
|
44,904
|
|
|
-
|
|
|
|
Total consolidated grams sold
|
|
889,965
|
|
|
755,059
|
|
|
435,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average net selling price per
gram sold
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Dried cannabis
|
|
7.32
|
|
|
6.79
|
|
|
6.32
|
|
|
|
Cannabis oils (per gram equivalent)
|
|
16.41
|
|
|
17.91
|
|
|
-
|
|
|
|
Total consolidated average selling price per gram sold
|
|
8.22
|
|
|
7.45
|
|
|
6.32
|
|
Revenues for the first quarter of fiscal 2018 were $8.2
million, up 168.6% from the same quarter in the prior year and up 39.0% from the
previous quarter (Q4 2017). Revenue growth was achieved across all of the
Company’s product lines and territories, driven predominantly by strong growth
in Canadian cannabis oil sales, sales in Germany, and an increase in the average
price per gram of product sold. The average price of product sold increased by
10.3% from $7.45 to $8.22 per gram, attributable mainly to strong increases in
cannabis oils sold and sales through Pedanios in Germany.
Total product sold for the period was 889,965 grams of dried
cannabis and cannabis oils, up 104% as compared to 435,720 grams of dried
cannabis in the first quarter of 2017, and up 17.9% from 755,059 grams in Q4
2017.
7
Cost of sales
Included in cost of sales for the three months ended September
30, 2017 were the unrealized gains on changes in fair value of biological assets
of $4.6 million, inventory expensed of $2.0 million, and production costs of
$2.1 million.
The increase in production costs and inventory expensed to cost
of sales during the three months ended September 30, 2017 was largely
attributable to increases in production and production yields during the period.
The Company produced 1,009,585 grams of cannabis in the first quarter 2017
compared to 354,975 grams produced in the same period 2016, an increase of 184%
or 654,610 grams. The cultivation of lower yielding but high demand strains
during the quarter resulted in a slightly lower grams of product harvested as
compared to Q4 2017 (1,164,683 grams).
Cash costs of sales per gram of dried cannabis produced during
the quarter continued to decline, coming in at $1.92 for Q1 2018, as compared to
$2.09 for Q4 2017 and $3.89 for Q1 2017.
Gross Profit
Gross profit for the period under review increased to $8.8
million, as compared to $0.1 million for the three months ended September 30,
2016, attributable to the gain on the effect of changes in fair value of
biological assets in addition to an increase of $5.2 million in revenues, as the
number of active registered patients increased from 8,200 at September 30, 2016
to 19,280 at September 30, 2017. In addition, the Company generated $1.2 million
in revenues through the sale of medical Cannabis by Pedanios in Germany.
Gross profit increased by 51% as compared to the previous
quarter, attributable to a 43% increase in the gain on the effect of changes in
fair value of biological assets and a 39% increase in revenues, offset partially
by a 22% increase in production costs and inventory expensed to cost of sales as
a result of scaling up of production.
General & Administrative Costs
General and administration costs increased by $1.9 million to
$3.0 million for the quarter as compared to Q1 2017, attributable primarily to
increases in corporate and general administrative activities as the Company
scaled up its business operations in Canada and Germany, as well as other costs
incurred related to ongoing negotiations for additional financings and
investment opportunities. In the prior period, the Company began to expand
operations with the acquisition of CanvasRx and closed equity and debt
financings.
Sales & Marketing
Sales and marketing costs were $3.7 million in Q1 2018,
relatively stable compared to Q4 2017, and up $2.1 million as compared to Q1
2017, attributable mainly to increased service fees paid in relation to
CanvasRx, and higher selling and client care expenses related to a substantial
increase in registered patients and resulting business volume.
8
Net Income
Net income before taxes of $4.7 million was recorded, as
compared to a net loss before taxes of $6.3 million for the same quarter in the
prior year. The increase was due predominantly due to higher revenues, an
unrealized gain on the change in fair value of biological assets, as well as an
unrealized gain on the $2.0 million Radient Technologies debenture Aurora
invested in as part of its strategic collaboration.
Unrealized gains on marketable securities primarily resulted in
in the Company recording a comprehensive net income of $14.5 million.
Liquidity and Capital Resources
Strengthened Capital Position
Aurora strengthened its balance sheet and liquidity position
during the first quarter of 2018 with $1.5 million in new financings as
follows:
|
|
•
|
The Company raised $1.30 million through the
exercise of warrants, options and compensation options.
|
|
|
|
|
|
|
•
|
The Company also converted approximately $0.25
million of convertible notes into common shares.
|
Approximately $96 million in additional gross cash proceeds
remain available from the future exercise of warrants, stock options and
compensation options/warrants.
Cash Position, Cash Flows, and Working Capital
Net cash and cash equivalents on hand decreased from $159.8
million as at June 30, 2017, to $127.9 million as at September 30, 2017, due
mainly by net cash used for operations of $5.0 million, investments and capital
expenditures of $28.4 million, and adjusted by $0.2 million from the effect of
foreign exchange on cash flows, offset partially by cash flows of $1.3 million
from financing activities.
Subsequent to the quarter, the Company raised $75 million
through a concurrent $69 million bought deal offering and a $6 million private
placement of units, with each unit priced at $3 in both placements, consisting
of one common share and one common share purchase warrant. Each warrant,
exercisable for three years following the closing date of the placement, gives
the right to purchase one common share at $4 per share. On a pro-forma basis
following the closing of the concurrent placements, the Company had a cash
balance of approximately $185 million.
Working capital as of September 30, 2017 was $169.7 million, as
compared to $170.1 million at June 30, 2017.
The Company anticipates that it has sufficient funds to cover
future operating cash flows, to complete the construction of its Aurora Sky
facility and to execute its growth strategy for domestic and international
expansion based on the current capital resources available.
9
Outstanding Share Data
As of the date of the MD&A, the Company had the following
securities issued and outstanding:
|
|
Securities
|
|
November 8, 2017
|
|
|
|
|
|
#
|
|
|
|
Issued and outstanding shares
|
|
375,421,933
|
|
|
|
Restricted stock units
|
|
2,127,128
|
|
|
|
Options
|
|
18,510,070
|
|
|
|
Warrants
|
|
47,427,237
|
|
|
|
Compensation warrants
|
|
699,468
|
|
|
|
Convertible debentures
|
|
24,644,962
|
|
Outlook
While production capacity at our Mountain View facility in
Cremona is nearly fully optimized, we anticipate further expansion from the
first calendar quarter of 2018 onwards with first harvest at Aurora Vie,
followed in subsequent quarters by harvest from the first completed bays at
Aurora Sky. Until such time, revenue growth will largely be a function of
increased shipments to our European subsidiary, Pedanios, which will start
contributing from Q2 onwards, growth of cannabis oil production and sales,
increased product availability through strategic wholesale supply relationships,
and consolidation of our recent acquisitions BC Northern Lights and Urban
Cultivator.
Aurora’s business strategy is to continue accelerating its
penetration of the Canadian medical cannabis market, leverage its Health Canada
sales license for derivative products (cannabis oils), commence cultivation at
its Aurora Vie facility in Quebec, and complete the Aurora Sky facility in
Alberta for additional production capacity. Upgrades are also being undertaken
to the Company’s first facility in Cremona, Alberta, to further enhance
production.
In preparation for the anticipated mid-2018 Canadian federal
legalization of adult consumer use of cannabis, the Company is building
organizational and production capacity to capture a share of the adult use
market.
Innovation and integration of technology are key components in
Aurora’s growth strategy. Going forward, Aurora will continue to leverage new
technologies, aimed at:
|
|
•
|
Improving the customer experience, e.g. via
further enhancements to Aurora’s unique mobile application - the world’s
only mobile app for ordering legal medical cannabis;
|
|
|
|
|
|
|
•
|
Delivering industry-leading per square foot
production capacity, while reducing operational expenses at its production
facilities, and
|
|
|
|
|
|
|
•
|
Substantially increasing the production of
cannabis concentrates through the Company’s collaboration with Radient.
|
The Company is also focusing on delivering further product
differentiation, through Aurora’s intended strategic investment in Hempco, its
partnership with Namaste Technologies, and the acquisition of homegrow and urban
garden companies BC Northern Lights and Urban Cultivator.
10
Finally, the Company is executing a significant international
expansion as evidenced by the lead participation in the May 2017 Cann Group IPO
in Australia, and the May 2017 acquisition of Pedanios, Germany’s largest
distributor of medical cannabis. The Company is actively pursuing further
international opportunities.
Non-IFRS Financial Measures
The Company has included the following non-IFRS performance
measures in this press release:
|
|
•
|
Cash cost of sales per gram of dried cannabis is
calculated by taking the total IFRS cost of sales and removing the effect
of changes in fair value of biological assets, non-cash production costs,
oil conversion costs, cost of sales from service revenue and purchases
from other Licensed Producers, all divided by the total number of grams of
dried cannabis produced in the period. Cash cost to produce dried cannabis
is calculated by further removing packaging costs.
|
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as “Aurora Vie” in Pointe-Claire,
Quebec on Montreal’s West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of- the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
###
|
Further information:
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
Director, IR & Corporate Development
|
|
+1.905.864.5525
|
marc.lakmaaker@auroramj.com
|
|
cam@auroramj.com
|
+1.647.269.5523
|
|
www.auroramj.com
|
|
11
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
(“forward-looking statements”). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward- looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release.
###
12
|
AURORA CANNABIS INC.
|
|
Condensed Interim Consolidated Statements of Financial
Position
|
|
September 30, 2017 and June 30, 2016
|
|
(Unaudited – In thousands of Canadian dollars)
|
|
|
|
September 30, 2017
|
|
|
June 30, 2017
|
|
|
|
|
$
|
|
|
$
|
|
|
Assets
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
127,915
|
|
|
159,796
|
|
|
Accounts receivable
|
|
3,701
|
|
|
2,312
|
|
|
Marketable
securities
|
|
34,760
|
|
|
14,845
|
|
|
Inventory
|
|
11,653
|
|
|
7,703
|
|
|
Biological
assets
|
|
6,083
|
|
|
4,088
|
|
|
Promissory notes receivable
|
|
5,250
|
|
|
1,222
|
|
|
Loans receivable
|
|
2,132
|
|
|
2,096
|
|
|
Prepaid and other current assets
|
|
1,742
|
|
|
1,544
|
|
|
|
|
193,236
|
|
|
193,606
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
71,385
|
|
|
45,523
|
|
|
Convertible debenture
|
|
-
|
|
|
11,071
|
|
|
Derivative
|
|
4,892
|
|
|
292
|
|
|
Investment in a joint venture
|
|
-
|
|
|
-
|
|
|
Intangible assets
|
|
30,670
|
|
|
31,087
|
|
|
Goodwill
|
|
47,651
|
|
|
41,100
|
|
|
|
|
|
|
|
|
|
|
|
|
347,834
|
|
|
322,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
Accounts payable
and accrued liabilities
|
|
12,015
|
|
|
8,753
|
|
|
Deferred revenue
|
|
1,548
|
|
|
1,421
|
|
|
Finance lease
|
|
71
|
|
|
69
|
|
|
Contingent consideration payable
|
|
9,928
|
|
|
13,221
|
|
|
|
|
23,562
|
|
|
23,464
|
|
|
|
|
|
|
|
|
|
|
Finance lease
|
|
263
|
|
|
282
|
|
|
Convertible notes
|
|
66,581
|
|
|
63,536
|
|
|
Deferred gain on convertible
debenture
|
|
-
|
|
|
10,206
|
|
|
Deferred gain on derivative
|
|
3,856
|
|
|
321
|
|
|
Deferred tax liability
|
|
8,656
|
|
|
5,937
|
|
|
|
|
102,918
|
|
|
103,746
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
Share capital
|
|
230,432
|
|
|
221,447
|
|
|
Reserves
|
|
39,108
|
|
|
25,912
|
|
|
Deficit
|
|
(24,624
|
)
|
|
(28,426
|
)
|
|
|
|
244,916
|
|
|
218,933
|
|
|
|
|
|
|
|
|
|
|
|
|
347,834
|
|
|
322,679
|
|
13
|
AURORA CANNABIS INC.
|
|
Condensed Interim Consolidated Statements of
Comprehensive Loss
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
$
|
|
|
$
|
|
|
Revenue
|
|
8,249
|
|
|
3,071
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized (gain) loss on
changes in fair value of biological assets
|
|
(4,611
|
)
|
|
1,262
|
|
|
Inventory expensed to cost of sales
|
|
1,973
|
|
|
482
|
|
|
Production costs
|
|
2,077
|
|
|
1,241
|
|
|
Cost
of sales (recovery)
|
|
(561
|
)
|
|
2,985
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
8,810
|
|
|
86
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
General and
administration
|
|
2,993
|
|
|
1,047
|
|
|
Sales and marketing
|
|
3,668
|
|
|
1,570
|
|
|
Research and
development
|
|
107
|
|
|
40
|
|
|
Acquisition and project
evaluation costs
|
|
340
|
|
|
165
|
|
|
Depreciation and
amortization
|
|
634
|
|
|
159
|
|
|
Share-based payments
|
|
2,486
|
|
|
380
|
|
|
|
|
10,228
|
|
|
3,361
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
(1,418
|
)
|
|
(3,275
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
Interest and
other income
|
|
590
|
|
|
28
|
|
|
Finance and other costs
|
|
(2,016
|
)
|
|
(3,040
|
)
|
|
Foreign exchange
|
|
(247
|
)
|
|
-
|
|
|
Unrealized gain on debenture
|
|
6,937
|
|
|
-
|
|
|
Unrealized gain on derivative
|
|
817
|
|
|
-
|
|
|
|
|
6,081
|
|
|
(3,012
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes
|
|
4,663
|
|
|
(6,287
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax recovery (expense)
|
|
|
|
|
|
|
|
Current
|
|
-
|
|
|
8
|
|
|
Deferred, net
|
|
(1,103
|
)
|
|
666
|
|
|
|
|
(1,103
|
)
|
|
674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
3,560
|
|
|
(5,613
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
(loss)
|
|
|
|
|
|
|
|
Deferred tax
|
|
(1,632
|
)
|
|
-
|
|
|
Unrealized gain
on marketable securities
|
|
12,551
|
|
|
-
|
|
|
Foreign currency translation
|
|
(4
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
14,475
|
|
|
(5,613
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share
|
|
|
|
|
|
|
|
Basic
|
|
0.01
|
|
|
(0.03
|
)
|
|
Diluted
|
|
0.01
|
|
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares outstanding
|
|
|
|
|
|
|
|
Basic
|
|
368,631,600
|
|
|
183,610,213
|
|
|
Diluted
|
|
376,199,780
|
|
|
183,610,213
|
|
14
|
AURORA CANNABIS INC.
|
|
Condensed Interim Consolidated Statements of Cash Flows
|
|
Three months ended September 30, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars)
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
Cash provided by (used in)
Operating activities
|
|
|
|
|
|
|
|
Net income (loss) for the period
|
|
3,560
|
|
|
(5,613
|
)
|
|
Adjustments for non-cash
items
|
|
|
|
|
|
|
|
Change in fair
value of biological assets
|
|
(3,881
|
)
|
|
1,262
|
|
|
Depreciation of fixed assets
|
|
359
|
|
|
159
|
|
|
Amortization of
intangible assets
|
|
417
|
|
|
-
|
|
|
Share-based payments
|
|
2,486
|
|
|
380
|
|
|
Unrealized gain on
debentures
|
|
(6,937
|
)
|
|
-
|
|
|
Unrealized gain on derivatives
|
|
(817
|
)
|
|
-
|
|
|
Accrued interest
and accretion expense
|
|
1,947
|
|
|
920
|
|
|
Financing fees
|
|
-
|
|
|
1,578
|
|
|
Interest and other
income
|
|
(59
|
)
|
|
-
|
|
|
Deferred tax recovery
|
|
1,103
|
|
|
(666
|
)
|
|
Changes in non-cash working capital
|
|
|
|
|
|
|
|
GST recoverable
|
|
(1,218
|
)
|
|
(13
|
)
|
|
Accounts
receivable
|
|
224
|
|
|
(389
|
)
|
|
Inventory
|
|
(1,173
|
)
|
|
(203
|
)
|
|
Prepaids and other
current assets
|
|
(143
|
)
|
|
494
|
|
|
Accounts payable and accrued liabilities
|
|
(829
|
)
|
|
(1,264
|
)
|
|
Contingent
consideration payable
|
|
(32
|
)
|
|
-
|
|
|
Deferred revenue
|
|
19
|
|
|
480
|
|
|
|
|
(4,974
|
)
|
|
(2,875
|
)
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
Promissory notes receivable
|
|
(4,736
|
)
|
|
-
|
|
|
Purchase of property, plant and equipment
|
|
(21,061
|
)
|
|
(630
|
)
|
|
Acquisition of businesses, net of cash acquired
|
|
(2,635
|
)
|
|
(3,418
|
)
|
|
|
|
(28,432
|
)
|
|
(4,048
|
)
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
Finance lease
|
|
(17
|
)
|
|
-
|
|
|
Proceeds of convertible notes
|
|
-
|
|
|
15,000
|
|
|
Proceeds (repayment) of short
term loans
|
|
-
|
|
|
(4,549
|
)
|
|
Proceeds (repayment) of long term loans
|
|
-
|
|
|
(4,000
|
)
|
|
Financing fees
|
|
-
|
|
|
(610
|
)
|
|
Shares issued for cash, net of share issue costs
|
|
1,296
|
|
|
24,017
|
|
|
|
|
1,279
|
|
|
29,858
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange on cash and cash equivalents
|
|
246
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash
and cash equivalents
|
|
(31,881
|
)
|
|
22,935
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
159,796
|
|
|
259
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
127,915
|
|
|
23,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary information:
|
|
|
|
|
|
|
|
Property, plant and equipment
in accounts payable
|
|
3,765
|
|
|
280
|
|
|
Depreciation in production costs
|
|
142
|
|
|
68
|
|
15
|
EX-1.38 39 exhibit1-38.htm EXHIBIT 1.38
|
|
|
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
"
)
1500 – 1199 West Hastings
Street
Vancouver, BC V6E 3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
November 14, 2017
A news release issued on November 14,
2017 at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. submits proposal
to CanniMed Therapeutics Inc. (“CanniMed”) board.
Full Description of Material
Change
At the request of IIROC, Aurora
Cannabis Inc. announced today that it has submitted a proposal (the “Proposal”)
to acquire all of the issued and outstanding common shares of CanniMed
Therapeutics Inc. The proposal was delivered to the Board of Directors of
CanniMed on November 13, 2017 and Aurora is seeking to pursue a mutually agreed
upon combination with CanniMed. CanniMed has not yet engaged in active
discussions with Aurora, however, Aurora welcomes the opportunity to do so, such
that CanniMed’s shareholders can benefit from the significant inherent value in
the Proposal. Aurora has requested that CanniMed’s Board respond to the Proposal
prior to 5:00 pm (Vancouver time) on Friday November 17, 2017, failing which,
Aurora intends to commence a formal takeover bid for CanniMed.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice
President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive
Officer
Mobile: (780) 722 - 8889
Email: terry@auroramj.com
DATED November 14, 2017.
|
November 14, 2017
|
TSX:ACB
|
Aurora Cannabis Submits Proposal to CanniMed Therapeutics
Board
Aurora Cannabis Executes Lock-up Agreements with 38% of CanniMed
Shareholders
_________________________________________________________________________
November 14, 2017 – Vancouver, British Columbia
--
At the request of IIROC, Aurora Cannabis Inc. (TSX: ACB) (“Aurora”)
announced today that it has submitted a proposal (the “
Propos
al
”)
to acquire all of the issued and outstanding common shares of CanniMed
Therapeutics Inc. (TSX: CMED) (“
CanniMed
”). The proposal was delivered to
the Board of Directors of CanniMed on November 13, 2017 and Aurora is seeking to
pursue a mutually agreed upon combination with CanniMed. CanniMed has not yet
engaged in active discussions with Aurora, however, Aurora welcomes the
opportunity to do so, such that CanniMed’s shareholders can benefit from the
significant inherent value in the Proposal. Aurora has requested that CanniMed’s
Board respond to the Proposal prior to 5:00 pm (Vancouver time) on Friday
November 17, 2017, failing which, Aurora intends to commence a formal takeover
bid for CanniMed.
Transaction Highlights
|
•
|
All-share Proposal, valued at $24.00 per CanniMed share
based on the closing share price of Aurora on November 14, 2017, reflects
a 56.9% premium over the most recent closing price of CanniMed shares on
November 14, 2017
|
|
|
|
|
•
|
Irrevocable lock-up agreements with approximately 38% of
CanniMed shareholders to vote in favour of Aurora’s proposal or tender to
Aurora’s bid
|
|
|
|
|
•
|
The combination would create a global leader in the
cannabis industry with a pro-forma market capitalization exceeding $3.0
billion
|
|
|
|
|
•
|
Combined entity would serve approximately 40,000 active
registered patients
|
|
|
|
|
•
|
Aurora – CanniMed combined would benefit from enhanced
capacity for future growth with greater access to capital and liquidity,
with trading volumes amongst the highest in the cannabis industry
|
Pursuant to the Proposal, CanniMed shareholders will be
entitled to receive a maximum of $24 per CanniMed share or 4.52586207 Aurora
shares, based on the 20-day volume weighted average price of Aurora. Based on
the closing price of Aurora shares on November 14, 2017, this translates to
3.74415 Aurora shares for each CanniMed share. Based on the closing prices of
Aurora and CanniMed on November 14, 2017, this represents a premium of
approximately 56.9% premium over the closing price of CanniMed shares on
November 14, 2017 and a 74.7% premium over the 20-day volume weighted average
price for the period ended November 14, 2017. Upon completion of the
transactions contemplated by the Proposal, based on the closing prices of
November 14, 2017, CanniMed’s shareholders will hold approximately 16% of the
issued and outstanding shares of Aurora.
“Aurora and CanniMed are a great fit, truly complementary, and
I am convinced we can generate even greater value by combining the two companies
and aligning our efforts strategically,” said Terry Booth, CEO. “Aurora has the
management expertise, capital markets strength, distribution channels, brand
power and growth prospects to successfully integrate CanniMed into Aurora - the
fastest-growing cannabis company with the sector’s most exceptional execution
track record.”
Lock-Up of Shareholders of CanniMed
In connection with the proposal, Aurora has entered into
irrevocable lock-up agreements in support of its proposal from shareholders
representing approximately 38% of CanniMed’s outstanding shares. Under the
lock-up agreements, the locked-up shareholders are precluded from tendering or
voting any of their CanniMed common shares in favour of any other acquisition
proposal relating to CanniMed and are required to vote against other acquisition
proposals or actions which might prevent, delay or frustrate Aurora’s proposal.
Compelling Strategic Rationale
Aurora believes the value that would result from the
combination of the two companies is substantial. Together, their unique and
complementary strengths would drive value, create the leading cannabis company
across multiple markets, and the combined entity will lower production costs
while connecting consumers via market leading brands. Among other things, the
combined entity will:
|
•
|
have a combined total of over 40,000 active registered
cannabis patients in Canada;
|
|
|
|
|
•
|
have significant cultivation capacity with five
state-of-the-art facilities, and additional facilities planned;
|
|
|
|
|
•
|
have existing or funded capacity of over 130,000
kilograms of annual production with significant additional capacity
planned;
|
|
|
|
|
•
|
further strengthen both companies’ international presence
with operations and agreements in the European Union, Australia and the
Cayman Islands;
|
|
|
|
|
•
|
increase the capacity to reach and service a wider
international patient base with a broader product offering;
|
|
|
|
|
•
|
improve yields through cross-application of proprietary
technologies from each of Aurora and CanniMed;
|
|
|
|
|
•
|
provide CanniMed with access to Aurora’s network of
strategic partners, such as extraction technology leader
RadientTechnologies;
|
|
|
|
|
•
|
enable CanniMed to leverage Aurora’s sector leadership in
innovation to accelerate development;
|
|
|
|
|
•
|
expand both companies’ portfolio of genetics; and
|
|
|
|
|
•
|
enable CanniMed to leverage Aurora’s unparalleled
e-commerce platform, including the only mobile app in Canada that enables
customer purchases.
|
Additional Details of the Proposal
Readers are cautioned that Aurora may determine not to proceed
with the Proposal if: (i) it identifies material adverse information concerning
the business, affairs, prospects or assets of CanniMed not previously disclosed
by CanniMed; (ii) CanniMed implements or attempts to implement defensive tactics
(such as the adoption of a shareholder rights plan, the grant of an option (or
similar right) to purchase material assets, the issue of additional shares of
CanniMed, or the announcement of a significant acquisition by CanniMed) in
relation to the Proposal. There can be no assurance that the Proposal will
result in a friendly combination of Aurora and CanniMed or would proceed on the
terms set out in this news release.
Should a takeover bid be commenced, full details of the offer
will be included in a formal offer and the take-over bid circular to be filed
with securities regulatory authorities and mailed to CanniMed shareholders. The
offer will be subject to certain conditions, including, but not limited to,
receipt of all necessary regulatory clearances, absence of material adverse
changes in CanniMed and acceptance of the offer by CanniMed shareholders owning
not less than 66-2/3% of the CanniMed common shares on a fully-diluted basis.
Once the 66-2/3% acceptance level is met, Aurora intends, but is not required
to, take steps to acquire all of the outstanding CanniMed common shares and
other convertible securities or rights to acquire CanniMed common shares.
This press release does not constitute an offer to buy or an
invitation to sell, or the solicitation of an offer to buy or invitation to
sell, any of the securities of Aurora or CanniMed. Such an offer may only be
made pursuant to an offer and take-over bid circular filed with the securities
regulatory authorities in Canada.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as “Aurora Vie” in Pointe-Claire,
Quebec on Montreal’s West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
###
|
Further information:
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
|
|
|
Executive Vice President
|
Director, Investor Relations and
|
|
|
|
|
+1.905.864.5525
|
Corporate Development
|
|
|
|
|
cam@auroramj.com
|
+1.647.269.5523
|
|
www.auroramj.com
|
marc.lakmaaker@auroramj.com
|
This news release contains certain "forward-looking statements"
within the meaning of such statements under applicable securities law.
Forward-looking statements are frequently characterized by words such as "plan",
"continue", "expect", "project", "intend", "believe", "anticipate", "estimate",
"may", "will", "potential", "proposed" and other similar words, or statements
that certain events or conditions "may" or "will" occur. These statements are
only predictions. Various assumptions were used in drawing the conclusions or
making the projections contained in the forward-looking statements throughout
this news release. Forward-looking statements include, but are not limited to,
the successful completion of the Offering and the use of proceeds of the
Offering and the Company’s intention to continue international and domestic
expansion. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
expressly required by applicable law. A more complete discussion of the risks
and uncertainties facing the Company appears in the Company’s Annual Information
Form and continuous disclosure filings, which are available at
www.sedar.com.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release
.
|
EX-1.37 38 exhibit1-37.htm EXHIBIT 1.37
|
|
|
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
"
)
1500 – 1199 West Hastings
Street
Vancouver, BC V6E 3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
November 14, 2017
A news release issued on November 14,
2017 at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. announces 2017
AGM voting results.
Full Description of Material
Change
Aurora Cannabis Inc. today announced
the voting results from its Annual General and Special Meeting of Shareholders
(the “Meeting”), held in Edmonton, Alberta, on November 13, 2017. The total
number of shares represented by shareholders present in person and by proxy at
the meeting was 88,726,591 million representing 23.86 per cent of Aurora’s
issued and outstanding Common Shares.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice
President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive
Officer
Mobile: (780) 722 - 8889
Email:
terry@auroramj.com
DATED November 14, 2017.
|
November 14,
2017
|
TSX:ACB
|
Aurora Announces 2017 AGM Voting Results
All Items of
Business Approved
Aurora Welcomes Diane Jang to Board
Vancouver, BC – November 14, 2017 –
Aurora Cannabis Inc.
(the “Company” or “Aurora” or the “Issuer”) (TSX: ACB) (OTCQX: ACBFF)
(Frankfurt: 21P; WKN: A1C4WM) today announced the voting results from its Annual
General and Special Meeting of Shareholders (the “Meeting”), held in Edmonton,
Alberta, on November 13, 2017. The total number of shares represented by
shareholders present in person and by proxy at the meeting was 88,726,591
million representing 23.86 per cent of Aurora’s issued and outstanding Common
Shares.
All of the matters put forward before shareholders for
consideration and approval as set out in the Company's Management Information
Circular dated October 6, 2017, were approved by the requisite majority of votes
cast at the Meeting. The details of the voting results for the election of
directors are set out below:
|
Nominee
|
# Votes for
|
% Votes for
|
# Votes withheld
|
% Votes withheld
|
|
Michael Singer
|
44,975,439
|
92.61%
|
3,591,454
|
7.39%
|
|
Terry Booth
|
45,135,102
|
92.93%
|
3,431,791
|
7.07%
|
|
Steve Dobler
|
44,397,421
|
91.41%
|
4,169,472
|
8.59%
|
|
Dr. Jason Dyck
|
45,145,502
|
92.96%
|
3,421,391
|
7.04%
|
|
Adam Szweras
|
48,177,434
|
99.20%
|
389,459
|
0.80%
|
|
Joseph del Moral
|
45,070,158
|
92.80%
|
3,496,735
|
7.20%
|
|
Diane Jang
|
48,189,124
|
99.22%
|
377,769
|
0.78%
|
The shareholders also approved the: (i) re-appointment of MNP
LLP as auditors of the Company for the ensuing year; (ii) non-binding advisory
vote on the Company’s approach to executive compensation; (iii) Company’s Fixed
Restricted Share Unit Plan (“RSU”) and RSU awards; and (iv) new form 10%
“Rolling” Share Option Plan and the grant of all currently available and
unallocated option entitlements.
The Company has filed a report of voting results on all
resolutions voted on at the Meeting on www.sedar.com.
Diane Jang
Aurora is pleased to welcome Diane Jang to its Board of
Directors. Ms. Jang is the newly appointed CEO of Hempco Food and Fiber,
commencing in her new role in December 2017. She is an experienced business
executive, specializing in strategic planning for sustainable success, growth
and profitability for companies. With over 27 years of business experience in
the Consumer Packaged Goods industry in premium foods and plant-based protein,
she has a proven track record in strategic planning, increasing profitability
and leading companies to become market leaders in their industries. Previously,
Ms. Jang led successful companies as President at Sunrise Soya Foods and General
Manager at Earth’s Own Food Co Inc., and also serves as a Director of Big
Sisters of BC Lower Mainland. Ms. Jang holds a Bachelor of Business
Administration from Simon Fraser University.
“We are very pleased with the election of Diane to our Board,”
said Terry Booth, CEO. “She brings a wealth of leadership experience in Consumer
Packaged Goods, having successfully led companies to become leaders in their
respective industry sectors. This is a strength that we will leverage in
executing our strategy in regard the commencement of sales of cannabis for adult
recreational use. We look forward to working closely with Diane.”
Ms. Jang added, “Serving on the Board of Aurora, a globally
dominant cannabis company, in such an exciting sector with such great potential,
is a fantastic opportunity, and I look forward to contributing towards the
further growth of the Company.”
Options grant
The Company granted stock options to certain directors and
officers to purchase 640,000 common shares under the Company’s Share Option
Plan. The options are exercisable at a price of $4.64 per share, vest evenly
every quarter over three years commencing November 13, 2017 and expire five
years from the date of grant.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as “Aurora Vie” in Pointe-Claire,
Quebec on Montreal’s West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of- the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
###
|
Further information:
|
|
|
|
|
|
Cam Battley
|
Marc Lakmaaker
|
|
|
|
|
Executive Vice President
|
Director, Investor Relations and
|
|
|
|
|
+1.905.864.5525
|
Corporate Development
|
|
|
|
|
cam@auroramj.com
|
+1.647.269.5523
|
|
www.auroramj.com
|
marc.lakmaaker@auroramj.com
|
This news release contains certain "forward-looking statements"
within the meaning of such statements under applicable securities law.
Forward-looking statements are frequently characterized by words such as "plan",
"continue", "expect", "project", "intend", "believe", "anticipate", "estimate",
"may", "will", "potential", "proposed" and other similar words, or statements
that certain events or conditions "may" or "will" occur. These statements are
only predictions. Various assumptions were used in drawing the conclusions or
making the projections contained in the forward-looking statements throughout
this news release. Forward-looking statements include, but are not limited to,
the successful completion of the Offering and the use of proceeds of the
Offering and the Company’s intention to continue international and domestic
expansion. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
expressly required by applicable law. A more complete discussion of the risks
and uncertainties facing the Company appears in the Company’s Annual Information
Form and continuous disclosure filings, which are available at
www.sedar.com.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release
.
|
EX-1.39 40 exhibit1-39.htm EXHIBIT 1.39
|
|
|
FORM 51-102F3
MATERIAL CHANGE
REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver, BC V6E
3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
November 15, 2017
A news release issued on November 15,
2017, at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. accelerates
warrant expiry date for anticipated proceeds of $50.8 million.
Full Description of Material
Change
Aurora Cannabis Inc. announced today
that the Company has elected to exercise its right under the warrant indenture
(the “Indenture”) governing the common share purchase warrants of the Company
(the “Warrants”) issued on February 28, 2017. Pursuant to the terms of the
Indenture, the Company may accelerate the expiry date of the Warrants when the
volume weighted average closing price (the “VWAP”) of the common shares of the
Company on the Toronto Stock Exchange for 10 consecutive trading days exceeds
$4.50.
As of the close of markets on November
14, 2017, the VWAP of the Common Shares on the Exchange for 10 consecutive
trading days equalled $5.01. Effective today, the Warrants are set to expire at
5:00 p.m. (Vancouver time) on Friday, December 15, 2017. This news release
constitutes notice to Warrant holders of the new expiry date. Any Warrants
remaining unexercised after the new expiry date will be cancelled.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive
Vice President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Vice President of Finance
Mobile: (604)
362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive
Officer
Mobile: (780) 722 - 8889
Email: terry@auroramj.com
DATED November 15, 2017.
|
November 15, 2017
|
TSX:ACB
|
|
|
|
Aurora Accelerates Warrant Expiry Date for Anticipated
Proceeds of $50.8 Million
Vancouver, BC – November 15, 2017
– Aurora Cannabis Inc.
– (the “Company” or “Aurora”) (TSX: ACB) announced today that the Company has
elected to exercise its right under the warrant indenture (the “Indenture”)
governing the common share purchase warrants of the Company (the “Warrants”)
issued on February 28, 2017. Pursuant to the terms of the Indenture, the Company
may accelerate the expiry date of the Warrants when the volume weighted average
closing price (the “VWAP”) of the common shares of the Company (the “Common
Shares”) on the Toronto Stock Exchange (the “Exchange”) for 10 consecutive
trading days exceeds $4.50.
As of the close of markets on November 14, 2017, the VWAP of
the Common Shares on the Exchange for 10 consecutive trading days equalled
$5.01. Effective today, the Warrants are set to expire at 5:00 p.m. (Vancouver
time) on Friday, December 15, 2017. This news release constitutes notice to
Warrant holders of the new expiry date. Any Warrants remaining unexercised after
the new expiry date will be cancelled.
As of close of market November 14, 2017, a total of 16,946,690
warrants of the 17,251,640 originally issued had yet to be exercised. Each
Warrant is exercisable to acquire one Common Share of the Company at an exercise
price of $3.00. Consequently, if all Warrants are exercised, proceeds will total
$50,840,070.
“The ability to accelerate the expiry of these warrants is an
indicator of Aurora’s powerful growth and increase in shareholder value,” said
Terry Booth, CEO. “It adds significant additional capital to our exceptional
cash position, with which we intend to continue our aggressive domestic and
international expansion strategy.”
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as “Aurora Vie” in Pointe-Claire,
Quebec on Montreal’s West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of- the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
###
Further information:
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
Director, Investor Relations and
|
|
+1.905.864.5525
|
Corporate Development
|
|
cam@auroramj.com
|
+1.647.269.5523
|
|
www.auroramj.com
|
marc.lakmaaker@auroramj.com
|
This news release contains certain "forward-looking statements"
within the meaning of such statements under applicable securities law.
Forward-looking statements are frequently characterized by words such as "plan",
"continue", "expect", "project", "intend", "believe", "anticipate", "estimate",
"may", "will", "potential", "proposed" and other similar words, or statements
that certain events or conditions "may" or "will" occur. These statements are
only predictions. Various assumptions were used in drawing the conclusions or
making the projections contained in the forward-looking statements throughout
this news release. Forward-looking statements include, but are not limited to,
the successful completion of the Offering and the use of proceeds of the
Offering and the Company’s intention to continue international and domestic
expansion. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
expressly required by applicable law. A more complete discussion of the risks
and uncertainties facing the Company appears in the Company’s Annual Information
Form and continuous disclosure filings, which are available at
www.sedar.com.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release
.
|
EX-1.41 42 exhibit1-41.htm EXHIBIT 1.41
|
|
|
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver, BC V6E
3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
November 16, 2017
A news release issued on November 16,
2017, at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Announces Conversion
of Remaining Balance of $75 Million Debenture. Conversion Generates Interest
Savings of $5.2 Million on Annual Basis
Full Description of Material
Change
Please see attached news release dated
November 16, 2017.
|
Item 5.
|
Full Description of Material Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice
President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive
Officer
Mobile: (780) 722 - 8889
Email: terry@auroramj.com
DATED November 16, 2017.
|
November 16, 2017
|
TSX:ACB
|
|
|
|
Aurora Cannabis Announces Conversion of Remaining Balance of
$75 Million Debenture
Conversion Generates Interest Savings of $5.2
Million on Annual Basis
Vancouver, BC – November 16, 2017
– Aurora Cannabis Inc.
(the “Company” or “Aurora”) (TSX: ACB) (OTCQX: ACBFF) (Frankfurt: 21P; WKN:
A1C4WM) announced today that the Company has elected to exercise its right under
the indenture (the “Indenture”) governing the Company’s 7.0% unsecured
convertible debentures due May 2, 2019 (the “Debentures”) to convert (the
“Conversion”) all of the principal amount outstanding of the remaining
Debentures into common shares of the Company (the “Common Shares”). Pursuant to
the terms of the Indenture, the Company may force the conversion of the
Debentures at the conversion price of $3.29 per Common Share when the VWAP of
the Common Shares on the TSX Exchange (the “Exchange”) for 10 consecutive
trading days equals or exceeds $4.94.
As of close of markets November 15, 2017, the VWAP of the
Common Shares on the Exchange for 10 consecutive trading days equals $5.09. The
Conversion is scheduled to be effective December 18, 2017. The estimated
remaining total of $73,593,000 of Debentures outstanding will be converted into
22,368,693 Common Shares, and accrued and unpaid interest will be paid.
“This conversion reflects our exceptional execution, and
further strengthens our already very powerful financial position to execute on
our aggressive domestic and international expansion strategy,” said Terry Booth,
CEO. “We will be generating over $5 million in interest savings on an annual
basis, while removing nearly $75 million in liabilities from our balance
sheet.”
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as “Aurora Vie” in Pointe-Claire,
Quebec on Montreal’s West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of- the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth CEO
###
Further information:
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
Director, Investor Relations and
|
|
+1.905.864.5525
|
Corporate Development
|
|
cam@auroramj.com
|
+1.647.269.5523
|
|
www.auroramj.com
|
marc.lakmaaker@auroramj.com
|
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
(“forward-looking statements”), including, but not limited to, statements with
respect to the use of proceeds from the Offering and the Private Placement.
Forward- looking statements are frequently characterized by words such as
"plan", "continue", "expect", "project", "intend", "believe", "anticipate",
"estimate", "may", "will", "potential", "proposed" and other similar words, or
statements that certain events or conditions "may" or "will" occur. These
statements are only predictions. Various assumptions were used in drawing the
conclusions or making the projections contained in the forward-looking
statements throughout this news release. Forward-looking statements are based on
the opinions and estimates of management at the date the statements are made,
and are subject to a variety of risks and uncertainties and other factors that
could cause actual events or results to differ materially from those projected
in the forward-looking statements. The Company is under no obligation, and
expressly disclaims any intention or obligation, to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release
.
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver, BC V6E 3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
November 16, 2017
A news release issued on November 16,
2017, at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Announces Conversion
of Remaining Balance of $75 Million Debenture. Conversion Generates Interest
Savings of $5.2 Million on Annual Basis
Full Description of Material
Change
Please see attached news release dated
November 16, 2017.
|
Item 5.
|
Full Description of Material
Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email: cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive
Officer
Mobile: (780) 722 - 8889
Email:
terry@auroramj.com
DATED November 16, 2017.
|
November 16, 2017
|
TSX:ACB
|
|
|
|
Aurora Cannabis Announces Conversion of Remaining Balance of
$75 Million Debenture
Conversion Generates Interest Savings of $5.2 Million on Annual
Basis
Vancouver, BC – November 16, 2017 –
Aurora Cannabis Inc.
(the “Company” or “Aurora”) (TSX: ACB) (OTCQX: ACBFF) (Frankfurt: 21P; WKN:
A1C4WM) announced today that the Company has elected to exercise its right under
the indenture (the “Indenture”) governing the Company’s 7.0% unsecured
convertible debentures due May 2, 2019 (the “Debentures”) to convert (the
“Conversion”) all of the principal amount outstanding of the remaining
Debentures into common shares of the Company (the “Common Shares”). Pursuant to
the terms of the Indenture, the Company may force the conversion of the
Debentures at the conversion price of $3.29 per Common Share when the VWAP of
the Common Shares on the TSX Exchange (the “Exchange”) for 10 consecutive
trading days equals or exceeds $4.94.
As of close of markets November 15, 2017, the VWAP of the
Common Shares on the Exchange for 10 consecutive trading days equals $5.09. The
Conversion is scheduled to be effective December 18, 2017. The estimated
remaining total of $73,593,000 of Debentures outstanding will be converted into
22,368,693 Common Shares, and accrued and unpaid interest will be paid.
“This conversion reflects our exceptional execution, and
further strengthens our already very powerful financial position to execute on
our aggressive domestic and international expansion strategy,” said Terry Booth,
CEO. “We will be generating over $5 million in interest savings on an annual
basis, while removing nearly $75 million in liabilities from our balance sheet.”
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations
("ACMPR"). The
Company operates a 55,200 square foot, state-of-the-art production facility in
Mountain View County, Alberta, known as "Aurora Mountain", a second 40,000
square foot high-technology production facility known as “Aurora Vie” in
Pointe-Claire, Quebec on Montreal’s West Island, and is currently constructing
an 800,000 square foot production facility, known as "Aurora Sky", at the
Edmonton International Airport.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone
investor with a 19.9% stake in Cann Group Limited, the first Australian company
licensed to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
###
Further information:
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
Director, Investor Relations and
|
|
+1.905.864.5525
|
Corporate Development
|
|
cam@auroramj.com
|
+1.647.269.5523
|
|
www.auroramj.com
|
marc.lakmaaker@auroramj.com
|
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
(“forward-looking statements”), including, but not limited to, statements with
respect to the use of proceeds from the Offering and the Private Placement.
Forward-looking statements are frequently characterized by words such as "plan",
"continue", "expect", "project", "intend", "believe", "anticipate", "estimate",
"may", "will", "potential", "proposed" and other similar words, or statements
that certain events or conditions "may" or "will" occur. These statements are
only predictions. Various assumptions were used in drawing the conclusions or
making the projections contained in the forward-looking statements throughout
this news release. Forward-looking statements are based on the opinions and
estimates of management at the date the statements are made, and are subject to
a variety of risks and uncertainties and other factors that could cause actual
events or results to differ materially from those projected in the
forward-looking statements. The Company is under no obligation, and expressly
disclaims any intention or obligation, to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
REPORT OF VOTING RESULTS
Pursuant to Section 11.2 of National Instrument 51-102 –
Continuous Disclosure Obligations
, the following is the report on voting
results for the annual general and special meeting of shareholders of Aurora
Cannabis Inc. (the “Company”) held on November 13, 2017.
Matters Voted Upon
|
|
|
|
Votes by Proxy
|
|
|
|
|
|
|
|
|
Outcome of Vote
|
Votes For
|
Votes Against
|
|
|
|
|
|
|
|
1.
|
To fix the number of directors at
seven.
|
Carried
|
48,228,609
|
338,284
|
|
|
|
|
Votes by Proxy
|
|
|
|
|
|
|
|
|
Outcome of Vote
|
Votes For
|
Votes Withheld
|
|
|
|
|
|
|
|
2.
|
The election of the following directors:
|
|
|
|
|
|
|
|
|
|
|
|
a) Terry Booth
|
Carried
|
45,135,102
|
3,431,791
|
|
|
|
|
|
|
|
|
b) Steve Dobler
|
Carried
|
44,397,421
|
4,169,472
|
|
|
|
|
|
|
|
|
c) Jason Dyck
|
Carried
|
45,145,502
|
3,421,391
|
|
|
|
|
|
|
|
|
d) Adam Szweras
|
Carried
|
48,177,434
|
389,459
|
|
|
|
|
|
|
|
|
e) Michael Singer
|
Carried
|
44,975,439
|
3,591,454
|
|
|
|
|
|
|
|
|
f) Joseph del Moral
|
Carried
|
45,070,158
|
3,496,735
|
|
|
|
|
|
|
|
|
g) Diane Jang
|
Carried
|
48,189,124
|
377,769
|
- 2 -
|
|
|
|
Votes by Proxy
|
|
|
|
|
|
|
|
|
|
Outcome of Vote
|
Votes For
|
Votes Withheld
|
|
|
|
|
|
|
|
3.
|
Appointment of MNP LLP, Chartered Professional
Accountants, as Auditors of the Company for the ensuing year and
authorizing the Directors to fix their remuneration.
|
Carried
|
84,422,654
|
906,416
|
|
|
|
|
Votes by Proxy
|
|
|
|
|
|
|
|
|
|
Outcome of Vote
|
Votes For
|
Votes Against
|
|
|
|
|
|
|
|
4.
|
To consider a non-binding advisory vote on
executive compensation as detailed in the Company’s Information Circular
dated October 2, 2017.
|
Carried
|
46,064,348
|
2,502,545
|
|
|
|
|
Votes by Proxy
|
|
|
|
|
|
|
|
|
|
Outcome of Vote
|
Votes For
|
Votes Against
|
|
|
|
|
|
|
|
5.
|
Approve by ordinary resolution to the adoption
of the Company’s Fixed Restricted Share Unit Plan together with approval
to certain RSU awards, as detailed in the Company’s Information Circular
dated October 2, 2017.
|
Carried
|
43,623,708
|
4,943,185
|
|
|
|
|
Votes by Proxy
|
|
|
|
|
|
|
|
|
|
Outcome of Vote
|
Votes For
|
Votes Against
|
|
|
|
|
|
|
|
6.
|
Approve by ordinary resolution to the adoption
of a new form 10% “rolling” share option plan and to authorize the grant
of all currently available and unallocated option entitlements issuable
under the new form share option plan, until November 13, 2020, as detailed
in the Company’s Information Circular dated October 2, 2017.
|
Carried
|
43,186,839
|
5,380,054
|
|
EX-1.42 43 exhibit1-42.htm EXHIBIT 1.42
|
|
|
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the "
Company
")
1500 – 1199 West
Hastings Street
Vancouver, BC V6E 3T5
Telephone: (604) 362-5207
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Item 2.
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Date of Material Change
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November 20, 2017
A news release issued on November 20,
2017, at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
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Item 4.
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Summary of Material Change
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Aurora Cannabis Inc. announces
intention to launch takeover bid for CanniMed Therapeutics Inc.
Full Description of Material
Change
Please see attached news release dated
November 20, 2017.
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Item 5.
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Full Description of Material Change
|
See attached press release.
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Item 6.
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Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
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Not applicable.
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Item 7.
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Omitted Information
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None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice
President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email:
cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive
Officer
Mobile: (780) 722 - 8889
Email:
terry@auroramj.com
DATED November 20, 2017.
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November 20, 2017
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TSX:ACB
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Aurora Cannabis Announces Intention to Launch Takeover Bid
for CanniMed Therapeutics Inc.
Provides Comments on CanniMed’s Poison Pill Tactic
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Aurora’s proposed offer currently valued at
$24.00 per CanniMed share
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Represents a 56.9% premium to CanniMed’s
closing price prior to Aurora’s takeover proposal announcement
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Lock-up agreements already in place with
CanniMed’s 3 largest shareholders for 38% of CanniMed shares
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CanniMed’s intention to acquire Newstrike is
highly conditional and oppressive to CanniMed shareholders in light of
Aurora’s proposed offer
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Vancouver, BC – November 20, 2017 – Aurora Cannabis Inc. (the
“Company” or “Aurora”) (TSX: ACB) announced today that, further to its press
release of November 14, 2017, it intends to make an offer (the “Offer”) to
purchase all of the issued and outstanding common shares (the “CanniMed Shares”)
of CanniMed Therapeutics Inc. (“CanniMed”) (TSX: CMED) for consideration
consisting of common shares of Aurora (the “Aurora Shares”).
The Offer will provide holders of CanniMed Shares with
4.52586207 Aurora Shares for each CanniMed Share, subject to a maximum of $24.00
per CanniMed Share (the “Cap Price”). If the market value for 4.52586207 Aurora
Shares is more than the Cap Price (based on the 20-day VWAP of Aurora Shares on
the earlier of the expiry date for the Offer and the date on which the
conditions to the Offer have been satisfied), then Aurora will adjust the number
of Aurora Shares offered as consideration in the Offer, such that the
consideration payable for each CanniMed Share is equal to the Cap Price.
The Offer Price, which would currently be equivalent to the Cap
Price of $24.00 given Aurora’s closing share price of $5.51 on November 17,
2017, represents a 56.9% premium over the closing price of CanniMed Shares on
November 14, 2017, the last day prior to the public disclosure of Aurora’s
intention to pursue a combination with CanniMed.
Background to the Offer
On November 13, 2017, Aurora presented the CanniMed board of
directors (the “Board”) with a proposal (the “Proposal”) to explore a mutually
agreeable merger on the terms set forth in the Offer, and requested a response
prior to 5:00 pm Pacific Time on November 17, 2017 (the "Proposal Deadline").
Although CanniMed’s Board failed to respond to the Proposal prior to the
Proposal Deadline, Aurora would still welcome a transaction supported by
CanniMed’s Board, and looks forward to engaging with CanniMed’s Board to deliver
significant value to CanniMed shareholders. However, at this time, the rationale
for the combination is too strong to accept inaction, and thus the decision has
been made to proceed to take Aurora’s Offer directly to shareholders.
“While we have attempted to engage and have a constructive
dialogue with CanniMed’s Board and management about the strong merits of our
offer, their refusal to enter into such a discussion, along with the powerful
strategic rationale for the combination, leaves us no recourse at this point but
to launch a formal offer for the company,” said Terry Booth, CEO of Aurora. “We
believe that CanniMed shareholders would benefit greatly from a combination, not
only through the very significant premium we are offering for their shares, but
also by participating in Aurora’s continued growth, which is well above our
industry peers, and is based on superior business strategy and exceptional,
industry-leading execution. We already have the support from a large percentage
of CanniMed shareholders, and look forward to bringing this process to a
positive conclusion for the benefit of our combined shareholders.”
CanniMed’s Highly Conditional Intention to Acquire Newstrike
Resources
CanniMed’s announcement late on November 17, 2017 (the
“CanniMed Press Release”) of its highly conditional intention to acquire
Newstrike Resources Ltd. (“Newstrike Resources” and “Newstrike Resources Offer”)
is extremely troubling in light of the bona fide acquisition proposal that
Aurora presented to CanniMed’s Board on November 13, 2017. At no point did
CanniMed try to engage or otherwise entertain discussions with Aurora regarding
the significant offer that had been presented to their Board for CanniMed
shareholders prior to entering into the Newstrike Resources agreement.
The Newstrike Resources Offer requires CanniMed shareholders to
approve the transaction. Given that 38% of CanniMed shareholders have
contractually agreed to support the Aurora Offer and to vote against any
proposed action by the CanniMed Board, the Newstrike Resources Offer is a highly
conditional proposition with significant uncertainty.
In entering into the highly conditional agreement, CanniMed has
agreed to pay a $9.5 million termination fee to Newstrike Resources should a
superior proposal, such as the Aurora Offer, emerge. The termination fee, if
paid, represents approximately $0.41 cash per share loss to CanniMed
shareholders.
The assertion in the CanniMed Press Release that the terms of
the Aurora offer “are unknown” is dubious, given that the detailed terms
available to CanniMed shareholders were outlined in the proposal delivered by
Aurora on November 13, 2017 to the CanniMed Board.
In light of these considerations, it is clear the Newstrike
Resources Offer should be considered oppressive to CanniMed shareholders and to
Aurora’s Offer, which delivers significantly higher financial and strategic
value to CanniMed shareholders. Aurora is reviewing its options with respect to
CanniMed’s Newstrike Resources Offer and will comment further in due course.
Compelling Strategic Rationale for the Aurora-CanniMed
Combination
Aurora believes that the combination of the two companies is
extremely compelling, in the best interest of all shareholders, and will
accelerate growth and shareholder value creation for the combined entity,
further extending the Company’s leadership position within the global cannabis
sector.
Among other things, the combined entity will have:
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Over 40,000 patients
- a combined total of over
40,000 active registered cannabis patients in Canada;
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•
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5 state-of-the-art facilities
- significant
cultivation capacity with five state-of-the-art facilities;
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•
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130,000 kg funded capacity
- funded capacity of
over 130,000 kilograms of annual production, with significant additional
capacity planned and funded;
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•
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Expanded international presence
- a strengthened
international presence with operations and agreements across North
America, the European Union, Australia, South Africa, and the Cayman
Islands;
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Increased export capacity
- multiple EU
GMP-compliant production facilities and significantly increased export
capacity;
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•
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Increased oil production
– high throughput oil
production through Aurora’s strategic extraction partner Radient
Technologies Inc. to satisfy growing international demand;
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Broader product portfolio
– expanded existing and
new, near-term product offerings, delivery mechanisms, and devices;
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Strategic product synergies
– complementary
product offerings which will enable faster market penetration in new
sectors for both companies;
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Improved yields
- enhanced production yields and
product quality through cross-application of proprietary technologies and
intellectual property from each of Aurora and CanniMed;
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CanvasRx
– immediate ability to address demand
growth constraints at CanniMed through CanvasRx’s industry leading
physician education and patient counselling services;
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Accelerated growth through innovation
- enabling
CanniMed to leverage Aurora’s sector leadership in execution, technology
integration and innovation to accelerate development and growth potential;
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Genetics
– expansion of both companies’ portfolio
of genetics;
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eCommerce
- enabling CanniMed to leverage Aurora’s
unparalleled e-commerce platform, including the only mobile app in Canada
that enables customer purchases;
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Same day delivery
- expanding Aurora’s same-day
delivery service into additional areas across Canada; and
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Strong cash position and balance sheet fueling rapid
growth
– Aurora`s sector-leading cash position and balance sheet will
enable faster roll-out of initiatives for CanniMed to accelerate growth.
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Reasons for CanniMed Shareholders to Support the
Aurora-CanniMed Combination
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Significant Premium to Market Price.
The Offer,
based on Aurora’s closing share price of $5.51 on November 17, 2017, will
result in CanniMed shareholders receiving the Cap Price of $24.00, which
represents a 56.9% premium over the closing price of CanniMed Shares on
November 14, 2017, the last day prior to the public disclosure of Aurora’s
intention to pursue a combination with CanniMed.
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High Likelihood of Completion.
Aurora believes
that there is a high likelihood that more than 66 2/3% of the outstanding
shares will be tendered to the Offer, and therefore the Offer will be
successful, given that the Offer is already supported by 38% of CanniMed
shareholders (the “Locked-Up Shareholders”).
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•
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Support of Major Shareholders.
38% of CanniMed
shareholders have already agreed to tender their shares in favour of the
Offer and are precluded from tendering any of their common shares in
favour of any other competing acquisition proposal relating to CanniMed.
The Locked-Up Shareholders include CanniMed’s three largest
shareholders.
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•
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Continued Participation with an Industry
Leader
.
Aurora has rapidly become a globally dominant cannabis
company with a proven track record of exceptional shareholder value
creation, with its rapid expansion driven by its agility, innovation and
unparalleled execution. The Offer provides CanniMed shareholders the
opportunity to continue to participate in the compelling industry growth
alongside the established and successful track record of Aurora.
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•
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Increased Scale, Capital Markets Presence and Access
to Capital.
The pro forma combined company would have a market
capitalization of approximately $3 billion, in addition to significantly
enhanced liquidity relative to CanniMed, providing greater access to
capital. Aurora has cash of more than $340 million upon closing of its two
current capital initiatives, relative to only $54 million for CanniMed.
Aurora’s capital position provides very significant firepower to continue
pursuing its aggressive global expansion and differentiation strategy.
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•
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Potential for Downward Share Price Impact if Offer is
Not Accepted.
The Offer represents a significant premium to the market
price of CanniMed shares prior to the public announcement of Aurora’s
interest to acquire CanniMed. Given the the agreements with the Locked-Up
Shareholders, CanniMed will be unable to proceed with an alternative
competing transaction to the Offer. If the Offer is not successful and no
competing transaction is made, Aurora believes it is likely the trading
price of CanniMed shares will decline to pre-Offer levels.
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Proposed Offer Particulars
Provided Aurora does not uncover or otherwise identify
information suggesting that the business, affairs, prospects or assets of
CanniMed have been materially impaired, Aurora intends to commence the bid
during the week of November 20, 2017 and thereafter mail a takeover bid circular
to the registered holders of CanniMed Shares (in the time required under
applicable Canadian securities laws). Aurora expects that the Offer, when made,
will be remain open for acceptance for at least 105 calendar days from the date
of the commencement of the Offer.
Aurora anticipates that the Offer will be subject to a number
of customary conditions, including: (i) there being deposited under the Offer,
and not withdrawn, at least 662/3% of the outstanding CanniMed Shares
(calculated on a fully diluted basis), excluding any CanniMed Shares held by
Aurora; (ii) receipt of all governmental, regulatory and third party approvals
that Aurora considers necessary or desirable in connection with the Offer; (iii)
no material adverse change having occurred in the business, affairs, prospects
or assets of CanniMed; and (iv) the minimum tender and other conditions set out
in National Instrument 62-104 Take-Over Bids and Issuer Bids. In addition,
Aurora may require the approval of its shareholders to issue the Aurora Shares
to be distributed by it in connection with the Offer. If required, Aurora
expects that it may call a meeting of its shareholders to consider a resolution
to approve the issuance of Aurora Shares in connection with the Offer in early
2018 if required by the policies of the Toronto Stock Exchange.
Intention to Make an Offer
CanniMed shareholders should note that Aurora has not yet
commenced the Offer and should carefully review the cautionary statements set
out below in this News Release respecting the status of the Offer and the
factors that may cause Aurora not to make the Offer.
Aurora may determine not to make the Offer if: (i) it
identifies material adverse information concerning the business, affairs,
prospects or assets of CanniMed not previously disclosed by CanniMed; (ii)
CanniMed implements or attempts to implement defensive tactics (such as a
shareholder rights plan, grant of an option (or similar right) to purchase
material assets, material acquisitions, issuances of shares (including, a
private placement), or increased indebtedness (including, incurrence of
significant new liabilities) in relation to the Offer); (iii) CanniMed completes
or undertakes to complete any significant transactions, including the proposed,
but not yet completed, acquisition of Newstrike Resources Ltd.; or (iv) CanniMed
determines to engage with Aurora to negotiate the terms of a combination
transaction and Aurora and CanniMed determine to undertake that transaction
utilizing a structure other than a takeover bid (a plan of arrangement, for
example). Accordingly, there can be no assurance that the Offer will be made or
that the final terms of the Offer will be as set out in this News Release.
If Aurora proceeds with the Offer, full details of the Offer
will be included in the formal offer and take-over bid circular to be filed with
securities regulatory authorities and mailed to shareholders.
This News Release does not constitute an offer to buy or an
invitation to sell, or the solicitation of an offer to buy or invitation to
sell, any of the securities of Aurora or CanniMed. Such an offer may only be
made pursuant to an offer and take-over bid circular filed with the securities
regulatory authorities in Canada.
Advisors
Aurora has retained Canaccord Genuity Corp. as its financial
advisor in connection with the Offer. McMillan LLP is acting as the legal
advisor to Aurora for the Offer. Laurel Hill Advisory Group has also been
retained by Aurora as its information agent in connection with the Offer.
Shareholders with questions regarding Aurora’s Offer can contact Laurel Hill at
1-877-452-7184 (or +1-416-304-0211 – collect call for shareholders outside North
America).
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as “Aurora Vie” in Pointe-Claire,
Quebec on Montreal’s West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
###
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Further information:
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Cam Battley
|
Marc Lakmaaker
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Executive Vice President
|
Director, Investor Relations and
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+1.905.864.5525
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Corporate Development
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cam@auroramj.com
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+1.647.269.5523
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www.auroramj.com
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marc.lakmaaker@auroramj.com
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SHAREHOLDER QUESTIONS
Questions may be directed to Aurora's Information Agent
at
:
Laurel Hill Advisory Group
North America Toll Free: 1-877-452-7184
Collect Calls Outside North America: 1-416-304-0211
Email:
assistance@laurelhill.com
This news release contains certain “forward-looking statements”
within the meaning of such statements under applicable securities law.
Forward-looking statements are frequently characterized by words such as “plan”,
“continue”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”,
“may”, “will”, “potential”, “proposed” and other similar words, or statements
that certain events or conditions “may” or “will” occur. These statements are
only predictions. Forward looking statements in release include statements
regarding the proposed terms of the business combination of Aurora with CanniMed
(the “Combination”), the timing or potential for discussions regarding the
Combination, the expected benefits of the Combination, and the anticipated
market capitalization of the combined entity. Various assumptions were used in
drawing the conclusions or making the projections contained in the
forward-looking statements throughout this news release, including assumptions
based upon CanniMed’s publicly disclosed information, and that there will be no
change in the business, prospects or capitalization of CanniMed or Aurora.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law. A more complete discussion of the risks and
uncertainties facing the Company appears in the Company’s Annual Information
Form and continuous disclosure filings, which are available at
www.sedar.com.
In particular, this News Release contains forward-looking
information concerning:
|
(i)
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the Offer, various terms of the Offer and the anticipated
timing of commencement of the Offer;
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(ii)
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expectations with respect to synergies and efficiencies
that may be achieved upon a combination of the businesses of Aurora and
CanniMed and other benefits of a combination of the businesses of Aurora
and CanniMed; and
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(iii)
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expectations with respect to business and geographical
diversification of the combined entity.
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Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release.
Cautionary Statement Respecting CanniMed Information
The information concerning CanniMed contained in this News
Release has been taken from, or is based upon, publicly available information
filed by CanniMed with securities regulatory authorities in Canada prior to the
date of this News Release and other public sources. CanniMed has not reviewed
this News Release and has not confirmed the accuracy and completeness of the
CanniMed information contained herein. Neither Aurora, nor any of the officers
or directors of Aurora, assumes any responsibility for the accuracy or
completeness of such CanniMed information or any failure by CanniMed to disclose
events or facts that may have occurred, or which may affect the significance or
accuracy of any such CanniMed information, but which are unknown to Aurora.
Aurora has no means of verifying the accuracy or completeness of any of the
CanniMed information contained in this News Release or whether there has been a
failure by CanniMed to disclose events or facts that may have occurred or may
affect the significance or accuracy of any such information.
Notice to U.S. Holders
The Offer will be made for the securities of a company formed
outside of the United States. The Offer will be subject to disclosure
requirements of Canada that are different from those of the United States.
Financial statements included in the documents, if any, will be prepared in
accordance with Canadian accounting standards and may not be comparable to the
financial statements of United States companies.
It may be difficult for a securityholder in the United States
to enforce his/her/its rights and any claim a securityholder may have arising
under the U.S. federal securities laws, since the issuer is located in Canada,
and some or all of its officers or directors may be residents of Canada or
another country outside of the United States. A securityholder may not be able
to sue a Canadian company or its officers or directors in a court in Canada or
elsewhere outside of the United States for violations of U.S. securities laws.
It may be difficult to compel a Canadian company and its affiliates to subject
themselves to a U.S. court’s judgment.
Securityholders should be aware that the issuer may purchase
securities otherwise than under the Offer, such as in open market or privately
negotiated purchases.
Cautionary Statement Respecting Status of the Offer
Aurora has not yet commenced the offer noted above in this news
release. Upon commencement of the offer, aurora will file a takeover bid
circular with various securities commissions in Canada. The takeover bid
circular will contain important information about the offer and should be read
in its entirety by CanniMed shareholders and others to whom the offer is
addressed. After the offer is commenced, CanniMed shareholders (and others) will
be able to obtain, at no charge, a copy of the offer to purchase, takeover bid
circular and various associated documents when they become available on the
system for electronic document analysis and retrieval (SEDAR) at www.sedar.com.
This announcement is for informational purposes only and does not constitute or
form part of any offer or invitation to purchase, otherwise acquire, subscribe
for, sell, otherwise dispose of or issue, or any other solicitation of any offer
to sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe
for any security. The offer will not be made in, nor will deposits of securities
be accepted from a person in, any jurisdiction in which the making or acceptance
thereof would not be in compliance with the laws of such jurisdiction. However,
aurora may, in its sole discretion, take such action as it deems necessary to
extend the offer in any such jurisdiction.
Aurora Cannabis to Acquire H2 Biopharma
Lachute, Quebec Site will be Company's Fourth
Advanced-Technology Production Facility
TSX: ACB
VANCOUVER, Nov. 23, 2017 /CNW/ - Aurora Cannabis Inc. (the
"Company" or "Aurora") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
today announced that the Company has entered into a binding share purchase
agreement to acquire H2 Biopharma Inc. ("H2"). H2 is a late stage ACMPR
applicant based in Lachute, Quebec.
H2 is currently completing a state-of-the-art, purpose-built
48,000 square foot cannabis production facility, less than an hour from Montreal
(the "Lachute Facility"), and near the Pierre-Elliott Trudeau International
Airport. Upon completion, which is anticipated before the end of 2017, the
Lachute Facility is projected to produce approximately 4,500 kilograms of
high-quality cannabis per annum. The facility is located on 46 acres (19
hectares) of land (the "Property"), which H2 has the right to acquire for
$136,000. The Property has access to ample low-cost power, water and
infrastructure to support a very significant capacity expansion – up to or
beyond the scale of the Company's 800,000 square foot Aurora Sky facility,
currently under construction at Edmonton International Airport.
The latest Aurora acquisition will be the Company's fourth
production facility in Canada - and second site in Quebec, in addition to its
40,000 square foot production "Aurora Vie" facility in Pointe-Claire, on the
island of Montreal.
"This is another outstanding transaction that further extends
Aurora's lead in establishing advanced-technology, ultra-efficient, low-cost
production via purpose-built facilities," said Terry Booth, CEO. "The Lachute
Facility, which is 80% complete and has the land and utilities required for
significant additional expansion, is fully consistent with the Aurora Standard,
and will be instrumental in delivering high quality products for the Quebec,
Canadian and overseas markets. Our participation in the final design and
construction of H2's purpose built facility will allow us to leverage our
experience, technology, and systems to improve performance and yields beyond the
original design. Our recent acquisition of Larssen Ltd. and the formation of
Aurora Larssen Projects will play an instrumental role in this respect, and we
look forward to a rapid completion of this project in line with the exceptional
execution we have shown at Aurora Vie, our other Quebec project."
A central fact of the domestic and global emerging markets is
the enormous excess of demand over supply for legal, regulated cannabis
products. By leveraging our powerful cash position and excellent liquidity, as
well as our experience building the most technologically advanced cannabis
facilities, Aurora has a unique ability to acquire top-notch production and
distribution assets at attractive valuations, thereby rapidly expanding capacity
to meet surging Canadian and global demand."
André Jerome, CEO of H2, added, "We are proud to be joining
forces with Aurora, a trail blazer in Canada and around the world in shaping the
legal cannabis industry. With the backing of Aurora's operational and
cultivation know-how, technological innovation and financial strength, we are
confident the Lachute site will be a showcase cannabis production facility, and
an important asset in the Company's execution of its domestic and international
growth strategy."
Consideration
The acquisition is subject to approval by Toronto Stock
Exchange, and other customary closing conditions. An initial payment of $10
million will be made, with further payments in consideration of the acquisition
to be made upon the achievement of certain performance related milestones,
including completion of the Facility, the granting of cultivation and sales
licenses by Health Canada, and municipal approval for expansion of the facility.
The total contingent consideration for the acquisition of H2, including closing
and milestone payments, is $25 million and all payments will be satisfied
through the issuance of Aurora common shares.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and holds approximately 22% of
Edmonton-based Hempco Food and Fiber with the ability to increase holdings to
over 50%. Furthermore, Aurora is the cornerstone investor with a 19.9% stake in
Cann Group Limited, the first Australian company licensed to conduct research on
and cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union,
based in Germany. The Company offers further differentiation through its
acquisition of BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens. Aurora's
common shares trade on the TSX under the symbol "ACB".
On behalf of the Board of Directors,
AURORA CANNABIS
INC.
Terry Booth
CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"), including, but not limited to, statements with
respect to the closing of the Acquisition and the performance of the Company,
including, but not limited to, H2 Biopharma. Forward-looking statements are
frequently characterized by words such as "plan", "continue", "expect",
"project", "intend", "believe", "anticipate", "estimate", "may", "will",
"potential", "proposed" and other similar words, or statements that certain
events or conditions "may" or "will" occur. These statements are only
predictions. Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking statements throughout this news
release. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/November2017/23/c5470.html
%SEDAR: 00025675E
For further information:
Cam Battley, Executive Vice
President, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc Lakmaaker,
Director, Investor Relations and Corporate Development, +1.647.289.6640,
marc.lakmaaker@auroramj.com
CO: Aurora Cannabis Inc.
CNW 17:05e 23-NOV-17
Aurora Cannabis Acquires Leading Global Greenhouse Design
Firm Larssen Ltd.
Creating a Turnkey Cannabis Cultivation Powerhouse - ALPS
(Aurora Larssen Projects Inc.)
TSX: ACB
VANCOUVER, Nov. 23, 2017 /CNW/ - Aurora Cannabis Inc. (the
"Company" or "Aurora") (TSX: ACB) (OTCQX: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
announced today that the Company has signed a definitive agreement for the
acquisition of 100% of the issued and outstanding shares (the "Acquisition") of
Larssen Ltd ("Larssen"). The terms of the transaction are undisclosed, but
include performance-based milestone payments, such as those related to
profitability metrics, as well as certain Aurora standards.
Larssen, a Canadian company that has set the industry standard
in high-tech, automated, environmentally controlled greenhouses for over 30
years, has consulted on the design, engineering, and construction oversight of
many of the world's most advanced greenhouse cultivation facilities. Best known
for the successful implementation of cutting-edge automation features,
proprietary design characteristics that generate exceptional yields, and the use
of advanced energy efficient materials and technologies, Larssen has been
involved with over 1,000 projects around the globe.
Following a thorough review process, Aurora selected Larssen to
design, engineer, and oversee construction of its Aurora Sky facility, which
upon completion is expected to be the largest capacity and most technologically
advanced cannabis facility in the world, producing ultra-low cost,
premium-quality cannabis. Larssen is currently involved with over 15 cannabis
industry clients globally, including 5 Canadian licensed producers. The Canadian
deals will be vetted by the Company's management team. Any Canadian project
deemed not to be in the best interest of Aurora shareholders will be notified
that ALPS will no longer participate in such project. We expect this process to
take no longer than 3 weeks.
Upon completion of the transaction, Larssen will be integrated
into a newly incorporated subsidiary, Aurora Larssen Projects Ltd. ("ALPS"),
focused on providing a unique turn-key service offering to Aurora and its
domestic and international partners, that will over time provide 360-degree
solutions for facility design, engineering, construction, support, maintenance,
security, regulatory support, cultivation, genetics, as well as provide
consulting and assistance in regard to meeting requirements for GACP cultivation
and EU GMP certification.
Thomas Larssen, the principal of Larssen, will serve as
President of ALPS and will continue to oversee Aurora's cultivation
infrastructure expansion. Management anticipates that the growth of ALPS will be
driven by the continued rapid evolution of the cannabis industry in Canada and
around the globe.
"The acquisition of Larssen is an immediately accretive,
high-margin revenue generating opportunity that also extends our technological
leadership in the cannabis sector," said Terry Booth, CEO. "We know Thomas and
his team very well, as they have been instrumental in the design and engineering
of our revolutionary Aurora Sky facility. This will help make the integration of
Larssen with Aurora seamless. The establishment of ALPS will add significant
capacity to our project execution team, enabling us to further accelerate the
expansion of our global presence. I look forward to working with Thomas and his
team as we pursue new opportunities going forward."
Differentiating transaction with strong strategic
rationale
|
|
•
|
For fiscal 2018 (the 12-month period ending September 30,
2018), Larssen is on pace to generate approximately $6 million in
revenues, with an EBITDA margin exceeding 40%.
|
|
|
•
|
Through direct ownership and providing a stronger
supportive infrastructure, Larssen will be able to dedicate additional
resources to developing unique technologies exclusively for Aurora,
further extending the Company's industry-leading innovation track record;
|
|
|
•
|
Given Larssen's reputation and visibility within the
industry, Aurora will gain immediate access to an expanded universe of
international M&A and partnership opportunities;
|
|
|
•
|
Aurora is executing on an aggressive expansion strategy
that is likely to include further construction projects. Through Larssen,
the Company will have secured direct access to the services of the world's
pre-eminent turn-key project team in the cannabis sector, enabling
management to focus on growing Aurora rather than allocating significant
resources to project management, as well as save considerable
project-related expenses going forward.
|
Thomas Larssen, Principal of Larssen, added, "We have been at
the cutting edge of greenhouse development for over 30 years, and have never
encountered a team that matches the vision, entrepreneurship and execution as
demonstrated by the people at Aurora. Our decision to join forces with Aurora in
this evolving industry was not difficult. Joining the Company will allow us to
leverage the incredible brand recognition Aurora enjoys, both within and outside
of the cannabis sector. I believe that the resources, infrastructure and
strategic support available at Aurora will help establish ALPS as the world's
leading horticultural engineering venture, and I look forward to making my
contribution to the continued rapid expansion of the Company."
Neil Belot, Chief Global Business Development Officer said,
"The acquisition of Larssen, and the creation of ALPS is another truly
differentiating transaction that exemplifies the Aurora Standard, and separates
us from our competition. Through the integration of our top-calibre teams, we
will rapidly introduce additional high-quality, high-yield, ultra-efficient
cannabis specialized greenhouse and post-harvest processing facilities to new
countries and partners around the globe."
The Acquisition is subject to the completion of customary
closing conditions and the Company anticipates completing the Acquisition within
the coming weeks.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations
("ACMPR"). The
Company operates a 55,200 square foot, state-of-the-art production facility in
Mountain View County, Alberta, known as "Aurora Mountain", a second 40,000
square foot high-technology production facility known as "Aurora Vie" in
Pointe-Claire, Quebec on Montreal's West Island, and is currently constructing
an 800,000 square foot production facility, known as "Aurora Sky", at the
Edmonton International Airport.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
On behalf of the Board of Directors,
AURORA CANNABIS
INC.
Terry Booth
CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"), including, but not limited to, statements with
respect to the closing of the Acquisition and the performance of the Company,
including, but not limited to, Aurora Larssen Projects Inc. Forward-looking
statements are frequently characterized by words such as "plan", "continue",
"expect", "project", "intend", "believe", "anticipate", "estimate", "may",
"will", "potential", "proposed" and other similar words, or statements that
certain events or conditions "may" or "will" occur. These statements are only
predictions. Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking statements throughout this news
release. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/November2017/23/c2550.html
%SEDAR: 00025675E
For further information:
Cam Battley, Executive Vice
President, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc Lakmaaker,
Director, Investor Relations and Corporate Development, +1.647.289.6640,
marc.lakmaaker@auroramj.com
CO: Aurora Cannabis Inc.
CNW 07:30e 23-NOV-17
Aurora and Hempco Announce Closing of $3.2 Million Private
Placement
Partnership Capitalizing on Hemp and CBD Opportunities
TSX: ACB
TSX-V: HEMP
VANCOUVER, Nov. 23, 2017 /CNW/ - Aurora Cannabis Inc. (the
"Company" or "Aurora") (TSX: ACB) (OTCQX: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
and Hempco Food and Fiber Inc. ("Hempco") (TSX-V: HEMP) are pleased to announce
that the companies have completed a non-brokered private placement for gross
proceeds of $3.2 million.
In relation to the placement, which was described in more
detail in a joint news release dated September 18, 2017, Hempco issued
10,558,676 units, at $0.3075 per unit, to Aurora. Each Unit consists of one
Hempco common share and one non-transferable common share purchase warrant. Each
Warrant entitles Aurora to purchase one additional Hempco Share at a price of
$0.41 until the second anniversary of the closing date. Each Warrant includes an
acceleration clause, providing that if at any time beginning four months and one
day after the date the warrant was issued the volume weighted average price per
Hempco share on the TSX Venture Exchange (
"TSXV"
) exceeds $0.65 for a
period of 30 consecutive calendar days, Hempco will have a limited right to
accelerate the expiration date of the Warrants.
The securities issued in connection with the private placement
are subject to a four-month hold period under applicable securities laws.
Consequently the placement, Aurora now holds approximately 33.6% of Hempco on a
fully-diluted basis. Additionally, Aurora has an option to purchase further
shares from two of Hempco's principal owners, which, upon full exercise, would
increase Aurora's take in Hempco to over 50%.
Management Commentary
"We are very pleased to now be a major investor in, and partner
with Hempco", said Terry Booth, CEO of Aurora. "The finalization of this
investment coincides with the proposed Health Canada regulations that, once
implemented, will allow Hempco to pursue its whole-plant-utilization vision, and
launch new product lines. Our partnership will also allow both companies to
benefit from being able to source this material to produce high quality and
lower cost CBD products for sale in Canada and for export."
Charles Holmes, CEO of Hempco, added "The completion of the
Private Placement marks a monumental milestone for Hempco and cements the
relationship with Aurora as its strategic partner. We are now able to complete
our new processing facility, implement our go-to-market strategy for new
products, including our new line of animal feed products, and access new sales
channels to further accelerate growth. With the proposed changes in legislation
and the resources available to Hempco under the strong and supportive
partnership with Aurora, we will now be able to dramatically accelerate the
implementation of our commercial strategy and pursue growth aggressively, both
within Canada and globally."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
About Hempco
For more than 12 years Hempco has been a trusted and respected
pioneer, innovator and provider of premier hemp seed foods. Hempco is committed
to developing hemp foods, hemp fiber and hemp nutraceuticals, a "tri-crop"
opportunity for producers and processors. Hempco is expanding its processing
ability to meet global demands in a 56,000sq. ft. facility located at Nisku,
Alberta. Hempco's common shares trade on the TSX Venture Exchange under the
symbol "HEMP". Hempco® has grown its business significantly and is generating
value and profits for shareholders.
On behalf of the Board of Directors
|
Terry Booth
|
Charles Holmes
|
|
Chief Executive Officer, Aurora
|
Chief Executive Officer, Hempco
|
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. Aurora
and Hempco are under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX, nor TSX-V, nor their Regulation Services
Provider (as that term is defined in the policies of Toronto Stock Exchange and
TSX Venture Exchange) accept responsibility for the adequacy or accuracy of this
release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/November2017/23/c6590.html
%SEDAR: 00025675E
For further information:
For Aurora: Cam Battley,
Executive Vice President, +1.905.864.5525, cam@auroramj.com, www.auroramj.com;
Marc Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.289.6640, marc.lakmaaker@auroramj.com; For Hempco: John Ross, Chief
Financial Officer, +1.647.291.4234, john@hempcocanada.com
CO: Aurora Cannabis Inc.
CNW 06:30e 23-NOV-17
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver, BC V6E 3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
November 29, 2017
A news release issued on November 29,
2017, at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. launches takeover
bid for CanniMed, invites CanniMed shareholders to tender to the bid.
Full Description of Material
Change
Please see attached news release dated
November 29, 2017.
|
Item 5.
|
Full Description of Material
Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email: cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive
Officer
Mobile: (780) 722 - 8889
Email:
terry@auroramj.com
DATED November 29, 2017.
|
November 29, 2017
|
TSX: ACB
|
|
|
|
Aurora Cannabis Launches Takeover Bid for CanniMed, Invites
CanniMed Shareholders
to Tender to the Bid
|
|
•
|
Offer currently valued at $24.00 per CanniMed
share
|
|
|
•
|
56.9% premium to CanniMed closing price prior to
Aurora’s takeover proposal announcement
|
|
|
•
|
Lockup agreements already in place with shareholders
holding 38% of CanniMed shares,
including Cannimed’s 3 largest
shareholders
|
Vancouver, BC – November 24, 2017 –
Aurora Cannabis Inc.
(the “
Company
” or “
Aurora
”) (TSX: ACB) announced today that,
further to its press release of November 17, 2017, it has formally commenced its
offer (the “
Offer
”) to purchase all of the issued and outstanding common
shares (the “
CanniMed Shares
”) of CanniMed Therapeutics Inc.
(“
CanniMed
”) (TSX: CMED) for consideration consisting of common shares of
Aurora (the “
Aurora Shares
”).
Notice and advertisement of the Offer was placed in the
November 24, 2017 edition of the Globe & Mail, and a takeover bid circular
will be mailed to CanniMed shareholders. In addition, Aurora will file the offer
and takeover bid circular and related documents (the “
Offer Documents
”)
on SEDAR. The Offer Documents will also be available on Aurora’s website at
www.auroramj.com
and shareholders are invited to visit
cannimed.auroramj.com
for further information.
The price being offered by Aurora for each CanniMed Share,
which would currently be equivalent to the Cap Price (as such term is defined
below) of $24.00 payable in Aurora Shares given Aurora’s closing share price of
$6.42 on November 22, 2017, represents a compelling premium of 56.9% over the
closing price of CanniMed Shares on November 14, 2017 (the last day prior to the
public disclosure of Aurora’s intention to pursue a combination with CanniMed),
and a 74.7% premium over the volume weighted average price (“
VWAP
”) for
CanniMed Shares for the last 20 trading days ended November 14, 2017.
Terms of the Offer
The Offer will provide holders of CanniMed Shares with
4.52586207 Aurora Shares for each CanniMed Share, subject to a maximum of $24.00
(the “
Cap Price
”) in Aurora Shares. If, on the earlier of the expiry time
of the Offer and the date on which all conditions to the Offer have been
satisfied, the 20-day volume weighted average price (the “
Calculation
Date
VWAP
”) of Aurora Shares traded on the TSX is greater than $5.30
per Aurora Share, the number of Aurora Shares that a holder of CanniMed Shares
will receive will be calculated by dividing the Cap Price of $24.00 by the
Calculation Date VWAP.
The Offer will be remain open for acceptance until 11:59 p.m.
(Pacific time) on March 9, 2018. Subject to applicable secuities laws, the
deposit period may be extended, or in certain circumstances reduced, by Aurora.
In light of CanniMed’s proposed alternative transaction with Newstrike Resources
Ltd. (the “
Newstrike Resources Alternative Transaction
”), Aurora has
applied to the Financial and Consumer Affairs Authority of Saskatchewan and the
Ontario Securities Commission to obtain an order reducing the minimum deposit
period for the Offer in order to allow CanniMed’s shareholders to consider the
Offer concurrently with the Newstrike Resources Alternative Transaction.
CanniMed shareholders are advised, however, that there is no assurance such
relief will be obtained.
Compelling Strategic Rationale for the Aurora-CanniMed
Combination
Aurora continues to believe that the combination of the two
companies is extremely compelling, in the best interest of both CanniMed’s and
Aurora’s shareholders, and will accelerate growth and shareholder value creation
for the combined entity, further extending Aurora’s leadership position within
the global cannabis sector.
“We are excited to be able to present this offer to CanniMed’s
shareholders. We are confident that they will find the significant premium we
are offering on CanniMed’s shares is highly attractive, and is amplified by the
opportunity to participate in the growth of the combined company through
Aurora’s common shares,” said Terry Booth, CEO of Aurora. “Our ability to unlock
value is one of the driving forces behind our offer, as we believe that we will
be able to accelerate CanniMed’s growth more effectively than current
management, and so we invite and encourage CanniMed’s shareholders to tender
their shares to the bid.”
By combining with Aurora, CanniMed will be able to leverage
certain of Aurora’s strengths to expand its business. The combined company will
have an expanded geographic footprint, increased production capacity, an
expanded product portfolio and other synergistic benefits, such as:
|
|
•
|
Increased Oil Production
. High throughput oil
production through Aurora’s strategic extraction partner, Radient
Technologies Inc., to satisfy growing international demand;
|
|
|
•
|
CanvasRx
. Aurora’s wholly owned subsidiary,
CanvasRx Inc., is the industry leading physician education and patient
counselling services company, having helped over 35,000 patients register
with licensed producers;
|
|
|
•
|
Accelerated Growth Through Innovation.
CanniMed
will be able to leverage Aurora’s sector leadership in execution,
technology integration and innovation for the purpose of accelerating
development and growth potential;
|
|
|
•
|
eCommerce.
CanniMed will have access to Aurora’s
e-commerce platform, including the only mobile app in Canada that enables
customer purchases;
|
|
|
•
|
Same Day Delivery.
CanniMed will have access to
Aurora’s same-day delivery capabilities; and
|
|
|
•
|
Strong Cash Position and Balance Sheet to Support
Additional Growth.
Aurora`s sector- leading cash position and balance
sheet will enable faster roll-out of initiatives for CanniMed to
accelerate growth.
|
In addition to Aurora’s standalone strengths, which can be
leveraged to build CanniMed’s brand and revenues, a combined Aurora-CanniMed
would have:
|
|
•
|
Over 130,000 kg of Funded Capacity
. Funded
capacity of over 130,000 kilograms of annual production (including both
current facilities and facilities under construction), with significant
additional capacity planned and funded;
|
|
|
•
|
Expanded International Presence
– A strengthened
international presence with operations and agreements across North
America, the European Union, Australia, South Africa, and the Cayman
Islands;
|
|
|
•
|
6 State-of-the-Art Facilities
. Significant
cultivation capacity with six state-of-the-art facilities;
|
|
|
•
|
Increased Export Capacity
. Multiple EU
GMP-compliant production facilities and significantly increased export
capacity;
|
|
|
•
|
Genetics
. Expansion of both companies’ portfolio
of genetics;
|
|
|
•
|
Broader Product Portfolio
. The combination of each
company’s product lines will broaden the number of product offerings,
delivery mechanisms, and devices;
|
|
|
•
|
Strategic Product Synergies
. Complementary product
offerings which will provide better opportunities for market penetration
in new sectors; and
|
|
|
•
|
Improved Yields
. Expected enhanced production
yields and product quality through cross- application of proprietary
technologies and intellectual property from each of Aurora and CanniMed.
|
Reasons to Tender to the Aurora-CanniMed Combination
Among other reasons, CanniMed’s shareholders are encouraged to
tender their shares to the Offer because:
|
|
•
|
Receive a Premium vs. Pay a Premium.
The Offer
provides CanniMed Shareholders the opportunity to receive a 56.9% premium
over the closing price of CanniMed Shares on November 14, 2017, the last
day prior to the public disclosure of Aurora’s intention to pursue a
combination with CanniMed, and a 74.7% premium over the VWAP over the last
twenty trading days ended on November 14, 2017. In contrast, the Newstrike
Resources Alternative Transaction has CanniMed Shareholders paying a 26%
premium to the Newstrike closing price as at November 6, 2017, the last
day prior to market speculation in Newstrike shares.
|
|
|
•
|
High Likelihood of Completion.
Aurora believes
that there is a high likelihood that more than 66 2/3% of the outstanding
shares will be tendered to the Offer, and therefore the Offer will be
successful, given that the Offer is already supported by 38% of CanniMed
Shareholders (the “
Locked-Up Shareholders
”).
|
|
|
•
|
Support of Major Shareholders.
The Locked-up
Shareholders include CanniMed’s three largest shareholders, which
represent 38% of CanniMed Shares. The Locked-up Shareholders have already
agreed to tender their shares in favour of the Offer and are precluded
from tendering any of their common shares in favour of any other competing
acquisition proposal relating to CanniMed.
|
|
|
•
|
Potential for Downward Share Price Impact if Offer is
Not Accepted.
The Offer represents a significant premium to the market
price of CanniMed Shares prior to the public announcement of Aurora’s
interest to acquire CanniMed. Given the Lock-Up Agreements, Aurora
believes it will be extremely difficult for CanniMed to proceed with an
alternative competing transaction to the Offer. If the Offer is not
successful and no competing transaction is made, Aurora believes the
trading price of CanniMed shares may decline to pre-Offer levels.
|
|
|
•
|
Continued Participation with an Industry Leader
.
Aurora has rapidly become a globally significant cannabis company with a
proven track record of exceptional shareholder value creation. Since
receiving its first license to cultivate from Health Canada in February
2015, Aurora has completed a number of acquisitions and investments,
completed capital programs to expand facilities, and developed marketing
and delivery capabilities, demonstrating an ability to be agile,
innovative and execute its business plans. The Offer provides CanniMed
shareholders the opportunity to continue to participate in the compelling
industry growth alongside the established and successful track record of
Aurora.
|
|
|
•
|
Increased Scale, Capital Markets Presence and Access
to Capital.
The pro forma combined company would have, based on the
current trading price of the Aurora Shares, a market capitalization
approaching $3.5 billion, in addition to significantly enhanced liquidity
relative to CanniMed, providing greater access to capital. Aurora has cash
of more than $180 million (increasing to $340 million upon completion of
its current capital initiatives), relative to only $54 million for
CanniMed based on its most recent quarterly financial statements. Aurora’s
capitalization makes it well positioned to continue pursuing its
aggressive global expansion and differentiation strategy.
|
Conditions of the Offer
The Offer is subject to a number of customary conditions,
including: (i) there being deposited under the Offer, and not withdrawn, at
least 66 % of the outstanding CanniMed Shares (calculated on a fully diluted
basis), excluding any CanniMed Shares held by Aurora; (ii) the proposed
acquisition of Newstrike Resources Inc. announced by CanniMed in its new release
of November 17, 2017 shall not have proceeded, and shall have been terminated;
(iii) receipt of all governmental, regulatory and third party approvals that
Aurora considers necessary or desirable in connection with the Offer; (iv) no
material adverse change having occurred in the business, affairs, prospects or
assets of CanniMed; and (v) the minimum tender and other conditions set out in
National Instrument 62-104
Take-Over Bids and Issuer Bids
. In addition,
in accordance with the policies of the TSX, Aurora requires the approval of its
shareholders to issue the Aurora Shares to be distributed by it in connection
with the Offer. Aurora will call a meeting of its shareholders to consider a
resolution to approve the issuance of Aurora Shares in connection with the Offer
in early 2018.
Acknowledgement of CanniMed Special Committee
Aurora acknowleges that, as announced in a press release on
November 22, 2017, the Board of Directors of CanniMed has formed a Special
Committee to review the Offer, and Aurora remains open to a dialogue whereby the
parties can work toward a constructive, mutually agreeable transaction in a
timely manner.
“The initial decision of CanniMed not to explore our proposal
was unfortunate.” said Ronan Levy, Aurora’s Vice President of Business and
Corporate Affairs. “However, we are hopeful that CanniMed’s Special Committee
will see, as we do, that the financial and strategic rationales for a
combination with Aurora are compelling, and that the transaction is in the best
interests of CanniMed’s shareholders. We remain available for productive
conversations with the Special Committee such that the benefits of the
combination can begin to be realized by the shareholders of both of our
companies as soon as possible.”
Advisors
Aurora has retained Canaccord Genuity Corp. as its financial
advisor in connection with the Offer. McMillan LLP is acting as the legal
advisor to Aurora for the Offer. Laurel Hill Advisory Group has also been
retained by Aurora as its Depositary and Information Agent in connection with
the Offer. Shareholders with questions regarding Aurora’s Offer can contact
Laurel Hill at 1-877-452-7184 (or +1-416-304-0211 – collect call for
shareholders outside North America).
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations
("ACMPR"). The
Company operates a 55,200 square foot, state-of-the-art production facility in
Mountain View County, Alberta, known as "Aurora Mountain", a second 40,000
square foot high-technology production facility known as “Aurora Vie” in
Pointe-Claire, Quebec on Montreal’s West Island, and is currently constructing
an 800,000 square foot production facility, known as "Aurora Sky", at the
Edmonton International Airport.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
###
Further information:
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
Director, Investor Relations and
|
|
+1.905.864.5525
|
Corporate Development
|
|
cam@auroramj.com
|
+1.647.269.5523
|
|
www.auroramj.com
|
marc.lakmaaker@auroramj.com
|
SHAREHOLDER QUESTIONS
Questions may be directed to Aurora's Depositary and
Information Agent at:
Laurel Hill Advisory Group
North America Toll Free: 1-877-452-7184
Collect Calls Outside North America: 1-416-304-0211
Email:
assistance@laurelhill.com
This news release contains certain “forward-looking
statements” within the meaning of such statements under applicable securities
law. Forward-looking statements are frequently characterized by words such as
“plan”, “continue”, “expect”, “project”, “intend”, “believe”, “anticipate”,
“estimate”, “may”, “will”, “potential”, “proposed” and other similar words, or
statements that certain events or conditions “may” or “will” occur. These
statements are only predictions. Forward looking statements in release include
statements regarding the proposed terms of the business combination of Aurora
with CanniMed (the “Combination”), the timing or potential for discussions
regarding the Combination, the expected benefits of the Combination, and the
anticipated market capitalization of the combined entity. Various assumptions
were used in drawing the conclusions or making the projections contained in the
forward-looking statements throughout this news release, including assumptions
based upon CanniMed’s publicly disclosed information, and that there will be no
change in the business, prospects or capitalization of CanniMed or Aurora.
Forward-looking statements include, but are not limited to, the successful
completion of the Offering and the use of proceeds of the Offering and the
Company’s intention to continue international and domestic expansion.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made and the accuracy and completeness of
publicly available information regarding CanniMed, and are subject to a variety
of risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
expressly required by applicable law. A more complete discussion of the risks
and uncertainties facing the Company appears in the Company’s Annual Information
Form and continuous disclosure filings, which are available at
www.sedar.com.
In particular, this News Release contains forward-looking
information concerning:
|
(i)
|
the Offer, various terms of the Offer and the
anticipated timing of completion of the Offer;
|
|
|
|
|
(ii)
|
expectations with respect to synergies and
efficiencies that may be achieved upon a combination of the businesses of
Aurora and CanniMed and other benefits of a combination of the businesses
of Aurora and CanniMed; and
|
|
|
|
|
(iii)
|
expectations with respect to business and geographical
diversification of the combined entity.
|
Readers are cautioned not to place undue reliance on forward
looking statements.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Cautionary Statement Respecting CanniMed Information
The information concerning CanniMed contained in this News
Release has been taken from, or is based upon, publicly available information
filed by CanniMed with securities regulatory authorities in Canada prior to the
date of this News Release and other public sources. CanniMed has not reviewed
this News Release and has not confirmed the accuracy and completeness of the
CanniMed information contained herein. Neither Aurora, nor any of the officers
or directors of Aurora, assumes any responsibility for the accuracy or
completeness of such CanniMed information or any failure by CanniMed to disclose
events or facts that may have occurred, or which may affect the significance or
accuracy of any such CanniMed information, but which are unknown to Aurora.
Aurora has no means of verifying the accuracy or completeness of any of the
CanniMed information contained in this News Release or whether there has been a
failure by CanniMed to disclose events or facts that may have occurred or may
affect the significance or accuracy of any such information.
Notice to U.S. Holders
The Offer will be made for the securities of a company formed
outside of the United States. The Offer will be subject to disclosure
requirements of Canada that are different from those of the United States.
Financial statements included in the documents, if any, will be prepared in
accordance with Canadian accounting standards and may not be comparable to the
financial statements of United States companies.
It may be difficult for a securityholder in the United States
to enforce his/her/its rights and any claim a securityholder may have arising
under the U.S. federal securities laws, since the issuer is located in Canada,
and some or all of its officers or directors may be residents of Canada or
another country outside of the United States. A securityholder may not be able
to sue a Canadian company or its officers or directors in a court in Canada or
elsewhere outside of the United States for violations of U.S. securities laws.
It may be difficult to compel a Canadian company and its affiliates to subject
themselves to a U.S. court’s judgment.
Securityholders should be aware that the issuer may purchase
securities otherwise than under the Offer, such as in open market purchases.
.
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver, BC V6E 3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
November 29, 2017
A news release issued on November 29,
2017, at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. completes $115
million financing.
Full Description of Material
Change
Please see attached news release dated
November 29, 2017.
|
Item 5.
|
Full Description of Material
Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice President
Phone: (905) 878-5525
Mobile:
(905) 864-5525
Email: cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive
Officer
Mobile: (780) 722 - 8889
Email:
terry@auroramj.com
DATED November 29, 2017.
|
November 29, 2017
|
TSX: ACB
|
|
|
|
NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S.
NEWSWIRE SERVICES
Aurora Cannabis Completes $115 Million Financing
Special Warrants Convertible into 6% Unsecured Convertible
Debentures
at $6.50 Per Common Share
Vancouver, BC – November 28, 2017 –
Aurora Cannabis Inc.
(the “Company” or “Aurora”) (TSX: ACB) today announced that, further to its news
release dated November 16, 2017, the Company has completed its offering of
115,000 special warrants (the "Initial Special Warrants"), including the
exercise, in full, of the over-allotment option (the "Special Warrants"),
through Canaccord Genuity Corp. (“Canaccord Genuity” or the “Agent”) for gross
proceeds of $115 million (the “Offering”).
Each Special Warrant shall be automatically exercisable
(without payment of any further consideration and subject to customary
anti-dilution adjustments) into $1,000 principal amount of 6% unsecured
convertible debentures of the Company (the "Debentures") on the date (the
"Automatic Exercise Date") that is the earlier of: (i) the date that is three
business days following the date on which the Company obtains a receipt from the
applicable securities regulatory authorities in Canada (the "Securities
Commissions") for a (final) short form prospectus qualifying the distribution of
the Debentures issuable upon exercise of the Special Warrants (the
"Qualification Prospectus"), and (ii) the date that is four months and one day
after the closing date.
The Debentures will have a maturity date of 5 years from the
Closing Date of the Offering (the "Maturity Date") will bear interest from the
Automatic Exercise Date at 6% per annum, payable semi-annually on June 30 and
December 31 of each year. The Debentures will be convertible, at the option of
the holder, into common shares of the Company ("Common Shares") at any time
prior to the close of business on the Maturity Date at a conversion price of
$6.50 per Common Share (the "Conversion Price").
Upon a change of control of the Company, holders of the
Debentures will have the right to require the Company to repurchase their
Debentures, in whole or in part, on the date that is 30 days following the
giving of notice of the change of control, at a price equal to 104% of the
principal amount of the Debentures then outstanding plus accrued and unpaid
interest thereon (the "Offer Price"). If 90% or more of the principal amount of
the Debentures outstanding on the date of the notice of the change of control
have been tendered for redemption, the Company will have the right to redeem all
of the remaining Debentures at the Offer Price.
All securities issued in connection with the Offering are
subject to a statutory four month hold period, subject to the earlier filing of
a Qualification Prospectus with the Securities Commissions qualifying such
securities for resale, as applicable. There is no assurance that a Qualification
Prospectus will be filed or that a receipt therefor will be obtained prior to
the expiry of the statutory four month hold period.
Beginning on the date that is four months plus one day
following the closing date, the Company may force the conversion of all of the
principal amount of the then outstanding Debentures at the Conversion Price on
not less than 30 days prior written notice should the daily volume weighted
average trading price of the Common Shares be greater than $9.00 for any 10
consecutive trading days.
The Company intends to use the net proceeds of the Offering for
working capital requirements, planned facilities expansion and other general
corporate purposes.
The securities offered have not been, nor will they be,
registered under the United States Securities Act of 1933, as amended, and may
not be offered or sold in the United States or to, or for the account or benefit
of, U.S. persons absent registration or an applicable exemption from the
registration requirements. This press release shall not constitute an offer to
sell or the solicitation of an offer to buy nor shall there be any sale of the
securities in any State in which such offer, solicitation or sale would be
unlawful.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as “Aurora Vie” in Pointe-Claire,
Quebec on Montreal’s West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport, as well as is completing a fourth facility in Lachute,
Quebec through its wholly owned subsidiary Aurora Larssen Projects Ltd.
In addition, the Company holds approximately 9.6% of the issued
shares (12.9% on a fully-diluted basis) in leading extraction technology company
Radient Technologies Inc., based in Edmonton, and is in the process of
completing an investment in Edmonton-based Hempco Food and Fiber for an
ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone investor
with a 19.9% stake in Cann Group Limited, the first Australian company licensed
to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
Further information:
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
Director, Investor Relations and
|
|
+1.905.864.5525
|
Corporate Development
|
|
cam@auroramj.com
|
+1.647.269.5523
|
|
www.auroramj.com
|
marc.lakmaaker@auroramj.com
|
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
(“forward-looking statements”), including, but not limited to, statements with
respect to the proposed use of proceeds from the Offering. Forward-looking
statements are frequently characterized by words such as "plan", "continue",
"expect", "project", "intend", "believe", "anticipate", "estimate", "may",
"will", "potential", "proposed" and other similar words, or statements that
certain events or conditions "may" or "will" occur. These statements are only
predictions. Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking statements throughout this news
release. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
|
|
|
INDENTURE
|
|
|
|
(Made as of November 28, 2017
|
|
|
|
Between
|
|
|
AURORA CANNABIS INC.
(the “
Corporation
”)
|
|
|
|
and
|
|
|
COMPUTERSHARE TRUST COMPANY OF CANADA
(the
“
Trustee
”)
|
|
|
|
|
TABLE OF CONTENTS
|
RECITALS
|
|
1
|
|
|
|
|
|
ARTICLE 1 – INTERPRETATION
|
1
|
|
|
Section 1.1 Definitions
|
1
|
|
|
Section 1.2 Meaning of
“Outstanding”
|
7
|
|
|
Section 1.3 Interpretation
|
8
|
|
|
Section 1.4 Headings, etc.
|
9
|
|
|
Section 1.5 Time of Essence
|
9
|
|
|
Section 1.6 Monetary References
|
9
|
|
|
Section 1.7 Invalidity, etc.
|
9
|
|
|
Section 1.8 Language
|
9
|
|
|
Section 1.9 Successors and Assigns
|
10
|
|
|
Section 1.10 Severability
|
10
|
|
|
Section 1.11 Entire Agreement
|
10
|
|
|
Section 1.12 Benefits of
Indenture
|
10
|
|
|
Section 1.13 Applicable Law and Attornment
|
10
|
|
|
Section 1.14 Currency of
Payment
|
10
|
|
|
Section 1.15 Non-Business Days
|
11
|
|
|
Section 1.16 Accounting Terms
|
11
|
|
|
Section 1.17 Calculations
|
11
|
|
|
Section 1.18 Schedules
|
11
|
|
|
|
|
|
ARTICLE 2 – THE DEBENTURES
|
11
|
|
|
Section 2.1 Issue of Global Debentures
|
11
|
|
|
Section 2.2 Limit of Debentures
|
13
|
|
|
Section 2.3 Terms of Debentures of any Series
|
13
|
|
|
Section 2.4 Form of Debentures
|
14
|
|
|
Section 2.5 Form and Terms of Initial
Debentures
|
15
|
|
|
Section 2.6 Certification and
Delivery of Additional Debentures
|
20
|
|
|
Section 2.7 Non-Certificated Deposit
|
21
|
|
|
Section 2.8 Execution of
Debentures
|
23
|
|
|
Section 2.9 Certification
|
23
|
|
|
Section 2.10 Interim Debentures
or Certificates
|
24
|
|
|
Section 2.11 Mutilation, Loss, Theft or
Destruction
|
24
|
|
|
Section 2.12 Concerning
Interest
|
25
|
|
|
Section 2.13 Debentures to Rank Pari Passu
|
25
|
|
|
Section 2.14 Payments of
Amounts Due on Maturity
|
25
|
|
|
Section 2.15 U.S. Legend
|
26
|
|
|
Section 2.16 Payment of
Interest
|
28
|
|
|
|
|
|
ARTICLE 3 – REGISTRATION,
TRANSFER, EXCHANGE AND OWNERSHIP
|
29
|
|
|
Section 3.1 Global Debentures or Book Based
Only Debentures
|
29
|
|
|
Section 3.2 Fully Registered
Debentures
|
32
|
|
|
Section 3.3 Transferee Entitled to Registration
|
34
|
|
|
Section 3.4 No Notice of Trusts
|
34
|
|
|
Section 3.5 Registers Open for Inspection
|
34
|
|
|
Section 3.6 Exchanges of
Debentures
|
35
|
(i)
|
|
Section 3.7 Closing of
Registers
|
35
|
|
|
Section 3.8 Charges for Registration, Transfer
and Exchange
|
36
|
|
|
Section 3.9 Ownership of
Debentures
|
36
|
|
|
|
|
|
ARTICLE 4 – PURCHASE OF
DEBENTURES
|
37
|
|
|
Section 4.1 Purchase of Debentures by the
Corporation
|
37
|
|
|
Section 4.2 Deposit of Maturity
Monies
|
37
|
|
|
|
|
|
ARTICLE 5 – SUBORDINATION OF
DEBENTURES
|
38
|
|
|
Section 5.1 Applicability of Article
|
38
|
|
|
Section 5.2 Order of Payment
|
38
|
|
|
Section 5.3 Subrogation to Rights of Holders of
Secured Indebtedness
|
39
|
|
|
Section 5.4 Obligation to Pay
Not Impaired
|
40
|
|
|
Section 5.5 No Payment if Secured Indebtedness
in Default
|
40
|
|
|
Section 5.6 Payment on
Debentures Permitted
|
41
|
|
|
Section 5.7 Confirmation of Subordination
|
41
|
|
|
Section 5.8 Knowledge of
Trustee
|
41
|
|
|
Section 5.9 Trustee May Hold Secured
Indebtedness
|
42
|
|
|
Section 5.10 Rights of Holders
of Secured Indebtedness Not Impaired
|
42
|
|
|
Section 5.11 Altering the Secured Indebtedness
|
42
|
|
|
Section 5.12 Additional
Indebtedness
|
42
|
|
|
Section 5.13 Right of Debentureholder to
Convert Not Impaired
|
42
|
|
|
Section 5.14 Invalidated
Payments
|
42
|
|
|
Section 5.15 Contesting Security
|
43
|
|
|
|
|
|
ARTICLE 6 – CONVERSION OF DEBENTURES
|
43
|
|
|
Section 6.1 Applicability of
Article
|
43
|
|
|
Section 6.2 Notice of Expiry of Conversion
Privilege
|
43
|
|
|
Section 6.3 Revival of Right to
Convert
|
43
|
|
|
Section 6.4 Manner of Exercise of Right to
Convert
|
44
|
|
|
Section 6.5 Adjustment of
Conversion Price
|
45
|
|
|
Section 6.6 No Requirement to Issue Fractional
Common Shares
|
52
|
|
|
Section 6.7 Forced Conversion
|
52
|
|
|
Section 6.8 Corporation to Reserve Common
Shares
|
53
|
|
|
Section 6.9 Cancellation of
Converted Debentures
|
53
|
|
|
Section 6.10 Certificate as to Adjustment
|
53
|
|
|
Section 6.11 Notice of Special
Matters
|
53
|
|
|
Section 6.12 Protection of Trustee
|
54
|
|
|
Section 6.13 Restricted CUSIP
or U.S. Legend on Certain Common Shares
|
54
|
|
|
|
|
|
ARTICLE 7 – COVENANTS OF THE
CORPORATION
|
55
|
|
|
Section 7.1 To Pay Principal, Premium (if any)
and Interest
|
55
|
|
|
Section 7.2 To Pay Trustee’s
Remuneration
|
55
|
|
|
Section 7.3 To Give Notice of Default
|
55
|
|
|
Section 7.4 Preservation of
Existence, etc.
|
55
|
|
|
Section 7.5 Keeping of Books
|
56
|
|
|
Section 7.6 Annual Certificate
of Compliance
|
56
|
|
|
Section 7.7 Performance of Covenants by Trustee
|
56
|
|
|
Section 7.8 Maintain Listing
|
56
|
|
|
Section 7.9 No Dividends on Common Shares if
Event of Default
|
56
|
|
|
Section 7.10 Withholding
Matters
|
57
|
|
|
Section 7.11 SEC Reporting Status
|
57
|
|
|
|
|
|
ARTICLE 8 – DEFAULT
|
58
|
|
|
Section 8.1 Events of Default
|
58
|
|
|
Section 8.2 Notice of Events of Default
|
60
|
|
|
Section 8.3 Waiver of Default
|
61
|
|
|
Section 8.4 Enforcement by the Trustee
|
61
|
|
|
Section 8.5 No Suits by
Debentureholders
|
63
|
|
|
Section 8.6 Application of Monies by Trustee
|
63
|
|
|
Section 8.7 Notice of Payment
by Trustee
|
64
|
|
|
Section 8.8 Trustee May Demand Production of
Debentures
|
64
|
|
|
Section 8.9 Remedies Cumulative
|
64
|
|
|
Section 8.10 Judgment Against the Corporation
|
65
|
|
|
Section 8.11 Immunity of
Directors, Officers and Others
|
65
|
|
|
|
|
|
ARTICLE 9 – SATISFACTION AND
DISCHARGE
|
65
|
|
|
Section 9.1 Cancellation and Destruction
|
65
|
|
|
Section 9.2 Non-Presentation of
Debentures
|
65
|
|
|
Section 9.3 Repayment of Unclaimed Monies
|
66
|
|
|
Section 9.4 Discharge
|
66
|
|
|
Section 9.5 Satisfaction
|
66
|
|
|
Section 9.6 Continuance of
Rights, Duties and Obligations
|
68
|
|
|
|
|
|
ARTICLE 10 – SUCCESSORS
|
69
|
|
|
Section 10.1 Corporation may Consolidate, etc.,
Only on Certain Terms
|
69
|
|
|
Section 10.2 Successor
Substituted
|
70
|
|
|
|
|
|
ARTICLE 11 – COMPULSORY
ACQUISITION
|
70
|
|
|
Section 11.1 Definitions In this Article:
|
70
|
|
|
Section 11.2 Offer for
Debentures
|
71
|
|
|
Section 11.3 Offeror’s Notice to Dissenting
Shareholders
|
71
|
|
|
Section 11.4 Delivery of
Debenture Certificates
|
72
|
|
|
Section 11.5 Payment of Consideration to
Trustee
|
72
|
|
|
Section 11.6 Consideration to
be held in Trust
|
72
|
|
|
Section 11.7 Completion of Transfer of
Debentures to Offeror
|
72
|
|
|
Section 11.8 Communication of
Offer to the Corporation
|
73
|
|
|
|
|
|
ARTICLE 12 – MEETINGS OF
DEBENTUREHOLDERS
|
73
|
|
|
Section 12.1 Right to Convene Meeting
|
73
|
|
|
Section 12.2 Notice of Meetings
|
73
|
|
|
Section 12.3 Chairman
|
75
|
|
|
Section 12.4 Quorum
|
75
|
|
|
Section 12.5 Power to Adjourn
|
76
|
|
|
Section 12.6 Show of Hands
|
76
|
|
|
Section 12.7 Poll
|
76
|
|
|
Section 12.8 Voting
|
76
|
|
|
Section 12.9 Proxies
|
77
|
|
|
Section 12.10 Persons Entitled
to Attend Meetings
|
77
|
|
|
Section 12.11 Powers Exercisable by
Extraordinary Resolution
|
77
|
|
|
Section 12.12 Meaning of
“Extraordinary Resolution”
|
79
|
|
|
Section 12.13 Powers Cumulative
|
80
|
|
|
Section 12.14 Minutes
|
80
|
|
|
Section 12.15 Instruments in
Writing
|
80
|
|
|
Section 12.16 Binding Effect of Resolutions
|
81
|
|
|
Section 12.17 Evidence of
Rights Of Debentureholders
|
81
|
|
|
Section 12.18 Concerning Serial Meetings
|
81
|
|
|
|
|
|
ARTICLE 13 – NOTICES
|
81
|
|
|
Section 13.1 Notice to
Corporation
|
81
|
|
|
Section 13.2 Notice to Debentureholders
|
82
|
|
|
Section 13.3 Notice to Trustee
|
82
|
|
|
Section 13.4 Mail Service Interruption
|
82
|
|
|
|
|
|
ARTICLE 14 – CONCERNING THE TRUSTEE
|
83
|
|
|
Section 14.1 No Conflict of
Interest
|
83
|
|
|
Section 14.2 Replacement of Trustee
|
83
|
|
|
Section 14.3 Duties of Trustee
|
84
|
|
|
Section 14.4 Reliance Upon Declarations,
Opinions, etc.
|
84
|
|
|
Section 14.5 Evidence and
Authority to Trustee, Opinions, etc.
|
84
|
|
|
Section 14.6 Officer’s Certificates Evidence
|
86
|
|
|
Section 14.7 Experts, Advisers
and Agents
|
86
|
|
|
Section 14.8 Trustee May Deal in Debentures
|
86
|
|
|
Section 14.9 Investment of
Monies Held by Trustee
|
86
|
|
|
Section 14.10 Trustee Not Ordinarily Bound
|
87
|
|
|
Section 14.11 Trustee Not
Required to Give Security
|
87
|
|
|
Section 14.12 Trustee Not Bound to Act on
Trust’s Request
|
87
|
|
|
Section 14.13 Conditions
Precedent to Trustee’s Obligations to Act Hereunder
|
87
|
|
|
Section 14.14 Authority to Carry on Business
|
88
|
|
|
Section 14.15 Compensation and
Indemnity
|
88
|
|
|
Section 14.16 Acceptance of Trust
|
89
|
|
|
Section 14.17 Third Party
Interests
|
89
|
|
|
Section 14.18 Anti-Money Laundering
|
89
|
|
|
Section 14.19 Privacy Laws
|
89
|
|
|
Section 14.20 Force Majeure
|
90
|
|
|
|
|
|
ARTICLE 15 – SUPPLEMENTAL INDENTURES
|
90
|
|
|
Section 15.1 Supplemental
Indentures
|
90
|
|
|
|
|
|
ARTICLE 16 – EXECUTION AND FORMAL
DATE
|
91
|
|
|
Section 16.1 Execution
|
91
|
|
|
Section 16.2 Formal Date
|
92
|
|
|
|
|
|
Schedule A – Form of Debenture
|
1
|
|
|
|
|
Schedule B – Form of Notice of
Conversion
|
1
|
|
|
|
|
Schedule C – Common Share Legend
|
1
|
|
|
|
|
Schedule D –Form of Certificate
of Transfer
|
1
|
|
|
|
|
Schedule E –Form of Certificate
Of Exchange
|
1
|
|
|
|
|
Schedule F – Form of U.S.
Purchaser Letter
|
1
|
INDENTURE
This Agreement is made as of November 28, 2017, between
AURORA CANNABIS INC
.
a
corporation existing under the laws of the Province of British
Columbia and
having its head office in the City of Vancouver, in
the Province of British
Columbia
(the “
Corporation
”)
AND
COMPUTERSHARE TRUST COMPANY OF CANADA
a trust company existing under the laws of Canada and registered
to
carry on business in the Province of British Columbia
(the “
Trustee
”)
RECITALS
The
Corporation wishes to create and issue the Debentures (as herein defined) in the
manner and subject to the terms and conditions of this Indenture; FOR VALUE
RECEIVED, the parties agree as follows:
ARTICLE 1– INTERPRETATION
Section 1.1
Definitions
In this
Indenture and in the Debentures, unless there is something in the subject matter
or context inconsistent therewith, the expressions following shall have the
following meanings, namely:
(1)
“1933 Act”
means the
United States
Securities Act of 1933
, as amended, and the rules and
regulations promulgated thereunder;
(2)
“90% Redemption Right”
has the meaning ascribed thereto in clause 2.5(7)(b);
(3)
“this Indenture”
,
“this Convertible Debenture Indenture”
,
“hereto”
,
“herein”
,
“hereby”
,
“hereunder”
,
“hereof”
and similar expressions
refer to this Indenture and not to any particular Article, Section, subsection,
clause, subdivision or other portion hereof and include any and every instrument
supplemental or ancillary hereto;
(4)
“Additional
Debentures”
means Debentures of any one or more series, other than the first
series of Debentures, being the Initial Debentures, issued under this Indenture;
- 2 -
(5)
“Applicable Securities
Legislation”
means applicable securities laws (including rules, regulations,
policies and instruments) in each of the applicable provinces and territories of
Canada;
(6)
“Auditors of the
Corporation”
means an independent firm of chartered accountants duly
appointed as auditors of the Corporation;
(7)
“Beneficial Holder”
means any Person who holds a beneficial interest in a Debenture that is
represented by a Debenture Certificate or an Uncertificated Debenture registered
in the name of such person’s nominee;
(8)
“Board of Directors”
means the board of directors of the Corporation;
(9) “
Book Based Only
Debentures
” means Debentures issued under this Indenture in non-certificated
form which are held only by way of book based (electronic) register maintained
by the Trustee;
(10)
“Business Day”
means
any day other than a Saturday, Sunday or any other day that the Trustee in
Vancouver, British Columbia is not generally open for business;
(11)
“Change of Control”
means: (i) any event as a result of or following which a Person or group of
Persons acting jointly or in concert within the meaning of Applicable Securities
Legislation, beneficially owns or exercises control or direction over an
aggregate of more than 50% of the then outstanding Common Shares; or (ii) the
sale or other transfer of all or substantially all of the consolidated assets of
the Corporation, unless the holders of voting securities of the Corporation
immediately prior to such sale, merger, reorganization or other similar
transaction hold securities representing 50% or more of the voting control or
direction in the Corporation or the successor entity upon completion of such
merged, reorganized or other continuing entity;
(12)
“Change of Control
Notice”
has the meaning ascribed thereto in subsection 2.5(7);
(13)
“Change of Control
Offer”
has the meaning ascribed thereto in subsection 2.5(7);
(14)
“Change of Control
Purchase Date”
has the meaning ascribed thereto in subsection 2.5(7);
(15)
“Common Shares”
means
the common shares in the capital of the Corporation, as such common shares are
constituted on the date of execution and delivery of this Indenture; provided
that in the event of a change or a subdivision, revision, reduction, combination
or consolidation thereof, any reclassification, capital reorganization,
consolidation, amalgamation, arrangement, merger, sale or conveyance or
liquidation, dissolution or winding- up, or such successive changes,
subdivisions, redivisions, reductions, combinations or consolidations,
reclassifications, capital reorganizations, consolidations, amalgamations,
arrangements, mergers, sales or conveyances or liquidations, dissolutions or
windings-up, then, subject to adjustments, if any, having been made in
accordance with the provisions of Section 6.5,
“Common Shares”
shall, as
the context may require, mean the shares or other securities or property
resulting from such change, subdivision, redivision, reduction, combination or
consolidation, reclassification, capital reorganization, consolidation,
amalgamation, arrangement, merger, sale or conveyance or liquidation,
dissolution or winding-up;
- 3 -
(16)
“Conversion Price”
means the dollar amount for which each Common Share may be issued from time to
time upon the conversion of Debentures or any series of Debentures which are by
their terms convertible in accordance with the provisions of Article 6;
(17)
“Corporation”
means
Aurora Cannabis Inc. and includes any successor to or of the Corporation which
shall have complied with the provisions of Article 10;
(18)
“Counsel”
means a
barrister or solicitor or firm of barristers or solicitors retained or employed
by the Trustee or retained or employed by the Corporation and reasonably
acceptable to the Trustee;
(19)
“Current Market
Price”
means, generally, the VWAP of the Common Shares on the TSX, if the
Common Shares are listed on the TSX, for the 20 consecutive trading days ending
on the date immediately preceding the applicable date. If the Common Shares are
not listed on the TSX, reference shall be made for the purpose of the above
calculation to the principal securities exchange or market on which the Common
Shares are listed or quoted or if no such prices are available “
Current
Market Price
” shall be the fair value of a Common Share as reasonably
determined by the Board of Directors;
(20)
“Date of Conversion”
has the meaning ascribed thereto in subsection 6.4(2);
(21)
“Debenture Certificate”
means a certificate evidencing Debentures substantially in the form attached
as Schedule A hereto;
(22)
“Debenture
Liabilities”
has the meaning ascribed thereto in Section 5.1;
(23)
“Debentureholders”
or
“holders”
means the Persons for the time being entered in the register
for Debentures as registered holders of Debentures or any transferees of such
Persons by endorsement or delivery;
(24)
“Debentures”
means
the debentures, notes or other evidence of indebtedness of the Corporation
issued and certified hereunder, or deemed to be issued and certified hereunder,
including, without limitation, the Initial Debentures, and for the time being
outstanding, whether in definitive, uncertificated or interim form;
(25) “
Deemed Exercise
Date
” means the deemed exercise of the Special Warrants;
(26)
“Defeased Debentures”
has the meaning ascribed thereto in subsection 9.6(2);
(27)
“Depository” or “CDS”
means CDS Clearing and Depository Services Inc. and its successors in interest;
(28)
“Event of Default”
has the meaning ascribed thereto in Section 8.1;
- 4 -
(29)
“Extraordinary
Resolution”
has the meaning ascribed thereto in Section 12.12;
(30) “
Forced Conversion
Date
” has the meaning ascribed thereto in Section 6.7;
(31) “
Forced Conversion
Notice
” has the meaning ascribed thereto in Section 6.7
(32) “
Fully Registered
Debentures
” means Debentures registered as to both principal and
interest;
(33)
“Global Debenture
”
means a Debenture that is issued to and registered in the name of the
Depository, or its nominee, pursuant to Section 2.6 for the purpose of being
held by or on behalf of the Depository as custodian for participants in the
Depository’s book-entry only registration system or non-certificated inventory
system;
(34)
“Government
Obligations”
means securities issued or guaranteed by the Government of
Canada or any province thereof;
(35)
“Guarantees”
means
any guarantee, undertaking to assume, endorse, contingently agree to purchase,
or to provide funds for the payment of, or otherwise become liable in respect
of, any indebtedness, liability or obligation of any Person;
(36)
“Ineligible
Consideration”
shall have the meaning ascribed to it in Section 6.5(n);
(37)
“IFRS”
means
International Financial Reporting Standards issued by the International
Accounting Standards Board (including as further described in Section 1.16);
(38)
“Initial Debentures”
means the Debentures designated as “6.0% Unsecured Convertible Debentures” and
described in Section 2.5;
(39)
“Interest Payment
Date”
means a date specified in a Debenture as the date on which interest on
such Debenture shall become due and payable;
(40) “
Internal Procedures
”
means in respect of the making of any one or more entries to, changes in or
deletions of any one or more entries in the register of Debentureholders at any
time (including without limitation, original issuance or registration of
transfer of ownership) the minimum number of the Trustee’s internal procedures
customary at such time for the entry, change or deletion made to be complete
under the operating procedures followed by the time by the Trustee, it being
understood that neither preparation and issuance shall constitute part of such
procedures for any purpose of this definition;
(41)
“Material Subsidiary”
means any Subsidiary of the Corporation which has consolidated assets equal to
or greater than 10% of the consolidated assets of the Corporation and its
Subsidiaries;
(42)
“Maturity Account”
means an account or accounts required to be established by the Corporation (and
which shall be maintained by and subject to the control of the Trustee) for each
series of Debentures issued pursuant to and in accordance with this Indenture;
- 5 -
(43)
“Maturity Date”
means
the date specified for maturity of any Debentures;
(44)
“Merger Event”
has
the meaning ascribed thereto in Section 6.5(d);
(45)
“NI 62-104”
means
National Instrument 62-104 —
Take-Over Bids and Issuer Bids
;
(46)
“Non-Recourse Debt”
means any indebtedness, liabilities or other obligations (including purchase
money obligations), and Guarantees, indemnities, endorsements (other than
endorsements for collection in the ordinary course of business) or other
contingent obligations in respect of obligations of another Person and, in each
case, incurred to finance the creation, development, construction or acquisition
of real and tangible personal property (including fixtures) and any increases in
or extensions, renewals or refunding of any such indebtedness, liabilities and
obligations, provided that the recourse of the lender thereof or any agent,
trustee, receiver or other Person acting on behalf of the lender in respect of
such indebtedness, liabilities and obligations or any judgment in respect
thereof is limited in all circumstances to the real and tangible personal
property (including fixtures) created, developed, constructed or acquired in
respect of which such indebtedness, liabilities and obligations have been
incurred and to any receivables, inventory, equipment, chattel paper,
intangibles and other rights or collateral arising from or connected with such
property (and, for certainty, shall include the shares or other ownership
interests of a Subsidiary of the Corporation which holds only such property and
other rights and collateral arising from or connected therewith) and to which
the lender has recourse;
(47)
“Offer Price”
has the
meaning ascribed thereto in subsection 2.5(7);
(48)
“Offering”
means the
private placement of up to 115,000 Special Warrants;
(49)
“Offeror’s Notice”
has the meaning ascribed thereto in Section 11.3;
(50)
“Officer’s
Certificate”
means a certificate of the Corporation signed by any authorized
officer or director of the Corporation, in their capacity as an officer or
director of the Corporation, and not in their personal capacity;
(51) “
Participant
” means a
Person recognized by CDS as a participant in the non-certificated inventory
system administered by CDS;
(52)
“Periodic Offering”
means an offering of Debentures of a series from time to time, the specific
terms of which Debentures, including, without limitation, the rate or rates of
interest, if any, thereon, the stated maturity or maturities thereof and the
redemption provisions, if any, with respect thereto, are to be determined by the
Corporation upon the issuance of such Debentures from time to time;
(53)
“Person”
includes an
individual, corporation, company, partnership, joint venture, association,
trust, trustee, unincorporated organization or government or any agency or
political subdivision thereof (and for the purposes of the definition of
“Change of Control”
, in addition to the foregoing,
“Person”
shall
include any syndicate or group that would be deemed to be a
“Person”
under NI 62-104);
- 6 -
(54)
“Privacy Laws”
has
the meaning ascribed thereto in Section 14.19;
(55)
“Qualified Institutional
Buyer”
means a “qualified institutional buyer” as such term is defined in
Rule 144A under the 1933 Act;
(56)
“Regulation S”
means
Regulation S adopted by the SEC under the 1933 Act;
(57)
“Restricted Debentures”
means collectively the Restricted Uncertificated Debentures and Restricted
Physical Debentures;
(58)
“Restricted Physical
Debenture”
means a definitive Debenture that bears the U.S. Legend;
(59)
“Restricted
Uncertificated Debenture”
means an Uncertificated Debenture that is marked
to bear the U.S. Legend;
(60) “
SEC
” has the meaning
ascribed thereto in Section 7.11;
(61)
“Securities”
has the
meaning ascribed thereto in Section 2.15;
(62)
“Secured Creditor”
means a holder or holders of Secured Indebtedness and includes any
representative or representatives, agent or agents or trustee or trustees of any
such holder or holders;
(63)
“Secured Indebtedness”
means the principal of, the premium (if any) and interest and other
obligations on secured indebtedness, statutory liens (other than statutory liens
where the party is defending same in good faith), secured bank or other
institutional indebtedness, and secured project indebtedness, in each case owing
by the Corporation, or renewals, extensions and refunding of such indebtedness,
including, without limitation: (a) obligations of the Corporation or its
Subsidiaries under any swap, hedging or other similar contracts or arrangements;
(b) all costs and expenses incurred by or on behalf of the holder of any Secured
Indebtedness in enforcing payment or collection of any such Secured
Indebtedness, including enforcing any security interest securing the same.
“Secured Indebtedness” shall not include any indebtedness that would otherwise
be Secured Indebtedness if it is expressly stated to be subordinate to or rank
pari passu
with the Debentures;
(64)
“Serial Meeting”
has
the meaning ascribed thereto in clause 12.2(2)(a);
(65) “
Special Warrants
”
means the 115,000 special warrants of the Corporation issued pursuant to a
special warrant indenture dated November 28, 2017 between the Corporation and
the Trustee;
(66)
“Subsidiary”
has the
meaning ascribed thereto in the
Securities Act
(Ontario);
(67)
“Tax Act”
means the
Income Tax Act
(Canada), as amended;
(68)
“Time of Expiry”
means the time of expiry of certain rights with respect to the conversion of
Debentures under Article 6 which is to be set forth separately in the form and
terms for each series of Debentures which by their terms are to
be convertible, and has the meaning ascribed thereto in subsection 2.5(5) with
respect to the Initial Debentures;
- 7 -
(69)
“trading day”
means,
with respect to the TSX or other market for securities, any day on which such
exchange or market is open for trading or quotation;
(70)
“Trustee”
means
Computershare Trust Company of Canada, or its successor or successors for the
time being as trustee hereunder;
(71) “
TSX
” means the
Toronto Stock Exchange;
(72) “
Uncertificated
Debenture
” means any Debenture which is not issued as part of a Debenture
Certificate;
(73)
“Unclaimed Funds Return
Date”
has the meaning ascribed thereto in clause 2.5(7)(f);
(74)
“United States”
or
“U.S.”
means the United States of America, its territories and
possessions, any state of the United States and the District of Columbia;
(75)
“Unrestricted Debentures”
means collectively Unrestricted Physical Debentures and Unrestricted
Uncertificated Debentures;
(76)
“Unrestricted Physical
Debenture”
means a definitive Debenture that does not bear the U.S.
Legend;
(77)
“Unrestricted
Uncertificated Debenture”
means a Debenture that is not marked to bear the
U.S. Legend;
(78)
“U.S. Legend”
has the
meaning ascribed thereto in Section 2.15;
(79) “
U.S. Securities Exchange
Act
” means the United States Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder;
(80)
“VWAP”
means the per
share volume weighted average trading price of the Common Shares for the
applicable period (which must be calculated utilizing days in which the Common
Shares actually trade) on the TSX (or if the Common Shares are no longer traded
on the TSX, on such other exchange as the Common Shares are then traded);
(81)
“Withholding Taxes”
has the meaning ascribed to it in Section 7.10; and
(82)
“Written Direction of the
Corporation”
means an instrument in writing signed by any one officer or
director of the Corporation.
Section 1.2
Meaning of “Outstanding”
Every
Debenture certified and delivered by the Trustee or every Uncertificated
Debenture authenticated by the Trustee by completing its internal procedures
hereunder shall be deemed to be outstanding until it is cancelled, converted or redeemed or
delivered to the Trustee for cancellation, conversion or redemption for monies
and/or Common Shares, as the case may be, or the payment thereof shall have been
set aside under Section 9.2, provided that:
- 8 -
|
|
(a)
|
Debentures which have been partially redeemed, purchased
or converted shall be deemed to be outstanding only to the extent of the
unredeemed, unpurchased or unconverted part of the principal amount
thereof;
|
|
|
|
|
|
|
(b)
|
when a new Debenture has been issued in substitution for
a Debenture which has been lost, stolen or destroyed, only one of such
Debentures shall be counted for the purpose of determining the aggregate
principal amount of Debentures outstanding; and
|
|
|
|
|
|
|
(c)
|
for the purposes of any provision of this Indenture
entitling holders of outstanding Debentures to vote, sign consents,
requisitions or other instruments or take any other action under this
Indenture, or to constitute a quorum of any meeting of Debentureholders,
Debentures owned directly or indirectly, legally or equitably, by the
Corporation shall be disregarded except that:
|
|
|
(i)
|
for the purpose of determining whether the Trustee shall
be protected in relying on any such vote, consent, requisition or other
instrument or action, or on the holders of Debentures present or
represented at any meeting of Debentureholders, only the Debentures which
the Trustee knows are so owned shall be so disregarded; and
|
|
|
|
|
|
|
(ii)
|
Debentures so owned which have been pledged in good faith
other than to the Corporation shall not be so disregarded if the pledgee
shall establish to the satisfaction of the Trustee the pledgee’s right to
vote such Debentures, sign consents, requisitions or other instruments or
take such other actions in his discretion free from the control of the
Corporation or a Subsidiary of the Corporation.
|
Section 1.3
Interpretation
In this Indenture:
|
|
(a)
|
words importing the singular number or masculine gender
shall include the plural number or the feminine or neuter genders, and
vice versa;
|
|
|
|
|
|
|
(b)
|
all references to Articles and Schedules refer, unless
otherwise specified, to articles of and schedules to this
Indenture;
|
|
|
|
|
|
|
(c)
|
all references to Sections, subsections or clauses refer,
unless otherwise specified, to Sections, subsections or clauses of this
Indenture;
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(d)
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words and terms denoting inclusiveness (such as “include”
or “includes” or “including”), whether or not so stated, are not limited
by and do not imply limitation of their context or the
words or phrases which precede or succeed them;
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(e)
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reference to any agreement or other instrument in writing
means such agreement or other instrument in writing as amended, modified,
replaced or supplemented from time to time;
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(f)
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unless otherwise indicated, reference to a statute shall
be deemed to be a reference to such statute as amended, re-enacted or
replaced from time to time; and
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(g)
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unless otherwise indicated, time periods within which a
payment is to be made or any other action is to be taken hereunder shall
be calculated by including the day on which the period commences and
excluding the day on which the period ends.
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Section 1.4
Headings, etc.
The
division of this Indenture into Articles and Sections, the provision of a Table
of Contents and the insertion of headings are for convenience of reference only
and shall not affect the construction or interpretation of this Indenture or of
the Debentures.
Section 1.5
Time of Essence
Time
shall be of the essence of this Indenture.
Section 1.6
Monetary References
Whenever
any amounts of money are referred to herein, such amounts shall be deemed to be
in lawful money of Canada unless otherwise expressed.
Section 1.7
Invalidity, etc.
Any
provision hereof which is prohibited or unenforceable shall be ineffective only
to the extent of such prohibition or unenforceability, without invalidating the
remaining provisions hereof.
Section 1.8
Language
Each of
the parties hereto hereby acknowledges that it has consented to and requested
that this Indenture and all documents relating hereto, including, without
limiting the generality of the foregoing, the form of Debenture attached hereto
as Schedule A and the form of U.S. Purchaser Letter attached hereto as Schedule
F, be drawn up in the English language only.
- 10 -
Section 1.9
Successors and Assigns
All
covenants and agreements of the Corporation in this Indenture and the Debentures
shall bind its successors and assigns, whether so expressed or not. All
covenants and agreements of the Trustee in this Indenture shall bind its
successors.
Section 1.10
Severability
In case
any provision in this Indenture or in the Debentures shall be invalid, illegal
or unenforceable, such provision shall be deemed to be severed herefrom or
therefrom and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected, prejudiced or impaired thereby.
Section 1.11
Entire Agreement
This
Indenture and all supplemental indentures and Schedules hereto and thereto, and
the Debentures issued hereunder and thereunder, together constitute the entire
agreement between the parties hereto with respect to the indebtedness created
hereunder and thereunder and under the Debentures and supersedes as of the date
hereof all prior memoranda, agreements, negotiations, discussions and term
sheets, whether oral or written, with respect to the indebtedness created
hereunder or thereunder and under the Debentures.
Section 1.12
Benefits of Indenture
Nothing
in this Indenture or in the Debentures, express or implied, shall give to any
Person, other than the parties hereto and their successors hereunder, any paying
agent, the holders of Debentures, the Secured Creditors (to the extent provided
in Article 5 only), and (to the extent provided in Section 8.11) the holders of
Common Shares, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
Section 1.13
Applicable Law and Attornment
This
Indenture, any supplemental indenture and the Debentures shall be governed by
and interpreted in accordance with the laws of the Province of Ontario and the
federal laws of Canada applicable therein and shall be treated in all respects
as Ontario contracts, with respect to any suit, action or proceedings relating
to this Indenture, any supplemental indenture or any Debenture, the Corporation,
the Trustee and each holder irrevocably submit and attorn to the non-exclusive
jurisdiction of the courts of the Province of Ontario.
Section 1.14
Currency of Payment
Unless
otherwise indicated in a supplemental indenture with respect to any particular
series of Debentures, all payments to be made under this Indenture or a
supplemental indenture shall be made in Canadian dollars.
- 11 -
Section 1.15
Non-Business Days
Whenever
any payment to be made hereunder shall be due, any period of time would begin or
end, any calculation is to be made or any other action is to be taken on, or as
of, or from a period ending on, a day other than a Business Day, such payment
shall be made, such period of time shall begin or end, such calculation shall be
made and such other action shall be taken, as the case may be, unless otherwise
specifically provided herein, on or as of the next succeeding Business Day
without any additional interest, cost or charge to the Corporation.
Section 1.16
Accounting Terms
Except
as hereinafter provided or as otherwise indicated in this Indenture, all
calculations required or permitted to be made hereunder pursuant to the terms of
this Indenture shall be made in accordance with IFRS. For greater certainty,
IFRS shall include any accounting standards that may from time to time be
approved for general application by the Canadian Institute of Chartered
Accountants.
Section 1.17
Calculations
The
Corporation shall be responsible for making all calculations called for
hereunder including, without limitation, calculations of Current Market Price.
The Corporation shall make such calculations in good faith and, absent manifest
error, the Corporation’s calculations shall be final and binding on holders and
the Trustee. The Corporation will provide a schedule of its calculations to the
Trustee and the Trustee shall be entitled to rely conclusively on the accuracy
of such calculations without independent verification.
Section 1.18
Schedules
(1) The following Schedules are
incorporated into and form part of this Indenture:
Schedule A – Form of
Debenture
Schedule B – Form of Notice of Conversion
Schedule C – Common
Share Legend
Schedule D –Form of Certificate of Transfer
Schedule E –Form
of Certificate Of Exchange
Schedule F – Form of U.S. Purchaser Letter
(2) In the event of any
inconsistency between the provisions of any Section of this Indenture and the
provisions of the Schedules which form a part hereof, the provisions of this
Indenture shall prevail to the extent of the inconsistency.
ARTICLE 2– THE DEBENTURES
Section 2.1
Issue of Global Debentures
(1) The Corporation may specify
that the Debentures of a series are to be issued in whole or in part as one or
more Global Debentures, that may or may not be Book Based Only Debentures, registered in the name of a Depository, or its nominee,
designated by the Corporation in the Written Direction of the Corporation
delivered to the Trustee at the time of issue of such Debentures, and in such
event the Corporation shall execute and the Trustee shall certify and deliver
one or more Global Debentures that are not Book Based Only Debentures that
shall:
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(a)
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represent an aggregate amount equal to the principal
amount of the outstanding Debentures of such series to be represented by
one or more Global Debentures;
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(b)
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be released by the Trustee as instructed by the
Corporation for further delivery to such Depository or pursuant to such
Depository’s instructions; and
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(c)
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bear a legend substantially to the following effect, or
as may otherwise be required by the
Depositary:
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“THIS DEBENTURE IS A GLOBAL DEBENTURE WITHIN THE MEANING
OF THE INDENTURE HEREIN REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITORY OR A NOMINEE THEREOF. THIS DEBENTURE MAY NOT BE TRANSFERRED TO
OR EXCHANGED FOR DEBENTURES REGISTERED IN THE NAME OF ANY PERSON OTHER
THAN THE DEPOSITORY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE
REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE TRUST
INDENTURE DATED AS OF THE 28
h
DAY OF NOVEMBER, 2017 BETWEEN
AURORA CANNABIS INC. AND COMPUTERSHARE TRUST COMPANY OF CANADA (THE
“
INDENTURE
”). EVERY DEBENTURE AUTHENTICATED AND DELIVERED UPON
REGISTRATION OF, TRANSFER OF, OR IN EXCHANGE FOR, OR IN LIEU OF, THIS
DEBENTURE SHALL BE A GLOBAL DEBENTURE SUBJECT TO THE FOREGOING, EXCEPT IN
SUCH LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
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UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF CDS CLEARING AND DEPOSITORY SERVICES INC. (“
CDS
”)
TO AURORA CANNABIS INC. OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN RESPECT THEREOF IS
REGISTERED IN THE NAME OF CDS & CO., OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS (AND ANY PAYMENT IS MADE
TO CDS & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF CDS), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
SINCE THE REGISTERED HOLDER HEREOF, CDS & CO., HAS A PROPERTY INTEREST
IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE HEREIN AND IT IS A
VIOLATION OF ITS RIGHTS FOR ANOTHER PERSON TO HOLD, TRANSFER OR DEAL WITH
THIS CERTIFICATE.”
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- 13 -
(2) Each Depository designated
for a Global Debenture must, at the time of its designation and at all times
while it serves as such Depository, be a clearing agency registered or
designated under the Applicable Securities Legislation of the jurisdiction where
the Depository has its principal offices.
Section 2.2
Limit of Debentures
The
aggregate principal amount of Debentures authorized to be issued under this
Indenture is unlimited, but Debentures may be issued only upon and subject to
the conditions and limitations herein set forth.
Section 2.3
Terms of Debentures of any Series
(1) The Debentures may be issued
in one or more series. There shall be established herein or in or pursuant to
one or more indentures supplemental hereto, prior to the initial issuance of
Debentures of any particular series:
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(a)
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the designation of the Debentures of the series (which
need not include the term “
Debentures
”), which shall distinguish
the Debentures of the series from the Debentures of all other
series;
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(b)
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any limit upon the aggregate principal amount of the
Debentures of the series that may be certified and delivered under this
Indenture (except for Debentures certified and delivered upon registration
of, transfer of, amendment of, or in exchange for, or in lieu of, other
Debentures of the series pursuant to Sections 2.10, 2.11, Section 3.1 and
Section 3.6 and Article 4 and Article 6);
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(c)
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the date or dates on which the principal of the
Debentures of the series is payable;
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(d)
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the rate or rates at which the Debentures of the series
shall bear interest, if any, the date or dates from which such interest
shall accrue, on which such interest shall be payable and on which record
date, if any, shall be taken for the determination of holders to whom such
interest shall be payable and/or the method or methods by which such rate
or rates or date or dates shall be determined;
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(e)
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the place or places where the principal of and any
interest on Debentures of the series shall be payable or where any
Debentures of the series may be surrendered for registration of transfer
or exchange;
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(f)
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the right, if any, of the Corporation to redeem
Debentures of the series, in whole or in part, at its option and the
period or periods within which, the price or prices at which and any terms
and conditions upon which, Debentures of the series may be so
redeemed;
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(g)
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the obligation, if any, of the Corporation to redeem,
purchase or repay Debentures of the series pursuant to any mandatory
redemption, sinking fund or analogous provisions or at the option of a
holder thereof and the price or prices at which, the period or periods
within which, the date or dates on which, and any terms and conditions
upon which, Debentures of the series shall be redeemed, purchased or
repaid, in whole or in part, pursuant to such obligations;
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(h)
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if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which Debentures of the series
shall be issuable;
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(i)
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subject to the provisions of this Indenture, any trustee,
Depositories, authenticating or paying agents, transfer agents or
registrars or any other agents with respect to the Debentures of the
series;
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(j)
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any other events of default or covenants with respect to
the Debentures of the series;
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(k)
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whether and under what circumstances the Debentures of
the series will be convertible into or exchangeable for securities of any
Person;
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(l)
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the form and terms of the Debentures of the
series;
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(m)
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if applicable, that the Debentures of the series shall be
issuable in certificated or uncertificated form;
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(n)
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if other than Canadian currency, the currency in which
the Debentures of the series are issuable; and
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(o)
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any other terms of the Debentures of the series (which
terms shall not be inconsistent with the provisions of this
Indenture).
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(2) All Debentures of any one
series shall be substantially identical, except as may otherwise be established
herein or by or pursuant to a resolution of the Board of Directors, Officer’s
Certificate or in an indenture supplemental hereto. All Debentures of any one
series need not be issued at the same time and may be issued from time to time,
including pursuant to a Periodic Offering, consistent with the terms of this
Indenture, if so provided herein, by or pursuant to such resolution of the Board
of Directors, Officer’s Certificate or in an indenture supplemental hereto.
Section 2.4
Form of Debentures
Except
in respect of the Initial Debentures, the form of which is provided for herein,
the Debentures of each series shall be substantially in such form or forms (not
inconsistent with this Indenture) as shall be established herein or by or pursuant to
one or more resolutions of the Board of Directors (or to the extent established
pursuant to, rather than set forth in, a resolution of the Board of Directors,
in an Officer’s Certificate detailing such establishment) or in one or more
indentures supplemental hereto, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture, and may have imprinted or otherwise reproduced thereon such
legend or legends or endorsements, not inconsistent with the provisions of this
Indenture, as may be required to comply with any law or with any rules or
regulations pursuant thereto or with any rules or regulations of any securities
exchange or securities regulatory authority or to conform to general usage, all
as may be determined by the directors or officers of the Corporation executing
such Debentures on behalf of the Corporation, as conclusively evidenced by their
execution of such Debentures.
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Section 2.5
Form and Terms of Initial
Debentures
(1) The first series of
Debentures (the “
Initial Debentures
”) authorized for issue immediately is
limited to an aggregate principal amount of up to $115,000,000 and shall be
designated as “6.0% Unsecured Convertible Debentures”.
(2) The Initial Debentures shall
be dated as of the Deemed Exercise Date and shall mature on November 28, 2022
(the “
Maturity Date
” for the Initial Debentures).
(3) The Initial Debentures shall
bear interest from the date of closing of the Offering at the rate of 6.0% per
annum (based on a year of 360 days comprised of twelve 30-day months), payable
in equal (with the exception of the first interest payment, which will include
interest from and including the date of closing of the Offering as set forth
below, and, if the Initial Debentures are issued at any time following December
31, 2017, the second interest payment, which will include interest from the date
following issuance of the Initial Debentures to the next interest payment date)
semi-annual payments in arrears on June 30 and December 31 in each year, the
first such payment to fall due on December 31, 2017 and the last such payment
(representing interest payable from the last Interest Payment Date to, but
excluding, the Maturity Date of the Initial Debentures) to fall due on November
28, 2022, payable after as well as before maturity and after as well as before
default, with interest on amounts in default at the same rate, compounded
semi-annually. For certainty, in the event that the Initial Debentures are
issued (i) on or before December 31, 2017, the first interest payment will
include interest accrued from November 28, 2017 to December 31, 2017, which will
be equal to $5.50 for each $1,000 principal amount of Initial Debentures; or
(ii) at any time following December 31, 2017, the first interest payment will
include interest accrued from November 28, 2017 to the date that the Initial
Debentures are so issued and, notwithstanding anything to the contrary contained
herein, shall be payable on the Business Day immediately following the date of
issuance. Any payment required to be made on any day that is not a Business Day
will be made on the next succeeding Business Day. The record date for the
payment of interest on the Initial Debentures will be that date which is five
Business Days prior to each Interest Payment Date.
(4) The Initial Debentures will
be subordinated to all existing and future Secured Indebtedness of the
Corporation in accordance with the provisions of Article 5. The Initial
Debentures will rank
pari passu
with each other series of Debentures
issued under this Indenture or under indentures supplemental to this Indenture (regardless
of their actual date or terms of issue) and, except as prescribed by law, with
all other existing and future unsecured indebtedness of the Corporation, other
than Secured Indebtedness.
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(5) Upon and subject to the
provisions and conditions of Article 6 and Section 3.7, the holder of each
Initial Debenture shall have the right at such holder’s option, at any time
prior to the close of business on the earliest of (i) the Business Day
immediately preceding the Maturity Date of the Initial Debentures; or (ii) if
subject to repurchase pursuant to a Change of Control, on the Business Day
immediately preceding the payment date, subject to the satisfaction of certain
conditions, by notice to the holders of Initial Debentures in accordance with
Section 2.5(7)
(the earlier of which will be the “
Time of Expiry
”
for the purposes of Article 6 in respect of the Initial Debentures), to convert
any part, being $1,000 or an integral multiple thereof, of the principal amount
of a Debenture into Common Shares at the Conversion Price in effect on the Date
of Conversion. Notwithstanding the foregoing, no Initial Debentures may be
converted on an Interest Payment Date or during the five Business Days preceding
each Interest Payment Date.
The Conversion Price in effect on the date hereof for each
Common Share to be issued upon the conversion of Initial Debentures shall be
equal to $6.50 such that approximately 153.8462 Common Shares shall be issued
for each $1,000 principal amount of Initial Debentures so converted. Except as
provided below, no adjustment in the number of Common Shares to be issued upon
conversion will be made for dividends or distributions on Common Shares issuable
upon conversion, the record date for the payment of which precedes the date upon
which the holder becomes a holder of Common Shares in accordance with Article 6,
or for interest accrued on Initial Debentures surrendered. No fractional Common
Shares will be issued, and holders will receive a cash payment in satisfaction
of any fractional interest based on the Current Market Price as of the Date of
Conversion, provided, however, the Corporation shall not be required to make any
payment of less than $1.00. The Conversion Price applicable to, and the Common
Shares, securities or other property receivable on the conversion of, the
Initial Debentures is subject to adjustment pursuant to the provisions of
Section 6.5. Holders converting their Initial Debentures will receive, in
addition to the applicable number of Common Shares, accrued and unpaid interest
(less any taxes required to be deducted) in respect of the Initial Debentures
surrendered for conversion up to but excluding the Date of Conversion from, and
including, the most recent Interest Payment Date. For clarity, payment of such
interest may, at the option of the Corporation, be paid on the next regularly
scheduled Interest Payment Date following the Date of Conversion.
The Conversion Price will not be adjusted for accrued interest.
Notwithstanding any other provisions of this Indenture, if a
Debenture is surrendered for conversion on an Interest Payment Date or during
the five preceding Business Days, the Person or Persons entitled to receive
Common Shares in respect of the Debenture so surrendered for conversion shall
not become the holder or holders of record of such Common Shares until the
Business Day following such Interest Payment Date and, for clarity, any interest
payable on such Debentures will be for the account of the holder of record of
such Debentures at the close of business on the relevant record date.
- 17 -
A Debenture in respect of which a holder has accepted a notice
in respect of a Change of Control Offer pursuant to the provisions of subsection
2.5(7) may be surrendered for conversion only if such notice is withdrawn in
accordance with this Indenture.
(6) The Initial Debentures shall
be issued in denominations of $1,000 and integral multiples of $1,000. Each
Initial Debenture and the certificate of the Trustee endorsed thereon shall be
issued in substantially the form set out in Schedule A, with such insertions,
omissions, substitutions or other variations as shall be required or permitted
by this Indenture, and may have imprinted or otherwise reproduced thereon such
legend or legends or endorsements, not inconsistent with the provisions of this
Indenture, as may be required to comply with any law or with any rules or
regulations pursuant thereto or with any rules or regulations of any securities
exchange or securities regulatory authority or to conform with general usage,
all as may be determined by the Board of Directors executing such Initial
Debenture in accordance with Section 2.8 hereof, as conclusively evidenced by
their execution of an Initial Debenture. Each Initial Debenture shall
additionally bear such distinguishing letters and numbers as the Trustee shall
approve. Notwithstanding the foregoing, an Initial Debenture may be in such
other form or forms as may, from time to time, be, approved by a resolution of
the Board of Directors, or as specified in an Officer’s Certificate. The Initial
Debentures may be engraved, lithographed, printed, mimeographed or typewritten
or partly in one form and partly in another.
The Initial Debentures shall be issued in the form of one or
more Debenture Certificates, shall bear the U.S. Legend, if applicable, and as
Uncertificated Debentures.
(7) Within 30 days following a
Change of Control, and subject to the provisions and conditions of this
subsection 2.5(7), the Corporation shall, at the discretion of the
Debentureholders, be obligated to offer to purchase or convert all of the
Initial Debentures then outstanding. The terms and conditions of such obligation
are set forth below:
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(a)
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Not less than 30 days following the occurrence of a
Change of Control, the Corporation shall deliver to the Trustee, and the
Trustee shall promptly deliver to the holders of the Initial Debentures, a
notice stating that there has been a Change of Control and specifying the
date on which such Change of Control occurred and the circumstances or
events giving rise to such Change of Control (a
“Change of Control
Notice
”). Prior to the Change of Control Purchase Date (as defined
below), the Debentureholders shall, in their sole discretion, have the
right to require the Corporation to, either: (i) purchase the Debentures
at 104% of the principal amount thereof plus unpaid interest to the
Maturity Date (the “
Offer Price
”); or (ii) convert the Debentures
at the Conversion Price (the “
Change of Control Offer
”). The
“
Change of Control Purchase Date”
shall be the date that is 30
Business Days after the date of the Change of Control Notice is delivered
to holders of Initial Debentures.
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(b)
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If 90% or more in aggregate principal amount of Initial
Debentures outstanding on the date the Corporation provides the Change of
Control Notice to holders of the Initial Debentures have been surrendered
for purchase pursuant to the Change of Control Offer on the
expiration thereof, the Corporation has the right upon written notice provided
to the Trustee within 10 days following the expiration of the Change of Control
Offer, to redeem all the Initial Debentures remaining outstanding on the
expiration of the Change of Control Offer at the Offer Price as at the Change of
Control Purchase Date (the
“90% Redemption Right
”).
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(c)
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Upon receipt of notice that the Corporation has exercised
or is exercising the 90% Redemption Right and is acquiring the remaining
Initial Debentures, the Trustee shall promptly provide written notice to
each Debentureholder that did not previously accept the Change of Control
Offer that:
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(i)
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the Corporation has exercised the 90% Redemption Right
and is purchasing all outstanding Initial Debentures effective on the
expiry of the Change of Control Offer at the Offer Price, and shall
include a calculation of the amount payable to such holder as payment of
the Offer Price as at the Change of Control Purchase Date;
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(ii)
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each such holder must transfer their Initial Debentures
to the Trustee on the same terms as those holders that accepted the Change
of Control Offer and must send their respective Initial Debentures, duly
endorsed for transfer, to the Trustee within 10 days after the sending of
such notice; and
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(iii)
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the rights of such holder under the terms of the Initial
Debentures and this Indenture cease effective as of the date of expiry of
the Change of Control Offer provided the Corporation has, on or before the
time of notifying the Trustee of the exercise of the 90% Redemption Right,
paid the Offer Price to, or to the order of, the Trustee and thereafter
the Initial Debentures shall not be considered to be outstanding and the
holder shall not have any right except to receive such holder’s Offer
Price upon surrender and delivery of such holder’s Initial Debentures in
accordance with the Indenture.
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(d)
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The Corporation shall, on or before 11:00 a.m. (Vancouver
time) on the Business Day immediately prior to the Change of Control
Purchase Date, deposit with the Trustee or any paying agent to the order
of the Trustee, such sums of money as may be sufficient to pay the Offer
Price of the Initial Debentures to be purchased or redeemed by the
Corporation on the Change of Control Purchase Date (less any tax required
by law to be deducted in respect of accrued and unpaid interest), provided
the Corporation may elect to satisfy this requirement by providing the
Trustee with a certified cheque or wire transfer for such amounts required
under this clause 2.5(7)(d) post-dated to the date of expiry of the Change
of Control Offer. The Corporation shall also deposit with the Trustee a
sum of money sufficient to pay any charges or expenses which may be
incurred by the Trustee in connection with such purchase. Every such
deposit shall be irrevocable. From the sums so deposited, the Trustee
shall pay or cause to be paid to the holders of such Initial Debentures,
the Offer Price to which they are entitled (less any tax
required by law to be deducted in respect of accrued and unpaid interest) on the
Corporation’s purchase.
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(e)
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In the event that one or more of such Initial Debentures
being purchased in accordance with this subsection 2.5(7) becomes subject
to purchase in part only, upon surrender of such Initial Debentures for
payment of the Offer Price, the Corporation shall execute and the Trustee
shall certify and deliver without charge to the holder thereof or upon the
holder’s order, one or more new Initial Debentures for the portion of the
principal amount of the Initial Debentures not purchased.
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(f)
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Initial Debentures for which holders have accepted the
Change of Control Offer and Initial Debentures which the Corporation has
elected to redeem in accordance with this subsection 2.5(7) shall become
due and payable at the Offer Price on the Change of Control Purchase Date,
in the same manner and with the same effect as if it were the date of
maturity specified in such Initial Debentures, anything therein or herein
to the contrary notwithstanding, and from and after the Change of Control
Purchase Date, if the money necessary to purchase or redeem, or the Common
Shares necessary to purchase or redeem, the Initial Debentures shall have
been deposited as provided in this subsection 2.5(7) and affidavits or
other proofs satisfactory to the Trustee as to the publication and/or
mailing of such notices shall have been lodged with it, interest on the
Initial Debentures shall cease. If any question shall arise as to whether
any notice has been given as above provided and such deposit made, such
question shall be decided by the Trustee whose decision shall be final and
binding upon all parties in interest.
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(g)
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In case the holder of any Initial Debenture to be
purchased or redeemed in accordance with this subsection 2.5(7) shall fail
on or before the Change of Control Purchase Date to so surrender such
holder’s Initial Debenture or shall not within such time accept payment of
the monies payable, to take delivery of certificates representing such
Common Shares issuable in respect thereof, or give such receipt therefor,
if any, as the Trustee may require, such monies may be set aside in trust,
or such certificates may be held in trust, without interest, either in the
deposit department of the Trustee or in a chartered bank, and such setting
aside shall for all purposes be deemed a payment to the Debentureholder of
the sum or the Common Shares so set aside and the Debentureholder shall
have no other right except to receive payment of the monies so paid and
deposited, or take delivery of the certificates so deposited, or both,
upon surrender and delivery of such holder’s Initial Debenture. In the
event that any money or certificates representing Common Shares required
to be deposited hereunder with the Trustee or any depository or paying
agent on account of principal, premium, if any, or interest, if any, on
Initial Debentures issued hereunder shall remain so deposited for a period
of six years from the Change of Control Purchase Date, then such monies,
or certificates representing Common Shares, together with any accumulated
interest thereon, or any distributions paid thereon, shall at the end of such
period be paid over or delivered over by the Trustee or such depository or
paying agent to the Corporation and the Trustee shall not be responsible to
Debentureholders for any amounts owing to them. Notwithstanding the foregoing,
the Trustee will pay any remaining funds deposited hereunder on that date which
is six years after the Change of Control Purchase Date (the “
Unclaimed Funds
Return Date
”) to the Corporation upon receipt from the Corporation of an
unconditional letter of credit from a Canadian chartered bank in an amount equal
to or in excess of the amount of the remaining funds. If the remaining funds are
paid to the Corporation prior to the Unclaimed Funds Return Date, the
Corporation shall reimburse the Trustee for any amounts required to be paid by
the Trustee to a holder of a Debenture pursuant to the Change of Control Offer
after the date of such payment of the remaining funds to the Corporation but
prior to the Unclaimed Funds Return Date.
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- 20 -
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(h)
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Subject to the provisions above related to Initial
Debentures purchased in part, all Initial Debentures redeemed and paid
under this subsection 2.5(7) shall forthwith be delivered to the Trustee
and cancelled and no Initial Debentures shall be issued in substitution
therefor.
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Section 2.6
Certification and Delivery of
Additional Debentures
The
Corporation may from time to time request the Trustee to certify and deliver
Additional Debentures of any series by delivering to the Trustee the documents
referred to below in this Section 2.6 whereupon the Trustee shall certify such
Debentures and cause the same to be delivered in accordance with the Written
Direction of the Corporation referred to below or pursuant to such procedures
acceptable to the Trustee as may be specified from time to time by a Written
Direction of the Corporation. The maturity date, issue date, interest rate (if
any) and any other terms of the Debentures of such series shall be set forth in
or determined by or pursuant to such Written Direction of the Corporation and
procedures. In certifying such Debentures, the Trustee shall be entitled to
receive and shall be fully protected in relying upon, unless and until such
documents have been superseded or revoked:
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(a)
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an Officer’s Certificate and/or executed supplemental
indenture by or pursuant to which the form and terms of such Additional
Debentures were established;
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(b)
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a Written Direction of the Corporation requesting
certification and delivery of such Additional Debentures and setting forth
delivery instructions, provided that, with respect to Debentures of a
series subject to a Periodic Offering:
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(i)
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such Written Direction of the Corporation may be
delivered by the Corporation to the Trustee prior to the delivery to the
Trustee of such Additional Debentures of such series for certification and
delivery;
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(ii)
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the Trustee shall certify and deliver Additional
Debentures of such series for original issue from time to time, in an
aggregate principal amount not exceeding the aggregate principal
amount, if any, established for such series, pursuant to a Written Direction of
the Corporation or pursuant to procedures acceptable to the Trustee as may be
specified from time to time by a Written Direction of the Corporation;
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- 21 -
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(iii)
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the maturity date or dates, issue date or dates, interest
rate or rates (if any) and any other terms of Additional Debentures of
such series shall be determined by an executed supplemental indenture or
by Written Direction of the Corporation or pursuant to such procedures;
and
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(iv)
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if provided for in such procedures, such Written
Direction of the Corporation may authorize certification and delivery
pursuant to oral or electronic instructions from the Corporation which
oral or electronic instructions shall be promptly confirmed in
writing;
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(c)
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an opinion of Counsel, in form and substance satisfactory
to the Trustee, acting reasonably, to the effect that all requirements
imposed by this Indenture and by law in connection with the proposed issue
of Additional Debentures have been complied with, subject to the delivery
of certain documents or instruments specified in such opinion;
and
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(d)
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an Officer’s Certificate (which Officer’s Certificate
shall be in such form that satisfies all applicable laws) certifying that
the Corporation is not in default under this Indenture, that the terms and
conditions for the certification and delivery of Additional Debentures
(including those set forth in Section 14.5), have been complied with
subject to the delivery of any documents or instruments specified in such
Officer’s Certificate and that no Event of Default exists or will exist
upon such certification and delivery.
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Section 2.7
Non-Certificated Deposit
(1) Subject to the provisions
hereof, at the Corporation’s option, Debentures may be issued and registered in
the name of CDS or its nominee and:
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(a)
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the deposit of which may be confirmed electronically by
the Trustee to a particular Participant through CDS; and
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(b)
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shall be identified by a specific CUSIP/ISIN as requested
by the Corporation from CDS to identify each specific series of Debentures
and the Initial Debentures shall be identified by CUSIP – 05156XAD0/ISIN –
CA05156XAD09
.
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(2) If the Corporation issues
Debentures in a non-certificated format, Beneficial Holders of such Debentures
registered and deposited with CDS shall not receive Debenture Certificates in
definitive form and shall not be considered owners or holders thereof under this
Indenture or any supplemental indenture. Beneficial interests in Debentures
registered and deposited with CDS will be represented only through the
non-certificated inventory system administered by CDS.
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Transfers of Debentures registered and deposited with CDS
between Participants shall occur in accordance with the rules and procedures of
CDS. Neither the Corporation nor the Trustee shall have any responsibility or
liability for any aspects of the records relating to or payments made by CDS or
its nominee, on account of the beneficial interests in Debentures registered and
deposited with CDS. Nothing herein shall prevent the Beneficial Holders of
Debentures registered and deposited with CDS from voting such Debentures using
duly executed proxies or voting instruction forms.
(3) All references herein to
actions by, notices given or payments made to Debentures shall, where Debentures
are held through CDS, refer to actions taken by, or notices given or payments
made to, CDS upon instruction from the Participants in accordance with its rules
and procedures. For the purposes of any provision hereof requiring or permitting
actions with the consent of or the direction of Debentureholders evidencing a
specified percentage of the aggregate Debentures outstanding, such direction or
consent may be given by Beneficial Holders acting through CDS and the
Participants owning Debentures evidencing the requisite percentage of the
Debentures. The rights of a Beneficial Holder whose Debentures are held
established by law and agreements between such holders and CDS and the
Participants upon instructions from the Participants. Each Trustee and the
Corporation may deal with CDS for all purposes (including the making of
payments) as the authorized representative of the respective Debentures and such
dealing with CDS shall constitute satisfaction or performance, as applicable, of
their respective obligations hereunder.
(4) For so long as Debentures are
held through CDS, if any notice or other communication is required to be given
to Debentureholders, the Trustee will give such notices and communications to
CDS.
(5) If CDS resigns or is removed
from its responsibility as Depository and the Trustee is unable or does not wish
to locate a qualified successor, CDS shall provide the Trustee with instructions
for registration of Debentures in the names and in the amounts specified by CDS
and the Corporation shall issue and the Trustee shall certify and deliver the
aggregate number of Debentures then outstanding in the form of definitive
Debentures Certificates representing such Debentures.
(6) The rights of Beneficial
Holders who hold securities entitlements in respect of the Debentures through
non-certificated inventory system administered by CDS shall be limited to those
established by applicable law and agreements between the Depository and the
Participants and between such Participants and the Beneficial Holders who hold
securities entitlements in respect of the Debentures through the
non-certificated inventory system administered by CDS, and such rights must be
exercised through a Participant in accordance with the rules and procedures of
the Depository.
(7) Notwithstanding anything
herein to the contrary, none of the Corporation nor the Trustee nor any agent
thereof shall have any responsibility or liability for:
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(a)
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the electronic records maintained by the Depository
relating to any ownership interests or other interests in the Debentures
or the depository system maintained by the Depository, or
payments made on account of any ownership interest or any other interest of any
Person in any Debenture represented by an electronic position in the
non-certificated inventory system administered by CDS (other than Depository or
its nominee);
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(b)
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for maintaining, supervising or reviewing any records of
the Depository or any Participant relating to any such interest;
or
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(c)
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any advice or representation made or given by the
Depository or those contained herein that relate to the rules and
regulations of the Depository or any action to be taken by the Depository
on its own direction or at the direction of any
Participant.
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(8) The Corporation may terminate
the application of this Section 2.7 in its sole discretion in which case all
Debentures shall be evidenced by Debenture Certificates registered in the name
of a Person other than the Depository.
Section 2.8
Execution of Debentures
All
Debentures shall be signed (either manually or by facsimile or other electronic
signature) by any one authorized director or officer of the Corporation holding
office at the time of signing. A facsimile or electronic signature upon a
Debenture shall for all purposes of this Indenture be deemed to be the signature
of the Person whose signature it purports to be. Notwithstanding that any Person
whose signature, either manual or in facsimile or electronic form, appears on a
Debenture as a director or officer may no longer hold such office at the date of
the Debenture or at the date of the certification and delivery thereof, such
Debenture shall be valid and binding upon the Corporation and entitled to the
benefits of this Indenture.
Section 2.9
Certification
(1) No Debenture shall be issued
or, if issued, shall be obligatory or shall entitle the holder to the benefits
of this Indenture, until it has been certified by or on behalf of the Trustee
substantially in the form set out in this Indenture, in the relevant
supplemental indenture, or in some other form approved by the Trustee. Such
certification or authentication of any Debenture shall be conclusive evidence
that such Debenture is duly issued, is a valid obligation of the Corporation and
the holder is entitled to the benefits hereof. Debentures will be authenticated
on a Written Direction of the Corporation.
(2) The certificate of the
Trustee signed on the Debentures, or interim Debentures hereinafter mentioned,
and the authentication of Uncertificated Debentures, shall not be construed as a
representation or warranty by the Trustee as to the validity of this Indenture
or of the Debentures or interim Debentures or as to the issuance of the
Debentures or interim Debentures and the Trustee shall in no respect be liable
or answerable for the use made of the Debentures or interim Debentures or any of
them or the proceeds thereof. The certificate of the Trustee on the Debentures
or interim Debentures, and the authentication of Uncertificated Debentures,
shall, however, be a representation and warranty by the Trustee that the
Debentures or interim Debentures have been duly certified by or on behalf of the
Trustee pursuant to the provisions of this Indenture.
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(3) The Trustee shall certify
Uncertificated Debentures (whether upon original issuance, exchange,
registration of transfer or otherwise) by completing its Internal Procedures and
the Corporation shall, and hereby acknowledges that it shall, thereupon be
deemed to have duly and validly issued such Uncertificated Debentures have been
duly issued hereunder and that the holder or holders are entitled to the
benefits of this Indenture. The register shall be final and conclusive evidence
as to all matters relating to Uncertificated Debentures with respect to which
this Indenture requires the Trustee to maintain records or accounts. In case of
differences between the register at any time and any other time the register at
the later time shall be controlling, absent manifest error and such
Uncertificated Debentures are binding on the Corporation.
Section 2.10
Interim Debentures or
Certificates
Pending
the delivery of definitive Debentures of any series to the Trustee, the
Corporation may issue and the Trustee certify in lieu thereof interim Debentures
in such forms and in such denominations and signed in such manner as provided
herein, entitling the holders thereof to definitive Debentures of the series
when the same are ready for delivery; or the Corporation may execute and the
Trustee certify a temporary Debenture for the whole principal amount of
Debentures of the series then authorized to be issued hereunder and deliver the
same to the Trustee and thereupon the Trustee may issue its own interim
certificates in such form and in such amounts, not exceeding in the aggregate
the principal amount of the temporary Debenture so delivered to it, as the
Corporation and the Trustee may approve entitling the holders thereof to
definitive Debentures of the series when the same are ready for delivery; and,
when so issued and certified, such interim or temporary Debentures or interim
certificates shall, for all purposes but without duplication, rank in respect of
this Indenture equally with Debentures duly issued hereunder and, pending the
exchange thereof for definitive Debentures, the holders of the interim or
temporary Debentures or interim certificates shall be deemed without duplication
to be Debentureholders and entitled to the benefit of this Indenture to the same
extent and in the same manner as though the said exchange had actually been
made. Forthwith after the Corporation shall have delivered the definitive
Debentures to the Trustee, the Trustee shall cancel such temporary Debentures,
if any, and shall call in for exchange all interim Debentures or certificates
that shall have been issued and forthwith after such exchange shall cancel the
same. No charge shall be made by the Corporation or the Trustee to the holders
of such interim or temporary Debentures or interim certificates for the exchange
thereof. All interest paid upon interim or temporary Debentures or interim
certificates shall be noted thereon as a condition precedent to such payment
unless paid by cheque to the registered holders thereof.
Section 2.11
Mutilation, Loss, Theft or
Destruction
In case
any of the Debentures issued hereunder shall become mutilated or be lost, stolen
or destroyed, the Corporation, in its discretion, may issue, and thereupon the
Trustee shall certify and deliver, a new Debenture upon surrender and
cancellation of the mutilated Debenture, or in the case of a lost, stolen or
destroyed Debenture, in lieu of and in substitution for the same, and the substituted Debenture shall be in a form approved by the
Trustee and shall be entitled to the benefits of this Indenture and rank equally
in accordance with its terms with all other Debentures issued or to be issued
hereunder. In case of loss, theft or destruction the applicant for a substituted
Debenture shall furnish to the Corporation and to the Trustee such evidence of
the loss, theft or destruction of the Debenture as shall be satisfactory to them
in their discretion and shall also furnish an indemnity and surety bond
satisfactory to them in their discretion. The applicant shall pay all reasonable
expenses incidental to the issuance of any substituted Debenture.
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Section 2.12
Concerning Interest
(1) All Debentures issued
hereunder, whether originally or upon exchange or in substitution for previously
issued Debentures which are interest bearing, shall bear interest (i) from and
including their issue date, or (ii) from and including the last Interest Payment
Date to which interest shall have been paid or made available for payment on the
outstanding Debentures of that series, whichever shall be the later, or, in
respect of Debentures subject to a Periodic Offering, from and including their
issue date or from and including the last Interest Payment Date to which
interest shall have been paid or made available for payment on such Debentures,
in all cases, to and excluding the next Interest Payment Date.
(2) Unless otherwise specifically
provided in the terms of the Debentures of any series, interest shall be
computed on the basis of a year of 360 days comprised of twelve 30-day months.
With respect to any series of Debentures, whenever interest is computed on the
basis of a year (the “
deemed year
”) which contains fewer days than the
actual number of days in the calendar year of calculation, such rate of interest
shall be expressed as a yearly rate for purposes of the
Interest Act
(Canada) by multiplying such rate of interest by the actual number of days in
the calendar year of calculation and dividing it by the number of days in the
deemed year.
Section 2.13
Debentures to Rank Pari Passu
The
Debentures will be direct unsecured obligations of the Corporation. Each
Debenture of the same series of Debentures will rank
pari passu
with each
other Debenture of the same series (regardless of their actual date or terms of
issue) and, subject to statutory preferred exceptions, with all other present
and future unsecured indebtedness of the Corporation.
Section 2.14
Payments of Amounts Due on
Maturity
Except
as may otherwise be provided herein or in any supplemental indenture in respect
of any series of Debentures, payments of amounts due upon maturity of the
Debentures will be made in the following manner. The Corporation will establish
and maintain with the Trustee a Maturity Account for each series of Debentures.
Each such Maturity Account shall be maintained by and be subject to the control
of the Trustee for the purposes of this Indenture. On or before 11:00 a.m.
(Vancouver time) on the Business Day immediately prior to each Maturity Date for
Debentures outstanding from time to time under this Indenture, the Corporation
will deliver to the Trustee a certified cheque or wire transfer for deposit in
the applicable Maturity Account in an amount sufficient to pay the cash amount
payable in respect of such Debentures (including the principal amount together with any accrued and
unpaid interest thereon less any tax required by law to be deducted), provided
the Corporation may elect to satisfy this requirement by providing the Trustee
with a cheque for such amounts required under this Section 2.14 post-dated to
the applicable Maturity Date. The Trustee, on behalf of the Corporation, will
pay to each holder entitled to receive payment the principal amount of and
premium (if any) and accrued and unpaid interest on the Debenture, upon
surrender of the Debenture at any branch of the Trustee designated for such
purpose from time to time by the Corporation and the Trustee. The delivery of
such funds to the Trustee for deposit to the applicable Maturity Account will
satisfy and discharge the liability of the Corporation for the Debentures to
which the delivery of funds relates to the extent of the amount delivered (plus
the amount of any tax deducted as aforesaid) and such Debentures will thereafter
to that extent not be considered as outstanding under this Indenture and such
holder will have no other right in regard thereto other than to receive out of
the money so delivered or made available the amount to which it is entitled.
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Section 2.15
U.S. Legend
(1) The Debentures and Common
Shares issuable upon conversion thereof have not been and will not be registered
under the 1933 Act or any state securities laws. To the extent that Initial
Debentures are offered and sold in the United States to Qualified Institutional
Buyers in reliance on an exemption from registration under Rule 144A under the
1933 Act, such Initial Debentures and all Common Shares issuable on conversion
thereof (collectively, the
“Securities
”), shall be “restricted
securities” within the meaning assigned to that term in Rule 144(a)(3) under the
1933 Act. Subject to subsection 2.15(3), such Securities, as well as all
securities issued in exchange for or in substitution of the Securities, shall be
issued in certificated form bearing the legend below or under a separate,
restricted CUSIP number and, until such time as the same is no longer required
under applicable requirements of the 1933 Act or state securities laws, shall
bear the following legend (the
“US Legend
”):
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(a)
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“THE SECURITIES REPRESENTED HEREBY HAVE NOT
BEEN AND WILL NOT BE REGISTERED UNDER THE
UNITED STATES
SECURITIES ACT OF 1933, AS
AMENDED (THE “U.S. SECURITIES ACT”) OR
THE
LAWS OF ANY STATE OF THE UNITED STATES. THE
HOLDER
HEREOF,
BY
PURCHASING
SUCH
SECURITIES,
AGREES FOR THE BENEFIT OF AURORA
CANNABIS INC. (THE “CORPORATION”),
THAT SUCH
SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR
OTHERWISE
TRANSFERRED,
DIRECTLY OR
INDIRECTLY,
ONLY (A) TO THE CORPORATION, (B)
OUTSIDE THE UNITED STATES IN
COMPLIANCE WITH
RULE 904 OF REGULATION S UNDER THE U.S.
SECURITIES ACT AND (C) IN COMPLIANCE WITH
APPLICABLE LOCAL LAWS
AND REGULATIONS, IN
COMPLIANCE WITH THE EXEMPTION
FROM
REGISTRATION UNDER THE U.S. SECURITIES ACT
PROVIDED BY (i) RULE
144 THEREUNDER, IF
AVAILABLE, OR (ii) RULE 144A THEREUNDER, IF
AVAILABLE, AND, IN BOTH CASES, IN ACCORDANCE
WITH APPLICABLE
U.S. STATE SECURITIES LAWS, OR
(D) IN A TRANSACTION THAT DOES NOT
REQUIRE
REGISTRATION UNDER THE U.S. SECURITIES ACT OR
ANY
APPLICABLE U.S. STATE SECURITIES LAWS, AND,
IN THE CASE OF (C)(i)
OR (D) ABOVE, AFTER THE
SELLER FURNISHES TO THE CORPORATION AN
OPINION OF COUNSEL OF RECOGNIZED STANDING IN
FORM
AND
SUBSTANCE
REASONABLY
SATISFACTORY TO THE CORPORATION AND
THE
[TRANSFER AGENT][TRUSTEE] TO SUCH EFFECT.
DELIVERY OF
THIS CERTIFICATE MAY NOT
CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT
OF
TRANSACTIONS ON STOCK EXCHANGES IN CANADA.”
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- 27 -
provided that if the Debentures or
Common Shares are being sold in compliance with the requirements of Rule 904 of
Regulation S and in compliance with Canadian local laws and regulations, and
provided that the Corporation is a “foreign issuer” within the meaning of
Regulation S at the time of issuance of the Debentures or Common Shares, as
applicable, such Securities may be transferred to an unrestricted CUSIP or the
U.S. Legend may be removed by providing a declaration to the Trustee
substantially as set forth in Schedule D (or as the Corporation or the Trustee
may prescribe from time to time), together with any other evidence reasonably
requested by the Corporation or Trustee, which evidence may include an opinion
of counsel of recognized standing, in form and substance reasonably satisfactory
to the Corporation and the Trustee, to the effect that the transfer is being
made in compliance with Rule 904 of Regulation S; and provided further that, if
any Debentures or Common Shares are being sold in accordance with Rule 144 under
the 1933 Act, if available, the Debentures or Common Shares, as applicable, may
be transferred into an unrestricted CUSIP or the U.S. Legend may be removed by
delivery to the Trustee of an opinion of counsel of recognized standing, in form
and substance reasonably satisfactory to the Trustee and the Corporation, that
the Debentures or Common Shares no longer required a restricted CUSIP or the
U.S. Legend is no longer required under applicable requirements of the 1933 Act
or applicable state securities laws. Provided that the Trustee obtains
confirmation from the Corporation that such counsel is satisfactory to it, it
shall be entitled to rely on such opinion of counsel without further inquiry.
(2) The parties hereto hereby
acknowledge and agree that the Securities may not be reoffered, or resold,
pledged or otherwise transferred except: (i) to the Corporation; (ii) outside
the United States in accordance with Regulation S and in compliance with
applicable local laws and regulations; (iii) in compliance with the exemption
from registration under the 1933 Act provided by (A) Rule 144 under the 1933
Act, or (B) Rule 144A under the 1933 Act, if applicable, and, in each case, in
accordance with applicable state securities laws; or (iv) in a transaction that
does not require registration under the 1933 Act or any applicable state
securities laws.
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(3) Notwithstanding subsection
2.15(1), to the extent that a Qualified Institutional Buyer acquiring the
Initial Debentures pursuant to the Offering has duly executed and delivered a
U.S. Purchaser Letter substantially as set forth in Schedule F, such Initial
Debentures shall be included in the Unrestricted Debentures, and any Common
Shares issued to such Qualified Institutional Buyer upon conversion of such
Initial Debentures shall neither be required to be issued under a restricted
CUSIP nor bear a U.S. Legend.
(4) Prior to the issuance of the
Debentures, the Corporation shall notify the Trustee, in writing, concerning
which Debentures are to be included in the Restricted Debentures which shall
bear the U.S. Legend. All Securities issued pursuant to Rule 144A under the 1933
Act shall bear the U.S. Legend. The Trustee will thereafter maintain a list of
all registered holders from time to time of such legended Debentures.
Section 2.16
Payment of Interest
The
following provisions shall apply to Debentures, except as otherwise provided in
subsection 2.5(3) or specified in a resolution of the Board of Directors, an
Officer’s Certificate or a supplemental indenture relating to a particular
series of Additional Debentures:
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(a)
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As interest becomes due on each Debenture (except,
subject to certain exceptions set forth herein including in subsection
2.5(3), on conversion or on redemption, when interest may at the option of
the Corporation be paid upon surrender of such Debenture), the
Corporation, either directly or through the Trustee or any agent of the
Trustee, shall send or forward by prepaid ordinary mail, wire transfer of
funds or such other means as may be agreed to by the Trustee, payment of
such interest (less any tax required to be withheld therefrom) to the
order of the registered holder of such Debenture appearing on the
registers maintained by the Trustee at the close of business on the record
date prior to the applicable Interest Payment Date and addressed to the
holder at the holder’s last address appearing on the register, unless such
holder otherwise directs. If payment is made by cheque, such cheque shall
be forwarded at least three days prior to each date on which interest
becomes due and if payment is made by other means (such as electronic
transfer of funds, provided the Trustee must receive confirmation of
receipt of funds prior to being able to wire funds to holders), such
payment shall be made in a manner whereby the holder receives credit for
such payment on the date such interest on such Debenture becomes due. The
mailing of such cheque or the making of such payment by other means shall,
to the extent of the sum represented thereby, plus the amount of any tax
withheld as aforesaid, satisfy and discharge all liability for interest on
such Debenture, unless in the case of payment by cheque, such cheque is
not paid at par on presentation. In the event of non-receipt of any cheque
for or other payment of interest by the Person to whom it is so sent as
aforesaid, the Corporation will issue to such Person a replacement cheque
or other payment for a like amount upon being furnished with such evidence
of non-receipt as it shall reasonably require and upon being indemnified
to its satisfaction. Notwithstanding the foregoing, if the Corporation is
prevented by circumstances beyond its control (including, without
limitation, any interruption in mail service) from making payment of any
interest due on each Debenture in the manner provided above, the Corporation may
make payment of such interest or make such interest available for payment in any
other manner acceptable to the Trustee with the same effect as though payment
had been made in the manner provided above.
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(b)
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All payments of interest on the Uncertificated Debenture
shall be made by wire funds transfer or certified cheque made payable (i)
to the Depository or its nominee on the day interest is payable for
subsequent payment to Beneficial Holders of the applicable Uncertificated
Debenture, unless the Corporation and the Depository otherwise agree or
(ii) if the Corporation wishes to have the Trustee act as interest paying
agent, to the Trustee by no later than the Business Day prior to the day
interest is payable for subsequent payment to Beneficial Holders of the
applicable Uncertificated Debenture. None of the Corporation, the Trustee
or any agent of the Trustee for any Debenture issued as an Uncertificated
Debenture will be liable or responsible to any Person for any aspect of
the records related to or payments made on account of beneficial interests
in any Uncertificated Debenture or for maintaining, reviewing, or
supervising any records relating to such beneficial
interests.
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ARTICLE 3– REGISTRATION, TRANSFER, EXCHANGE AND OWNERSHIP
Section 3.1
Global Debentures or Book Based Only
Debentures
(1) With respect to each series
of Debentures issuable in whole or in part as one or more Global Debentures
and/or as Book Based Only Debentures, the Corporation shall cause to be kept by
and at the principal offices of the Trustee in Vancouver, British Columbia and
by the Trustee or such other registrar as the Corporation, with the approval of
the Trustee, may appoint at such other place or places, if any, as the
Corporation may designate with the approval of the Trustee, a register in which
shall be entered the name and address of the holder of each such Global
Debenture and/or Book Based Only Debenture as holder thereof and particulars of
the Global Debenture and/or Book Based Only Debenture held by it, and of all
transfers thereof. If any Debentures of such series are at any time not Global
Debentures or Book Based Only Debentures, the provisions of Section
Error!
Reference source not found.
shall govern with respect to registrations and
transfers of such Debentures.
(2) Notwithstanding any other
provision of this Indenture, a Global Debenture or Book Based Only Debenture may
not be transferred by the registered holder thereof and accordingly, no
definitive certificates shall be issued to Beneficial Holders except in the
following circumstances or as otherwise specified in a resolution of the
Directors, an Officer’s Certificate or a supplemental indenture relating to a
particular series of Additional Debentures:
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(a)
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Global Debentures or Book Based Only Debentures may be
transferred by a Depository to a nominee of such Depository or by a
nominee of a Depository to such Depository or to another nominee
of such Depository or by a Depository or its nominee to a successor Depository
or its nominee;
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- 30 -
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(b)
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Global Debentures or Book Based Only Debentures may be
transferred at any time after (i) the Depository for such Global
Debentures or Book Based Only Debentures, as the case may be, or the
Corporation has notified the Trustee that the Depository is unwilling or
unable to continue as Depository for such Global Debentures or Book Based
Only Debentures, or (ii) the Depository ceases to be a clearing agency or
otherwise ceases to be eligible to be a Depository under Section Section
2.1(2), provided in each case that at the time of such transfer the
Trustee and the Corporation are unable to locate a qualified successor
Depository for such Global Debentures or Book Based Only
Debentures;
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(c)
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Global Debentures or Book Based Only Debentures may be
transferred at any time after the Corporation has determined, in its sole
discretion, with the consent of the Trustee to terminate the book-entry
only registration system or book based entry, as the case may be, in
respect of such Global Debentures or Book Based Only Debentures and has
communicated such determination to the Trustee in writing;
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(d)
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Global Debentures or Book Based Only Debentures may be
transferred at any time after the Trustee has determined that an Event of
Default has occurred and is continuing with respect to the Debentures of
the series issued as a Global Debenture or Book Based Only Debentures, as
the case may be, provided that Beneficial Holders of the Debentures
representing, in the aggregate, more than 25% of the aggregate principal
amount of the Debentures of such series advise the Depository in writing,
through the Depository Participants, that the continuation of the
book-entry only registration system or book based entry, as applicable,
for such series of Debentures is no longer in their best interest and also
provided that at the time of such transfer the Trustee has not waived the
Event of Default pursuant to Section
Error! Reference source not
found.
;
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(e)
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Global Debentures or Book Based Only Debentures may be
transferred if required by applicable law; or
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(f)
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Global Debentures or Book Based Only Debentures may be
transferred if the book-entry only registration system or book based
entry, as applicable, ceases to exist.
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(3) With respect to the Global
Debentures, unless and until definitive certificates have been issued to
Beneficial Holders of the Debentures pursuant to subsection Section 3.1(2):
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(a)
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the Corporation and the Trustee may deal with the
Depository for all purposes (including paying interest on the Debentures)
as the sole holder of such series of Debentures and the authorized
representative of the Beneficial Holders;
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(b)
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the rights of the Beneficial Holders of the Debentures
shall be exercised only through the Depository and shall be limited to
those established by law and agreements between such Beneficial Holders
and the Depository or the Depository Participants;
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(c)
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the Depository will make book-entry or book based, as
applicable, transfers among the Depository Participants; and
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(d)
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whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Debentureholders evidencing
a specified percentage of the outstanding Debentures, the Depository shall
be deemed to be counted in that percentage only to the extent that it has
received instructions to such effect from the Beneficial Holders of the
Debentures or the Depository Participants, and has delivered such
instructions to the Trustee.
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(4) Whenever a notice or other
communication is required to be provided to Debentureholders, unless and until
definitive certificate(s) have been issued to Beneficial Holders of the
Debentures pursuant to this Section Section 3.1, the Trustee shall provide all
such notices and communications to the Depository for forwarding by the
Depository to such Beneficial Holders in accordance with Applicable Securities
Legislation. Upon the termination of the book-entry only registration system or
book based entry, as applicable, on the occurrence of one of the conditions
specified in Section Section 3.1(2) with respect to a series of Debentures
issued hereunder, the Trustee shall notify all applicable Depository
Participants and Beneficial Holders, through the Depository, of the availability
of definitive Debenture certificates. Upon surrender by the Depository of the
certificate(s) representing the Global Debentures and receipt of new
registration instructions from the Depository, the Trustee shall deliver the
definitive Debenture certificates for such Debentures to the holders thereof in
accordance with the new registration instructions and thereafter, the
registration and transfer of such Debentures will be governed by Section
Error! Reference source not found.
and the remaining Sections of this
Error! Reference source not found.
, as applicable.
(5) Notwithstanding any other
provisions of this Indenture or the Debentures, transfers and exchanges of
Debentures and beneficial interests in Global Debentures shall be made in
accordance the applicable rules and guidelines of the Securities Transfer
Association of Canada.
(6) Notwithstanding any
provisions made in this Indenture for the issuance, certification and
authentication of Debentures in physical form as Additional Debentures,
Debentures or Global Debentures, the Debentures issued under the terms of this
Indenture may also be issued to the Depository in book based only form,
non-certificated and appearing on the register of the Trustee as a book based
entry. In the absence of any physical securities being created for certification
by the Corporation and authentication by the Trustee both at the initial
issuance of the Debentures and at the time of any subsequent additional issuance
of Debentures pursuant to the terms of a supplemental indenture, confirmation of
the due issuance and validity of any Debentures shall be based upon the
comparison of the Debentures in quantity and description appearing under the
relevant broker’s instant deposit request identification number to the quantity
and description of Debentures as detailed in the delivery order of the
Corporation addressed to the Trustee and to the broker upon whose posting of the Book Based Only Debentures
to the book entry records of the Depository on a non-certificated basis on which
both the Corporation and the Trustee shall depend. It is the responsibility of
the Corporation to make the necessary arrangements with its broker or brokers to
obtain, in a timely manner, the necessary instant deposit request identification
number to facilitate the issuance of non-certificated Book Based Only
Debentures.
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(7) In the establishment and
maintenance of a non-certificated Book Based Only Debenture issue, the Trustee
shall maintain such a record on its register for Debentures in book based form
only. Transfers of Debentures appearing on the register of the Depository shall
otherwise occur as provided for in this Indenture. The parties hereto further
recognize that, notwithstanding the issuance of Book Based Only Debentures,
conversions of Debentures shall occur as contemplated by the terms of this
Indenture but the Trustee is permitted to employ whatever reasonable means it
may from time to time require in order to guarantee the unhindered (but subject
to the terms and conditions hereof) conversion of such Debentures appearing on
the register for Debentures in book based only form by making whatever
arrangements are deemed necessary by it with the Depository.
(8) At the time of the execution
of this Indenture, the parties hereto understand that no declarations or other
paper certificates or documentation will be required in order to effect
conversions of Debentures held by Persons in the United States. If at any time
subsequent to the initial issuance of Debentures it is determined by the
Depository, the Trustee, the Corporation or legal counsel that physical
declarations or other paper documentation are required for conversions or
otherwise, the parties hereto and the Debentureholders acknowledge that the
Trustee may be obliged to require the Debentures held by such Persons converting
their Debentures to be certificated rather than held in book based form.
Section 3.2
Fully Registered Debentures
(1) With respect to each series
of Debentures issuable as Fully Registered Debentures, the Corporation shall
cause to be kept by and at the principal office of the Trustee in Vancouver,
British Columbia and by the Trustee or such other registrar as the Corporation,
with the approval of the Trustee, may appoint at such other place or places, if
any, as may be specified in the Debentures of such series or as the Corporation
may designate with the approval of the Trustee, a register in which shall be
entered the names and addresses of the holders of Fully Registered Debentures
and particulars of the Debentures held by them respectively and of all transfers
of Fully Registered Debentures. Such registration shall be noted on the
Debentures by the Trustee or other registrar unless a new Debenture shall be
issued upon such transfer.
(2) No transfer of a Fully
Registered Debenture shall be valid unless made on such register referred to in
subsection 3.2(1) by the registered holder or such holder’s executors,
administrators or other legal representatives or an attorney duly appointed by
an instrument in writing in form and executed in a manner satisfactory to the
Trustee or other registrar upon surrender of the Debentures together with a duly
executed form of transfer acceptable to the Trustee upon compliance with such
other reasonable requirements as the Trustee or other registrar may prescribe,
or unless the name of the transferee shall have been noted on the Debenture by
the Trustee or other registrar.
- 33 -
(3) Notwithstanding any other
provisions in this Indenture or the Debentures, transfers and exchanges of
Restricted Debentures shall be made in accordance with this Section 3.2(3):
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(a)
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Transfer and Exchange of Interests in a Restricted
Uncertificated Debenture for Interests in an Unrestricted Uncertificated
Debenture.
An interest in a Restricted Uncertificated Debenture may be
exchanged by any holder thereof for an interest in an Unrestricted
Uncertificated Debenture or transferred to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted
Uncertificated Debenture if the Trustee receives the
following:
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(i)
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if the holder of such interest in a Restricted
Uncertificated Debenture proposes to exchange such beneficial interest for
a beneficial interest in an Unrestricted Uncertificated Debenture, a
certificate from such holder in the form of Schedule E, including the
certifications in item (1)(a) thereof; or
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(ii)
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if the holder of such beneficial interest in a Restricted
Uncertificated Debenture proposes to transfer such beneficial interest to
a Person who shall take delivery thereof in the form of a beneficial
interest in an Unrestricted Uncertificated Debenture, a certificate from
such holder in the form of Schedule D, including the certifications in
items (2) or (3) thereof;
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and, in each such case set forth in
this subsection 3.2(3)(a), an opinion of counsel in form reasonably acceptable
to the Corporation and the Trustee to the effect that such transfer or exchange
is in compliance with the 1933 Act and all applicable state securities laws.
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(b)
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Transfer of Restricted Physical Debenture for
Restricted Physical Debenture.
A Restricted Physical Debenture may be
transferred to a Person who takes delivery thereof in the form of a
Restricted Physical Debenture if the Trustee receives a certificate to the
effect set forth in Schedule D, including the certifications in item (1)
thereof.
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(c)
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Transfer and Exchange of Restricted Physical
Debentures for Unrestricted Physical Debentures.
A Restricted Physical
Debenture may be exchanged by the holder thereof for an Unrestricted
Physical Debenture or transferred to a Person who takes delivery thereof
in the form of an Unrestricted Physical Debenture if the Trustee receives
the following:
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(i)
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if the holder of such Restricted Physical Debenture
proposes to exchange such Debenture for an Unrestricted Physical
Debenture, a certificate from such holder in the form of Schedule E,
including the certifications in item (1)(b) thereof;
or
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- 34 -
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(ii)
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if the holder of such Restricted Physical Debenture
proposes to transfer such Debenture to a Person who shall take delivery
thereof in the form of an Unrestricted Physical Debenture, a certificate
from such holder in the form of Schedule D, including the certifications
in item (2) or (3) thereof;
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and, in each such case set forth in
this subsection 3.2(3)(c), an opinion of counsel in form reasonably acceptable
to the Corporation and the Trustee to the effect that such transfer or exchange
is in compliance with the 1933 Act and all applicable state securities laws.
Section 3.3
Transferee Entitled to
Registration
The
transferee of a Debenture shall be entitled, after the appropriate form of
transfer is lodged with the Trustee or other registrar and upon compliance with
all other conditions in that behalf required by this Indenture or by law, to be
entered on the register as the owner of such Debenture free from all equities or
rights of set-off or counterclaim between the Corporation and the transferor or
any previous holder of such Debenture, save in respect of equities of which the
Corporation is required to take notice by statute or by order of a court of
competent jurisdiction. Upon surrender for registration of transfer of
Debentures, the Corporation shall issue and thereupon the Trustee shall certify
and deliver a new Debenture Certificate or confirm the electronic deposit of
Uncertificated Debentures of like tenor in the name of the designated transferee
and register such transfer in accordance with Section 3.2. If less than all the
Debentures evidenced by the Debenture Certificate(s) or Uncertificated
Debentures so surrendered are transferred, the transferor shall be entitled to
receive, in the same manner, a new Debenture Certificate or electronically
deposited Uncertificated Debentures registered in his name evidencing the
Debentures not transferred.
Section 3.4
No Notice of Trusts
Neither
the Corporation nor the Trustee nor any registrar shall be bound to take notice
of or see to the execution of any trust (other than that created by this
Indenture) whether express, implied or constructive, in respect of any
Debenture, and may transfer the same on the direction of the Person registered
as the holder thereof, whether named as trustee or otherwise, as though that
Person were the beneficial owner thereof.
Section 3.5
Registers Open for Inspection
The
registers referred to in Sections 3.1 shall at all reasonable times be open for
inspection by the Corporation, the Trustee or any Debentureholder. Every
registrar, including the Trustee, shall from time to time when requested so to
do by the Corporation, in writing, furnish the Corporation with a list of names
and addresses of holders of registered Debentures entered on the register kept
by them and showing the principal amount and serial numbers of the Debentures
held by each such holder, provided the Trustee shall be entitled to charge a
reasonable fee to the Corporation to provide such a list.
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Section 3.6
Exchanges of Debentures
(1) Subject to Section 3.1 and
Section 3.7, Debentures in any authorized form or denomination, other than
Uncertificated Debentures, may be exchanged for Debentures in any other
authorized form or denomination, of the same series and date of maturity,
bearing the same interest rate and of the same aggregate principal amount as the
Debentures so exchanged.
(2) In respect of exchanges of
Debentures permitted by subsection 3.6(1), Debentures of any series may be
exchanged only at the principal offices of the Trustee in the city of Vancouver,
British Columbia or at such other place or places, if any, as may be specified
in the Debentures of such series and at such other place or places as may from
time to time be designated by the Corporation with the approval of the Trustee.
Any Debentures tendered for exchange shall be surrendered to the Trustee. The
Corporation shall execute and the Trustee shall certify all Debentures necessary
to carry out exchanges as aforesaid. All Debentures surrendered for exchange
shall be cancelled.
(3) Debentures issued in exchange
for Debentures which at the time of such issue have been selected or called for
redemption at a later date shall be deemed to have been selected or called for
redemption in the same manner and shall have noted thereon a statement to that
effect.
Section 3.7
Closing of Registers
(1) Neither the Corporation nor
the Trustee nor any registrar shall be required to:
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(a)
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make transfers or exchanges or convert any Debentures on
any Interest Payment Date for such Debentures or during the five preceding
Business Days;
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(b)
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make transfers or exchanges of, or convert any Debentures
on the day of any selection by the Trustee of Debentures to be redeemed or
during the ten preceding Business Days;
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(c)
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make conversions of Debentures on any Interest Payment
Date or during the five preceding Business Days;
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(d)
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make exchanges of any Debentures which will have been
selected or called for redemption unless upon due presentation thereof for
redemption such Debentures shall not be redeemed, as the register for the
applicable series of Debentures shall be closed in respect of such actions
on such dates; or
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(e)
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make conversions of any Debentures the Business Day
immediately preceding the Maturity Date for such Debentures or during such
greater period prior to an applicable maturity date as directed in writing
by the Corporation (which period shall not exceed the five Business Days
preceding the applicable date of maturity).
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(2) Subject to any restriction
herein provided, the Corporation with the approval of the Trustee may at any
time close any register for any series of Debentures, other than those kept at
the principal offices of the Trustee in Vancouver, British
Columbia, and transfer the registration of any Debentures registered thereon to
another register (which may be an existing register) and thereafter such
Debentures shall be deemed to be registered on such other register. Notice of
such transfer shall be given to the holders of such Debentures.
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Section 3.8
Charges for Registration, Transfer
and Exchange
For each
Debenture exchanged, registered, transferred or discharged from registration,
the Trustee or other registrar, except as otherwise herein provided, may make a
reasonable charge for its services and in addition may charge a reasonable sum
for each new Debenture issued (such amounts to be agreed upon from time to time
by the Trustee and the Corporation), and payment of such charges and
reimbursement of the Trustee or other registrar for any stamp taxes or
governmental or other charges required to be paid shall be made by the party
requesting such exchange, registration, transfer or discharge from registration
as a condition precedent thereto. Notwithstanding the foregoing provisions, no
charge shall be made to a Debentureholder hereunder:
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(a)
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for any exchange, registration, transfer or discharge
from registration of any Debenture applied for within a period of two
months from the date of the first delivery of Debentures of that series
or, with respect to Debentures subject to a Periodic Offering, within a
period of two months from the date of delivery of any such
Debenture;
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(b)
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for any exchange of any interim or temporary Debenture or
interim certificate that has been issued under Section 2.10 for a
definitive Debenture; or
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(c)
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for any exchange of an Uncertificated Debenture as
contemplated in Section 3.1.
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Section 3.9
Ownership of Debentures
(1) Unless otherwise required by
law, the Person in whose name any registered Debenture is registered shall for
all purposes of this Indenture be and be deemed to be the owner thereof and
payment of or on account of the principal of and premium, if any, on such
Debenture and interest thereon shall be made to such registered holder.
(2) The registered holder for the
time being of any registered Debenture shall be entitled to the principal,
premium, if any, and/or interest evidenced by such instruments, respectively,
free from all equities or rights of set-off or counterclaim between the
Corporation and the original or any intermediate holder thereof and all persons
may act accordingly and the receipt of any such registered holder for any such
principal, premium or interest shall be a good discharge to the Trustee, any
registrar and to the Corporation for the same and none shall be bound to inquire
into the title of any such registered holder.
(3) Where Debentures are
registered in more than one name, the principal, premium, if any, and interest
from time to time payable in respect thereof may be paid to the order of all
such holders, failing written instructions from them to the
contrary, and the receipt of any one of such holders therefor shall be a valid
discharge, to the Trustee, any registrar and to the Corporation.
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(4) In the case of the death of
one or more joint holders of any Debenture the principal, premium, if any, and
interest from time to time payable thereon may be paid to the order of the
survivor or survivors of such registered holders and the receipt of any such
survivor or survivors therefor shall be a valid discharge to the Trustee and any
registrar and to the Corporation.
ARTICLE 4– PURCHASE OF DEBENTURES
Section 4.1
Purchase of Debentures by the
Corporation
(1) Unless otherwise specifically
provided with respect to a particular series of Debentures, the Corporation may,
if it is not at the time in default hereunder, at any time and from time to
time, purchase Debentures in the market (which shall include purchases from or
through an investment dealer or a firm holding membership on a recognized stock
exchange) or by tender or by contract, at any price. All Debentures so purchased
will be delivered to the Trustee and shall be cancelled and no Debentures shall
be issued in substitution therefor.
(2) If, upon an invitation for
tenders, more Debentures are tendered at the same lowest price than the
Corporation is prepared to accept, the Debentures to be purchased by the
Corporation shall be selected by the Trustee on a pro rata basis from the
Debentures tendered by each tendering Debentureholder who tendered at such
lowest price. For this purpose the Trustee may make, and from time to time
amend, regulations with respect to the manner in which Debentures may be so
selected, and regulations so made shall be valid and binding upon all
Debentureholders, notwithstanding the fact that as a result thereof one or more
of such Debentures become subject to purchase in part only. The holder of a
Debenture of which a part only is purchased, upon surrender of such Debenture
for payment, shall be entitled to receive, without expense to such holder, one
or more new Debentures for the unpurchased part so surrendered, and the Trustee
shall certify and deliver such new Debenture or Debentures upon receipt of the
Debenture so surrendered or, with respect to an Uncertificated Debenture, the
Depository shall electronically deposit the unpurchased part so surrendered.
Section 4.2
Deposit of Maturity Monies
Payment
on maturity of Debentures shall be provided for by the Corporation depositing
with the Trustee or any paying agent to the order of the Trustee, on or before
11:00 a.m. (Vancouver time) on the Business Day immediately prior to the
Maturity Date such sums of money as may be sufficient to pay all accrued and
unpaid interest thereon up to but excluding the Maturity Date, provided the
Corporation may elect to satisfy this requirement by providing the Trustee with
a certified cheque or wire transfer for such amounts required under this Section
4.2 post-dated to the Maturity Date. The Corporation shall also deposit with the
Trustee a sum of money sufficient to pay any charges or expenses which may be
incurred by the Trustee in connection therewith. Every such deposit shall be
irrevocable. From the sums so deposited, the Trustee shall pay or cause to be
paid to the holders of such Debentures, upon surrender of such Debentures, the principal and interest to which they are
respectively entitled on the Maturity Date.
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ARTICLE 5– SUBORDINATION OF DEBENTURES
Section 5.1
Applicability of Article
The
indebtedness, liabilities and obligations of the Corporation hereunder (except
as provided in Section 14.15) or under the Debentures, whether on account of
principal, premium, if any, interest or otherwise, but excluding the issuance of
Common Shares upon any conversion pursuant to Article 6, upon any purchase
pursuant to Article 4, or at maturity pursuant to Section 2.14 (collectively,
the “
Debenture Liabilities
”), shall be subordinated and postponed and
subject in right of payment, to the extent and in the manner hereinafter set
forth in the following Sections of this Article 5, to the full and final payment
of all Secured Indebtedness, and each holder of any such Debenture by his
acceptance thereof agrees to and shall be bound by the provisions of this
Article 5.
Section 5.2
Order of Payment
(1) In the event of any
insolvency or bankruptcy proceedings, or any receivership, liquidation,
reorganization or other similar proceedings relative to the Corporation, or to
its property or assets, or in the event of any proceedings for voluntary
liquidation, dissolution or voluntary winding-up of the Corporation, whether or
not involving insolvency or bankruptcy, or any marshalling of the assets and
liabilities of the Corporation:
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(a)
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all Secured Indebtedness shall first be paid in full, or
provision made for such payment, before any payment is made on account of
Debenture Liabilities;
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(b)
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any payment or distribution of assets of the Corporation,
whether in cash, property or securities, to which the holders of the
Debentures or the Trustee on behalf of such holders would be entitled
except for the provisions of this Article 5, shall be paid or delivered by
the trustee in bankruptcy, receiver, assignee for the benefit of
creditors, or other liquidating agent making such payment or distribution,
directly to the holders of Secured Indebtedness or their representative or
representatives, or to the trustee or trustees under any indenture
pursuant to which any instruments evidencing any of such Secured
Indebtedness may have been issued, to the extent necessary to pay all
Secured Indebtedness in full after giving effect to any concurrent payment
or distribution, or provision therefor, to the holders of such Secured
Indebtedness; and
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(c)
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the Secured Creditors or a receiver or a receiver-manager
of the Corporation or of all or part of its assets or any other
enforcement agent may sell, mortgage, or otherwise dispose of the
Corporation’s assets in whole or in part, free and clear of all Debenture
Liabilities and without the approval of the Debentureholders or the
Trustee.
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- 39 -
(2) The rights and priority of
the Secured Indebtedness and the subordination pursuant hereto shall not be
affected by:
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(a)
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the time, sequence or order of creating, granting,
executing, delivering of, or registering, perfecting or failing to
register or perfect any security notice, caveat, financing statement or
other notice in respect of any security securing the Secured Indebtedness
(the “
Senior Security
”);
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(b)
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the time or order of the attachment, perfection or
crystallization of any security constituted by the Senior
Security;
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(c)
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the taking of any collection, enforcement or realization
proceedings pursuant to the Senior Security;
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(d)
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the date of obtaining of any judgment or order of any
bankruptcy court or any court administering bankruptcy, insolvency or
similar proceedings as to the entitlement of the Secured Creditors, or any
of them or the Debentureholders or any of them to any money or property of
the Corporation;
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(e)
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the failure to exercise any power or remedy reserved to
the Secured Creditors under the Senior Security or to insist upon a strict
compliance with any terms thereof;
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(f)
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whether any Senior Security is now perfected, hereafter
ceases to be perfected, is avoidable by any trustee in bankruptcy or like
official or is otherwise set aside, invalidated or lapses;
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(g)
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the date of giving or failing to give notice to or making
demand upon the Corporation; or
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(h)
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any other matter whatsoever.
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Section 5.3
Subrogation to Rights of Holders
of Secured Indebtedness
(1) Subject to the prior payment
in full of all Secured Indebtedness, the holders of the Debentures shall be
subrogated to the rights of the holders of Secured Indebtedness to receive
payments or distributions of assets of the Corporation to the extent of the
application thereto of such payments or other assets which would have been
received by the holders of the Debentures but for the provisions hereof until
the principal of, premium, if any, and interest on the Debentures shall be paid
in full, and no such payments or distributions to the holders of the Debentures
of cash, property or securities, which otherwise would be payable or
distributable to the holders of the Secured Indebtedness, shall, as between the
Corporation, its creditors other than the holders of Secured Indebtedness, and
the holders of Debentures, be deemed to be a payment by the Corporation to the
holders of the Secured Indebtedness or on account of the Secured Indebtedness,
it being understood that the provisions of this Article 5 are and are intended
solely for the purpose of defining the relative rights of the holders of the
Debentures, on the one hand, and the holders of Secured Indebtedness, on the
other hand.
- 40 -
(2) The Trustee, for itself and
on behalf of each of the Debentureholders, hereby waives any and all rights to
require a Secured Creditor to pursue or exhaust any rights or remedies with
respect to the Corporation or any property and assets subject to any Senior
Security or in any other manner to require the marshalling of property, assets
or security in connection with the exercise by the Secured Creditors of any
rights, remedies or recourses available to them.
Section 5.4
Obligation to Pay Not Impaired
Nothing
contained in this Article 5 or elsewhere in this Indenture or in the Debentures
is intended to or shall impair, as between the Corporation, its creditors other
than the holders of Secured Indebtedness, and the holders of the Debentures, the
obligation of the Corporation, which is absolute and unconditional, to pay to
the holders of the Debentures the principal of, premium, if any, and interest on
the Debentures, as and when the same shall become due and payable in accordance
with their terms, or affect the relative rights of the holders of the Debentures
and creditors of the Corporation other than the holders of the Secured
Indebtedness, nor shall anything herein or therein prevent the Trustee or the
holder of any Debenture from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article 5 of the holders of Secured Indebtedness in respect of cash,
property or securities.
Section 5.5
No Payment if Secured Indebtedness
in Default
(1) Upon the maturity of any
Secured Indebtedness by lapse of time, acceleration or otherwise, or any other
enforcement of any Secured Indebtedness, then, except as provided in Section
5.8, all such Secured Indebtedness shall first be paid in full, or shall first
have been duly provided for, before any payment is made on account of the
Debenture Liabilities.
(2) In case of a circumstance
constituting a default or event of default with respect to any Secured
Indebtedness permitting (whether at that time or upon notice, lapse of time, or
satisfaction of any other condition precedent) a Secured Creditor to demand
payment or accelerate the maturity thereof where the notice of such default or
event of default has been given by or on behalf of the holders of Secured
Indebtedness to the Corporation or the Corporation otherwise has knowledge
thereof, unless and until such default or event of default shall have been cured
or waived or shall have ceased to exist, no payment (by purchase of Debentures
or otherwise) shall be made by the Corporation (except as provided in Section
5.8) with respect to the Debenture Liabilities and neither the Trustee nor the
holders of Debentures shall be entitled to demand, institute proceedings for the
collection of (which shall, for certainty include proceedings related to an
adjudication or declaration as to the insolvency or bankruptcy of the
Corporation and other similar creditor proceedings), or receive any payment or
benefit (including without limitation by set-off, combination of accounts or
otherwise in any manner whatsoever) on account of the Debentures after the
happening of such a default or event of default (except as provided in Section
5.8), and unless and until such default or event of default shall have been
cured or waived or shall have ceased to exist, such payments shall be held in
trust for the benefit of, and, if and when such Secured Indebtedness shall have
become due and payable, shall be paid over to, the holders of the Secured
Indebtedness or their representative or representatives or to the trustee or
trustees under any indenture under which any instruments evidencing an amount of the Secured Indebtedness remaining
unpaid until all such Secured Indebtedness shall have been paid in full, after
giving effect to any concurrent payment or distribution to the holders of such
Secured Indebtedness.
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(3) The fact that any payment
hereunder is prohibited by this Section 5.5 shall not prevent the failure to
make such payment from being an Event of Default hereunder.
Section 5.6
Payment on Debentures Permitted
Nothing
contained in this Article 5 or elsewhere in this Indenture, or in any of the
Debentures, shall affect the obligation of the Corporation to make, or prevent
the Corporation from making, at any time except as prohibited by Sections 5.2 or
5.5, any payment of principal of or, premium, if any, or interest on the
Debentures. The fact that any such payment is prohibited by Sections 5.2 or 5.5
shall not prevent the failure to make such payment from being an Event of
Default hereunder. Nothing contained in this Article 5 or elsewhere in this
Indenture, or in any of the Debentures, shall prevent the conversion of the
Debentures or, except as prohibited by Sections 5.2 or 5.5, the application by
the Trustee of any monies deposited with the Trustee hereunder for the purpose,
to the payment of or on account of the Debenture Liabilities.
Section 5.7
Confirmation of Subordination
Each
holder of Debentures by his acceptance thereof authorizes and directs the
Trustee on his behalf to take such action as may be necessary or appropriate to
effect the subordination as provided in this Article 5 and appoints the Trustee
his attorney-in-fact for any and all such purposes. Upon request of the
Corporation, and upon being furnished an Officer’s Certificate stating that one
or more named Persons are Secured Creditors and specifying the amount and nature
of the Secured Indebtedness of such Secured Creditor, the Trustee shall enter
into a written agreement or agreements with the Corporation and the Person or
Persons named in such Officer’s Certificate providing that such Person or
Persons are entitled to all the rights and benefits of this Article 5 as a
Secured Creditor and for such other matters, such as an agreement not to amend
the provisions of this Article 5 and the definitions herein without the consent
of such Secured Creditor, as the Secured Creditor may reasonably request. Such
agreement shall be conclusive evidence that the indebtedness specified therein
is Secured Indebtedness, however, nothing herein shall impair the rights of any
Secured Creditor who has not entered into such an agreement.
Section 5.8
Knowledge of Trustee
Notwithstanding the provisions of this Article 5 or any provision in this
Indenture or in the Debentures contained, the Trustee will not be charged with
knowledge of any Secured Indebtedness or of any default in the payment thereof,
or of the existence of any Event of Default or any other fact that would
prohibit the making of any payment of monies to or by the Trustee, or the taking
of any other action by the Trustee, unless and until the Trustee has received
written notice thereof from the Corporation, any Debentureholder or any Secured
Creditor.
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Section 5.9
Trustee May Hold Secured
Indebtedness
The
Trustee is entitled to all the rights set forth in this Article 5 with respect
to any Secured Indebtedness at the time held by it, to the same extent as any
other holder of Secured Indebtedness, and nothing in this Indenture deprives the
Trustee of any of its rights as such holder.
Section 5.10
Rights of Holders of Secured
Indebtedness Not Impaired
No right
of any present or future holder of any Secured Indebtedness to enforce the
subordination herein will at any time or in any way be prejudiced or impaired by
any act or failure to act on the part of the Corporation or by any
non-compliance by the Corporation with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof which any such holder may
have or be otherwise charged with.
Section 5.11
Altering the Secured Indebtedness
The
holders of the Secured Indebtedness have the right to extend, renew, modify or
amend the terms of the Secured Indebtedness or any security therefor and to
release, sell or exchange such security and otherwise to deal freely with the
Corporation, all without notice to or consent of the Debentureholders or the
Trustee and without affecting the liabilities and obligations of the parties to
this Indenture or the Debentureholders.
Section 5.12
Additional Indebtedness
This
Indenture does not restrict the Corporation from incurring additional
indebtedness for borrowed money or other obligations or liabilities (including
Secured Indebtedness) or mortgaging, pledging or charging its properties to
secure any indebtedness or liabilities. Except for Secured Indebtedness, any
additional indebtedness for borrowed money or other obligations or liabilities
or other debts will be subordinated to the Debentures.
Section 5.13
Right of Debentureholder to
Convert Not Impaired
The
subordination of the Debentures to the Secured Indebtedness and the provisions
of this Article 5 do not impair in any way the right of a Debentureholder to
convert its Debentures pursuant to Article 6 provided that there is no
continuing default or event under Secured Indebtedness or acceleration of
Secured Indebtedness that has not been rescinded and provided that such
conversion does not result in a payment that could reasonably be expected to
cause a default or event of default under any Secured Indebtedness.
Section 5.14
Invalidated Payments
In the
event that any of the Secured Indebtedness shall be paid in full and
subsequently, for whatever reason, such formerly paid or satisfied Secured
Indebtedness becomes unpaid or unsatisfied, the terms and conditions of this
Article 5 shall be reinstated and the provisions of this Article shall again be
operative until all Secured Indebtedness is repaid in full, provided that such
reinstatement shall not give the Secured Creditors any rights or recourses
against the Trustee or the Debentureholders for amounts paid to the
Debentureholders subsequent to such payment or satisfaction in full and prior to
such reinstatement.
- 43 -
Section 5.15
Contesting Security
The
Trustee, for itself and on behalf of the Debentureholders, agrees that it shall
not contest or bring into question the validity, perfection or enforceability of
any of the Secured Indebtedness, the Senior Security or the relative priority of
the Senior Security.
ARTICLE 6– CONVERSION OF DEBENTURES
Section 6.1
Applicability of Article
(1) Any Debentures issued
hereunder of any series which by their terms are convertible (subject, however,
to any applicable restriction of the conversion of Debentures of such series)
will be convertible into Common Shares or other securities of the Corporation,
at such conversion rate or rates, and on such date or dates and in accordance
with such other provisions as shall have been determined at the time of issue of
such Debentures and shall have been expressed in this Indenture (including
subsection 2.5(5) and Section 3.7 hereof), in such Debentures, in an Officer’s
Certificate, or in a supplemental indenture authorizing or providing for the
issue thereof.
(2) Such right of conversion
shall extend only to the maximum number of whole Common Shares into which the
aggregate principal amount of the Debenture or Debentures surrendered for
conversion at any one time by the holder thereof may be converted. Fractional
interests in Common Shares shall be adjusted for in the manner provided in
Section 6.6.
Section 6.2
Notice of Expiry of Conversion
Privilege
Notice
of the expiry of the conversion privileges of the Debentures shall be given by
or on behalf of the Corporation, not more than 60 days and not less than 30 days
prior to the date fixed for the Time of Expiry, in the manner provided in
Section 13.2.
Section 6.3
Revival of Right to Convert
If the
redemption of any Debenture called for redemption by the Corporation is not made
or the payment of the purchase price of any Debenture which has been tendered in
acceptance of an offer by the Corporation to purchase Debentures for
cancellation is not made, in the case of a redemption upon due surrender of such
Debenture or in the case of a purchase on the date on which such purchase is
required to be made, as the case may be, then, provided the Time of Expiry has
not passed, the right to convert such Debentures shall revive and continue as if
such Debenture had not been called for redemption or tendered in acceptance of
the Corporation’s offer, respectively.
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Section 6.4
Manner of Exercise of Right to
Convert
(1) The holder of a Debenture
desiring to convert such Debenture in whole or in part into Common Shares shall
surrender such Debenture to the Trustee at its principal office in the City of
Vancouver, British Columbia together with the conversion notice in the form of
Schedule B or any other written notice in a form satisfactory to the Trustee,
duly executed by the holder or his executors or administrators or other legal
representatives or his or their attorney duly appointed by an instrument in
writing in form and executed in a manner satisfactory to the Trustee, exercising
his right to convert such Debenture in accordance with the provisions of this
Article; provided that with respect to an Uncertificated Debenture, registration
and surrender of interests in the Debentures will be made only through the
Depositary’s non-certificated system. Thereupon such Debentureholder or, subject
to payment of all applicable stamp or security transfer taxes or other
governmental charges and compliance with all reasonable requirements of the
Trustee, his nominee(s) or assignee(s) shall be entitled to be entered in the
books of the Corporation as at the Date of Conversion (or such later date as is
specified in subsection 6.4(2)) as the holder of the number of Common Shares, as
applicable, into which such Debenture is convertible in accordance with the
provisions of this Article and, as soon as practicable thereafter, the
Corporation shall deliver to such Debentureholder or, subject as aforesaid, his
nominee(s) or assignee(s), a certificate or certificates for such Common Shares
or deposit such Common Shares through the Depository’s non-certificated system
and make or cause to be made any payment of interest to which such holder is
entitled in accordance with subsection 6.4(5) . With respect to a Global
Debenture, the obligation to surrender a Debenture to the Trustee shall be
satisfied if the Trustee makes a notation on the Global Debenture of the
principal amount thereof so converted and the Trustee is provided with all other
documentation which it may request.
(2) For the purposes of this
Article, a Debenture shall be deemed to be surrendered for conversion on the
date (herein called the “
Date of Conversion
”) on which it is so
surrendered when the register of the Trustee is open and in accordance with the
provisions of this Article or, in the case of an Uncertificated Debenture which
the Trustee received notice of and all necessary documentation in respect of the
exercise of the conversion rights and, in the case of a Debenture so surrendered
by mail or other means of transmission, on the date on which it is received by
the Trustee at one of its offices specified in subsection 6.4(1); provided that
if a Debenture is surrendered for conversion on a day on which the register of
Common Shares is closed, the Person or Persons entitled to receive Common Shares
shall become the holder or holders of record of such Common Shares as at the
date on which such registers are next reopened.
(3) Any part, being $1,000 or an
integral multiple thereof, of a Debenture in a denomination in excess of $1,000
may be converted as provided in this Article and all references in this
Indenture to conversion of Debentures shall be deemed to include conversion of
such parts.
(4) The holder of any Debenture
of which only a part is converted shall, upon the exercise of his right of
conversion surrender such Debenture to the Trustee in accordance with subsection
6.4(1), and the Trustee shall cancel the same and shall without charge forthwith
certify and deliver to the holder a new Debenture or Debentures in an aggregate
principal amount equal to the unconverted part of the principal amount of the
Debenture so surrendered or, with respect to an Uncertificated Debenture, registration and
surrender of interests in the Debentures will be made only through the
Depositary’s non-certificated system.
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(5) The holder of a Debenture
surrendered for conversion in accordance with this Section 6.4 shall be entitled
(subject to any applicable restriction on the right to receive interest on
conversion of Debentures of any series) to receive accrued and unpaid interest
in respect thereof, in cash, up to but excluding the Date of Conversion and the
Common Shares issued upon such conversion shall rank only in respect of
distributions or dividends declared in favour of shareholders of record on and
after the Date of Conversion or such later date as such holder shall become the
holder of record of such Common Shares pursuant to subsection 6.4(2), from which
applicable date they will for all purposes be and be deemed to be issued and
outstanding as fully paid and non-assessable Common Shares.
Section 6.5
Adjustment of Conversion Price
The
Conversion Price in effect at any date shall be subject to adjustment from time
to time as set forth below.
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(a)
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If and whenever at any time prior to the Time of Expiry
the Corporation shall
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(i)
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subdivide or redivide the outstanding Common Shares into
a greater number of shares,
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(ii)
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reduce, combine or consolidate the outstanding Common
Shares into a smaller number of shares, or
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(iii)
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issue Common Shares to the holders of all or
substantially all of the outstanding Common Shares by way of a dividend or
distribution (other than the issue of Common Shares to holders of Common
Shares who have elected to receive dividends or distributions in the form
of Common Shares in lieu of cash dividends or cash distributions paid in
the ordinary course on the Common Shares),
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the Conversion Price in effect on the
effective date of such subdivision, redivision, reduction, combination or
consolidation or on the record date for such issue of Common Shares by way of a
dividend or distribution, as the case may be, shall in the case of any of the
events referred to in (i) and (iii) above be decreased in proportion to the
number of outstanding Common Shares resulting from such subdivision, redivision
or dividend, or shall, in the case of any of the events referred to in (ii)
above, be increased in proportion to the number of outstanding Common Shares
resulting from such reduction, combination or consolidation. Such adjustment
shall be made successively whenever any event referred to in this subsection
6.5(a) shall occur. Any such issue of Common Shares by way of a dividend or
distribution shall be deemed to have been made on the record date for the
dividend or distribution for the purpose of calculating the number of
outstanding Common Shares under subsections (c) and (d) of this Section 6.5.
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(b)
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If and whenever at any time prior to the Time of Expiry
the Corporation shall fix a record date for the payment of a cash dividend
or distribution to the holders of all or substantially all of the
outstanding Common Shares, the Conversion Price shall be adjusted
immediately after such record date so that it shall be equal to the price
determined by multiplying the Conversion Price in effect on such record
date by a fraction, of which the denominator shall be the Current Market
Price on such record date and of which the numerator shall be the Current
Market Price on such record date minus the amount in cash per Common Share
distributed to holders of Common Shares. Such adjustment shall be made
successively whenever such a record date is fixed. To the extent that any
such cash dividend or distribution is not paid, the Conversion Price shall
be re-adjusted to the Conversion Price which would then be in effect if
such record date had not been fixed.
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(c)
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If and whenever at any time prior to the Time of Expiry
the Corporation shall fix a record date for the issuance of options,
rights or warrants to all or substantially all the holders of its
outstanding Common Shares entitling them, for a period expiring not more
than 45 days after such record date, to subscribe for or purchase Common
Shares (or securities convertible into Common Shares) at a price per share
(or having a conversion or exchange price per share) less than 95% of the
Current Market Price on such record date, the Conversion Price shall be
adjusted immediately after such record date so that it shall equal the
price determined by multiplying the Conversion Price in effect on such
record date by a fraction, of which the numerator shall be the total
number of Common Shares outstanding on such record date plus a number of
Common Shares equal to the number arrived at by dividing the aggregate
price of the total number of additional Common Shares offered for
subscription or purchase (or the aggregate conversion or exchange price of
the convertible securities so offered) by such Current Market Price, and
of which the denominator shall be the total number of Common Shares
outstanding on such record date plus the total number of additional Common
Shares offered for subscription or purchase (or into which the convertible
securities so offered are convertible). Such adjustment shall be made
successively whenever such a record date is fixed. To the extent that any
such options, rights or warrants are not so issued or any such options,
rights or warrants are not exercised prior to the expiration thereof, the
Conversion Price shall be re-adjusted to the Conversion Price which would
then be in effect if such record date had not been fixed or to the
Conversion Price which would then be in effect based upon the number of
Common Shares (or securities convertible into Common Shares) actually
issued upon the exercise of such options, rights or warrants were included
in such fraction, as the case may be.
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(d)
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If and whenever at any time prior to the Time of Expiry,
there is a reclassification of the Common Shares or a capital
reorganization of the Corporation other than as described in subsection
6.5(a) or a consolidation, amalgamation, arrangement, binding share
exchange, merger of the Corporation with or into any other Person or other
entity or acquisition of the Corporation or other combination pursuant to which
the Common Shares are converted into or acquired for cash, securities or other
property; or a sale or conveyance of the property and assets of the Corporation
as an entirety or substantially as an entirety to any other Person (other than a
direct or indirect wholly-owned subsidiary of the Corporation) or other entity
or a liquidation, dissolution or winding-up of the Corporation (any such event,
a “
Merger Event
”), any holder of a Debenture who has not exercised its
right of conversion prior to the effective date of such reclassification,
capital reorganization, consolidation, amalgamation, arrangement, merger, share
exchange, acquisition, combination, sale or conveyance or liquidation,
dissolution or winding-up, upon the exercise of such right thereafter, shall be
entitled to receive and shall accept, in lieu of the number of Common Shares
then sought to be acquired by it, such amount of cash or the number of shares or
other securities or property of the Corporation or of the Person or other entity
resulting from such merger, amalgamation, arrangement, acquisition, combination
or consolidation, or to which such sale or conveyance may be made or which
holders of Common Shares receive pursuant to such liquidation, dissolution or
winding-up, as the case may be, that such holder of a Debenture would have been
entitled to receive on such reclassification, capital reorganization,
consolidation, amalgamation, arrangement, merger, share exchange, acquisition,
combination, sale or conveyance or liquidation, dissolution or winding-up, if,
on the record date or the effective date thereof, as the case may be, the holder
had been the registered holder of the number of Common Shares sought to be
acquired by it and to which it was entitled to acquire upon the exercise of the
conversion right, subject to subsection 6.5(m) . If determined appropriate by
the Board of Directors, to give effect to or to evidence the provisions of this
subsection 6.5(d), the Corporation, its successor, or such purchasing Person or
other entity, as the case may be, shall, prior to or contemporaneously with any
such reclassification, capital reorganization, consolidation, amalgamation,
arrangement, merger, share exchange, acquisition, combination, sale or
conveyance or liquidation, dissolution or winding-up, enter into an indenture
which shall provide, to the extent possible, for the application of the
provisions set forth in this Indenture with respect to the rights and interests
thereafter of the holder of Debentures to the end that the provisions set forth
in this Indenture shall thereafter correspondingly be made applicable, as nearly
as may reasonably be, with respect to any cash, shares or other securities or
property to which a holder of Debentures is entitled on the exercise of its
acquisition rights thereafter. Any indenture entered into between the
Corporation and the Trustee pursuant to the provisions of this subsection 6.5(d)
shall be a supplemental indenture entered into pursuant to the provisions of
Article 16. Any indenture entered into between the Corporation, any successor to
the Corporation or such purchasing Person or other entity and the Trustee shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided in this subsection 6.5(d) and which
shall apply to successive reclassifications, capital
reorganizations, amalgamations, consolidations, mergers, share exchanges,
acquisitions, combinations, sales or conveyances. For greater certainty, nothing
in this subsection 6.5(d) shall affect or reduce the requirement for any Person
to make a Change of Control Offer, and notice of any transaction to which this
subsection 6.5(d) applies shall be given in accordance with Section 6.10.
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The Corporation shall not become a
party to any Merger Event unless its terms are consistent with this subsection
6.5(d) .
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(e)
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If the Corporation shall make a distribution to all or
substantially all of the holders of Common Shares of shares in the capital
of the Corporation, other than Common Shares, or evidences of indebtedness
or other assets of the Corporation, including securities (but excluding
(i) any issuance of rights or warrants for which an adjustment was made
pursuant to subsection 6.5(c), and (ii) any dividend or distribution paid
exclusively in cash for which an adjustment was made pursuant to
subsection 6.5(b)) (the “
Distributed Securities
”), then in each
such case (unless the Corporation at its option chooses to distribute such
Distributed Securities to the holders of Debentures on such dividend or
distribution date (as if each holder had converted such Debenture into
Common Shares immediately preceding the record date with respect to such
distribution)) the Conversion Price in effect immediately preceding the
ex-distribution date fixed for the dividend or distribution shall be
adjusted so that the same shall equal the price determined by multiplying
the Conversion Price in effect immediately preceding such ex-distribution
date by a fraction of which the denominator shall be the five-day VWAP
immediately prior to the ex-distribution date and of which the numerator
shall be the five-day VWAP for the first five trading days that occur
immediately post the ex- distribution date. Such adjustment shall be made
successively whenever any such distribution is made and shall become
effective five Business Days immediately after the ex-distribution date.
In the event that such dividend or distribution is not so paid or made,
the Conversion Price shall again be adjusted to be the Conversion Price
that would then be in effect if such dividend or distribution had not been
declared.
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Notwithstanding the foregoing, if the securities
distributed by the Corporation to all holders of its Common Shares consist
of capital stock of, or similar equity interests in, a Subsidiary or other
business of the Corporation (the “
Spinoff Securities
”), the
Conversion Price shall be adjusted, unless the Corporation makes an
equivalent distribution to the holders of Debentures, so that the same
shall be equal to the rate determined by multiplying the Conversion Price
in effect on the record date fixed for the determination of shareholders
entitled to receive such distribution by a fraction, the denominator of
which shall be the sum of (A) the weighted average trading price of one
Common Share over the 20 consecutive trading day period (the “
Spinoff
Valuation Period
”) commencing on and including the fifth trading day
after the date on which ex- dividend trading commences for such
distribution on the TSX (or such other exchange on which the Common Shares are
then listed) and (B) the product of (i) the weighted average trading price
(calculated in substantially the same way as the Current Market Price is
calculated for the Common Shares) over the Spinoff Valuation Period of the
Spinoff Securities or, if no such prices are available, the fair market value of
the Spinoff Securities as reasonably determined by the Board of Directors (which
determination shall be conclusive and shall be evidenced by an Officer’s
Certificate delivered to the Trustee) multiplied by (ii) the number of Spinoff
Securities distributed in respect of one Common Share and the numerator of which
shall be the weighted average trading price of one Common Share over the Spinoff
Valuation Period, such adjustment to become effective immediately preceding the
opening of business on the 25th trading day after the date on which ex-dividend
trading commences; provided, however, that the Corporation may in lieu of the
foregoing adjustment elect to make adequate provision so that each holder of
Debentures shall have the right to receive upon conversion thereof the amount of
such Spinoff Securities that such holder of Debentures would have received if
such Debentures had been converted on the record date with respect to such
distribution.
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(f)
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If any issuer bid made by the Corporation or any of its
Subsidiaries for all or any portion of Common Shares shall expire, then,
if the issuer bid shall require the payment to shareholders of
consideration per Common Share having a fair market value (determined as
provided below) that exceeds the Current Market Price on the last date
(the “
Expiration Date
”) tenders could have been made pursuant to
such issuer bid (as it may be amended) (the last time at which such
tenders could have been made on the Expiration Date is hereinafter
sometimes called the “
Expiration Time
”), the Conversion Price shall
be adjusted so that the same shall equal the rate determined by
multiplying the Conversion Price in effect immediately preceding the close
of business on the Expiration Date by a fraction of which (i) the
denominator shall be the sum of (A) the fair market value of the aggregate
consideration (the fair market value as determined by the Board of
Directors, whose determination shall be conclusive evidence of such fair
market value and which shall be evidenced by an Officer’s Certificate
delivered to the Trustee) payable to shareholders based on the acceptance
(up to any maximum specified in the terms of the issuer bid) of all Common
Shares validly tendered and not withdrawn as of the Expiration Time (the
Common Shares deemed so accepted, up to any such maximum, being referred
to as the “
Purchased Common Shares
”) and (B) the product of the
number of Common Shares outstanding (less any Purchased Common Shares and
excluding any Common Shares held in the treasury of the Corporation) at
the Expiration Time and the Current Market Price on the Expiration Date
and (ii) the numerator of which shall be the product of the number of
Common Shares outstanding (including Purchased Common Shares but excluding
any Common Shares held in the treasury of the Corporation) at the
Expiration Time multiplied by the Current Market Price on the
Expiration Date, such increase to become effective immediately preceding the
opening of business on the day following the Expiration Date. In the event that
the Corporation is obligated to purchase Common Shares pursuant to any such
issuer bid, but the Corporation is permanently prevented by applicable law from
effecting any or all such purchases or any or all such purchases are rescinded,
the Conversion Price shall again be adjusted to be the Conversion Price which
would have been in effect based upon the number of Common Shares actually
purchased, if any. If the application of this subsection 6 . 5 ( f ) to any
issuer bid would result in a decrease in the Conversion Price, no adjustment
shall be made for such issuer bid under this subsection 6.5(f) .
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For purposes of this subsection
6.5(f), the term “
issuer bid
” shall mean an issuer bid under Applicable
Securities Legislation or a take-over bid under Applicable Securities
Legislation by a Subsidiary of the Corporation for the Common Shares and all
references to “purchases” of Common Shares in issuer bids (and all similar
references) shall mean and include the purchase of Common Shares in issuer bids
and all references to “tendered Common Shares” (and all similar references)
shall mean and include Common Shares tendered in issuer bids.
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(g)
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In any case in which this Section 6.5 shall require that
an adjustment shall become effective immediately after a record date for
an event referred to herein, the Corporation may defer, until the
occurrence of such event, issuing to the holder of any Debenture converted
after such record date and before the occurrence of such event the
additional Common Shares issuable upon such conversion by reason of the
adjustment required by such event before giving effect to such adjustment;
provided, however, that the Corporation shall deliver to such holder an
appropriate instrument evidencing such holder’s right to receive such
additional Common Shares upon the occurrence of the event requiring such
adjustment and the right to receive any distributions made on such
additional Common Shares declared in favour of holders of record of Common
Shares on and after the Date of Conversion or such later date as such
holder would, but for the provisions of this subsection 6.5(g), have
become the holder of record of such additional Common Shares pursuant to
subsection 6.4(2).
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(h)
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The adjustments provided for in this Section 6.5 are
cumulative and shall apply to successive subdivisions, redivisions,
reductions, combinations, consolidations, distributions, issues or other
events resulting in any adjustment under the provisions of this Section,
provided that, notwithstanding any other provision of this Section, no
adjustment of the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
Conversion Price then in effect; provided however, that any adjustments
which by reason of this subsection 6.5(h) are not required to
be made shall be carried forward and
taken into account in any subsequent adjustment.
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(i)
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For the purpose of calculating the number of Common
Shares outstanding, Common Shares owned by or for the benefit of the
Corporation shall not be counted.
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(j)
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In the event of any question arising with respect to the
adjustments provided in this Section 6.5, such question shall be
conclusively determined by a firm of nationally recognized chartered
accountants appointed by the Corporation and acceptable to the Trustee
(who may be the Auditors of the Corporation); such accountants shall have
access to all necessary records of the Corporation and such determination
shall be binding upon the Corporation, the Trustee, and the
Debentureholders.
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(k)
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In case the Corporation shall take any action affecting
the Common Shares other than action described in this Section 6.5, which
in the opinion of the Board of Directors, would materially affect the
rights of Debentureholders, the Conversion Price shall be adjusted in such
manner and at such time, by action of the Board of Directors, as the Board
of Directors, in their sole discretion may determine to be equitable in
the circumstances. Failure of the directors to make such an adjustment
shall be conclusive evidence that they have determined that it is
equitable to make no adjustment in the circumstances.
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(l)
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No adjustment in the Conversion Price shall be made in
respect of any event described in subsections 6.5(a), 6.5(b), 6.5(c),
6.5(e) or 6.5(f) other than the events described in clauses 6.5(a)(i) or
6.5(a)(ii) if the holders of the Debentures are entitled to participate in
such event on the same terms mutatis mutandis as if they had converted
their Debentures prior to the effective date or record date, as the case
may be, of such event.
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(m)
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Except as stated above in this Section 6.5, no adjustment
will be made in the Conversion Price for any Debentures as a result of the
issuance of Common Shares at less than the Current Market Price on the
date of issuance or the then applicable Conversion Price.
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(n)
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Notwithstanding any of the foregoing in this Section 6.5,
if a holder of a Debenture would otherwise be entitled to receive, upon
conversion of the Debenture, any property (including cash) or securities
that would not constitute “prescribed securities” for the purposes of
clause 212(1)(b)(vii)(E) of the Tax Act as it applied on December 31, 2007
(“
Ineligible Consideration
”), such holder of a Debenture shall not
be entitled to receive such Ineligible Consideration and the Corporation
or the successor or acquirer, as the case may be, shall have the right (at
the sole option of the Corporation or the successor or acquirer, as the
case may be) to deliver to such holder “prescribed securities” for the
purposes of clause 212(1)(b)(vii)(E) of the Tax Act as it applied
on December 31, 2007 with a market value
(as conclusively determined by the Board of Directors) equal to the market value
of such Ineligible Consideration.
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- 52 -
Section 6.6
No Requirement to Issue Fractional
Common Shares
The
Corporation shall not be required to issue fractional Common Shares upon the
conversion of Debentures pursuant to this Article. If more than one Debenture
shall be surrendered for conversion at one time by the same holder, the number
of whole Common Shares issuable upon conversion thereof shall be computed on the
basis of the aggregate principal amount of such Debentures to be converted. If
any fractional interest in a Common Share would, except for the provisions of
this Section, be deliverable upon the conversion of any principal amount of
Debentures, the Corporation shall, in lieu of delivering any certificate
representing such fractional interest, make a cash payment to the holder of such
Debenture of an amount equal to the fractional interest which would have been
issuable multiplied by the Current Market Price, provided, however, the
Corporation shall not be required to make any payment of less than $1.00.
Section 6.7
Forced Conversion
If,
beginning on that date that is four months and one day following the closing of
the Offering and prior to the Maturity Date, the VWAP of the Common Shares on
the TSX (or such other Canadian stock exchange on which the Common Shares are
listed for trading) for 10 consecutive trading days equals or exceeds $9.00, as
adjusted in accordance with Section 6.5, the Corporation may force conversion of
all but not less than all of the principal amount (less any tax required by law
to be deducted or withheld) of the Debenture at the Conversion Price, upon
giving the Debentureholders 30 days advance written notice by way to the Trustee
in accordance with Section 13.3 (the “
Forced Conversion Notice
”) and
concurrently issuing a news release. The Corporation shall pay all accrued and
unpaid interest (less any tax required by law to be deducted or withheld) in
cash. The holder of a Debenture may convert such Debenture in whole or in part
into Common Share until 4:30 p.m. (Vancouver time) on the Business Day prior to
the date the Debenture is forced to convert in the manner provided in Section
6.4.
In the
event that the Corporation exercises its right to force conversion of all of the
the principal amount of the Debentures pursuant to this Section 6.7, the
effective date for the forced conversion (the “
Forced Conversion Date
”)
shall be: (a) the date stipulated in the Forced Conversion Notice; or (b) if no
date is so stipulated in the Forced Conversion Notice, the date that is 30 days
following the date of such Forced Conversion Notice, and upon such Forced
Conversion Date: (i) all of the principal amount (less any tax required by law
to be deducted or withheld) of the Debentures shall be deemed to be converted
into Common Shares at the then applicable Conversion Price; and (ii) the
Debentureholders shall be entered in the books of the Corporation as at the
Forced Conversion Date as the holder of the number of Common Shares, as
applicable, into which the Debentures held by them are convertible. Upon the
surrender of Debenture Certificates to the Trustee at its principal office in
the City of Vancouver, at 510 Burrard Street, 3
rd
Floor, Vancouver,
British Columbia V6C 3B9, by the Debentureholders, or in the case of
Uncertificated Debentures, the surrender of interests in the Debentures through
the Depository’s non-certificated system, the Corporation shall deliver to the
Debentureholders certificates for the Common Shares or deposit Common Shares
through the Depository’s non-certificated system, as applicable, for the Common
Shares into which the Debentures held by them have been converted.
- 53 -
Section 6.8
Corporation to Reserve Common
Shares
The
Corporation covenants with the Trustee that it will at all times reserve and
keep available out of its authorized Common Shares (if the number thereof is or
becomes limited), solely for the purpose of issue upon conversion of Debentures
as in this Article provided, and conditionally allot to Debentureholders who may
exercise their conversion rights hereunder, such number of Common Shares as
shall then be issuable upon the conversion of all outstanding Debentures. The
Corporation covenants with the Trustee that all Common Shares which shall be so
issuable shall be duly and validly issued as fully-paid and non-assessable.
Section 6.9
Cancellation of Converted
Debentures
Subject
to the provisions of Section 6.4 as to Debentures converted in part, all
Debentures converted in whole or in part under the provisions of this Article
shall be forthwith delivered to and cancelled by the Trustee and no Debenture
shall be issued in substitution for those converted.
Section 6.10
Certificate as to Adjustment
The
Corporation shall from time to time immediately after the occurrence of any
event which requires an adjustment or readjustment as provided in Section 6.5,
deliver an Officer’s Certificate to the Trustee specifying the nature of the
event requiring the same and the amount of the adjustment necessitated thereby
and setting forth in reasonable detail the method of calculation and the facts
upon which such calculation is based, which certificate and the amount of the
adjustment specified therein shall be verified by an opinion of a firm of
nationally recognized chartered accountants appointed by the Corporation and
acceptable to the Trustee (who may be the Auditors of the Corporation) and shall
be conclusive and binding on all parties in interest. When so approved, the
Corporation shall, except in respect of any subdivision, redivision, reduction,
combination or consolidation of the Common Shares, forthwith give notice to the
Debentureholders in the manner provided in Section 13.2 specifying the event
requiring such adjustment or readjustment and the results thereof, including the
resulting Conversion Price; provided that, if the Corporation has given notice
under this Section 6.10 covering all the relevant facts in respect of such event
and if the Trustee approves, no such notice need be given under this Section
6.10.
Section 6.11
Notice of Special Matters
(1) The Corporation covenants
with the Trustee that so long as any Debenture remains outstanding, it will give
notice to the Trustee, and to the Debentureholders in the manner provided in
Section 13.2, of its intention to fix a record date for any event referred to in
subsections 6.5(a), 6.5(b), 6.5(c), 6.5(d) or 6.5(e) (other than the
subdivision, redivision, reduction, combination or consolidation of its Common
Shares) which may give rise to an adjustment in the Conversion Price, and, in each case, such
notice shall specify the particulars of such event and the record date and the
effective date for such event; provided that the Corporation shall only be
required to specify in such notice such particulars of such event as shall have
been fixed and determined on the date on which such notice is given. Such notice
shall be given not less than 14 days in each case prior to such applicable
record date.
- 54 -
(2) In addition, the Corporation
covenants with the Trustee that so long as any Debenture remains outstanding, it
will give notice to the Trustee, and to the Debentureholders in the manner
provided in Section 13.2, at least 30 days prior to the (i) effective date of
any transaction referred to in Section 6.5(d) stating the consideration into
which the Debentures will be convertible after the effective date of such
transaction, and (ii) Expiration Date of any transaction referred to in
subsection 6.5(f) stating the consideration paid per Common Share in such
transaction.
Section 6.12
Protection of Trustee
The
Trustee:
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(a)
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shall not at any time be under any duty or responsibility
to any Debentureholder to determine whether any facts exist which may
require any adjustment in the Conversion Price, or with respect to the
nature or extent of any such adjustment when made, or with respect to the
method employed in making the same;
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(b)
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shall not be accountable with respect to the validity or
value (or the kind or amount) of any Common Shares or of any shares or
other securities or property which may at any time be issued or delivered
upon the conversion of any Debenture; and
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(c)
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shall not be responsible for any failure of the
Corporation to make any cash payment or to issue, transfer or deliver
Common Shares or share certificates upon the surrender of any Debenture
for the purpose of conversion, or to comply with any of the covenants
contained in this Article.
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Section 6.13
Restricted CUSIP or U.S. Legend
on Certain Common Shares
Each
Common Share issued upon conversion of Debentures represented by the Restricted
Debentures shall be represented by a certificate with a restricted CUSIP for
Common Shares and each certificate representing Common Shares issued upon
conversion of Debentures bearing the U.S. Legend shall have imprinted or
otherwise reproduced thereon such legend or legends in substantially the form of
Schedule C attached hereto; provided that if such Common Shares are being sold
in compliance with the requirements of Rule 904 of Regulation S and in
compliance with local laws and regulations, and provided that the Corporation is
a “foreign issuer” within the meaning of Regulation S at the time of issuance of
such Common Shares, the U.S. Legend may be removed or the Common Shares may be
transferred from the restricted CUSIP by providing a declaration to the Trustee,
as registrar and transfer agent for the Common Shares, substantially as set
forth in Schedule D (or as the Corporation or the Trustee may prescribe from
time to time), together with any other evidence reasonably requested by the
Corporation or Trustee, which evidence may include an opinion of counsel of recognized
standing, in form and substance reasonably satisfactory to the Corporation and
the Trustee, to the effect that the transfer is being made in compliance with
Rule 904 of Regulation S; and provided further that, if any such Common Shares
are being sold in accordance with Rule 144 under the 1933 Act, Common Shares may
be transferred from the restricted CUSIP or the U.S. Legend may be removed by
delivery to the Trustee, as registrar and transfer agent for the Common Shares,
of an opinion of counsel of recognized standing, in form and substance
reasonably satisfactory to the Trustee and the Corporation, that the transfer
out of the restricted CUSIP is permissible or that the U.S. Legend is no longer
required under applicable requirements of the 1933 Act or applicable state
securities laws. Provided that the Trustee obtains confirmation from the
Corporation that such counsel is satisfactory to it, it shall be entitled to
rely on such opinion of counsel without further inquiry.
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ARTICLE 7 – COVENANTS OF THE CORPORATION
The
Corporation hereby covenants and agrees with the Trustee for the benefit of the
Trustee and the Debentureholders, that so long as any Debentures remain
outstanding:
Section 7.1
To Pay Principal, Premium (if any)
and Interest
The
Corporation will duly and punctually pay or cause to be paid to every
Debentureholder the principal of, premium (if any) and interest accrued on the
Debentures of which it is the holder on the dates, at the places and in the
manner mentioned herein and in the Debentures.
Section 7.2
To Pay Trustee’s Remuneration
The
Corporation will pay the Trustee reasonable remuneration for its services as
Trustee hereunder and will repay to the Trustee on demand all monies which shall
have been paid by the Trustee in connection with the execution of the trusts
hereby created and such monies including the Trustee’s remuneration, shall be
payable out of any funds coming into the possession of the Trustee in priority
to payment of any principal of the Debentures or interest or premium thereon.
Such remuneration shall continue to be payable until the trusts hereof be
finally wound up and whether or not the trusts of this Indenture shall be in the
course of administration by or under the direction of a court of competent
jurisdiction.
Section 7.3
To Give Notice of Default
The
Corporation shall notify the Trustee and the Debentureholders immediately upon
obtaining knowledge of any Event of Default hereunder.
Section 7.4
Preservation of Existence, etc.
Subject
to the express provisions hereof, the Corporation will carry on and conduct its
activities, and cause its Subsidiaries to carry on and conduct their businesses,
in a business-like manner and in accordance with good business practices; and,
subject to the express provisions hereof, it will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and rights.
- 56 -
Section 7.5
Keeping of Books
The
Corporation will keep or cause to be kept proper books of record and account, in
which full and correct entries shall be made of all financial transactions and
the assets and business of the Corporation in accordance with generally accepted
accounting principles.
Section 7.6
Annual Certificate of Compliance
The
Corporation shall deliver to the Trustee, within 120 days after the end of each
calendar year, (and at any reasonable time upon demand by the Trustee) an
Officer’s Certificate as to the knowledge of such officers of the Corporation
who execute the Officer’s Certificate of the Corporation’s compliance with all
conditions and covenants in this Indenture certifying that after reasonable
investigation and inquiry, the Corporation has complied with all covenants,
conditions or other requirements contained in this Indenture, the non-compliance
with which could, with the giving of notice, lapse of time or otherwise,
constitute an Event of Default hereunder, or if such is not the case, setting
forth with reasonable particulars the circumstances of any failure to comply and
steps taken or proposed to be taken to eliminate such circumstances and remedy
such Event of Default, as the case may be.
Section 7.7
Performance of Covenants by
Trustee
If the
Corporation shall fail to perform any of its covenants contained in this
Indenture, the Trustee may notify the Debentureholders of such failure on the
part of the Corporation or may itself perform any of the covenants capable of
being performed by it, but shall be under no obligation to do so or to notify
the Debentureholders All sums so expended or advanced by the Trustee shall be
repayable as provided in Section 7.2. No such performance, expenditure or
advance by the Trustee shall be deemed to relieve the Corporation of any default
hereunder.
Section 7.8
Maintain Listing
The
Corporation will use reasonable commercial efforts to maintain the listing of
the Common Shares on the TSX, and to maintain the Corporation’s status as a
“reporting issuer” not in default of the requirements of the Applicable
Securities Legislation; provided that the foregoing covenant shall not prevent
or restrict the Corporation from carrying out a transaction to which Article 10
would apply if carried out in compliance with Article 10 even if as a result of
such transaction the Corporation ceases to be a “reporting issuer” in all or any
of the provinces of Canada or the Common Shares cease to be listed on the TSX or
any other stock exchange.
Section 7.9
No Dividends on Common Shares if
Event of Default
The
Corporation shall not declare or pay any dividend to the holders of its issued
and outstanding Common Shares after the occurrence of an Event of Default unless
and until such default shall have been cured or waived or shall have ceased to
exist.
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Section 7.10
Withholding Matters
All
payments made by or on behalf of the Corporation under or with respect to the
Debentures (including, without limitation, any penalties, interest and other
liabilities related thereto) will be made free and clear of and without
withholding, or deduction for, or on account of, any present or future tax,
duty, levy, impost, assessment or other governmental charge (including, without
limitation, penalties, interest and other liabilities related hereto) imposed or
levied by or on behalf of the Government of Canada or the United States or
elsewhere, or of any province or territory thereof or by any authority or agency
therein or thereof having power to tax (“
Withholding Taxes
”), unless the
Corporation is required by law or the interpretation or administration thereof,
to withhold or deduct any amounts for, or on account of Withholding Taxes. If
the Corporation is so required to withhold or deduct any amount for, or on
account of, Withholding Taxes from any payment made under or with respect to the
Debentures, the Corporation shall deduct and withhold such Withholding Taxes
from any payment to be made or with respect to the Debentures and, provided that
the Corporation forthwith remits such amount to the relevant governmental
authority or agency, the amount of any such deduction or withholding will be
considered an amount paid in satisfaction of the Corporation’s obligations under
the Debentures. There is no obligation on the Corporation to gross-up or pay
additional amounts to a holder of Debentures in respect of such deductions or
withholdings. For greater certainty, if any amount is required to be deducted or
withheld in respect of Withholding Taxes upon a conversion of a Debenture, the
Corporation shall be entitled to liquidate such number of Common Shares (or
other securities) issuable as a result of such conversion as shall be necessary
in order to satisfy such requirement. The Corporation shall provide the Trustee
with copies of receipts or other communications relating to the remittance of
such withheld amount or the filing of any forms received from such government
authority or agency promptly after receipt thereof.
Section 7.11
SEC Reporting Status
The Corporation confirms that as at the date of execution of
this Indenture it does not have
a class of securities registered
pursuant to Section 12 of the U.S. Securities Exchange Act or have a reporting
obligation pursuant to Section 15(d) of the U.S. Securities Exchange Act.
The Corporation covenants that in the event that (i) any class
of its securities shall become registered pursuant to Section 12 of the U.S.
Securities Exchange Act or such Corporation shall incur a reporting obligation
pursuant to Section 15(d) of the U.S. Securities Exchange Act, or (ii) any such
registration or reporting obligation shall be terminated by such Corporation in
accordance with the U.S. Securities Exchange Act, such Corporation shall
promptly deliver to the Trustee an Officers' Certificate (in a form provided by
the Trustee) notifying the Trustee of such registration or termination and such
other information as the Trustee may require at the time. The Corporation
acknowledges that the Trustee is relying upon the foregoing representation and
covenants in order to meet certain SEC obligations with respect to those clients
who are filing with the SEC.
- 58 -
Section 7.12 Cannabis Related Covenant
(1) The Corporation, for so long
as Debentures remain outstanding, shall not conduct, directly or indirectly:
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(a)
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the business of the production, sale or distribution of
cannabis or products or materials based on or that include cannabis,
or
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(b)
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other commercial activities relating to the production,
sale or distribution of cannabis or products or materials based on or that
include cannabis,
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other than the production, sale or
distribution of cannabis in Canada pursuant to one or more licences issued by
Health Canada, or such other regulatory agency as may be required, and in
accordance with applicable law, or in other jurisdictions in accordance with all
applicable laws of such jurisdictions, unless prior approval is obtained from
the Special Warrant Agent; and
(2) The Corporation and any
subsidiary of the Corporation shall not acquire or own, directly or indirectly,
any assets, operations or interests in Canada or in any other jurisdiction,
which acquisition or ownership, or the operation of which, is contrary to any
applicable law, including the laws of the United States of Americas.
ARTICLE 8– DEFAULT
Section 8.1
Events of Default
(1) Each of the following events
constitutes, and is herein sometimes referred to as, an “
Event of
Default
”:
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(a)
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failure for 10 days to pay interest on the Debentures
when due;
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(b)
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failure to pay principal or premium (whether by way of
payment of cash or delivery of Common Shares), if any, when due on the
Debentures whether at maturity, upon redemption or a Change of Control, by
declaration or otherwise;
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(c)
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default in the delivery, when due, of any Common Shares
or other consideration, payable on conversion with respect to the
Debentures, which default continues for 15 days;
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(d)
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default in the observance or performance of any covenant
or condition of the Indenture by the Corporation and the failure to cure
(or obtain a waiver for) such default for a period of 30 days after notice
in writing has been given by the Trustee or from holders of not less than
25% in aggregate principal amount of the Debentures to the Corporation
specifying such default and requiring the Corporation to rectify such
default or obtain a waiver for same;
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(e)
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if a decree or order of a Court having jurisdiction is
entered adjudging the Corporation or any Material Subsidiary a bankrupt or
insolvent under the
Bankruptcy and Insolvency Act
(Canada) or any
other bankruptcy, insolvency or analogous laws, or issuing sequestration
or process of execution against, or against any substantial part of, the
property of the Corporation or any Material Subsidiary, or appointing a
receiver of, or of any substantial part of, the property of the
Corporation or any Material Subsidiary or ordering the winding- up or
liquidation of its affairs, and any such decree or order continues
unstayed and in effect for a period of 60 days;
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(f)
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if the Corporation or any Material Subsidiary institutes
proceedings to be adjudicated a bankrupt or insolvent, or consents to the
institution of bankruptcy or insolvency proceedings against it under the
Bankruptcy and Insolvency Act
(Canada) or any other bankruptcy,
insolvency or analogous laws, or consents to the filing of any such
petition or to the appointment of a receiver of, or of any substantial
part of, the property of the Corporation or any Material Subsidiary or
makes a general assignment for the benefit of creditors, or admits in
writing its inability to pay its debts generally as they become
due;
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(g)
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if a resolution is passed for the winding-up or
liquidation of the Corporation or any Material Subsidiary except in the
course of carrying out or pursuant to a transaction in respect of which
the conditions of Section 10.1 are duly observed and performed;
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(h)
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if, after the date of this Indenture, any proceedings
with respect to the Corporation or any Material Subsidiary are taken with
respect to a compromise or arrangement, with respect to creditors of the
Corporation or any Material Subsidiary generally, under the applicable
legislation of any jurisdiction; or
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(i)
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if an event of default occurs or exists under any
indenture, agreement or other instrument evidencing or governing
indebtedness for borrowed money (other than Non-Recourse Debt) of the
Corporation or any Material Subsidiary and as a result of such event of
default (i) indebtedness for borrowed money thereunder in excess of
$500,000 (or the equivalent amount in any other currency) has become due
and payable before the date it would otherwise have been due and payable
or (ii) the holders of such indebtedness are entitled to commence, and
have commenced, the enforcement of security they hold for such
indebtedness (if any) or the exercise of any other creditors’ remedies to
collect such indebtedness; and
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(j)
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if the Corporation fails to comply with Article 10
hereof;
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then: (i) in each and every such event listed above, the
Trustee may, in its discretion, but subject to the provisions of this Section,
and shall, upon receipt of a request in writing signed by the holders of not
less than 25% in principal amount of the Debentures then outstanding (or if the
Event of Default shall exist only in respect of one or more series of the
Debentures then outstanding, then upon receipt of a request in writing signed
by the holders of not less than 25% in principal amount of the Debentures of
such series then outstanding), subject to the provisions of Section 8.3, by
notice in writing to the Corporation declare the principal of and interest and
premium, if any, on all Debentures then outstanding and all other monies
outstanding hereunder to be due and payable and the same shall thereupon
forthwith become immediately due and payable (or, if the Event of Default shall
exist only in respect of one or more series of the Debentures then outstanding,
then the Trustee may declare due and payable the principal and interest and
premium, if any, only with respect to such Debentures in respect of which there
is an Event of Default) to the Trustee, and (ii) on the occurrence of an Event
of Default under clauses 8.1(1)(e), 8.1(1)(f), 8.1(1)(g) or 8.1(1)(i), the
principal of and interest and premium, if any, on all Debentures then
outstanding hereunder and all other monies outstanding hereunder, shall
automatically without any declaration or other act on the part of the Trustee or
any Debentureholder become immediately due and payable to the Trustee and, in
either case, upon such amounts becoming due and payable in either (i) or (ii)
above, the Corporation shall forthwith pay to the Trustee for the benefit of the
Debentureholders such principal, accrued and unpaid interest and premium, if
any, and interest on amounts in default on such Debenture and all other monies
outstanding hereunder, together with subsequent interest at the rate borne by
the Debentures on such principal, interest, premium and such other monies from
the date of such declaration or event until payment is received by the Trustee,
such subsequent interest to be payable at the times and places and in the manner
mentioned in and according to the tenor of the Debentures. Such payment when
made shall be deemed to have been made in discharge of the Corporation’s
obligations hereunder and any monies so received by the Trustee shall be applied
in the manner provided in Section 8.6.
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(2) For greater certainty, for
the purposes of this Section 8.1, a series of Debentures shall be in default in
respect of an Event of Default if such Event of Default relates to a default in
the payment of principal, premium, if any, or interest on the Debentures of such
series in which case references to Debentures in this Section 8.1 refer to
Debentures of that particular series.
(3) For purposes of this Article
8, where the Event of Default refers to an Event of Default with respect to a
particular series of Debentures as described in this Section 8.1, then this
Article 8 shall apply
mutatis mutandis
to the Debentures of such series
and references in this Article 8 to the Debentures shall mean Debentures of the
particular series and references to the Debentureholders shall refer to the
Debentureholders of the particular series, as applicable.
Section 8.2
Notice of Events of Default
If an
Event of Default shall occur and be continuing the Trustee shall, within 30 days
after it receives written notice of the occurrence of such Event of Default,
give notice of such Event of Default to the Debentureholders in the manner
provided in Section 12.2, provided that notwithstanding the foregoing, unless
the Trustee shall have been requested to do so by the holders of at least 25% of
the principal amount of the Debentures then outstanding, the Trustee shall not
be required to give such notice if the Trustee in good faith shall have
determined that the withholding of such notice is in the best interests of the
Debentureholders and shall have so advised the Corporation in writing.
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When
notice of the occurrence of an Event of Default has been given and the Event of
Default is thereafter cured, notice that the Event of Default is no longer
continuing shall be given by the Trustee to the Debentureholders within 15 days
after the Trustee becomes aware the Event of Default has been cured.
Section 8.3
Waiver of Default
(1) Upon the happening of any
Event of Default hereunder:
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(a)
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the holders of the Debentures shall have the power (in
addition to the powers exercisable by Extraordinary Resolution as
hereinafter provided) by requisition in writing by the holders of more
than 50% of the principal amount of Debentures then outstanding, to
instruct the Trustee to waive any Event of Default and to cancel any
declaration made by the Trustee pursuant to Section 8.1 and the Trustee
shall thereupon waive the Event of Default and cancel such declaration, or
either, upon such terms and conditions as shall be prescribed in such
requisition; provided that notwithstanding the foregoing if the Event of
Default has occurred by reason of the non-observance or non-performance by
the Corporation of any covenant applicable only to one or more series of
Debentures, then the holders of more than 50% of the principal amount of
the outstanding Debentures of that series shall be entitled to exercise
the foregoing power and the Trustee shall so act and it shall not be
necessary to obtain a waiver from the holders of any other series of
Debentures; and
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(b)
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the Trustee, so long as it has not become bound to
declare the principal and interest on the Debentures then outstanding to
be due and payable, or to obtain or enforce payment of the same, shall
have power to waive any Event of Default if, in the Trustee’s opinion, the
same shall have been cured or adequate satisfaction made therefor, and in
such event to cancel any such declaration theretofore made by the Trustee
in the exercise of its discretion, upon such terms and conditions as the
Trustee may deem advisable.
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(2) No such act or omission
either of the Trustee or of the Debentureholders shall extend to or be taken in
any manner whatsoever to affect any subsequent Event of Default or the rights
resulting therefrom.
Section 8.4
Enforcement by the Trustee
(1) Subject to the provisions of
Section 8.3 and to the provisions of any Extraordinary Resolution that may be
passed by the Debentureholders, if the Corporation shall fail to pay to the
Trustee, forthwith after the same shall have been declared to be due and payable
under Section 8.1, the principal of and premium (if any) and interest on all
Debentures then outstanding, together with any other amounts due hereunder, the
Trustee may in its discretion and shall upon receipt of a request in writing
signed by the holders of not less than 25% in principal amount of the Debentures
then outstanding and upon being funded and indemnified to its reasonable
satisfaction against all costs, expenses and liabilities to be incurred, proceed
in its name as trustee hereunder to obtain or enforce payment of such
principal of and premium (if any) and interest on all the Debentures then
outstanding together with any other amounts due hereunder by such proceedings
authorized by this Indenture or by law or equity as the Trustee in such request
shall have been directed to take, or if such request contains no such direction,
or if the Trustee shall act without such request, then by such proceedings
authorized by this Indenture or by suit at law or in equity as the Trustee shall
deem expedient.
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(2) The Trustee shall be entitled
and empowered, either in its own name or as Trustee of an express trust, or as
attorney-in-fact for the holders of the Debentures, or in any one or more of
such capacities, to file such proof of debt, amendment of proof of debt, claim,
petition or other document as may be necessary or advisable in order to have the
claims of the Trustee and of the holders of the Debentures allowed in any
insolvency, bankruptcy, liquidation or other judicial proceedings relative to
the Corporation or its creditors or relative to or affecting its property. The
Trustee is hereby irrevocably appointed (and the successive respective holders
of the Debentures by taking and holding the same shall be conclusively deemed to
have so appointed the Trustee) the true and lawful attorney-in-fact of the
respective holders of the Debentures with authority to make and file in the
respective names of the holders of the Debentures or on behalf of the holders of
the Debentures as a class, subject to deduction from any such claims of the
amounts of any claims filed by any of the holders of the Debentures themselves,
any proof of debt, amendment of proof of debt, claim, petition or other document
in any such proceedings and to receive payment of any sums becoming
distributable on account thereof, and to execute any such other papers and
documents and to do and perform any and all such acts and things for and on
behalf of such holders of the Debentures, as may be necessary or advisable in
the opinion of the Trustee, in order to have the respective claims of the
Trustee and of the holders of the Debentures against the Corporation or its
property allowed in any such proceeding, and to receive payment of or on account
of such claims; provided, however, that subject to Section 8.3, nothing
contained in this Indenture shall be deemed to give to the Trustee, unless so
authorized by Extraordinary Resolution, any right to accept or consent to any
plan of reorganization or otherwise by action of any character in such
proceeding to waive or change in any way any right of any Debentureholder.
(3) The Trustee shall also have
the power at any time and from time to time to institute and to maintain such
suits and proceedings as it may be advised shall be necessary or advisable to
preserve and protect its interests and the interests of the Debentureholders.
(4) All rights of action
hereunder may be enforced by the Trustee without the possession of any of the
Debentures or the production thereof on the trial or other proceedings relating
thereto.
(5) Any such suit or proceeding
instituted by the Trustee shall be brought in the name of the Trustee as trustee
of an express trust, and any recovery of judgment shall be for the rateable
benefit of the holders of the Debentures subject to the provisions of this
Indenture. In any proceeding brought by the Trustee (and also any proceeding in
which a declaratory judgment of a court may be sought as to the interpretation
or construction of any provision of this Indenture, to which the Trustee shall
be a party) the Trustee shall be held to represent all the holders of the
Debentures, and it shall not be necessary to make any holders of the Debentures
parties to any such proceeding.
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Section 8.5
No Suits by Debentureholders
No
holder of any Debenture shall have any right to institute any action, suit or
proceeding at law or in equity for the purpose of enforcing payment of the
principal of or interest on the Debentures or for the execution of any trust or
power hereunder or for the appointment of a liquidator or receiver or for a
receiving order under the
Bankruptcy and Insolvency Act
(Canada) or to
have the Corporation wound up or to file or prove a claim in any liquidation or
bankruptcy proceeding or for any other remedy hereunder, unless: (a) such holder
shall previously have given to the Trustee written notice of the happening of an
Event of Default hereunder; and (b) the Debentureholders by Extraordinary
Resolution or by written instrument signed by the holders of at least 25% in
principal amount of the Debentures then outstanding shall have made a request to
the Trustee and the Trustee shall have been afforded reasonable opportunity
either itself to proceed to exercise the powers hereinbefore granted or to
institute an action, suit or proceeding in its name for such purpose; and (c)
the Debentureholders or any of them shall have furnished to the Trustee, when so
requested by the Trustee, sufficient funds and security and indemnity
satisfactory to it against the costs, expenses and liabilities to be incurred
therein or thereby; and (d) the Trustee shall have failed to act within a
reasonable time after such notification, request and offer of indemnity and such
notification, request and offer of indemnity are hereby declared in every such
case, at the option of the Trustee, to be conditions precedent to any such
proceeding or for any other remedy hereunder by or on behalf of the holder of
any Debentures.
Section 8.6
Application of Monies by Trustee
(1) Except as herein otherwise
expressly provided, any monies received by the Trustee from the Corporation
pursuant to the foregoing provisions of this Article 8, or as a result of legal
or other proceedings or from any trustee in bankruptcy or liquidator of the
Corporation, shall be applied, together with any other monies in the hands of
the Trustee available for such purpose, as follows:
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(a)
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first, in payment or in reimbursement to the Trustee of
its compensation, costs, charges, expenses, borrowings, advances or other
monies furnished or provided by or at the instance of the Trustee in or
about the execution of its trusts under, or otherwise in relation to, this
Indenture, with interest thereon as herein provided;
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(b)
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second, but subject as hereinafter in this Section 8.6
provided, in payment, rateably and proportionately to the holders of
Debentures, of the principal of and premium (if any) and accrued and
unpaid interest and interest on amounts in default on the Debentures which
shall then be outstanding in the priority of principal first and then
premium and then accrued and unpaid interest and interest on amounts in
default unless otherwise directed by Extraordinary Resolution and in that
case in such order or priority as between principal, premium (if any) and
interest as may be directed by such resolution; and
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(c)
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third, in payment of the surplus, if any, of such monies
to the Corporation or its assigns;
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provided, however, that no payment shall be made pursuant to
clause (b) above in respect of the principal, premium or interest on any
Debenture held, directly or indirectly, by or for the benefit of the Corporation
or any Subsidiary (other than any Debenture pledged for value and in good faith
to a Person other than the Corporation or any Subsidiary but only to the extent
of such person’s interest therein) except subject to the prior payment in full
of the principal, premium (if any) and interest (if any) on all Debentures which
are not so held.
(2) The Trustee shall not be
bound to apply or make any partial or interim payment of any monies coming into
its hands if the amount so received by it, after reserving thereout such amount
as the Trustee may think necessary to provide for the payments mentioned in
subsection 8.6(1), is insufficient to make a distribution of at least 2% of the
aggregate principal amount of the outstanding Debentures, but it may retain the
money so received by it and invest or deposit the same as provided in Section
14.9 until the money or the investments representing the same, with the income
derived therefrom, together with any other monies for the time being under its
control shall be sufficient for the said purpose or until it shall consider it
advisable to apply the same in the manner hereinbefore set forth. The foregoing
shall, however, not apply to a final payment in distribution hereunder.
Section 8.7
Notice of Payment by Trustee
Not less
than 15 days’ notice shall be given in the manner provided in Section 13.2 by
the Trustee to the Debentureholders of any payment to be made under this Article
8. Such notice shall state the time when and place where such payment is to be
made and also the liability under this Indenture to which it is to be applied.
After the day so fixed, unless payment shall have been duly demanded and have
been refused, the Debentureholders will be entitled to interest only on the
balance (if any) of the principal monies, premium (if any) and interest due (if
any) to them, respectively, on the Debentures, after deduction of the respective
amounts payable in respect thereof on the day so fixed.
Section 8.8
Trustee May Demand Production of
Debentures
The
Trustee shall have the right to demand production of the Debentures in respect
of which any payment of principal, interest or premium required by this Article
8 is made and may cause to be endorsed on the same a memorandum of the amount so
paid and the date of payment, but the Trustee may, in its discretion, dispense
with such production and endorsement, upon such indemnity being given to it and
to the Corporation as the Trustee shall deem sufficient.
Section 8.9
Remedies Cumulative
No
remedy herein conferred upon or reserved to the Trustee, or upon or to the
holders of Debentures is intended to be exclusive of any other remedy, but each
and every such remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now existing or hereafter to exist by law or by
statute.
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Section 8.10
Judgment Against the Corporation
The
Corporation covenants and agrees with the Trustee that, in case of any judicial
or other proceedings to enforce the rights of the Debentureholders, judgment may
be rendered against it in favour of the Debentureholders or in favour of the
Trustee, as trustee for the Debentureholders, for any amount which may remain
due in respect of the Debentures and premium (if any) and the interest thereon
and any other monies owing hereunder.
Section 8.11
Immunity of Directors, Officers
and Others
The
Debentureholders and the Trustee hereby waive and release any right, cause of
action or remedy now or hereafter existing in any jurisdiction against any past,
present or future officer, director or employee of the Corporation or holder of
Common Shares of the Corporation or of any successor for the payment of the
principal of or premium or interest on any of the Debentures or on any covenant,
agreement, representation or warranty by the Corporation contained herein or in
the Debentures.
ARTICLE 9– SATISFACTION AND DISCHARGE
Section 9.1
Cancellation and
Destruction
All
Debentures shall forthwith after payment thereof be delivered to the Trustee and
cancelled by it. All Debentures cancelled or required to be cancelled under this
or any other provision of this Indenture shall be destroyed by the Trustee and,
if required by the Corporation, the Trustee shall furnish to it a destruction
certificate setting out the designating numbers of the Debentures so destroyed.
Section 9.2
Non-Presentation of Debentures
In case
the holder of any Debenture shall fail to present the same for payment on the
date on which the principal of, premium (if any) or the interest thereon or
represented thereby becomes payable either at maturity or otherwise or shall not
accept payment on account thereof and give such receipt therefor, if any, as the
Trustee may require:
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(a)
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the Corporation shall be entitled to pay or deliver to
the Trustee and direct it to set aside; or
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(b)
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in respect of monies in the hands of the Trustee which
may or should be applied to the payment of the Debentures, the Corporation
shall be entitled to direct the Trustee to set aside; or
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(c)
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if the redemption was pursuant to notice given by the
Trustee, the Trustee may itself set aside;
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the monies in trust to be paid to the holder of such Debenture
upon due presentation or surrender thereof in accordance with the provisions of
this Indenture; and thereupon the principal of, premium (if any) or the interest
payable on or represented by each Debenture in respect whereof such monies have been set aside shall be deemed to have been
paid and the holder thereof shall thereafter have no right in respect thereof
except that of receiving delivery and payment of the monies so set aside by the
Trustee upon due presentation and surrender thereof, subject always to the
provisions of Section 9.3.
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Section 9.3
Repayment of Unclaimed
Monies
Subject
to applicable law, any monies set aside under Section 9.2 and not claimed by and
paid to holders of Debentures as provided in Section 9.2 within six years after
the date of such setting aside shall be repaid and delivered to the Corporation
by the Trustee and thereupon the Trustee shall be released from all further
liability with respect to such monies and thereafter the holders of the
Debentures in respect of which such monies were so repaid to the Corporation
shall have no rights in respect thereof except to obtain payment and delivery of
the monies from the Corporation subject to any limitation provided by the laws
of the Province of Ontario. Notwithstanding the foregoing, the Trustee will pay
any remaining funds prior to the expiry of six years after the setting aside
described in Section 9.2 to the Corporation upon receipt from the Corporation,
of an unconditional letter of credit from a Canadian chartered bank in an amount
equal to or in excess of the amount of the remaining funds. If the remaining
funds are paid to the Corporation prior to the expiry of six years after such
setting aside, the Corporation shall reimburse the Trustee for any amounts so
set aside which are required to be paid by the Trustee to a holder of a
Debenture after the date of such payment of the remaining funds to the
Corporation but prior to six years after such setting aside.
Section 9.4
Discharge
The
Trustee shall at the written request of the Corporation release and discharge
this Indenture and execute and deliver such instruments as it shall be advised
by Counsel are requisite for that purpose and to release the Corporation from
its covenants herein contained (other than the provisions relating to the
indemnification of the Trustee), upon proof being given to the reasonable
satisfaction of the Trustee that the principal of, premium (if any) and interest
(including interest on amounts in default, if any), on all the Debentures and
all other monies payable hereunder have been paid or satisfied or that all the
Debentures having matured or having been duly called for redemption, payment of
the principal of and interest (including interest on amounts in default, if any)
on such Debentures and of all other monies payable hereunder has been duly and
effectually provided for in accordance with the provisions hereof.
Section 9.5
Satisfaction
(1) The Corporation shall be
deemed to have fully paid, satisfied and discharged all of the outstanding
Debentures of any series and the Trustee, at the expense of the Corporation,
shall execute and deliver proper instruments acknowledging the full payment,
satisfaction and discharge of such Debentures, when, with respect to all of the
outstanding Debentures or all of the outstanding Debentures of any series, as
applicable:
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(a)
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the Corporation has deposited or caused to be deposited
with the Trustee as trust funds or property in trust for the purpose of
making payment on such Debentures, an amount in money sufficient to pay,
satisfy and discharge the entire amount of principal of,
premium, if any, and interest, if any, to maturity, or any repayment date, or
any Change of Control Purchase Date, or upon conversion or otherwise as the case
may be, of such Debentures;
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(b)
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the Corporation has deposited or caused to be deposited
with the Trustee as trust property in trust for the purpose of making
payment on such Debentures:
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(i)
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if the Debentures are issued in Canadian dollars, such
amount in Canadian dollars of direct obligations of, or obligations the
principal and interest of which are guaranteed by, the Government of
Canada; or
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(ii)
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if the Debentures are issued in a currency or currency
unit other than Canadian dollars, cash in the currency or currency unit in
which the Debentures are payable and/or such amount in such currency or
currency unit of direct obligations of, or obligations the principal and
interest of which are guaranteed by, the Government of Canada or the
government that issued the currency or currency unit in which the
Debentures are payable;
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as will be sufficient to pay and discharge the entire amount of
principal of, premium, if any on, and accrued and unpaid interest to maturity or
any repayment date, as the case may be, of all such Debentures; or
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(c)
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all Debentures authenticated and delivered (other than
(A) Debentures which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 2.10 and (B) Debentures for
whose payment has been deposited in trust and thereafter repaid to the
Corporation as provided in Section 9.3) have been delivered to the Trustee
for cancellation;
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so long as in any such event:
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(d)
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the Corporation has paid, caused to be paid or made
provisions to the satisfaction of the Trustee for the payment of all other
sums payable or which may be payable with respect to all of such
Debentures (together with all applicable expenses of the Trustee in
connection with the payment of such Debentures); and
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(e)
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the Corporation has delivered to the Trustee an Officer’s
Certificate stating that all conditions precedent herein provided relating
to the payment, satisfaction and discharge of all such Debentures have
been complied with.
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Any deposits with the Trustee referred to in this Section 9.5
shall be irrevocable, subject to Section 9.6, and shall be made under the terms
of an escrow and/or trust agreement in form and substance satisfactory to the
Trustee and which provides for the due and punctual payment of the principal of,
premium, if any, and interest on the Debentures being satisfied.
(2) Upon the satisfaction of the
conditions set forth in this Section 9.5 with respect to all the outstanding
Debentures, or all the outstanding Debentures of any series, as applicable, the
terms and conditions of the Debentures, including the terms and
conditions with respect thereto set forth in this Indenture (other than those
contained in Article 2 and Article 4 and the provisions of Article 1 pertaining
to Article 2 and Article 4) shall no longer be binding upon or applicable to the
Corporation.
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(3) Any funds or obligations
deposited with the Trustee pursuant to this Section 9.5 shall be denominated in
the currency or denomination of the Debentures in respect of which such deposit
is made.
(4) If the Trustee is unable to
apply any money or securities in accordance with this Section 9.5 by reason of
any legal proceeding or any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Corporation’s obligations under this Indenture and the affected Debentures shall
be revived and reinstated as though no money or securities had been deposited
pursuant to this Section 9.5 until such time as the Trustee is permitted to
apply all such money or securities in accordance with this Section 9.5, provided
that if the Corporation has made any payment in respect of principal of,
premium, if any, or interest on Debentures or, as applicable, other amounts
because of the reinstatement of its obligations, the Corporation shall be
subrogated to the rights of the holders of such Debentures to receive such
payment from the money or securities held by the Trustee.
Section 9.6
Continuance of Rights, Duties and
Obligations
(1) Where trust funds or trust
property have been deposited pursuant to Section 9.5, the holders of Debentures
and the Corporation shall continue to have and be subject to their respective
rights, duties and obligations under Article 2 and Article 4.
(2) In the event that, after the
deposit of trust funds or trust property pursuant to Section 9.5 in respect of a
series of Debentures (the “
Defeased Debentures
”), any holder of any of
the Defeased Debentures from time to time converts its Debentures to Common
Shares or other securities of the Corporation in accordance with Section 2.5 (in
respect of Initial Debentures or the comparable provision of any other series of
Debentures), Article 6 or any other provision of this Indenture, the Trustee
shall upon receipt of a Written Direction of the Corporation return to the
Corporation from time to time the proportionate amount of the trust funds or
other trust property deposited with the Trustee pursuant to Section 9.5 in
respect of the Defeased Debentures which is applicable to the Defeased
Debentures so converted (which amount shall be based on the applicable principal
amount of the Defeased Debentures being converted in relation to the aggregate
outstanding principal amount of all the Defeased Debentures).
(3) In the event that, after the
deposit of trust funds or trust property pursuant to Section 9.5, the
Corporation is required to make a Change of Control Offer to purchase any
outstanding Debentures pursuant to subsection 2.5(7) (in respect of Initial
Debentures or the comparable provision of any other series of Debentures), in
relation to Initial Debentures or to make an offer to purchase Debentures
pursuant to any other similar provisions relating to any other series of
Debentures, the Corporation shall be entitled to use any trust money or trust
property deposited with the Trustee pursuant to Section 9.5 for the purpose of
paying to any holders of Defeased Debentures who have accepted any such offer of
the Corporation the Offer Price payable to such holders in respect of such Change of Control Offer in respect
of Initial Debentures (or the total offer price payable in respect of an offer
relating to any other series of Debentures). Upon receipt of a Written Direction
from the Corporation, the Trustee shall be entitled to pay to such holder from
such trust money or trust property deposited with the Trustee pursuant to
Section 9.5 in respect of the Defeased Debentures which is applicable to the
Defeased Debentures held by such holders who have accepted any such offer to the
Corporation (which amount shall be based on the applicable principal amount of
the Defeased Debentures held by accepting offerees in relation to the aggregate
outstanding principal amount of all the Defeased Debentures).
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ARTICLE 10– SUCCESSORS
Section 10.1
Corporation may Consolidate,
etc., Only on Certain Terms
(1) The Corporation may not,
without the consent of the holders of the Debentures by Extraordinary Resolution
hereunder, consolidate with or amalgamate or merge with or into any Person
(other than a directly or indirectly wholly-owned Subsidiary of the Corporation)
or sell, convey, transfer or lease all or substantially all of the properties
and assets of the Corporation to another Person (other than a directly or
indirectly wholly-owned Subsidiary of the Corporation) unless:
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(a)
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the Person formed by such consolidation or into which the
Corporation is amalgamated or merged, or the Person which acquires by
sale, conveyance, transfer or lease all or substantially all of the
properties and assets of the Corporation is a corporation, organized and
existing under the laws of Canada or any province or territory thereof or
the laws of the United States or any state thereof and such corporation
(if other than the Corporation or the continuing corporation resulting
from the amalgamation of the Corporation with another corporation under
the laws of Canada or any province or territory thereof) expressly
assumes, by an indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the obligations of the
Corporation under the Debentures and this Indenture and the performance or
observance of every covenant and provision of this Indenture and the
Debentures required on the part of the Corporation to be performed or
observed and the conversion rights shall be provided for in accordance
with Article 6, by supplemental indenture satisfactory in form to the
Trustee, executed and delivered to the Trustee, by the Person (if other
than the Corporation or the continuing corporation resulting from the
amalgamation of the Corporation with another corporation under the laws of
Canada or any province or territory thereof) formed by such consolidation
or into which the Corporation shall have been merged or by the Person
which shall have acquired the Corporation’s assets;
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(b)
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after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have occurred and be continuing;
and
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(c)
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if the Corporation or the continuing corporation
resulting from the amalgamation or merger of the Corporation with another
Person under the laws of Canada or any province or territory thereof or
the laws of the United States or any state thereof will not be the
resulting, continuing or surviving corporation, the Corporation shall
have, at or prior to the effective date of such consolidation,
amalgamation, merger or sale, conveyance, transfer or lease, delivered to
the Trustee an Officer’s Certificate and an opinion of Counsel, each
stating that such consolidation, merger or transfer complies with this
Article and, if a supplemental indenture is required in connection with
such transaction, such supplemental indenture complies with this Article,
and that all conditions precedent herein provided for relating to such
transaction have been complied with.
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(2) For purposes of the
foregoing, the sale, conveyance, transfer or lease (in a single transaction or a
series of related transactions) of the properties or assets of one or more
Subsidiaries of the Corporation (other than to the Corporation or another
wholly-owned Subsidiary of the Corporation), which, if such properties or assets
were directly owned by the Corporation, would constitute all or substantially
all of the properties and assets of the Corporation and its Subsidiaries, taken
as a whole, shall be deemed to be the sale, conveyance, transfer or lease of all
or substantially all of the properties and assets of the Corporation.
Section 10.2
Successor Substituted
Upon any
consolidation of the Corporation with, or amalgamation or merger of the
Corporation into, any other Person or any sale, conveyance, transfer or lease of
all or substantially all of the properties and assets of the Corporation and its
Subsidiaries, taken as a whole, in accordance with Section 10.1, the successor
Person formed by such consolidation or into which the Corporation is amalgamated
or merged or to which such sale, conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Corporation under this Indenture with the same effect as if such successor
Person had been named as the Corporation herein, and thereafter, except in the
case of a lease, and except for obligations the predecessor Person may have
under a supplemental indenture entered into pursuant to clause 10.1(1)(c), the
predecessor Person shall be relieved of all obligations and covenants under this
Indenture and the Debentures.
ARTICLE 11– COMPULSORY ACQUISITION
Section 11.1
Definitions In this Article:
(1)
“Affiliate”
and
“Associate”
shall have their respective
meanings set forth in the
Securities Act
(Ontario);
(2)
“Dissenting Debentureholders”
means a Debentureholder who does
not accept an Offer referred to in Section 11.2 and includes any assignee of the
Debenture of a Debentureholder to whom such an Offer is made, whether or not
such assignee is recognized under this Indenture;
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(3)
“Offer”
means an offer to acquire outstanding Debentures, which
is a takeover bid for Debentures within the meaning ascribed thereto in NI
62-104, whereas of the date of the offer to acquire, the Debentures that are
subject to the offer to acquire, together with the Offeror’s Debentures,
constitute in the aggregate 20% or more of the outstanding principal amount of
the Debentures;
(4)
“offer to
acquire”
includes an acceptance of an offer to sell;
(5)
“Offeror”
means a person, or two or more persons acting jointly
or in concert, who make an Offer to acquire Debentures;
(6)
“Offeror’s Debentures”
means Debentures beneficially owned, or
over which control or direction is exercised, on the date of an Offer by the
Offeror, any Affiliate or Associate of the Offeror or any Person or company
acting jointly or in concert with the Offeror; and
(7)
“Offeror’s Notice”
means the notice described in Section 11.3.
Section 11.2
Offer for Debentures
If an
Offer for all of the outstanding Debentures (other than Debentures held by or on
behalf of the Offeror or an Affiliate or Associate of the Offeror) is made and:
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(a)
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within the time provided in the Offer for its acceptance
or within 120 days after the date the Offer is made, whichever period is
the shorter, the Offer is accepted by Debentureholders representing at
least 90% of the outstanding principal amount of the Debentures, other
than the Offeror’s Debentures;
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(b)
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the Offeror is bound to take up and pay for, or has taken
up and paid for the Debentures of the Debentureholders who accepted the
Offer;
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(c)
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the Offeror complies with Sections 11.3 and 11.5;
and
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(d)
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the Offer complies with applicable securities laws
(including any applicable requirements of the U.S. Securities Exchange
Act).
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the Offeror is entitled to acquire, and the Dissenting
Debentureholders are required to sell to the Offeror, the Debentures held by the
Dissenting Debentureholder for the same consideration per Debenture payable or
paid, as the case may be, under the Offer.
Section 11.3
Offeror’s Notice to Dissenting
Shareholders
Where an
Offeror is entitled to acquire Debentures held by Dissenting Debentureholders
pursuant to Section 11.2 and the Offeror wishes to exercise such right, the
Offeror shall send by registered mail within 30 days after the date of
termination of the Offer a notice (the “
Offeror’s Notice
”) to each
Dissenting Debentureholder stating that:
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(a)
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Debentureholders holding at least 90% of the principal
amount of all outstanding Debentures, other than Offeror’s Debentures,
have accepted the Offer;
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(b)
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the Offeror is bound to take up and pay for, or has taken
up and paid for, the Debentures of the Debentureholders who accepted the
Offer;
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(c)
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Dissenting Debentureholders must transfer their
respective Debentures to the Offeror on the terms on which the Offeror
acquired the Debentures of the Debentureholders who accepted the Offer
within 21 days after the date of the sending of the Offeror’s Notice;
and
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(d)
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Dissenting Debentureholders must send their respective
Debenture certificate(s) to the Trustee within 21 days after the date of
the sending of the Offeror’s Notice.
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Section 11.4
Delivery of Debenture
Certificates
A
Dissenting Debentureholder to whom an Offeror’s Notice is sent pursuant to
Section 11.3 shall, within 21 days after the sending of the Offeror’s Notice,
send his or her Debenture certificate(s) to the Trustee duly endorsed for
transfer.
Section 11.5
Payment of Consideration to
Trustee
Within
21 days after the Offeror sends an Offeror’s Notice pursuant to Section 11.3,
the Offeror shall pay or transfer to the Trustee, or to such other Person as the
Trustee may direct, the cash or other consideration that is payable to
Dissenting Debentureholders pursuant to Section 11.2. The acquisition by the
Offeror of all Debentures held by all Dissenting Debentureholders shall be
effective as of the time of such payment or transfer.
Section 11.6
Consideration to be held in Trust
The
Trustee, or the Person directed by the Trustee, shall hold in trust for the
Dissenting Debentureholders the cash or other consideration they or it receives
under Section 11.5. The Trustee, or such persons, shall deposit cash in a
separate account in a Canadian chartered bank, or other body corporate, any of
whose deposits are insured by the Canada Deposit Insurance Corporation, and
shall place other consideration in the custody of a Canadian chartered bank or
such other body corporate.
Section 11.7
Completion of Transfer of
Debentures to Offeror
Within
30 days after the date of the sending of an Offeror’s Notice pursuant to Section
11.3, the Trustee, if the Offeror has complied with Section 11.5, shall:
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(a)
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do all acts and things and execute and cause to be
executed all instruments as in the Trustee’s opinion may be necessary or
desirable to cause the transfer of the Debentures of the Dissenting
Debentureholders to the Offeror;
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(b)
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send to each Dissenting Debentureholder who has complied
with Section 11.4 the consideration to which such Dissenting
Debentureholder is entitled under this Article 11; and
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(c)
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send to each Dissenting Debentureholder who has not
complied with Section 11.4 a notice stating
that:
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(i)
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his or her Debentures have been transferred to the
Offeror;
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(ii)
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the Trustee or some other Person designated in such
notice are holding in trust the consideration for such Debentures;
and
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(iii)
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the Trustee, or such other Person, will send the
consideration to such Dissenting Debentureholder as soon as possible after
receiving such Dissenting Debentureholder’s Debenture certificate(s) or
such other documents as the Trustee or such other Person may require in
lieu thereof;
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and the Trustee is hereby appointed the agent and attorney of
the Dissenting Debentureholders for the purposes of giving effect to the
foregoing provisions.
Section 11.8
Communication of Offer to the
Corporation
An
Offeror cannot make an Offer for Debentures unless, concurrent with the
communication of the Offer to any Debentureholder, a copy of the Offer is
provided to the Corporation.
ARTICLE 12– MEETINGS OF DEBENTUREHOLDERS
Section 12.1
Right to Convene Meeting
The
Trustee or the Corporation may at any time and from time to time, and the
Trustee shall, on receipt of a Written Direction of the Corporation or a written
request signed by the holders of not less than 25% of the principal amount of
the Debentures then outstanding and upon receiving funding and being indemnified
to its reasonable satisfaction by the Corporation or by the Debentureholders
signing such request against the costs which may be incurred in connection with
the calling and holding of such meeting, convene a meeting of the
Debentureholders. In the event of the Trustee failing, within 30 days after
receipt of any such request and such funding of indemnity, to give notice
convening a meeting, the Corporation or such Debentureholders, as the case may
be, may convene such meeting. Every such meeting shall be held in the City of
Vancouver or at such other place as may be approved or determined by the
Trustee.
Section 12.2
Notice of Meetings
(1) At least 21 days’ notice of
any meeting shall be given to the Debentureholders in the manner provided in
Section 13.2 and a copy of such notice shall be sent by post to the Trustee,
unless the meeting has been called by it. Such notice shall state the time when
and the place where the meeting is to be held and shall state briefly the
general nature of the business to be transacted thereat and it shall not be
necessary for any such notice to set out the terms of any resolution to be
proposed or any of the provisions of this Article. The accidental omission to
give notice of a meeting to any holder of Debentures shall not invalidate any
resolution passed at any such meeting. A holder may waive notice of a meeting
either before or after the meeting.
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(2) If the business to be
transacted at any meeting by Extraordinary Resolution or otherwise, or any
action to be taken or power exercised by instrument in writing under Section
12.15, especially affects the rights of holders of Debentures of one or more
series in a manner or to an extent differing in any material way from that in or
to which the rights of holders of Debentures of any other series are affected
(determined as provided in subsections 12.2(3) and (4)), then:
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(a)
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a reference to such fact, indicating each series of
Debentures in the opinion of the Trustee so especially affected
(hereinafter referred to as the “especially affected series”) shall be
made in the notice of such meeting, and in any such case the meeting shall
be and be deemed to be and is herein referred to as a “
Serial
Meeting
”; and
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(b)
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the holders of Debentures of an especially affected
series shall not be bound by
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(c)
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any action taken at a Serial Meeting or by instrument in
writing under Section 12.15 unless in addition to compliance with the
other provisions of this Article 12:
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(i)
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at such Serial Meeting: (I) there are Debentureholders
present in person or by proxy and representing at least 25% in principal
amount of the Debentures then outstanding of such series, subject to the
provisions of this Article 12 as to quorum at adjourned meetings; and (II)
the resolution is passed by the affirmative vote of the holders of more
than 50% (or in the case of an Extraordinary Resolution not less than 66
%) of the principal amount of the Debentures of such series then
outstanding voted on the resolution; or
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(ii)
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in the case of action taken or power exercised by
instrument in writing under Section 12.15, such instrument is signed in
one or more counterparts by the holders of not less than 66 % in principal
amount of the Debentures of such series then
outstanding.
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(3) Subject to Section 12.2(4),
the determination as to whether any business to be transacted at a meeting of
Debentureholders, or any action to be taken or power to be exercised by
instrument in writing under Section 12.15, especially affects the rights of the
Debentureholders of one or more series in a manner or to an extent differing in
any material way from that in or to which it affects the rights of
Debentureholders of any other series (and is therefore an especially affected
series) shall be determined by an opinion of Counsel, which shall be binding on
all Debentureholders, the Trustee and the Corporation for all purposes hereof.
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(4) A proposal:
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(a)
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to extend the maturity of Debentures of any particular
series or to reduce the principal amount thereof, the rate of interest or
redemption premium thereon or to impair any conversion right
thereof;
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(b)
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to modify or terminate any covenant or agreement which by
its terms is effective only so long as Debentures of a particular series
are outstanding; or
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(c)
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to reduce with respect to Debentureholders of any
particular series any percentage stated in this Section 12.2 or Sections
12.4, 12.12 and 12.15;
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shall be deemed to especially affect the rights of the
Debentureholders of such series in a manner differing in a material way from
that in which it affects the rights of holders of Debentures of any other
series, whether or not a similar extension, reduction, modification or
termination is proposed with respect to Debentures of any or all other series.
Section 12.3
Chairman
Some
person, who need not be a Debentureholder, nominated in writing by the Trustee
shall be chairman of the meeting and if no Person is so nominated, or if the
Person so nominated is not present within 15 minutes from the time fixed for the
holding of the meeting, a majority of the Debentureholders present in person or
by proxy shall choose some Person present to be chairman.
Section 12.4
Quorum
Subject
to the provisions of Section 12.12, at any meeting of the Debentureholders a
quorum shall consist of Debentureholders present in person or by proxy and
representing at least 25% in principal amount of the outstanding Debentures and,
if the meeting is a Serial Meeting, at least 25% of the Debentures then
outstanding of each especially affected series. If a quorum of the
Debentureholders shall not be present within 30 minutes from the time fixed for
holding any meeting, the meeting, if summoned by the Debentureholders or
pursuant to a request of the Debentureholders, shall be dissolved, but in any
other case the meeting shall be adjourned to the same day in the next week
(unless such day is not a Business Day in which case it shall be adjourned to
the next following Business Day thereafter) at the same time and place to the
extent possible and no notice shall be required to be given in respect of such
adjourned meeting. At the adjourned meeting, the Debentureholders present in
person or by proxy shall, subject to the provisions of Section 12.12, constitute
a quorum and may transact the business for which the meeting was originally
convened notwithstanding that they may not represent 25% of the principal amount
of the outstanding Debentures or of the Debentures then outstanding of each
especially affected series. Any business may be brought before or dealt with at
an adjourned meeting which might have been brought before or dealt with at the
original meeting in accordance with the notice calling the same. No business
shall be transacted at any meeting unless the required quorum is present at the
commencement of business.
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Section 12.5
Power to Adjourn
The
chairman of any meeting at which a quorum of the Debentureholders is present
may, with the consent of the holders of a majority in principal amount of the
Debentures represented thereat, adjourn any such meeting and no notice of such
adjournment need be given except such notice, if any, as the meeting may
prescribe.
Section 12.6
Show of Hands
Every
question submitted to a meeting shall, subject to Section 12.7, be decided in
the first place by a majority of the votes given on a show of hands except that
votes on Extraordinary Resolutions shall be given in the manner hereinafter
provided. At any such meeting, unless a poll is duly demanded as herein
provided, a declaration by the chairman that a resolution has been carried or
carried unanimously or by a particular majority or lost or not carried by a
particular majority shall be conclusive evidence of the fact. The chairman of
any meeting shall be entitled, both on a show of hands and on a poll, to vote in
respect of the Debentures, if any, held by him.
Section 12.7
Poll
On every
Extraordinary Resolution, and on any other question submitted to a meeting when
demanded by the chairman or by one or more Debentureholders or proxies for
Debentureholders, a poll shall be taken in such manner and either at once or
after an adjournment as the chairman shall direct. Questions other than
Extraordinary Resolutions shall, if a poll be taken, be decided by the votes of
the holders of a majority in principal amount of the Debentures and of each
especially affected series, if applicable, represented at the meeting and voted
on the poll.
Section 12.8
Voting
On a
show of hands every Person who is present and entitled to vote, whether as a
Debentureholder or as proxy for one or more Debentureholders or both, shall have
one vote. On a poll each Debentureholder present in person or represented by a
proxy duly appointed by an instrument in writing shall be entitled to one vote
in respect of each $1,000 principal amount of Debentures of which he shall then
be the holder. In the case of any Debenture denominated in a currency or
currency unit other than Canadian dollars, the principal amount thereof for
these purposes shall be computed in Canadian dollars on the basis of the
conversion of the principal amount thereof at the applicable spot buying rate of
exchange for such other currency or currency unit as reported by the Bank of
Canada at the close of business on the Business Day next preceding the meeting.
Any fractional amounts resulting from such conversion shall be rounded to the
nearest $100. A proxy need not be a Debentureholder. In the case of joint
holders of a Debenture, any one of them present in person or by proxy at the
meeting may vote in the absence of the other or others but in case more than one
of them be present in person or by proxy, they shall vote together in respect of
the Debentures of which they are joint holders.
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Section 12.9
Proxies
A
Debentureholder may be present and vote at any meeting of Debentureholders by an
authorized representative. The Corporation (in case it convenes the meeting) or
the Trustee (in any other case) for the purpose of enabling the Debentureholders
to be present and vote at any meeting without producing their Debentures, and of
enabling them to be present and vote at any such meeting by proxy and of lodging
instruments appointing such proxies at some place other than the place where the
meeting is to be held, may from time to time make and vary such regulations as
it shall think fit providing for and governing the form of the instrument
appointing a proxy, which shall be in writing, and the manner in which the same
shall be executed and the production of the authority of any Person signing on
behalf of a Debentureholder.
Any regulations so made shall be binding and effective and the
votes given in accordance therewith shall be valid and shall be counted. Save as
such regulations may provide, the only persons who shall be recognized at any
meeting as the holders of any Debentures, or as entitled to vote or be present
at the meeting in respect thereof, shall be Debentureholders and persons whom
Debentureholders have by instrument in writing duly appointed as their proxies.
Section 12.10
Persons Entitled to Attend
Meetings
The
Corporation and the Trustee, by their respective officers and directors, the
Auditors of the Corporation and the legal advisors of the Corporation, the
Trustee or any Debentureholder may attend any meeting of the Debentureholders,
but shall have no vote as such.
Section 12.11
Powers Exercisable by
Extraordinary Resolution
(1) In addition to the powers conferred
upon them by any other provisions of this Indenture or by law, a meeting of the
Debentureholders shall have the following powers exercisable from time to time
by Extraordinary Resolution (subject in the case of the matters in paragraphs
(a)– (d) and (l) to the prior approval of the TSX (or such other recognized
stock exchange on which the Common Shares are listed for trading)):
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(a)
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power to authorize the Trustee to grant extensions of
time for payment of any principal, premium or interest on the Debentures,
whether or not the principal, premium, or interest, the payment of which
is extended, is at the time due or overdue;
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(b)
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power to sanction any modification, abrogation,
alteration, compromise or arrangement of the rights of the
Debentureholders or the Trustee (with its consent) against the
Corporation, or against its property, whether such rights arise under this
Indenture or the Debentures or otherwise;
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(c)
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power to assent to any modification of or change in or
addition to or omission from the provisions contained in this Indenture or
any Debenture which shall be agreed to by the Corporation and to authorize
the Trustee to concur in and execute any indenture supplemental hereto
embodying any modification, change, addition or
omission;
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(d)
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power to sanction any scheme for the reconstruction,
reorganization or recapitalization of the Corporation or for the
consolidation, amalgamation, arrangement, combination or merger of the
Corporation with any other Person or for the sale, leasing, transfer or
other disposition of all or substantially all of the undertaking, property
and assets of the Corporation or any part thereof, provided that no such
sanction shall be necessary in respect of any such transaction if the
provisions of Section 10.1 shall have been complied with;
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(e)
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power to direct or authorize the Trustee to exercise any
power, right, remedy or authority given to it by this Indenture in any
manner specified in any such Extraordinary Resolution or to refrain from
exercising any such power, right, remedy or authority;
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(f)
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power to waive, and direct the Trustee to waive, any
default hereunder and/or cancel any declaration made by the Trustee
pursuant to Section 8.1 either unconditionally or upon any condition
specified in such Extraordinary Resolution;
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(g)
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power to restrain any Debentureholder from taking or
instituting any suit, action or proceeding for the purpose of enforcing
payment of the principal, premium or interest on the Debentures, or for
the execution of any trust or power hereunder;
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(h)
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power to direct any Debentureholder who, as such, has
brought any action, suit or proceeding to stay or discontinue or otherwise
deal with the same upon payment, if the taking of such suit, action or
proceeding shall have been permitted by Section 8.5, of the costs, charges
and expenses reasonably and properly incurred by such Debentureholder in
connection therewith;
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(i)
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power to assent to any compromise or arrangement with any
creditor or creditors or any class or classes of creditors, whether
secured or otherwise, and with holders of any shares or other securities
of the Corporation;
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(j)
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power to appoint a committee with power and authority
(subject to such limitations, if any, as may be prescribed in the
resolution) to exercise, and to direct the Trustee to exercise, on behalf
of the Debentureholders, such of the powers of the Debentureholders as are
exercisable by Extraordinary Resolution or other resolution as shall be
included in the resolution appointing the committee. The resolution making
such appointment may provide for payment of the expenses and disbursements
of and compensation to such committee. Such committee shall consist of
such number of persons as shall be prescribed in the resolution appointing
it and the members need not be themselves Debentureholders. Every such
committee may elect its chairman and may make regulations respecting its
quorum, the calling of its meetings and the filling of vacancies occurring
in its number and its procedure generally. Such regulations may provide
that the committee may act at a meeting at which a quorum is present or
may act by minutes signed by the number of members
thereof necessary to constitute a quorum. All
acts of any such committee within the authority delegated to it shall be binding
upon all Debentureholders. Neither the committee nor any member thereof shall be
liable for any loss arising from or in connection with any action taken or
omitted to be taken by them in good faith;
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(k)
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power to remove the Trustee from office and to appoint a
new Trustee or Trustees provided that no such removal shall be effective
unless and until a new Trustee or Trustees shall have become bound by this
Indenture;
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(l)
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power to sanction the exchange of the Debentures for or
the conversion thereof into shares, bonds, debentures or other securities
or obligations of the Corporation or of any other Person formed or to be
formed;
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(m)
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power to authorize the distribution in specie of any
shares or securities received pursuant to a transaction authorized under
the provisions of subsection 12.11(1); and
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(n)
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power to amend, alter or repeal any Extraordinary
Resolution previously passed or sanctioned by the Debentureholders or by
any committee appointed pursuant to clause
12.11(1)(j).
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(2) Notwithstanding the foregoing
provisions of this Section 12.11 none of such provisions shall in any manner
allow or permit any amendment, modification, abrogation or addition to the
provisions of Article 5 which could reasonably be expected to detrimentally
affect the rights, remedies or recourse of the priority of the Secured
Creditors.
Section 12.12
Meaning of “Extraordinary
Resolution”
(1) The expression “
Extraordinary
Resolution
” when used in this Indenture means, subject as hereinafter in
this Article provided, a resolution proposed to be passed as an Extraordinary
Resolution at a meeting of Debentureholders (including an adjourned meeting)
duly convened for the purpose and held in accordance with the provisions of this
Article at which the holders of not less than 25% of the principal amount of the
Debentures then outstanding, and if the meeting is a Serial Meeting, at which
holders of not less than 25% of the principal amount of the Debentures then
outstanding of each especially affected series, are present in person or by
proxy and passed by the favourable votes of the holders of not less than 66 % of
the principal amount of the Debentures, and if the meeting is a Serial Meeting
by the affirmative vote of the holders of not less than 66 % of each especially
affected series, in each case present or represented by proxy at the meeting and
voted upon on a poll on such resolution.
(2) If, at any such meeting, the
holders of not less than 25% of the principal amount of the Debentures then
outstanding and, if the meeting is a Serial Meeting, 25% of the principal amount
of the Debentures then outstanding of each especially affected series, in each
case are not present in person or by proxy within 30 minutes after the time
appointed for the meeting, then the meeting, if convened by or on the
requisition of Debentureholders, shall be dissolved but in any other case it
shall stand adjourned to such date, being not less than 14 nor more than 60 days
later, and to such place and time as may be appointed by the
chairman. Not less than 10 days’ notice shall be given of the time and place of
such adjourned meeting in the manner provided in Section 13.2. Such notice shall
state that at the adjourned meeting the Debentureholders present in person or by
proxy shall form a quorum. At the adjourned meeting the Debentureholders present
in person or by proxy shall form a quorum and may transact the business for
which the meeting was originally convened and a resolution proposed at such
adjourned meeting and passed thereat by the affirmative vote of holders of not
less than 66⅔% of the principal amount of the Debentures and, if the meeting is
a Serial Meeting, by the affirmative vote of the holders of not less than 66 ⅔%
of the principal amount of the Debentures of each especially affected series, in
each case present or represented by proxy at the meeting and voted upon on a
poll shall be an Extraordinary Resolution within the meaning of this Indenture,
notwithstanding that the holders of not less than 25% in principal amount of the
Debentures then outstanding, and if the meeting is a Serial Meeting, holders of
not less than 25% of the principal amount of the Debentures then outstanding of
each especially affected series, are not present in person or by proxy at such
adjourned meeting.
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(3) Votes on an Extraordinary
Resolution shall always be given on a poll and no demand for a poll on an
Extraordinary Resolution shall be necessary.
Section 12.13
Powers Cumulative
Any one
or more of the powers in this Indenture stated to be exercisable by the
Debentureholders by Extraordinary Resolution or otherwise may be exercised from
time to time and the exercise of any one or more of such powers from time to
time shall not be deemed to exhaust the rights of the Debentureholders to
exercise the same or any other such power or powers thereafter from time to
time.
Section 12.14
Minutes
Minutes
of all resolutions and proceedings at every meeting as aforesaid shall be made
and duly entered in books to be from time to time provided for that purpose by
the Trustee at the expense of the Corporation, and any such minutes as
aforesaid, if signed by the chairman of the meeting at which such resolutions
were passed or proceedings had, or by the chairman of the next succeeding
meeting of the Debentureholders, shall be prima facie evidence of the matters
therein stated and, until the contrary is proved, every such meeting, in respect
of the proceedings of which minutes shall have been made, shall be deemed to
have been duly held and convened, and all resolutions passed thereat or
proceedings taken thereat to have been duly passed and taken.
Section 12.15
Instruments in Writing
All
actions which may be taken and all powers that may be exercised by the
Debentureholders at a meeting held as hereinbefore in this Article provided may
also be taken and exercised by the holders of 66 % of the principal amount of
all the outstanding Debentures and, if the meeting at which such actions might
be taken would be a Serial Meeting, by the holders of 66 % of the principal
amount of the Debentures then outstanding of each especially affected series, by an instrument in writing signed in one or
more counterparts and the expression “Extraordinary Resolution” when used in
this Indenture shall include an instrument so signed.
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Section 12.16
Binding Effect of Resolutions
Every
resolution and every Extraordinary Resolution passed in accordance with the
provisions of this Article at a meeting of Debentureholders shall be binding
upon all the Debentureholders, whether present at or absent from such meeting,
and every instrument in writing signed by Debentureholders in accordance with
Section 12.15 shall be binding upon all the Debentureholders, whether
signatories thereto or not, and each and every Debentureholder and the Trustee
(subject to the provisions for its indemnity herein contained) shall be bound to
give effect accordingly to every such resolution, Extraordinary Resolution and
instrument in writing.
Section 12.17
Evidence of Rights Of
Debentureholders
(1) Any request, direction,
notice, consent or other instrument which this Indenture may require or permit
to be signed or executed by the Debentureholders may be in any number of
concurrent instruments of similar tenor signed or executed by such
Debentureholders.
(2) The Trustee may, in its
discretion, require proof of execution in cases where it deems proof desirable
and may accept such proof as it shall consider proper.
Section 12.18
Concerning Serial Meetings
If in
the opinion of Counsel any business to be transacted at any meeting, or any
action to be taken or power to be exercised by instrument in writing under
Section 12.15, does not adversely affect the rights of the holders of Debentures
of one or more series, the provisions of this Article 12 shall apply as if the
Debentures of such series were not outstanding and no notice of any such meeting
need be given to the holders of Debentures of such series. Without limiting the
generality of the foregoing, a proposal to modify or terminate any covenant or
agreement which is effective only so long as Debentures of a particular series
are outstanding shall be deemed not to adversely affect the rights of the
holders of Debentures of any other series.
ARTICLE 13– NOTICES
Section 13.1
Notice to Corporation
Any
notice to the Corporation under the provisions of this Indenture shall be valid
and effective if delivered to the Corporation at: Suite 1500, 1199 West Hastings
Street, Vancouver, British Columbia V6E 3T5, Attention: Chief Executive Officer,
or if given by registered letter, postage prepaid, to such offices and so
addressed and if mailed, shall be deemed to have been effectively given three
days following the mailing thereof. The Corporation may from time to time notify
the Trustee in writing of a change of address which thereafter, until changed by
like notice, shall be the address of the Corporation for all purposes of this
Indenture.
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Section 13.2
Notice to Debentureholders
(1) All notices to be given
hereunder with respect to the Debentures shall be deemed to be validly given to
the holders thereof if sent by first class mail, postage prepaid, by letter or
circular addressed to such holders at their post office addresses appearing in
any of the registers hereinbefore mentioned and shall be deemed to have been
effectively given three days following the day of mailing. Accidental error or
omission in giving notice or accidental failure to mail notice to any
Debentureholder or the inability of the Corporation to give or mail any notice
due to anything beyond the reasonable control of the Corporation shall not
invalidate any action or proceeding founded thereon.
(2) If any notice given in
accordance with the foregoing paragraph would be unlikely to reach the
Debentureholders to whom it is addressed in the ordinary course of post by
reason of an interruption in mail service, whether at the place of dispatch or
receipt or both, the Corporation shall give such notice by publication at least
once in the city of Vancouver (or in such of those cities as, in the opinion of
the Trustee, is sufficient in the particular circumstances), each such
publication to be made in a daily newspaper of general circulation in the
designated city.
(3) Any notice given to
Debentureholders by publication shall be deemed to have been given on the day on
which publication shall have been effected at least once in each of the
newspapers in which publication was required.
(4) All notices with respect to
any Debenture may be given to whichever one of the holders thereof (if more than
one) is named first in the registers hereinbefore mentioned, and any notice so
given shall be sufficient notice to all holders of any persons interested in
such Debenture.
Section 13.3
Notice to Trustee
Any notice to
the Trustee under the provisions of this Indenture shall be valid and effective
if delivered, receipt confirmed, to the Trustee at its principal office in the
City of Vancouver, at 510 Burrard Street, 3
rd
Floor, Vancouver,
British Columbia V6C 3B9, Attn: General Manager, Corporate Trust, or by Email:
corporatetrust.vancouver@computershare.com, and shall be deemed to have been
effectively given as of the date of such receipt confirmation or if given by
registered letter, postage prepaid, to such office and so addressed and, if
mailed, shall be deemed to have been effectively given three days following the
mailing thereof.
Section 13.4
Mail Service Interruption
If by reason
of any interruption of mail service, actual or threatened, any notice to be
given to the Trustee would reasonably be unlikely to reach its destination by
the time notice by mail is deemed to have been given pursuant to Section 13.3,
such notice shall be valid and effective only if delivered at the appropriate
address in accordance with Section 13.3.
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ARTICLE 14– CONCERNING THE TRUSTEE
Section 14.1
No Conflict of Interest
The
Trustee represents to the Corporation that to the best of its knowledge at the
date of execution and delivery by it of this Indenture there exists no material
conflict of interest in the role of the Trustee as a fiduciary hereunder but if,
notwithstanding the provisions of this Section 14.1, such a material conflict of
interest exists, or hereafter arises, the validity and enforceability of this
Indenture, and the Debentures issued hereunder, shall not be affected in any
manner whatsoever by reason only that such material conflict of interest exists
or arises but the Trustee shall, within 30 days after ascertaining that it has a
material conflict of interest, either eliminate such material conflict of
interest or resign in the manner and with the effect specified in Section 14.2.
Section 14.2
Replacement of Trustee
(1) The Trustee may resign its
trust and be discharged from all further duties and liabilities hereunder by
giving to the Corporation 90 days’ notice in writing or such shorter notice as
the Corporation may accept as sufficient. If at any time a material conflict of
interest exists in the Trustee’s role as a fiduciary hereunder the Trustee
shall, within 30 days after ascertaining that such a material conflict of
interest exists, either eliminate such material conflict of interest or resign
in the manner and with the effect specified in this Section 14.2. The validity
and enforceability of this Indenture and of the Debentures issued hereunder
shall not be affected in any manner whatsoever by reason only that such a
material conflict of interest exists. In the event of the Trustee resigning or
being removed or being dissolved, becoming bankrupt, going into liquidation or
otherwise becoming incapable of acting hereunder, the Corporation shall
forthwith appoint a new Trustee unless a new Trustee has already been appointed
by the Debentureholders. Failing such appointment by the Corporation, the
retiring Trustee or any Debentureholder may apply to a Judge of the Ontario
Superior Court of Justice, on such notice as such Judge may direct at the
Corporation’s expense, for the appointment of a new Trustee but any new Trustee
so appointed by the Corporation or by the Court shall be subject to removal as
aforesaid by the Debentureholders and the appointment of such new Trustee shall
be effective only upon such new Trustee becoming bound by this Indenture. Any
new Trustee appointed under any provision of this Section 14.2 shall be a
corporation authorized to carry on the business of a trust company in all of the
Provinces of Canada. On any new appointment the new Trustee shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named herein as Trustee.
(2) Any company into which the
Trustee may be merged or, with or to which it may be consolidated, amalgamated
or sold, or any company resulting from any merger, consolidation, sale or
amalgamation to which the Trustee shall be a party, or any company which shall
purchase all or substantially all of the corporate trust book of business of the
Trustee, shall be the successor trustee under this Indenture without the
execution of any instrument or any further act. Nevertheless, upon the written
request of the successor Trustee or of the Corporation, the Trustee ceasing to
act shall execute and deliver an instrument assigning and transferring to such
successor Trustee, upon the trusts herein expressed, all the rights, powers and
trusts of the Trustee so ceasing to act, and, upon receipt by the Trustee of
payment in full for any outstanding charges due to it, shall duly assign,
transfer and deliver all property and money held by such Trustee to the
successor Trustee so appointed in its place. Should any deed, conveyance or
instrument in writing from the Corporation be required by any new Trustee for
more fully and certainly vesting in and confirming to it such estates,
properties, rights, powers and trusts, then any and all such deeds, conveyances
and instruments in writing shall on request of said new Trustee, be made,
executed, acknowledged and delivered by the Corporation.
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Section 14.3
Duties of Trustee
In the
exercise of the rights, duties and obligations prescribed or conferred by the
terms of this Indenture, the Trustee shall act honestly and in good faith and
exercise that degree of care, diligence and skill that a reasonably prudent
trustee would exercise in comparable circumstances.
Section 14.4
Reliance Upon Declarations,
Opinions, etc.
In the
exercise of its rights, duties and obligations hereunder the Trustee may, if
acting in good faith, rely, as to the truth of the statements and accuracy of
the opinions expressed therein, upon statutory declarations, opinions, reports
or certificates furnished pursuant to any covenant, condition or requirement of
this Indenture or required by the Trustee to be furnished to it in the exercise
of its rights and duties hereunder, if the Trustee examines such statutory
declarations, opinions, reports or certificates and determines that they comply
with Section 14.5, if applicable, and with any other applicable requirements of
this Indenture. The Trustee may nevertheless, in its discretion, require further
proof in cases where it deems further proof desirable. Without restricting the
foregoing, the Trustee may rely on an opinion of Counsel satisfactory to the
Trustee notwithstanding that it is delivered by a solicitor or firm which acts
as solicitors for the Corporation.
Section 14.5
Evidence and Authority to
Trustee, Opinions, etc.
(1) The Corporation shall furnish
to the Trustee evidence of compliance with the conditions precedent provided for
in this Indenture relating to any action or step required or permitted to be
taken by the Corporation or the Trustee under this Indenture or as a result of
any obligation imposed under this Indenture, including without limitation, the
certification and delivery of Debentures hereunder, the satisfaction and
discharge of this Indenture and the taking of any other action to be taken by
the Trustee at the request of or on the application of the Corporation,
forthwith if and when (a) such evidence is required by any other Section of this
Indenture to be furnished to the Trustee in accordance with the terms of this
Section 14.5, or (b) the Trustee, in the exercise of its rights and duties under
this Indenture, gives the Corporation written notice requiring it to furnish
such evidence in relation to any particular action or obligation specified in
such notice.
(2) Such evidence shall consist
of
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(a)
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a certificate made by any two officers or directors of
the Corporation, stating that any such condition precedent has been
complied with in accordance with the terms of this Indenture;
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(b)
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in the case of a condition precedent compliance with
which is, by the terms of this Indenture, made subject to review or
examination by a solicitor, an opinion of Counsel that such condition
precedent has been complied with in accordance with the terms of this
Indenture; and
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(c)
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in the case of any such condition precedent compliance
with which is subject to review or examination by auditors or accountants,
an opinion or report of the Auditors of the Corporation whom the Trustee
for such purposes hereby approves, that such condition precedent has been
complied with in accordance with the terms of this
Indenture.
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(3) Whenever such evidence
relates to a matter other than the certificates and delivery of Debentures and
the satisfaction and discharge of this Indenture, and except as otherwise
specifically provided herein, such evidence may consist of a report or opinion
of any solicitor, auditor, accountant, engineer or appraiser or any other Person
whose qualifications give authority to a statement made by him, provided that if
such report or opinion is furnished by a trustee, officer or employer of the
Corporation it shall be in the form of a statutory declaration. Such evidence
shall be, so far as appropriate, in accordance with the immediately preceding
paragraph of this Section.
(4) Each statutory declaration,
certificate, opinion or report with respect to compliance with a condition
precedent provided for in the Indenture shall include (a) a statement by the
Person giving the evidence that he has read and is familiar with those
provisions of this Indenture relating to the condition precedent in question,
(b) a brief statement of the nature and scope of the examination or
investigation upon which the statements or opinions contained in such evidence
are based, (c) a statement that, in the belief of the Person giving such
evidence, he has made such examination or investigation as is necessary to
enable him to make the statements or give the opinions contained or expressed
therein, and (d) a statement whether in the opinion of such Person the
conditions precedent in question have been complied with or satisfied.
(5) The Corporation shall furnish
or cause to be furnished to the Trustee at any time if the Trustee reasonably so
requires, its certificate that the Corporation has complied with all covenants,
conditions or other requirements contained in this Indenture, the non-compliance
with which would, with the giving of notice or the lapse of time, or both, or
otherwise, constitute an Event of Default, or if such is not the case,
specifying the covenant, condition or other requirement which has not been
complied with and giving particulars of such non-compliance. The Corporation
shall, whenever the Trustee so requires, furnish the Trustee with evidence by
way of statutory declaration, opinion, report or certificate as specified by the
Trustee as to any action or step required or permitted to be taken by the
Corporation or as a result of any obligation imposed by this Indenture.
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Section 14.6
Officer’s Certificates Evidence
Except
as otherwise specifically provided or prescribed by this Indenture, whenever in
the administration of the provisions of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or
omitting any action hereunder, the Trustee, if acting in good faith, may rely
upon an Officer’s Certificate.
Section 14.7
Experts, Advisers and Agents
The
Trustee may:
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(a)
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employ or retain and act and rely on the opinion or
advice of or information obtained from any solicitor, auditor, valuer,
engineer, surveyor, appraiser or other expert, whether obtained by the
Trustee or by the Corporation, or otherwise, and shall not be liable for
acting, or refusing to act, in good faith on any such opinion or advice
and shall not be responsible for any misconduct on the part of any of them
and may pay proper and reasonable compensation for all such legal and
other advice or assistance as aforesaid. The reasonable costs of such
services shall be added to and become part of the Trustee’s remuneration
hereunder; and
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(b)
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employ such agents and other assistants as it may
reasonably require for the proper discharge of its duties hereunder, and
may pay reasonable remuneration for all services performed for it (and
shall be entitled to receive reasonable remuneration for all services
performed by it) in the discharge of the trusts hereof and compensation
for all disbursements, costs and expenses made or incurred by it in the
discharge of its duties hereunder and in the management of the trusts
hereof and any solicitors employed or consulted by the Trustee may, but
need not be, solicitors for the Corporation.
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Section 14.8
Trustee May Deal in Debentures
Subject
to Sections 14.1 and 14.3, the Trustee may, in its personal or other capacity,
buy, sell, lend upon and deal in the Debentures and generally contract and enter
into financial transactions with the Corporation or otherwise, without being
liable to account for any profits made thereby.
Section 14.9
Investment of Monies Held by
Trustee
(1) Unless otherwise provided in
this Indenture, any monies held by the Trustee, which, under this Indenture, may
or ought to be invested or which may be on deposit with the Trustee or which may
be in the hands of the Trustee, may be invested and reinvested in the name or
under the control of the Trustee in securities in which, under the laws of the
Province of Ontario, trustees are authorized to invest trust monies, provided
that such securities are expressed to mature within two years or such shorter
period selected to facilitate any payments expected to be made under this
Indenture, after their purchase by the Trustee, and unless and until the Trustee
shall have declared the principal of and interest on the Debentures to be due
and payable, the Trustee shall so invest such monies at the Written Direction of
the Corporation given in a reasonably timely manner. Pending the investment of
any monies as hereinbefore provided, such monies may be deposited in the name of
the Trustee in any chartered bank of Canada or, with the consent of the
Corporation, in the deposit department of the Trustee or any other loan or trust
company authorized to accept deposits under the laws of Canada or any Province
thereof at the rate of interest, if any, then current on similar deposits.
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(2) Unless and until the Trustee
shall have declared the principal of and interest on the Debentures to be due
and payable, the Trustee shall pay over to the Corporation all interest received
by the Trustee in respect of any investments or deposits made pursuant to the
provisions of this Section.
Section 14.10
Trustee Not Ordinarily Bound
Except
as provided in Section 8.2 and as otherwise specifically provided herein, the
Trustee shall not, subject to Section 14.3, be bound to give notice to any
Person of the execution hereof, nor to do, observe or perform or see to the
observance or performance by the Corporation of any of the obligations herein
imposed upon the Corporation or of the covenants on the part of the Corporation
herein contained, nor in any way to supervise or interfere with the conduct of
the Corporation’s business, unless the Trustee shall have been required to do so
in writing by the holders of not less than 25% of the aggregate principal amount
of the Debentures then outstanding or by any Extraordinary Resolution of the
Debentureholders passed in accordance with the provisions contained in Article
12, and then only after it shall have been funded and indemnified to its
satisfaction against all actions, proceedings, claims and demands to which it
may render itself liable and all costs, charges, damages and expenses which it
may incur by so doing.
Section 14.11
Trustee Not Required to Give
Security
The
Trustee shall not be required to give any bond or security in respect of the
execution of the trusts and powers of this Indenture or otherwise in respect of
the premises.
Section 14.12
Trustee Not Bound to Act on
Trust’s Request
Except
as otherwise specifically provided in this Indenture, the Trustee shall not be
bound to act in accordance with any direction or request of the Corporation
until a duly authenticated copy of the instrument or resolution containing such
direction or request shall have been delivered to the Trustee, and the Trustee
shall be empowered to act upon any such copy purporting to be authenticated and
believed by the Trustee to be genuine.
Section 14.13
Conditions Precedent to
Trustee’s Obligations to Act Hereunder
(1) The obligation of the Trustee
to commence or continue any act, action or proceeding for the purpose of
enforcing the rights of the Trustee and of the Debentureholders hereunder shall
be conditional upon the Debentureholders furnishing when required by notice in
writing by the Trustee, sufficient funds to commence or continue such act,
action or proceeding and indemnity reasonably satisfactory to the Trustee to
protect and hold harmless the Trustee against the costs, charges and expenses and liabilities to be incurred thereby and
any loss and damage it may suffer by reason thereof.
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(2) None of the provisions
contained in this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers.
(3) The Trustee may, before
commencing or at any time during the continuance of any such act, action or
proceeding require the Debentureholders at whose instance it is acting to
deposit with the Trustee the Debentures held by them for which Debentures the
Trustee shall issue receipts.
Section 14.14
Authority to Carry on Business
The
Trustee represents to the Corporation that at the date of execution and delivery
by it of this Indenture it is authorized to carry on the business of a trust
company in each of the provinces and territories of Canada but if,
notwithstanding the provisions of this Section 14.14, it ceases to be so
authorized to carry on business, the validity and enforceability of this
Indenture and the securities issued hereunder shall not be affected in any
manner whatsoever by reason only of such event but the Trustee shall, within 90
days after ceasing to be authorized to carry on the business of a trust company
in any of the provinces of Canada, either become so authorized or resign in the
manner and with the effect specified in Section 14.2.
Section 14.15
Compensation and Indemnity
(1) The Corporation shall pay to
the Trustee from time to time compensation for its services hereunder as agreed
separately by the Corporation and the Trustee, and shall pay or reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in the administration or execution of its duties
under this Indenture (including the reasonable and documented compensation and
disbursements of its Counsel and all other advisers and assistants not regularly
in its employ), both before any default hereunder and thereafter until all
duties of the Trustee under this Indenture shall be finally and fully performed.
Any fees and expenses of the trustee in connection herewith shall be paid by the
Corporation within 30 days of issuance of an invoice therefor and, if not so
paid, shall bear interest at a rate per annum to the then-current rate of
interest charged by the Trustee to its corporate clients. The Trustee’s
compensation shall not be limited by any law on compensation of a trustee of an
express trust.
(2) The Corporation hereby
indemnifies and holds the Trustee and its affiliates, their successors and
assigns, as well as its and their respective directors, officers, employees and
agents, harmless from and against any and all claims, demands, assessments,
interest, penalties, actions, suits, proceedings, liabilities, losses, damages,
costs and expenses, including, without limiting the foregoing, expert,
consultant and counsel fees and disbursements on a solicitor and client basis,
arising from or in connection with any actions or omissions that the Trustee or
they take pursuant to this Indenture, provided that any such action or omission
is without gross negligence, bad faith or wilful misconduct or is taken on
advice and instructions given to the Trustee or them by the Corporation, or the Corporation’s
representatives, including the Corporation’s legal counsel, or counsel consulted
by the Trustee or them. This indemnity shall survive the resignation or removal
of the Trustee and the termination or discharge of this Indenture.
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(3) Notwithstanding any other
provision of this Indenture, the Trustee shall not be liable for any (i) breach
by any other party of the Applicable Securities Legislation, (ii) lost profits
or (iii) punitive, consequential or special damages of any Person.
Section 14.16
Acceptance of Trust
The
Trustee hereby accepts the trusts in this Indenture declared and provided for
and agrees to perform the same upon the terms and conditions herein set forth
and to hold all rights, privileges and benefits conferred hereby and by law in
trust for the various persons who shall from time to time be Debentureholders,
subject to all the terms and conditions herein set forth.
Section 14.17
Third Party Interests
Each
party to this Indenture (in this paragraph referred to as a “representing
party”) hereby represents to the Trustee that any account to be opened by, or
interest to be held by, the Trustee in connection with this Indenture, for or to
the credit of such representing party, either (i) is not intended to be used by
or on behalf of any third party; or (ii) is intended to be used by or on behalf
of a third party, in which case such representing party hereby agrees to
complete, execute and deliver forthwith to the Trustee a declaration, in the
Trustee’s prescribed form or in such other form as may be satisfactory to it, as
to the particulars of such third party.
Section 14.18
Anti-Money Laundering
The
Trustee shall retain the right not to act and shall not be liable for refusing
to act if, due to a lack of information or for any other reason whatsoever, the
Trustee, in its sole judgment, acting reasonably, determines that such act might
cause it to be in noncompliance with any applicable anti-money laundering or
anti-terrorist or economic sanctions legislation, regulation or guideline.
Further, should the Trustee, in its sole judgment, acting reasonably, determine
at any time that its acting under this Indenture has resulted in its being in
non-compliance with any applicable anti-money laundering or anti-terrorist or
economic sanctions legislation, regulation or guideline, then it shall have the
right to resign on 10 days’ prior written notice sent to the Corporation
provided that (i) the Trustee’s written notice shall describe the circumstances
of such non-compliance; and (ii) if such circumstances are rectified to the
Trustee’s satisfaction within such 10-day period, then such resignation shall
not be effective.
Section 14.19
Privacy Laws
The
parties acknowledge that the Trustee may, in the course of providing services
hereunder, collect or receive financial and other personal information about
such parties and/or their representatives, as individuals, or about other
individuals related to the subject matter hereof, and use such information for
the following purposes:
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(a)
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to provide the services required under this Indenture and
other services that may be requested from time to time;
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(b)
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to help the Trustee manage its servicing relationships
with such individuals;
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(c)
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to meet the Trustee’s legal and regulatory requirements;
and
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(d)
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if Social Insurance Numbers are collected by the Trustee,
to perform tax reporting and to assist in verification of an individual’s
identity for security purposes.
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Each
party acknowledges and agrees that the Trustee may receive, collect, use and
disclose personal information provided to it or acquired by it in the course of
this Indenture for the purposes described above and, generally, in the manner
and on the terms described in its Privacy Code, which the Trustee shall make
available on its website,
www.computershare.com
, or upon request,
including revisions thereto. The Trustee may transfer personal information to
other companies in or outside of Canada that provide data processing and storage
or other support in order to facilitate the services it provides.
Further,
each party agrees that it shall not provide or cause to be provided to the
Trustee any personal information relating to an individual who is not a party to
this Indenture unless that party has assured itself that such individual
understands and has consented to the aforementioned uses and disclosures.
Section 14.20
Force Majeure
Neither
party shall be liable to the other, or held in breach of this Indenture, if
prevented, hindered, or delayed in the performance or observance of any
provision contained herein by reason of act of God, riots, terrorism, acts of
war, epidemics, governmental action or judicial order, earthquakes, or any other
similar causes (including, but not limited to, mechanical, electronic or
communication interruptions, disruptions or failures). Performance times under
this Indenture shall be extended for a period of time equivalent to the time
lost because of any delay that is excusable under this Section.
ARTICLE 15– SUPPLEMENTAL INDENTURES
Section 15.1
Supplemental Indentures
From
time to time the Trustee and, when authorized by a resolution of the directors
of Corporation, the Corporation, may, subject to the provisions hereof and
subject to the prior approval of the TSX, as need be, and they shall when
required by this Indenture, execute, acknowledge and deliver by their proper
officers deeds or indentures supplemental hereto which thereafter shall form
part hereof, for any one or more of the following purposes:
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(a)
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providing for the issuance of Additional Debentures under
this Indenture;
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- 91 -
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(b)
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adding to the covenants of the Corporation herein
contained for the protection of the Debentureholders, or of the Debentures
of any series, or providing for events of default, in addition to those
herein specified;
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(c)
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making such provisions not inconsistent with this
Indenture as may be necessary or desirable with respect to matters or
questions arising hereunder, including the making of any modifications in
the form of the Debentures which do not affect the substance thereof and
which in the opinion of the Trustee relying on an opinion of Counsel will
not be prejudicial to the interests of the Debentureholders;
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(d)
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evidencing the succession, or successive successions, of
others to the Corporation and the covenants of and obligations assumed by
any such successor in accordance with the provisions of this
Indenture;
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(e)
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giving effect to any Extraordinary Resolution passed as
provided in Article 12; and
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(f)
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for any other purpose not inconsistent with the terms of
this Indenture.
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Unless the supplemental indenture requires the consent or
concurrence of Debentureholders or the holders of a particular series of
Debentures, as the case may be, by Extraordinary Resolution, the consent or
concurrence of Debentureholders or the holders of a particular series of
Debentures, as the case may be, shall not be required in connection with the
execution, acknowledgement or delivery of a supplemental indenture. The
Corporation and the Trustee may amend any of the provisions of this Indenture
related to matters of United States law or the issuance of Debentures into the
United States in order to ensure that such issuances can be made in accordance
with applicable law in the United States without the consent or approval of the
Debentureholders. Further, the Corporation and the Trustee may without the
consent or concurrence of the Debentureholders or the holders of a particular
series of Debentures, as the case may be, by supplemental indenture or
otherwise, make any changes or corrections in this Indenture which it shall have
been advised by Counsel are required for the purpose of curing or correcting any
ambiguity or defective or inconsistent provisions or clerical omissions or
mistakes or manifest errors contained herein or in any indenture supplemental
hereto or any Written Direction of the Corporation provided for the issue of
Debentures, providing that in the opinion of the Trustee (relying upon an
opinion of Counsel) the rights of the Debentureholders are in no way prejudiced
thereby.
ARTICLE 16– EXECUTION AND FORMAL DATE
Section 16.1
Execution
This
Indenture may be simultaneously executed in several counterparts, each of which
when so executed shall be deemed to be an original and such counterparts
together shall constitute one and the same instrument.
- 92 -
Section 16.2
Formal Date
For the
purpose of convenience this Indenture may be referred to as bearing the formal
date of November 28, 2017 irrespective of the actual date of execution hereof.
The parties have executed this Agreement.
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AURORA CANNABIS INC.
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By:
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(signed) Glen Ibbott
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Name:
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Title:
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COMPUTERSHARE TRUST
COMPANY
OF
CANADA
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By:
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(signed) Jennifer Wong
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Name:
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Title:
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By:
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(signed) Jill Dunn
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Name:
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Title:
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Schedule A – Form of Debenture
[INITIAL DEBENTURES LEGEND]
[U.S. LEGEND (RULE 506) – TO BE INCLUDED ON ALL INITIAL
DEBENTURES ISSUED
TO U.S. PERSONS OR IN THE UNITED STATES PURSUANT TO RULE
506]
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT
BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
“U.S. SECURITIES ACT”), OR THE LAWS OF ANY STATE OF THE UNITED STATES. THE
HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF AURORA
CANNABIS INC. (THE “CORPORATION”) THAT SUCH SECURITIES MAY BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (A) TO THE
CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF
REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE
LOCAL LAWS AND REGULATIONS, IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION
UNDER THE U.S. SECURITIES ACT PROVIDED BY (i) RULE 144 THEREUNDER, IF AVAILABLE,
OR RULE 144A THEREUNDER, IF AVAILABLE, AND, IN BOTH CASES, IN ACCORDANCE WITH
APPLICABLE U.S. STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT
REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE U.S. STATE
SECURITIES LAWS, AND, IN THE CASE OF (C)(i) OR (D) ABOVE, AFTER THE SELLER
FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE CORPORATION AND THE
[TRUSTEE][TRANSFER AGENT] TO SUCH EFFECT. DELIVERY OF THIS CERTIFICATE MAY NOT
CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN
CANADA.
A - 1
CUSIP 05156XAD0
ISIN CA05156XAD09
AURORA CANNABIS INC.
(A corporation incorporated under the laws of British
Columbia)
6.0% UNSECURED CONVERTIBLE SUBORDINATED DEBENTURE
DUE NOVEMBER 28, 2022
Aurora Cannabis Inc.
(the “
Corporation
”) for
value received hereby acknowledges itself indebted and, subject to the
provisions of the Debenture Indenture (the “
Indenture
”) dated as of
November 28, 2017 between the Corporation and Computershare Trust Company of
Canada (the “
Trustee
”), promises to pay to the registered holder hereof
on November 28, 2022 or on such earlier date as the principal amount hereof may
become due in accordance with the provisions of the Indenture (any such date,
the “
Maturity Date
”) the principal sum of • Dollars ($•) in lawful money
of Canada on presentation and surrender of this Initial Debenture at the main
branch of the Trustee in Vancouver, British Columbia in accordance with the
terms of the Indenture and, subject as hereinafter provided, to pay interest on
the principal amount hereof from, and including, the date hereof, or from the
last Interest Payment Date to which interest shall have been paid or made
available for payment hereon, whichever is later, at the rate of 6.0% per annum
(based on a year of 360 days comprised of twelve 30-day months), in like money,
in arrears in equal (with the exception of the first interest payment which will
include interest from November 28, 2017, as set forth below, and, if this
Initial Debenture is issued at any time following December 31, 2017, the second
interest payment which will include interest from the date following issuance of
this Initial Debenture to the next interest payment date) semi-annual
instalments (less any tax required by law to be deducted) on June 30 and
December 31 in each year commencing on December 31, 2017 and the last payment
(representing interest payable from the last Interest Payment Date to, but
excluding, the Maturity Date) to fall due on the Maturity Date and, should the
Corporation at any time make default in the payment of any principal, premium,
if any, or interest, to pay interest on the amount in default at the same rate,
in like money and on the same dates. For certainty, in the event that this
Initial Debenture is issued; (i) on or before December 31, 2017, the first
interest payment will include interest accrued from November 28, 2017 to
December 31, 2017, which will be equal to $5.50 for each $1,000 principal amount
of the Initial Debentures; or (ii) at any time following December 31, 2017, the
first interest payment will include interest accrued from November 28, 2017 to
the date that this Initial Debenture is so issued and, notwithstanding anything
to the contrary contained herein, shall be payable on the Business Day (as
defined in the Indenture) immediately following the date of issuance.
This
Initial Debenture is one of the 6.0% Unsecured Convertible Debentures (referred
to herein as the “
Initial Debentures
”) of the Corporation issued or
issuable in one or more series under the provisions of the Indenture. The
Initial Debentures authorized for issue immediately are limited to an aggregate principal amount of $115,000,000 in
lawful money of Canada. Reference is hereby expressly made to the Indenture for
a description of the terms and conditions upon which the Initial Debentures are
or are to be issued and held and the rights and remedies of the holders of the
Initial Debentures and of the Corporation and of the Trustee, all to the same
effect as if the provisions of the Indenture were herein set forth to all of
which provisions the holder of this Initial Debenture by acceptance hereof
assents.
A - 2
The
Initial Debentures are issuable only in denominations of $1,000 and integral
multiples thereof. Upon compliance with the provisions of the Indenture,
Debentures of any denomination may be exchanged for an equal aggregate principal
amount of Debentures in any other authorized denomination or denominations.
Any
part, being $1,000 or an integral multiple thereof, of the principal of this
Initial Debenture, provided that the principal amount of this Initial Debenture
is in a denomination in excess of $1,000, is convertible, at the option of the
holder hereof, upon surrender of this Initial Debenture at the principal office
of the Trustee in Vancouver, British Columbia, at any time prior to the close of
business on the Maturity Date or, if this Initial Debenture is called for
redemption on or prior to such date, then, to the extent so called for
redemption, up to but not after the close of business on the last Business Day
immediately preceding the date specified for redemption of this Initial
Debenture or, if called for repurchase pursuant to a Change of Control (as
defined in the Indenture) on the Business Day immediately prior to the payment
date, into common shares of the Corporation (the “
Common Shares
”)
(without adjustment for interest accrued hereon or for dividends or
distributions on Common Shares issuable upon conversion) at a conversion price
of $6.50 (the “
Conversion Price
”) per Common Share, being a rate of
approximately 153.8462 Common Shares for each $1,000 principal amount of Initial
Debentures, all subject to the terms and conditions and in the manner set forth
in the Indenture. No Initial Debentures may be converted during the five
Business Days preceding each of June 30 and December 31 in each year, commencing
December 31, 2017, as the registers of the Trustee will be closed during such
periods. The Indenture makes provision for the adjustment of the Conversion
Price in the events therein specified. No fractional Common Shares will be
issued on any conversion but in lieu thereof, the Corporation will satisfy such
fractional interest by a cash payment equal to the market price of such
fractional interest determined in accordance with the Indenture. Holders
converting their Debentures will receive accrued and unpaid interest thereon. If
a Debenture is surrendered for conversion on an Interest Payment Date or during
the five preceding Business Days, the person or persons entitled to receive
Common Shares in respect of the Debentures so surrendered for conversion shall
not become the holder or holders of record of such Common Shares until the
Business Day following such Interest Payment Date and, for clarity, any interest
payable on such Debentures will be for the account of the holder of record of
such Debentures at the close of business on the relevant record date.
Subject
to the provisions in the Indenture and without further action on the part of the
Registered Holder, if prior to the Maturity Date, the volume weighted average
price of the Common Shares on the Toronto Stock Exchange (or such other Canadian
stock exchange on which the Common Shares are listed for trading) for 10
consecutive trading days equals or exceeds $9.00, as adjusted in accordance with
the Indenture, the Corporation may deliver a written notice (the “
Forced
Conversion Notice
”) to the Trustee in accordance with the Indenture and to the Registered Holder by way of news release
to cause the Registered Holder to convert all but not less than the principal
amount of the Debentures (less any tax required by law to be deducted or
withheld) into that number of Common Shares of the Corporation equal to the
principal amount of the Debentures (less any tax required by law to be deducted
or withheld) to the date of such forced conversion. The Corporation shall pay
all accrued and unpaid interest in cash. The effective date for the forced
conversion (the “
Forced Conversion Date
”) shall be: (a) the date
stipulated in the Forced Conversion Notice; or (b) if no date is so stipulated
in the Forced Conversion Notice, the date that is 30 days following the date of
such Forced Conversion Notice, and upon such Forced Conversion Date: (i) all of
the principal amount of the Debentures (less any tax required by law to be
deducted or withheld) shall be deemed to be converted into Common Shares at the
then applicable Conversion Price; and (ii) the registered holder shall be
entered in the books of the Corporation as at the Forced Conversion Date as the
holder of the number of Common Shares, as applicable, into which the Debentures
are convertible. In the event that the Corporation delivers a Forced Conversion
Notice, upon surrender of this Initial Debenture to the Trustee, the Corporation
shall deliver certificates for the Common Shares into which the Debentures have
been converted.
A - 3
Not less
than 30 days prior to the consummation of: (i) any event as a result of or
following which any person, or persons acting jointly or in concert directly or
indirectly within the meaning of applicable securities legislation, beneficially
owns or exercises control or direction over an aggregate of more than 50% of the
outstanding Common Shares; or (ii) the sale or other transfer of all or
substantially all of the consolidated assets of the Corporation, unless the
holders of voting securities of the Corporation immediately prior to such sale,
merger, reorganization or other similar transaction hold securities representing
50% or more of the voting control or direction in the Corporation or the
successor entity upon completion of such merged, reorganized or other continuing
entity (collectively, a “
Change of Control
”), the Corporation shall
notify the holders of the Initial Debentures of the Change of Control, and the
holders of the Initial Debentures shall, in their sole discretion, have the
right to require the Corporation to, either: (i) purchase the Debentures at 104%
of the principal amount thereof plus unpaid interest to the Maturity Date; or
(ii) convert the Debentures at the Conversion Price (the “
Change of Control
Offer
”). If 90% or more of the principal amount of all Debentures
outstanding on the date the Corporation provides notice of a Change of Control
to the Trustee have been tendered for purchase pursuant to the Change of Control
Offer, the Corporation has the right to redeem all the remaining outstanding
Initial Debentures on the same date and at the same price.
If an offer is made for the Initial Debentures which is a
take-over bid for the Initial Debentures within the meaning of applicable
Canadian securities laws and 90% or more of the principal amount of all the
Initial Debentures (other than Initial Debentures held at the date of the offer
by or on behalf of the Offeror, associates or affiliates of the Offeror or
anyone acting jointly or in concert with the Offeror) are taken up and paid for
by the Offeror, the Offeror will be entitled to acquire the Initial Debentures
of those holders who did not accept the offer on the same terms as the Offeror
acquired the first 90% of the principal amount of the Initial Debentures.
The indebtedness evidenced by this Initial Debenture, and by
all other Initial Debentures now or hereafter certified and delivered under the
Indenture, is a direct unsecured obligation of the Corporation, and is
subordinated in right of payment, to the extent and in the manner provided in the Indenture, to the prior payment in full of all Secured
Indebtedness, whether outstanding at the date of the Indenture or thereafter
created, incurred, assumed or guaranteed.
A - 4
The Indenture contains provisions binding upon all holders of
Initial Debentures outstanding thereunder (or in certain circumstances specific
series of Initial Debentures) resolutions passed at meetings of such holders
held in accordance with such provisions and instruments signed by the holders of
a specified majority of Initial Debentures outstanding (or specific series),
which resolutions or instruments may have the effect of amending the terms of
this Initial Debenture or the Indenture.
The Indenture contains provisions disclaiming any personal
liability on the part of holders of Common Shares and officers, directors and
employees of the Corporation in respect of any obligation or claim arising out
of the Indenture or this Initial Debenture.
This Initial Debenture may only be transferred, upon compliance
with the conditions prescribed in the Indenture, in one of the registers to be
kept at the principal office of the Trustee in the City of Vancouver and in such
other place or places and/or by such other registrars (if any) as the
Corporation with the approval of the Trustee may designate. No transfer of this
Initial Debenture shall be valid unless made on the register by the registered
holder hereof or his executors or administrators or other legal representatives,
or his or their attorney duly appointed by an instrument in form and substance
satisfactory to the Trustee or other registrar, and upon compliance with such
reasonable requirements as the Trustee and/or other registrar may prescribe and
upon surrender of this Initial Debenture for cancellation. Thereupon a new
Initial Debenture or Initial Debentures in the same aggregate principal amount
shall be issued to the transferee in exchange hereof.
This Initial Debenture shall not become obligatory for any
purpose until it shall have been certified by the Trustee under the Indenture.
Capitalized words or expressions used in this Initial Debenture
shall, unless otherwise defined herein, have the meaning ascribed thereto in the
Indenture. In the event of any inconsistency between the terms of this Initial
Debenture and the Indenture, the terms of the Indenture shall govern.
IN WITNESS WHEREOF AURORA CANNABIS INC.
has caused this
Debenture to be signed by its authorized representatives as of November 28,
2017.
A - 5
TRUSTEE’S CERTIFICATE
This
Initial Debenture is one of the 6.0% Unsecured Convertible Debentures due
November 28, 2022 referred to in the Indenture within mentioned.
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Dated:
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COMPUTERSHARE
TRUST
COMPANY
OF CANADA
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By:
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Name:
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Title:
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REGISTRATION PANEL
(No writing hereon except by Trustee or other registrar)
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Date of Registration
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In Whose Name
Registered
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Signature of Trustee or
Registrar
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A - 6
FORM OF ASSIGNMENT
FOR VALUE RECEIVED
, the undersigned hereby sells,
assigns and transfers unto
_____________________
, whose address and
social insurance number, if applicable, are set forth below, this Initial
Debenture (or $ ________________ principal amount hereof
*
) of
AURORA CANNABIS INC.
standing in the name(s) of the undersigned in the
register maintained by the Corporation with respect to such Initial Debenture
and does hereby irrevocably authorize and direct the Trustee to transfer such
Initial Debenture in such register, with full power of substitution in the
premises.
Dated:
____________________________________________________________________________________________________________________________________________________
Address of Transferee:
________________________________________________________________________________________________________________________________________
(Street Address, City, Province and Postal Code)
Social Insurance Number of Transferee, if applicable:
__________________________________________________________________________________________________________________
*If less than the full principal amount of the within Initial
Debenture is to be transferred, indicate in the space provided the principal
amount (which must be $1,000 or an integral multiple thereof, unless you hold an
Initial Debenture in a non-integral multiple of $1,000 by reason of your having
exercised your right to exchange upon the making of a Change of Control Offer,
in which case such Initial Debenture is transferable only in its entirety) to be
transferred.
[ ] Check if the
undersigned Transferor is a Qualified Institutional Buyer that acquired Initial
Debentures under the Offering as “restricted securities” which, pursuant to
Section 2.15(3)
of the Indenture, have been included in the Unrestricted
Debenture against execution and delivery by the Transferor of a U.S. Purchaser
Letter substantially as set forth in Schedule F to the Indenture. IF THIS BOX IS
CHECKED, THE TRANSFEROR MUST COMPLETE AND DELIVER A CERTIFICATE OF TRANSFER
SUBSTANTIALLY AS SET FORTH IN SCHEDULE D TO THE INDENTURE.
REASON FOR TRANSFER – For US Residents only (where the
individual(s) or
corporation receiving the securities is a
US resident). Please select only one (see
instructions
below).
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[ ] Gift
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[ ] Estate
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[ ] Private Sale
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[ ] Other (or no change in
ownership)
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Date of Event
(Date of gift, death or sale):
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Value per Debenture
on the date of
event:
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;
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A - 7
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1.
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The signature(s) of the transferor(s) must correspond
with the name(s) as written upon the face of this certificate(s), in every
particular, without alteration or enlargement, or any change whatsoever.
The signature(s) on this form must be guaranteed by an authorized officer
of Royal Bank of Canada, Scotia Bank or TD Canada Trust whose sample
signature(s) are on file with the transfer agent, or by a member of an
acceptable Medallion Signature Guarantee Program (STAMP, SEMP, NYSE, MSP).
Notarized or witnessed signatures are not acceptable as guaranteed
signatures. The Guarantor must affix a stamp bearing the actual words:
“SIGNATURE GUARANTEED”, “MEDALLION GUARANTEED” OR “SIGNATURE &
AUTHORITY TO SIGN GUARANTEE”, all in accordance with the transfer agent’s
then current guidelines and requirements at the time of transfer. For
corporate holders, corporate signing resolutions, including certificate of
incumbency, will also be required to accompany the transfer unless there
is a “SIGNATURE & AUTHORITY TO SIGN GUARANTEE” Stamp affixed to the
Form of Transfer obtained from an authorized officer of the Royal Bank of
Canada, Scotia Bank or TD Canada Trust or a “MEDALLION GUARANTEED” Stamp
affixed to the Form of Transfer, with the correct prefix covering the face
value of the certificate.
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2.
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The registered holder of this Initial Debenture is
responsible for the payment of any documentary, stamp or other transfer
taxes that may be payable in respect of the transfer of this
Debenture.
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Signature of Guarantor:
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Authorized Officer
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Signature
of transferring registered holder
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Name of Institution
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A - 8
Schedule B – Form of Notice of Conversion
CONVERSION NOTICE
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To:
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AURORA CANNABIS INC.
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Note:
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All capitalized terms used herein have the
meaning ascribed thereto in the Indenture mentioned below, unless
otherwise indicated.
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The
undersigned registered holder of 6.0% Unsecured Convertible Debentures
irrevocably elects to convert such Debentures (or $• principal amount
thereof
*
) in accordance with the terms of the Indenture referred to
in such Debentures and tenders herewith the Debentures and directs that the
Common Shares of Aurora Cannabis Inc. issuable upon a conversion be issued and
delivered to the person indicated below. (If Common Shares are to be issued in
the name of a person other than the holder, all requisite transfer taxes must be
tendered by the undersigned and a Residency Declaration Form and the Form of
Assignment must be completed and delivered in respect of such other person).
[ ]
Check if the
undersigned registered holder is a Qualified Institutional Buyer that acquired
Initial Debentures under the Offering as “restricted securities” which, pursuant
to Section 2.15(3) of the Indenture, have been included in the Unrestricted
Debenture against execution and delivery by the Transferor of a U.S. Purchaser
Letter substantially as set forth in Schedule F to the Indenture. IF THIS BOX IS
CHECKED, THE UNDERSIGNED REGISTERED HOLDER ACKNOWLEDGES AND AGREES THAT IT
CONTINUES TO BE BOUND BY THE TERMS AND CONDITIONS SET FORTH IN THE U.S.
PURCHASER LETTER.
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Dated:
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(Signature of Registered Holder)
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*
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If less than the full principal amount of the
Debentures, indicate in the space provided the principal amount (which
must be $1,000 or integral multiples thereof).
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NOTE:
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If Common Shares are to be issued in the name of a person
other than the holder, the signature must be guaranteed by a chartered
bank, a trust company or by a member of an acceptable Medallion Guarantee
Program. The Guarantor must affix a stamp bearing the actual words:
“SIGNATURE GUARANTEED”.
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B - 1
(Print name in which Common Shares are to be issued, delivered
and registered)
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Name:
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Address
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(City, Province and Postal Code)
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Name of guarantor:
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Authorized signature:
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B - 2
Schedule C – Common Share Legend
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
“
U.S. SECURITIES ACT
”), OR THE LAWS OF ANY STATE OF THE UNITED STATES.
THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF
AURORA CANNABIS INC. (THE “
CORPORATION
”) THAT SUCH SECURITIES MAY BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY
(A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE
904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH
APPLICABLE LOCAL LAWS AND REGULATIONS, IN COMPLIANCE WITH THE EXEMPTION FROM
REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY (i) RULE 144 THEREUNDER,
IF AVAILABLE, OR RULE 144A THEREUNDER, IF AVAILABLE, AND, IN BOTH CASES, IN
ACCORDANCE WITH APPLICABLE U.S. STATE SECURITIES LAWS, OR (D) IN A TRANSACTION
THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY
APPLICABLE U.S. STATE SECURITIES LAWS, AND, IN THE CASE OF (C)(i) OR (D) ABOVE,
AFTER THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF
RECOGNIZED STANDING IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE
CORPORATION AND THE [TRUSTEE][TRANSFER AGENT] TO SUCH EFFECT. DELIVERY OF THIS
CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON
STOCK EXCHANGES IN CANADA.
C - 1
Schedule D –Form of Certificate of Transfer
Aurora Cannabis Inc.
Suite 1500, 1199 West Hastings Street
Vancouver, British Columbia
V6E 3T5
Attention: Terry Booth
Computershare Trust Company of Canada
510 Burrard Street,
2
nd
Floor
Vancouver, British Columbia V6C 3B9
Re: Transfer of Debentures
Reference is hereby made to the Indenture, dated as of November 28, 2017 (the
“
Indenture
”), between Aurora Cannabis Inc., as issuer (the
“
Corporation
”), and Computershare Trust Company of Canada, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
____________(the “
Transferor
”) owns and proposes to transfer the
Debentures or interests in such Debentures specified in Annex A hereto, in the
principal amount of $____________(the “
Transfer
”), to ____________(the
“
Transferee
”), as further specified in Annex A hereto. In connection with
the Transfer, the Transferor hereby certifies that
[CHECK ALL THAT APPLY]
1.
[ ]
Check
if Transferee will take delivery of an interest in a Restricted Uncertificated
Debenture or a Restricted Physical Debenture pursuant to Rule 144A.
The
Transfer is being effected pursuant to and in accordance with Rule 144A
(“
Rule 144A
”) under the Securities Act of 1933, as amended (the
“
Securities Act
”), and, accordingly, the Transferor hereby further
certifies that the interest or physical Debenture is being transferred to a
Person that the Transferor reasonably believes is purchasing the interest or
physical Debenture for its own account, or for one or more accounts with respect
to which such Person exercises sole investment discretion, and such Person and
each such account is a “qualified institutional buyer” within the meaning of
Rule 144A in a transaction meeting the requirements of Rule 144A, and such
Transfer is in compliance with any applicable blue sky securities laws of any
state of the United States. Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture, the transferred beneficial interest
or physical Debenture will be subject to the restrictions on transfer enumerated
in the U.S. Legend.
2.
[ ]
Check if
Transferee will take delivery of an interest in an Unrestricted Uncertificated
Debenture or an Unrestricted Physical Debenture pursuant to Regulation S.
The Transfer is being effected pursuant to and in accordance with Rule 904 of
Regulation S under the Securities Act and, accordingly, the Transferor hereby
further certifies that (i) the Transferor is not an “affiliate” of the
Corporation as that term is defined in Rule 405 under the Securities Act, (ii) the offer was not made, and the
Transfer is not being made, to a Person in the United States and (x) at the time
the buy order was originated, the Transferee was outside the United States or
such Transferor and any Person acting on its behalf reasonably believed and
believes that the Transferee was outside the United States or (y) the
transaction was executed in, on or through the facilities of a designated
offshore securities market and neither such Transferor nor any Person acting on
its behalf knows that the transaction was prearranged with a buyer in the United
States, (iii) neither the Transferor nor any affiliate of the Transferor nor any
Person acting on any of their behalf has engaged or will engage in any directed
selling efforts in the United States in connection with the Transfer, (iv) the
Transfer is
bona fide
and not for the purpose of “washing off’ the resale
restrictions imposed because the securities are “restricted securities” (as that
term is defined in Rule 144(a)(3) under the Securities Act), (v) the Transferor
does not intend to replace such securities with fungible unrestricted securities
and (vi) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act. Terms used in this section have
the meaning given to them by Regulation S under the Securities Act.
D - 1
3.
[ ]
Check
and complete if Transferee will take delivery of an interest in an Unrestricted
Uncertificated Debenture or an Unrestricted Physical Debenture pursuant to any
provision of the Securities Act other than Regulation S.
(a)
[ ]
Check if
Transfer is pursuant to Rule 144
. (i) The Transfer is being effected
pursuant to and in accordance with Rule 144 under the Securities Act (“
Rule
144
”) and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
U.S. Legend are not required to be imposed on the beneficial interest of the
Transferor in order to maintain compliance with the Securities Act.
(b)
[ ]
Check if
Transfer is Pursuant to Other Exemption
. (i) The Transfer is being effected
pursuant to and in compliance with an exemption from the registration
requirements of the Securities Act other than Rule 144A, Regulation S and Rule
144, and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any State of the United States
and (ii) the restrictions on transfer contained in the Indenture and the U.S.
Legend are not required to be imposed on the beneficial interest of the
Transferor in order to maintain compliance with the Securities Act.
In
connection with requests for transfers pursuant to item 3(a) or Rule 144, the
Transferor must deliver to the Trustee an opinion of counsel of recognized
standing in form and substance satisfactory to the Trustee and reasonably
satisfactory to the Corporation, to the effect that the legend is no longer
required under applicable requirements of the Securities Act or state securities
laws.
D - 2
This
certificate and the statements contained herein are made for your benefit and
the benefit of the Corporation.
|
|
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|
[Insert
Name of Transferor]
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|
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|
By:
|
|
|
|
|
|
|
Name: •
|
|
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Title: •
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Dated:
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|
D - 3
ANNEX A TO CERTIFICATE OF TRANSFER
|
1.
|
The Transferor owns and proposes to transfer the
following:
|
[CHECK ONE OF (a) OR (b) OR (c) OR (d)]
|
|
(a)
|
[ ] a Restricted Uncertificated
Debenture CUSIP
|
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(b)
|
[ ] an Unrestricted Uncertificated
Debenture CUSIP
|
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(c)
|
[ ] a Restricted Physical Debenture
|
|
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|
(d)
|
[ ] an Unrestricted Physical
Debenture
|
after the Transfer the Transferee will hold:
[CHECK ONE OF (a) OR (b) OR (c) OR (d)]
|
|
(e)
|
[ ] a Restricted Uncertificated
Debenture CUSIP
|
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(f)
|
[ ] an Unrestricted Uncertificated
Debenture CUSIP
|
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(g)
|
[ ] a Restricted Physical Debenture
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(h)
|
[ ] an Unrestricted Physical
Debenture
|
in accordance with the terms of the Indenture.
D - 4
Schedule E –Form of Certificate Of Exchange
Aurora Cannabis Inc.
Suite 1500, 1199 West Hastings Street
Vancouver, British Columbia
V6E 3T5
Attention: Terry Booth
Computershare Trust Company of Canada
510 Burrard Street,
2
nd
Floor
Vancouver, British Columbia V6C 3B9
Re: Exchange of Debentures
(
CUSIP 05156XAD0)
Reference is hereby made to the Indenture, dated as of November 28, 2017 (the
“
Indenture
”), between Aurora Cannabis Inc., as issuer (the
“
Corporation
”), and Computershare Trust Company of Canada, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
____________(the “
Owner
”) owns and proposes to exchange the Debentures or
interests in such Debentures specified herein, in the principal amount of $
____________(the “
Exchange
”). In connection with the Exchange, the Owner
hereby certifies that:
1.
Exchange of
Restricted Physical Debentures or Restricted Uncertificated Debenture for
Unrestricted Physical Debentures or Unrestricted Uncertificated Debenture
(a)
[ ]
Check if
Exchange is a Restricted Uncertificated Debenture to an Unrestricted
Uncertificated Debenture.
In connection with the Exchange of the Restricted
Uncertificated Debenture for an Unrestricted Uncertificated Debenture in an
equal principal amount, the Owner hereby certifies (i) the interest is being
acquired for the Owner’s own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Uncertificated Debentures and pursuant to and in accordance with the Securities
Act of 1933, as amended (the “
Securities Act
”), (iii) the restrictions on
transfer contained in the Indenture and the U.S. Legend are not required to be
imposed on the beneficial interest of the Owner in order to maintain compliance
with the Securities Act and (iv) the interest in an Unrestricted Uncertificated
Debenture is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.
(b)
[ ]
Check if
Exchange is from Restricted Physical Debenture to Unrestricted Physical
Debenture
. In connection with the Owner’s Exchange of a Restricted Physical
Debenture for an Unrestricted Physical Debenture, the Owner hereby certifies (i)
the Unrestricted Physical Debenture is being acquired for the Owner’s own
account without transfer, such Exchange has been effected in compliance with the
transfer restrictions applicable to Restricted Physical Debentures and pursuant to and in
accordance with the Securities Act, the restrictions on transfer contained in
the Indenture and the U.S. Legend are not required to be imposed on the Physical
Debenture of the Owner in order to maintain compliance with the Securities Act
and (iv) the Unrestricted Physical Debenture is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.
E - 1
In
connection with requests for Exchanges pursuant to item 1(a) or 1(b), the Owner
must deliver to the Trustee an opinion of counsel of recognized standing in form
and substance satisfactory to the Trustee and reasonably satisfactory to the
Corporation, to the effect that the legend is no longer required under
applicable requirements of the Securities Act or state securities laws.
This
certificate and the statements contained herein are made for your benefit and
the benefit of the Corporation.
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[Insert
Name of Transferor]
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By:
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Name: •
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Title: •
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Dated:
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E - 2
Schedule F – Form of U.S. Purchaser Letter
Aurora Cannabis Inc.
Suite 1500, 1199 West Hastings Street
Vancouver, British Columbia V6E 3T5
Canada
Ladies and Gentlemen:
In connection with its agreement to purchase debentures (the
“
Debentures
”) of Aurora Cannabis Inc. (the “
Corporation
”), the
undersigned purchaser acknowledges, represents to, warrants, covenants and
agrees with the Corporation, as follows:
|
|
1.
|
It is authorized to consummate the purchase of the
Debentures.
|
|
|
|
|
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|
2.
|
It is a Qualified Institutional Buyer, purchasing the
Debentures for its own account or for the account or benefit of one or
more Qualified Institutional Buyers with respect to which it exercises
sole investment discretion for investment purposes only and not with a
view to any resale, distribution or other disposition of the Debentures or
the Common Shares in violation of United States federal or U.S. state
securities laws.
|
|
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|
3.
|
It understands and acknowledges that none of the
Debentures or the Common Shares have been nor will be registered under the
U.S. Securities Act or the securities laws of any state of the United
States, and will, therefore, be “restricted securities” within the meaning
of Rule 144 under the U.S. Securities Act that will not be represented by
certificates that bear a U.S. restricted legend or identified by a
restricted CUSIP number, and that the offer and sale of the Debentures to
it will be made in reliance upon an exemption from registration available
for offers and sales to Qualified Institutional Buyers.
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4.
|
It, alone or with the assistance of its professional
advisors, has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of its
investment in the Debentures or the Common Shares and is able, without
impairing its financial condition, to hold the Debentures or the Common
Shares for an indefinite period of time and to bear the economic risks,
and withstand a complete loss, of such investment.
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|
|
5.
|
It acknowledges that it has not purchased the Debentures
as a result of any “general solicitation” or “general advertising” (as
those terms are used in Regulation D under the U.S. Securities Act),
including, but not limited to, any advertisements, articles, notices or
other communications published in any newspaper, magazine or similar media
or on the Internet or broadcast over radio, television or the Internet, or
any seminar or meeting whose attendees have been invited by general
solicitation or general advertising.
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|
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|
6.
|
In consideration for the receipt of unlegended
“restricted securities”, it agrees that if it decides to offer, sell,
pledge or otherwise transfer any of the Debentures or Common Shares, it
will not offer, sell, pledge or otherwise transfer such securities,
directly or indirectly, unless the transfer is: (i) to the Corporation,
(ii) outside the United States in accordance with the requirements of Rule
904 of Regulation S and in compliance with applicable local laws and
regulations, (iii) in compliance with an exemption from registration under
the U.S. Securities Act provided by (A) Rule 144 thereunder, if available,
or (B) Rule 144A, if available, and, in both cases, in accordance with
applicable U.S. state securities laws, or (iv) in another transaction that
does not require registration under the U.S. Securities Act or any
applicable U.S. state securities laws, and, in the case of (iii)(A) and
(iv) above, after it has furnished to the Corporation an opinion of
counsel of recognized standing in form and substance reasonably
satisfactory to the Corporation to such effect.
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F - 1
|
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7.
|
It acknowledges it has implemented, or shall immediately
implement, adequate internal procedures to be able to ensure compliance
with the transfer restrictions and, in particular, to ensure that the
Debentures and Common Shares shall be properly identified in its records
as “restricted securities” that are subject to such transfer restrictions
notwithstanding the absence of a U.S. restrictive legend.
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8.
|
It understands and acknowledges that the Corporation is
not obligated to file and has no present intention of filing with the SEC
or with any U.S. state securities commission any registration statement in
respect of resales of any of the Debentures or Common Shares in the United
States.
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9.
|
It understands and acknowledges that the Corporation (i)
is not obligated to remain a “foreign issuer” within the meaning of
Regulation S, (ii) may not, at the time of conversion of the Debentures
into Common Shares, or at any other time, be a foreign issuer, and (iii)
may engage in one or more transactions which could cause the Corporation
not to be a foreign issuer.
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10.
|
It is aware that (i) purchasing, holding and disposing of
the Debentures or the Common Shares may have tax consequences under the
laws of Canada and the United States, and (ii) it is solely responsible
for determining the tax consequences applicable to its particular
circumstances and should consult its own tax advisors concerning
investment in the Debentures or the Common Shares.
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11.
|
No agency, governmental authority, regulatory body, stock
exchange or other entity (including, without limitation, the SEC or any
U.S. state securities commission) has made any finding or determination as
to the merit of investment in, nor have any such agencies or governmental
authorities made any recommendation or endorsement with respect to, the
Debentures or the Common Shares.
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12.
|
If required by applicable securities legislation,
regulatory policy or order or by any securities commission, stock exchange
or other regulatory authority, it will execute, deliver and file and
otherwise assist the Corporation in filing reports, questionnaires,
undertakings and other documents with respect to the issuance of the
Debentures or the Common Shares.
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|
13.
|
It understands and acknowledges that it is making the
representations, warranties and agreements contained herein with the
intent that they may be relied upon by the Corporation in determining its
eligibility to purchase the Debentures and the Common Shares.
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|
14.
|
(i) If it is acquiring any Debentures as a fiduciary or
agent for one or more investor accounts, it represents that it has full
power to make the representations, warranties and agreements contained
herein on behalf of each such account and that the representations,
warranties and agreements contained herein are true and correct and will
be binding upon each such account; or (ii) the undersigned is an officer
of the purchaser duly authorized to execute and deliver this letter on
behalf of the purchaser.
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15.
|
It acknowledges and consents to the fact that the
Corporation may be required by applicable securities laws to provide the
securities regulators or other authorities pursuant to the
Proceeds of
Crime (Money Laundering) and Terrorist Financing Act
(Canada) with its
personal information; and, notwithstanding that it may be purchasing
securities as agent on behalf of an undisclosed principal, it agrees to
provide, on request, particulars as to the identity of such undisclosed
principal as may be required by the Corporation in order to comply with
the foregoing.
|
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16.
|
It represents and warrants that (i) the funds
representing the purchase price which will be advanced by it will not
represent proceeds of crime for the purposes of the
United States
Uniting and Strengthening America by Providing Appropriate Tools Required
to Intercept and Obstruct Terrorism Act
(the “
PATRIOT Act
”),
and it acknowledges that the Corporation may in the future be required by
law to disclose its name and other information, on a confidential basis,
pursuant to the PATRIOT Act, and (b) no portion of the purchase price
to be provided by it (i) has been or will be derived from or related to any
activity that is deemed criminal under the laws of the United States of America
or any other jurisdiction, or (ii) is being tendered on behalf of a person or
entity that has not been identified to or by it; and it shall promptly notify
the Corporation if it discovers that any of such representations ceases to be
true and provide the Corporation with appropriate information in connection
therewith.
|
F - 2
|
|
17.
|
It agrees that by accepting the Debentures it shall be
representing and warranting that the foregoing representations and
warranties are true and correct as at the closing date of the offering of
the Debentures and that they shall survive the purchase by it of the
Debentures and shall continue in full force and effect notwithstanding any
subsequent disposition by it of the Debentures. It irrevocably authorizes
the Corporation to produce this U.S. Purchaser Letter or a copy hereof to
any interested party in any administrative or legal proceedings or
official enquiry with respect to the matters set forth
herein.
|
The Corporation shall be entitled to rely on delivery of an
electronic mail or facsimile copy of this U.S. Purchaser Letter, and acceptance
by the Corporation of an electronic mail or facsimile copy of this U.S.
Purchaser Letter shall create a legal, valid and binding agreement between the
Corporation and the undersigned.
|
By:
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Print Name of U.S. Purchaser
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By:
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Name:
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Title:
|
F - 3
AURORA CANNABIS INC.
- and -
COMPUTERSHARE TRUST COMPANY OF CANADA
|
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|
SPECIAL WARRANT INDENTURE
|
|
|
|
Providing for the Issue of Special Warrants
|
|
|
November 28, 2017
TABLE OF CONTENTS
|
ARTICLE 1 INTERPRETATION
|
1
|
|
|
|
|
1.1
|
Definitions
|
1
|
|
1.2
|
Headings
|
5
|
|
1.3
|
Gender
|
5
|
|
1.4
|
Weekends and Holidays
|
5
|
|
1.5
|
Meaning of “Outstanding”
|
6
|
|
1.6
|
Time
|
6
|
|
1.7
|
Applicable Law
|
6
|
|
1.8
|
Severability
|
6
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|
1.9
|
Currency
|
6
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|
1.10
|
Conflicts
|
6
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|
1.11
|
Schedules
|
6
|
|
|
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|
|
ARTICLE 2 ISSUE AND PURCHASE
OF SPECIAL WARRANTS
|
6
|
|
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|
2.1
|
Creation, Form and Terms of
Special Warrants
|
6
|
|
2.2
|
Form of Warrants, Certificated Warrants
|
7
|
|
2.3
|
Book Entry Only Warrants
|
7
|
|
2.4
|
Special Warrant Certificate
|
9
|
|
2.5
|
Transferability and Ownership
of Special Warrants
|
10
|
|
2.6
|
Special Warrantholders Not Shareholders
|
13
|
|
2.7
|
Signing of Special Warrants
|
14
|
|
2.8
|
Countersigning
|
14
|
|
2.9
|
Loss, Mutilation, Destruction
or Theft of Special Warrants
|
14
|
|
2.10
|
Exchange of Special Warrants
|
15
|
|
2.11
|
Ranking
|
15
|
|
2.12
|
Purchase of Special Warrants for Cancellation
|
15
|
|
2.13
|
Cancellation of Surrendered
Special Warrants
|
15
|
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|
|
ARTICLE 3 COVENANTS OF THE
CORPORATION
|
16
|
|
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|
|
3.1
|
To Issue Special Warrants and
Create Convertible Debentures
|
16
|
|
3.2
|
To Execute Further Assurances
|
16
|
|
3.3
|
To Carry On Business
|
16
|
|
3.4
|
Reporting Issuer
|
16
|
|
3.5
|
No Breach of Constating
Documents
|
17
|
|
3.6
|
Filing Prospectus and Related Matters
|
17
|
|
3.7
|
Notices to Special Warrant
Agent
|
17
|
|
3.8
|
Securities Qualification Requirements
|
17
|
|
3.9
|
Maintain Listing
|
17
|
|
3.10
|
Satisfy Covenants
|
17
|
|
3.11
|
Performance of Covenants by
Special Warrant Agent
|
17
|
|
3.12
|
Special Warrant Agent’s Remuneration and
Expenses
|
18
|
|
3.13
|
Trust for Special
Warrantholders’ Benefit
|
18
|
|
3.14
|
Payment of Commissions
|
18
|
|
3.15
|
Contractual Right of Rescission
|
18
|
|
3.16
|
Cannabis Related Covenant
|
19
|
|
|
|
|
|
ARTICLE 4 DEEMED EXERCISE OF SPECIAL
WARRANTS
|
19
|
|
|
|
|
4.1
|
Notice of Deemed Exercise to Special
Warrantholders
|
19
|
- i -
|
4.2
|
Deemed Exercise of Special
Warrants
|
19
|
|
4.3
|
Effect of Exercise of Special Warrants
|
20
|
|
4.4
|
Special Warrants Void After
Exercise Time
|
20
|
|
4.5
|
Accounting and Recording
|
20
|
|
4.6
|
Legending of Special Warrants
|
20
|
|
|
|
|
|
ARTICLE 5 MEETINGS OF SPECIAL
WARRANTHOLDERS
|
21
|
|
|
|
|
5.1
|
Definitions
|
21
|
|
5.2
|
Convening Meetings
|
21
|
|
5.3
|
Place of Meeting
|
22
|
|
5.4
|
Notice
|
22
|
|
5.5
|
Persons Entitled to Attend
|
22
|
|
5.6
|
Quorum
|
22
|
|
5.7
|
Chairman
|
22
|
|
5.8
|
Power to Adjourn
|
22
|
|
5.9
|
Adjourned Meeting
|
23
|
|
5.10
|
Show of Hands
|
23
|
|
5.11
|
Poll
|
23
|
|
5.12
|
Regulations
|
23
|
|
5.13
|
Powers of Special
Warrantholders
|
24
|
|
5.14
|
Powers Cumulative
|
25
|
|
5.15
|
Minutes of Meetings
|
25
|
|
5.16
|
Written Resolutions
|
25
|
|
5.17
|
Binding Effect
|
25
|
|
5.18
|
Holdings by the Corporation or Subsidiaries of
the Corporation Disregarded
|
26
|
|
5.19
|
Corporation, Special Warrant
Agent and Agent May be Represented
|
26
|
|
|
|
|
|
ARTICLE 6 SUPPLEMENTAL
INDENTURES, MERGER, SUCCESSORS
|
26
|
|
|
|
|
6.1
|
Provision for Supplemental
Indentures for Certain Purposes
|
26
|
|
6.2
|
Corporation May Consolidate, etc. on Certain
Terms
|
27
|
|
6.3
|
Successor Body Corporate
Substituted
|
27
|
|
|
|
|
|
ARTICLE 7 CONCERNING THE
SPECIAL WARRANT AGENT
|
28
|
|
|
|
|
7.1
|
Duties of Special Warrant Agent
|
28
|
|
7.2
|
Action by Special Warrant Agent
|
28
|
|
7.3
|
Certificate of the Corporation
|
28
|
|
7.4
|
Special Warrant Agent May Employ Experts
|
28
|
|
7.5
|
Resignation and Replacement of
Special Warrant Agent
|
29
|
|
7.6
|
Indenture Legislation
|
30
|
|
7.7
|
Notice
|
30
|
|
7.8
|
Use of Proceeds
|
30
|
|
7.9
|
No Inquiries
|
30
|
|
7.10
|
Actions by Special Warrant Agent to Protect
Interest
|
31
|
|
7.11
|
Special Warrant Agent Not
Required to Give Security
|
31
|
|
7.12
|
Special Warrant Agent Not Ordinarily Bound
|
31
|
|
7.13
|
Special Warrant Agent May Deal
in Instruments
|
31
|
|
7.14
|
Recitals or Statements of Fact Made by
Corporation
|
31
|
|
7.15
|
Special Warrant Agent’s
Discretion Absolute
|
31
|
|
7.16
|
No Representations as to Validity
|
32
|
|
7.17
|
Acceptance of Trusts
|
32
|
|
7.18
|
Special Warrant Agent’s Authority to Carry on
Business
|
32
|
- ii -
|
7.19
|
Indemnification of Special
Warrant Agent
|
32
|
|
7.20
|
Performance of Covenants by Special Warrant
Agent
|
33
|
|
7.21
|
Third Party Interests
|
33
|
|
7.22
|
Not Bound to Act
|
33
|
|
7.23
|
Not Appointed Receiver
|
34
|
|
|
|
|
|
ARTICLE 8 NOTICES
|
34
|
|
|
|
|
8.1
|
Notice to Corporation, Special
Warrant Agent and Agent
|
34
|
|
8.2
|
Notice to Special Warrantholders
|
35
|
|
|
|
|
|
ARTICLE 9 POWER OF BOARD OF DIRECTORS
|
36
|
|
|
|
|
9.1
|
Board of Directors
|
36
|
|
|
|
|
|
ARTICLE 10 MISCELLANEOUS PROVISIONS
|
36
|
|
|
|
|
10.1
|
Further Assurances
|
36
|
|
10.2
|
Unenforceable Terms
|
36
|
|
10.3
|
No Waiver
|
36
|
|
10.4
|
Waiver of Default
|
37
|
|
10.5
|
Immunity of Shareholders
|
37
|
|
10.6
|
Limitation of Liability
|
37
|
|
10.7
|
Suits by Special Warrantholders
|
37
|
|
10.8
|
Force Majeure
|
38
|
|
10.9
|
U.S. Securities and Exchange Commission
Certification
|
38
|
|
10.10
|
Privacy Matters
|
38
|
|
10.11
|
Enurement
|
39
|
|
10.12
|
Counterparts and Formal Date
|
39
|
|
10.13
|
Satisfaction and Discharge of Special Warrant
Indenture
|
39
|
|
10.14
|
Provisions of Special Warrant
Indenture and Special Warrants for the Sole Benefit of Parties and Special
Warrantholders
|
40
|
|
10.15
|
Further Assurances
|
40
|
|
10.16
|
Formal Date and Effective Date
|
40
|
|
|
|
|
|
SCHEDULE "A" FORM OF SPECIAL
WARRANT CERTIFICATE
|
|
|
|
|
|
SCHEDULE "B" NOTICE
|
|
- iii -
SPECIAL WARRANT INDENTURE
THIS SPECIAL WARRANT INDENTURE
made as of November 28, 2017.
BETWEEN:
AURORA CANNABIS INC.
a corporation
existing under the laws of the Province of British Columbia
(the “
Corporation
”)
OF THE FIRST PART
- AND -
COMPUTERSHARE TRUST COMPANY OF
CANADA
, a trust company existing under the laws of Canada
(the “
Special Warrant Agent
”)
OF THE SECOND PART
WHEREAS
, pursuant to the terms
of the Agency Agreement, the Corporation sold an aggregate of 115,000
Special Warrants at the purchase price of $1,000 per Special Warrant;
AND WHEREAS
each Special
Warrant shall entitle the holder thereof to acquire, upon the deemed exercise
thereof, $1,000 principal amount of Convertible Debentures without the payment
of additional consideration;
AND WHEREAS
the Corporation is
authorized to create and issue the Special Warrants;
AND WHEREAS
the
Corporation represents to the Special Warrant Agent that all necessary
resolutions of the directors of the Corporation have been or will be duly
enacted, passed or confirmed and all other proceedings taken and conditions
complied with to authorize the execution and delivery of this Special Warrant
Indenture and the execution and issue of the Special Warrants and to make the
same legal, valid and binding on the Corporation in accordance with the laws
relating to the Corporation; and
AND WHEREAS
the Special Warrant
Agent has been appointed by the Corporation and has agreed to act as agent on
behalf of the Special Warrantholders on the terms and conditions set forth
herein.
NOW THEREFORE THIS SPECIAL
WARRANT INDENTURE WITNESSETH THAT
,in consideration of the premises and
in further consideration of the mutual covenants herein set forth, the parties
hereto agree as follows:
ARTICLE 1
INTERPRETATION
In this Special
Warrant Indenture, unless there is something in the subject matter or context
inconsistent therewith, the following words have the respective meaning
indicated below:
- 2 -
|
|
(a)
|
“
1933 Act
” means the
United States Securities
Act of 1933
, as amended;
|
|
|
|
|
|
|
(b)
|
“
Agency Agreement
” means the Agency agreement
dated November 28, 2017 between the Corporation and the Agent in respect
of the Offering;
|
|
|
|
|
|
|
(c)
|
“
Agent
” means Canaccord Genuity Corp.;
|
|
|
|
|
|
|
(d)
|
“
Authenticated
” means (a) with respect to the
issuance of a Special Warrant Certificate, one which has been duly signed
by the Corporation and authenticated by the signature of an authorized
officer of the Special Warrant Agent, (b) with respect to the issuance of
an Uncertificated Special Warrant, one in respect of which the Special
Warrant Agent has completed all Internal Procedures such that the
particulars of such Uncertificated Special Warrant are entered in the
register of holders of Warrants, and “
Authenticate
”,
“
Authenticating
” and “
Authentication
” have the appropriate
correlative meanings;
|
|
|
|
|
|
|
(e)
|
“
Book Entry Only Participants
” means institutions
that participate directly or indirectly in the Depository’s book entry
registration system for the Special Warrants;
|
|
|
|
|
|
|
(f)
|
“
Book Entry Only Warrants
” means Special Warrants
that are to be held only by or on behalf of the Depository;
|
|
|
|
|
|
|
(g)
|
“
Business Day
” means a day (other than a Saturday,
Sunday, civic or statutory holiday) on which Canadian chartered banks are
open for the transaction of regular business in the City of Toronto,
Ontario and the City of Vancouver, British Columbia;
|
|
|
|
|
|
|
(h)
|
“
CDS Global Warrants
” means Special Warrants
representing all or a portion of the aggregate number of Special Warrants
issued in the name of the Depository represented by an Uncertificated
Special Warrant, or if requested by the Depository or the Corporation, by
a Special Warrant Certificate;
|
|
|
|
|
|
|
(i)
|
“
Closing
” means the closing on the Closing Date of
the transaction of purchase and sale in respect of the Special Warrants as
contemplated in the Agency Agreement and the subscription
agreements;
|
|
|
|
|
|
|
(j)
|
“
Closing Date
” means November 28, 2017 or such
other date as the Agent and the Corporation agree for the Closing of the
Offering;
|
|
|
|
|
|
|
(k)
|
“
Closing Time
” means 8:00 a.m. (Toronto time) on
the Closing Date or such other time as determined by the Corporation and
the Agent;
|
|
|
|
|
|
|
(l)
|
“
Convertible Debentureholder
” means the registered
holder from time to time of an outstanding Convertible
Debenture;
|
|
|
|
|
|
|
(m)
|
“
Convertible Debentures
” means the 6.0% unsecured
convertible debentures of the Corporation to be created and issued
pursuant to the Convertible Debenture Indenture;
|
|
|
|
|
|
|
(n)
|
“
Convertible Debenture Indenture
” means a
convertible debenture indenture dated the date hereof and executed
concurrently with this Agreement among the Corporation and the Convertible
Debenture Trustee pursuant to which the Convertible Debentures will be
created and issued upon exercise of the Special
Warrants;
|
- 3 -
|
|
(o)
|
“
Convertible Debenture Trustee
” means the
convertible debenture trustee under the Convertible Debenture Indenture,
initially being Computershare Trust Company of Canada, in its capacity as
convertible debenture trustee;
|
|
|
|
|
|
|
(p)
|
“
Corporation
” means Aurora Cannabis Inc., a
corporation existing under the laws of the Province of British
Columbia;
|
|
|
|
|
|
|
(q)
|
“
Corporation’s auditors
” means the firm of
accountants appointed by the shareholders of the Corporation and serving
as the auditors of the Corporation at the relevant time;
|
|
|
|
|
|
|
(r)
|
“
Counsel
” means a barrister or solicitor or firm
of barristers and solicitors retained by the Special Warrant Agent,
Corporation (who may be counsel to the Corporation), or Special
Warrantholders;
|
|
|
|
|
|
|
(s)
|
“
Deemed Exercise Date
” means the earlier
of:
|
|
|
(i)
|
the third Business Day after the Qualification Date;
and
|
|
|
|
|
|
|
(ii)
|
March 29, 2018, being the date that is four months and
one day following the Closing Date;
|
|
|
(t)
|
“
Deemed Exercise Time
” means 5:00 p.m. (Toronto
time) on the Deemed Exercise Date;
|
|
|
|
|
|
|
(u)
|
“
Depository
” means CDS Clearing and Depository
Services Inc. or such other person as is designated in writing by the
Corporation to act as depository in respect of the Special
Warrants;
|
|
|
|
|
|
|
(v)
|
“
Designated Provinces
” means the provinces of
Alberta, British Columbia and Ontario
;
|
|
|
|
|
|
|
(w)
|
“
director
” means a director of the Corporation for
the time being and, unless otherwise specified herein, a reference to an
action by the directors means an action by the directors of the
Corporation as a board or, whenever duly empowered, action by a committee
of such board;
|
|
|
|
|
|
|
(x)
|
“
Exercise Notice
” has the meaning ascribed thereto
in subsection 3.7;
|
|
|
|
|
|
|
(y)
|
“
Governmental Entity
” means any (a) multinational,
federal, provincial, territorial, state, municipal, local or other
governmental or public department, central bank, court, commission,
commissioner, tribunal, board, bureau, agency or instrumentality, domestic
or foreign, (b) any subdivision or authority of any of the foregoing, (c)
any quasi- governmental or private body exercising any regulatory,
expropriation or taxing authority under or for the account of any of the
above, or (d) a stock exchange, automated quotation system,
self-regulatory authority or securities regulatory authority;
|
|
|
|
|
|
|
(z)
|
“
Internal Procedures
” means in respect of the
making of any one or more entries to, changes in or deletions of any one
or more entries in the register at any time (including without limitation,
original issuance or registration of transfer of ownership) the minimum
number of the Special Warrant Agent’s internal procedures customary at
such time for the entry, change or deletion made to be complete under the
operating procedures followed at the time by the Special Warrant Agent, it
being understood that neither preparation and issuance shall constitute part of such
procedures for any purpose of this definition;
|
- 4 -
|
|
(aa)
|
“
Law
” or “
Laws
” means all federal, state
and provincial codes, conventions, laws, ordinances, policies, by-laws,
statutes, rules, regulations, principles of law and equity, orders,
rulings, ordinances, judgements, injunctions, determinations, awards,
decrees or other requirements and the terms and conditions of any grant of
approval, permission, authority or license of any Governmental Entity, and
the term “applicable” with respect to such Laws and in a context that
refers to one or more parties to this Agreement, means such Laws as are
applicable to such party or its business, undertaking, property or
securities and emanate from a person having jurisdiction over the party or
parties or its or their business, undertaking, property or
securities;
|
|
|
|
|
|
|
(bb)
|
“
Offering
” means the offering of the Special
Warrants by way of private placement;
|
|
|
|
|
|
|
(cc)
|
“
Officer’s Certificate
” means a certificate signed
by a senior officer of the Corporation;
|
|
|
|
|
|
|
(dd)
|
“
Prospectus
” means a (final) short form prospectus
in the Designated Provinces relating to the distribution of the
Convertible Debentures under the terms and conditions of the Convertible
Debenture Indenture;
|
|
|
|
|
|
|
(ee)
|
“
Qualification Date
” means the date of the final
receipt for the Prospectus qualifying the distribution in the Designated
Provinces of the Convertible Debentures issuable under the terms and
conditions of the Convertible Debenture Indenture;
|
|
|
|
|
|
|
(ff)
|
“
Securities Regulators
” means, collectively, the
securities commissions or other applicable securities regulatory
authorities of each of the Designated Provinces;
|
|
|
|
|
|
|
(gg)
|
“
Shares
” means the common shares of the
Corporation;
|
|
|
|
|
|
|
(hh)
|
“
Special Warrant
” means a special warrant of the
Corporation created by the Corporation and issued and Authenticated
hereunder entitling the holder thereof to acquire $1,000 principal amount
of Convertible Debentures upon the deemed exercise thereof, in accordance
with this Special Warrant Indenture, without payment of additional
consideration or further action on the part of the holder of Special
Warrants;
|
|
|
|
|
|
|
(ii)
|
“
Special Warrant Agent
” means the special warrant
agent under this Special Warrant Indenture, initially being Computershare
Trust Company of Canada, in its capacity as special warrant agent
hereunder;
|
|
|
|
|
|
|
(jj)
|
“
Special Warrant Certificate
” means a certificate
evidencing one or more Special Warrants issuable hereunder, substantially
in the form attached hereto as Schedule “A”;
|
|
|
|
|
|
|
(kk)
|
“
Special Warrant Indenture
”, “
herein
”,
“
hereto
”, “
hereunder
”, “
hereof
”, “
hereby
” and
similar expressions mean or refer to this Special Warrant Indenture and
not to any particular Article, Section, paragraph, clause, subdivision or
portion hereof and include any indenture, deed or instrument supplemental
or ancillary hereto; and the expressions “
Article
”,
“
Section
” and “
paragraph
” followed by a number mean and
refer to the specified Article, Section or paragraph of this Special
Warrant Indenture;
|
- 5 -
|
|
(ll)
|
“
Special Warrantholder
” means the registered
holder from time to time of an outstanding Special Warrant;
|
|
|
|
|
|
|
(mm)
|
“
Subscription Price
” means $1,000.00 per Special
Warrant;
|
|
|
|
|
|
|
(nn)
|
“
Subsidiary of the Corporation
” means a
corporation of which voting securities carrying a majority of the votes
attached to all outstanding voting securities of the Corporation are
owned, directly or indirectly, by the Corporation or by one or more
subsidiaries of the Corporation, or by the Corporation and one or more
subsidiaries of the Corporation, and, as used in this definition, voting
securities means securities, other than debt securities, carrying a voting
right to elect directors either under all circumstances or under some
circumstances that may have occurred and are continuing;
|
|
|
|
|
|
|
(oo)
|
“
Trading Day
” means a day on which the TSX (or
such other exchange on which the Shares are listed and which forms the
primary trading market for such shares) are open for trading, and if the
Shares are not listed on a stock exchange, a day on which an over-
the-counter market where such shares are traded is open for
business;
|
|
|
|
|
|
|
(pp)
|
“
TSX
” means the Toronto Stock Exchange;
|
|
|
|
|
|
|
(qq)
|
“
Uncertificated Special Warrant
” means any Special
Warrant which is not represented by a Special Warrant
Certificate;
|
|
|
|
|
|
|
(rr)
|
“
United States
” means the United States of
America, its territories and possessions, any state of the United States,
and the District of Columbia; and
|
|
|
|
|
|
|
(ss)
|
“
written direction of the Corporation
” and
“
certificate of the Corporation
” and any other document required to
be signed by the Corporation, means, respectively, a written direction,
request, consent, certificate or other document signed in the name of the
Corporation by any officer or director and may consist of one or more
instruments so executed.
|
The division of this
Special Warrant Indenture into Articles, Sections or other subdivisions, the
provision of a Table of Contents and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Special Warrant Indenture or the Special Warrants.
Words importing the
singular number also include the plural and vice versa and words importing the
masculine gender include the feminine gender.
|
1.4
|
Weekends and Holidays
|
If the date for the
taking of any action under this Special Warrant Indenture expires on a day which
is not a Business Day, such action may be taken on the next succeeding Business
Day with the same force and effect as if taken within the period for the taking
of such action.
- 6 -
|
1.5
|
Meaning of
“
Outstanding
”
|
Every Special Warrant
represented by a Special Warrant Certificate countersigned by the Special
Warrant Agent or Uncertificated Special Warrant that has been Authenticated and
delivered to the holder thereof is deemed to be outstanding until it is
cancelled or delivered to the Special Warrant Agent for cancellation or until
the Deemed Exercise Time. Where a new Special Warrant Certificate has been
issued pursuant to Section 2.9 to replace one which has been mutilated, lost,
stolen or destroyed, the Special Warrants represented by only one of such
Special Warrant Certificates are counted for the purpose of determining the
aggregate number of Special Warrants outstanding.
Time is of the
essence hereof and of each Special Warrant Certificate.
This Special Warrant
Indenture and each Special Warrant Certificate are subject to and construed in
accordance with the laws of the Province of British Columbia and the federal
laws of Canada applicable therein.
Wherever possible,
each provision hereof shall be interpreted in such manner as to be effective and
valid under Law. In the event that any provision hereof shall be determined to
be invalid, illegal or unenforceable in any respect under Law the validity,
legality and enforceability of the remainder of such provision and any other
provision hereof shall not be affected or impaired thereby.
All references to
currency herein are to Canadian dollars unless otherwise indicated.
In the event of any
conflict or inconsistency between the provisions of this Special Warrant
Indenture and the Special Warrant Certificates, the provisions of this Special
Warrant Indenture will govern.
The attached Schedule
“A” and Schedule “B” are incorporated into and form part of this Special Warrant
Indenture.
ARTICLE 2
ISSUE AND PURCHASE OF SPECIAL
WARRANTS
|
2.1
|
Creation, Form and Terms of Special
Warrants
|
|
|
(a)
|
The Corporation hereby creates and authorizes for
issuance 115,000 Special Warrants.
|
|
|
|
|
|
|
(b)
|
The Special Warrants shall be executed by the Corporation
and certified by, or on behalf of, the Special Warrant Agent upon the
written order of the Corporation and delivered
by the Special Warrant Agent to the Corporation in accordance with
the written direction of the Corporation.
|
- 7 -
|
|
(c)
|
Each Special Warrant shall entitle the holder thereof to
acquire, upon the deemed exercise thereof, $1,000 principal amount of
Convertible Debentures without the payment of additional consideration;
and
|
|
|
|
|
|
|
(d)
|
Subject to the provisions hereof, the Special Warrants
issued under this Special Warrant Indenture are limited in the aggregate
to 115,000 Special Warrants.
|
|
2.2
|
Form of Warrants, Certificated
Warrants
|
The Special Warrants
may be issued in both certificated and uncertificated form. All Special Warrants
issued in certificated form shall be evidenced by a Special Warrant Certificate
(including all replacements issued in accordance with this Special Warrant
Indenture), substantially in the form set out in Schedule “A” hereto, which
shall be dated as of the Closing Date, shall bear such distinguishing letters
and numbers as the Corporation may, with the approval of the Special Warrant
Agent, prescribe, and shall be issuable in any denomination excluding fractions.
All Special Warrants issued to the Depository may be in either a certificated or
uncertificated form, such uncertificated form being evidenced by a book position
on the register of Special Warrantholders to be maintained by the Special
Warrant Agent.
|
2.3
|
Book Entry Only
Warrants
|
|
|
(a)
|
Registration of beneficial interests in and transfers of
Special Warrants held by the Depository shall be made only through the
book entry registration system and no Special Warrant Certificates shall
be issued in respect of such Special Warrants except where physical
certificates evidencing ownership in such securities are required or as
set out herein or as may be requested by the Depository, as determined by
the Corporation, from time to time. Except as provided herein, owners of
beneficial interests in any CDS Global Warrants shall not be entitled to
have Special Warrants registered in their names and shall not receive or
be entitled to receive Special Warrants in definitive form or to have
their names appear in the register. Notwithstanding any terms set out
herein, Special Warrants having any legend set forth in Section 2.4(g)
herein and held in the name of the Depository may only be held in the form
of Uncertificated Special Warrants with the prior consent of the Special
Warrant Agent and in accordance with the Internal Procedures of the
Special Warrant Agent.
|
|
|
|
|
|
|
(b)
|
Notwithstanding any other provision in this Special
Warrant Indenture, no CDS Global Warrants may be exchanged for Special
Warrants registered, and no transfer of any CDS Global Warrants may be
registered in the name of any person other than the Depository for such
CDS Global Warrants or a nominee thereof
unless:
|
|
|
(i)
|
the Depository notifies the Corporation that it is
unwilling or unable to continue to act as depository in connection with
the Book Entry Only Warrants and the Corporation is unable to locate a
qualified successor;
|
|
|
|
|
|
|
(ii)
|
the Corporation determines that the Depository is no
longer willing, able or qualified to discharge properly its
responsibilities as holder of the CDS Global Warrants and the Corporation
is unable to locate a qualified successor;
|
- 8 -
|
|
(iii)
|
the Depository ceases to be a clearing agency or
otherwise ceases to be eligible to be a depository and the Corporation is
unable to locate a qualified successor;
|
|
|
|
|
|
|
(iv)
|
the Corporation determines that the Special Warrants
shall no longer be held as Book Entry Only Warrants through the
Depository;
|
|
|
|
|
|
|
(v)
|
such right is required by Law, as determined by the
Corporation and the Corporation’s Counsel;
|
|
|
|
|
|
|
(vi)
|
the Special Warrant is to be Authenticated to or for the
account or benefit of a person in the United States; or
|
|
|
|
|
|
|
(vii)
|
such registration is effected in accordance with the
internal procedures of the Depository and the Special Warrant
Agent;
|
following which, Special Warrants for
those holders requesting the same shall be registered and issued to the
beneficial owners of such Special Warrants or their nominees as directed by the
holder. The Corporation shall provide an Officer’s Certificate giving notice to
the Special Warrant Agent of the occurrence of any event outlined in this
Section.
|
|
(c)
|
Every Special Warrant that is Authenticated upon
registration or transfer of a CDS Global Warrant, or in exchange for or in
lieu of a CDS Global Warrant or any portion thereof, shall be
Authenticated in the form of, and shall be, a CDS Global Warrant, unless
such Special Warrant is registered in the name of a person other than the
Depository for such CDS Global Warrant or a nominee thereof.
|
|
|
|
|
|
|
(d)
|
Notwithstanding anything to the contrary in this Special
Warrant Indenture, a CDS Global Warrant will be issued as an
Uncertificated Special Warrant, unless otherwise requested in writing by
the Depository or the Corporation.
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(e)
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The rights of beneficial owners of Special Warrants who
hold securities entitlements in respect of the Special Warrants through
the book entry registration system shall be limited to those established
by Law and agreements between the Depository and the Book Entry Only
Participants and between such Book Entry Only Participants and the
beneficial owners of Special Warrants who hold securities entitlements in
respect of the Special Warrants through the book entry registration
system, and such rights must be exercised through a Book Entry Only
Participant in accordance with the rules and procedures of the
Depository.
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(f)
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Notwithstanding anything herein to the contrary, neither
the Corporation nor the Special Warrant Agent nor any agent thereof shall
have any responsibility or liability for:
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(i)
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the electronic records maintained by the Depository
relating to any ownership interests or any other interests in the Special
Warrants or the depository system maintained by the Depository, or
payments made on account of any ownership interest or any other interest
of any person in any Special Warrant represented by an electronic position
in the book entry registration system (other than the Depository or its
nominee);
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(ii)
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maintaining, supervising or reviewing any records of the
Depository or any Book Entry Only Participant relating to any such
interest; or
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(iii)
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any advice or representation made or given by the
Depository or those contained herein that relate to the rules and
regulations of the Depository or any action to be taken by the Depository
on its own direction or at the direction of any Book Entry Only
Participant.
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(g)
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The Corporation may terminate the application of this
Section in its sole discretion in which case all Special Warrants shall be
evidenced by Special Warrant Certificates registered in the name of a
person other than the Depository.
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2.4
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Special Warrant
Certificate
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(a)
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For Special Warrants issued in certificated form, the
form of certificate representing Special Warrants shall be substantially
as set out in Schedule “A” hereto or such other form as is authorized from
time to time by the Special Warrant Agent. Each Special Warrant
Certificate shall be Authenticated on behalf of the Special Warrant Agent.
Each Special Warrant Certificate shall be signed by at least one duly
authorized signatory of the Corporation, whose signature shall appear on
the Special Warrant Certificate and may be printed, lithographed or
otherwise mechanically reproduced thereon and, in such event, certificates
so signed are as valid and binding upon the Corporation as if it had been
signed manually. Any Special Warrant Certificate which has two signatures
as hereinbefore provided shall be valid, and the Special Warrantholder
entitled to the benefits, notwithstanding that one or more of the persons
whose signature is printed, lithographed or mechanically reproduced no
longer holds office at the date of issuance of such certificate. The
Special Warrant Certificates may be engraved, printed or lithographed, or
partly in one form and partly in another, as the Corporation, with the
approval of the Special Warrant Agent, may determine.
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(b)
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The Special Warrant Agent shall Authenticate
Uncertificated Special Warrants (whether upon original issuance, exchange,
registration of transfer, partial payment or otherwise) by completing its
Internal Procedures and the Corporation shall, and hereby acknowledges
that it shall, thereupon be deemed to have duly and validly issued such
Uncertificated Special Warrants under this Special Warrant Indenture. Such
Authentication shall be conclusive evidence that such Uncertificated
Special Warrant has been duly issued hereunder and that the holder or
holders are entitled to the benefits of this Special Warrant Indenture.
The register shall be final and conclusive evidence as to all matters
relating to Uncertificated Special Warrants with respect to which this
Special Warrant Indenture requires the Special Warrant Agent to maintain
records or accounts. In case of differences between the register at any
time and any other time the register at the later time shall be
controlling, absent manifest error and such Uncertificated Special
Warrants are binding on the Corporation.
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(c)
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No Special Warrant shall be considered issued and shall
be valid or obligatory or shall entitle the holder thereof to the benefits
of this Special Warrant Indenture until it has been Authenticated by the
Special Warrant Agent.
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(d)
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No Special Warrant Certificate shall be considered issued
and Authenticated or, if Authenticated, shall be obligatory or shall
entitle the holder thereof to the benefits of this Special Warrant
Indenture, until it has been Authenticated by signature by or on behalf
of the Special Warrant Agent. Such Authentication on any such
Special Warrant Certificate shall be conclusive evidence that such Special
Warrant Certificate is duly Authenticated and is valid and a binding obligation
of the Corporation and that the holder is entitled to the benefits of this
Special Warrant Indenture.
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(e)
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No Uncertificated Special Warrant shall be considered
issued and shall be obligatory or shall entitle the holder thereof to the
benefits of this Special Warrant Indenture, until it has been
Authenticated by entry on the register of the particulars of the
Uncertificated Special Warrant. Such entry on the register of the
particulars of an Uncertificated Special Warrant shall be conclusive
evidence that such Uncertificated Special Warrant is a valid and binding
obligation of the Corporation and that the holder is entitled to the
benefits of this Special Warrant Indenture.
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(f)
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The Authentication by the Special Warrant Agent of any
Special Warrants whether by way of entry on the register or otherwise
shall not be construed as a representation or warranty by the Special
Warrant Agent as to the validity of this Special Warrant Indenture or such
Special Warrants (except the due Authentication thereof) or as to the
performance by the Corporation of its obligations under this Special
Warrant Indenture and the Special Warrant Agent shall in no respect be
liable or answerable for the use made of the Special Warrants or any of
them or the proceeds thereof. Authentication by the Special Warrant Agent
shall be conclusive evidence as against the Corporation that the Special
Warrants so Authenticated have been duly issued hereunder and that the
holder thereof is entitled to the benefits of this Special Warrant
Indenture.
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(g)
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Each CDS Global Warrant originally issued in Canada and
held by the Depository, and each CDS Global Warrant issued in exchange
therefor or in substitution thereof shall bear or be deemed to bear the
following legend or such variations thereof as the Corporation may
prescribe from time to time:
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“UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF CDS CLEARING AND DEPOSITORY SERVICES INC.
(
“
CDS
”) TO AURORA CANNABIS INC. (THE “
ISSUER
”) OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME OF CDS, OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS
(AND ANY PAYMENT IS MADE TO CDS OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF CDS), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED HOLDER HEREOF, CDS, HAS A PROPERTY INTEREST IN THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HEREIN AND IT IS A VIOLATION OF ITS RIGHTS
FOR ANOTHER PERSON TO HOLD, TRANSFER OR DEAL WITH THIS
CERTIFICATE.”
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2.5
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Transferability and Ownership of Special
Warrants
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(a)
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The Corporation hereby appoints the Special Warrant Agent
as registrar of the Special Warrants and shall cause the Special Warrant
Agent to keep at its Vancouver office set forth in Section 8.1(b) a
register in which the Special Warrant Agent shall enter the names and
addresses of the Special Warrantholders, and the number of Special
Warrants, and other particulars, prescribed by law, of the Special
Warrants held by them, together with a record of transfers in which particulars of all
transfers of Special Warrants will be recorded. The Special Warrant Agent shall
cause the register to be open at all reasonable times for inspection by the
Corporation, the Agent and any Special Warrantholder and upon payment to the
Special Warrant Agent of its reasonable fees. Any Special Warrantholder
exercising such right of inspection shall first provide an affidavit in form
satisfactory to the Corporation and the Special Warrant Agent stating the name
and address of the Special Warrantholder and agreeing not to use the information
therein except in connection with (i) an effort to call a meeting of Special
Warrantholders or to influence the voting of Special Warrantholders at any
meeting of Special Warrantholders; (ii) an offer to acquire securities of the
Corporation or (iii) any other matter relating to the affairs of the
Corporation.
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(b)
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Once an Uncertificated Special Warrant has been
Authenticated, the information set forth in the register with respect
thereto at the time of Authentication may be altered, modified, amended,
supplemented or otherwise changed only to reflect exercise or proper
instructions to the Special Warrant Agent from the holder as provided
herein, except that the Special Warrant Agent may act unilaterally to make
purely administrative changes internal to the Special Warrant Agent and
changes to correct errors. Each person who becomes a holder of an
Uncertificated Special Warrant, by his, her or its acquisition thereof
shall be deemed to have irrevocably (i) consented to the foregoing
authority of the Special Warrant Agent to make such minor error
corrections and (ii) agreed to pay to the Special Warrant Agent, promptly
upon written demand, the full amount of all loss and expense (including
without limitation reasonable legal fees of the Corporation and the
Special Warrant Agent plus interest, at an appropriate then prevailing
rate of interest to the Special Warrant Agent), sustained by the
Corporation or the Special Warrant Agent as a proximate result of such
error if but only if and only to the extent that such present or former
holder realized any benefit as a result of such error and could reasonably
have prevented, forestalled or minimized such loss and expense by prompt
reporting of the error or avoidance of accepting benefits thereof whether
or not such error is or should have been timely detected and corrected by
the Special Warrant Agent; provided, that no person who is a bona fide
purchaser shall have any such obligation to the Corporation or to the
Special Warrant Agent.
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(c)
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The Special Warrant Certificates may only be transferred
by the Special Warrantholder (or its legal representatives or its attorney
duly appointed), in accordance with Law and upon compliance with the
conditions herein, on the register kept at the office of the Special
Warrant Agent pursuant to Section 2.5(a) by delivering to the Special
Warrant Agent’s Vancouver office a duly executed Form of Transfer attached
as Appendix “1” to the Special Warrant Certificate and complying with such
other reasonable requirements as the Corporation and the Special Warrant
Agent may prescribe and such transfer shall be duly noted on the register
by the Special Warrant Agent. In the case of Uncertificated Special
Warrants held electronically by the Depository, the Special Warrants may
only be transferred, in accordance with the procedures of the Depository
under its book entry registration system. All other transfers and
exchanges of beneficial interests must be in compliance with (i) the
conditions herein; (ii) such reasonable requirements as the Special
Warrant Agent may prescribe; and (iii) all applicable securities
legislation and requirements of regulatory authorities; and such transfer
shall be duly noted in such register by the Special Warrant Agent. Upon
compliance with such requirements, the Special Warrant Agent shall issue
to the transferee of a Special Warrant Certificate a Special Warrant
Certificate and to the transferee of an Uncertificated Special Warrant, an
Uncertificated Special Warrant, or the Special Warrant Agent shall
Authenticate and deliver a Special Warrant Certificate upon request that part of
the CDS Global Warrant be certificated. Transfers within the systems of the
Depository are not the responsibility of the Warrant Agent and will not be noted
on the register maintained by the Sepcial Warrant Agent.
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(d)
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Notwithstanding anything contained in this Special
Warrant Indenture, in the Special Warrant Certificate or in any
subscription agreements under which Special Warrants were issued and sold,
the Special Warrant Agent, relying solely on the Form of Transfer or such
other reasonable requirements as the Corporation and Special Warrant Agent
may prescribe pursuant to Section 2.5(b) or this Section shall not
register any transfer of a Special Warrant unless the transfer is made in
compliance with this Section.
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(e)
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The Corporation shall direct the Special Warrant Agent as
to matters related to the applicable hold periods and applicable
securities legislation. The Special Warrant Agent shall have no obligation
to ensure or verify compliance with any Law or regulatory requirements on
the issue, exercise or transfer of any Special Warrants or any Convertible
Debentures or other securities issuable upon the deemed exercise of any
Special Warrants. The Special Warrant Agent shall be entitled to process
all proffered transfers and exercises of Special Warrants upon the
presumption that such transfers or exercises are permissible pursuant to
all Law and regulatory requirements and the terms of this Special Warrant
Indenture. The Special Warrant Agent may assume for the purposes of this
Special Warrant Indenture that the address on the register of Special
Warrantholders of any Special Warrantholder is the Special Warrantholder’s
actual address and is also determinative of the Special Warrantholder’s
residency and that the address of any transferee to whom any Special
Warrants or any Convertible Debentures are to be registered, as shown on
the transfer document, is the transferee’s actual address and is also
determinative of the transferee’s residency.
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(f)
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Upon any transfer of Special Warrants in accordance with
the provisions of this Special Warrant Indenture, the Corporation shall
covenant and agree with the Special Warrant Agent, on behalf of the
transferee holder and with the transferee holder, that the transferee
holder is a permitted assignee of the transferring holder, subject to the
restrictions and limitations described hereunder. Should a holder of
Special Warrants exercise any legal, statutory, contractual or other right
of withdrawal or rescission that may be available to it, the Special
Warrant Agent shall not be responsible for ensuring the Special Warrants
or the exercise of Special Warrants is cancelled and a refund of the
holder’s funds is paid back to the holder. In such cases, the holder shall
seek a refund directly from the Corporation and subsequently, the
Corporation shall instruct the Special Warrant Agent in writing, to cancel
the Special Warrants or exercise transaction and any Convertible
Debentures on the register, which may have already been issued upon the
Special Warrant exercise.
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(g)
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A person who furnishes evidence that he is, to the
reasonable satisfaction of the Special Warrant
Agent:
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(i)
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the executor, administrator, heir or legal representative
of the heirs of the estate of a deceased Special Warrantholder;
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(ii)
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a guardian, committee, trustee, curator or tutor
representing a Special Warrantholder who is an infant, an incompetent
person or a missing person; or
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(iii)
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a liquidator or a trustee in bankruptcy for a Special
Warrantholder,
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may, as hereinafter stated, by
surrendering such evidence together with the Special Warrant Certificate in
question to the Special Warrant Agent (by delivery or mail as set forth in
Section 8.1 hereof), and subject to such reasonable requirements as the Special
Warrant Agent may prescribe and all applicable securities legislation and
requirements of regulatory authorities, become noted upon the register of
Special Warrantholders. After receiving the surrendered Special Warrant
Certificate and upon the person surrendering the Special Warrant Certificate
meeting the requirements as hereinbefore set forth, the Special Warrant Agent
shall forthwith give written notice thereof together with confirmation as to the
identity of the person entitled to become the holder to the Corporation.
Forthwith after receiving written notice from the Special Warrant Agent as
aforesaid, the Corporation shall cause a new Special Warrant Certificate to be
issued and sent to the new holder and the Special Warrant Agent shall alter the
register of holders accordingly.
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(h)
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The Corporation and the Special Warrant Agent shall deem
and treat the registered holder of any Special Warrant as the absolute
legal and beneficial owner thereof for all purposes, free from all
equities or rights of set off or counterclaim between the Corporation and
any previous holder of such Special Warrant, save in respect of equities
of which the Corporation is required to take notice by statute or by order
of a court of competent jurisdiction, and neither the Corporation nor the
Special Warrant Agent is affected by any notice to the contrary.
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(i)
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Subject to the provisions of this Special Warrant
Indenture and Law, each Special Warrantholder is entitled to the rights
and privileges attaching to the Special Warrants, and the issue of the
Convertible Debentures by the Corporation on the deemed exercise of
Special Warrants in accordance with the terms and conditions herein
contained discharges all responsibilities of the Corporation and the
Special Warrant Agent with respect to such Special Warrants and neither
the Corporation nor the Special Warrant Agent is bound to inquire into the
title of any such registered holder.
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(j)
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A reasonable charge will be levied on a presenter of a
Special Warrant Certificate pursuant to this Special Warrant Indenture for
the transfer of any Special Warrant. Either the Special Warrantholder or
the Corporation will assume this charge.
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(k)
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Notwithstanding any other provision of this Section 2.5,
in connection with any transfer of Special Warrants, the transferor and
transferee shall comply with all reasonable requirements of the Special
Warrant Agent as the Special Warrant Agent may deem necessary to secure
the obligations of the transferee of such Special Warrants with respect to
such transfer.
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2.6
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Special Warrantholders Not
Shareholders
|
A Special
Warrantholder is not deemed or regarded as a shareholder of the Corporation nor
is such Special Warrantholder entitled to any right or interest except as is
expressly provided in this Special Warrant Indenture and on the Special Warrant
Certificates.
- 14 -
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2.7
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Signing of Special
Warrants
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For Special Warrants
issued in certificated form, the form of certificate representing the Special
Warrants shall be substantially as set out in Schedule “A” hereto or such other
form as is authorized from time to time by the Special Warrant Agent. Each
Special Warrant Certificate shall be Authenticated on behalf of the Warrant
Agent. Each Special Warrant Certificate shall be signed by any one director or
officer of the Corporation; whose signature shall appear on the Special Warrant
Certificate and may be printed, lithographed or otherwise mechanically
reproduced thereon and, in such event, certificates so signed are as valid and
binding upon the Corporation as if it had been signed manually. Any Special
Warrant Certificate which has been duly executed by the Corporation as
hereinbefore provided shall be valid notwithstanding that one or more of the
persons whose signature is printed, lithographed or mechanically reproduced no
longer hold office at the date of issuance of such Special Warrant Certificate.
The Special Warrant Certificates may be engraved, printed or lithographed, or
partly in one form and partly in another, as the Warrant Agent may determine.
The Special Warrant
Agent shall countersign Special Warrant Certificates and Authenticate
Uncertificated Special Warrants upon the written direction of the Corporation.
No Special Warrant Certificate shall be issued, or if issued, is valid or
exercisable or entitles the holder thereof to the benefits of this Special
Warrant Indenture until the Special Warrant Certificate has been countersigned
by the Special Warrant Agent or the Uncertificated Special Warrant has been
Authenticated by the Special Warrant Agent, as the case may be. The
countersignature or Authentication by or on behalf of the Special Warrant Agent
will be conclusive evidence as against the Corporation that the Special Warrant
Certificate so countersigned or Uncertificated Special Warrant so Authenticated
has been duly issued hereunder and that the holder is entitled to the benefit
hereof. The countersignature by or on behalf of the Special Warrant Agent on any
Special Warrant Certificate or the Authentication of any Uncertificated Special
Warrant by or on behalf of the Special Warrant Agent is not to be construed as a
representation or warranty by the Special Warrant Agent as to the validity of
this Special Warrant Indenture or of the Special Warrants or as to the
performance by the Corporation of its obligations under this Special Warrant
Indenture and the Special Warrant Agent is in no way liable or answerable for
the use made of the Special Warrants or the proceeds from the issuance thereof,
except as specified by this Special Warrant Indenture. The countersignature or
Authentication, as the case may be, by or on behalf of the Special Warrant Agent
is only a representation and warranty of the Special Warrant Agent that the
Special Warrant Certificate has been duly countersigned by or on behalf of the
Special Warrant Agent or the Uncertificated Special Warrant has been duly
Authenticated by or on behalf of the Special Warrant Agent pursuant to the
provisions of this Special Warrant Indenture.
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2.9
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Loss, Mutilation, Destruction or Theft of Special
Warrants
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In case any of the
Special Warrant Certificates issued and countersigned hereunder is mutilated or
lost, destroyed or stolen, the Corporation, in its discretion, may issue and
thereupon the Special Warrant Agent will countersign and deliver a new Special
Warrant Certificate of like date and tenor in exchange for and in place of the
one mutilated, lost, destroyed or stolen and upon surrender and cancellation of
such mutilated Special Warrant Certificate or in lieu of and in substitution for
such lost, destroyed or stolen Special Warrant Certificate and the substituted
Special Warrant Certificate entitles the holder thereof to the benefits hereof
and ranks equally in accordance with its terms with all other Special Warrants
issued hereunder.
The Special
Warrantholder applying for the issue of a new Special Warrant Certificate
pursuant to this Section shall bear the cost of the issue thereof and in case of
loss, destruction or theft shall, as a condition precedent to the issue thereof, furnish to the
Corporation and the Special Warrant Agent such evidence of ownership and of the
loss, destruction or theft of the Special Warrant Certificate so lost, destroyed
or stolen as is satisfactory to the Corporation and the Special Warrant Agent in
their discretion. The Corporation and the Special Warrant Agent may also, as a
condition precedent to issuing a new Special Warrant Certificate, require such
applicant to furnish an indemnity and surety bond in amount and form
satisfactory to the Corporation and Special Warrant Agent in their discretion,
and the applicant shall pay the reasonable charges of the Corporation and the
Special Warrant Agent in connection therewith.
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2.10
|
Exchange of Special
Warrants
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A Special
Warrantholder may at any time prior to the Deemed Exercise Time, by written
instruction delivered to the Special Warrant Agent at the office of the Special
Warrant Agent set forth in Section 8.1, exchange his Special Warrant
Certificates for Special Warrant Certificates evidencing Special Warrants in
other denominations entitling the Special Warrantholder to acquire in the
aggregate the same number of Convertible Debentures to which it was entitled to
acquire under the Special Warrant Certificates so surrendered, in which case the
Special Warrant Agent may make a charge sufficient to reimburse it for any
government fees or charges required to be paid and such reasonable fees as the
Special Warrant Agent may determine for every Special Warrant Certificate issued
upon exchange. The Special Warrantholder surrendering such Special Warrant
Certificate shall bear such fee and charge. Payment of the charges is a
condition precedent to the exchange of the Special Warrant Certificate. The
Corporation shall sign and the Special Warrant Agent shall countersign all
Special Warrant Certificates necessary to carry out exchanges as aforesaid.
Special Warrant
Certificates exchanged for Special Warrant Certificates that bear the legends
set forth in Section 4.6 shall bear the same legend.
All Special Warrants
will have the same attributes and rank
pari passu
regardless of the date
of actual issue.
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2.12
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Purchase of Special Warrants for
Cancellation
|
Subject to Law, the
Corporation may, at any time or from time to time, purchase all or any of the
Special Warrants in the market, by private contract or otherwise, on such terms
as the Corporation may determine. Any such purchase shall be made at the lowest
price or prices at which, in the opinion of the directors, such Special Warrants
are then obtainable plus reasonable costs of purchase. The Special Warrant
Certificates representing the Special Warrants purchased hereunder by the
Corporation shall, immediately following purchase, be delivered to and cancelled
by the Special Warrant Agent and no Special Warrants shall be issued in
substitution therefor. In the case of Uncertificated Warrants, the Special
Warrants purchased pursuant to this Section 2.12 shall be reflected accordingly
on the register of the Special Warrants and in accordance with procedures
prescribed by the Depository under the book entry registration system. No
Special Warrants shall be issued in replacement thereof.
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2.13
|
Cancellation of Surrendered Special
Warrants
|
All Special Warrants
Certificates surrendered pursuant to Article 4 shall be cancelled by the Special
Warrant Agent and upon such circumstances all such Uncertificated Warrants shall
be deemed cancelled and so noted on the register by the Special Warrant Agent.
- 16 -
ARTICLE 3
COVENANTS OF THE
CORPORATION
So long as any Special Warrants remain outstanding, the
Corporation represents, warrants, covenants and agrees with the Special Warrant
Agent for the benefit of the Special Warrant Agent and Special Warrantholders as
follows:
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3.1
|
To Issue Special Warrants and Create Convertible
Debentures
|
That it is duly
authorized to create, issue and sell the Special Warrants and that the Special
Warrant Certificates, when issued and countersigned by the Special Warrant
Agent, and each Uncertificated Special Warrant that has been Authenticated by
the Special Warrant Agent will be valid and enforceable against the Corporation
in accordance with their terms and the terms of this Special Warrant Indenture
and that the Corporation has authorized the creation for issuance and sale of
$115,000,000
aggregate principal amount of
Convertible Debentures,
being that aggregate principal amount of Convertible Debentures issuable upon
the deemed exercise of Special Warrants in accordance with the terms of this
Special Warrant Indenture.
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3.2
|
To Execute Further
Assurances
|
That it shall do,
execute, acknowledge and deliver or cause to be done, executed, acknowledged and
delivered, all other acts, deeds and assurances in law as may reasonably be
required for the better accomplishing and effecting of the intentions and
provisions of this Special Warrant Indenture.
That subject to the
express provisions hereof the Corporation or any Subsidiary of the Corporation
may cease to operate or may dispose of any business, premises, property, assets
or operation if in the opinion of the directors or officers of the Corporation
or any Subsidiary of the Corporation, as the case may be, it would be advisable
and in the best interests of the Corporation or any Subsidiary of the
Corporation, as the case may be, to do so, and, subject to the express
provisions hereof, it shall do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence, provided,
however, that nothing herein contained shall prevent any winding-up or
liquidation of the Corporation or any Subsidiary of the Corporation or the
abandonment of any rights and franchises of the Corporation or any Subsidiary of
the Corporation or any corporate reorganization, amalgamation, consolidation,
merger, sale, or take-over bid or other business combination from being
completed by the Corporation or any Subsidiary of the Corporation in accordance
with applicable corporate and securities laws (and none of which are presently
contemplated by the Corporation at the date hereof) if, in the opinion of the
directors or officers of the Corporation or any Subsidiary of the Corporation,
as the case may be, it is advisable and in the best interest of the Corporation
or of such Subsidiary of the Corporation to do so.
That the Corporation
is presently a reporting issuer in the Provinces of British Columbia, Alberta,
Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince
Edward Island and Newfoundland and Labrador, and will use its best efforts to
maintain its status in such jurisdictions and make all requisite filings under
applicable Canadian securities legislation and stock exchange rules to report
the exercise of the right to acquire Convertible Debentures pursuant to the
deemed exercise of the Special Warrants.
- 17 -
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3.5
|
No Breach of Constating
Documents
|
That the issue and
sale of the Special Warrants and the issue of the Convertible Debentures do not
or will not conflict with any of the terms, conditions or provisions of the
constating documents of the Corporation or the articles or resolutions of the
Corporation or any trust indenture, loan agreement or any other agreement or
instrument to which the Corporation or any Subsidiary of the Corporation is
contractually bound as of the date of this Special Warrant Indenture.
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3.6
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Filing Prospectus and Related
Matters
|
The Corporation
shall, in accordance with the terms of the Agency Agreement, use all reasonable
commercial efforts to file a Prospectus.
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3.7
|
Notices to Special Warrant
Agent
|
That upon completion
of the filing of the Prospectus as contemplated in Section 3.6, the Corporation
shall forthwith, and in any event not later than the first Business Day
thereafter give written notice to the Special Warrant Agent and the Agent of the
filing of the Prospectus and the date upon which the Special Warrants will be
deemed to be exercised (the “
Exercise Notice
”).
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3.8
|
Securities Qualification
Requirements
|
That, if any
instrument is required to be filed with or any permission, order or ruling is
required to be obtained from the Securities Regulators or any other step is
required under any federal or provincial law of the Designated Provinces before
any securities or property which a Special Warrantholder is entitled to receive
pursuant to the deemed exercise of a Special Warrant may properly and legally be
delivered upon the deemed exercise of a Special Warrant, the Corporation
covenants that it shall use its commercially reasonable efforts to make such
filing, obtain such permission, order or ruling and take all such action, at its
expense, as is required or appropriate in the circumstances.
That the Corporation
will use its commercially reasonable efforts to both maintain the listing of the
Shares which are outstanding on the TSX and ensure that, on the Qualification
Date, the Shares issuable on the due conversion of the Convertible Debentures
will be approved for listing and trading on the TSX.
That the Corporation
will comply with all covenants and satisfy all terms and conditions on its part
to be performed and satisfied under this Special Warrant Indenture and advise
the Special Warrant Agent and the Special Warrant holders promptly in writing of
any default under the terms of this Special Warrant Indenture.
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3.11
|
Performance of Covenants by Special Warrant
Agent
|
If the Corporation
shall fail to perform any of its covenants contained in this Special Warrant
Indenture and the Corporation has not rectified such failure within 10 Business
Days after receiving notice of such failure by the Special Warrant Agent, the
Special Warrant Agent may notify the Special Warrantholders of such failure on
the part of the Corporation or may itself perform any of the covenants capable
of being performed by it, but shall be under no obligation to perform said
covenants or to notify the Special Warrantholders of such performance by it. No such
performance, expenditure or advance by the Special Warrant Agent shall relieve
the Corporation of any default hereunder or of its continuing obligations under
the covenants herein contained.
- 18 -
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3.12
|
Special Warrant Agent’s Remuneration and
Expenses
|
The Corporation will
pay the Special Warrant Agent from time to time such reasonable remuneration for
its services hereunder as may be agreed upon between the Corporation and the
Special Warrant Agent and will pay or reimburse the Special Warrant Agent upon
its request for all reasonable expenses and disbursements and advances properly
incurred or made by the Special Warrant Agent in the administration or execution
of the trusts hereby created (including the reasonable compensation and
disbursements of its Counsel and all other advisers and assistants not regularly
in its employ), both before any default hereunder and thereafter until all
duties of the Special Warrant Agent hereunder shall be finally and fully
performed, except any such expense, disbursement, or advance as may arise from
the gross negligence, wilful misconduct or fraud of the Special Warrant Agent.
Any amount owing hereunder and remaining unpaid after 30 Business Days from the
invoice date will bear interest at the then current rate charged by the Special
Warrant Agent against unpaid invoices and shall be payable upon demand. This
Section shall survive the resignation of the Special Warrant Agent and/or the
termination of this Special Warrant Indenture.
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3.13
|
Trust for Special Warrantholders’
Benefit
|
The covenants of the
Corporation to the Special Warrant Agent provided for in this Special Warrant
Indenture shall be held in trust by the Special Warrant Agent for the benefit of
the Special Warrantholders.
|
3.14
|
Payment of Commissions
|
The Corporation will
not pay or give any commission or other remuneration within the meaning of
Section 3(a)(9) of the 1933 Act to any person, directly or indirectly, for
soliciting the exchange of the Special Warrants.
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3.15
|
Contractual Right of
Rescission
|
The Corporation
covenants with the Special Warrant Agent to provide a right of rescission to
each Special Warrantholder as hereinafter set forth, which right shall be
exercisable by a Special Warrantholder directly.
The Corporation has
agreed that in the event that a holder of a Special Warrant who acquires
Convertible Debentures upon deemed exercise of the Special Warrants is or
becomes entitled under applicable securities laws to the remedy of rescission by
reason of a misrepresentation in the Prospectus filed by the Corporation in
connection herewith or any amendment, qualifying the distribution of the
Convertible Debentures to be issued on the deemed exercise of the Special
Warrants in the Designated Provinces, such holder shall be entitled, subject to
available defences and any limitation period under applicable securities laws,
to rescission not only of the holder’s deemed exercise of its Special Warrants
but also of the private placement transaction pursuant to which the Special
Warrants were acquired (i.e. the Offering), and shall be entitled in connection
with such rescission to a full refund of all consideration paid to the
Corporation on the acquisition of the Special Warrants. In the event that such
holder is a permitted assignee of the interest of the original purchaser of the
Special Warrants, such permitted assignee shall be permitted to exercise the
rights of rescission and refund granted hereunder as if such permitted assignee
was such original purchaser. The foregoing right, which is extended by the Corporation in respect of the Special Warrants issued by the
Corporation pursuant to accepted subscriptions at the Closing Time, is in
addition to any other right or remedy available to a holder of Special Warrants
under applicable securities laws, or otherwise at law, and is subject to the
defences and limitations described under such securities laws.
- 19 -
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3.16
|
Cannabis Related
Covenant
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(a)
|
The Corporation, for so long as Special Warrants remain
outstanding, shall not conduct, directly or
indirectly:
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(i)
|
the business of the production, sale or distribution of
cannabis or products or materials based on or that include cannabis,
or
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(ii)
|
other commercial activities relating to the production,
sale or distribution of cannabis or products or materials based on or that
include cannabis,
|
other than the production, sale or
distribution of cannabis in Canada pursuant to one or more licences issued by
Health Canada, or such other regulatory agency as may be required, and in
accordance with applicable law, or in other jurisdictions in accordance with all
applicable laws of such jurisdictions, unless prior approval is obtained from
the Special Warrant Agent; and
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(b)
|
The Corporation and any subsidiary of the Corporation
shall not acquire or own, directly or indirectly, any assets, operations
or interests in Canada or in any other jurisdiction which acquisition or
ownership, or the operation of which, is contrary to any applicable law,
including the laws of the United States of
Americas.
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ARTICLE 4
DEEMED EXERCISE OF SPECIAL
WARRANTS
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4.1
|
Notice of Deemed Exercise to Special
Warrantholders
|
Upon receipt of
written notice from the Corporation in accordance with Section 3.7, the Special
Warrant Agent shall give written notice, in the form to be provided by the
Corporation to the Special Warrant Agent, to each holder of a Special Warrant
(in the form to be provided by the Corporation to the Special Warrant Agent)
concurrently with delivery of the certificates or other evidence of ownership
representing the Convertible Debentures in accordance with Section 4.2.
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4.2
|
Deemed Exercise of Special
Warrants
|
Special Warrants will
be deemed to have been exercised immediately prior to the Deemed Exercise Time
and surrendered by the Special Warrantholders without any further action on the
part of the Special Warrantholders. In that event, the Special Warrant Agent
shall, (i) in respect of the CDS Global Warrants, immediately deliver in
uncertificated form to the Depository through the book entry registration
system, the Convertible Debentures issued upon the deemed exercise of the
Special Warrants and the Corporation will direct the Depository to receive the
Convertible Debentures through the book entry only system; and (ii) in respect
of the Special Warrant Certificates, mail within three Business Days of the date
on which the Special Warrant is deemed to be exercised, one or more certificates
representing the Convertible Debentures issued upon the deemed exercise of the
Special Warrants, registered in the name of the Special Warrantholders, to the
addresses of the Special Warrantholders as specified in the register for the
Special Warrants or to such address as the Corporation or Special Warrantholder
may specify in writing to the Special Warrant Agent prior to the Deemed Exercise
Time.
- 20 -
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4.3
|
Effect of Exercise of Special
Warrants
|
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(a)
|
Subject to subsection (b), on the deemed exercise of a
Special Warrant, the Corporation shall cause to be issued to (i) in
respect of Special Warrants that are not CDS Global Warrants, the person
or persons in whose name or names the Convertible Debentures so subscribed
for are to be issued as specified in the Special Warrantholder’s
subscription agreement, or (ii) in respect of CDS Global Warrants, the
Depository, the number of Convertible Debentures to be issued to such
person or persons and such person or persons shall become a Convertible
Debentureholder of the Corporation in respect of the Convertible
Debentures with effect from the date on which the Special Warrant is
exercised and shall be entitled to delivery of certificates evidencing the
Convertible Debentures, and the Corporation shall cause the certificates,
or in the case of Convertible Debentures issued under the book entry
registration system, any other appropriate evidence of the issuance of
Convertible Debentures to be mailed by insured mail or delivered as
specified to such person or persons at the address or addresses specified
in the Special Warrantholder’s subscription agreement, as the case may be,
within three Business Days of the date on which the Special Warrant is
deemed to be exercised.
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(b)
|
Upon any deemed exercise of the Special Warrants and
issuance of Convertible Debentures, the registered holder of the
Convertible Debentures so issued is deemed to have received the notice
provided in Schedule “B” hereof.
|
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4.4
|
Special Warrants Void After Exercise
Time
|
After the deemed
exercise of a Special Warrant as provided in this Article 4, the holder of a
Special Warrant Certificate representing the Special Warrant so exercised no
longer has any rights either under this Special Warrant Indenture or the Special
Warrant Certificate, other than, the right to receive certificates or other
evidence of ownership as provided herein representing the Convertible Debentures
and the Special Warrant is void and of no value or effect.
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4.5
|
Accounting and Recording
|
The Special Warrant
Agent shall record the particulars of the Special Warrants exercised which
include the name or names and addresses of the persons who become holders of
Convertible Debentures on deemed exercise pursuant to this Article 4 and the
number of Convertible Debentures issued.
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4.6
|
Legending of Special
Warrants
|
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(a)
|
All Special Warrants and all securities issued in
exchange therefor or in substitution thereof prior to the earlier of the
Qualification Date and the date which is four months and one day following
the Closing Date (and all certificates issued in exchange therefor or in
substitution thereof, as applicable) will have the following legends
endorsed thereon:
|
“
UNLESS PERMITTED UNDER SECURITIES
LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE
MARCH 29, 2018.
”
and, if applicable in accordance with
the policies of the TSX:
- 21 -
“
WITHOUT PRIOR WRITTEN APPROVAL OF THE
TORONTO STOCK EXCHANGE AND COMPLIANCE WITH ALL APPLICABLE SECURITIES
LEGISLATION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF
THE TORONTO STOCK EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A
CANADIAN RESIDENT UNTIL MARCH 29, 2018.
”
The Special Warrant Agent shall be
entitled to request any other documents that it may require in accordance with
its internal policies of the removal of the legend set forth above.
Notwithstanding any other provisions of this Agreement, in
processing and registering transfers of Special Warrants, no duty or
responsibility whatsoever shall rest upon the Special Warrant Agent to determine
the compliance by any transferor or transferee with the terms of the legend
contained in this subsection 4.6, or with the relevant securities laws or
regulations, and the Special Warrant Agent shall be entitled to assume that all
transfers are legal and proper.
ARTICLE 5
MEETINGS OF SPECIAL
WARRANTHOLDERS
In this Article 5 or otherwise in this
Special Warrant Indenture:
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(a)
|
“
Adjourned Meeting
” means a meeting adjourned in
accordance with Section 5.8;
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(b)
|
“
Extraordinary Resolution
” means a resolution
proposed to be passed as an extraordinary resolution at a Meeting duly
convened for that purpose and held in accordance with the provisions of
this Article 5, and carried by not less than 66 2/3% of the votes cast on
such resolution; and
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(c)
|
“
Meeting
” means a meeting of the Special
Warrantholders in respect of any resolution including an Extraordinary
Resolution.
|
The Special Warrant
Agent or the Corporation may convene a Meeting at any time at the expense of the
Corporation. Upon receipt of a written requisition signed in one or more
counterparts by Special Warrantholders holding not less than 25% of the
aggregate number of the then outstanding Special Warrants, the Special Warrant
Agent or the Corporation shall convene a Meeting, provided that, in the case of
the Special Warrant Agent, it has been indemnified and funded to its reasonable
satisfaction by the Corporation or the Special Warrantholders for the costs of
convening and holding a Meeting. If the Special Warrant Agent or the Corporation
fails to convene the Meeting within 15 Business Days after being duly
requisitioned to do so and indemnified and funded as aforesaid, the Special
Warrantholders holding not less than 25% of the aggregate number of the then
outstanding Special Warrants may themselves convene a Meeting, the notice for
which must be signed by a person that those Special Warrantholders specify,
provided that the Special Warrant Agent and Corporation receive notice of the
Meeting in accordance with Section 5.4. A written requisition must state,
generally, the reason for the Meeting and business to be transacted at the
Meeting.
- 22 -
Every Meeting must be
held in Vancouver, British Columbia or at such other place that the Special
Warrant Agent and Corporation approve, at a location specified by the
Corporation.
The Special Warrant
Agent or the Corporation, as the case may be, shall give written notice of each
Meeting to each Special Warrantholder, the Special Warrant Agent (unless the
Meeting has been called by the Special Warrant Agent) and the Corporation
(unless the Meeting has been called by the Corporation) in the manner specified
in Article 8 at least 10 calendar days before the date of the Meeting. The
Special Warrant Agent shall give written notice of each Adjourned Meeting to
each Special Warrantholder in the manner specified in Article 8 at least seven
calendar days before the date of the Adjourned Meeting. The notice for a Meeting
must state the time and place of the Meeting and, generally, the reason for the
Meeting and the business to be transacted at the Meeting, together with such
additional information as may be required to sufficiently inform the Special
Warrantholders regarding the business to be transacted at the Meeting. The
notice for an Adjourned Meeting must state the time and place of the Adjourned
Meeting but need not specify the business to be transacted at an Adjourned
Meeting. The accidental omission by the Special Warrant Agent or the
Corporation, as the case may be, to give notice of a Meeting or an Adjourned
Meeting to a Special Warrantholder does not invalidate a resolution passed at a
Meeting or Adjourned Meeting.
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5.5
|
Persons Entitled to Attend
|
The Corporation may
and the Special Warrant Agent shall, each by its authorized representatives
including directors, officers, employees, and agents, attend every Meeting and
Adjourned Meeting but neither the Corporation nor the Special Warrant Agent has
the right to vote unless they are acting in their capacity as a Special
Warrantholder or a proxy for a Special Warrantholder. The legal advisors of the
Corporation, the Special Warrant Agent, and any Special Warrantholders,
respectively, may also attend a Meeting or Adjourned Meeting but do not have the
right to vote, unless they have the right to vote as a Special Warrantholder.
Subject to the
provisions of Section 5.18, a quorum for a Meeting shall consist of two or more
persons present in person and owning or representing by proxy, not less than 25%
of the aggregate number of the then outstanding Special Warrants.
The Special Warrant
Agent shall nominate a natural person as the chairman of a Meeting or Adjourned
Meeting. If the person so nominated is not present within 15 minutes after the
time set for holding the Meeting or Adjourned Meeting, the Special
Warrantholders present in person or represented by proxy shall choose one of
their number to be chairman. The chairman may vote any Special Warrants for
which he or she is the registered holder.
The chairman of any
Meeting at which a quorum of the Special Warrantholders is present may, with the
consent of the Meeting, adjourn any such meeting. Notice of such adjournment
will be given in accordance with Section 5.4 with such other requirements, if
any, as the Meeting may prescribe.
- 23 -
If a quorum of the
Special Warrantholders shall not be present within 30 minutes from the time
fixed for holding any Meeting, the Meeting, if summoned by the Special
Warrantholders or on a Special Warrantholders’ request, shall be dissolved; but
in any other case the Meeting shall be adjourned to the same day in the next
week (unless such day is not a Business Day, in which case it shall be adjourned
to the next following Business Day) at a place determined in accordance with
Section 5.3, and at a time specified by the chairman and no notice of the
adjournment need be given. Any business may be brought before or dealt with at
an Adjourned Meeting which might have been dealt with at the original Meeting in
accordance with the notice calling the same. No business shall be transacted at
any Meeting unless a quorum is present at the commencement of the Meeting. At
the Adjourned Meeting the Special Warrantholders present in person or
represented by proxy shall form a quorum and may transact the business for which
the Meeting was originally convened, notwithstanding that they may not hold at
least 25% of the aggregate number of the then outstanding Special Warrants.
Subject to a poll and
except as otherwise required herein, every question submitted to a Meeting or
Adjourned Meeting, except an Extraordinary Resolution, shall be decided, in the
first instance, by the majority of votes in a show of hands. If the vote is
tied, the chairman does not have a casting vote and the motion will not be
carried. On a show of hands, each Special Warrantholder present in person or
represented by proxy and entitled to vote is entitled to one vote for every
Special Warrant then outstanding of which such Special Warrantholder is the
registered owner.
When requested by a
Special Warrantholder acting in person or by the proxy representing the Special
Warrantholder and holding in the aggregate at least 5% of the aggregate number
of the then outstanding Special Warrants, and on every Extraordinary Resolution,
the chairman of a Meeting or Adjourned Meeting shall request a poll on a
question submitted to the Meeting. Except as otherwise required herein, if a
question has been put to a poll, that question shall be decided by the
affirmative vote of not less than a majority of the votes given on the poll. If
the vote is tied, the motion shall not be carried. On a poll, each Special
Warrantholder or person representing a Special Warrantholder by proxy shall be
entitled to one vote for every Special Warrant of which he is the registered
holder or of which the person being represented by proxy is the registered
holder, as the case may be. A declaration made by the chairman that a resolution
has been carried or lost is conclusive evidence thereof. In the case of joint
registered Special Warrantholders, any one of them present in person or
represented by proxy may vote in the absence of the other or others but when
more than one of them is present in person or by proxy, they may only vote
together in respect of the Special Warrants of which they are joint registered
holders.
Subject to the
provisions of this Special Warrant Indenture, the Special Warrant Agent, or the
Corporation with the approval of the Special Warrant Agent, may from time to
time make and, thereafter, vary regulations not contrary to the provisions of
this Special Warrant Indenture as it deems fit providing for setting a record
date for a Meeting for determining Special Warrantholders entitled to receive
notice of and vote at a Meeting.
A regulation so made
is binding and effective and votes given in accordance with such a regulation
shall be valid and counted. The Special Warrant Agent may permit Special Warrantholders to make proof of ownership in the manner the
Special Warrant Agent approves.
- 24 -
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5.13
|
Powers of Special
Warrantholders
|
By Extraordinary Resolution passed pursuant to this Article 5, the
Special Warrantholders may:
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(a)
|
agree to any modification, abrogation, alteration,
compromise, or arrangement of the rights of the Special Warrantholders
whether arising under this Special Warrant Indenture, or otherwise at law,
including the rights of the Special Warrant Agent in its capacity as agent
hereunder, subject to the consent of the Special Warrant Agent, or on
behalf of the Special Warrantholders against the Corporation, which has
been agreed to by the Corporation;
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(b)
|
direct and authorize the Special Warrant Agent to
exercise any power, right, remedy or authority given to it by or under
this Special Warrant Indenture in the manner specified in such resolution
or to refrain from exercising any such power, right, remedy, or
authority;
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(c)
|
direct the Special Warrant Agent to enforce any covenant
or obligation on the part of the Corporation contained in this Special
Warrant Indenture or to waive any default by the Corporation in compliance
with any provision of this Special Warrant Indenture either
unconditionally or upon any conditions specified in such
resolution;
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(d)
|
assent to any change in or omission from the provisions
contained in this Special Warrant Indenture or the Special Warrant
Certificates or any ancillary or supplemental instrument which is agreed
to by the Corporation, and to authorize the Special Warrant Agent to
concur in and execute any ancillary or supplemental indenture embodying
the change or omission;
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(e)
|
without limiting the generality of Sections 5.13(a) and
(c), assent to an extension of time thereunder;
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(f)
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with the consent of the Corporation, remove the Special
Warrant Agent or its successor in office and to appoint a new registrar
and agent to take the place of the Special Warrant Agent so
removed;
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(g)
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upon the Special Warrant Agent being furnished with
funding and an indemnity that is, in its discretion, sufficient, require
the Special Warrant Agent to enforce any covenant of the Corporation
contained in this Special Warrant Indenture or the Special Warrant
Certificates, or to enforce any right of the Special Warrantholders in any
manner specified in such Extraordinary Resolution, or to refrain from
enforcing any such covenant or right;
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(h)
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restrain any Special Warrantholder from instituting or
continuing any suit or proceeding against the Corporation for the
enforcement of a covenant on the part of the Corporation contained in this
Special Warrant Indenture or any of the rights conferred upon the Special
Warrantholders as set out in this Special Warrant Indenture or the Special
Warrant Certificates;
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(i)
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direct a Special Warrantholder who, as such, has brought
a suit, action or proceeding to stay or discontinue or otherwise deal with
the same upon payment of the costs, charges, and expenses reasonably and properly incurred by such Special
Warrantholder in connection therewith;
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- 25 -
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(j)
|
subject to subsection 10.4 of this Special Warrant
Indenture, waive and direct the Special Warrant Agent to waive a default
by the Corporation in complying with any of the provisions of this Special
Warrant Indenture or the Special Warrant Certificate either
unconditionally or upon any conditions specified in such Extraordinary
Resolution;
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(k)
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assent to a compromise or arrangement with a creditor or
creditors or a class or classes of creditors, whether secured or
otherwise, and with holders of any shares or other securities of the
Corporation; or
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(l)
|
amend, alter, or repeal any Extraordinary Resolution
previously passed pursuant to this Section
5.13.
|
Any one or more of
the powers or any combination of the powers in this Special Warrant Indenture
stated to be exercised by the Special Warrantholders by Extraordinary Resolution
or otherwise may be exercised from time to time and the exercise of any one or
more of such powers or any combination of powers from time to time shall not be
deemed to exhaust the right of the Special Warrantholder to exercise such power
or combination of powers then or thereafter from time to time.
The Special Warrant
Agent shall make and maintain minutes and records of all resolutions and
proceedings at a Meeting or Adjourned Meeting at the expense of the Corporation
and shall make available those minutes and records at the office of the Special
Warrant Agent for inspection by a Special Warrantholder or his authorized
representative and the Agent at reasonable times. If signed by the chairman of
the Meeting or by the chairman of the next succeeding Meeting, such minutes
shall be prima facie evidence of the matters therein stated and, until the
contrary is proved, every such Meeting in respect of which minutes shall have
been made shall be deemed to have been duly convened and held, and all the
resolutions passed thereat or proceedings taken shall be deemed to have been
duly passed and taken.
Notwithstanding the
foregoing, a written resolution or instrument signed in one or more counterparts
by the Special Warrantholders holding not less than a majority of the Special
Warrants outstanding in the case of an ordinary resolution, or not less than
66•% of the Special Warrants outstanding in the case of an Extraordinary
Resolution, is deemed to be the same as, and to have the same force and effect
as, an ordinary resolution or Extraordinary Resolution, as the case may be, duly
passed at a Meeting or Adjourned Meeting.
A resolution of the
Special Warrantholders passed pursuant to this Article 5 is binding upon all
Special Warrantholders. Upon the passing of a Special Warrantholders’ resolution
at a meeting of the Special Warrantholders, or upon the signing of a written
resolution or instrument pursuant to Section 5.16 and delivery by the
Corporation to the Special Warrant Agent of an original, certified or notarial
copy, or copies, of such resolution as executed or passed by the Special
Warrantholders, the Special Warrant Agent is entitled to and shall give effect
thereto.
- 26 -
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5.18
|
Holdings by the Corporation or Subsidiaries of the
Corporation Disregarded
|
In determining
whether Special Warrantholders are present at a Meeting for the purpose of
determining a quorum or have concurred in any consent, waiver, resolution,
Extraordinary Resolution or other action under this Special Warrant Indenture,
Special Warrants owned legally or beneficially by the Corporation or any
Subsidiary of the Corporation shall be disregarded. The Corporation will provide
the Special Warrant Agent with, upon request, a certificate of the Corporation
detailing their holdings and those of their subsidiaries and the various
registrations.
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5.19
|
Corporation, Special Warrant Agent and Agent May be
Represented
|
The Corporation, the
Special Warrant Agent and the Agent, by their respective directors, officers and
employees and Counsel to the Corporation, the Special Warrant Agent and the
Agent, may attend any Meeting, but shall have no vote as such unless they are
acting in their capacity as a Special Warrantholder or a proxy for a Special
Warrantholder.
ARTICLE 6
SUPPLEMENTAL INDENTURES, MERGER,
SUCCESSORS
|
6.1
|
Provision for Supplemental Indentures for Certain
Purposes
|
From time to time the
Corporation shall, when authorized by the directors of the Corporation, and the
Special Warrant Agent may, subject to the provisions of this Special Warrant
Indenture, execute and deliver by their proper officers, deeds, indentures or
instruments supplemental hereto, which thereafter form part hereof for any one
or more or all of the following purposes:
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(a)
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adding to the provisions hereof such additional
covenants, enforcement provisions, and release provisions (if any) as in
the opinion of Counsel acceptable to the Corporation and the Special
Warrant Agent are necessary or advisable, provided the same are not, in
the opinion of the Special Warrant Agent, relying on the opinion of
Counsel, prejudicial to the interests of the Special
Warrantholders;
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(b)
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adding to the covenants of the Corporation in this
Special Warrant Indenture for the protection of the Special
Warrantholders;
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(c)
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evidencing any succession (or successive successions) of
other companies to the Corporation and the covenants of, and obligations
assumed by, such successor (or successors) in accordance with the
provisions of this Special Warrant Indenture;
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(d)
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making such provisions not inconsistent with this Special
Warrant Indenture as may be deemed necessary or desirable with respect to
matters or questions arising hereunder, provided that such provisions are
not, in the opinion of the Special Warrant Agent, relying on the opinion
of Counsel, prejudicial to the interests of the Special
Warrantholders;
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(e)
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giving effect to an Extraordinary
Resolution;
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- 27 -
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(f)
|
rectifying any ambiguity, defective provision, clerical
omission or mistake or manifest or other error contained herein or in any
deed or indenture supplemental or ancillary hereto provided that, in the
opinion of the Special Warrant Agent, relying on the opinion of Counsel,
the rights of the Special Warrantholders are not prejudiced thereby and
provided that the Special Warrant Agent may in its discretion decline to
enter into any such supplemental indenture which in its opinion, relying
on the opinion of Counsel, may not afford adequate protection to the
Special Warrant Agent when the same will become operative;
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(g)
|
adding to or altering the provisions hereof in respect of
the transfer of Special Warrants, making provision for the exchange of
Special Warrant Certificates of different denominations, and making any
modification in the form of the Special Warrant Certificate which does not
affect the substance thereof;
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(h)
|
for any other purpose not inconsistent with the
provisions of this Special Warrant Indenture, provided that, in the
opinion of the Special Warrant Agent, relying on the opinion of Counsel,
the rights of the Special Warrant Agent, acting on the advice of Counsel,
and the Special Warrantholders are in no way prejudiced thereby;
or
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(i)
|
providing for the issuance of additional Special Warrants
hereunder and any consequential amendments hereto as may be required by
the Special Warrant Agent, provided the same are not prejudicial to the
interests of the Special Warrantholders, based on the opinion of
Counsel.
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6.2
|
Corporation May Consolidate, etc. on Certain
Terms
|
Subject to Section
3.16, nothing in this Special Warrant Indenture prevents any consolidation,
amalgamation, arrangement or merger of the Corporation with or into any other
body corporate or bodies corporate, or a conveyance or transfer of all or
substantially all the properties and assets of the Corporation as an entirety to
any body corporate lawfully entitled to acquire and operate the same, provided,
however, that the body corporate formed by such consolidation, amalgamation,
arrangement or into which such merger has been made, or which has acquired by
conveyance or transfer all or substantially all the properties and assets of the
Corporation as an entirety in circumstances resulting in the Special
Warrantholders being entitled to receive property from or securities of such
body corporate, shall execute prior to or contemporaneously with such
consolidation, amalgamation, arrangement, merger, conveyance or transfer, an
indenture supplemental hereto wherein the due and punctual performance and
observance of all the covenants and conditions of this Special Warrant Indenture
to be performed or observed by the Corporation are assumed by the successor body
corporate. The Special Warrant Agent is entitled to receive and is fully
protected in relying upon an opinion of Counsel that any such consolidation,
amalgamation, arrangement, merger, conveyance or transfer, and a supplemental
indenture executed in connection therewith, complies with the provisions of this
Section.
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6.3
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Successor Body Corporate
Substituted
|
Where the
Corporation, pursuant to Section 6.2 hereof, is consolidated, amalgamated,
arranged or merged with or into any other body corporate or bodies corporate or
conveys or transfers all of substantially all of the properties and assets of
the Corporation as an entirety to another body corporate, the successor body
corporate formed by such consolidation, amalgamation, arrangement or into which
the Corporation has been merged or which has received a conveyance or transfer
as aforesaid succeeds to and is substituted for the Corporation hereunder with
the same effect as nearly as may be possible as if it had been named herein. Such changes may be made in the Special
Warrants as may be appropriate in view of such consolidation, amalgamation,
arrangement, merger, conveyance or transfer.
- 28 -
ARTICLE 7
CONCERNING THE SPECIAL WARRANT
AGENT
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7.1
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Duties of Special Warrant
Agent
|
By way of supplement
to the provisions of any statute for the time being relating to trustees, and
notwithstanding any other provision of this Special Warrant Indenture, in the
exercise of the rights, duties and obligations prescribed or conferred by the
terms of this Special Warrant Indenture, the Special Warrant Agent shall act
honestly and in good faith with a view to the best interests of the Special
Warrantholders and shall exercise that degree of care, diligence and skill that
a reasonably prudent trustee would exercise in comparable circumstances. No
provision of this Special Warrant Indenture shall be construed to relieve the
Special Warrant Agent from, or require any other person to indemnify the Special
Warrant Agent against, any liability for its own gross negligence, wilful
misconduct or fraud.
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7.2
|
Action by Special Warrant
Agent
|
The Special Warrant
Agent is not obligated to do any act or thing except where required to do so by
this Special Warrant Indenture and, in the case of a default, only when it has
actual notice thereof.
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7.3
|
Certificate of the
Corporation
|
If, in the
administration of the trusts of this Special Warrant Indenture, the Special
Warrant Agent deems it necessary or desirable that any matter be proved or
established by the Corporation, prior to taking or suffering any action
hereunder, the Special Warrant Agent may accept, act, and rely upon, and shall
be protected in accepting, acting, and relying upon, a certificate of the
Corporation as conclusive evidence of the truth of any fact relating to the
Corporation or its assets therein stated and proof of the regularity of any
proceedings or actions associated therewith, but the Special Warrant Agent may
in its discretion require further evidence or information before acting or
relying on any such certificate. In addition to the reports, certificates,
opinions, and other evidence required by this Special Warrant Indenture, the
Corporation shall furnish to the Special Warrant Agent such additional evidence
of compliance with any provision hereof, and in such form as may be prescribed
by Law, under Section 7.6, or as the Special Warrant Agent may reasonably
require by written notice to the Corporation. Whenever Law requires that
evidence referred to in this Section 7.3 be in the form of a statutory
declaration, the Special Warrant Agent may accept such statutory declaration in
lieu of a certificate of the Corporation required by any provision hereof. Any
such statutory declaration may be made by any one or more of the Chairman of the
Board, Chief Executive Officer, General Counsel, or Chief Financial Officer of
the Corporation or by any other officer or director of the Corporation to whom
such authority is delegated by the directors from time to time.
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7.4
|
Special Warrant Agent May Employ
Experts
|
The Special Warrant
Agent may, at the Corporation’s expense, employ or retain such lawyers,
accountants, engineers, appraisers or other experts, advisers or agents as it
may reasonably require for the purpose of determining and discharging its duties
hereunder and may pay reasonable remuneration for such services rendered to it
but it is not responsible for any misconduct, negligence, mistake or error of
judgment on the part of any of them. The Corporation shall reimburse the Special
Warrant Agent for all disbursements, costs and expenses made or incurred by the
Special Warrant Agent in the discharge of its duties and in the management of
the trusts hereunder. The Special Warrant Agent may rely upon and act upon, and shall be protected from relying and acting upon, the
opinion or advice of, or information obtained from, any such lawyer, accountant,
engineer, appraiser or other expert, adviser or agent in relation to any matter
arising in the administration of the trusts hereof. The Special Warrant Agent
shall not incur any liability for the acts or omissions of such lawyers,
accountants, engineers, appraisers or other experts, advisers or agents employed
by the Special Warrant Agent in good faith.
- 29 -
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7.5
|
Resignation and Replacement of Special Warrant
Agent
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(a)
|
The Special Warrant Agent may resign its trust and be
discharged from all further obligations hereunder by giving to the
Corporation and the Special Warrantholders written notice at least 60
calendar days, or such shorter time period if acceptable to the Special
Warrant Agent, the Corporation and the Special Warrantholders, before the
effective date of the resignation. If the Special Warrant Agent resigns,
or becomes incapable of acting hereunder, the Corporation shall forthwith
appoint in writing a new trustee, unless a new Special Warrant Agent has
already been appointed by the Special Warrantholders.
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(b)
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Failing such appointment by the Corporation or by the
Special Warrantholders by Extraordinary Resolution, the retiring Special
Warrant Agent, at the expense of the Corporation, or any Special
Warrantholder may apply to a Judge of the Supreme Court of British
Columbia on such notice as such Judge may direct, for the appointment of a
new trustee. The Special Warrantholders may, by Extraordinary Resolution,
remove the Special Warrant Agent (including a trustee appointed by the
Corporation or by a Judge as aforesaid) and appoint a new
trustee.
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(c)
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Any new Special Warrant Agent appointed under the
provisions of this Section 7.5 shall be a corporation authorized to carry
on the business of a trust company in the Province of British Columbia
and, if required by Law of any other province, in such other
province.
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(d)
|
On any new appointment, the new Special Warrant Agent is
vested with the same powers, rights, duties and obligations as if it had
been originally named as Special Warrant Agent without any further
assurance, conveyance, act or deed; but there will be immediately
executed, at the expense of the Corporation, all such conveyances or other
instruments as may, in the opinion of Counsel, be necessary or advisable
for the purpose of assuring such powers, rights, duties, and
responsibilities of the new Special Warrant Agent, provided that, any
resignation or removal of the Special Warrant Agent and appointment of the
successor Special Warrant Agent shall have executed an appropriate
instrument accepting such appointment and, at the request of the
Corporation, the predecessor Special Warrant Agent, upon payment of its
outstanding remuneration and expenses, shall execute and deliver to the
successor Special Warrant Agent an appropriate instrument transferring to
such successor Special Warrant Agent all rights and powers of the Special
Warrant Agent hereunder.
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(e)
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On the appointment of a new Special Warrant Agent, the
Corporation will promptly give notice thereof to the Special
Warrantholders.
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(f)
|
Any Special Warrant Certificates certified but not
delivered by a predecessor Special Warrant Agent may be certified by the
successor Special Warrant Agent in the name of the predecessor or
successor Special Warrant Agent.
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- 30 -
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(g)
|
Any corporation into which the Special Warrant Agent may
be merged or consolidated or amalgamated, or any corporation resulting
therefrom to which the Special Warrant Agent shall be a party, or any
corporation succeeding to substantially the corporate trust business of
the Special Warrant Agent shall be the successor to the Special Warrant
Agent hereunder without any further act on its part or any of the parties
hereto, provided that such corporation would be eligible for appointment
as successor Special Warrant Agent.
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7.6
|
Indenture Legislation
|
The Corporation and
the Special Warrant Agent agree that each shall at all times in relation to this
Special Warrant Indenture and to any action to be taken hereunder, observe and
comply with and be entitled to the benefits of all Law. If and to the extent
that any provision of this Special Warrant Indenture limits, qualifies or
conflicts with any mandatory requirement of Law, such mandatory requirement
prevails.
The Special Warrant
Agent shall not be bound to give any notice or do or take any act, action, or
proceeding by virtue of the powers conferred on it hereby unless and until it
shall have required so to do under the terms hereof; nor shall the Special
Warrant Agent be required to take notice of any default hereunder, unless and
until notified in writing of such default, which notice shall distinctly specify
the default desired to be brought to the attention of the Special Warrant Agent
and in the absence of any such notice the Special Warrant Agent may for all
purposes of this Special Warrant Indenture conclusively assume that no default
has been made in the observance or performance of any of the representations,
warranties, covenants, agreements, or conditions contained herein. Any such
notice will in no way limit any discretion herein given the Special Warrant
Agent to determine whether or not the Special Warrant Agent will take action
with respect to any default. The Special Warrant Agent shall not be bound to
give notice to any person of execution hereof.
The Special Warrant
Agent is in no way responsible for the use by the Corporation of the proceeds of
the issue hereunder.
In the exercise of
any right or duty hereunder the Special Warrant Agent, if it is acting in good
faith, may act and rely, as to the truth of any statement or the accuracy of any
opinion expressed therein, on any statutory declaration, opinion, report,
certificate or other evidence furnished to the Special Warrant Agent pursuant to
a provision hereof or of Law or pursuant to a request of the Special Warrant
Agent, if such evidence complies with Law and the Special Warrant Agent examines
such evidence and determines that it complies with the applicable requirements
of this Special Warrant Indenture. The Special Warrant Agent may nevertheless,
in its discretion, require further proof in cases where it deems further proof
desirable. Proof of execution of any document or instrument in writing by a
holder may be made by the certificate of a notary public, or other officer with
similar powers, that the person signing such instrument acknowledged to him the
execution thereof, or by an affidavit of a witness to such execution, or in any
other manner the Special Warrant Agent considers adequate. The Special Warrant
Agent is not bound to make any inquiry or investigation as to the performance by
the Corporation of the Corporation’s covenants hereunder.
- 31 -
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7.10
|
Actions by Special Warrant Agent to Protect
Interest
|
The Special Warrant
Agent shall have the power to institute and to maintain such actions and
proceedings as it may consider necessary or expedient to preserve, protect or
enforce its interests and the interests of the Special Warrantholders.
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7.11
|
Special Warrant Agent Not Required to Give
Security
|
The Special Warrant
Agent is not required to give any bonds or security with respect to the
execution or administration of the trusts and powers of this Special Warrant
Indenture.
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7.12
|
Special Warrant Agent Not Ordinarily
Bound
|
No provision of this
Special Warrant Indenture shall require the Special Warrant Agent (and its
officers, directors, employees and agents) to expend or risk its (or their) own
funds or otherwise incur financial liability in the performance of any of its
(or their) duties or in the exercise of any of its (or their) rights or powers
unless it is (or they are) so indemnified and funded. The obligation of the
Special Warrant Agent to commence or continue any act, action or proceeding for
the purpose of enforcing any rights of the Special Warrantholders hereunder, is
conditional upon Special Warrantholders furnishing, when required in writing so
to do by the Special Warrant Agent, an indemnity reasonably satisfactory to the
Special Warrant Agent and funds sufficient for commencing or continuing the act,
action or proceeding and an indemnity reasonably satisfactory to the Special
Warrant Agent to protect and hold harmless the Special Warrant Agent against any
costs, charges, expenses, loss, damage or liability by reason thereof. The
Special Warrant Agent may, before commencing or at any time during the
continuance of any such act, action, or proceeding, require the Special
Warrantholders at whose instance it is acting to deposit with the Special
Warrant Agent the Special Warrants held by them, for which Special Warrants the
Special Warrant Agent shall issue receipts.
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7.13
|
Special Warrant Agent May Deal in
Instruments
|
The Special Warrant
Agent may in its personal or other capacity, buy, sell, lend upon and deal in
and hold securities of the Corporation and in the Special Warrants and generally
contract and enter into financial transactions with the Corporation or
otherwise, without being liable to account for any profits made thereby.
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7.14
|
Recitals or Statements of Fact Made by
Corporation
|
Except for the
representations contained in Sections
Error! Reference source not found.
subject to the provisions hereof, the Special Warrant Agent is not liable for or
by reason of any of the statements of fact or recitals contained in this Special
Warrant Indenture or in the Special Warrant Certificates and is not required to
verify the same, but all such statements and recitals are and are deemed to have
been made by the Corporation only.
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7.15
|
Special Warrant Agent’s Discretion
Absolute
|
The Special Warrant
Agent, except as herein otherwise provided, has, as regards all the trusts,
powers, authorities and discretions vested in it, absolute discretion as to the
exercise thereof, whether in relation to the manner or as to the mode and time
for the exercise thereof.
- 32 -
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7.16
|
No Representations as to
Validity
|
The Special Warrant
Agent is not:
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(a)
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under any responsibility in respect of the validity of
this Special Warrant Indenture or the execution and delivery thereof or
(subject to Section 2.4(a) and Section 2.8 hereof) in respect of the
validity or the execution of any Special Warrant Certificate;
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(b)
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under any obligation to see to, or to require evidence
of, the registration or filing (or renewal thereof) of this Special
Warrant Indenture or any instrument ancillary or supplemental
hereto;
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(c)
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responsible for any breach by the Corporation of any
covenant or condition contained in this Special Warrant Indenture or in
any Special Warrant Certificate and will not incur any liability or
responsibility whatever or be in any way responsible for the consequences
of any breach by the Corporation of any obligation herein contained or of
any act of any director, officer, employee, or agent of the Corporation;
or
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(d)
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by any act hereunder, deemed to make any representation
or warranty as to the authorization or reservation of any securities to be
issued as provided in this Special Warrant Indenture or in any Special
Warrant Certificate or as to whether any shares will when issued be duly
authorized or be validly issued and fully paid and non-assessable. The
duty and responsibility as to all the matters and things referred to in
this Section 7.16 rests upon the Corporation and not upon the Special
Warrant Agent and the failure of the Corporation to discharge any such
duty and responsibility does not in any way render the Special Warrant
Agent liable or place upon it any duty or responsibility for breach of
which it would be liable.
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7.17
|
Acceptance of Trusts
|
The Special Warrant
Agent hereby accepts the trusts of this Special Warrant Indenture and agrees to
perform the same upon the terms and conditions herein set forth or referred to
unless and until discharged therefrom by resignation or in some other lawful
way.
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7.18
|
Special Warrant Agent’s Authority to Carry on
Business
|
The Special Warrant
Agent represents to the Corporation that at the date hereof it is authorized to
carry on the business of a trust company in the Province of British Columbia.
If, notwithstanding the provisions of this Section 7.18, it ceases to be
authorized to carry on such business in British Columbia, the validity and
enforceability of this Special Warrant Indenture and of the Special Warrants
issued hereunder are not affected in any manner whatsoever by reason only of
such event, provided that the Special Warrant Agent shall, within 30 calendar
days after ceasing to be authorized to carry on such business in British
Columbia, either become so authorized or resign in the manner and with the
effect specified in Section 7.5.
|
7.19
|
Indemnification of Special Warrant
Agent
|
Without limiting any
protection or indemnity of the Special Warrant Agent under any other provision
hereof, or otherwise at law, the Corporation hereby agrees to indemnify and hold
harmless the Special Warrant Agent and its affiliates, their successors,
assigns, and each of their directors, officers, employees and agents (the
“
Indemnified Parties
”) and save them harmless from and against any and
all liabilities, losses, damages, penalties, claims, actions,
suits, costs, charges, payments, expenses and disbursements, including
reasonable legal or advisor fees and disbursements, of whatever kind and nature
which may at any time be imposed on, incurred by or asserted against the
Indemnified Parties in connection with the performance of its duties and
obligations hereunder, other than such liabilities, losses, damages, penalties,
claims, actions, suits, costs, charges, payments, expenses and other
disbursements arising by reason of the gross negligence, wilful misconduct or
fraud of the Special Warrant Agent. This provision shall survive the resignation
or removal of the Special Warrant Agent, or the termination of this Special
Warrant Indenture. In the absence of gross negligence, wilful misconduct, or
fraud on its part, the Special Warrant Agent will not be liable for any action
taken, suffered, or omitted by it or for any error of judgment made by it in
performance of its duties under this Special Warrant Indenture. Notwithstanding
any other provision of this Agreement, and whether such losses or damages are
foreseeable or unforeseeable, the Special Warrant Agent shall not be liable
under any circumstances whatsoever for any (a) breach by any other party of
securities law or other rule of any securities regulatory authority, (b) lost
profits or (c) special, indirect, incidental, consequential, exemplary,
aggravated or punitive losses or damages. The Special Warrant Agent shall not be
under any obligation to prosecute or to defend any action or suit in respect of
the relationship which, in the opinion of its Counsel, may involve it in expense
or liability, unless the Corporation shall, so often as required, furnish the
Special Warrant Agent with satisfactory indemnity and funding against such
expense or liability.
- 33 -
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7.20
|
Performance of Covenants by Special Warrant
Agent
|
If the Corporation
fails to perform any of its covenants contained in this Special Warrant
Indenture, then the Corporation will notify the Special Warrant Agent in writing
of such failure and, upon receipt by the Special Warrant Agent of such notice,
the Special Warrant Agent will notify the Special Warrantholders of such failure
on the part of the Corporation and may itself perform any of the said covenants
capable of being performed by it, but shall be under no obligation to perform
said covenants or to notify the Special Warrantholders of such performance by
it. All sums expended or disbursed by the Special Warrant Agent in so doing
shall be reimbursed as provided in Section 3.12. No such performance,
expenditure or disbursement by the Special Warrant Agent shall be deemed to
relieve the Corporation of any default hereunder or of its continuing
obligations under the covenants herein contained.
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7.21
|
Third Party Interests
|
Each party to this
Special Warrant Indenture hereby represents to the Special Warrant Agent that
any account to be opened by, or interest to held by the Special Warrant Agent in
connection with this Special Warrant Indenture, for or to the credit of such
party, either (i) is not intended to be used by or on behalf of any third party;
or (ii) is intended to be used by or on behalf of a third party, in which case
such party hereto agrees to complete and execute forthwith a declaration in the
Special Warrant Agent’s prescribed form as to the particulars of such third
party.
The Special Warrant
Agent shall retain the right not to act and shall not be liable for refusing to
act if, due to a lack of information or for any other reason whatsoever, the
Special Warrant Agent, in its sole judgment, determines that such act might
cause it to be in non-compliance with any applicable anti-money laundering,
anti-terrorist legislation, or economic sanctions legislation, regulation or
guideline. Further, should the Special Warrant Agent, in its sole judgment,
determine at any time that its acting under this Special Warrant Indenture has
resulted in its being in non- compliance with any applicable anti-money
laundering, anti-terrorist legislation, or economic sanctions legislation,
regulation or guideline, then it shall have the right to resign on 10 calendar
days’ written notice to the Corporation, provided (i) that the Special Warrant
Agent’s written notice shall describe the circumstances of such non-compliance; and (ii) that if such circumstances are rectified
to the Special Warrant Agent’s satisfaction within such 10-day period, then such
resignation shall not be effective.
- 34 -
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7.23
|
Not Appointed Receiver
|
The Special Warrant
Agent and any person related to the Special Warrant Agent will not be appointed
a receiver or receiver and manager or liquidator of all or any part of the
assets or undertaking of the Corporation.
ARTICLE 8
NOTICES
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8.1
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Notice to Corporation, Special Warrant Agent and
Agent
|
Any notice to the
Corporation, Special Warrant Agent or Agent under the provisions of this Special
Warrant Indenture is valid and effective if in writing delivered, sent by
registered letter, postage prepaid or sent by facsimile:
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(a)
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to the Corporation at:
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11500-1199 West Hastings Street
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Vancouver, British Columbia V6E 3T5
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Email: terry@auroramj.com
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Attention: Terry Booth, Chief Executive Officer
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with a copy to:
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McMillan LLP
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1500-1055 West Georgian Street
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Vancouver, British Columbia
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Email: Barbara.collins@mcmillan.ca
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Facsimile: (604) 685-7084
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Attention: Barbara Collins
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(b)
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to the Special Warrant Agent at:
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Computershare Trust Company of Canada
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510 Burrard Street, 3
rd
Floor
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Vancouver, British Columbia, V6C 3B9
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Email:
corporatetrust.vancouver@computershare.com
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Attention: General Manager, Corporate
Trust
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(c)
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to the Agent at (which shall not constitute
notice):
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Canaccord Genuity Corp.
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161 Bay Street, Suite 3000
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Toronto, Ontario M5J 2S1
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- 35 -
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Email: swinokur@canaccordgenuity.com
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Facsimile: (416) 869-3876
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Attention: Steve Winokur
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with a copy (which shall not constitute notice)
to:
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DLA Piper (Canada) LLP
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Suite 6000, 1 First Canadian Place
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P.O. Box 376, 100 King Street West
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Toronto, ON M5X 1E2
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Email: Robert.fonn@dlapiper.com
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Attention: Robert Fonn
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Any notice, direction
or other instrument aforesaid will, if delivered, be deemed to have been given
and received on the day it was delivered and, if mailed, be deemed to have been
received on the third Business Day following the date of the postmark on such
notice and, if sent by facsimile or electronic transmission, be deemed to have
been given and received on the day it was so sent unless it was sent:
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(d)
|
on a day which is not a business day in the place to
which it was sent; or
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(e)
|
after 4:30 p.m. in the place to which it was
sent,
|
in which cases it will be deemed to have been given and
received on the next day which is a business day in the place to which it was
sent.
The Corporation or
the Special Warrant Agent, as the case may be, may from time to time notify the
other in the manner provided in this Section 8.1 of a change of address which,
from the effective date of such notice and until changed by like notice, shall
be the address of the Corporation or the Special Warrant Agent, as the case may
be, for all purposes of this Special Warrant Indenture.
If, by reason of a
strike, lockout or other work stoppage, actual or threatened, involving postal
employees, any notice to be given to the Special Warrant Agent or to the
Corporation hereunder could reasonably be considered unlikely to reach its
destination, such notice shall be valid and effective only if it is delivered to
the named officer of the party to which it is addressed or, if it is delivered
to such party at the appropriate address provided in this Section 8.1, by
facsimile or electronic transmission or other means of prepaid, transmitted and
recorded communication.
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8.2
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Notice to Special
Warrantholders
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Any notice to the
Special Warrantholders under the provisions of this Special Warrant Indenture is
valid and effective if delivered, sent by regular mail or sent by courier, to
each Special Warrantholder at its address appearing on the register of Special
Warrants kept by the Special Warrant Agent or, in the case of joint holders, to
the first such address, and, if delivered or couriered, shall be deemed to have
been given and received on the day it was delivered and, if mailed, be deemed to
have been received on the third Business Day following the date of the postmark
on such notice. Accidental error or omission in giving notice or accidental
failure to mail notice to any holder will not invalidate any action or
proceeding founded thereon. All notices may be given to whichever one of the
Special Warrantholders (if more than one) is named first in the appropriate
register hereinbefore mentioned, and any notice so given shall be sufficient notice to all Special Warrantholders of and any
other persons (if any) interested in such Special Warrants.
- 36 -
If, by reason of any
interruption of mail service, actual or threatened, any notice to be given to
the Special Warrantholders by the Special Warrant Agent or the Corporation would
be unlikely to reach its destination in the ordinary course of mail, such notice
shall be valid and effective only if published once (i) in the national edition
of The Globe & Mail newspaper; and (ii) in such other place or places and
manner, if any, as the Special Warrant Agent may require. Any notice given to
Special Warrantholders by publication shall be deemed to have been given on the
last day on which publication shall have been effected.
A copy of any notice
provided to the Special Warrantholders shall be concurrently provided to the
Agent in the manner specified in Section 8.1.
ARTICLE 9
POWER OF BOARD OF
DIRECTORS
In this Special
Warrant Indenture, where the Corporation is required or empowered to exercise
any acts, all such acts may be exercised by the directors of the Corporation, by
any duly appointed committee of the directors of the Corporation or by those
officers of the Corporation authorized to exercise such acts.
ARTICLE 10
MISCELLANEOUS PROVISIONS
The parties covenant
and agree from time to time, as may be reasonably required by any party hereto,
to execute and deliver such further and other documents and do all matters and
things which are convenient or necessary to carry out the intention of this
Special Warrant Indenture more effectively and completely.
If any term, covenant
or condition of this Special Warrant Indenture or the application thereof to any
party or circumstance is invalid or unenforceable to any extent, the remainder
of this Special Warrant Indenture or application of such term, covenant or
condition to a party or circumstance other than those to which it is held
invalid or unenforceable is not affected thereby and each remaining term,
covenant or condition of this Special Warrant Indenture is valid and enforceable
to the fullest extent permitted by law.
No consent or waiver,
express or implied, by either party to or of any breach or default by the other
party in the performance by the other party of its obligations hereunder is
deemed or construed to be a consent or waiver to or of any other breach or
default in the performance of obligations hereunder by such party. Failure on
the part of either party to complain of any act or failure to act by the other
party or to declare the other party in default, irrespective of how long such
failure continues, does not constitute a waiver by such party of its rights
hereunder.
- 37 -
Notwithstanding
Section 10.3 above, upon the happening of any default hereunder:
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(a)
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the holders of not less than 50% of the Special Warrants
plus one Special Warrant then outstanding shall have power (in addition to
the powers exercisable by Extraordinary Resolution created under Article
5) by requisition in writing to instruct the Special Warrant Agent to
waive any default hereunder and the Special Warrant Agent shall thereupon
waive the default upon such terms and conditions as shall be prescribed in
such requisition; or
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(b)
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the Special Warrant Agent shall have power to waive any
default hereunder upon such terms and conditions as the Special Warrant
Agent may deem advisable, if, in the Special Warrant Agent’s opinion,
relying on the opinion of Counsel, the same shall have been cured or
adequate provision made therefor;
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provided that no delay or omission of the Special Warrant Agent
or of the Special Warrantholders to exercise any right or power accruing upon
any default shall impair any such right or power or shall be construed to be a
waiver of any such default or acquiescence therein and provided further that no
act or omission either of the Special Warrant Agent or of the Special
Warrantholders shall extend to or be taken in any manner whatsoever to affect
any subsequent default hereunder of the rights resulting therefrom.
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10.5
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Immunity of Shareholders
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Subject to the
contractual right of action given by the Corporation to the Special
Warrantholders in the subscription agreements between the Corporation and the
purchasers of the Special Warrants, given in Section 3.15 herein and to be
contained in the Prospectus, and subject to any other rights or remedies
available to the Special Warrantholders under applicable securities legislation
or otherwise, the Special Warrant Agent and, by the acceptance of the Special
Warrant Certificate or other evidence of ownership in the case of Uncertificated
Special Warrants and as part of the consideration for the issue of the Special
Warrants, the Special Warrantholders hereby waive and release any right, cause
of action or remedy now or hereafter existing in any jurisdiction against any
incorporator or any past, present or future shareholder, director, officer,
employee or agent of the Corporation or of any successor corporation on any
covenant, agreement, representation or warranty by the Corporation contained
herein or in the Special Warrant Certificates.
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10.6
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Limitation of Liability
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The obligations
hereunder are not personally binding upon, nor shall resort hereunder be had to,
the private property of any of the past, present or future directors or
shareholders of the Corporation or of any successor corporation or any of the
past, present or future officers, employees or agents of the Corporation or of
any successor corporation, but only the property of the Corporation or of any
successor corporation shall be bound in respect hereof.
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10.7
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Suits by Special
Warrantholders
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(a)
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No Special Warrantholder has any right to institute any
action, suit or proceeding at law or in equity for the purpose of
enforcing the execution of any trust or power hereunder or for the
appointment of a liquidator or receiver or for a receiving order under the
Bankruptcy and Insolvency Act
(Canada) or to have the Corporation
wound up or to file or prove a claim in any liquidation or bankruptcy
proceedings or for any other remedy hereunder unless the Special Warrantholders by Extraordinary
Resolution have made a request to the Special Warrant Agent and the Special
Warrant Agent has been afforded reasonable opportunity to proceed or complete
any action or suit for any such purpose whether or not in its own name and the
Special Warrantholders or any of them have furnished to the Special Warrant
Agent, when so requested by the Special Warrant Agent, sufficient funds and
security and indemnity satisfactory to it against the costs, expenses and
liabilities to be incurred therein or thereby and the Special Warrant Agent has
failed to act within a reasonable time or the Special Warrant Agent has failed
to actively pursue any such act or proceeding.
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- 38 -
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(b)
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Subject to the provisions of this Section and otherwise
in this Special Warrant Indenture, all or any of the rights conferred upon
a Special Warrantholder by the terms of a Special Warrant may be enforced
by such Special Warrantholder by appropriate legal proceedings without
prejudice to the right which is hereby conferred upon the Special Warrant
Agent to proceed in its own name to enforce each and all of the provisions
herein contained for the benefit of the Special Warrantholders from time
to time.
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Except for the
payment obligations of the Corporation contained herein, neither party shall be
liable to the other, or held in breach of this Special Warrant Indenture, if
prevented, hindered, or delayed in the performance or observance of any
provision contained herein by reason of act of God, riots, terrorism, acts of
war, epidemics, governmental action or judicial order, earthquakes, or any other
similar causes (including, but not limited to, mechanical, electronic or
communication interruptions, disruptions or failures). Performance times under
this Special Warrant Indenture shall be extended for a period of time equivalent
to the time lost because of any delay that is excusable under this Section.
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10.9
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U.S. Securities and Exchange Commission
Certification
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The Corporation
confirms that as at the date of execution of this Agreement it does not have a
class of securities registered pursuant to Section 12 of the
United States
Securities and Exchange Act of 1934
, as amended (the “
Act
”) or have a
reporting obligation pursuant to Section 15(d) of the Act.
The Corporation
covenants that in the event that (i) any class of its securities shall become
registered pursuant to Section 12 of the Act or Corporation shall incur a
reporting obligation pursuant to Section 15(d) of the Act, or (ii) any such
registration or reporting obligation shall be terminated by the Corporation in
accordance with the Act, the Corporation shall promptly deliver to the Special
Warrant Agent an officers’ certificate (in a form provided by the Special
Warrant Agent notifying the Special Warrant Agent of such registration or
termination and such other information as the Special Warrant Agent may require
at the time. The Corporation acknowledges that the Special Warrant Agent is
relying upon the foregoing representation and covenants in order to meet certain
United States Securities and Exchange Commission (“
SEC
”) obligations with
respect to those clients who are filing with the SEC.
The parties
acknowledge that the Special Warrant Agent may, in the course of providing
services hereunder, collect or receive financial and other personal information
about such parties and/or their representatives, as individuals, or about other
individuals related to the subject matter hereof, and use such information for
the following purposes:
- 39 -
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(a)
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to provide the services required under this Agreement and
other services that may be requested from time to time;
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(b)
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to help the Special Warrant Agent manage its servicing
relationships with such individuals;
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(c)
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to meet the Special Warrant Agent’s legal and regulatory
requirements; and
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(d)
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if Social Insurance Numbers are collected by the Special
Warrant Agent, to perform tax reporting and to assist in verification of
an individual’s identity for security purposes.
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Each party
acknowledges and agrees that the Special Warrant Agent may receive, collect, use
and disclose personal information provided to it or acquired by it in the course
of this Agreement for the purposes described above and, generally, in the manner
and on the terms described in its Privacy Code, which the Special Warrant Agent
shall make available on its website, www.computershare.com, or upon request,
including revisions thereto. The Special Warrant Agent may transfer personal
information to other companies in or outside of Canada that provide data
processing and storage or other support in order to facilitate the services it
provides.
Further, each party
agrees that it shall not provide or cause to be provided to the Special Warrant
Agent any personal information relating to an individual who is not a party to
this Agreement unless that party has assured itself that such individual
understands and has consented to the aforementioned uses and disclosures.
This Special Warrant
Indenture enures to the benefit of and is binding upon the parties hereto and
their respective successors and assigns and may not be assigned by either party
hereto without the consent in writing of the other party, such consent not to be
unreasonably withheld.
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10.12
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Counterparts and Formal
Date
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This Special Warrant
Indenture may be executed in several counterparts, each of which when so
executed shall be deemed to be an original and such counterparts together shall
constitute one and the same instrument and notwithstanding their date of
execution shall be deemed to be dated as of the Closing Date.
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10.13
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Satisfaction and Discharge of Special Warrant
Indenture
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Upon the earlier of:
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(a)
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the date by which there shall have been delivered to the
Special Warrant Agent for exercise, cancellation or destruction all
Special Warrants certified hereunder; or
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(b)
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the Deemed Exercise Date;
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and if all certificates required to be issued in compliance
with the provisions hereof have been issued and delivered hereunder, this
Special Warrant Indenture (except for any indemnities given to the Special
Warrant Agent) shall cease to be of further effect and the Special Warrant
Agent, on demand of and at the cost and expense of the Corporation and upon
delivery to the Special Warrant Agent of a certificate of the Corporation
stating that all conditions precedent to the satisfaction and discharge of this
Special Warrant Indenture have been complied with, and upon payment to the
Special Warrant Agent of the fees and other remuneration payable to the Special
Warrant Agent, the Special Warrant Agent shall execute proper instruments
acknowledging satisfaction of and discharging this Special Warrant Indenture.
Notwithstanding the foregoing, the indemnities provided to the Special Warrant
Agent by the Corporation hereunder shall remain in full force and effect and
survive the termination of this Special Warrant Indenture.
- 40 -
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10.14
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Provisions of Special Warrant Indenture and Special
Warrants for the Sole Benefit of Parties and Special
Warrantholders
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Nothing in this
Special Warrant Indenture or the Special Warrants, expressed or implied, shall
give or be construed to give to any person other than the parties hereto and the
holders from time to time of the Special Warrants any legal or equitable right,
remedy or claim under this Special Warrant Indenture, or under any covenant or
provision therein contained, all such covenants and provisions being for the
sole benefit of the parties hereto and the Special Warrantholders.
Each of the parties
hereto, including the Corporation, subject to Law, shall do or cause to be done
all such acts and things and execute such further documents, agreements and
assurances as may reasonably be necessary or advisable from time to time to
carry out the provisions of this Special Warrant Indenture in accordance with
their true intent.
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10.16
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Formal Date and Effective
Date
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For the purpose of
convenience, this Special Warrant Indenture is referred to as bearing the formal
date of November 28, 2017; however, notwithstanding such formal date, this
Special Warrant Indenture becomes effective as between the Corporation and any
particular Special Warrantholder upon the date of issuance of a Special Warrant
Certificate to such Special Warrantholder.
[Remainder of page intentionally left blank. Signature
page follows.]
- 41 -
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AURORA CANNABIS INC.
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Per:
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(signed) Glen Ibbott
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Authorized Signatory
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COMPUTERSHARE TRUST
COMPANY
OF
CANADA
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Per:
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(signed) Jennifer Wong
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Authorized Signatory
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Per:
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(signed) Jill Dunn
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Authorized Signatory
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(Signature Page – Special Warrant Indenture)
SCHEDULE "A"
FORM OF SPECIAL WARRANT CERTIFICATE
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF
THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE MARCH 29, 2018.
[IF APPLICABLE]
WITHOUT PRIOR WRITTEN APPROVAL
OF THE TORONTO STOCK EXCHANGE AND COMPLIANCE WITH ALL APPLICABLE SECURITIES
LEGISLATION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF
THE TORONTO STOCK EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A
CANADIAN RESIDENT UNTIL MARCH 29, 2018.
[Note: Each CDS Global Warrant originally issued in Canada
and held by the Depository, and each CDS Global Warrant issued in exchange
therefor or in substitution thereof shall bear or be deemed to bear the
following legend or such variations thereof as the Corporation may prescribe
from time to time:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF CDS CLEARING AND DEPOSITORY SERVICES INC.
(
“
CDS
”
) TO AURORA CANNABIS INC. (THE
“
ISSUER
”
) OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME OF CDS, OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS (AND ANY PAYMENT IS
MADE TO CDS OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF CDS), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED HOLDER HEREOF,
CDS, HAS A PROPERTY INTEREST IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HEREIN AND IT IS A VIOLATION OF ITS RIGHTS FOR ANOTHER PERSON TO HOLD, TRANSFER
OR DEAL WITH THIS CERTIFICATE.]
A-1
SPECIAL WARRANT CERTIFICATE
AURORA CANNABIS INC.
(a corporation existing under
the laws of British Columbia)
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No.
CUSIP NO:
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«Number» SPECIAL WARRANTS entitling the holder to
acquire $1,000 principal amount of Convertible Debentures for each Special
Warrant
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THIS IS TO CERTIFY
that, for
value received, «Name» (the “
Special Warrantholder
”) is the registered
holder of the number of special warrants (the “
Special Warrants
”) stated
above and for each Special Warrant held is entitled to acquire in the manner and
at the time, and subject to the restrictions contained in the Special Warrant
Indenture (as defined below) $1,000 principal amount of 6.0% senior unsecured
convertible debentures (the “
Convertible Debentures
”) of Aurora Cannabis
Inc. (the “
Corporation
”), all without payment of any consideration.
The Special Warrants
represented by this certificate are issued under and pursuant to a certain
indenture (the “
Special Warrant
Indenture
”) made as of November
28, 2017 between the Corporation and Computershare Trust Company of Canada (the
“
Special Warrant Agent
”) (which expression includes any successor trustee
appointed under the Special Warrant Indenture), to which Special Warrant
Indenture and any instruments supplemental thereto reference is hereby made for
a full description of the rights of the holders of the Special Warrants and the
terms and conditions upon which such Special Warrants are, or are to be, issued
and held, all to the same effect as if the provisions of the Special Warrant
Indenture and all instruments supplemental thereto were herein set forth, to all
of which provisions the holder of these Special Warrants by acceptance hereof
assents. All terms defined in the Special Warrant Indenture are used herein as
so defined. In the event of any conflict or inconsistency between the provisions
of the Special Warrant Indenture and the provisions of this Special Warrant
Certificate, except those that are necessary by context, the provisions of the
Special Warrant Indenture shall prevail. The Corporation will furnish to the
holder of this Special Warrant Certificate, upon request and without charge, a
copy of the Special Warrant Indenture.
The Special Warrants
represented by this Special Warrant Certificate will be deemed to be
automatically exercised at 5:00 p.m. (Toronto time) on the earlier of:
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(a)
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the third Business Day after the Qualification
Date;
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(b)
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March 29, 2018, being the date that is four months and
one day following the Closing Date;
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(the “
Deemed
Exercise Time
”).
Special Warrants will be deemed to
have been exercised, delivered and surrendered by the holder thereof immediately
prior to the Deemed Exercise Time without any further action on the part of the
holder.
The Convertible
Debentures in respect of which the Special Warrants are exercised will be deemed
to have been issued on the date of such exercise, at which time each Special
Warrantholder will be deemed to have become the holder of record of such
Convertible Debentures.
A-2
After the deemed
exercise of Special Warrants, the Special Warrant Agent shall within three
Business Days of such deemed exercise cause to be mailed or delivered to each
Special Warrantholder at its address specified in the register for the Special
Warrants maintained by the Special Warrant Agent or to such address as the
Corporation or Special Warrantholder may specify in writing to the Special
Warrant Agent prior to the deemed exercise of such Special Warrants,
certificates for the appropriate number of Convertible Debentures issuable in
respect of such Special Warrants, not exceeding those which such Special
Warrantholder is entitled to acquire pursuant to the Special Warrants so
exercised.
The holder of this
Special Warrant Certificate may at any time up to the Deemed Exercise Time, upon
written instruction delivered to the Special Warrant Agent and payment of the
charges provided for in the Special Warrant Indenture and otherwise in
accordance with the provisions of the Special Warrant Indenture, exchange this
Special Warrant Certificate for other Special Warrant Certificates evidencing
Special Warrants entitling the holder to acquire in the aggregate the same
number of Convertible Debentures as may be acquired under this Special Warrant
Certificate.
The holding of the
Special Warrants evidenced by this Special Warrant Certificate does not
constitute the Special Warrantholder a shareholder of the Corporation or entitle
such holder to any right or interest in respect thereof except as expressly
provided herein and in the Special Warrant Indenture.
The Special Warrants
may only be transferred by the Special Warrantholder (or its legal
representatives or its attorney duly appointed), on the register kept at the
office of the Special Warrant Agent, in accordance with applicable laws and upon
compliance with the conditions set out in the Special Warrant Indenture, by
delivering to the Special Warrant Agent’s Vancouver office a duly executed Form
of Transfer attached as Appendix “1” hereto and complying with such other
reasonable requirements as the Corporation and the Special Warrant Agent may
prescribe and such transfer shall be duly noted on the register by the Special
Warrant Agent.
This Special Warrant
Certificate shall be construed in accordance with the laws of the Province of
British Columbia and the laws of Canada applicable therein and shall be treated
in all respects as a British Columbia contract.
After the deemed
exercise of any of the Special Warrants represented by this Special Warrant
Certificate, the Special Warrantholder shall no longer have any rights under
either the Special Warrant Indenture or this Special Warrant Certificate with
respect to such Special Warrants, other than the right to receive certificates
representing the Convertible Debentures issuable on the exercise of those
Special Warrants, and those Special Warrants shall be void and of no further
value or effect.
The Special Warrant
Indenture contains provisions making binding upon all Special Warrantholders
resolutions passed at meetings of such holders in accordance with such
provisions or by instruments in writing signed by the Special Warrantholders
holding a specified percentage of the Special Warrants.
Time shall be of the
essence hereof.
A-3
IN WITNESS WHEREOF
the
Corporation has caused this Special Warrant Certificate to be executed and the
Special Warrant Agent has caused this Special Warrant Certificate to be
countersigned by its duly authorized officers as of this _____dayof
________________, 2017.
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AURORA CANNABIS INC.
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Per:
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Authorized Signatory
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COUNTERSIGNED BY:
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COMPUTERSHARE TRUST COMPANY OF
CANADA
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Per:
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Authorized Signatory
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A-4
APPENDIX “1”
SPECIAL WARRANT CERTIFICATE - FORM
OF TRANSFER
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TO:
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AURORA CANNABIS INC. (the “Corporation”)
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AND TO:
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COMPUTERSHARE TRUST COMPANY OF CANADA
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FOR VALUE RECEIVED
, the undersigned hereby sells,
assigns and transfers unto (name) _________________(the “
Transferee
”), of
___________________________________(residential address) _____________Special
Warrants of the Corporation registered in the name of the undersigned on the
records of Computershare Trust Company of Canada represented by the attached
certificate, and irrevocably appoints • as the attorney of the undersigned to
transfer the said securities on the books or register of transfer, with full
power of substitution.
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Signature Guaranteed
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(Signature of Special Warrantholder, to
be the same as appears on the face of this Special Warrant Certificate)
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Name of Special Warrantholder:
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Address (
Please print
):
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REASON FOR TRANSFER – For US Residents only (where the
individual(s) or corporation
receiving the securities is a
US resident). Please select only one (see instructions below).
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[ ] Gift
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[ ] Estate
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[ ] Private Sale
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[ ] Other (or no change
in ownership)
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Date of Event
(Date of gift, death or sale):
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Value per Special Warrant
on the date of
event:
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Note to Special Warrantholders:
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(1)
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In order to transfer the Special Warrants represented by
this Special Warrant Certificate, this transfer form must be delivered to
the Special Warrant Agent, together with this Special Warrant
Certificate.
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(2)
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The signature(s) must be guaranteed by a Medallion
Signature Guarantee obtained from a member of an acceptable Medallion
Signature Guarantee Program (STAMP, SEMP, NYSE MSP). Many commercial
banks, savings banks, credit unions, and all broker dealers participate
in a Medallion Signature Guarantee Program. The Guarantor must
affix a stamp bearing the actual words “Medallion Guaranteed”, with the correct
prefix covering the face value of the certificate.
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A-5
REASON FOR TRANSFER – FOR US RESIDENTS ONLY
Consistent with US IRS regulations, Computershare is required
to request cost basis information from US security holders. Please indicate the
reason for requesting the transfer as well as the date of event relating to the
reason. The event date is not the day in which the transfer is finalized, but
rather the date of the event which led to the transfer request (i.e. date of
gift, date of death of the securityholder, or the date the private sale took
place).
A-6
SCHEDULE "B"
NOTICE
Reference is made to the Special Warrant Indenture (the
“
Special Warrant
Indenture
”) dated November 28, 2017 between
Aurora Cannabis Inc. (the “
Corporation
”) and Computershare Trust Company
of Canada, as Special Warrant Agent. All capitalized terms not used but not
defined herein shall have the meaning ascribed thereto in the Special Warrant
Indenture. The Corporation, a corporation existing under the federal laws of
Canada, hereby gives notice to the registered holder of the Convertible
Debentures issued upon deemed exercise of Special Warrants in accordance with
the terms of the Special Warrant Indenture of the following:
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(a)
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the Convertible Debentures so issued upon the deemed
exercise of the Special Warrants have been issued to (i) in respect of
Special Warrants that are not CDS Global Warrants, the person or persons
in whose name or names the Convertible Debentures so subscribed for are to
be issued as specified in the subscription agreement, or (ii) in respect
of CDS Global Warrants, the Depository;
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(b)
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the number of Convertible Debentures issued is equal to
the number of Convertible Debentures issuable, in accordance with the
terms of the Special Warrant Indenture, per Special Warrant deemed
exercised; and
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(c)
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the Corporation will furnish to the registered holder of
such Convertible Debenture, on demand and without charge, a full copy of
the text of:
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(1)
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the rights, privileges, restrictions and conditions
attached to the Convertible Debentures; and
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(2)
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the authority of the directors to fix the rights,
privileges, restrictions and conditions of subsequent series, if
applicable.
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Per:
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Authorized Signatory
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B-1
Aurora Cannabis Increases Ownership Interest in Radient
Technologies
Funds to be Used for Expansion of Radient Facility and
Operations
TSX: ACB
TSX-V: RTI
VANCOUVER and EDMONTON, Dec. 4, 2017 /CNW/ - Aurora Cannabis
Inc. ("Aurora") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) and
Radient Technologies Inc. ("Radient) (TSX-V: RTI) today announced that further
to the investor rights agreement between both companies, as announced on
November 6, 2017, Aurora will make a further investment in Radient for a total
of $12 million.
The strategic investment is structured as follows:
|
|
•
|
Exercise of all 15,856,321 common share purchase warrants
of Radient currently held by Aurora for total proceeds of $5.8 million
|
|
|
•
|
Investment through a private placement (the `Placement`)
in units consisting of one common share of Radient and one common share
purchase warrant. Units are priced at $1.37. Each warrant gives Aurora the
right to purchase one common share of Radient for $1.71 for a period of 24
months following closing of the placement. Aurora will be purchasing
4,541,889 units for total proceeds of $6.2 million.
|
The placement is subject to the receipt of all necessary
approvals, including the approval of the TSX Venture Exchange. All securities
issued in connection with the Offering are subject to a statutory four-month
hold period. Upon completion of the investment, Aurora will have increased its
position in Radient from 8.8% to 19.18% on an undiluted basis (15.87% on a
diluted basis).
Radient intends to use the proceeds from the financing to
accelerate plant capacity expansion and increased throughput at its Edmonton
facility, the purchase of land adjacent to this facility for further expansion,
including preparations for the broadening range of extraction-based cannabis
products that are expected to be permitted under the new Cannabis Act, as well
as for working capital purposes.
"With multiple Aurora facilities coming online and ramping up
production in the coming quarters, as well as the anticipated export of cannabis
oils and preparations for the legalization of adult consumer use in Canada,
Radient's planned expansion positions both companies exceptionally well to
accelerate revenue growth," said Terry Booth, CEO of Aurora. "This investment
reflects our strategy to build a constellation of vertically integrated partners
and subsidiaries, and we look forward to jointly pursuing further expansion of
market share in this exiting space."
Denis Taschuk, CEO of Radient, added, "This investment by
Aurora, our cornerstone customer and investor, enables us to more rapidly reach
capacity, yield, and throughput levels that will meet Aurora's needs, including
the potentially large opportunity presented by CBD from hemp. With this
investment, Radient will be well-positioned to become the leader in its segment
of the cannabis supply chain, while further strengthening a relationship that
has been very beneficial in terms of market recognition, operational expansion
and shareholder value creation."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). Aurora operates a
55,200 square foot, state-of-the-art production facility in Mountain View
County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport, as well as is completing a fourth facility in Lachute,
Quebec through its wholly owned subsidiary Aurora Larssen Projects Ltd.
In addition to Aurora's investment in Radient, Aurora is in the
process of completing an investment in Edmonton-based Hempco Food and Fiber for
an ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone
investor with a 19.9% stake in Cann Group Limited, the first Australian company
licensed to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
About Radient
Radient extracts natural compounds from a range of biological
materials using microwave assisted processing ("MAP™"), a patented technology
platform which provides superior customer outcomes in terms of ingredient
purity, yield, and cost. From its 20,000 square foot manufacturing plant in
Edmonton, Alberta, Radient serves market leaders in industries that include
cannabis, pharmaceutical, food, beverage, natural health, personal care and
biofuel markets. Visit www.radientinc.com for more information.
|
On behalf of the Board of Directors,
|
On behalf of the Board of Directors
|
|
AURORA CANNABIS INC.
|
RADIENT TECHNOLOGIES INC.
|
|
|
|
|
Terry Booth
|
Denis Taschuk
|
|
CEO
|
President and CEO
|
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"), including, but not limited to, statements with
respect to the investment in Radient by Aurora and the use of the proceeds
thereof by Radient. Forward-looking statements are frequently characterized by
words such as "plan", "continue", "expect", "project", "intend", "believe",
"anticipate", "estimate", "may", "will", "potential", "proposed" and other
similar words, or statements that certain events or conditions "may" or "will"
occur. These statements are only predictions. Various assumptions were used in
drawing the conclusions or making the projections contained in the
forward-looking statements throughout this news release. Forward-looking
statements are based on the opinions and estimates of management at the date the
statements are made, and are subject to a variety of risks and uncertainties and
other factors that could cause actual events or results to differ materially
from those projected in the forward-looking statements. Neither Aurora nor
Radient is under any obligation, and each expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX or TSX-V nor their Regulation Services Provider
(as that term is defined in the policies of Toronto Stock Exchange and TSX
venture Exchange) accept responsibility for the adequacy or accuracy of this
release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/December2017/04/c5093.html
%SEDAR: 00025675E
For further information:
For Aurora: Cam Battley,
Executive Vice President, +1.905.864.5525, cam@auroramj.com, www.auroramj.com;
Marc Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.269.5523, marc.lakmaaker@auroramj.com; For Radient: Denis Taschuk,
President and CEO, dtaschuk@radientinc.com, 780-465-1318; Prakash Hariharan,
Chief Financial Officer, phariharhan@radientinc.com, 780-465-1318
CO: Aurora Cannabis Inc.
CNW 06:30e 04-DEC-17
Aurora Cannabis Increases Ownership Interest in Radient
Technologies
Funds to be Used for Expansion of Radient Facility and
Operations
TSX: ACB
TSX-V: RTI
VANCOUVER and EDMONTON, Dec. 4, 2017 /CNW/ - Aurora Cannabis
Inc. ("Aurora") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) and
Radient Technologies Inc. ("Radient) (TSX-V: RTI) today announced that further
to the investor rights agreement between both companies, as announced on
November 6, 2017, Aurora will make a further investment in Radient for a total
of $12 million.
The strategic investment is structured as follows:
|
|
•
|
Exercise of all 15,856,321 common share purchase warrants
of Radient currently held by Aurora for total proceeds of $5.8 million
|
|
|
•
|
Investment through a private placement (the `Placement`)
in units consisting of one common share of Radient and one common share
purchase warrant. Units are priced at $1.37. Each warrant gives Aurora the
right to purchase one common share of Radient for $1.71 for a period of 24
months following closing of the placement. Aurora will be purchasing
4,541,889 units for total proceeds of $6.2 million.
|
The placement is subject to the receipt of all necessary
approvals, including the approval of the TSX Venture Exchange. All securities
issued in connection with the Offering are subject to a statutory four-month
hold period. Upon completion of the investment, Aurora will have increased its
position in Radient from 8.8% to 19.18% on an undiluted basis (15.87% on a
diluted basis).
Radient intends to use the proceeds from the financing to
accelerate plant capacity expansion and increased throughput at its Edmonton
facility, the purchase of land adjacent to this facility for further expansion,
including preparations for the broadening range of extraction-based cannabis
products that are expected to be permitted under the new Cannabis Act, as well
as for working capital purposes.
"With multiple Aurora facilities coming online and ramping up
production in the coming quarters, as well as the anticipated export of cannabis
oils and preparations for the legalization of adult consumer use in Canada,
Radient's planned expansion positions both companies exceptionally well to
accelerate revenue growth," said Terry Booth, CEO of Aurora. "This investment
reflects our strategy to build a constellation of vertically integrated partners
and subsidiaries, and we look forward to jointly pursuing further expansion of
market share in this exiting space."
Denis Taschuk, CEO of Radient, added, "This investment by
Aurora, our cornerstone customer and investor, enables us to more rapidly reach
capacity, yield, and throughput levels that will meet Aurora's needs, including
the potentially large opportunity presented by CBD from hemp. With this
investment, Radient will be well-positioned to become the leader in its segment
of the cannabis supply chain, while further strengthening a relationship that
has been very beneficial in terms of market recognition, operational expansion
and shareholder value creation."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). Aurora operates a
55,200 square foot, state-of-the-art production facility in Mountain View
County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport, as well as is completing a fourth facility in Lachute,
Quebec through its wholly owned subsidiary Aurora Larssen Projects Ltd.
In addition to Aurora's investment in Radient, Aurora is in the
process of completing an investment in Edmonton-based Hempco Food and Fiber for
an ownership stake of up to 50.1% . Furthermore, Aurora is the cornerstone
investor with a 19.9% stake in Cann Group Limited, the first Australian company
licensed to conduct research on and cultivate medical cannabis. Aurora also owns
Pedanios, a leading wholesale importer, exporter, and distributor of medical
cannabis in the European Union, based in Germany. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
About Radient
Radient extracts natural compounds from a range of biological
materials using microwave assisted processing ("MAP™"), a patented technology
platform which provides superior customer outcomes in terms of ingredient
purity, yield, and cost. From its 20,000 square foot manufacturing plant in
Edmonton, Alberta, Radient serves market leaders in industries that include
cannabis, pharmaceutical, food, beverage, natural health, personal care and
biofuel markets. Visit www.radientinc.com for more information.
|
On behalf of the Board of Directors,
|
On behalf of the Board of Directors
|
|
AURORA CANNABIS INC.
|
RADIENT TECHNOLOGIES INC.
|
|
|
|
|
Terry Booth
|
Denis Taschuk
|
|
CEO
|
President and CEO
|
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"), including, but not limited to, statements with
respect to the investment in Radient by Aurora and the use of the proceeds
thereof by Radient. Forward-looking statements are frequently characterized by
words such as "plan", "continue", "expect", "project", "intend", "believe",
"anticipate", "estimate", "may", "will", "potential", "proposed" and other
similar words, or statements that certain events or conditions "may" or "will"
occur. These statements are only predictions. Various assumptions were used in
drawing the conclusions or making the projections contained in the
forward-looking statements throughout this news release. Forward-looking
statements are based on the opinions and estimates of management at the date the
statements are made, and are subject to a variety of risks and uncertainties and
other factors that could cause actual events or results to differ materially
from those projected in the forward-looking statements. Neither Aurora nor
Radient is under any obligation, and each expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX or TSX-V nor their Regulation Services Provider
(as that term is defined in the policies of Toronto Stock Exchange and TSX
venture Exchange) accept responsibility for the adequacy or accuracy of this
release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/December2017/04/c5093.html
%SEDAR: 00025675E
For further information:
For Aurora: Cam Battley,
Executive Vice President, +1.905.864.5525, cam@auroramj.com, www.auroramj.com;
Marc Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.269.5523, marc.lakmaaker@auroramj.com; For Radient: Denis Taschuk,
President and CEO, dtaschuk@radientinc.com, 780-465-1318; Prakash Hariharan,
Chief Financial Officer, phariharhan@radientinc.com, 780-465-1318
CO: Aurora Cannabis Inc.
CNW 06:30e 04-DEC-17
Aurora Cannabis Completes Larssen and H2 Biopharma
Acquisitions
TSX: ACB
VANCOUVER, Dec. 5, 2017 /CNW/ - Aurora Cannabis Inc. (the
"Company" or "Aurora") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
today announced that, further to its press releases of November 23, 2017, the
Company has completed the acquisitions of Larssen Ltd, a globally leading
greenhouse engineering and design consultancy, and that of H2 Biopharma, a
late-stage ACMPR applicant based in Quebec.
Larssen has set the industry standard in high-tech, automated,
environmentally controlled greenhouses for over 30 years, has consulted on the
design, engineering, and construction oversight of many of the world's most
advanced greenhouse cultivation facilities, having been involved with over 1,000
projects around the globe. Larssen currently is involved in 15 cannabis
projects, five of which are with Canadian Licensed Producers.
H2 is currently completing a state-of-the-art, purpose-built
48,000 square foot cannabis production facility (the "Lachute facility"), less
than an hour from Montreal, which, upon completion, is projected to produce
approximately 4,500 kilograms of high-quality cannabis per annum, with
significant expansion potential on 46 acres (19 hectares) of land, which H2 has
the right to acquire for $136,000. Aurora Larssen Projects Ltd. ("ALPS"), which
was recently incorporated as Aurora's greenhouse design and consulting arm, will
play an important role in the completion of this newest Aurora facility to EU
GMP standards.
"These are two important acquisitions for Aurora that clearly
show how our growing constellation of trusted partners and subsidiaries
accelerate shareholder value creation through strategic synergies," said Terry
Booth, CEO. "Larssen's pedigree in designing the world's most technologically
advanced and efficient greenhouses will be leveraged for the completion of our
new Lachute Facility. The addition of this latest facility will increase our
capacity to serve the domestic and export markets, and signals our major
commitment to operations in Quebec, Canada's second most populous province."
Tracking for $6 million in fiscal 2018 revenues, the Larssen
transaction will be immediately accretive. Completion of the H2 facility is
anticipated for early calendar 2018 with production, and therefore additional
revenues, anticipated shortly thereafter.
In consideration of the H2 acquisition, Aurora has issued
4,789,273 common shares of Aurora to the H2 vendors, at a price of $5.22 per
share, based on 90% of the VWAP of the Aurora common shares for the 5 days
immediately prior to signing of the share purchase agreement. Of these shares,
1,728,718 are released to the H2 vendors immediately, and the remaining shares
have been put into escrow and are subject to release to the H2 vendors or
cancellation, based on the achievement of certain operational milestones.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport, as well as is completing a fourth facility in Lachute,
Quebec through its wholly owned subsidiary Aurora Larssen Projects Ltd.
In addition, the Company holds approximately 19.18% of the
issued shares in leading extraction technology company Radient Technologies
Inc., based in Edmonton, and is in the process of completing an investment in
Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1% .
Furthermore, Aurora is the cornerstone investor with a 19.9% stake in Cann Group
Limited, the first Australian company licensed to conduct research on and
cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union,
based in Germany. The Company offers further differentiation through its
acquisition of BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens. Aurora's
common shares trade on the TSX under the symbol "ACB".
On behalf of the Board of Directors,
AURORA CANNABIS
INC.
Terry Booth
CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"), including, but not limited to, statements with
respect to the closing of the Acquisition and the performance of the Company,
including, but not limited to, H2 Biopharma. Forward-looking statements are
frequently characterized by words such as "plan", "continue", "expect",
"project", "intend", "believe", "anticipate", "estimate", "may", "will",
"potential", "proposed" and other similar words, or statements that certain
events or conditions "may" or "will" occur. These statements are only
predictions. Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking statements throughout this news
release. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events
or
results to differ materially from those projected in the
forward-looking statements. The Company is under no obligation, and expressly
disclaims any intention or obligation, to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/December2017/05/c3388.html
%SEDAR: 00025675E
For further information:
Cam Battley, Executive Vice
President, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc Lakmaaker,
Director, Investor Relations and Corporate Development, +1.647.269.5523,
marc.lakmaaker@auroramj.com
CO: Aurora Cannabis Inc.
CNW 07:00e 05-DEC-17
Aurora Cannabis and its Subsidiary Pedanios GmbH Both
Receive EU GMP Certification
Rare Dual Certification Enables Wider EU Expansion
TSX: ACB
VANCOUVER, Dec. 11, 2017 /CNW/ - Aurora Cannabis Inc. (the
"Company" or "Aurora") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
today announced that Aurora has received European Union (EU) Good Manufacturing
Practices (GMP) certification regarding the production, handling, storage and
packaging of cannabis flowers. The certificate granted covers both Chapter I and
Chapter II of the EU GMP regulations, certifying Aurora for the production of
active ingredients and their formulation into a pharmaceutical drug.
Additionally, Aurora's wholly-owned subsidiary, Pedanios Gmbh ("Pedanios"),
Germany's largest distributor of cannabis to pharmacies, has received EU GMP
certification pertaining to the import, release and distribution of dried
cannabis flowers, also within chapter I and II of the EU GMP regulation.
EU GMP certification is the highest such recognition attainable
by companies in the pharmaceutical space, and is a requirement for companies to
supply the German and wider EU markets with medical cannabis. Aurora becomes
only the second Canadian company with wholly owned subsidiaries possessing an EU
GMP certification for production, handling, storage and packaging in Canada, as
well as, for the import, release, and distribution in Germany and beyond.
"We cannot overstate the value to Aurora of receiving these
certifications. They enable us to accelerate expansion and market penetration in
the EU, while the vast majority of our competitors are precluded from
participating in these important and fast-growing markets," said Terry Booth,
CEO. "The opportunity we are pursuing aggressively in Europe is vast. Germany,
which provides broad insurance coverage for medically prescribed cannabis, has a
population in excess of 82 million, approximately 2.5 times that of Canada,
while the wider EU represents a market of well over 400 million people. Being
one of a select few integrated cannabis companies with a global infrastructure,
the required certification, and strong capitalization in a market with
substantial barriers to entry, positions us extremely well to leverage our first
mover advantage and continue to accelerate our growth."
Patrick Hoffmann, Managing Director of Pedanios, added,
"Receiving our EU GMP certification is a clear validation of the quality of our
products and operations, and reflects how Aurora and Pedanios continue to
execute exceptionally well. With considerable additional production capacity
coming online at Aurora in the coming quarters, we look forward to further
accelerating customer growth and cementing our position as the leading medical
cannabis distributor in Germany and the broader EU markets."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport, as well as is completing a fourth facility in Lachute,
Quebec through its wholly owned subsidiary Aurora Larssen Projects Ltd.
In addition, the Company holds approximately 19.18% of the
issued shares in leading extraction technology company Radient Technologies
Inc., based in Edmonton, and is in the process of completing an investment in
Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1% .
Furthermore, Aurora is the cornerstone investor with a 22.9% stake in Cann Group
Limited, the first Australian company licensed to conduct research on and
cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union,
based in Germany. The Company offers further differentiation through its
acquisition of BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens. Aurora's
common shares trade on the TSX under the symbol "ACB".
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"), including, but not limited to the performance of
the Company and its intended expansion in the EU. Forward-looking statements are
frequently characterized by words such as "plan", "continue", "expect",
"project", "intend", "believe", "anticipate", "estimate", "may", "will",
"potential", "proposed" and other similar words, or statements that certain
events or conditions "may" or "will" occur. These statements are only
predictions. Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking statements throughout this news
release. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. The Company is under no obligation, and
expressly disclaims any intention or obligation, to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accept responsibility
for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/December2017/11/c3995.html
%SEDAR: 00025675E
For further information:
Cam Battley, Executive Vice
President, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc Lakmaaker,
Director, Investor Relations and Corporate Development, +1.647.269.5523,
marc.lakmaaker@auroramj.com
CO: Aurora Cannabis Inc.
CNW 07:00e 11-DEC-17
Aurora Cannabis Increases Investment in Radient
Technologies
Funds to be Used for Expansion of Radient Facility and
Operations
TSX: ACB TSX-V: RTI
VANCOUVER and EDMONTON, Dec. 12, 2017 /CNW/ - Aurora Cannabis
Inc. ("Aurora") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) and
Radient Technologies Inc. ("Radient) (TSX-V: RTI) today announced that Aurora
has completed its previously announced $12 million strategic investment in
Radient.
The strategic investment was structured as follows:
|
|
•
|
Aurora exercised all 15,856,321 common share purchase
warrants of Radient previously held by Aurora for total proceeds of $5.8
million
|
|
|
•
|
Aurora completed a private placement (the `Placement`) of
4,541,889 units for total proceeds of $6.2 million, with each unit
consisting of one common share of Radient and one common share purchase
warrant. Units were priced at $1.37. Each warrant gives Aurora the right
to purchase one common share of Radient for $1.71 for a period of 24
months.
|
Radient intends to use the proceeds from the financing to
accelerate plant capacity expansion and increased throughput at its Edmonton
facility, the purchase of land adjacent to this facility for further expansion,
as well as for working capital purposes.
All securities issued in connection with the Placement are
subject to a statutory four-month hold period.
"Our relationship with and investment in Radient are important
elements in our expansion strategy considering the growing importance of
cannabis extracts," said Terry Booth, CEO of Aurora. "This partnership clearly
shows how Aurora is executing on an intelligent, vertically integrated approach
to capturing market share, which continues successfully to generate shareholder
value."
Denis Taschuk, CEO of Radient, added "Government proposals in
regard to the new Cannabis Act allow for a much broader offering of
extract-based products than was previously the case. Our technology and our
capacity expansion, enabled through the investment from our key partner Aurora,
positions us exceptionally well for this incredibly dynamic and rapidly growing
market."
Early Warning Language
Prior to the investment Aurora held 17,245,221 common shares
and 15,856,321 purchase warrants. After giving effect to the investment, Aurora
holds 37,643,431 common shares and 4,541,889 share purchase warrants of Radient
representing approximately 17.23% of the issued and outstanding common shares,
and 15.87% of the issued and outstanding common shares on a fully-diluted basis.
As at the date of this press release, Radient has 218,511,520 shares issued and
outstanding at closing.
Aurora acquired the securities for investment purposes. Aurora
will evaluate its investment in Radient from time to time and may, based on such
evaluation, market conditions and other circumstances, increase or decrease
shareholdings as circumstances require through market transactions, private
agreements, or otherwise. A copy of the Early Warning report will be filed by
Aurora in connection with the acquisition and will be available on Radient's
SEDAR profile. In order to obtain a copy of the early warning report, please
contact Nilda Rivera, Aurora's Controller, at telephone number: 604-362-5207.
Aurora's registered office is located at 1500 - 1199 West Hastings St.
Vancouver, British Columbia, V6E 3T5.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport, as well as is completing a fourth facility in Lachute,
Quebec through its wholly owned subsidiary Aurora Larssen Projects Ltd.
In addition, the Company holds approximately 17.23% of the
issued shares in leading extraction technology company Radient Technologies
Inc., based in Edmonton, and is in the process of completing an investment in
Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1% .
Furthermore, Aurora is the cornerstone investor with a 19.9% stake in Cann Group
Limited, the first Australian company licensed to conduct research on and
cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union,
based in Germany. The Company offers further differentiation through its
acquisition of BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens. Aurora's
common shares trade on the TSX under the symbol "ACB".
About Radient
Radient extracts natural compounds from a range of biological
materials using microwave assisted processing ("MAP™"), a patented technology
platform which provides superior customer outcomes in terms of ingredient
purity, yield, and cost. From its 20,000 square foot manufacturing plant in
Edmonton, Alberta, Radient serves market leaders in industries that include
cannabis, pharmaceutical, food, beverage, natural health, personal care and biofuel markets. Visit www.radientinc.com for more
information.
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On behalf of the Board of Directors,
|
On behalf of the Board of Directors,
|
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AURORA CANNABIS INC.
|
RADIENT TECHNOLOGIES INC.
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Terry Booth
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Denis Taschuk
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CEO
|
President and CEO
|
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"), including, but not limited to, statements with
respect to Radient's use of the proceeds from the investment. Forward-looking
statements are frequently characterized by words such as "plan", "continue",
"expect", "project", "intend", "believe", "anticipate", "estimate", "may",
"will", "potential", "proposed" and other similar words, or statements that
certain events or conditions "may" or "will" occur. These statements are only
predictions. Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking statements throughout this news
release. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. Neither Aurora nor Radient is under any obligation, and each
expressly disclaims any intention or obligation, to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/December2017/12/c8442.html
%SEDAR: 00025675E
For further information:
For Aurora: Cam Battley,
Executive Vice President, +1.905.864.5525, cam@auroramj.com, www.auroramj.com;
Marc Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.269.5523, marc.lakmaaker@auroramj.com; For Radient: Denis Taschuk,
President and CEO, dtaschuk@radientinc.com, 780-465-1318; Prakash Hariharan,
Chief Financial Officer, phariharhan@radientinc.com, 780-465-1318
CO: Aurora Cannabis Inc.
CNW 07:00e 12-DEC-17
AURORA CANNABIS INC.
1500
–
1199
West Hastings Street
Vancouver, British Columbia Canada V6E 3T5
Telephone: 1-844-601-2448
NOTICE OF SPECIAL MEETING
and
MANAGEMENT INFORMATION CIRCULAR
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
MONDAY, JANUARY 15, 2018
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Place:
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McMillan LLP, Suite 1500, 1055 West Georgia
Street,
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Vancouver, British Columbia Canada
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Time:
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2:00 p.m. (Pacific Time)
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Date of Meeting:
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Monday, January 15, 2018
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December 8,
2017
THIS NOTICE OF MEETING AND MANAGEMENT
INFORMATION
CIRCULAR (THE “INFORMATION CIRCULAR”) CONTAINS
CERTAIN FORWARD-LOOKING
INFORMATION WITHIN THE MEANING OF APPLICABLE CANADIAN SECURITIES LAWS (AS
DEFINED IN THE GLOSSARY ATTACHED HERETO). READERS SHOULD REVIEW THE CAUTIONARY
STATEMENT SET OUT U
NDER THE HEADING “CAUTIONARY STATEMENTS –
FORWARD-LOOKING STATEMENTS AND INFORMATION
” IN THIS
INFORMATION
CIRCULAR.
Shareholders of Aurora Cannabis Inc. (the
“
Corporation
”
) or
(
“
Aurora
”
) should carefully consider the matters
described under the heading
“
Risk Factors
”
in this
Information Circular for a discussion of various risk factors they should
consider in voting their common shares of the Corporation.
This Information Circular contains a summary of the Offer (as
defined in the Glossary attached hereto) and is qualified in its entirety by the
more detailed information contained in the Offer and Bid Circular (as defined in
the Glossary attached hereto) and the letter of transmittal and notice of
guaranteed delivery that were provided with the Offer and Bid Circular. Each of
these documents are available under the SEDAR profile of CanniMed Therapeutics
Inc. (“
CanniMed
”) at
www.sedar.com
and the Corporation’s website
at
www.auroramj.com
. You should read each of these documents in their
entirety. See “Matters to be Considered at the Meeting – Issuance Resolution”.
This Information Circular does not constitute an offer to sell
or a solicitation of an offer to purchase any securities of the Corporation or
CanniMed or the solicitation of a proxy by any person in any jurisdiction in
which such an offer or solicitation is not authorized or in which the person
making such offer or solicitation is not qualified to do so or to any person to
whom it is unlawful to make such an offer or solicitation of an offer or a proxy
solicitation. The Offer is only made pursuant to the Offer and Bid Circular
filed with the Securities Regulatory Authorities (as defined in the Glossary
attached hereto) and pursuant to registration or qualification under the
securities laws of any other jurisdiction. Neither the delivery of this
Information Circular nor any distribution of the securities referred to in this
Information Circular will, under any circumstances, create an implication that
there has been no change in the information set out herein since the date as of
which such information is given in this Information Circular.
Except as otherwise noted in this document, the information
concerning CanniMed has been taken from, or is based upon, publicly available
information filed by CanniMed with Securities Regulatory Authorities. CanniMed
has not reviewed this Information Circular and has not confirmed the accuracy
and completeness of the information concerning CanniMed set out herein. See
“Notice Regarding CanniMed Information”.
No person (including, in respect of the Offer, the depositary
for the Offer, the Corporation’s information agent or any dealer manager or any
soliciting dealer) has been authorized to give any information or make any
representation on behalf of the Corporation or any of its Affiliates (as defined
in the Glossary attached hereto) in connection with the Meeting (as defined
herein), the Issuance Resolution (as defined in the Glossary attached hereto),
the Offer or any other matters described in this Information Circular other than
those statements and representations contained in this Information Circular and
those statements and representations contained in the Offer and Bid Circular or
the letter of transmittal that was provided with the Offer and Bid Circular and,
if given or made, any such information or representation must not be relied upon
as having been authorized by the Corporation, the depositary for the Offer, the
Corporation’s information agent or any dealer manager or any soliciting dealer.
Shareholders should not construe the contents of this
Information Circular as legal, tax or financial advice and should consult with
their own professional advisor(s) as to the relevant legal, tax, financial or
other matters which pertain to their individual circumstances.
Information contained in this Information Circular is given as
of
November 30, 2017, unless otherwise specifically stated. The
Corporation does not undertake to update any such information except as required
by applicable Canadian Securities Laws.
LETTER TO SHAREHOLDERS
December 8, 2017
Dear Shareholders:
You are invited to attend a special meeting (the
“
Meeting
”) of the holders (the “
Shareholders
”) of common shares
(the “
Common Shares
”) of Aurora Cannabis Inc. (the “
Corporation
”)
or (“
Aurora
”), which is to be held at the office of McMillan LLP, Suite
1500, 1055 West Georgia Street, Vancouver, British Columbia Canada on
Monday,
January 15, 2018
, at the hour of 2:00 p.m. (Pacific Time).
At the Meeting, you will be asked to consider and, if thought
advisable, pass an ordinary resolution (the “
Issuance Resolution
”)
approving the issuance of up to 170,000,000 Common Shares of the Corporation
(“
Aurora Shares
”) to the holders (the “
CanniMed Common
Shareholders
”) of common shares (the “
CanniMed Shares
”) of CanniMed
Therapeutics Inc. (“
CanniMed
”), in exchange for each CanniMed Share in
connection with the offer (the “
Offer
”) made by the Corporation to the
CanniMed Common Shareholders to purchase all of the CanniMed Shares. On November
24, 2017, the Corporation formally commenced the Offer to purchase all of the
CanniMed Shares, including any CanniMed Shares that may become issued and
outstanding (including upon the exercise, exchange of conversion of any
securities convertible into, or exchangeable or exercisable for, CanniMed Shares
or otherwise evidencing a right to acquire any CanniMed Shares or other
securities of CanniMed) after November 24, 2017 but prior to 11:59 p.m. (Pacific
Time) on March 9, 2018 (the “
Expiry Time
”), unless the Offer is
accelerated or extended by the Corporation or withdrawn by the Corporation.
Pursuant to the Offer, a holder of CanniMed Shares will receive, for each
CanniMed Share, 4.52586207 (the “
Base Exchange Ratio
”) Aurora Shares,
subject to a maximum of $24.00 (the “
Cap Price
”) in Aurora Shares. If, on
the earlier of the Expiry Time and the date on which all conditions of the Offer
have been satisfied, the 20-day volume weighted average price of the Aurora
Shares (“
Calculation Date
VWAP
”) traded on the Toronto Stock
Exchange (“
TSX
”) is greater than $5.30 per Aurora Share (“
Cap VWAP
Price
”), the number of Aurora Shares that a holder of CanniMed Shares will
receive for each CanniMed Share will be calculated by dividing the Cap Price of
$24.00 by the Calculation Date VWAP (the “
Cap Exchange Ratio
”). The
number of Aurora Shares to be issued in consideration for the CanniMed Shares,
whether as a result of the application of the Base Exchange Ratio or the Cap
Exchange Ratio, is referred to herein as the “
Offer Consideration
”.
Under the policies of the TSX, if the number of Aurora Shares
to be issued to the CanniMed Shareholders exceeds 25% of the outstanding Aurora
Shares at the time of issuance, then, in order for the Corporation to issue
Aurora Shares to the CanniMed Common Shareholders in connection with the Offer,
the Issuance Resolution must be approved by a majority of votes cast by
Shareholders present in person or by proxy at the Meeting. As at the date
hereof, it is expected that the Corporation will, subject to any future issuance
of CanniMed Shares or securities convertible or exchangeable into CanniMed
Shares, issue approximately 113,978,903 Aurora Shares under the Offer, which
represents approximately 25.2% of the number of Aurora Shares issued and
outstanding (calculated on a non-diluted basis) as at November 30, 2017. The
Issuance Resolution authorizes for issuance 170,000,000 Aurora Shares, which
represents approximately 37.5% of the number of Aurora Shares currently issued
and outstanding (calculated on a non-diluted basis) as at November 30, 2017.
The Board of Directors of the Corporation believes that the
combination of the two companies is a compelling proposition, in the best
interest of Aurora shareholders and will accelerate growth and shareholder value
creation not only for Aurora, but for the combined entity, further extending its
leadership position within the global cannabis sector.
- 2 -
The combined entity will also have the platform, stability and
lower cost of capital by virtue of being the second largest cannabis company by
market capitalization. The combination of CanniMed and the Corporation on the
terms proposed by the Offer represents a unique opportunity to achieve industry
consolidation and efficiencies of scale under a proven management team with a
track record of creating sustainable shareholder value. Upon completion of the
acquisition of CanniMed, the Board of Directors and management of the
Corporation are committed to continuing to exercise the focus and discipline
required to ensure Shareholders, both existing and new, will benefit from this
transaction going forward.
The Board of Directors of the Corporation unanimously
recommends that Shareholders vote FOR the Issuance Resolution.
The accompanying Information Circular contains a description of
the Offer, CanniMed and certain risk factors associated with the Offer and the
issuance of the Aurora Shares under the Offer. Please give this material your
careful consideration. Should you require assistance, please consult your
financial, legal, tax or other professional advisor.
We look forward to seeing you at the Meeting.
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Yours truly,
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(signed) “
Terry Booth
”
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Terry Booth
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Chief Executive Officer
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AURORA CANNABIS INC.
1500 – 1199 West Hastings Street
Vancouver, British Columbia Canada V5E 3T5
Tel: 1-844-601-2448
NOTICE IS HEREBY GIVEN
that a special meeting (the
“
Meeting
”) of the holders (the “
Shareholders
”) of common shares
(the “
Common Shares
”) of Aurora Cannabis Inc. (the “
Corporation
”)
will be held at the offices of McMillan LLP, Suite 1500, 1055 West Georgia
Street, Vancouver, British Columbia Canada, on
Monday, January 15, 2018
,
at the hour of 2:00 p.m. (Pacific Time), for the following purpose:
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1.
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to consider and, if thought advisable, to pass, with or
without variation, an ordinary resolution (the “
Issuance
Resolution
”), the full text of which is set out in Appendix A to the
Management Information Circular (the “
Information Circular
”),
approving the issuance of up to 170,000,000 Common Shares of the
Corporation (the “
Aurora Shares
”) to the holders (the “
CanniMed
Common Shareholders
”) of common shares (the “
CanniMed Shares
”)
of CanniMed Therapeutics Inc. (“
CanniMed
”), in connection with the
offer (the “
Offer
”) made by the Corporation to the CanniMed Common
Shareholders to purchase all of the CanniMed Shares, all as more
particularly described in the Information
Circular.
|
Additional information concerning the Issuance Resolution is
set out in the Information Circular. Only Shareholders of record at the close of
business on November 30, 2017 (the “
Record Date
”) are entitled to receive
notice of and to attend the Meeting, or any adjournment or adjournments thereof,
and to vote thereat.
Your participation at the Meeting is important
. If you
are a registered Shareholder (i.e., you hold your Common Shares in the
Corporation (also called, the “
Common Shares
” or the “
Aurora
Shares
”) directly in your name and not through a broker or other
intermediary), you may attend the Meeting in person and vote your Common Shares
on any motions made at the Meeting. Alternatively, you may appoint a proxyholder
to vote your Common Shares at the Meeting on your behalf.
If you do not
expect to attend the Meeting in person and would like your Common Shares to be
voted, please complete a form of proxy (to appoint a proxyholder), or another
suitable form of proxy as soon as possible, following the instructions set out
in the Information Circular.
If you are a registered Shareholder and wish to
complete and deposit a proxy to appoint a proxyholder, you may do so through the
Internet, by telephone, by mail or by facsimile – please see the instructions
set out in the Information Circular in that regard. To be valid, all proxies
deposited by registered Shareholders must be received at the office of the
Corporation’s transfer agent, Computershare Trust Company of Canada (Attention:
Proxy Department, 100 University Avenue, 8th Floor, Toronto, Ontario M5J 2Y1)
not later than 2:00 p.m. (Pacific Time) on January 11, 2018 or 48 hours
(excluding Saturdays, Sundays and holidays) preceding any adjournment of the
Meeting. The Chairman of the Meeting has the discretion to accept proxies
deposited less than 48 hours before the time of the Meeting or any adjournment
or postponement thereof.
- 2 -
If you are a non-registered (beneficial) Shareholder (i.e.,
your Common Shares are not registered directly in your name, but are held
through a broker or other intermediary), you must use the voting instruction
form provided to you to vote your Common Shares at the Meeting. Instructions
respecting the use of voting instruction forms is set out in the Information
Circular. Please note that if you are a non-registered (beneficial) Shareholder
and you wish to attend the Meeting in person and vote Common Shares beneficially
owned by you, you must arrange to appoint yourself as proxyholder, following the
instructions set out in the Information Circular.
Dated at Vancouver, British Columbia December 8, 2017.
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BY ORDER OF THE BOARD OF DIRECTORS
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(signed) “
Terry Booth
”
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Terry Booth
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Chief Executive Officer
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SPECIAL MEETING OF THE SHAREHOLDERS OF AURORA CANNABIS
INC.
MANAGEMENT INFORMATION CIRCULAR
(Containing
information as at November 30, 2017 unless indicated otherwise)
GENERAL
This Management Information Circular (the
“
Information Circular
”
) is furnished in connection
with the solicitation, by the management (the
“
Management
”
) of Aurora Cannabis Inc. (the
“
Corporation
”
) or
(
“
Aurora
”
), of proxies to be used at the special
meeting (the
“
Meeting
”
) of the holders (the
“
Shareholders
”
) of outstanding common shares (the
“
Common Shares
”
) or (
“
Aurora
Shares
”
) of the Corporation, which is to be held at the time and
place and for the purpose set out in the accompanying notice of meeting (the
“
Notice of Meeting
”
).
This Information Circular does not constitute an offer to sell
or a solicitation of an offer to purchase any securities or the solicitation of
a proxy by any person in any jurisdiction in which such an offer or solicitation
is not authorized or in which the person making such offer or solicitation is
not qualified to do so or to any person to whom it is unlawful to make such an
offer or solicitation of an offer or a proxy solicitation. The offer is only
made pursuant to the Offer and Bid Circular filed with the Securities Regulatory
Authorities and pursuant to registration or qualification under the securities
laws of any other jurisdiction. Neither the delivery of this Information
Circular nor any distribution of the securities referred to in this Information
Circular will, under any circumstances, create an implication that there has
been no change in the information set out herein since the date as of which such
information is given in this Information Circular.
In this Information Circular, unless the context otherwise
requires or unless defined elsewhere herein, capitalized terms shall have the
meanings set out in the Glossary attached as Appendix D to this Information
Circular.
No person (including, in respect of the Offer, the depositary
for the Offer, the Corporation’s information agent or any dealer manager or any
soliciting dealer) has been authorized to give any information or make any
representation on behalf of the Corporation or any of its Affiliates in
connection with the Meeting, the Issuance Resolution, the Offer or any other
matters described in this Information Circular other than those statements and
representations contained in this Information Circular and those statements and
representations contained in the Offer and Bid Circular or the letter of
transmittal that was provided with the Offer and Bid Circular and, if given or
made, any such information or representation must not be relied upon as having
been authorized by the Corporation, the depositary for the Offer, the
Corporation’s information agent or any dealer manager or any soliciting dealer.
Information contained in this Information Circular is given as
of November 30, 2017, unless otherwise specifically stated. The Corporation does
not undertake to update any such information except as required by applicable
Canadian Securities Laws. All references in this Information Circular, including
the appendices hereto, to “$” means Canadian dollars and to “US$” mean United
States dollars.
- 2 -
VOTING AND PROXIES
Solicitation of Proxies
The solicitation of proxies will be primarily by mail, but
proxies may be solicited personally or by telephone by directors, officers and
regular employees of the Corporation. The Corporation may engage a proxy
solicitation agent in connection with the solicitation of proxies. The
Corporation will bear all costs of this solicitation. The Corporation arranged
for intermediaries to forward the meeting materials to beneficial owners of the
Common Shares held of record by those intermediaries and may reimburse the
intermediaries for their reasonable fees and disbursements in that regard.
Notice-and-Access
In November 2012, the Canadian Securities Administrators
announced the adoption of regulatory amendments to securities laws governing the
delivery of proxy-related materials by public companies. Public companies are
now permitted to advise their shareholders of the availability of all
proxy-related materials on an easily-accessible website, rather than mailing
copies of the materials.
The Corporation has elected to use the notice and access
procedure (“
Notice and Access
”) under National Instrument 51-102 –
Continuous Disclosure Obligations
(“
NI 51-102
”) and National
Instrument 54-101 –
Communication with Beneficial Owners of Securities of a
Reporting Issuer
(“
NI 54-101
”), for the delivery of meeting materials
to the Corporation’s shareholders for the Special Meeting to be held on Monday,
January 15, 2018 (the “
Meeting
”). Under Notice and Access provisions,
Shareholders will receive a notice (“
Notice and Access Notice
”)
containing information on how they can access the Corporation’s Notice of
Meeting and Information Circular (the “
Meeting Materials
”) electronically
instead of receiving a printed copy; and it will contain information on how to
obtain a printed copy of the Meeting Materials. Together with the Notice and
Access Notice, Shareholders will receive a proxy (“
Proxy
”), in the case
of registered shareholders, enabling them to vote at the Meeting. The Meeting
Materials for the Meeting will be posted on the Corporation’s website at
https
://auroramj.com/investors on
December 12, 2017, and will remain on
the website for one year. The Meeting Materials will also be available on the
Corporation’s SEDAR corporate profile at
www.sedar.com
.
All
registered and beneficial Shareholders will receive a Notice and Access Notice.
If you wish to receive a paper copy of the Meeting Materials,
they will be sent within three business days of your request, if such requests
are made before the meeting date. To ensure you receive the material in advance
of the voting deadline and meeting date, your request should be provided to the
Corporation as soon as possible.
Appointment of Proxyholders
Terry Booth is the Chief Executive Officer and a director of
the Corporation, Glen Ibbott, the Chief Financial Officer of the Corporation and
Nilda Rivera, Vice President, Finance and Corporate Secretary of the
Corporation.
A Shareholder has the right to appoint a person as proxyholder
(who need not be a Shareholder), other than Terry Booth, Glen Ibbott or Nilda
Rivera, to represent the Shareholder at the Meeting.
To exercise that right,
the Shareholder should strike out the names of Terry Booth, Glen Ibbott or Nilda
Rivera on the accompanying instrument of proxy (the “
Instrument of
Proxy
”) and insert the name of the other person in the blank space provided
on that Instrument of Proxy. Alternatively, a Shareholder may complete another
appropriate form of proxy. The Shareholder should notify the proxyholder of his
or her appointment and instruct the proxyholder on how the Common Shares are to
be voted. A proxy will not be valid unless it is received by the transfer agent
of the Common Shares, Computershare Trust Company of Canada (Attention: Proxy
Department, 100 University Avenue, 8
th
Floor, Toronto, Ontario, M5J
2Y1). To be valid, a proxy must be received by Computershare Trust Company of
Canada not later than 2:00 p.m. (Pacific Time) on January 11, 2018 or 48 hours
(excluding Saturdays, Sundays and holidays) preceding any adjournment of the
Meeting. The Chairman of the Meeting has the discretion to accept proxies
deposited less than 48 hours before the time of the Meeting or any adjournment
or postponement thereof.
- 3 -
A Shareholder who has signed and returned a proxy may revoke
that proxy: (a) by signing a proxy bearing a later date and depositing such
proxy with Computershare Trust Company of Canada, at its address set out above,
at least 48 hours (excluding Saturdays, Sundays and holidays) prior to the
commencement of the Meeting or any adjournment thereof; (b) as to any matter on
which a vote shall not already have been cast pursuant to the authority
conferred by such proxy, by depositing a written notice of revocation with
Computershare Trust Company of Canada, at its address set out above, at any time
up to and including the last business day preceding the day of the Meeting or
any adjournment thereof or by delivering the notice of revocation to the
Chairman of the Meeting; (c) by attending the Meeting and voting the Common
Shares subject to the applicable proxy; or (d) in any other manner permitted by
law.
Voting of Proxies
On any ballot that may be called for at the Meeting, the
management designees named in the accompanying Instrument of Proxy will vote or
withhold from voting the Common Shares in respect of which they are appointed in
accordance with the direction of the Shareholder appointing them, and if the
Shareholder specifies a choice with respect to any matter to be acted upon, the
applicable Common Shares will be voted accordingly.
In the absence of such
direction, the management designees named in the accompanying Instrument of
Proxy intend to vote the relevant Common Shares FOR the approval of the Issuance
Resolution, all as more particularly described in this Information Circular.
Exercise of Discretion by Proxyholders
The accompanying Instrument of Proxy confers discretionary
authority upon the persons named therein with respect to amendments or
variations of the matters identified in the Notice of Meeting and any other
matters that may properly be brought before the Meeting. As at the date of this
Information Circular, Management knows of no such amendment, variation or other
matter to be brought before the Meeting. If other matters are properly brought
before the Meeting, it is the intention of the management designees named in the
accompanying Instrument of Proxy to exercise the voting rights attached to the
applicable Common Shares in their best judgment pursuant to the discretionary
authority conferred by such proxy with respect to such matters.
Registered Shareholders
Registered Shareholders may wish to vote by proxy whether or
not they are able to attend the Meeting in person. Registered shareholders may
choose one of the following options to submit their proxy:
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(a)
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completing, dating and signing the enclosed form of proxy
and returning it to the Corporation’s transfer agent, Computershare Trust
Company of Canada (“Computershare”), by fax within North America at
1-866-249-7775, outside North America at (416) 263-9524, or by mail to the
8
th
Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1 or
by hand delivery at 3
rd
Floor, 510 Burrard Street, Vancouver,
British Columbia, Canada V6C 3B9;
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(b)
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Call Computershare at 1-866-732-8683 (toll-free) and use
the touch-tone phone to transmit your voting choices. Registered
shareholders must follow the instructions of the voice response system and
refer to the enclosed proxy form for the holder’s account number and the
control number; or
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(c)
|
use the internet through the website of the Corporation’s
transfer agent at
www.investorvote.com
. Registered Shareholders
must follow the instructions that appear on the screen and refer to the
enclosed proxy form for the holder’s account number and the control
number.
|
In all cases the Registered Shareholder must ensure the proxy
is received at least 48 hours (excluding Saturdays, Sundays and statutory
holidays) before the Meeting, or the adjournment thereof, at which the proxy is
to be used.
- 4 -
The Chairman of the Meeting has the discretion to accept
proxies deposited less than 48 hours before the time of the Meeting or any
adjournment or postponement thereof.
Beneficial Shareholders
The following information is of significant importance to
shareholders who do not hold Common Shares in their own name
. Beneficial
Shareholders should note that the only proxies that can be recognized and acted
upon at the Meeting are those deposited by registered shareholders (those whose
names appear on the records of the Corporation as the registered holders of
Common Shares) or as set out in the following disclosure.
If Common Shares are listed in an account statement provided to
a shareholder by a broker, then in almost all cases those Common Shares will not
be registered in the shareholder’s name on the records of the Corporation. Such
Common Shares will more likely be registered under the names of the
shareholder’s broker or an agent of that broker. In Canada, the vast majority of
such Common Shares are registered under the name of CDS & Co. (the
registration name for The Canadian Depository for Securities Limited, which acts
as nominee for many Canadian brokerage firms), and in the United States (the
“U.S.”), under the name of Cede & Co. as nominee for The Depository Trust
Company (which acts as depositary for many U.S. brokerage firms and custodian
banks).
Intermediaries are required to seek voting instructions from
Beneficial Shareholders in advance of shareholder meetings. Every intermediary
has its own mailing procedures and provides its own return instructions to
clients.
You should carefully follow the instructions of your broker or
intermediary in order to ensure that your Common Shares are voted at the
Meeting.
The form of proxy supplied to you by your broker will be
similar to the Proxy provided to registered shareholders by the Corporation.
However, its purpose is limited to instructing the intermediary on how to vote
your Common Shares on your behalf. Most brokers now delegate responsibility for
obtaining instructions from clients to Broadridge Financial Solutions, Inc.
(“Broadridge”) in Canada and in the United States. Broadridge mails a voting
instruction form (a “VIF”) in lieu of a Proxy provided by the Corporation. The
VIF will name the same persons as the Corporation’s Proxy to represent your
Common Shares at the Meeting. You have the right to appoint a person (who need
not be a Beneficial Shareholder of the Corporation), other than any of the
persons designated in the VIF to represent your Common Shares at the Meeting and
that person may be you. To exercise this right, insert the name of the desired
representative (which may be you), in the blank space provided in the VIF. The
completed VIF must then be returned to Broadridge by mail or facsimile or given
to Broadridge by phone or over the internet, in accordance with Broadridge’s
instructions. Broadridge then tabulates the results of all instructions received
and provides appropriate instructions respecting voting of Common Shares to be
represented at the Meeting.
If you receive a VIF from Broadridge, the VIF
must be completed and returned to Broadridge, in accordance with
Broadridge
’
s instructions, well in advance of the Meeting in order
to have the Common Shares voted at the Meeting, or to have an alternate
representative duly appointed to attend the Meeting and vote your Common Shares.
Notice to United States Shareholders
The solicitation of proxies is not subject to the requirements
of Section 14(a) of the U.S. Exchange Act by virtue of an exemption applicable
to proxy solicitations by foreign private issuers as defined in Rule 3b-4 of the
U.S. Exchange Act. Accordingly, this Information Circular has been prepared in
accordance with applicable Canadian disclosure requirements. Residents of the
United States should be aware that such requirements differ from those of the
United States applicable to proxy statements under the U.S. Exchange Act.
This document does not address any income tax consequences of
the disposition of the Common Shares by Shareholders. Shareholders in a
jurisdiction outside of Canada should be aware that the disposition of shares by
them may have tax consequences both in those jurisdictions and in Canada, and
are urged to consult their tax advisors with respect to their particular
circumstances and the tax considerations applicable to them.
- 5 -
Any information concerning and operations of the Corporation
has been prepared in accordance with Canadian standards under applicable
Canadian Securities Laws, and may not be comparable to similar information for
United States companies.
Financial statements included or incorporated by reference
herein have been prepared in accordance with International Financial Reporting
Standards, as issued by the International Accounting Standards Board, and are
subject to auditing and auditor independence standards in Canada, and reconciled
to accounting principles generally accepted in the United States. Such
consequences for the Shareholders who are resident in, or citizens of, the
United States may not be described fully in this Information Circular.
The enforcement by Shareholders of civil liabilities under the
United States federal securities laws may be affected adversely by the fact that
the Corporation is incorporated or organized under the laws of a foreign
country, that some or all of their officers and directors and the experts named
herein are residents of a foreign country and that the major assets of the
Corporation are located outside the United States.
Revocation of Proxies
In addition to revocation in any other manner permitted by law,
a registered shareholder who has given a proxy may revoke it by:
|
|
(a)
|
executing a proxy bearing a later date or by executing a
valid notice of revocation, either of the foregoing to be executed by the
registered Shareholder or the registered Shareholder’s authorized attorney
in writing, or, if the Shareholder is a corporation, under its corporate
seal by an officer or attorney duly authorized, and by delivering the
proxy bearing a later date to Computershare, at any time up to and
including the last business day that precedes the day of the Meeting or,
if the Meeting is adjourned, the last business day that precedes any
reconvening thereof, or to the chairman of the Meeting on the day of the
Meeting or any reconvening thereof, or in any other manner provided by
law; or
|
|
|
|
|
|
|
(b)
|
personally attending the Meeting and voting the
registered Shareholder’s Common Shares.
|
A revocation of a proxy will not affect a matter on which a
vote is taken before the revocation.
RECORD DATE AND ENTITLEMENT TO VOTING
The board of directors (the “
Board
”) of the Corporation
has fixed November 30, 2017 as the record date (the “
Record Date
”) for
determination of persons entitled to receive notice of the Meeting. Only
Shareholders of record at the close of business on the Record Date who either
attend the Meeting personally or complete, sign and deliver a form of proxy in
the manner and subject to the provisions described above will be entitled to
vote or to have their Common Shares voted at the Meeting.
INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE
ACTED UPON
No director or executive officer of the Corporation, nor any
associate or affiliate of the foregoing persons, has any substantial or material
interest, direct or indirect, by way of beneficial ownership of securities or
otherwise, in any matter to be acted on at the Meeting.
COMMON SHARES AND PRINCIPAL HOLDERS
The Corporation is authorized to issue an unlimited number of
Common Shares without par value. As at the Record Date there were 452,860,231
Common Shares issued and outstanding.
The Corporation is also authorized to issue an unlimited number
of Class A Shares with a par value of $1.00 each and an unlimited number of
Class B Shares with a par value of $5.00 each. There were no Class A or Class B
Shares issued and outstanding at the Record Date.
- 6 -
To the knowledge of the directors and officers of the
Corporation, as at the Record Date, no person beneficially owns, directly or
indirectly, or exercises control or direction over, Common Shares entitled to
more than 10% of the votes that may be cast at the Meeting.
MATTERS TO BE CONSIDERED AT THE MEETING
The business of the Meeting is to consider and, if thought
advisable, pass the Issuance Resolution.
ISSUANCE RESOLUTION
In connection with the Offer and for the reasons set out below,
at the Meeting, Shareholders will be asked to consider and, if thought
advisable, pass the Issuance Resolution, the full text of which is set out in
Appendix A to this Information Circular.
|
The Board of Directors unanimously recommends that
Shareholders vote FOR the Issuance Resolution. Unless
otherwise
directed, the management nominees named in the accompanying form of proxy
intend to vote FOR
the approval of the Issuance Resolution.
|
The Offer
On November 24, 2017 the Corporation formally commenced the
Offer to purchase all of the CanniMed Shares, including any CanniMed Shares that
may become issued and outstanding after November 24, 2017, but prior to the
Expiry Time, unless the Offer is withdrawn by the Corporation.
Expiry Time
The Offer is open for acceptance until 11:59 p.m. (Pacific
Time) on March 9, 2018, unless the Offer is accelerated or extended by the
Corporation or withdrawn by the Corporation.
Offer Consideration
Pursuant to the Offer, a holder of CanniMed Shares will
receive, for each CanniMed Share, 4.52586207 (the “
Base Exchange Ratio
”)
Aurora Shares, subject to a maximum of $24.00 (the “
Cap Price
”) in Aurora
Shares. If, on the earlier of the Expiry Time (as defined herein) and the date
on which all conditions of the Offer have been satisfied, the 20-day volume
weighted average price of the Aurora Shares (“
Calculation Date
VWAP
”) traded on the Toronto Stock Exchange (“
TSX
”) is greater
than $5.30 per Aurora Share (“
Cap VWAP Price
”), the number of Aurora
Shares that a holder of CanniMed Shares will receive for each CanniMed Share
will be calculated by dividing the Cap Price of $24.00 by the Calculation Date
VWAP (the “
Cap Exchange Ratio
”). The number of Aurora Shares to be issued
in consideration for the CanniMed Shares, whether as a result of the application
of the Base Exchange Ratio or the Cap Exchange Ratio, is referred to herein as
the “
Offer Consideration
”.
- 7 -
The following table provides an analysis of the changes in
price of Aurora shares on the Offer Consideration.
|
Calculation
|
|
Number of
|
|
Consideration
|
|
Date VWAP
|
|
Aurora Shares
|
|
In
|
|
(Price of
Aurora
|
|
Issued per
|
|
Aurora
|
|
Shares)
|
|
Cannimed Share
|
|
Shares
|
|
$4.50
|
|
4.52586207
|
|
$20.37
|
|
$4.75
|
|
4.52586207
|
|
$21.50
|
|
$5.00
|
|
4.52586207
|
|
$22.63
|
|
$5.25
|
|
4.52586207
|
|
$23.76
|
|
$5.50
|
|
4.36363636
|
|
$24.00
|
|
$5.75
|
|
4.17391304
|
|
$24.00
|
|
$6.00
|
|
4.00000000
|
|
$24.00
|
|
$6.25
|
|
3.84000000
|
|
$24.00
|
|
$6.50
|
|
3.69230769
|
|
$24.00
|
Shareholder Approval
Pursuant to Section 611(c) of the TSX Company Manual, the TSX
requires shareholder approval in circumstances where an issuance of securities
will result in the issuance of 25% or more of an issuer's outstanding securities
on a non-diluted basis in connection with an acquisition.
The Issuance Resolution will authorize the issuance of a number
of Aurora Shares equal to approximately 37.5% of the issued and outstanding
Aurora Shares as of November 30, 2017 on a non-diluted basis.
The Corporation has made application to list the Aurora Shares
issuable under the Offer. Such listing is subject to the Corporation fulfilling
all of the listing requirements of the TSX, including obtaining approval of the
Issuance Resolution, which will be required under Section 611(c) of the TSX
Company Manual if the aggregate number of Aurora Shares issuable under the Offer
is greater than 25% of the outstanding Aurora Shares.
In the event that the aggregate number of Aurora Shares payable
under the Offer is less than 25% of the outstanding Aurora Shares and it is
determined that the approval of the Issuance Resolution is not required under
the Section 611(c) of the TSX Company Manual, the Corporation reserves the right
to complete the Offer without obtaining approval of the Shareholders for the
Issuance Resolution.
For information in respect of the number of Aurora Shares to be
issued under the Offer please see below “Aurora Shares to be Issued Under the
Offer.”
Aurora Shares to be Issued Under the Offer
As at November 30, 2017, there were 452,860,231 Aurora Shares
issued and outstanding, on a non-diluted basis. Based on information provided to
the Corporation by CanniMed and the publicly available information, as at
November 23, 2017 the Corporation understands that:
|
|
•
|
the aggregate number of CanniMed Shares issued
and outstanding, on a non-diluted basis, is approximately 22,964,927;
|
|
|
|
|
|
|
•
|
the aggregate number of CannIMed shares
issuable upon exercise of CanniMed stock options is 2,044,455; and
|
|
|
|
|
|
|
•
|
the aggregate number of CannIMed shares
issuable upon exercise of CanniMed warrants is 174,528.
|
Based on the above information, the approximate total number of
CanniMed Shares that may be outstanding upon Expiry Time may be equal to
25,183,910 CanniMed Shares.
The number of Aurora Shares to be issued under the Offer (the "
Estimated
Consideration Shares
") will be equal to:
- 8 -
|
|
1.
|
the number of issued and outstanding CanniMed Shares on
the Expiry Date (including CanniMed Shares issuable upon exercise of
CanniMed convertible securities, such as stock options and
warrants)
|
|
|
|
|
|
|
|
multiplied by
|
|
|
|
|
|
|
2.
|
Base Exchange Ratio or the Cap Exchange Ratio, as the
case may be
|
The table below describes for illustrative purposes the total
number of Aurora Shares that may be Issued under the Offer will be as follows:
|
Calculation
|
|
Number of
|
|
Consideration
|
|
|
|
Date VWAP
|
|
Aurora Shares
|
|
In
|
|
Estimated
|
|
(Price of
Aurora
|
|
Issued per
|
|
Aurora
|
|
Consideration
|
|
Shares)
|
|
Cannimed Share
|
|
Shares
|
|
Shares
|
|
$4.50
|
|
4.52586207
|
|
$20.37
|
|
113,978,903
|
|
$4.75
|
|
4.52586207
|
|
$21.50
|
|
113,978,903
|
|
$5.00
|
|
4.52586207
|
|
$22.63
|
|
113,978,903
|
|
$5.25
|
|
4.52586207
|
|
$23.76
|
|
113,978,903
|
|
$5.50
|
|
4.36363636
|
|
$24.00
|
|
109,893,425
|
|
$5.75
|
|
4.17391304
|
|
$24.00
|
|
105,115,450
|
|
$6.00
|
|
4.00000000
|
|
$24.00
|
|
100,735,640
|
|
$6.25
|
|
3.84000000
|
|
$24.00
|
|
96,706,215
|
|
$6.50
|
|
3.69230769
|
|
$24.00
|
|
92,986,745
|
Notwithstanding the number of Estimated Consideration Shares,
since: (a) during the period prior to the Corporation acquiring 100% of the
CanniMed Common Shares under the Offer and any Compulsory Acquisition, the
number of CanniMed Common Shares issued and outstanding on a fully-diluted basis
is subject to change as a result of factors outside the control of the
Corporation; and (b) other circumstances may arise during the period the Offer
is outstanding that may cause the exchange ratio to be amended (as determined by
the Board of Directors of the Corporation), the aggregate number of Aurora
Shares issuable under the Offer (inclusive of any Compulsory Acquisition) cannot
be definitively determined as at or prior to the date of the Meeting.
Accordingly, in order to ensure that the Issuance Resolution authorizes the
issuance of an adequate number of Common Shares under all circumstances in
connection with the Offer and complies with the TSX’s requirements that such
resolution specify a fixed maximum number of Common Shares that the Corporation
may issue under the Offer, the Issuance Resolution authorizes the approval of a
number of Common Shares in an amount that significantly exceeds the Estimated
Consideration Shares.
As of the date of this Information Circular, the Corporation
does not expect that the aggregate consideration shares will exceed the
Estimated Consideration Shares by a material number, if at all.
Any increase in the number of Aurora Shares issuable under the
Offer in excess of the Estimated Consideration Shares, up to the maximum number
of Common Shares approved for issuance by the Issuance Resolution, will be at
the discretion of the Corporation, and will not require further approval of the
Shareholders.
Accordingly, Shareholders are advised that, following the
approval of the Issuance Resolution, the Corporation will be authorized to issue
up to 170,000,000 Aurora Shares in connection with the Offer, representing
approximately 37.5% of the issued and outstanding Aurora Shares on a non-diluted
basis.
Conditions of the Offer
The Offer is subject to certain conditions, including, without
limitation
|
|
1.
|
more than 66 2/3% of the CanniMed Shares (calculated on a
fully diluted basis) held by CanniMed Shareholders having been validly
tendered under the Offer and not withdrawn;
|
- 9 -
|
|
2.
|
the proposed acquisition of Newstrike Resources Ltd.
(“
Newstrike Resources
”) announced by CanniMed in its news release
of November 17, 2017 (the “
Newstrike News Release
”) shall not have
proceeded, and any acquisition agreement for such acquisition (the
“
Newstrike Resources Agreement
”) shall have been
terminated;
|
|
|
|
|
|
|
3.
|
the Regulatory Approvals (as defined in the Bid Circular)
and other third party approvals considered necessary by the Corporation in
relation to the Offer shall have been obtained on terms satisfactory to
the Corporation in its sole judgment;
|
|
|
|
|
|
|
4.
|
there not having occurred (in the judgment of the
Corporation) any material adverse change in respect of CanniMed;
and
|
|
|
|
|
|
|
5.
|
CanniMed shall not have taken certain actions that could
(in the judgment of the Corporation) impair the ability of the Corporation
to acquire CanniMed Shares or materially diminish the economic value to
the Corporation of the acquisition of CanniMed.
|
Shareholders are encouraged to read the Offer and Bid Circular
which is available under CanniMed’s SEDAR profile at
www.sedar.com
or by
accessing the Corporation’s website at
https://auroramj.com/investors
.
FURTHER INFORMATION CONCERNING THE OFFER AND CANNIMED
CanniMed Therapeutics Inc.
CanniMed is a Canada-based, international plant
biopharmaceutical company and a leader in the Canadian medical cannabis
industry, with 15 years of pharmaceutical cannabis cultivation experience,
state-of-the-art, GMP-compliant production process and world class research and
development platforms with a wide range of pharmaceutical-grade cannabis
products. In addition, CanniMed has an active plant biotechnology research and
product development program focused on the production of plant-based materials
for pharmaceutical, agricultural and environmental applications. Through its
subsidiaries, CanniMed was the first producer to be licensed under the
Marihuana for Medical Purposes Regulations
, the predecessor to the
current
Access to Cannabis for Medical Purposes Regulations
. It was the
sole supplier to Health Canada under the former medical marijuana system for 13
years, and has been producing medical marijuana for thousands of Canadian
patients, with no incident of product diversion or recalls.
Shareholders should refer to Appendix B to this Information
Circular for further information concerning CanniMed.
EXCEPT AS OTHERWISE INDICATED HEREIN, THE INFORMATION
CONCERNING CANNIMED CONTAINED IN THIS INFORMATION CIRCULAR, INCLUDING IN
APPENDIX B TO THIS INFORMATION CIRCULAR, HAS BEEN TAKEN FROM, OR IS BASED UPON,
PUBLICLY AVAILABLE INFORMATION FILED BY CANNIMED WITH VARIOUS SECURITIES
REGULATORY AUTHORITIES IN CANADA. AS OF SUCH DATE, THE CORPORATION HAS NOT HAD
ACCESS TO THE NON-PUBLIC BOOKS AND RECORDS OF CANNIMED AND THE CORPORATION IS
NOT IN A
POSITION TO INDEPENDENTLY ASSESS OR VERIFY CERTAIN OF THE
INFORMATION IN CANNIMED’S P
UBLICLY FILED DOCUMENTS, INCLUDING ITS
FINANCIAL STATEMENTS. CANNIMED HAS NOT REVIEWED THIS DOCUMENT AND HAS NOT
CONFIRMED THE ACCURACY AND COMPLETENESS OF THE INFORMATION CONCERNING CANNIMED
CONTAINED HEREIN. WHILE THE CORPORATION HAS NO REASON TO BELIEVE THAT SUCH
INFORMATION IS INACCURATE OR INCOMPLETE, THE CORPORATION HAS NO MEANS OF
VERIFYING THE ACCURACY OR COMPLETENESS OF ANY INFORMATION CONTAINED HEREIN THAT
IS DERIVED FROM PUBLICLY AVAILABLE INFORMATION REGARDING CANNIMED OR WHETHER
THERE HAS BEEN ANY FAILURE BY CANNIMED TO DISCLOSE EVENTS OR FACTS THAT MAY HAVE
OCCURRED OR MAY AFFECT THE SIGNIFICANCE OR ACCURACY OF ANY SUCH INFORMATION.
NEITHER THE CORPORATION, NOR ANY OF THE DIRECTORS OR OFFICERS OF THE
CORPORATION, ASSUMES ANY RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS OF SUCH
INFORMATION OR ANY FAILURE BY CANNIMED TO DISCLOSE EVENTS OR FACTS WHICH MAY
HAVE OCCURRED OR WHICH MAY AFFECT THE SIGNIFICANCE OR ACCURACY OF ANY SUCH
INFORMATION, BUT WHICH ARE UNKNOWN TO THE CORPORATION OR SUCH PERSONS.
- 10 -
Reasons for the Offer
The Board of Directors of the Corporation believes that the
combination of the two companies is extremely compelling, in the best interest
of all shareholders, and will accelerate growth and shareholder value creation
for the combined entity, further extending the Corporation’s leadership position
within the global cannabis sector. The pro-forma combined company would have a
market capitalization of approximately $4 billion, as at December 6, 2017, and
the stability of being the second largest cannabis company by market
capitalization. By combining with Aurora, CanniMed will be able to leverage certain of Aurora’s
strengths to expand its business and the combined company will have an expanded
geographic footprint, production capacity, product portfolio and other
synergistic benefits, as follows:
Leverag
ing Aurora’s Strengths
Aurora believes that CanniMed will be able to leverage Aurora’s
capabilities as follows:
|
|
1.
|
Increased Oil Production.
High throughput oil
production through Aurora’s strategic extraction partner Radient
Technologies Inc. to satisfy growing international demand;
|
|
|
|
|
|
|
2.
|
CanvasRx
. Aurora’s wholly owned subsidiary,
CanvasRx, is the industry leading physician education and patient
counseling services company having helped over 35,000 patients register
with licensed producers;
|
|
|
|
|
|
|
3.
|
Accelerated Growth Through Innovation
. CanniMed
will be able to leverage Aurora’s sector leadership in execution,
technology integration and innovation for the purpose of accelerating
development and growth potential;
|
|
|
|
|
|
|
4.
|
eCommerce
. CanniMed will have access to Aurora’s
e-commerce platform, including the only mobile app in Canada that enables
customer purchases;
|
|
|
|
|
|
|
5.
|
Same Day Delivery
. CanniMed will have access to
Aurora’s same-day delivery capabilities; and
|
|
|
|
|
|
|
6.
|
Strong Cash Position and Balance Sheet to Support
Additional Growth
. Aurora’s sector-leading cash position and balance
sheet will enable faster roll-out of initiatives for CanniMed to
accelerate growth.
|
Aurora-
CanniMed’s Combined
Strength
s
In addition to Aurora’s standalone strengths, which could be
leveraged to build CanniMed’s brand and revenues, a combined Aurora-CanniMed
would have:
|
|
1.
|
Over 130,000 kg of Funded Capacity
. Funded
capacity of over 130,000 kilograms of annual production (including current
facilities and facilities under construction), with significant additional
capacity planned;
|
|
|
|
|
|
|
2.
|
Expanded International Presence
– A strengthened
international presence with operations and agreements across North
America, the European Union, Australia, South Africa, and the Cayman
Islands;
|
|
|
|
|
|
|
3.
|
Six State-of-the-Art Facilities
. Significant
cultivation capacity with six state-of-the-art facilities;
|
|
|
|
|
|
|
4.
|
Increased Export Capacity
. Multiple EU
GMP-compliant production facilities and significantly increased export
capacity;
|
|
|
|
|
|
|
5.
|
Genetics
. Expansion of both companies’ portfolio
of genetics;
|
|
|
|
|
|
|
6.
|
Broader Product Portfolio
. The combination of each
company’s product lines will broaden the number of product offerings,
delivery mechanisms and devices;
|
|
|
|
|
|
|
7.
|
Strategic Product Synergies
. Complementary product
offerings which will provide better opportunities for market penetration
in new sectors; and
|
- 11 -
|
|
8.
|
Improved Yields
. Expected enhanced production
yields and product quality through cross-application of proprietary
technologies and intellectual property from each of Aurora and
CanniMed.
|
Acknowledgement of CanniMed Special Committee
Aurora acknowledges that, as announced in a press release on
November 22, 2017, the Board of Directors of CanniMed has formed a Special
Committee to review the Offer, and Aurora continues to remain open to a dialogue
whereby the parties can work toward a constructive, mutually agreeable
transaction in a timely manner.
Aurora takes the position that the initial decision of CanniMed
not to explore the Offer as extremely unfortunate. However, Aurora is hopeful
that CanniMed’s Special Committee will see, as the Corporation does, that the
financial and strategic rationales for a combination with Aurora are compelling,
and that the transaction is in the best interests of CanniMed’s shareholders.
Accordingly, Aurora remains available for productive conversations with the
Special Committee such that the benefits of the combination can begin to be
realized by the shareholders of both Aurora and CanniMed as soon as possible.
Insiders of the Corporation
As at the date hereof, no director or officer of the
Corporation, nor, to the knowledge of the directors and officers of the
Corporation after reasonable enquiry, (i) any associate or Affiliate of an
insider of the Corporation or (ii) any insider of the Corporation (other than a
director or officer of the Corporation), beneficially owns or exercises control
or direction over any of the securities of CanniMed.
Locked-Up Shareholders
The Locked-up Shareholders include CanniMed’s three largest
shareholders, which represent shareholders holding 38% of the CanniMed Shares,
as at November 12, 2017. They have already agreed to tender their shares in
favour of the Offer and are precluded from tendering any of their common shares
in favour of any other competing acquisition proposal relating to CanniMed.
Consolidated Capitalization
The following table sets out information concerning the
consolidated capitalization of the Corporation as at September 30, 2017, before
and after giving effect to the issuance by the Corporation of the Aurora Shares
as consideration under the Offer. This table should be read in conjunction with:
(a) audited consolidated financial statements of Aurora for the years ended June
30, 2017 and June 30, 2016, and the notes and the auditors’ report in respect
thereof; (b) unaudited condensed interim consolidated financial statements of
Aurora for the three months ended September 30, 2017; (c) unaudited condensed
interim consolidated financial statements of CanniMed for the three and nine
months ended July 31, 2017; and (d) pro forma condensed interim consolidated
statements of financial position as at September 30, 2017 attached hereto as
Appendix C.
|
|
|
|
Aurora
|
|
|
CanniMed
|
|
|
|
|
|
Aurora
|
|
|
|
|
|
Sept
30,
|
|
|
Jul
31,
|
|
|
Pro
Forma
|
|
|
Pro
|
|
|
|
|
|
2017
|
|
|
2017
|
|
|
Adjustments
|
|
|
Forma
|
|
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
|
Statement of Financial
Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
193,236
|
|
|
67,052
|
|
|
—
|
|
|
260,288
|
|
|
|
Total Assets
|
|
347,834
|
|
|
107,661
|
|
|
481,694
|
|
|
937,189
|
|
|
|
Current Liabilities
|
|
23,562
|
|
|
5,453
|
|
|
5,470
|
|
|
34,485
|
|
|
|
Total Liabilities
|
|
102,918
|
|
|
16,833
|
|
|
5,470
|
|
|
125,221
|
|
|
|
Shareholders’ Equity
|
|
244,916
|
|
|
90,828
|
|
|
476,224
|
|
|
811,968
|
|
- 12 -
Recommendation of the Board of Directors
The Board of Directors unanimously recommends that
Shareholders vote FOR the Issuance Resolution.
Notwithstanding the recommendation of the Board of Directors
that Shareholders vote FOR the Issuance Resolution, Shareholders should make
their own decision whether to vote their Common Shares FOR the Issuance
Resolution and, if appropriate, should consult their own financial, legal, tax
or other professional advisor in making that decision.
RISK FACTORS
Shareholders should carefully consider the following risk
factors related to the approval of the Issuance Resolution and the Offer. Such
risks may not be the only risks applicable to the approval of the Issuance
Resolution and the Offer. Additional risks and uncertainties not presently known
by the Corporation or that the Corporation currently believes are not material
may also materially and adversely affect the successful completion of the Offer
or the business, operations, prospects, financial condition, financial
performance, cash flows or reputation of the Corporation.
The Offer may not be Completed for a Variety of
Reasons
In addition to various risks identified under the heading
“Forward-Looking Statements and Information”, completion of the Offer is subject
to satisfaction or waiver of a number of conditions, certain of which are
outside the control of the Corporation, including, but not limited to CanniMed
Shareholders tendering a sufficient number of CanniMed Shares to the Offer, and
the Corporation obtaining the Regulatory Approvals, as needed. There is no
certainty, nor can the Corporation provide any assurance, that the conditions of
the Offer will be satisfied.
If the Offer is completed, the market for CanniMed Shares
may be adversely affected, CanniMed Shares may be delisted and CanniMed may
cease to be a reporting issuer.
The purchase of any CanniMed Shares under the Offer will reduce
the number of CanniMed Shares that might otherwise trade publicly, as well as
the number of CanniMed Shareholders, and, depending on the number of CanniMed
Shareholders participating in the Offer and the number of CanniMed Shares
deposited by such CanniMed Shareholders under the Offer, successful completion
of the Offer would likely adversely affect the liquidity and market value of the
remaining CanniMed Shares held by the public. After the purchase of the CanniMed
Shares under the Offer, the Corporation may be able to cause CanniMed to
eliminate any public reporting obligations of CanniMed under applicable Canadian
Securities Laws. The rules and regulations of the TSX establish certain criteria
that, if not met, could lead to the delisting of the CanniMed Shares from the
TSX. Although it is possible that the CanniMed Shares could be traded on other
securities exchanges or in the over-the-counter market, and price quotations
would be reported by such exchanges or by other sources, there can be no
assurance that any such trading or quotations will occur. In addition, the
extent of the public market for the CanniMed Shares and the availability of such
quotations would depend upon the number of holders and/or the aggregate market
value of the CanniMed Shares remaining at such time and the interest in
maintaining a market in the CanniMed Shares on the part of securities firms. The
Corporation intends to cause CanniMed to apply to delist the CanniMed Shares
from the TSX as soon as practicable after the completion of the Offer or any
Compulsory Acquisition or Subsequent Acquisition Transaction. If the CanniMed
Shares are delisted and if CanniMed ceases to be a “public corporation” for the
purposes of the Tax Act of any reason, CanniMed Shares may cease to be qualified investments for trusts governed by RRSPs, RRIFs,
registered education savings plans, registered disability savings plans,
deferred profit sharing plans and tax free savings accounts.
- 13 -
The issuance of Aurora Shares as consideration under the
Offer could adversely affect the market price of Aurora Shares after the take up
of CanniMed Shares under the Offer.
If the fully diluted CanniMed Shares are tendered to the Offer,
a significant number of additional Aurora Shares will be available for trading
in the public market. The overall increase in the number of Aurora Shares may
lead to sales of such shares or the perception that such sales may occur, either
of which may adversely affect the market for, and the market price of, Aurora
Shares. The perceived risk of substantial sales of Aurora Shares, as well as any
actual sales of such Aurora Shares in the public market, could adversely affect
the market price of Aurora Shares.
The acquisition of all of the outstanding CanniMed Shares
might not be successfully completed without the possibility of CanniMed
Shareholders exercising dissent and appraisal rights in connection with a
Compulsory Acquisition or a Subsequent Acquisition Transaction.
In order for the Corporation to acquire all of the issued and
outstanding CanniMed Shares, it will likely be necessary, following consummation
of the Offer, to effect a Compulsory Acquisition or Subsequent Acquisition
Transaction. A Compulsory Acquisition or Subsequent Acquisition Transaction may
result in CanniMed Shareholders having the right to dissent and demand payment
of the fair value of their CanniMed Shares. If the statutory procedures
governing dissent rights are available and are complied with, this right could
lead to a judicial determination of the fair value required to be paid to such
dissenting CanniMed Shareholders for their CanniMed Shares that is different
from the consideration to be paid under the Offer. There is no assurance that a
Compulsory Acquisition or Subsequent Acquisition Transaction can be completed
without CanniMed Shareholders exercising dissent rights in respect of a
substantial number of CanniMed Shares, which could result in the requirement to
make a substantial cash payment that could have an adverse effect on the
Corporation’s financial position and liquidity.
The tax consequences to a CanniMed Shareholder under the Offer
may differ materially from the tax consequences to a CanniMed Shareholder under
a Compulsory Acquisition or Subsequent Acquisition Transaction.
After consummation of the Offer, the
Corporation
’
s interest could differ from that of the remaining
minority CanniMed Shareholders.
After the consummation of the Offer, the Corporation intends to
exercise its statutory right of Compulsory Acquisition, if available, to acquire
all of the CanniMed Shares not deposited under the Offer or, if such statutory
right of acquisition is not available or the Corporation elects not to pursue
such right, to integrate CanniMed and the Corporation, by a Subsequent
Acquisition Transaction for the purpose of enabling the Corporation or an
affiliate to acquire all CanniMed Shares not acquired under the Offer. In any of
these contexts, the Corporation’s interests with respect to CanniMed may differ
from, and conflict with, those of any remaining minority CanniMed
Shareholders.
Change of control provisions in CanniMed
’
s
agreements triggered upon the acquisition of CanniMed may lead to adverse
consequences.
CanniMed may be a party to agreements that contain change of
control provisions that may be triggered following successful completion of the
Offer, since the Corporation would then hold CanniMed Shares representing a
majority of the voting rights of CanniMed. The operation of these change of
control provisions, if triggered, could result in unanticipated expenses and/or
cash payments following the consummation of the Offer or adversely affect
CanniMed’s results of operations and financial condition or, following the
completion of any Compulsory Acquisition or Subsequent Acquisition Transaction,
the results of operations and financial condition of CanniMed and the
Corporation on a combined basis. Unless these change of control provisions are
waived by the other party to any such agreements, the operation of any of these
provisions could adversely affect the results of operations and financial
condition of CanniMed or, following the completion of any Compulsory Acquisition
or Subsequent Acquisition Transaction, the results of operations and
financial condition of CanniMed and the Corporation on a combined basis.
- 14 -
The Corporation has been unable to independently verify the
accuracy and completeness of CanniMed information.
The Corporation has not had access to CanniMed’s detailed
accounting records or other non-public books and records. The Corporation has
not been able to independently assess or verify the information in CanniMed’s
publicly filed documents, including its financial statements. As a result, all
historical information regarding CanniMed contained herein, including all of
CanniMed’s financial information and all pro forma financial information
reflecting the pro forma effects of a combination of CanniMed and the
Corporation derived in part from CanniMed’s financial information, has been
derived, by necessity, from CanniMed’s public reports and securities filings.
Although the Corporation has no reason to doubt the accuracy of CanniMed’s
publicly disclosed information, any inaccuracy or material omission in
CanniMed’s publicly available information, including the information about or
relating to CanniMed contained in the Offer, could result in unanticipated
liabilities or expenses, increase the cost of integrating the two companies, or
adversely affect the operational plans of the combined company and its results
of operations and financial condition.
The Corporation may not realize all of the anticipated
benefits and synergies from the completion of the transaction.
The Offer has been made with the expectation that its
successful completion will result in certain synergies and costs savings. These
anticipated benefits will depend in part on whether the operations of CanniMed
and the Corporation can be integrated in an efficient and effective manner and
the timing and manner of completion of a Compulsory Acquisition or Subsequent
Acquisition Transaction, if any. The integration of the two companies may
present challenges to management of the Corporation, and the Corporation may
encounter unanticipated delays, liabilities and costs. If the Corporation does
not acquire at least 66 2/3% of the CanniMed Shares and cannot or does not
complete a Compulsory Acquisition or Subsequent Acquisition Transaction, it will
not be able to fully and efficiently integrate CanniMed into its business. There
can be no assurance that the operational or other synergies that the Corporation
expects to realize in the combined entity will be ultimately realized, or that
the integration of the operations of both companies will be timely or
effectively accomplished, or will ultimately result in cost reductions.
Risks Relating to CanniMed
’
s Business.
Shareholders should read and consider the risk factors specific
to CanniMed’s business that will also affect the Corporation after the
successful completion of the Offer.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION
PLANS
The following table sets forth the details of all equity
compensation plans of the Corporation as of the Record Date, being the
Corporation’s current 10% rolling share option plan, effective September 25,
2017 (the “
Share Option Plan
”), and the previous share option plan (the
“
2007 Share Option Plan
” and, together with the Share Option Plan, the
“
Share Option Plans
”). Also on September 25, 2017, the Board approved a
fixed restricted share unit (“
RSU
”) plan (the “
RSU Plan
”) allowing
for the grant of a maximum of 10,000,000 restricted share units.
|
Plan
Category
|
Number of securities to
be issued upon
exercise
of outstanding options,
under equity
compensation plans
(a)
|
Weighted-average
exercise price of
outstanding options
(b)
|
Number of securities remaining
available for
future issuance
under equity compensation
plans
(excluding securities
reflected in column (a))
(c)
(1)
|
|
Share Option Plans
|
20,146,938
(1)
|
$1.79
|
25,139,085
(2)(3)
|
|
RSU Plan
|
2,000,000
(4)
|
N/A
|
8,000,000
(5)
|
- 15 -
|
Plan Category
|
Number of securities to
be issued upon
exercise
of outstanding options,
under equity
compensation plans
(a)
|
Weighted-average
exercise price of
outstanding options
(b)
|
Number of securities remaining
available for
future issuance
under equity compensation
plans
(excluding securities
reflected in column (a))
(c)
(1)
|
Equity compensation plans
not approved by
securityholders
|
None
|
N/A
|
N/A
|
|
Total
|
22,146,938
|
$1.79
|
33,139,085
(2)(3)
|
______________________________
Notes:
|
(1)
|
The outstanding options are governed by the Corporation’s
Share Option Plan.
|
|
(2)
|
Represents the aggregate number of shares remaining
available for issuance under the Corporation’s Share Option Plan at
November 30, 2017, less the number of Common Shares issuable upon the
exercise of outstanding Options.
|
|
(3)
|
The Corporation has an incentive share option plan, which
provides that the Board may from time to time, in its discretion, and in
accordance with the TSX requirements, grant non-transferable options to
purchase Aurora Shares, provided that the number of Common Shares reserved
for issuance will not exceed 10% of the issued and outstanding Aurora
Shares of the
|
|
(4)
|
Corporation. At November 30, 2017 there were 452,860,231
Aurora Shares issued and outstanding.
|
|
|
The Aurora Shareholders approved the RSU Plan on November
13, 2017, and at the same time they approved the grant of 2,127,128 RSUs
issued on September 29, 2017. As of November 30, 2017, 127,128 RSUs have
been exercised.
|
|
(5)
|
The aggregate maximum number of Aurora Shares that may be
reserved for issuance under the RSU Plan is 10,000,000, which at November
30, 2017 represented 2.21% of the issued and outstanding Aurora
Shares.
|
Share Option Plan and the RSU Plan
In order to provide a long-term component to the executive
compensation program, certain officers, employees and consultants of the
Corporation are granted share options (“
Share Options
”) pursuant to the
Share Option Plans from time to time. On Monday, November 13, 2017 the Aurora
Shareholders approved the new 10% rolling share option plan (defined above as
the “
Share Option Plan
”) and the fixed number restricted share unit plan
(defined above as the “
RSU Plan
”) (together the “
Share Compensation
Plans
”), both of which provide that certain employees of the Corporation may
have vested in them Share Options, or Restricted Share Units at the discretion
of the Board of Directors, which are to be issued at the market price of the
Common Shares, being a five day weighted average trading price at the time of
the grant. The Share Option Plan replaced the 2007 Share Option Plan. The
details of the Share Option Plan and the RSU Plan are contained in the
Corporation’s Information Circular dated October 2, 2017.
The principal purposes of the Share Compensation Plans are:
|
|
1.
|
to enable the Corporation (and its Affiliates) to attract
and retain qualified officers, employees and consultants;
|
|
|
|
|
|
|
2.
|
to promote a proprietary interest in the Corporation on
the part of officers and employees of the Corporation (and its Affiliates)
and consultants to the Corporation (and its Affiliates), by providing such
persons with the opportunity to acquire an equity interest in the
Corporation or augment their equity interest in the Corporation, as the
case may be; and
|
|
|
|
|
|
|
3.
|
to provide an additional incentive to officers, employees
and consultants in their efforts on behalf of the Corporation (and its
Affiliates).
|
- 16 -
Under the Share Option Plan, the Board of Directors may, from
time to time, issue Share Options to officers, employees or consultants of the
Corporation (and its Affiliates) and persons who provide services to the
Corporation (and its Affiliates).
The maximum number of Common Shares reserved for issuance
pursuant to Share Options granted under the Share Option Plan may not exceed 10%
of the issued and outstanding Common Shares from time to time.
The TSX has conditionally accepted the Share Compensation Plans
and the grant of the pre-approval RSUs.
For more information about the Share Compensation Plans, see
“Securities Authorized for Issuance Under Equity Compensation Plans” and
“Schedule C – Aurora Cannabis Inc. – Fixed Restricted Share Unit Plan” and
Schedule D – Aurora Cannabis Inc. – New Form 10% “Rolling” Share Option Plan” in
the Corporation’s information circular dated October 2, 2017 with respect to the
annual general and special meeting of Shareholders held on November 13, 2017, a
copy of which can be found on SEDAR at
www.sedar.com
.
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
At the date of this Information Circular no director, executive
officer, employee, nor any associate of any such director, executive officer, of
the Corporation or any of its subsidiaries, is indebted to the Corporation or
any of its subsidiaries or indebted to another entity where such indebtedness is
or has been the subject of a guarantee, support agreement, letter of credit or
other similar arrangement or understanding provided by the Corporation or any of
its subsidiaries, other than routine indebtedness.
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
The Corporation is not aware of any material interest, direct
or indirect, of any Informed Person of the Corporation, or any associate or
Affiliate of any Informed Person, in any transaction since the commencement of
the Corporation’s most recently completed financial year, or in any proposed
transaction, that has materially affected or would materially affect the
Corporation or any of its Subsidiaries.
MANAGEMENT CONTRACTS
Except as set out herein, there are no management functions of
the Corporation which are to any substantial degree performed by a person or
company other than the directors or executive officers of the Company.
OTHER BUSINESS
The directors and management of the Corporation are not aware
of any other business to be brought before the Meeting other than the matters
referred to in the Notice of Meeting. However, if any other matter is properly
brought before the Meeting, the accompanying form of proxy confers discretionary
authority on the proxyholder to vote with respect to such matter.
ADDITIONAL INFORMATION
Additional information about the Corporation, including
financial information, is provided in the Corporation’s AIF, the Corporation’s
audited consolidated financial statements for the year ended June 30, 2017, the
Corporation’s Interim consolidated financial statements for the three months
ended September 30, 2017, and the Corporation’s Annual MD&A and Interim
MD&A respectively, which can be found, along with all other publicly filed
documents, including the Offer and Bid Circular, on SEDAR at
www.sedar.com
.
Shareholders are encouraged to contact the Corporation at Suite
1500 - 1199 West Hastings Street, Vancouver, British Columbia, Canada V6E 3T5 or
toll free at 1-844-601-2448 (within Canada and the US) with any questions.
- 17 -
APPROVAL
The contents and sending of this Information Circular and the
accompanying Notice of Meeting have been approved by the Board.
Dated at Vancouver, British Columbia December 8, 2017.
|
BY ORDER OF THE BOARD OF
|
|
DIRECTORS
|
|
|
|
(signed) “
Terry Booth
”
|
|
|
|
Terry Booth
|
|
Chief Executive Officer
|
FORWARD LOOKING STATEMENTS AND INFORMATION
This Information Circular and certain documents incorporated by
reference herein contain forward-looking information (“forward-looking
information” or “forward-looking statements”) within the meaning of applicable
Canadian Securities Laws. Forward-looking statements are often, but not always,
identified by the use of words such as “anticipate”, “believe”, “plan”,
“intend”, “objective”, “scheduled”, “continuous”, “ongoing”, “estimate”,
“expect”, “may”, “will”, “project”, “should”, or similar words suggesting future
events, circumstances or outcomes. In particular, statements and information
contained in this Information Circular, the pro forma financial statements, as
well as statements relating to the tax treatment of CanniMed Shareholders, the
satisfaction of the conditions of the Offer, the anticipated successful
completion of the Offer, the process and timing for obtaining the Regulatory
Approvals applicable to the Offer and other approvals, including the approval of
the shareholders of the Corporation, the expected Expiry Time, the estimated
expenses of the Offer, the completion of a Compulsory Acquisition or a
Subsequent Acquisition Transaction, the anticipated effect of the Offer, the
Corporation’s plans for CanniMed if the Offer is successful, expected benefits
to CanniMed Shareholders of tendering CanniMed Shares to the Offer, CanniMed
Shareholders entitlement to dividends and the timing thereof, the Corporation’s
capitalization strength following successful completion of the Offer, and other
statements that are not historical facts, are forward-looking statements in
addition to certain statements and information contained elsewhere in this
document and in the documents incorporated by reference concerning the business,
operations and financial performance and condition of the Corporation and
CanniMed that are not historical facts are forward-looking statements or
forward-looking information within the meaning of applicable securities laws.
All such forward-looking statements are subject to important risks,
uncertainties and assumptions. It is important to know that:
|
|
•
|
unless otherwise indicated, forward-looking statements in
this document describe the Corporation’s expectations as at the date
hereof and, accordingly, are subject to change after such date;
|
|
|
|
|
|
|
•
|
forward-looking statements in the documents incorporated
by reference herein are as at the dates specified in the applicable
documents and are expressly qualified by the statements made therein;
|
|
|
|
|
|
|
•
|
the Corporation’s actual results and events could differ
materially from those expressed or implied in the forward-looking
statements in this Information Circular or documents incorporated by
reference herein, if known or unknown risks affect the business of the
Corporation, or if its estimates or assumptions turn out to be inaccurate.
As a result, the Corporation cannot guarantee that the results or events
expressed or implied in any forward-looking statement will materialize,
and accordingly, you are cautioned against relying on the forward-looking
statements; and
|
|
|
|
|
|
|
•
|
the Corporation disclaims any intention and assumes no
obligation to update or revise any forward-looking statement even if new
information becomes available, as a result of future events or for any
other reason, except in accordance with applicable Canadian Securities
Laws.
|
Forward-looking statements are based upon, among other things,
the opinions and expectations of management of the Corporation as at the
effective date of such statements and, in some cases, information supplied by
third parties. Although the Corporation believes the opinions and expectations
reflected in such forward-looking statements are based upon reasonable
assumptions and that information received from third parties is reliable, it can
give no assurance that those opinions and expectations will prove to have been
correct. The Corporation made a number of assumptions in making forward-looking
statements in the Offer and the Bid Circular and in this Information Circular,
including the documents incorporated by reference. In particular, in making
these statements, the Corporation has assumed, among other things, that the
Corporation will receive the Regulatory Approvals applicable to the Offer on the
timelines and in the manner currently anticipated and that the other conditions
to the Offer will be satisfied on a timely basis in accordance with their
terms.
Forward-looking information respecting the Offer, various terms
of the Offer and the anticipated timing of certain steps or events associated
with the Offer is based upon various assumptions and factors, including publicly
reported financial information concerning CanniMed, publicly reported
information concerning the number of outstanding CanniMed Shares and the number
of options and other convertible or exchangeable rights and securities granted
by CanniMed (entitling holders thereof to acquire CanniMed Shares), advice from
professional advisors with respect to statutorily mandated time frames for
various applications and steps/events associated with the Offer, that CanniMed
has made full and accurate disclosure of all material information concerning
CanniMed in accordance with applicable Canadian Securities Laws (including
disclosure of all material contracts and existing and potential contingent
liabilities) and that there have been no material changes in the business,
affairs, capital, prospects or assets of CanniMed. Forward-looking information
concerning possible synergies and efficiencies that may be achieved upon a
combination of the businesses of the Corporation and CanniMed and other benefits
of a combination of the businesses of the Corporation and CanniMed is based upon
various assumptions and factors, including (in addition to assumptions and
factors noted above and elsewhere in this Information Circular), financial
information of CanniMed available through publicly filed documents and the
Corporation’s general industry knowledge and experience. Forward-looking
information concerning the business and geographical diversification that may be
achieved upon a combination of the businesses of the Corporation and CanniMed is
based upon various assumptions and factors, including (in addition to
assumptions and factors noted above and elsewhere in this Information Circular)
publicly available information concerning the location and size of various
CanniMed operating facilities and the Corporation’s general industry knowledge
and experience. Forward-looking information concerning the anticipated market
capitalization of the Corporation following successful completion of the Offer
is based upon various assumptions and factors including the current market
capitalization of both the Corporation and CanniMed, advice from the
Corporation’s financial advisor, the absence of market disruptions that would
affect the trading price of Aurora Shares and the absence of material adverse
changes or developments affecting the Corporation or CanniMed.
- 2 -
The Corporation cautions you that the risks described or
referenced in this Information Circular are not the only ones that could affect
the Offer or the Corporation. Additional risks and uncertainties not presently
known by the Corporation or that the Corporation currently believes are not
material may also materially and adversely affect the receipt of the Regulatory
Approvals, the satisfaction or waiver by the Corporation of any of the
conditions of the Offer, the successful completion of the Offer or the business,
operations, financial condition, financial performance, cash flows, reputation
or prospects of the Corporation. Except as otherwise indicated by the
Corporation, forward-looking statements do not reflect the potential impact of
any special initiatives or of any dispositions, monetizations, mergers,
acquisitions, other business combinations or other transactions that may be
announced or that may occur after November 23, 2017. The financial impact of any
such special initiatives or transactions may be complex and will depend on the
facts particular to each of them. The Corporation, therefore, cannot describe
the expected effects in a meaningful way or in the same way it presents known
risks affecting its business. Forward-looking statements are presented herein
for the purpose of providing information about the Corporation and the Offer and
its anticipated impacts.
NOTICE REGARDING CANNIMED INFORMATION
Except as otherwise indicated herein, the information
concerning CanniMed contained in this document has been taken from, or is based
upon, publicly available information filed by CanniMed with various Securities
Regulatory Authorities in Canada and other public sources available as at
November 30, 2017. As of the date of the Offer, the Corporation has not had
access to the non-public books and records of CanniMed and the Corporation is
not in a position to independently assess or verify certain of the information
in CanniMed
’
s publicly filed documents, including its financial
statements. CanniMed has not reviewed this document and has not confirmed the
accuracy and completeness of the information concerning CanniMed contained
herein. While the Corporation has no reason to believe that such information is
inaccurate or incomplete, the Corporation has no means of verifying the accuracy
or completeness of any information contained herein that is derived from
publicly available information regarding CanniMed or whether there has been any
failure by CanniMed to disclose events or facts that may have occurred or may
affect the significance or accuracy of any such information. Neither the
Corporation, nor any of the directors or officers of the Corporation, assumes
any responsibility for the accuracy or completeness of such information or any
failure by CanniMed to disclose events or facts which may have occurred or which
may affect the significance or accuracy of any such information, but which are
unknown to the Corporation or such Persons. The documents of CanniMed, filed
with the various provincial Securities Regulatory Authorities in Canada,
specifically incorporated by reference in the Bid Circular contain
forward-looking statements within the meaning of applicable Canadian Securities
Laws. The forward-looking statements contained in the documents of CanniMed
incorporated by reference in this Information Circular are subject to the
qualifications, assumptions and cautionary statements in respect thereof, as set
out in the respective documents in which such forward- looking statements are
contained. The Corporation disclaims any intention and assumes no obligation to
update or revise any forward- looking statement contained in the documents of
CanniMed incorporated by reference in this Information Circular even if new
information becomes available, as a result of future events
or for any other reason, except in accordance with applicable Canadian
Securities Laws.
- 3 -
Unaudited Pro Forma Financial Statements
Shareholders should refer to Appendix C to this Information
Circular for the unaudited pro forma consolidated statement of financial
position of the Corporation, giving effect to the proposed acquisition of all
outstanding CanniMed Shares under the Offer, as set out therein. Such unaudited
pro forma consolidated financial statements have been prepared using certain of
the Corporation’s and CanniMed’s respective financial statements as more
particularly described in the notes to the unaudited pro forma consolidated
financial statements. In preparing the unaudited pro forma consolidated
financial statements, Management of the Corporation has made certain assumptions
that affect the amounts reported in the unaudited pro forma consolidated
financial statements.
Such unaudited pro forma consolidated financial
statements are not intended to be indicative of the results that would have
actually occurred, had the events reflected therein occurred on the dates
indicated, and do not purport to project the future financial position of the
Corporation. Actual amounts recorded upon consummation of the Offer will differ
from such unaudited pro forma consolidated financial statements. Any potential
synergies that may be realized following consummation of the Offer have been
excluded from such unaudited pro forma consolidated financial statements.
Shareholders are cautioned to not place undue reliance on such unaudited pro
forma consolidated financial statements.
APPENDIX A
AURORA CANNABIS INC.
ISSUANCE RESOLUTION
“BE IT RESOLVED THAT:
|
1.
|
the issuance of up to an aggregate of 170,000,000 common
shares (the “
Common Shares
”) of Aurora Cannabis Inc. (the
“
Corporation
”) as may be required to be issued pursuant to the
terms of the offer (the “
Offer
”) to purchase all of the common
shares (the “
CanniMed Shares”)
, dated November 24, 2017, made to
the holders of CanniMed Shares (the “
CanniMed Common Shareholders
”)
of CanniMed Therapeutics Inc. (“
CanniMed
”) by the
|
|
|
|
|
|
Corporation, as such Offer may be amended or varied by
the Corporation, in its sole discretion, without further notice to, or
approval of, the holders (the “
Shareholders
”) of Common Shares of
the Corporation, be and is hereby authorized and approved;
|
|
|
|
|
2.
|
any one officer or director of the Corporation be and is
hereby authorized and directed, for and on behalf of the Corporation, to
do all such further acts and things and to execute and deliver (whether
under corporate seal or otherwise) or sign and file (as the case may be)
all such further agreements, instruments, certificates, notices,
acceptances and other documents (including any documents required under
applicable laws or regulatory policies), as such officer or director may
consider necessary or advisable having regard to the foregoing paragraph
of this resolution; and
|
|
|
|
|
3.
|
notwithstanding that this resolution has been duly passed
by the Shareholders, the Board of Directors of the Corporation may, in its
sole discretion, revoke this resolution, in whole or in part, without any
further approval of the Shareholders.”
|
APPENDIX B
AURORA CANNABIS INC.
INFORMATION CONCERNING CANNIMED
Notice Regarding CanniMed Information
Except as otherwise indicated herein, the information
concerning CanniMed contained in this document has been taken from, or is based
upon, publicly available information filed by CanniMed with various Securities
Regulatory Authorities in Canada and other public sources available as at
November 30, 2017. As of the date of the Offer, the Corporation has not had
access to the non-public books and records of CanniMed and the Corporation is
not in a position to independently assess or verify certain of the information
in CanniMed
’
s publicly filed documents, including its financial
statements. CanniMed has not reviewed this document and has not confirmed the
accuracy and completeness of the information concerning CanniMed contained
herein. While the Corporation has no reason to believe that such information is
inaccurate or incomplete, the Corporation has no means of verifying the accuracy
or completeness of any information contained herein that is derived from
publicly available information regarding CanniMed or whether there has been any
failure by CanniMed to disclose events or facts that may have occurred or may
affect the significance or accuracy of any such information. Neither the
Corporation, nor any of the directors or officers of the Corporation, assumes
any responsibility for the accuracy or completeness of such information or any
failure by CanniMed to disclose events or facts which may have occurred or which
may affect the significance or accuracy of any such information, but which are
unknown to the Corporation or such persons.
CanniMed
CanniMed was incorporated under the laws of Canada. The head
office and registered office of CanniMed is located at #1 Plant Technology Road,
Saskatoon, SK, Canada, S7K 3J8.
CanniMed has three wholly owned subsidiaries: Prairie Plant
Systems, Inc. (“PPS”), CanniMed Ltd. (“CML”) and SubTerra LLC (“SubTerra”).
CanniMed was incorporated under the laws of Canada. PPS and CML were both
incorporated under the laws of Saskatchewan. CanniMed, PPS and CanniMed are all
headquartered in Saskatoon, Saskatchewan. SubTerra was incorporated under
Michigan law and is located in White Pine, Michigan.
CanniMed is a Canadian based plant biotechnology company. Since
1988, when its subsidiary PPS was incorporated, the Corporation has been
involved in plant biotechnology research, product development and production of
plant based materials for biopharmaceutical, agricultural and environmental
market applications. Operations and production are subject to regulatory
approval.
CanniMed has produced medical marijuana since 2000 under
applicable licenses from Health Canada and is focused on developing a
pharmaceutical brand supported by clinical trials and an extensive product
portfolio. CanniMed sells in the Canadian and international medical marijuana
markets and is involved in the development of cannabinoids as mainstream
pharmaceutical products.
According to public documents filed under the CanniMed SEDAR
profile, CanniMed is a Canadian-based, international plant biopharmaceutical
company and a leader in the Canadian medical cannabis industry, with 15 years of
pharmaceutical cannabis cultivation experience, state-of-the-art, GMP-compliant
production process and world class research and development platforms with a
wide range of pharmaceutical-grade cannabis products. In addition, CanniMed has
an active plant biotechnology research and product development program focused
on the production of plant-based materials for pharmaceutical, agricultural and
environmental applications. Through its subsidiaries, CanniMed was the first
producer to be licensed under the
Marihuana for Medical Purpsoses
Regulations, the
predecessor to the current
Access to Cannabis for
Medical Purposes Regulations
. It was the sole supplier to the Health Canada
under the former medical marijuana system for 13 years, and has been producing
safe and consistent medical marijuana for thousands of Canadian patients, with
no incidence of product diversion or recalls.
- 2 -
Authorized and Outstanding Share Capital
At July 31, 2017, the authorized share capital of the CanniMed
consists of Class “A” common shares (also called CanniMed Shares). The rights,
privileges, restrictions and conditions attached to each series of shares are
determined by the Board of Directors of CanniMed at the time of creation of such
series. The CanniMed Shares are entitled to vote at all meetings of the
shareholders and, upon dissolution or any other distribution of assets, to
receive such assets of the Company as are distributable to the holders of the
common shares.
As at July 31, 2017, 22,958,261 CanniMed Shares were issued and
outstanding.
Principal Holders of CanniMed Common Shares
Based on publicly available information as at February 28,
2017, the Corporation understands that no person beneficially owns, directly or
indirectly, or exercises control or direction over, 10% or more of any class of
securities of CanniMed, except as follows:
|
|
Number of CanniMed Common
|
Percentage of Outstanding Savanna
|
|
Name
|
Shares
|
Common
Shares
|
|
|
|
|
|
Golden Opportunities Fund Inc.
|
3,978,668
|
17.7%
|
Price Range and Trading Volume of the CanniMed Common Shares
The CanniMed Common Shares are listed and traded under the
symbol “CMED” on the TSX. The following table sets out, the high and low trading
prices (in Canadian dollars) and trading volumes of the CanniMed Common Shares
on the TSX.
|
|
|
|
High
|
|
|
Low
|
|
|
|
|
|
|
Month
|
|
($)
|
|
|
($)
|
|
|
Total Volume
|
|
|
|
December 2016
|
|
13.18
|
|
|
10.28
|
|
|
1,993,112
|
|
|
|
January 2017
|
|
12.40
|
|
|
10.78
|
|
|
2,883,087
|
|
|
|
February 2017
|
|
13.35
|
|
|
11.90
|
|
|
1,694,507
|
|
|
|
March 2017
|
|
12.70
|
|
|
10.35
|
|
|
1,336,980
|
|
|
|
April 2017
|
|
13.25
|
|
|
10.40
|
|
|
1,988,641
|
|
|
|
May 2017
|
|
11.60
|
|
|
8.65
|
|
|
998,289
|
|
|
|
June 2017
|
|
9.20
|
|
|
7.32
|
|
|
1,623,490
|
|
|
|
July 2017
|
|
10.75
|
|
|
7.90
|
|
|
762,245
|
|
|
|
August 2017
|
|
10.60
|
|
|
9.00
|
|
|
580,406
|
|
|
|
September 2017
|
|
10.16
|
|
|
8.59
|
|
|
834,184
|
|
|
|
October 2017
|
|
13.00
|
|
|
9.65
|
|
|
1,357,229
|
|
|
|
November 2017
|
|
21.90
|
|
|
12.54
|
|
|
5,577,643
|
|
The closing price of the CanniMed Common Shares on the TSX on
November 23, 2017, the last trading day prior to the announcement of the Offer,
was $20.98. The closing price of the CanniMed Common Shares on December 6, 2017
was $19.63.
- 3 -
Prior Sales
Based on the publicly available information, as at November 30,
2017, CanniMed had not issued any CanniMed Shares during the twelve (12) months
prior to the date of this Information Circular, except as follows:
|
Approximate Date of
Issue
|
Number of
CanniMed Shares
|
Price per
CanniMed Shares
|
Approximate
Gross Proceeds
|
|
December 29, 2016
|
3,978,668
|
$12.00
|
$69,000,000
|
Recent Developments
Newstrike Agreement
On November 17, 2017, CanniMed announced that it had entered
into a definitive arrangement agreement (the “
Newstrike Resources
Agreement
”) to acquire Newstrike Resources Ltd. (“
Newstrike
Resources
”), the parent company of Up Cannabis Inc., a licensed producer of
cannabis under the Access to Cannabis for Medical Purposes Regulations (ACMPR).
The arrangement will be by way of a plan of arrangement pursuant to which each
Newstrike Resources shareholder will receive 0.033 CanniMed shares in exchange
for each Newstrike Resources share held. Subsequent to closing of the
arrangement, the current CanniMed shareholders will own in aggregate
approximately 65% of the combined entity and the Newstrike Resources
shareholders will in aggregate own approximately 35% of the combined entity.
The Newstrike Resources Agreement provides that on closing of
the arrangement, the board of directors of the combined entity will include two
persons who will be nominated by Newstrike Resources. In addition, certain
shareholders of Newstrike will be entitled to nominate two persons to the
CanniMed board of directors at its 2018 annual shareholders’ meeting and will
have a right to nominate one person to the board at each annual meeting for so
long as they hold at least 10% of the outstanding CanniMed Shares.
Under applicable TSX rules, the transaction requires the
approval of CanniMed Common Shareholders by a majority vote, as the number of
CanniMed Shares to be issued exceeds 25% of the total number of outstanding
CanniMed Shares. A meeting of CanniMed Common Shareholders has been called by
CanniMed for January 23, 2018 to approve the issuance of the CanniMed Shares
under the arrangement.
Special Committee
On November 22, 2017 CanniMed announced that it had formed a
special committee of its of independent directors in anticipation of a potential
formal offer from Aurora Cannabis Inc. for all of the issued and outstanding
CanniMed Shares.
Offer
On November 24, 2017, the Corporation formally commenced the
Offer to purchase all of the CanniMed Shares, including any CanniMed Common
Shares that may become issued and outstanding (including upon the exercise,
exchange or conversion of any CanniMed convertible securities) prior to the
Expiry Time.
Pursuant to the Offer, a holder of CanniMed Shares will
receive, for each CanniMed Share, 4.52586207 (the “
Base Exchange Ratio
”)
Aurora Shares, subject to a maximum of $24.00 (the “
Cap Price
”) in Aurora
Shares. If, on the earlier of the Expiry Time (as defined herein) and the date
on which all conditions of the Offer have been satisfied, the 20-day volume
weighted average price of the Aurora Shares (“
Calculation Date
VWAP
”) traded on the Toronto Stock Exchange (“
TSX
”) is greater
than $5.30 per Aurora Share (“
Cap VWAP Price
”), the number of Aurora
Shares that a holder of CanniMed Shares will receive for each CanniMed Share
will be calculated by dividing the Cap Price of $24.00 by the Calculation Date
VWAP (the “
Cap Exchange Ratio
”). The number of Aurora Shares to be issued
in consideration for the CanniMed Shares, whether as a result of the application
of the Base Exchange Ratio or the Cap Exchange Ratio, is referred to herein as
the “
Offer Consideration
”.
- 4 -
The following table provides an analysis of the changes in
price of Aurora shares on the Offer Consideration.
|
Calculation
|
|
Number of
|
|
Consideration
|
|
Date VWAP
|
|
Aurora Shares
|
|
In
|
|
(Price of
Aurora
|
|
Issued per
|
|
Aurora
|
|
Shares)
|
|
Cannimed Share
|
|
Shares
|
|
$4.50
|
|
4.52586207
|
|
$20.37
|
|
$4.75
|
|
4.52586207
|
|
$21.50
|
|
$5.00
|
|
4.52586207
|
|
$22.63
|
|
$5.25
|
|
4.52586207
|
|
$23.76
|
|
$5.50
|
|
4.36363636
|
|
$24.00
|
|
$5.75
|
|
4.17391304
|
|
$24.00
|
|
$6.00
|
|
4.00000000
|
|
$24.00
|
|
$6.25
|
|
3.84000000
|
|
$24.00
|
|
$6.50
|
|
3.69230769
|
|
$24.00
|
The Offer is subject to certain conditions, including, without
limitation
|
|
1.
|
more than 66 2/3% of the CanniMed Shares (calculated on a
fully diluted basis) held by CanniMed Shareholders having been validly
tendered under the Offer and not withdrawn;
|
|
|
|
|
|
|
2.
|
the proposed acquisition of Newstrike Resources Ltd.
(“
Newstrike Resources
”) announced by CanniMed in its news release
of November 17, 2017 (the “
Newstrike News Release
”) shall not have
proceeded, and any acquisition agreement for such acquisition (the
“
Newstrike Resources Agreement
”) shall have been
terminated;
|
|
|
|
|
|
|
3.
|
the Regulatory Approvals (as defined in the Bid Circular)
and other third party approvals considered necessary by the Corporation in
relation to the Offer shall have been obtained on terms satisfactory to
the Corporation in its sole judgment;
|
|
|
|
|
|
|
4.
|
there not having occurred (in the judgment of the
Corporation) any material adverse change in respect of CanniMed;
and
|
|
|
|
|
|
|
5.
|
CanniMed shall not have taken certain actions that could
(in the judgment of the Corporation) impair the ability of the Corporation
to acquire CanniMed Shares or materially diminish the economic value to
the Corporation of the acquisition of CanniMed.
|
CanniMed Shareholder Rights Plan
On November 28, 2017, CanniMed announced that it adopted a
shareholder rights plan (the “
CanniMed Rights Plan
”). The Plan prevents
the Corporation from acquiring any CanniMed Shares other than those tendered to
its Offer or from entering into any lock-up agreements in respect of its Offer
other than those it has already entered into and filed on SEDAR.
TSX Defers Consideration of CanniMed Rights Plan
On December 5, 2017, CanniMed announced that it was notified by
the TSX that the TSX had deferred the consideration of the acceptance of
CanniMed’s Rights Plan until such time as (i) the TSX is satisfied that the
Ontario Securities Commission will not intervene pursuant to National Policy
62-202 -
Take-Over Bids - Defensive Tactics
, and (ii) the CanniMed Rights
Plan has been ratified by shareholders by May 28, 2018.
Shareholders are encouraged to read the Offer and Bid Circular
which is available under CanniMed’s profile on SEDAR at
www.sedar.com
or
by accessing the Corporation’s website at
https://auroramj.com/investors
.
Auditors, Transfer Agent and Registrar of CanniMed
The auditors of CanniMed are Deloitte LLP, Chartered
Professional Accountants, Suite 400, 122 1st Avenue South, Saskatoon,
Saskatchewan, S7K 7E5.
- 5 -
The transfer agent and registrar for the CanniMed Common Shares
is Computershare Investor Services Inc. at its principal offices in Toronto,
Ontario.
Risk Factors Relating to CanniMed
Shareholders should read and consider the risk factors specific
to CanniMed’s business that will also affect the Corporation after the
successful completion of the Offer.
Documents Incorporated by Reference
Further information regarding CanniMed and its business and
operations is incorporated by reference from documents filed by CanniMed with
the various provincial Securities Regulatory Authorities in Canada. The
Corporation understands that copies of the documents incorporated by reference
regarding CanniMed may be obtained on request without charge from the Corporate
Secretary of CanniMed at 1 Plant Technology Road, Box 19A, RR #5, Saskatoon,
Saskatchewan, S7K 3J8, Telephone: (306) 975-1207, Fax: (844) 231-8929, Email:
media@cannimed.com and by accessing CanniMed’s SEDAR profile at
www.sedar.com
.
The following documents of CanniMed, filed with the various
provincial Securities Regulatory Authorities in Canada at
www.sedar.com
,
are specifically incorporated by reference in this Information Circular:
|
|
(a)
|
interim condensed consolidated financial statements and
related management discussion and analysis as at (Q1) January 31, 2017,
(Q2) April 30, 2017 and (Q3) July 31, 2017 filed on SEDAR on March 16,
2017, June 12, 2017 and September 11, 2017, respectively; and the audited
consolidated financial statements for the year ended October 31, 2016,
together with the notes thereto and the independent auditor’s report
thereon, and related management discussion and analysis, as SEDAR filed on
February 24, 2017; and
|
|
|
|
|
|
|
(b)
|
News Release dated November 17, 2017 and SEDAR
filed;
|
|
|
|
|
|
|
(c)
|
News Release dated November 22, 2017 and SEDAR filed;
and
|
|
|
|
|
|
|
(d)
|
News Release dated November 24, 2017 and SEDAR
filed.
|
ANY STATEMENT CONTAINED IN THIS INFORMATION CIRCULAR OR IN A
DOCUMENT INCORPORATED OR DEEMED TO BE INCORPORATED BY REFERENCE IN THIS
INFORMATION CIRCULAR SHALL BE DEEMED TO BE MODIFIED OR SUPERSEDED, FOR PURPOSES
OF THIS INFORMATION CIRCULAR, TO THE EXTENT THAT A STATEMENT CONTAINED IN THIS
INFORMATION CIRCULAR OR IN ANY OTHER SUBSEQUENTLY FILED DOCUMENT THAT ALSO IS,
OR IS DEEMED TO BE, INCORPORATED BY REFERENCE IN THIS INFORMATION CIRCULAR
MODIFIES, REPLACES OR SUPERSEDES SUCH STATEMENT. ANY STATEMENT SO MODIFIED OR
SUPERSEDED SHALL NOT BE DEEMED, EXCEPT AS SO MODIFIED OR SUPERSEDED, TO
CONSTITUTE A PART OF IN THIS INFORMATION CIRCULAR. THE MODIFYING OR SUPERSEDING
STATEMENT NEED NOT STATE THAT IT HAS MODIFIED OR SUPERSEDED A PRIOR STATEMENT OR
INCLUDE ANY OTHER INFORMATION SET OUT IN THE DOCUMENT THAT IT MODIFIES OR
SUPERSEDES. THE MAKING OF A MODIFYING OR SUPERSEDING STATEMENT SHALL NOT BE
DEEMED AN ADMISSION FOR ANY PURPOSES THAT THE MODIFIED OR SUPERSEDED STATEMENT,
WHEN MADE, CONSTITUTED A MISREPRESENTATION, AN UNTRUE STATEMENT OF A MATERIAL
FACT OR AN OMISSION TO STATE A MATERIAL FACT THAT IS REQUIRED TO BE STATED OR
THAT IS NECESSARY TO MAKE A STATEMENT NOT MISLEADING IN LIGHT OF THE
CIRCUMSTANCES IN WHICH IT WAS MADE.
All documents of the type referred to above (excluding
confidential material change reports) and any other financial information or
business acquisition reports subsequently filed by CanniMed with any securities
commission or similar regulatory authority in Canada on or after the date of
this Information Circular and prior to the Meeting (or any postponement or
adjournment thereof) shall be deemed to be incorporated by reference into this
Information Circular.
APPENDIX C
AURORA CANNIABIS INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
These unaudited pro forma consolidated financial statements
have been prepared using certain financial statements of the Corporation and
CanniMed, respectively, as more particularly described in the notes to such
unaudited pro forma consolidated financial statements. In preparing these
unaudited pro forma consolidated financial statements, Management of the
Corporation has made certain assumptions that affect the amounts reported in the
unaudited pro forma consolidated financial statements. These unaudited pro forma
consolidated financial statements are not intended to be indicative of the
results that would have actually occurred, had the events reflected therein
occurred on the dates indicated, and do not purport to project the future
financial position of the Corporation. Actual amounts recorded upon consummation
of the transactions contemplated by the Offer will differ from these unaudited
pro forma consolidated financial statements. Any potential synergies that may be
realized after consummation of the Offer have been excluded from these unaudited
pro forma consolidated financial statements. Shareholders are cautioned to not
place undue reliance on these unaudited pro forma consolidated financial
statements.
All amounts are in thousands of Canadian dollars, except where
noted.
|
AURORA CANNABIS INC.
|
|
Pro forma Condensed Interim Consolidated Statements of
Financial Position
|
|
As at September 30, 2017 and July 31, 2017
|
|
(Unaudited – In
thousands of Canadian dollars)
|
|
|
|
Aurora
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
|
|
|
CanniMed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,
|
|
|
July 31,
|
|
|
|
|
|
Pro forma
|
|
|
Pro forma
|
|
|
|
|
2017
|
|
|
2017
|
|
|
Notes
|
|
|
Adjustments
|
|
|
Consolidated
|
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
$
|
|
|
$
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
127,915
|
|
|
54,195
|
|
|
|
|
|
-
|
|
|
182,110
|
|
|
Accounts receivable
|
|
3,701
|
|
|
1,455
|
|
|
|
|
|
-
|
|
|
5,156
|
|
|
Marketable
securities
|
|
34,760
|
|
|
-
|
|
|
|
|
|
-
|
|
|
34,760
|
|
|
Inventory
|
|
11,653
|
|
|
10,552
|
|
|
|
|
|
-
|
|
|
22,205
|
|
|
Biological
assets
|
|
6,083
|
|
|
640
|
|
|
|
|
|
-
|
|
|
6,723
|
|
|
Promissory notes receivable
|
|
5,250
|
|
|
-
|
|
|
|
|
|
-
|
|
|
5,250
|
|
|
Loans receivable
|
|
2,132
|
|
|
-
|
|
|
|
|
|
-
|
|
|
2,132
|
|
|
Prepaid and other current assets
|
|
1,742
|
|
|
210
|
|
|
|
|
|
-
|
|
|
1,952
|
|
|
|
|
193,236
|
|
|
67,052
|
|
|
|
|
|
-
|
|
|
260,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
71,385
|
|
|
37,641
|
|
|
|
|
|
-
|
|
|
109,026
|
|
|
Derivative
|
|
4,892
|
|
|
-
|
|
|
|
|
|
-
|
|
|
4,892
|
|
|
Intangible assets
|
|
30,670
|
|
|
2,476
|
|
|
|
|
|
-
|
|
|
33,146
|
|
|
Goodwill
|
|
47,651
|
|
|
492
|
|
|
3(a)
|
|
|
(492
|
)
|
|
529,837
|
|
|
|
|
|
|
|
|
|
|
3(a)
|
|
|
482,186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
347,834
|
|
|
107,661
|
|
|
|
|
|
481,694
|
|
|
937,189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
and accrued liabilities
|
|
12,015
|
|
|
2,747
|
|
|
3(b)
|
|
|
5,250
|
|
|
20,232
|
|
|
|
|
|
|
|
|
|
|
3(c)
|
|
|
220
|
|
|
|
|
|
Deferred revenue
|
|
1,548
|
|
|
124
|
|
|
|
|
|
-
|
|
|
1,672
|
|
|
Finance lease
|
|
71
|
|
|
-
|
|
|
|
|
|
-
|
|
|
71
|
|
|
Loans and
borrowings
|
|
-
|
|
|
2,582
|
|
|
|
|
|
-
|
|
|
2,582
|
|
|
Contingent consideration payable
|
|
9,928
|
|
|
-
|
|
|
|
|
|
-
|
|
|
9,928
|
|
|
|
|
23,562
|
|
|
5,453
|
|
|
|
|
|
5,470
|
|
|
34,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred revenue
|
|
-
|
|
|
12
|
|
|
|
|
|
-
|
|
|
12
|
|
|
Finance lease
|
|
263
|
|
|
-
|
|
|
|
|
|
-
|
|
|
263
|
|
|
Loans and borrowings
|
|
-
|
|
|
11,368
|
|
|
|
|
|
-
|
|
|
11,368
|
|
|
Convertible notes
|
|
66,581
|
|
|
-
|
|
|
|
|
|
-
|
|
|
66,581
|
|
|
Deferred gain on derivative
|
|
3,856
|
|
|
-
|
|
|
|
|
|
-
|
|
|
3,856
|
|
|
Deferred tax liability
|
|
8,656
|
|
|
-
|
|
|
|
|
|
-
|
|
|
8,656
|
|
|
|
|
102,918
|
|
|
16,833
|
|
|
|
|
|
5,470
|
|
|
125,221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
230,432
|
|
|
109,594
|
|
|
3(a)
|
|
|
572,522
|
|
|
802,734
|
|
|
|
|
|
|
|
|
|
|
3(a)
|
|
|
(109,594
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
3(c)
|
|
|
(220
|
)
|
|
|
|
|
Reserves
|
|
39,108
|
|
|
3,579
|
|
|
3(a)
|
|
|
(3,579
|
)
|
|
39,108
|
|
|
Deficit
|
|
(24,624
|
)
|
|
(22,345
|
)
|
|
3(a)
|
|
|
22,345
|
|
|
(29,874
|
)
|
|
|
|
|
|
|
|
|
|
3(b)
|
|
|
(5,250
|
)
|
|
|
|
|
|
|
244,916
|
|
|
90,828
|
|
|
|
|
|
476,224
|
|
|
811,968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
347,834
|
|
|
107,661
|
|
|
|
|
|
481,694
|
|
|
937,189
|
|
See accompanying notes to the unaudited pro forma
consolidated financial statements.
|
AURORA CANNABIS INC.
|
|
Pro forma Condensed Interim Consolidated Statements of
Comprehensive Income (Loss)
|
|
Three months ended September 30, 2017 and July 31, 2017
|
|
(Unaudited – In
thousands of Canadian dollars, except share and per share amounts)
|
|
|
|
Aurora
|
|
|
CanniMed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
|
July 31,
|
|
|
|
|
|
Pro forma
|
|
|
Pro forma
|
|
|
|
|
2017
|
|
|
2017
|
|
|
Notes
|
|
|
Adjustments
|
|
|
Consolidated
|
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
$
|
|
|
$
|
|
|
Revenue
|
|
8,249
|
|
|
4,770
|
|
|
|
|
|
-
|
|
|
13,019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on changes in
fair value of biological assets
|
|
(4,611
|
)
|
|
(1,450
|
)
|
|
|
|
|
-
|
|
|
(6,061
|
)
|
|
Inventory expensed to cost of
sales
|
|
1,973
|
|
|
2,232
|
|
|
|
|
|
-
|
|
|
4,205
|
|
|
Production costs
|
|
2,077
|
|
|
1,345
|
|
|
|
|
|
-
|
|
|
3,422
|
|
|
Cost of sales (recovery)
|
|
(561
|
)
|
|
2,127
|
|
|
|
|
|
-
|
|
|
1,566
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
8,810
|
|
|
2,643
|
|
|
|
|
|
-
|
|
|
11,453
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administration
|
|
2,993
|
|
|
1,371
|
|
|
|
|
|
-
|
|
|
4,364
|
|
|
Sales and
marketing
|
|
3,668
|
|
|
1,517
|
|
|
|
|
|
-
|
|
|
5,185
|
|
|
Research and
development
|
|
107
|
|
|
147
|
|
|
|
|
|
-
|
|
|
254
|
|
|
Acquisition and
project evaluation costs
|
|
340
|
|
|
-
|
|
|
3(b)
|
|
|
5,250
|
|
|
5,590
|
|
|
Depreciation and
amortization
|
|
634
|
|
|
314
|
|
|
|
|
|
-
|
|
|
948
|
|
|
Share-based payments
|
|
2,486
|
|
|
143
|
|
|
|
|
|
-
|
|
|
2,629
|
|
|
|
|
10,228
|
|
|
3,492
|
|
|
|
|
|
5,250
|
|
|
18,970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
(1,418
|
)
|
|
(849
|
)
|
|
|
|
|
(5,250
|
)
|
|
(7,517
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and
other income
|
|
590
|
|
|
93
|
|
|
|
|
|
-
|
|
|
683
|
|
|
Finance and
other costs
|
|
(2,016
|
)
|
|
(381
|
)
|
|
|
|
|
-
|
|
|
(2,397
|
)
|
|
Foreign exchange
|
|
(247
|
)
|
|
(335
|
)
|
|
|
|
|
-
|
|
|
(582
|
)
|
|
Unrealized gain
on debenture
|
|
6,937
|
|
|
-
|
|
|
|
|
|
-
|
|
|
6,937
|
|
|
Unrealized gain on derivative
|
|
817
|
|
|
116
|
|
|
|
|
|
-
|
|
|
933
|
|
|
|
|
6,081
|
|
|
(507
|
)
|
|
|
|
|
-
|
|
|
5,574
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes
|
|
4,663
|
|
|
(1,356
|
)
|
|
|
|
|
(5,250
|
)
|
|
(1,943
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
-
|
|
|
-
|
|
|
|
|
|
-
|
|
|
-
|
|
|
Deferred, net
|
|
(1,103
|
)
|
|
-
|
|
|
|
|
|
-
|
|
|
(1,103
|
)
|
|
|
|
(1,103
|
)
|
|
-
|
|
|
|
|
|
-
|
|
|
(1,103
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
3,560
|
|
|
(1,356
|
)
|
|
|
|
|
(5,250
|
)
|
|
(3,046
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax
|
|
(1,632
|
)
|
|
-
|
|
|
|
|
|
-
|
|
|
(1,632
|
)
|
|
Unrealized gain
on marketable securities
|
|
12,551
|
|
|
-
|
|
|
|
|
|
-
|
|
|
12,551
|
|
|
Foreign currency translation
|
|
(4
|
)
|
|
(79
|
)
|
|
|
|
|
-
|
|
|
(83
|
)
|
|
|
|
14,475
|
|
|
(1,435
|
)
|
|
|
|
|
(5,250
|
)
|
|
7,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.01
|
|
$
|
(0.06
|
)
|
|
|
|
|
|
|
$
|
(0.01
|
)
|
|
Diluted
|
$
|
0.01
|
|
$
|
(0.06
|
)
|
|
|
|
|
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
368,631,600
|
|
|
22,741,000
|
|
|
|
|
|
|
|
|
472,537,523
|
|
|
Diluted
|
|
376,199,780
|
|
|
22,741,000
|
|
|
|
|
|
|
|
|
472,537,523
|
|
See accompanying notes to the unaudited pro forma
consolidated financial statements.
|
AURORA CANNABIS INC.
|
|
Pro forma Condensed Interim Consolidated Statements of
Comprehensive Loss
|
|
Twelve months ended June 30, 2017 and July 31, 2017
|
|
(Unaudited – In
thousands of Canadian dollars, except share and per share amounts)
|
|
|
|
Aurora
|
|
|
CanniMed
|
|
|
|
|
|
Pro forma
|
|
|
Pro forma
|
|
|
|
|
June 30, 2017
|
|
|
July 31, 2017
|
|
|
Notes
|
|
|
Adjustments
|
|
|
Consolidated
|
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
$
|
|
|
$
|
|
|
Revenue
|
|
18,067
|
|
|
15,031
|
|
|
|
|
|
-
|
|
|
33,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on changes in
fair value of biological assets
|
|
(7,469
|
)
|
|
(3,588
|
)
|
|
|
|
|
-
|
|
|
(11,057
|
)
|
|
Inventory expensed to cost of sales
|
|
3,472
|
|
|
6,261
|
|
|
|
|
|
-
|
|
|
9,733
|
|
|
Production costs
|
|
6,008
|
|
|
2,906
|
|
|
|
|
|
-
|
|
|
8,914
|
|
|
Cost
of sales
|
|
2,011
|
|
|
5,579
|
|
|
|
|
|
-
|
|
|
7,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
16,056
|
|
|
9,452
|
|
|
|
|
|
-
|
|
|
25,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administration
|
|
6,813
|
|
|
5,418
|
|
|
|
|
|
-
|
|
|
12,231
|
|
|
Sales and marketing
|
|
10,270
|
|
|
4,248
|
|
|
|
|
|
-
|
|
|
14,518
|
|
|
Research and
development
|
|
314
|
|
|
973
|
|
|
|
|
|
-
|
|
|
1,287
|
|
|
Acquisition and project
evaluation costs
|
|
1,551
|
|
|
-
|
|
|
3(b)
|
|
|
5,250
|
|
|
6,801
|
|
|
Depreciation and
amortization
|
|
716
|
|
|
908
|
|
|
|
|
|
-
|
|
|
1,624
|
|
|
Share-based payments
|
|
7,584
|
|
|
960
|
|
|
|
|
|
-
|
|
|
8,544
|
|
|
|
|
27,248
|
|
|
12,507
|
|
|
|
|
|
5,250
|
|
|
45,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
(11,192
|
)
|
|
(3,055
|
)
|
|
|
|
|
(5,250
|
)
|
|
(19,497
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income
|
|
861
|
|
|
516
|
|
|
|
|
|
-
|
|
|
1,377
|
|
|
Finance and
other costs
|
|
(6,582
|
)
|
|
(1,942
|
)
|
|
|
|
|
-
|
|
|
(8,524
|
)
|
|
Foreign exchange
|
|
(215
|
)
|
|
(565
|
)
|
|
|
|
|
-
|
|
|
(780
|
)
|
|
Unrealized gain
on debenture
|
|
(1,135
|
)
|
|
-
|
|
|
|
|
|
-
|
|
|
(1,135
|
)
|
|
Unrealized gain on marketable
securities
|
|
1,334
|
|
|
-
|
|
|
|
|
|
|
|
|
1,334
|
|
|
Unrealized gain on derivative
|
|
(335
|
)
|
|
(10,446
|
)
|
|
|
|
|
-
|
|
|
(10,781
|
)
|
|
|
|
(6,072
|
)
|
|
(12,437
|
)
|
|
|
|
|
-
|
|
|
(18,509
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
(17,264
|
)
|
|
(15,492
|
)
|
|
|
|
|
(5,250
|
)
|
|
(38,006
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax recovery
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
19
|
|
|
-
|
|
|
|
|
|
-
|
|
|
19
|
|
|
Deferred, net
|
|
4,277
|
|
|
762
|
|
|
|
|
|
-
|
|
|
5,039
|
|
|
|
|
4,296
|
|
|
762
|
|
|
|
|
|
-
|
|
|
5,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from continuing
operations
|
|
(12,968
|
)
|
|
(14,730
|
)
|
|
|
|
|
(5,250
|
)
|
|
(32,948
|
)
|
|
Net
loss from discontinued operations
|
|
-
|
|
|
(12,986
|
)
|
|
|
|
|
-
|
|
|
(12,986
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
(12,968
|
)
|
|
(27,716
|
)
|
|
|
|
|
(5,250
|
)
|
|
(45,934
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax
|
|
(885
|
)
|
|
-
|
|
|
|
|
|
-
|
|
|
(885
|
)
|
|
Unrealized gain on marketable
securities
|
|
6,077
|
|
|
-
|
|
|
|
|
|
-
|
|
|
6,077
|
|
|
Foreign currency
translation – continuing operations
|
|
(25
|
)
|
|
(10,659
|
)
|
|
|
|
|
-
|
|
|
(10,684
|
)
|
|
Foreign currency translation – discontinued
operation
|
|
-
|
|
|
(78
|
)
|
|
|
|
|
-
|
|
|
(78
|
)
|
|
|
|
(7,801
|
)
|
|
(38,453
|
)
|
|
|
|
|
(5,250
|
)
|
|
(51,504
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.05
|
)
|
$
|
(1.69
|
)
|
|
|
|
|
|
|
$
|
(0.12
|
)
|
|
Diluted
|
$
|
(0.05
|
)
|
$
|
(1.69
|
)
|
|
|
|
|
|
|
$
|
(0.12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
279,029,226
|
|
|
22,741,000
|
|
|
|
|
|
|
|
|
382,935,149
|
|
|
Diluted
|
|
279,029,226
|
|
|
22,741,000
|
|
|
|
|
|
|
|
|
382,935,149
|
|
See accompanying notes to the unaudited pro forma
consolidated financial statements.
|
AURORA CANNABIS INC.
|
|
Pro forma Condensed Interim Consolidated Statements of
Comprehensive Loss
|
|
Twelve months ended June 30, 2017 and July 31, 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
1.
|
Description of the Transaction
|
|
|
|
|
|
On November 13, 2017, Aurora Cannabis Inc. (“Aurora” or
the “Company”) submitted a proposal to the board of directors of CanniMed
Therapeutics Inc. (“CanniMed”) to acquire all of the issued and
outstanding shares of CanniMed (the “Acqusition”), a licensed producer and
distributor of medical cannabis pursuant to the
Access to Cannabis for
Medical Purposes Regulations
(“ACMPR”). CanniMed is involved in plant
biotechnology research, product development and the production of plant
based materials for biopharmaceutical, agricultural and environmental
market applications. CanniMed and Aurora are listed on the Toronto Stock
Exchange (“TSX”) under the symbol “ACB” and “CMED”,
respectively.
|
|
|
|
|
|
Pursuant to the Acquisition, Aurora will acquire all of
the issued and outstanding shares of CanniMed on the basis that each
CanniMed shareholder will receive 4.52586207 common shares of Aurora for
each CanniMed share held. The exchange ratio represents a maximum of
$24.00 per share and a premium of 56.9% over the closing price of CanniMed
shares on November 14, 2017, the day prior to Aurora’s announcement of its
intention to pursue a combination with CanniMed.
|
|
|
|
|
2.
|
Basis of Presentation
|
|
|
|
|
|
The unaudited pro forma condensed consolidated statement
of financial position as at September 30, 2017, the unaudited pro forma
condensed interim consolidated statement of comprehensive income (loss)
for the three months ended September 30, 2017, and the unaudited pro forma
condensed interim consolidated statement of comprehensive income (loss)
for the twelve months ended June 30, 2017 of Aurora were prepared in
compliance with National Instrument 62-104F1
Takeover Bid Circular
to reflect the Company’s proposal to purchase all of CanniMed’s issued
and outstanding common shares.
|
|
|
|
|
|
The unaudited pro forma condensed consolidated statement
of financial position and the unaudited pro forma condensed consolidated
statements of comprehensive income (loss) of Aurora are comprised of
information derived from:
|
|
|
•
|
the unaudited condensed interim consolidated
statement of financial position of Aurora as at September 30,
|
|
2017;
|
|
|
|
|
|
|
•
|
the unaudited condensed interim consolidated
statement of financial position of CanniMed as at July 31, 2017;
|
|
|
|
|
|
|
•
|
the unaudited condensed interim consolidated
statement of comprehensive income of Aurora for the three months ended
September 30, 2017;
|
|
|
|
|
|
|
•
|
the unaudited condensed interim consolidated
statement of comprehensive loss of CanniMed for the three months ended
July 31, 2017;
|
|
|
|
|
|
|
•
|
the audited consolidated statement of
comprehensive loss of Aurora for the twelve months ended June 30, 2017;
|
|
|
|
|
|
|
•
|
the audited statement of comprehensive loss of
CanniMed for the twelve months ended October 31, 2016;
|
|
|
|
|
|
|
•
|
the unaudited condensed interim consolidated
statement of comprehensive loss of CanniMed for the three months ended
January 31, 2017; and
|
|
|
|
|
|
|
•
|
the unaudited condensed interim consolidated
statement of comprehensive loss of CanniMed for the three months ended
April 30, 2017.
|
|
2.
|
Basis of Presentation (Continued)
|
|
|
|
|
|
The unaudited pro forma condensed consolidated financial
statements do not include all of the information disclosures required by
International Financial Reporting Standards (“IFRS”) and should be read in
conjunction with Aurora’s unaudited condensed interim consolidated
financial statements as at and for the three months ended September 30,
2017, the audited consolidated financial statements of Aurora for the year
ended June 30, 2017, the unaudited condensed interim consolidated
financial statements of CanniMed as at and for the three months ended July
31, 2017, and the audited consolidated financial statements of CanniMed
for the year ended October 31, 2016.
|
|
|
|
|
|
The pro forma condensed interim consolidated statement of
comprehensive loss for the twelve months ended July 31, 2017 of CanniMed
has been constructed using the unaudited condensed interim consolidated
statement of comprehensive loss of CanniMed for the nine months ended July
31, 2017 and the unaudited condensed interim consolidated statement of
comprehensive loss of CanniMed for the three months ended October 31,
2016. The financial statements of CanniMed used to prepare the pro forma
financial statements were prepared for the purpose of the pro forma
financial statements and do not conform with the publicly filed financial
statements of CanniMed.
|
|
|
|
|
|
The unaudited pro forma condensed consolidated statement
of financial position gives effect to the proposed acquisition of CanniMed
as if it had occurred on September 30, 2017. The unaudited pro forma
condensed consolidated statements of comprehensive loss for the three
months ended September 30, 2017 and the twelve months ended June 30, 2017
give effect to the proposed acquisition as if it had occurred at July 1,
2016.
|
|
|
|
|
|
The accounting policies used in the preparation of the
unaudited pro forma condensed consolidated financial statements are
consistent with those described in the audited consolidated financial
statements of Aurora for the year ended June 30, 2017. Certain historical
CanniMed amounts have been reclassified to conform to Aurora’s
presentation.
|
|
|
|
|
|
The unaudited pro forma condensed consolidated financial
statements are not necessarily indicative of the results of operations
that would have occurred had the acquisition of CanniMed been effected on
the dates indicated, nor are the unaudited pro forma condensed
consolidated financial statements indicative of future periods. Actual
amounts recorded upon consummation of the proposed acquisition will differ
from such unaudited pro forma condensed consolidated financial statements.
Since the pro forma condensed consolidated financial statements have been
developed to retroactively show the effect of a transaction that is
expected to occur at a later date (even though this was accomplished by
following generally accepted practice and using reasonable assumptions),
there are limitations inherent in the very nature of such pro forma
data.
|
|
|
|
|
|
As of the date of these pro forma consolidated financial
statements, Aurora has not had access to the nonpublic books and records
of CanniMed and Aurora is not in a position to independently assess or
verify certain of the information in CanniMed’s publicly filed documents,
including its financial statements. CanniMed has not reviewed these pro
forma consolidated financial statements and has not confirmed the accuracy
and completeness of the information in respect of CanniMed contained
herein. As a result, all pro forma financial information regarding
CanniMed included herein has been derived, by necessity, from CanniMed’s
public reports and securities filings as of November 15, 2017. While
Aurora has no reason to believe that such publicly filed information is
inaccurate or incomplete, Aurora does not assume any responsibility for
the accuracy or completeness of any such
information.
|
|
3.
|
Pro forma Consolidation Adjustments
|
|
|
|
|
|
The unaudited pro forma condensed interim consolidated
statement of financial position of Aurora as at September 30, 2017 has
been adjusted to reflect the following transactions as if the acquisition
of CanniMed had been completed on September 30,
2017:
|
|
|
(a)
|
The Acquisition will be accounted for as a business
combination under IFRS 3. The estimated fair value of net assets acquired
and consideration paid for 100% ownership of CanniMed is allocated as
follows:
|
|
|
|
$
|
|
|
Cash and cash equivalents
|
|
54,195
|
|
|
Accounts receivable
|
|
1,455
|
|
|
Inventories
|
|
10,552
|
|
|
Biological assets
|
|
640
|
|
|
Prepaid expenses and other
assets
|
|
210
|
|
|
Property, plant and equipment
|
|
37,641
|
|
|
Intangible assets
|
|
2,476
|
|
|
Total assets
|
|
107,169
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities
|
|
2,747
|
|
|
Deferred revenue
|
|
136
|
|
|
Loans and borrowings
|
|
13,950
|
|
|
Total liabilities
|
|
16,833
|
|
|
|
|
|
|
|
Net assets acquired
|
|
90,336
|
|
|
|
|
|
|
|
Consideration paid
|
|
572,522
|
|
|
|
|
|
|
|
Goodwill
|
|
482,186
|
|
In accordance with IFRS 3, the fair
value of equity securities issued as part of the consideration transferred will
be measured on the closing date of the acquisition at the then-current market
price. Accordingly, it is likely that Aurora’s share price used to determine
purchase consideration on closing of the acquisition will differ from the share
price used in the estimate of purchase consideration, and that difference may be
material. Aurora’s historical share price volatility was approximately 89%.
Accordingly, it is reasonable to expect that Aurora’s share price on closing of
the acquisition may differ from the common share price used in these financial
statements by an amount up to at least this share price volatility. A change in
Aurora’s share price of 89% results in an increase or decrease to the estimate
of purchase consideration totaling approximately $509,544, with a corresponding
increase or decrease to goodwill.
|
3.
|
Pro forma Consolidation Adjustments
(Continued)
|
The pro forma purchase price is subject to change based
on the finalization of purchase price adjustments and completion of
management’s assessment of the fair values of the assets and liabilities
acquired. Due to the timing of the announcement of the Acquisition, Aurora
has not yet obtained sufficient information to accurately determine the
fair market value of CanniMed’s net assets by category and has therefore
allocated the book values of the net assets acquired as a proxy of fair
value as at July 31, 2017, except for the elimination of CanniMed’s
historical goodwill of $492. Goodwill represents the amount by which the
purchase price exceeds the book value, being a proxy of fair value of the
assets acquired and liabilities assumed. The final calculation and
allocation of the purchase price will be based on the net assets purchased
as of the closing date of the Acquisition and other information available
at that time. There may be material differences from this pro forma
purchase price allocation as a result of finalizing the valuation. Based
on management’s preliminary estimates, the goodwill may be allocated to
other items such as certain identified intangible assets, including
customer lists and a deferred tax asset.
As a result of the Acquisition,
CanniMed’s equity accounts were eliminated on the pro forma consolidated
statement of financial position.
|
|
(b)
|
Estimated acquisition related costs of approximately
$5,250 consisting of investment banker, legal and accounting fees are to
be expensed on completion of the Acquisition which have been recorded to
deficit of the pro forma condensed consolidated statement of financial
position as at September 30, 2017 and reflected in the pro forma condensed
consolidated statements of comprehensive income (loss) for the three and
twelve month periods ended September 30, 2017 and June 30, 2017,
respectively.
|
|
|
|
|
|
|
(c)
|
Estimated share issuance costs of approximately $220
consisting of regulatory and transfer agent fees related to the issuance
of shares for the Acquisition have been recorded against share capital on
the pro forma consolidated statement of financial
position.
|
|
3.
|
Pro forma Net Loss Per Share
|
|
|
|
|
|
The pro forma net loss per share for the three months
ended September 30, 2017 and the year ended June 30, 2017 is as
follows:
|
|
|
|
|
Three Months
|
|
|
Twelve Months
|
|
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
|
|
Sept 30, 2017
|
|
|
June 30, 2017
|
|
|
|
Pro forma net loss
|
|
(3,046
|
)
|
|
(45,934
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
368,631,600
|
|
|
279,029,226
|
|
|
|
Pro
forma shares issued to CanniMed
|
|
103,905,923
|
|
|
103,905,923
|
|
|
|
Pro forma weighted average shares outstanding
|
|
472,537,523
|
|
|
382,935,149
|
|
|
|
Pro
forma net loss per share – basic and diluted
|
$
|
(0.01
|
)
|
$
|
(0.12
|
)
|
APPENDIX D
AURORA CANNABIS INC.
GLOSSARY
In this document, unless the context otherwise requires or
unless defined elsewhere herein, the following terms have the meanings set out
below:
“
Affiliate
” or “
Affiliates
” includes, in relation
to a body corporate, any other corporation that is considered an affiliated
corporation of that body corporate for purposes of the BCBCA and otherwise
includes, in relation to a person, any other person that constitutes an
affiliate of the first person for purposes of NI 62-104, and, unless the context
requires otherwise, “
Affiliate
” or “
Affiliates
”, when used in
relation to CanniMed, includes all general and limited partnerships in which
CanniMed has a direct or indirect ownership interest, including a minority
interest;
“
AIF
” means the annual information form of the
Corporation dated September 25, 2017 for the year ended June 30, 2017;
“
Annual MD&A
” means the management’s discussion and
analysis of the Corporation of results of operations and financial condition for
the year ended June 30, 2017;
“
Aurora Shares
” or “
Common Shares
” means the
common shares in the capital of the Corporation;
“
BCBCA
”
means the
Business Corporations
Act
(British Columbia), and the regulations thereunder, as amended from time
to time;
“
Bid Circular
” means the take-over bid circular
accompanying the Offer;
“
Board of Directors
” means the Board of Directors of the
Corporation;
“
CanniMed
” means CanniMed Therapeutics Inc., a body
corporate incorporated under
the Canada Business Corporations Act
;
“
CanniMed Common Shareholder
” or “
CanniMed Common
Shareholders
” means a holder or holders of CanniMed Common Shares;
“
CanniMed
Convertible Securities
” means all
securities convertible into, or exchangeable or exercisable for, CanniMed Common
Shares or otherwise evidencing a right to acquire any CanniMed Common Shares or
other securities of CanniMed and including, without limitation, CanniMed Options
and CanniMed warrants;
“
CanniMed
Options
” means the options to acquire
CanniMed Common Shares granted pursuant to the CanniMed Stock Option Plan;
“
CanniMed Shares
” means the issued and outstanding
common shares of CanniMed, and unless the context requires otherwise;
“
CanniMed
Stock Option Plan
” means the stock
option plan of CanniMed;
“
Compulsory Acquisition
” means the acquisition of the
remainder of the CanniMed Common Shares not deposited under the Offer by way of
amalgamation, statutory arrangement, capital reorganization or other transaction
(as determined by the Corporation) involving CanniMed and the Corporation or an
Affiliate of the Corporation if, within 120 days after the Expiry Date, the
Offer is accepted by CanniMed Common Shareholders who hold not less than 90% of
the CanniMed Common Shares (calculated on a diluted basis, including exercisable
or exchangeable CanniMed Convertible Securities);
“
Corporation
” means Aurora Cannabis Inc., a body
corporate incorporated under the BCBCA;
“
Expiry Time
” means 11:59 p.m. (Pacific Time) on March
9, 2018, unless the Offer is accelerated or extended by the Corporation;
- 2 -
“
fully-diluted basis
” means, with respect to the number
of CanniMed Common Shares at any time, the number of CanniMed Common Shares that
would be outstanding assuming all CanniMed Options, and any other rights to
receive CanniMed Common Shares outstanding at that time (whether or not yet
exercisable or convertible) have been exercised or converted in accordance with
their terms as publicly disclosed by CanniMed;
“
Governmental Entity
” means (a) any multinational,
federal, provincial, state, regional, municipal, local or other government,
governmental or public department, central bank, court, tribunal, arbitral body,
commission, commissioner, board, bureau or agency, domestic or foreign; (b) any
subdivision, agent, commission, commissioner, board, or authority of any of the
foregoing; (c) any self-regulatory authority, including the TSX, or any
quasi-governmental or private body exercising any regulatory, expropriation or
taxing authority under or for the account of any of the foregoing;
“
Informed Person
” means a director or executive officer
of the Corporation, a director or executive officer of a person or company that
is itself an “Informed Person” or subsidiary of the Corporation and any person
or company who beneficially owns, directly or indirectly, voting securities of
the Corporation or who exercises control or direction over voting securities of
the Corporation or a combination of both carrying more than 10% of the voting
rights attached to all outstanding Common Shares;
“
Interim MD&A
” means the management’s discussion and
analysis of the Corporation of results of operations and financial condition for
the three month period ended September 30, 2017;
“
Issuance Resolution
” means the ordinary resolution of
the Shareholders approving the issuance of up to an aggregate of 170,000,000
Aurora Shares in connection with the Offer, the full text of which is set out in
Appendix A to the Information Circular to which this Appendix is attached;
“
NI 62-104
” means National Instrument 62-104
–
Take-Over Bids and Issuer Bids
, as amended or replaced from time to time;
“
Offer
” means the offer made by the Corporation, on
November 24, 2017, to purchase all of the issued and outstanding CanniMed Common
Shares, including any CanniMed Common Shares that may become issued and
outstanding (including upon the exercise, exchange or conversion of any CanniMed
Convertible Securities) after November 24, 2017 but before the Expiry Time, as
amended or varied from time to time;
“
Offer and Bid Circular
” means, together the Offer and
the Bid Circular and including all appendices thereto, as amended or varied from
time to time;
“
person
” includes an individual, partnership,
association, body corporate, joint venture, business organization, trustee,
executor, administrator, legal representative, government (including any
Governmental Entity) or any other entity, whether or not having legal status;
“
Securities Act
” means the
Securities Act
(British Columbia), as amended;
“
Securities Laws
” means the Securities Act and all other
applicable securities laws, including, unless otherwise noted, U.S. securities
laws;
“
Securities Regulatory Authorities
” means the applicable
securities commission or regulatory authority in each province and territory of
Canada;
“
SEDAR
” means the System for Electronic Document
Analysis and Retrieval, a filing system developed for the Securities Regulatory
Authorities and accessible at
www.sedar.com
;
“
Subsequent Acquisition Transaction
” means the
acquisition of the remainder of the CanniMed Common Shares not deposited under
the Offer by way of amalgamation, statutory arrangement, capital reorganization
or other transaction (as determined by the Corporation) involving CanniMed and
the Corporation or an Affiliate of the Corporation if, within 120 days after the
Expiry Date:
- 3 -
|
|
(a)
|
the Offer is accepted by CanniMed Common Shareholders who
hold less than 90% of the CanniMed Common Shares (calculated on a diluted
basis, including exercisable or exchangeable CanniMed Convertible
Securities);
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(b)
|
the right of Compulsory Acquisition above is not
available to the Corporation for any other reason, or
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(c)
|
the Corporation chooses not to avail itself of the right
of Compulsory Acquisition;
|
“
Subsidiary
” means, in relation to a person, another
person that is controlled directly or indirectly by that first person, and
includes a Subsidiary of a Subsidiary. For the purposes of this definition, a
person (the first person) is deemed to control another person (the second
person) if:
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(a)
|
the first person, directly or indirectly, beneficially
owns or exercises control or direction (including, without limitation, by
way of agreement or arrangement) over securities of the second person
carrying votes which, if exercised, taking into account any rights of the
first person under such agreement or arrangement, as applicable, would
entitle the first person to elect or direct or cause the election of a
majority of the directors or trustees, as applicable, of the second
person, unless that first person holds the voting securities only to
secure an obligation;
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(b)
|
the second person is a partnership, other than a limited
partnership, and the first person holds more than 50% of the interests of
the partnership; or
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(c)
|
the second person is a limited partnership and the
general partner of the limited partnership is the first person;
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(d)
|
and, for greater certainty, a person (the first person)
who controls another person (the second person) also controls all persons
that the second person controls. In addition, in respect of CanniMed,
unless the context requires otherwise, “
Subsidiary
” includes any
general or limited partnership in which CanniMed has a direct or indirect
ownership interest, including a minority interest;
|
“
Tax Act
” means the
Income Tax Act
(Canada), as
amended;
“
TSX
” means the Toronto Stock Exchange; and
“
VWAP
” means the volume weighted average price.
|
AURORA CANNABIS INC.
|
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1500 – 1199 West Hastings Street
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Vancouver, British Columbia Canada V5E 3T5
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Tel: 1-844-601-2448
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NOTICE IS HEREBY GIVEN
that a special meeting (the
“
Meeting
”) of the holders (the “
Shareholders
”) of common shares
(the “
Common Shares
”) of Aurora Cannabis Inc. (the “
Corporation
”)
will be held at the offices of McMillan LLP, Suite 1500, 1055 West Georgia
Street, Vancouver, British Columbia Canada, on
Monday, January 15, 2018
,
at the hour of 2:00 p.m. (Pacific Time), for the following purpose:
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1.
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to consider and, if thought advisable, to pass, with or
without variation, an ordinary resolution (the “
Issuance
Resolution
”), the full text of which is set out in Appendix A to the
Management Information Circular (the “
Information Circular
”),
approving the issuance of up to 170,000,000 Common Shares of the
Corporation (the “
Aurora Shares
”) to the holders (the “
CanniMed
Common Shareholders
”) of common shares (the “
CanniMed Shares
”)
of CanniMed Therapeutics Inc. (“
CanniMed
”), in connection with the
offer (the “
Offer
”) made by the Corporation to the CanniMed Common
Shareholders to purchase all of the CanniMed Shares, all as more
particularly described in the Information
Circular.
|
Additional information concerning the Issuance Resolution is
set out in the Information Circular. Only Shareholders of record at the close of
business on November 30, 2017 (the “
Record Date
”) are entitled to receive
notice of and to attend the Meeting, or any adjournment or adjournments thereof,
and to vote thereat.
Your participation at the Meeting is important
. If you
are a registered Shareholder (i.e., you hold your Common Shares in the
Corporation (also called, the “
Common Shares
” or the “
Aurora
Shares
”) directly in your name and not through a broker or other
intermediary), you may attend the Meeting in person and vote your Common Shares
on any motions made at the Meeting. Alternatively, you may appoint a proxyholder
to vote your Common Shares at the Meeting on your behalf.
If you do not
expect to attend the Meeting in person and would like your Common Shares to be
voted, please complete a form of proxy (to appoint a proxyholder), or another
suitable form of proxy as soon as possible, following the instructions set out
in the Information Circular.
If you are a registered Shareholder and wish to
complete and deposit a proxy to appoint a proxyholder, you may do so through the
Internet, by telephone, by mail or by facsimile – please see the instructions
set out in the Information Circular in that regard. To be valid, all proxies
deposited by registered Shareholders must be received at the office of the
Corporation’s transfer agent, Computershare Trust Company of Canada (Attention:
Proxy Department, 100 University Avenue, 8th Floor, Toronto, Ontario M5J 2Y1)
not later than 2:00 p.m. (Pacific Time) on January 11, 2018 or 48 hours
(excluding Saturdays, Sundays and holidays) preceding any adjournment of the
Meeting. The Chairman of the Meeting has the discretion to accept proxies
deposited less than 48 hours before the time of the Meeting or any adjournment
or postponement thereof.
- 2 -
If you are a non-registered (beneficial) Shareholder (i.e.,
your Common Shares are not registered directly in your name, but are held
through a broker or other intermediary), you must use the voting instruction
form provided to you to vote your Common Shares at the Meeting. Instructions
respecting the use of voting instruction forms is set out in the Information
Circular. Please note that if you are a non-registered (beneficial) Shareholder
and you wish to attend the Meeting in person and vote Common Shares beneficially
owned by you, you must arrange to appoint yourself as proxyholder, following the
instructions set out in the Information Circular.
Dated at Vancouver, British Columbia December 8, 2017.
|
BY ORDER OF THE BOARD OF DIRECTORS
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(signed) “
Terry Booth
”
|
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Terry Booth
|
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Chief Executive Officer
|
Aurora Cannabis and CannaRoyalty Sign Letter of Intent for
International Drug Delivery Technology Agreement
Agreement Covers Award-Winning MüV Specialty Medical Products
Line
TSX: ACB CSE: CRZ
VANCOUVER and OTTAWA, Dec. 13, 2017 /CNW/ - Aurora Cannabis
Inc. ("Aurora") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) and
CannaRoyalty Corp. (CSE: CRZ) (OTCQX: CNNRF) ("CannaRoyalty") today announced
that the companies have signed a binding Letter of Intent, giving Aurora the
exclusive right for 90 days to negotiate a final licensing agreement (the "Final
Agreement").
The Final Agreement concerns the acquisition by Aurora of the
exclusive rights for Canada, Europe and Australia to the intellectual property,
manufacturing procedures, and the sales and marketing rights related to a
portfolio of specialty branded cannabis drug delivery technologies from the
award-winning MüV brand, to which CannaRoyalty holds the licensing rights.
MüV is a line of cannabis-infused products, developed by
CannaRoyalty investee AltMed Enterprises, focused on advanced alternative
cannabinoid delivery mechanisms for the medical and the LOHAS (Lifestyles of
Health and Sustainability) segments of the market. The line was successfully
launched in the U.S. in 2016.
The MüV products to be covered by the license agreement include
the following:
|
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•
|
MüV Metered Dose Inhaler
|
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•
|
MüV Transdermal Patch
|
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•
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CBD Sports Gel
|
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•
|
CBD Hydrating Lotion
|
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•
|
THC Sports Gel
|
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•
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THC Hydrating Lotion
|
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•
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THC Pain Relief Cream
|
Characterization tests, meeting FDA standards, were conducted,
and the data were subsequently reviewed by Aurora on the MüV Metered Dose
Inhaler, which was found to achieve the required criteria, validating that the
product meets the Aurora Standard of quality and user experience.
"This agreement shows Aurora's strategic commitment to the
development of advanced alternative delivery mechanisms to broaden the Company's
product offering," said Terry Booth, CEO. "It also shows how a growing
constellation of trusted innovation partners sees Aurora as the winning brand to
help commercialize their products and technologies, and we look forward to
finalizing our agreement with CannaRoyalty and bringing these exciting new
offerings to our growing international customer base."
Marc Lustig, CEO of CannaRoyalty, added, "This agreement with
Aurora represents a significant opportunity to accelerate the growth of AltMed's
award-winning MüV product line on an international scale, leveraging our
relationship with one of the world's most dynamic cannabis companies. The MüV
line meets the growing need for specialized products with alternative delivery
mechanisms, especially in critical jurisdictions, such as Canada and Germany,
where consumers to date have been limited in terms of product choice. Aurora is
a great partner to help us penetrate these new markets, and we look forward to
completing our final agreement."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport, as well as is completing a fourth facility in Lachute,
Quebec through its wholly owned subsidiary Aurora Larssen Projects Ltd.
In addition, the Company holds approximately 17.23% of the
issued shares in leading extraction technology company Radient Technologies
Inc., based in Edmonton, and is in the process of completing an investment in
Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1% .
Furthermore, Aurora is the cornerstone investor with a 22.9% stake in Cann Group
Limited, the first Australian company licensed to conduct research on and
cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union,
based in Germany. The Company offers further differentiation through its
acquisition of BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens. Aurora's
common shares trade on the TSX under the symbol "ACB".
About CannaRoyalty
CannaRoyalty is an active investor and operator in the legal
cannabis sector. Our focus is building and supporting a diversified portfolio of
growth-ready assets in high-value segments of the cannabis sector, including
research, consumer brands, devices and intellectual property. Our management
team combines a hands-on understanding of the cannabis industry with seasoned
financial know-how, assembling a platform of holdings via royalty agreements, equity interests, secured
convertible debt, licensing agreements and its own branded portfolio.
About MüV
The MüV brand is owned by Alternative Medical Enterprises, LLC
("AltMed"). CannaRoyalty owns a 8.3% equity ownership position in AltMed, with
licensing right for MüV products in various jurisdictions. MüV is an
award-winning science focused cannabis consumer brand that is focused on
developing outstanding, consistent, and pure cannabis-based branded products.
MüV has medical, scientific, and development teams that conduct ongoing
innovative research and development aimed at producing the finest and most
consistent cannabis-based products on the market. MüV believes in purity,
testing ingredients and product components to assure 100% compliance with its
benchmark quality standards. This approach has allowed MüV to become one of the
most recognized cannabis brands in North America, as it continues to expand and
improve its leading product portfolio.
About AltMed
Alternative Medical Enterprises, LLC, headquartered in
Sarasota, FL and doing business as AltMed Enterprises, is a fully integrated
company that brings pharmaceutical industry precision to the development,
production and dispensing of medical cannabinoids.
|
On behalf of the Boards of Directors,
|
On behalf of the Boards of Directors,
|
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|
|
|
AURORA CANNABIS INC.
|
CannaRoyalty Corp.
|
|
Terry Booth
|
Marc Lustig
|
|
CEO
|
CEO
|
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"), including, but not limited to, statements with
respect to the completion of a final agreement between Aurora and CannaRoyalty.
Forward-looking statements are frequently characterized by words such as "plan",
"continue", "expect", "project", "intend", "believe", "anticipate", "estimate",
"may", "will", "potential", "proposed" and other similar words, or statements
that certain events or conditions "may" or "will" occur. These statements are
only predictions. Various assumptions were used in drawing the conclusions or
making the projections contained in the forward-looking statements throughout
this news release. Forward-looking statements are based on the opinions and
estimates of management at the date the statements are made, and are subject to
a variety of risks and uncertainties and other factors that could cause actual
events or results to differ materially from those projected in the
forward-looking statements. The Company is under no obligation, and expressly
disclaims any intention or obligation, to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
except as expressly required by applicable law.
Neither TSX or CSE, nor their Regulation Services Provider
(as that term is defined in the policies of Toronto Stock Exchange and the
Canadian Securities Exchange) accept responsibility for the adequacy or accuracy
of this release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/December2017/13/c4892.html
%SEDAR: 00025675E
For further information:
For Aurora: Cam Battley,
Executive Vice President, +1.905.864.5525, cam@auroramj.com, www.auroramj.com;
Marc Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.269.5523, marc.lakmaaker@auroramj.com; For CannaRoyalty: Marc Lustig,
CEO, info@cannaroyalty.com, 1-844-556-5070, www.cannaroyalty.com; Jonathan Ross,
CFA, LodeRock Advisors Inc, jon.ross@loderockadvisors.com, 416-283-0178
CO: Aurora Cannabis Inc.
CNW 07:00e 13-DEC-17
MASTER SERVICES AGREEMENT
THIS AGREEMENT
made effective the 5th day of November,
2017
BETWEEN:
AURORA CANNABIS ENTERPRISES INC.
(“Aurora”)
AND:
RADIENT TECHNOLOGIES INC.
(“Radient”)
WHEREAS:
(A) Aurora is a licensed producer
pursuant to the terms of the
Access to Cannabis for Medical Purposes
Regulations
;
(B) Radient has applied to become
a licensed dealer pursuant to the terms of the
Narcotic Control
Regulations
and a licensed producer pursuant to the terms of the
Access
to Cannabis for Medical Purposes Regulations
, and anticipates becoming a
licensed dealer and / or licensed producer in the near future;
(C) Pursuant to the terms of
Joint Venture Research Agreement dated January 4, 2017 between Aurora and
Radient, Aurora and Radient completed research activities relating to the
extraction of materials from cannabis and desire to continue to work together by
way of a services relationship, and potentially by way of further research and
development, and Radient has agreed to perform certain Services (as defined
below) for Aurora using its proprietary MAP technology as well as other
technology as an independent contractor in relation to the development,
commercialization and supply of standardized cannabis extracts;
(D) The parties acknowledge and
agree that Radient will provide the Services to Aurora within the Territory (as
defined below) at a reduced fee, which is applicable only to Aurora and its
Affiliates (for clarity, Radient may perform services similar to the Services to
third parties within the Territory as long as Radient charges such third party a
fee equal to or greater than the Premium Fee (as defined below). [terms of a
certain right of first offer redacted];
(E) Radient may develop or
acquire, directly or indirectly, certain intellectual property related to
cannabis that is of value and benefit to Aurora in the future and which Aurora
may want to license from Radient or otherwise secure the use of in the future.
The parties have agreed that Aurora shall have a right of first offer to acquire
from Radient all of Radient’s rights in such intellectual property that Radient
desires to convey to a third party, such as license rights or an outright sale,
and it is understood that Aurora would not have entered into this Agreement
without this being agreed upon.
- 2 -
(F) Based on the foregoing,
Aurora and Radient have reached agreement with respect to the terms and
conditions under which Radient will provide such Services and convey such rights
to Aurora;
NOW THEREFORE THIS AGREEMENT
WITNESSETH
that in consideration of the promises, mutual terms, covenants
and conditions herein, the parties hereto agree as follows:
ARTICLE 1
In this Agreement:
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(a)
|
“ACMPR” means the
Access to Cannabis for Medical
Purposes Regulations
;
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(b)
|
“Affiliate” means in respect of a Person, any other
Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such first
Person where “control” means, with respect to the relationship between or
among two or more Persons, the possession, directly or indirectly or as
trustee, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting
securities, as trustee, by statute, contract, credit arrangement or
otherwise, including the ownership, directly or indirectly, of securities
having the power to elect a majority of the board of directors or similar
body governing the affairs of such Person, or by the effective control of
such a Person by way of the contractual right to acquire such
control;
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(c)
|
“Aurora Property” means the Input Material, the Processed
Material, Work Product and all information, records or materials,
regardless of form provided by Aurora for use by Radient;
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(d)
|
“Batch” means, with respect to each Processing Plan, a
manufacturing or production run of Input Material, of the scale set forth
in the applicable Processing Plan;
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(e)
|
“Business Day” means any day other than a Saturday,
Sunday or statutory holiday in the Province of Alberta;
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(f)
|
“Claim” means any claim, demand, action, proceeding or
liability;
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(g)
|
“Commencement Date” means the date first written
above;
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(h)
|
“Confidential Information”
means:
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(i)
|
in the case of Aurora,
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(1)
|
the Work Product and all of the following whether held
individually or collectively by Aurora or any of its
Affiliates:
|
- 3 -
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(A)
|
proprietary intellectual property, trade secrets and
methodologies of Aurora or its Affiliates;
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(B)
|
business information including, without limitation,
financial information, business and marketing planning and related
initiatives and any and all data and information of Aurora or its
Affiliates obtained by Radient or any of its employees or contractors from
Aurora or is Affiliates; and
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(C)
|
accounting and personnel records, customer and supplier
lists of Aurora and its Affiliates and attendant confidential information,
initiatives, projects undertaken or to be undertaken by Aurora or its
Affiliates, and all proprietary and confidential information of Aurora or
its Affiliates; and
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(2)
|
all information or data of Aurora or its Affiliates
received by Radient that is not generally available to the public, but
does not include any information which Radient can
demonstrate:
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(A)
|
was, at the time of disclosure to Radient, in the public
domain;
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(B)
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after disclosure to Radient, became part of the public
domain through no fault of Radient;
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(C)
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was in the possession of Radient at the time of
disclosure to it as demonstrated by written record;
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(D)
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was received by Radient from a third party who had lawful
right to disclose such information; or
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(E)
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was independently developed by Radient without reference
to such information.
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(ii)
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in the case of Radient:
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(1)
|
all of the following whether held individually or
collectively by Radient:
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(A)
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proprietary intellectual property, trade secrets and
methodologies of Radient;
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(B)
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business information including, without limitation,
financial information, business and marketing planning and related
initiatives and any and all data and information of Radient obtained by
Aurora or any of its employees or contractors from Radient;
and
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- 4 -
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(C)
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accounting and personnel records, customer and supplier
lists of Radient and attendant confidential information, initiatives,
projects undertaken or to be undertaken by Radient, and any and all
proprietary and confidential information of Radient;
and
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(2)
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all information or data of Radient received by Aurora
that is not generally available to the public, but does not include any
information which Aurora can demonstrate:
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(A)
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was, at the time of disclosure to Aurora, in the public
domain;
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(B)
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after disclosure to Aurora, became part of the public
domain through no fault of Aurora;
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(C)
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was in the possession of Aurora at the time of disclosure
to it as demonstrated by written record;
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(D)
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was received by Aurora from a third party who had lawful
right to disclose such information; or
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(E)
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was independently developed by Aurora without reference
to such information.
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(i)
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“Current Good Manufacturing Practices” means the
practices required in order to conform to the guidelines recommended by
the respective agency or agencies in each respective country in the
Territory that control authorization and licensing for manufacture and
sale of food and drug products, specifically as such practices relate to
cannabis;
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(j)
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“Dealer License Date” means the date that Radient becomes
a licensed dealer at its facility located at 4035-101 Street NW, Edmonton,
Alberta pursuant to the Narcotic Control Regulations;
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(k)
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“Delivery Date” means each respective date that Aurora
delivers Input Material to Radient during the Term;
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(l)
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“Fee” means the fee to be paid by Aurora or its
Affiliates to Radient as set forth in each particular Processing
Plan;
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(m)
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“Force Majeure” means any act of God, major storms, civil
disturbance or any similar major event or occurrence not within the
control of a party and which by the exercise of due diligence by such
party could not have been prevented, but lack of funds on the part of such
party shall be deemed not to be a Force Majeure;
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(n)
|
“Initial Term” means the period of time commencing on the
Commencement Date and expiring on the 5
th
anniversary of the
earlier of the Licenced Producer Date and the Dealer License
Date;
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- 5 -
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(o)
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“Input Material” means a form of cannabis (including, but
not limited to, hemp) as specified in that applicable Processing
Plan;
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(p)
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“Licensed Producer Date” means the date that Radient
becomes a licensed producer pursuant to the ACMPR;
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(q)
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“Performance Requirements” means those certain
requirements and performance levels set forth in the applicable Processing
Plan;
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(r)
|
“Person” means an individual, corporation, body
corporate, firm, partnership, trust, trustee, syndicate, joint venture,
limited liability company, association, or unincorporated
organization;
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(s)
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“Premium Fee” [terms of premium fee redacted];
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(t)
|
“Processed Material” means the cannabis product generated
by Radient upon Radient taking the Input Material and providing the
Services, including, but not limited to, extracts or powders;
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(u)
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“Processing Plan” means the written plan according to
which Input Material is processed into Processed Material, as to be
developed by the parties based on the characteristics of the Input
Material and attached as Schedules to this Agreement;
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(v)
|
“Quality Agreement” means the quality assurance / quality
control agreement to be entered into by Radient and Aurora as contemplated
in Section
Error! Reference source not found.
of this Agreement and
to be attached to this Agreement as Schedule “B” once agreed to;
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(w)
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“Recovery” means the percent of available total
cannabinoids present in the Input Material that are recovered in the
Processed Material;
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(x)
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“Recovery Standard” means the percentage standard of
recovery as set out in each particular Processing Plan;
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(y)
|
“Services” means the collection of processes and
procedures defined in each Processing Plan;
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(z)
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“Territory” means the geographic territories of Canada,
Australia, and countries in the European Union as of the Commencement
Date, subject to the addition of other geographic territories, as may be
mutually agreed to by the parties in writing;
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(aa)
|
“Term” means the Initial Term and any renewal term in
accordance with Section 3.1, subject to earlier terminated in accordance
with the terms of this Agreement; and
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(bb)
|
“Work Product” means any and all materials, reports,
documentation, and other items made, prepared or produced for Aurora by or
on behalf of Radient or any of its employees and contractors as part of
the provision of the Services (whether then provided or delivered to Aurora or not), including related
materials, regardless of media or format.
|
- 6 -
ARTICLE 2
|
2.1
|
Preamble and Schedules
|
The parties hereby confirm and
ratify the matters contained and referred to in the Preamble to this Agreement
and agree that same and the various schedules hereto are expressly incorporated
into and form part of this Agreement:
Schedule “A” – Investor Rights
Agreement
Schedule “B” – Quality Agreement
Schedule “C” – Processing
Plan(s)
Additionally, the parties agree that additional schedules,
including, but not limited to, Processing Plans, may be agreed to by the parties
and appended to this Agreement from time to time, and such schedules shall be
expressly incorporated into and form part of this Agreement once agreed to in
writing by the parties.
ARTICLE 3
Aurora shall have the option to
renew this Agreement for an additional 5 year renewal term by providing Radient
at least 60 days written notice prior to the expiry of the Initial Term.
ARTICLE 4
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4.1
|
Obligations
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Radient shall:
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(a)
|
after the earlier of Dealer License Date or Licensed
Producer Date, perform the Services faithfully and in a reasonable manner,
exercising best efforts, and in accordance with and subject to the terms
and conditions contained in this Agreement, including, without
restriction, the Performance Requirements;
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(b)
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be bound by and observe all applicable federal,
provincial and municipal legislation and related regulations as amended
from time to time, and Radient shall cause all of its employees and
approved subcontractors to be so bound;
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(c)
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obtain and maintain at its sole expense all necessary
permits, licenses, consents and approvals required by all authorities
having jurisdiction incidental to the performance of Radient’s obligations
under this Agreement;
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(d)
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pay all fees and all other costs incidental to the
performance of Radient’s obligations under this Agreement (subject always
to the payment of the Fees as contemplated
herein);
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- 7 -
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(e)
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provide all such written and verbal reports as required
by Aurora, acting reasonably, on the progress of the Services. Radient
will make available such information, including data and documents, as
Aurora may require from time to time to allow Aurora to evaluate the
quality and progress of the Services; and
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(f)
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enter into an Investor Rights Agreement with Aurora’s
parent corporation, Aurora Cannabis Inc. (“ACB”), in the form set out as
Schedule “A” hereto.
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ARTICLE 5
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5.1
|
Exclusivity Regarding Processing Cannabis Unless
Premium Fee is Charged
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Radient and its Affiliates shall
provide the Services to Aurora and its Affiliates within the Territory for the
Fee. If Radient or its Affiliates perform the Services or services that are
substantially similar to the Services for a third party, then Radient shall
charge such third party a fee for the services equal to or greater than the
Premium Fee. Without limiting the generality of the foregoing, Radient, shall
not accept a retainer to provide, or in fact provide, to any party that is
located within the Territory or exports any form of cannabis to any jurisdiction
in the Territory, services that are the same or substantially similar to the
Services provided to Aurora hereunder unless a fee equal to or greater than the
Premium Fee is charged to such third party. For clarity, Radient and its
Affiliates shall not process any form of cannabis, including, but not limited to
hemp, in any manner for any party located the Territory, or any party that
exports cannabis, including, but not limited to hemp, to any jurisdiction in the
Territory, without charging such third party a fee equal to or greater than the
Premium Fee. [Terms related to certain verification rights in favour of Aurora
redacted].
Notwithstanding the foregoing, at
any time after the later of the Licensed Producer Date (or, if applicable, the
Licensed Dealer Date) and the completion of Aurora’s Sky facility located at the
Edmonton International Airport such that it is fully operational, if Aurora does
not provide [Aurora’s minimum quantity requirement redacted] then Radient’s
obligations and covenants in this Section 5.1 shall not apply until such time as
Aurora subsequently provides Radient with a minimum of [Aurora’s minimum
quantity requirement redacted], at which time this Section 5.1 shall
automatically be applicable again.
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5.2
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Priority for Services for Aurora
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[Terms of certain priority for services to Aurora
redacted]
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5.3
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Exclusive Right to Negotiate In Relation to New
Jurisdictions
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If Radient (or any of its
Affiliates) desires to perform services that are substantially similar to or the
same as the Services in any geographical jurisdiction that is not included in
the Territory (a “
New Jurisdiction
”), it shall provide Aurora with
written notice of its intention to do so and the notice shall specify the New
Jurisdiction (the “
Jurisdiction Notice
”) and Radient’s proposed business
activities in the New Jurisdiction. Upon receipt of such Jurisdiction Notice,
Aurora shall have an exclusive right to negotiate with Radient for a period of
[number of days redacted] days to add such New Jurisdiction to the definition of
“
Territory
”. During such [number of days redacted] day period of
exclusivity, Radient shall not enter into discussions or negotiations with any third party relating to the provision of
Services or services similar thereto, and Aurora and Radient shall negotiate in
good faith. If Aurora and Radient have not reached an agreement within such
30-day period or agreed to extend the exclusive negotiation period, Radient may
enter into negotiations with third parties in relation to the New Jurisdiction
specified in the Jurisdiction Notice.
- 8 -
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5.4
|
Exclusivity Regarding Future Research and Development
Related to Cannabis
|
Radient shall notify Aurora in
writing of its intention (or the intention of any of its Affiliates) to perform
any joint research and development activities pursuant to any type of
partnership arrangement or joint research and development arrangement or similar
arrangement with a third party relating to Input Material or any other form of
cannabis product within a reasonable time of deciding to proceed with such
research and development activities (the “
R&D Notice
”) and such
notification must occur prior to Radient proceeding. Aurora shall have a period
of [number of days redacted] days after receipt of the R&D Notice to provide
written notice to Radient that it is interested in participating in such
research and development activities (the “
Interest Notice
”). If Aurora
provides the Interest Notice to Radient prior to the expiry of such [number of
days redacted] day time frame, it shall to the exclusion of any other licensed
producer pursuant to the ACMPR or any similar or successor legislation in
Canada, or any third party producer of cannabis no matter where such producer is
located, have the exclusive right to negotiate with Radient to participate in
such research and development activities for a period of [number of days
redacted]days after providing the Interest Notice to Radient. Aurora and Radient
shall negotiate in good faith and shall use reasonable efforts to negotiate
terms and conditions similar to the terms and conditions set out in the Joint
Venture Research Agreement between the parties dated January 4, 2017, as
applicable. If Aurora and Radient have not reached an agreement within such
[number of days redacted] day period or agreed to extend the exclusive
negotiation period, Radient may enter into negotiations with third party
licensed producers (pursuant to the ACMPR or any similar or successor
legislation in Canada) in relation to the activities set out in the R&D
Notice.
ARTICLE 6
6.1
The Services shall include the
processing of Input Material, as delivered by Aurora to Radient from time to
time during the Term, to produce Processed Material. The Services shall be
performed in accordance with written plans detailed in the Processing Plans,
with a distinct Processing Plan created for each variation in Input Material or
Processed Material. For clarity, each new Processing Plan must be agreed to by
the Parties and shall be attached to this Agreement as a schedule after it has
been agreed to.
For clarity, Radient shall not
perform the Services until after the earlier of the Dealer License Date or the
Licensed Producer Date and Radient shall only perform Services upon the request
of Aurora and after the agreement of the Parties to the applicable Processing
Plan for such Services.
- 9 -
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6.2
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Each Processing Plan shall
contain:
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(a)
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a written description of the Input Material and Processed
Material;
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(b)
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the pricing terms for the Processed Material;
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(c)
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the specifications for the Processed Material;
and
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(d)
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the timeline of the Processing
Plan;
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No Processing Plan may alter or
amend the terms of this Agreement, and in the event of any conflict between a
Processing Plan and this Agreement, the latter shall take precedence and
control.
6.3
Within sixty (60) days of the
Effective Date, the Parties shall enter into the Quality Agreement outlining
responsibilities and key contacts for quality and compliance related issues. The
Quality Agreement will also address, without limitation, compliance with Current
Good Manufacturing Practices and the delineation of responsibilities around
topics such as annual product reviews, returned goods, regulatory audits, and
such other quality related concerns deemed appropriate. The final agreed Quality
Agreement will be attached to this Agreement as Schedule B and shall form part
of this Agreement. In the event that the Quality Agreement contains material
provisions that substantially differ from applicable Regulatory Standards, the
Regulatory Standards shall prevail.
ARTICLE 7
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7.1
|
Aurora’s Exclusive Period Relating to Disposition of
Intellectual Property
|
If Radient determines that it
desires to sell, license or otherwise dispose of or divest its interest in any
intellectual property that Radient or an Affiliate has developed that is related
to cannabis (including, but not limited to, hemp) or any other related product
or thing, Radient shall provide Aurora [mechanism for ownership and transfer of
IP created in the performance of this agreement redacted]
7.2
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7.3
|
Minimum Volume of Input Material
Requirement
|
Notwithstanding the foregoing, at
any time after the later of the Licensed Producer Date (or, if applicable, the
Licensed Dealer Date) and the completion of Aurora’s Sky facility located at the
Edmonton International Airport such that it is fully operational, if Aurora does
not provide a minimum [Aurora’s minimum quantity requirement redacted] then
Radient’s obligations and covenants in Sections 7.1 and
Error! Reference
source not found.
shall not apply until such time as Aurora subsequently
provides Radient with a minimum of [Aurora’s minimum quantity requirement
redacted] at which time, Sections 7.1 and
Error! Reference source not
found.
shall automatically become applicable again.
- 10 -
ARTICLE 8
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8.1
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Confidential Information
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Each party shall:
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(a)
|
keep the other party’s Confidential Information
confidential; and
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(b)
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not use, observe or record any of the Confidential
Information except as necessary to meet its obligations
hereunder.
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Each party acknowledges and
agrees that any contravention of this Section by such party may cause the other
party harm which may not be compensable by monetary damages alone and,
accordingly, in addition to any other remedy available, each of the parties
shall be entitled as a matter of right to seek immediate injunctive relief
restraining the other party from committing or continuing to commit such breach.
The parties acknowledge and agree
that the restrictions set forth in this Agreement and imposed upon them are
reasonable in all respects, are valid and are enforceable against it and further
acknowledges and agrees that:
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(a)
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the other party would not have entered into this
Agreement unless the parties had agreed to be bound by the foregoing
restrictions and therefore, that all the restrictions imposed upon it
herein are of significant value to each party; and
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(b)
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the restrictions imposed upon it herein are necessary to
protect the legitimate interests of each party and any violation of such
restrictions may result in immediate and substantial irreparable injury to
a party.
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ARTICLE 9
Radient shall not engage or
retain any agent, subcontractor or any other third party for purposes of
providing the Services hereunder, in whole or in part, without first causing
such agent, subcontractor or any third party to be bound by all covenants and
obligations of Radient under this Agreement as such relate to those of the
Services being provided by such persons respectively.
The use of any agents,
subcontractors or any other third parties by Radient shall in no way relieve
Radient from its responsibility and obligation to provide the Services in
accordance with the provisions of this Agreement.
ARTICLE 10
Aurora will pay Radient the Fees
following receipt of invoice and in accordance with the payment terms set forth
in the Schedules hereto, plus any applicable GST thereon.
- 11 -
ARTICLE 11
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11.1
|
Taxes and Deductions
|
Radient shall be responsible to
collect, remit, and pay all source deductions, Canada Pension contributions,
employment insurance premiums, taxes and GST and all other required payments,
contributions or deductions under all applicable laws and authorities including,
but not limited to, any assessments levied pursuant to the
Workers’
Compensation Act
(Alberta) which arise or may hereafter arise with respect
to the performance of the obligations of Radient under this Agreement and Aurora
shall have no liability for the same.
ARTICLE 12
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12.1
|
Concurrent Retainers
|
Subject to Article 5, Radient may
provide services to other parties and may accept concurrent contracting
retainers from other parties during the Term.
ARTICLE 13
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13.1
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Radient’s Warranties and
Representations
|
Radient hereby represents and
warrants with and to Aurora, and acknowledges that Aurora is relying upon such
representations and warranties, that:
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(a)
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Radient is in compliance with all laws and regulations of
any public authority relating to the conduct of its business and has all
required approvals, permits, licenses, certificates and authorizations
necessary to carry on its business and, upon becoming a licensed dealer
pursuant to the
Narcotic Control Regulations
or a licensed producer
pursuant to the ACMPR, shall have all required approvals, permits,
licenses, certificates and authorizations necessary to carry out its
obligations hereunder and there are not any proceedings whatsoever, actual
or pending, and whether concerning cancellation, extension or otherwise,
relating to the said approvals, permits, licenses, certificates or
authorizations;
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(b)
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Radient is experienced in the performance of all aspects
of the Services, and is capable of performing the Services in accordance
with the terms, covenants and conditions contained in this Agreement
including, without restriction, the Performance Requirements;
and
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(c)
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if the obligations of Radient hereunder require the
supply of software or any other intellectual property to Aurora or the use
of such software or intellectual property to perform the Services, such
software or other intellectual property does not, as of the date of this
Agreement, infringe any patent, copyright, trade secret, trade- mark,
moral rights or other legal or equitable intellectual property rights of
any third party and that no one, to Radient’s knowledge, has alleged that
such software or other intellectual property infringes any patent,
copyright, trade secret, trade-mark or other legal or equitable intellectual
property rights of any third party.
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- 12 -
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13.2
|
Aurora’s Representations and
Warranties
|
Aurora hereby represents and
warrants with and to Radient, and acknowledges that Radient is relying upon such
representations and warranties, that Aurora is in compliance with all laws and
regulations of any public authority relating to the conduct of its business and
has all required approvals, permits, licenses, certificates and authorizations
necessary to carry on its business and to carry out its obligations hereunder
and there are not any proceedings whatsoever, actual or pending, and whether
concerning cancellation, extension or otherwise, relating to the said approvals,
permits, licenses, certificates or authorization.
ARTICLE 14
Without in any way limiting the
liability of Radient under this Agreement, Radient shall be responsible for
obtaining and maintaining any insurance which may be required by law or merely
required for the protection of Radient and any employees, agents or approved
subcontractors, as determined by Radient and consistent with industry practice.
Radient shall, upon the request of Aurora, furnish written documentation,
satisfactory to Aurora, acting reasonably, evidencing the required insurance
coverage. Additionally, Radient shall ensure that it maintains such types and
amounts of insurance to reimburse Aurora for any damages or losses to Aurora’s
Input Material and Processed Material while they are located on Radient’s
premises, consistent with industry practice. The cost of all of the insurance
required to be held by Radient as set forth herein shall be borne by Radient and
Radient shall provide Aurora with a certificate of insurance evidencing such
insurance upon request of Aurora.
ARTICLE 15
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15.1
|
Indemnification by Radient
|
Radient shall at all times and
without limitation, indemnify and save harmless Aurora, its Affiliates,
directors, officers, employees, contractors, agents, insurers and
representatives from and against all liabilities, losses, costs, damages, legal
fees, disbursements, fines, penalties, expenses, all manner of actions, causes
of action, claims, demands and proceedings, all of whatever nature and kind
which any of Aurora, its Affiliates, directors, officers, employees,
contractors, agents, insurers and representatives may sustain, pay or incur or
which may be brought or made against all or any of them, and whether or not
incurred in connection with any action or other proceedings or claims or demands
made by third parties, with respect to any occurrence, event, incident or matter
caused by, and/or arising as a direct or indirect result of:
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(a)
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the misconduct, negligent action or negligent failure to
act, as the case may be, of Radient and/or any of those persons for whom
Radient is responsible at law (including, without limitation, any of its
employees or subcontractors); or
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- 13 -
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(b)
|
any breach, violation or non-performance of any
representation, warranty, obligation, covenant, condition or agreement in
this Agreement set forth and contained on the part of Radient to be
fulfilled, kept, observed or performed, as the case may be; or
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(c)
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any damages to third parties caused by, resulting at any
time from, arising out of or in consequence of, the misconduct, negligent
action or negligent failure to act, of Radient and/or any of those persons
for whom Radient is responsible at law (including, without limitation, any
of its employees or subcontractors
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15.2
|
Indemnification by Aurora
|
Aurora shall at all times and
without limitation, indemnify and save harmless Radient, its Affiliates,
directors, officers, employees, contractors, agents, insurers and
representatives from and against all liabilities, losses, costs, damages, legal
fees, disbursements, fines, penalties, expenses, all manner of actions, causes
of action, claims, demands and proceedings, all of whatever nature and kind
which any of Radient, its Affiliates, directors, officers, employees,
contractors, agents, insurers and representatives may sustain, pay or incur or
which may be brought or made against all or any of them, and whether or not
incurred in connection with any action or other proceedings or claims or demands
made by third parties, with respect to any occurrence, event, incident or matter
caused by, and/or arising as a direct or indirect result of:
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(a)
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the misconduct, negligent action or negligent failure to
act, as the case may be, of Aurora and/or any of those persons for whom
Aurora is responsible at law (including, without limitation, any of its
employees or subcontractors); or
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(b)
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any breach, violation or non-performance of any
representation, warranty, obligation, covenant, condition or agreement in
this Agreement set forth and contained on the part of Aurora to be
fulfilled, kept, observed or performed, as the case may be; or
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(c)
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any damages to third parties caused by, resulting at any
time from, arising out of or in consequence of, the misconduct, negligent
action or negligent failure to act, of Aurora and/or any of those persons
for whom Aurora is responsible at law (including, without limitation, any
of its employees or subcontractors.
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15.3
|
Conduct of Third Party
Claims
|
This Section 15.3 will apply to
the conduct of Claims made by a third party against a Party having, or claiming
to have, the benefit of an indemnity under this Agreement. The Party having, or
claiming to have, the benefit of the indemnity is referred to as the
“Beneficiary” and the Party from whom the indemnity is sought is referred to as
the “Indemnifier”. Subject to the requirements of any insurer who may have an
obligation to provide an indemnity in respect of any liability arising under
this Agreement, the following provisions shall apply to all such Claims:
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(a)
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If the Beneficiary receives any notice, demand, letter or
other document concerning any Claim for which it appears that the
Beneficiary is, or may become entitled to, indemnification under this Agreement, the
Beneficiary will give notice in writing to the Indemnifier as soon as reasonably
practicable and in any event within ten (10) days of receipt thereof.
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(b)
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Subject to Sections (d), (e) and (f), on the giving of a
notice by the Beneficiary pursuant to Section (a), if it appears that the
Beneficiary is or may be entitled to indemnification from the Indemnifier
in respect of all (but not less than all) of the liability arising out of
the Claim, the Indemnifier will be entitled to dispute the Claim in the
name of the Beneficiary at the Indemnifier’s own expense and take conduct
of any defence, dispute, compromise, or appeal of the Claim and of any
incidental negotiations. The Beneficiary will give the Indemnifier all
reasonable cooperation, access and assistance for the purposes of
considering and resisting such Claim.
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(c)
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In defending any Claim described in Section (b) in which
there is a conflict of interest between the Indemnifier and the
Beneficiary, the Beneficiary may appoint independent legal counsel in
respect of such Claim and, if it is determined that the Beneficiary is
entitled to indemnification by the Indemnifier, all reasonable costs and
expenses incurred by the Beneficiary in so doing will be included in the
indemnity from the indemnifier.
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(d)
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With respect to any Claim conducted by the Indemnifier
pursuant to Section (b):
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(i)
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the Indemnifier will keep the Beneficiary fully informed
and consult with it about material elements of the conduct of the
Claim;
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(ii)
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the Indemnifier shall not bring the name or reputation of
the Beneficiary into disrepute;
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(iii)
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the Indemnifier will not pay, compromise or settle such
Claim without the prior consent of the Beneficiary, such consent not to be
unreasonably withheld or delayed;
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(iv)
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the Indemnifier shall not admit liability or fault to any
third party without the prior consent of the Beneficiary, such consent not
to be unreasonably withheld or delayed; and
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(v)
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the Indemnifier shall use all reasonable efforts to have
the Indemnified Party named as a beneficiary under any release given by
the Persons bringing the Claim to which these provisions
relate.
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(e)
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The Beneficiary may take conduct of any defence, dispute,
compromise or appeal of the Claim and of any incidental negotiations
if:
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(i)
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the Indemnifier is not entitled to take conduct of the
Claim in accordance with Section (b);
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- 15 -
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(ii)
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the Indemnifier fails to notify the Beneficiary of its
intention to take conduct of the relevant Claim within twenty (20)
Business Days of the notice from the Beneficiary under Section (a) or
notifies the Beneficiary that it does not intend to take conduct of the
Claim; or
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(iii)
|
the Indemnifier fails to comply in any material respect
with the provisions of Section (d) above.
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In the case of Section (iii), the Beneficiary may pay or
settle any Claim on such terms as it thinks fit (provided such settlement
is in monetary terms only) and without prejudice to its rights and
remedies under this Agreement. Otherwise the Beneficiary will not pay or
settle such Claims without the prior consent of the Indemnifier, such
consent not to be unreasonably withheld or delayed.
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(f)
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The Beneficiary may at any time give notice to the
Indemnifier that it is retaining or taking over, as the case may be, the
conduct of any defence, dispute, compromise, settlement or appeal of any
Claim, or of any incidental negotiations, to which Section (e) above
applies. On receipt of such notice the Indemnifier will promptly take all
steps necessary to transfer the conduct of such Claim to the Beneficiary,
and will provide to the Beneficiary all relevant documentation and all
reasonable cooperation, access and assistance for the purpose of
considering and resisting such Claim. If the Beneficiary gives any notice
pursuant to this Section (f), the Indemnifier will not thereby be released
from its obligation to indemnify the Beneficiary pursuant to this Article
15.
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(g)
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If the Indemnifier pays to the Beneficiary an amount in
respect of any indemnity and the Beneficiary subsequently recovers
(whether by payment, discount, credit, saving, relief or other benefit or
otherwise) a sum which is directly referable to the fact, matter, event or
circumstances giving rise to the Claim under the indemnity, the
Beneficiary will forthwith repay to the Indemnifier the lesser
of:
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(i)
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an amount equal to the sum recovered (or the value of the
saving or benefit obtained) less any out-of-pocket costs and expenses
properly incurred by the Beneficiary in recovering such sum; and
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(ii)
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the amount paid to the Beneficiary by the Indemnifier in
respect of the Claim under the relevant
indemnity;
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provided that there will be no obligation on the
Beneficiary to pursue such recovery and that the Indemnifier will be
repaid only to the extent that the amount of such recovery aggregated with
any sum recovered from the Indemnifier exceeds any direct loss sustained
by the Beneficiary.
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(h)
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Any person taking any of the steps contemplated by this
Section shall comply with the requirements of every insurer who may have
an obligation to provide an indemnity in respect of any liability arising
under this Agreement.
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- 16 -
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(i)
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To the extent that an Indemnifier has fulfilled its
indemnity obligations pursuant to this Section, the Indemnifier shall be
subrogated to all rights and claims of the Beneficiary who the Indemnifier
has indemnified, and shall be entitled to exercise all remedies available
to such Indemnifier.
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ARTICLE 16
|
16.1
|
Ownership of Aurora
Property
|
Radient acknowledges and agrees
that Aurora is the sole legal and beneficial owner of any and all of Aurora
Property. This Section shall survive the termination or expiry of this
Agreement.
ARTICLE 17
This Agreement may be terminated
by Aurora during the Initial Term or any subsequent Term by written notice to
Radient effective upon the date set out in the written notice, and Radient’s
right to consideration shall be limited to payment for Services performed but
not yet paid for up to the effective date of termination. Radient specifically
agrees that the consideration set forth in this paragraph constitutes
reasonable, fair and equitable compensation for damages, if any, that may be
suffered by Radient as a result of termination of this Agreement.
If such notice is given as this
Section 17.1, Radient shall perform the Services up to and including the
effective date of termination specified in such notice and shall, upon written
request, perform the Services to a predetermined ending point, as determined by
Aurora and provide Aurora with a written report on the Services rendered to the
time of termination. Except for any such report, Radient shall not perform any
further Services subsequent to the effective date of termination.
ARTICLE 18
If the parties shall fail to meet
their respective obligations hereunder within the respective time prescribed
therefor and such failure shall be directly caused or materially contributed to
by an event of Force Majeure, such failure shall be deemed not to be a breach of
the obligations of such party, provided however, in such event, such party
shall:
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(a)
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immediately notify the other party of the circumstances
of the event of Force Majeure, the extent to which the performance of
obligations under this Agreement are affected, and the actions taken by
the said party to mitigate against the effects of the event of Force
Majeure; and
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(b)
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use its best efforts to put itself in a position to carry
out its obligations hereunder as soon as reasonably
possible.
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- 17 -
In no event shall the relief
provided in respect of the occurrence of an event of Force Majeure exceed ninety
(90) days.
ARTICLE 19
Whether or not so stipulated
herein, all notices, communication, requests and statements (the “Notice”)
required or permitted hereunder shall be in writing.
Any Notice required or permitted
hereunder shall be sent to the intended recipient at its address as follows:
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(a)
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Aurora Cannabis Enterprises Inc.
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1500 – 1199 West Hastings Street
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Vancouver, BC V6E 3T5
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Attention: Allan Cleiren
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E-mail: allan@auroramj.com
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(b)
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Radient Technologies Inc.
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8223 Roper Road
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Edmonton, AB T6E 6S4
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Attention: Mike Cabigon
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E-mail: mcabigon@radientinc.com
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or to such other address as each party may from time to time
direct in writing.
Notice shall be served by one of the
following means:
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(a)
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by delivering it to the party on whom it is to be served.
Notice delivered in this manner shall be deemed received when actually
delivered to such party;
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(b)
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if delivered to a corporate party, by delivering it to
the address specified in above during normal business hours. Notice
delivered in this manner shall be deemed received when actually
delivered;
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(c)
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by fax or email to the party on whom it is to be served.
Notice delivered in this manner shall be deemed received on the earlier
of:
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(i)
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if transmitted before 3:00 p.m. on a Business Day, on
that Business Day; or
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(ii)
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if transmitted after 3:00 p.m. on a Business Day, on the
next Business Day after the date of transmission;
or
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(d)
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by mailing via first class registered post, postage
prepaid, to the party to whom it is served. Notice so served shall be
deemed to be received five (5) days after the date it is postmarked. In
the event of postal interruption, no notice sent by means of the postal
system during or within seven (7) days prior to the
commencement of such postal interruption or seven (7) days after the
cessation of such postal interruption shall be deemed to have been received
unless actually received.
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- 18 -
This Agreement shall be construed
and governed by the laws of the Province of Alberta and the laws of Canada
applicable therein and the parties hereto irrevocably attorn to the exclusive
jurisdiction of the Courts of the Province of Alberta.
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19.3
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Time of Essence
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Time shall be of the essence of this Agreement.
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19.4
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Headings
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The headings, captions, paragraph
numbers, sub-paragraph numbers, article numbers and indices appearing in this
Agreement have been inserted as a matter of convenience and for reference only
and in no way define, limit, construct or enlarge the scope or meaning of this
Agreement or any provisions hereof.
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19.5
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Relationship between
Parties
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Nothing contained herein shall be
deemed or construed by the parties hereto nor by any third party, as creating
the relationship of employer and employee, principal and agent, partnership, or
of a joint venture between the parties hereto, it being understood and agreed
that none of the provisions contained herein nor any act of the parties hereto
shall be deemed to create any relationship between the parties hereto other than
an independent service agreement between the two parties at arm’s length.
Except as may from time to time
be expressly stated in writing by the one party, the other party has no
authority to assume or create any obligation whatsoever, expressed or implied,
on behalf of or in the name of the other party, nor to bind the other party in
any manner whatsoever. Without restricting any of the foregoing, unless
otherwise specifically authorized and documented between the parties at no time
shall Radient have authority to bind Aurora as its agent or otherwise, nor make
representations or warranties for or on behalf of Aurora.
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19.7
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Agreement Entire
Relationship
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This Agreement constitutes the
entire agreement between the parties in relation to the subject matter hereof
and the parties acknowledge and agree that there are no covenants,
representations, warranties, agreements or conditions expressed or implied,
collateral or otherwise forming part of or in any way affecting or relating to
this Agreement save as expressly set out in this Agreement.
- 19 -
Each of the parties do hereby
agree to do such things and execute such further documents, agreements and
assurances as may be necessary or advisable from time to time in order to carry
out the terms and conditions of this Agreement in accordance with their true
intent.
This Agreement may not be altered
or amended in any of its provisions, except where any such changes are reduced
to writing and executed by the parties.
No consent or waiver, express or
implied, by either party to or of any breach or default by the other party in
the performance by the other party of its obligations hereunder shall be deemed
or construed to be a consent or waiver to or of any other breach or default in
the performance of obligations hereunder by such party hereunder. Failure on the
part of either party to complain of any act or failure to act of the other party
or to declare the other party in default, irrespective of how long such failure
continues, shall not constitute a waiver by such party of its rights hereunder.
This Agreement may be executed
and delivered in any number of counterparts, by facsimile copy, by electronic or
digital signature or by other written acknowledgement of consent and agreement
to be legally bound by its terms. Each counterpart when executed and delivered
will be considered an original but all counterparts taken together constitute
one and the same instrument.
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19.12
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Statutory Reference
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Any reference to a statute shall
include and shall be deemed to be a reference to such statute and to the
regulations made pursuant thereto and promulgated thereunder with all amendments
made thereto and in force from time to time and any final judicial decisions
interpreting the same, and to any statute or regulation that may be passed which
has the effect of supplementing or superseding the statute so referred to or the
regulations made pursuant thereto.
If any term, covenant or
condition of this Agreement or the application thereof to any party or
circumstances shall be invalid or unenforceable to any extent, the remainder of
this Agreement or application of such term, covenant or condition to a party or
circumstance other than those to which it is held invalid or unenforceable shall
not be affected thereby and each remaining term, covenant or condition of this
Agreement shall be valid and shall be enforceable to the fullest permitted by
law.
- 20 -
The parties acknowledge and agree
that the provisions of this Agreement which, by their context, are meant to
survive the termination or expiry of the Term shall survive the termination or
expiry of the Term and shall not be merged therein or therewith.
Mention in this Agreement of any
particular remedy of a party in respect of a default by the other party does not
preclude the first party from any other remedy in respect thereof, whether
available at law or in equity or by statute or expressly provided for in this
Agreement. No remedy shall be exclusive or dependent upon any other remedy, but
a party may from time to time exercise any one of more of such remedies
generally or in combination, such remedies being cumulative and not alternative.
The parties acknowledge and agree
that any payment of monies required to be made hereunder shall be made in
Canadian funds.
All amounts payable by Aurora to
Radient hereunder will be exclusive of any goods and services tax (“GST”) and
Aurora will, in addition the amounts payable hereunder, pay to Radient all
amounts of GST applicable thereon.
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19.18
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Singular, Plural and
Gender
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Wherever the singular, plural,
masculine, feminine or neuter is used throughout this Agreement the same shall
be construed as meaning the singular, plural, masculine, feminine, neuter, body
politic or body corporate where the fact or context so requires and the
provisions hereof.
This Agreement shall enure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties.
Radient shall not assign its
interest in this Agreement, or any part hereof, in any manner whatsoever without
having first received the written consent from Aurora, which consent may not be
arbitrarily withheld.
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19.21
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Requests for Consent
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Aurora shall provide any decision with regard to a
request for consent in a timely manner.
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- 21 -
This Agreement shall be
interpreted according to its fair construction and shall not be construed as
against any party hereto.
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19.23
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Structure of Transactions
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In the event that the ACMPR or
other applicable legislation does not allow for Aurora to provide Material to
Radient to perform the Services on, but instead requires the transaction to be
structured as a purchase and sale transaction, the parties shall work together
in good faith to restructure the mechanics associated with this Agreement as a
purchase and sale, but the commercial terms shall remain the same.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
- 22 -
IN WITNESS WHEREOF
the parties hereto have executed this
Agreement effective the Commencement Date.
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AURORA CANNABIS ENTERPRISES
INC.
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Per:
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Authorized Signatory
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RADIENT TECHNOLOGIES INC.
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Per:
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Authorized Signatory
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SCHEDULE A
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INVESTOR RIGHTS AGREEMENT
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AURORA CANNABIS INC.
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and
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RADIENT TECHNOLOGIES INC.
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November 5,
2017
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INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (this “
Agreement
”) is
made the 5th day of November, 2017,
BETWEEN:
AURORA CANNABIS INC.
(the “
Investor
”)
- and -
RADIENT TECHNOLOGIES INC.
(the “
Company
”)
WHEREAS
the Company and the Investor have entered into Master Services Agreement dated
November 5, 2017 (the “
Services Agreement
”), and the Investor owns
approximately 17.4% of the Company’s issued and outstanding common shares on a
fully diluted basis;
AND
WHEREAS
in consideration of the Investor’s agreement to enter into, and
complete the transactions contemplated by the Services Agreement, the Company
has agreed to grant the Investor certain additional rights as set out herein;
THIS
AGREEMENT WITNESSES THAT
in consideration of the respective covenants and
agreements of the Parties herein contained and for other good and valuable
consideration (the receipt and sufficiency of which are acknowledged by each
Party), the Parties agree as follows:
ARTICLE 1
INTERPRETATION
For the purposes of this Agreement, unless the context
otherwise requires, the following terms shall have the respective meanings set
out below and grammatical variations of such terms shall have corresponding
meanings:
“
Act
” means the
Business
Corporations Act
(Alberta);
“
Affiliate
” has the meaning
ascribed to such term in the Act, as in effect on the date of this Agreement;
“
Board
” means the board of
directors of the Company;
A-2
“
Business Day
” means any day,
other than (i) a Saturday, Sunday or statutory holiday in the Province of
Alberta; and (ii) a day on which banks are generally closed in the Province of
Alberta;
“
Canadian Securities Laws
” means
the applicable securities legislation of each of the provinces and territories
of Canada and all published regulations, policy statements, orders, rules,
instruments, rulings and interpretation notes issued thereunder or in relation
thereto, as the same may hereafter be amended from time to time or replaced;
“
Common Shares
” means the common
shares in the capital of the Company issued and outstanding from time to time
and includes any common shares that may be issued hereafter;
“
Exchange
” means the TSX Venture
Exchange or such other stock exchange in Canada where the Common Shares may be
listed from time to time;
“
Exercise Notice
” shall have the
meaning set out in Section 2.3;
“
Governmental Authority
” means
any (a) multinational, federal, provincial, state, regional, municipal, local or
other government, governmental or public department, ministry, central bank,
court, tribunal, arbitral body, bureau or agency, domestic or foreign, (b)
subdivision, agent, commission, board, or authority of any of the foregoing, or
(c) quasi-governmental or private body exercising any regulatory, expropriation
or taxing authority under or for the account of any of the foregoing, including
any stock exchange or self-regulatory authority and, for greater certainty, the
securities regulatory authorities and the Exchange;
“
Issuance
” shall have the
meaning set out in Section 2.1;
“
Notice Period
” shall have the
meaning set out in Section 2.3;
“
Offered Securities
” any equity
or voting securities, or securities convertible into or exchangeable for equity
or voting securities, of the Company;
“
Offering
” shall have the
meaning set out in Section 2.1;
“
Offering Notice
” shall have the
meaning set out in Section 2.1;
“
Participation Right
” shall have
the meaning set out in Section 2.2;
“
Parties
” means the parties to
this Agreement and “Party” means one of them;
“
Person
” means any individual,
sole proprietorship, partnership, unincorporated association, unincorporated
syndicate, unincorporated organization, trust, company, corporation or other
body corporate, union, Governmental Authority and a natural person in his
capacity as trustee, executor, administrator, or other legal representative; and
“
Services Agreement
” has the
meaning set out in the recitals hereto.
A-3
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1.2
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Rules of
Construction
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Except as may be otherwise specifically provided in this
Agreement and unless the context otherwise requires, in this Agreement:
(a) the terms “Agreement”,
“this Agreement”, “the Agreement”, “hereto”, “hereof”, “herein”, “hereby”,
“hereunder” and similar expressions refer to this Agreement in its entirety and
not to any particular provision hereof;
(b) references to an “Article”
or “Section” followed by a number or letter refer to the specified Article or
Section to this Agreement;
(c) the division of this
Agreement into articles and sections and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement;
(d) words importing the
singular number only shall include the plural and vice versa and words importing
the use of any gender shall include all genders;
(e) the word “including” is
deemed to mean “including without limitation”;
(f) any reference to this
Agreement means this Agreement as amended, modified, replaced or supplemented
from time to time;
(g) any reference to a statute,
regulation or rule shall be construed to be a reference thereto as the same may
from time to time be amended, re-enacted or replaced, and any reference to a
statute shall include any regulations or rules made thereunder;
(h) all dollar amounts refer to
Canadian dollars;
(i) all references to a
percentage ownership of shares shall be calculated on a non-diluted basis,
unless otherwise indicated;
(j) any time period within
which a payment is to be made or any other action is to be taken hereunder shall
be calculated excluding the day on which the period commences and including the
day on which the period ends; and
(k) whenever any action is
required to be taken or period of time is to expire on a day other than a
Business Day, such action shall be taken or period shall expire on the next
following Business Day.
This Agreement constitute the entire agreement between the
Parties with respect to the subject matter hereof and thereof and supersedes all
prior agreements, understandings, negotiations and discussions, whether written
or oral. There are no conditions, covenants, agreements, representations,
warranties or other provisions, express or implied, collateral, statutory or
otherwise, relating to the subject matter hereof except as provided in the
aforesaid agreements.
A-4
Time shall be of the essence of this Agreement.
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1.5
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Governing Law and Submission to
Jurisdiction
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This Agreement shall be interpreted and enforced in accordance
with, and the respective rights and obligations of the Parties shall be governed
by, the laws of the Province of Alberta and the federal laws of Canada
applicable in that province.
Each of the Parties irrevocably and unconditionally (i) submits
to the exclusive jurisdiction of the courts of the Province of Alberta in the
City of Edmonton over any action or proceeding arising out of or relating to
this Agreement, (ii) waives any objection that it might otherwise be entitled to
assert to the jurisdiction of such courts and (iii) agrees not to assert that
such courts are not a convenient forum for the determination of any such action
or proceeding.
If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid, illegal or unenforceable in any respect,
all other provisions of this Agreement shall nevertheless remain in full force
and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to either
Party hereto. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the Parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the Parties hereto as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
ARTICLE 2
PARTICIPATION RIGHT
Subject to Section 2.5, if the Company proposes to issue (the
“
Issuance
”) any Offered Securities for cash consideration pursuant to a
public offering or a private placement (an “
Offering
”) at any time after
the date hereof, the Company will , as soon as possible after the public
announcement of the Issuance, but in any event not later than two Business Days
following such public announcement, and at least ten Business Days prior to the
expected completion date of the Issuance, give written notice of the Issuance
(the “
Offering Notice
”) to the Investor including, to the extent known by
the Company, full particulars of the Offering, including the number of Offered
Securities, the rights, privileges, restrictions, terms and conditions of the
Offered Securities, the price per Offered Security to be issued under the
Offering, the expected use of proceeds of the Offering and the expected closing
date of the Offering.
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2.2
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Grant of Participation
Right
|
The Company agrees that, subject to Section 2.5 hereof, the
Investor (directly or through an Affiliate) has the right (the “
Participation
Right
”), to subscribe for and to be issued as part of an Offering at the
subscription price per Offered Security pursuant to the Offering and otherwise
on substantially the terms and conditions of the Offering
(provided that, if the Investor is prohibited by Canadian Securities Laws or
other applicable law from participating on substantially the terms and
conditions of the Offering, the Company shall use commercially reasonable
efforts to enable the Investor to participate on terms and conditions that are
as substantially similar as circumstances permit):
A-5
(a) in the case of an Offering
of Common Shares, up to such number of Common Shares that will allow the
Investor to acquire, or maintain, as applicable, a 19.99% ownership interest in
the Common Shares after giving effect to such Offering assuming conversion,
exercise or exchange of all of the convertible, exercisable or exchangeable
securities of the Company held by the Investor and its Affiliates; and
(b) in the case of an Offering
of Offered Securities (other than Common Shares), up to such number of Offered
Securities that will (after giving effect to the Offering and assuming
conversion, exercise or exchange of all of the convertible, exercisable or
exchangeable Offered Securities issued in connection with the Offering and
issuable pursuant to this Section 2.2) allow the Investor to acquire, or
maintain, as applicable, a 19.99% ownership interest in the Common Shares.
If the Investor wishes to exercise the Participation Right, the
Investor shall give written notice to the Company (the “
Exercise Notice
”)
of its intention to exercise such right and of the number of Offered Securities
the Investor wishes to purchase, and shall subscribe to the Offering within five
Business Days after the date of receipt of an Offering Notice, or in the case of
a public offering that is a “bought deal”, within three Business Days of receipt
of an Offering Notice (the “
Notice Period
”), failing which the Investor
will not be entitled to exercise the Participation Right in respect of such
Offering or Issuance.
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2.4
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Issuance of Participation Right Offered
Securities
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(a) If the Company receives an
Exercise Notice from the Investor within the Notice Period, then the Company
shall:
(i) subject to the receipt and
continued effectiveness of all required approvals (including any applicable
approval(s) of the Exchange and any required approvals under Canadian Securities
Laws and any required shareholder approval), which approvals the Company shall
use all commercially reasonable efforts to promptly obtain (including by
applying for any necessary price protection confirmations, seeking shareholder
approval (if required) in the manner described below, and using its commercially
reasonable efforts to cause management and each member of the Board to vote
their Common Shares and any shares of the Company entitled to vote in the matter
and all votes received by proxy in favour of the issuance of the Offered
Securities to the Investor);
(ii) subject to the issuance to
the Investor or its Affiliate of Common Shares or other Offered Securities being
exempt from prospectus and registration requirements under Canadian Securities
Laws; and
A-6
(iii) subject to the completion
of the relevant Offering,
issue to the Investor or its Affiliate,
against payment of the subscription price payable in respect thereof, that
number of Common Shares or other Offered Securities, as applicable, set forth in
the Exercise Notice. The parties agree that the issuance of any Common Shares or
other Offered Securities to the Investor pursuant to this Section 2.4 shall
occur concurrently with the completion of the relevant Offering.
(b) If the Company is required
by the Exchange or otherwise to seek shareholder approval for the issuance of
the Offered Securities to the Investor or its Affiliate, then the Company shall
call and hold a meeting of its shareholders to consider the issuance of the
Offered Securities to the Investor or its Affiliate as soon as reasonably
practicable, and in any event such meeting shall be held within 75 days after
the date that the Company is advised that it will require shareholder approval,
and shall recommend approval of the issuance of the Offered Securities and shall
solicit proxies in support thereof.
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2.5
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Issuances Not Subject to Participation
Rights
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The following Issuances will not give rise to a Participation
Right:
(a) Issuances for compensatory
purposes to directors, officers, employees of or consultants to the Company and
its Affiliates pursuant to a security-based compensation plan of the Company
that complies with the requirements of the Exchange;
(b) pursuant to the exercise of
convertible securities of the Company issued in an Offering in respect of which
the Investor had a Participation Right or that have been issued and granted as
of the date hereof; or
(c) pursuant to any plan of
arrangement, merger, business combination, take-over bid or other acquisition of
a third party.
ARTICLE 3
MISCELLANEOUS
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3.1
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Nomination of 1
Director
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The Investor shall be entitled to nominate 1 director to the
Board.
This Agreement shall terminate on the date that the Investor
and its Affiliates collectively own, directly or indirectly, less than 8% of the
issued and outstanding Common Shares (on a fully diluted basis).
(a) Any notice or other
communication required or permitted to be given hereunder shall be in writing
and shall be delivered in person, transmitted by e-mail or similar means of recorded electronic communication or sent by
registered mail, charges prepaid, addressed as follows:
A-7
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(i)
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in the case of the Investor:
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Aurora Cannabis Inc.
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1500 1199 West Hastings Street
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Vancouver, BC V6E 3T5
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Attention: Allan Cleiren
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Email: allan@auroramj.com
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With a copy to:
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Brownlee LLP
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2200 10155 102 St.
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Edmonton, AB T5J 4G8
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Attention: Jillian Swainson
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Email: jswainson@brownleelaw.com
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(ii)
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in the case of the Company:
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Radient Technologies Inc.
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8223 Roper Road
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Edmonton, ABH T6E 6S4
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Attention: Mike Cabigon
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Email: mcabigon@radientinc.com
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(b) Any such notice or other
communication shall be deemed to have been given and received on the day on
which it was delivered or transmitted (or, if such day is not a Business Day or
if delivery or transmission is made on a Business Day after 5:00 p.m. (Vancouver
time) at the place of receipt, then on the next following Business Day) or, if
mailed, on the third Business Day following the date of mailing; provided,
however, that if at the time of mailing or within three Business Days thereafter
there is or occurs a labour dispute or other event which might reasonably be
expected to disrupt the delivery of documents by mail, any notice or other
communication hereunder shall be delivered or transmitted by means of recorded
electronic communication as aforesaid.
(c) Any Party may at any time
change its address for service from time to time by giving notice to the other
Party in accordance with this Section 3.3.
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3.4
|
Amendments and
Waivers
|
No amendment or waiver of any provision of this Agreement shall
be binding on any Party unless consented to in writing by such Party. No waiver
of any provision of this Agreement shall constitute a waiver of any other provision, nor shall any
waiver of any provision of this Agreement constitute a continuing waiver unless
otherwise expressly provided.
A-8
No Party may assign any of its rights or benefits under this
Agreement, or delegate any of its duties or obligations, except with the prior
written consent of the other Parties, such consent to be in their sole
discretion. Notwithstanding the forgoing, the Parties agree that Investor may
assign this Agreement to an Affiliate provided that Investor agrees to remain
bound by the terms of this Agreement.
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3.6
|
Successors and
Assigns
|
This Agreement shall enure to the benefit of and shall be
binding on and enforceable by and against the Parties and their respective
successors or heirs, executors, administrators and other legal personal
representatives, and permitted assigns.
Except as otherwise expressly provided in this Agreement, each
Party will pay for its own costs and expenses incurred in connection with the
negotiation, preparation, execution and performance of this Agreement and the
transactions contemplated herein, including the fees and expenses of legal
counsel, financial advisors, accountants, consultants and other professional
advisors.
Each of the Parties hereto shall, from time to time hereafter
and upon any reasonable request of the other, promptly do, execute, deliver or
cause to be done, executed and delivered all further acts, documents and things
as may be required or necessary for the purposes of giving effect to this
Agreement.
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3.9
|
Right to Injunctive
Relief
|
The Parties agree that any breach of the terms of this
Agreement by any of the Parties would result in immediate and irreparable injury
and damage to the other Parties which could not be adequately compensated by
damages. The Parties therefore also agree that in the event of any such breach
or any anticipated or threatened breach by the defaulting Party, the other
Parties shall be entitled to equitable relief, including by way of temporary or
permanent injunction or specific performance, without having to prove damages,
in addition to any other remedies (including damages) to which such other
Parties may be entitled at law or in equity.
A-9
This Agreement and all documents contemplated by or delivered
under or in connection with this Agreement may be executed and delivered in any
number of counterparts, with the same effect as if each Party had signed and
delivered the same document, and all counterparts shall be construed together to
be an original and will constitute one and the same agreement.
[Remainder of page intentionally left blank]
A-10
IN WITNESS WHEREOF
this Agreement has been executed by
the Parties on the date first above written.
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AURORA CANNABIS ENTERPRISES
INC.
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By:
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Name:
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Allan Cleiren
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Title:
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COO
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RADIENT TECHNOLOGIES INC.
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Per:
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Name:
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Mike Cabigon
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Title:
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COO
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SCHEDULE B
QUALITY AGREEMENT
[Terms of quality agreement redacted]
SCHEDULE C
PROCESSING PLAN
Reference is made to the Master Services Agreement dated
November 5, 2017 (the “Agreement”) between Aurora Cannabis Enterprises Inc.
(“Aurora”) and Radient Technologies Inc. (“Radient”). Capitalized terms used
herein that are not otherwise defined shall have the meanings given them in the
Agreement.
Processing Plan for [product description redacted]
Input Material
[certain input materials redacted] cannabis flowers in
packaging to be mutually agreed upon by Aurora and Radient.
Processed Material
[Process material redacted] in packaging to be mutually agreed
upon by Aurora and Radient.
Processed Material Specifications
See Exhibit A
Pre-processing Analysis
Aurora shall advise Radient as to the identity of the source
(i.e.: producer) of the Input Material in order to assist Radient with
determining the level of pre-processing analysis that is required. Prior to the
processing of the Input Material, Aurora shall at its sole expense, have
performed an analysis, the process and method of such analysis to be mutually
agreed upon by Aurora and Radient, of the Input Material to be used for each
Batch to determine the mean cannabinoid profile and cannabinoid concentration
(“Concentration”) and contaminants, including microbial contaminants,
aflatoxins, heavy metals and pesticides and other such contaminants as may be
required by applicable regulatory bodies (“Contaminants”), which Concentration
and testing results shall be reported to Radient as per the agreed upon
Timeline. Radient shall reserve, at its sole discretion, the right to reject
processing of any Input Material found to have a Concentration less than
[percentage redacted] THC equivalents or Contaminants exceeding concentrations
to be mutually agreed upon by both parties.
For efficiency, Aurora may perform the pre-production analysis
for all Input Material in its possession prior to commencing production (as
opposed to performing pre-production analysis on a Batch by Batch basis), in
which case Aurora shall provide to Radient a Certificate of Analysis for all
Input Material subject to such Pre-processing Analysis. Radient shall not
commence production of a Batch without prior written approval of Aurora.
C-2
Storage
Radient shall store the Input Material and Processed Material
in a prescribed manner and in compliance with the terms of the ACMPR and the
Quality Agreement.
Delivery
Aurora shall arrange for delivery of the Input Material for
each Delivery Date to Radient’s facility at Aurora’s cost, and for the delivery
of the Processed Material to Aurora’s facility at Aurora’s cost.
Timeline
For each prospective Batch, the following timeline shall apply,
subject to modifications as required to comply with Health Canada regulation:
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•
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Upon or prior to execution of this Agreement: Aurora
shall provide Radient with a forecast of the quantities and Delivery Dates
of the Input Material anticipated to be used in Batches over a specified
forecast period (the “Batch Forecast”), with such forecast period to be no
less than 45 days, and with each new Batch Forecast being provided at
least 30 days prior to the end of the preceding Batch Forecast period;
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15 days or more prior to an anticipated Delivery Date per
the Batch Forecast: Aurora shall provide Radient with written notice of
Input Material to be used in a Batch (“Batch Notice”) with such notice to
include
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(a)
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the results of the Pre-processing Analysis for the Input
Material to be used in the Batch; and
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(b)
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the quantity of Input Material to be delivered;
and
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(c)
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the anticipated Delivery Date of the Input Material to be
used in the Batch.
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•
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3 Business Days following the receipt of the Batch
Notice, Radient shall confirm to Aurora its agreement to process the Input
Material based upon the results of the Pre- processing Analysis.
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•
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3 Business Days following receipt of the Batch Notice,
Radient shall confirm to Aurora that it will be able to process the Batch
per the Batch Notice beginning on the anticipated Delivery Date. If
Radient is unable to process the Batch on the anticipated Delivery Date,
Radient shall provide Aurora with written notice of the date that it will
be able to process the Batch and such date shall be no later than 30 days
after the anticipated Delivery Date.
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Testing of Processed Material after Services Provided
Prior to delivering the Processed Material to Aurora, Radient
shall send a sample and retain a second for archive purposes of each [identity
of laboratory redacted] as designated by Aurora and agreed to in writing by both
parties from time to time, so that such Processed Material can be tested in
accordance with the ACMPR and any other reasonable requirements imposed by Aurora that Aurora typically tests its own products for . Such
testing for cannabinoids shall be completed at the expense of Radient, the
results of which shall be reported to Radient and shared with Aurora.
C-3
If the Processed Material does not pass the Processed Material
Specifications, as determined by Aurora, acting reasonably, Aurora and Radient
shall investigate the Out-of-Specification test results (“OOS”) per the Quality
Agreement. If following the OOS investigation, the Processed Material is found
to not pass the Processed Material Specifications, then Radient shall have the
right, at its sole discretion, to reprocess the Processed Material to pass the
Processed Material Specifications in a manner to be mutually agreed upon by
Aurora and Radient acting reasonably (“Re-processed Material”). [mechanism for
dealing with reprocessed material redacted]
Processing Fee:
[terms of process fee redacted]
Additionally, upon request, Aurora shall provide Radient with a
copy of its books and records related to the volume of sales through each sales
channel and the associated price points so that Radient may verify the
calculation of the Processing Fee.
Disposal
Radient shall dispose of all plant material that is not sent to
Aurora after processing the Input Material in accordance with the terms of the
ACMPR and Radient SOP’s and shall not use such material for research or
development activities without the written consent of Aurora.
Payment:
Radient shall submit a written, signed invoice to Aurora at the
end of each month in which the Services are provided. Such invoice shall only
include the Fees or Processed Material that has successfully passed the Testing
Requirements, as set out in this Schedule. If the testing is not successful,
then no Fees shall be payable by Aurora.
Aurora shall pay such invoice within 30 days of receipt.
Accepted and agreed:
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AURORA CANNABIS ENTERPRISES
INC.
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RADIENT TECHNOLOGIES INC.
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By:
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By:
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Name:
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Name:
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Mike Cabigon
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Title:
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Title:
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Chief Operating Officer
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C-4
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Exhibit A
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Processed Material Specifications
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Aurora Cannabis to Make Strategic Investment in Micron Waste
Technologies
Companies Enter into Collaboration Agreement
Partnership to Optimize Environmentally-Friendly Organic
Waste Digester for Cannabis Waste
TSX: ACB
VANCOUVER, Dec. 19, 2017 /CNW/ - Aurora Cannabis Inc. (the
"Company" or "Aurora") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
and Micron Waste Technologies Inc. ("Micron") (CSE: MWM, OTC: MICWF, Frankfurt:
7FM2), a developer of proprietary digester solutions for the treatment of
organic waste, today announced that the companies have signed a non-binding term
sheet for Aurora to make a strategic investment in Micron, and for both
companies to collaborate on the optimization of Micron's technology for the
treatment of organic waste generated in the cultivation and production of
cannabis products.
Micron has developed a new technology, based on aerobic
digestion and subsequent treatment, that converts organic waste into clean water
that meets municipal effluent discharge standards. The effluent from currently
available digester-based treatment systems of organic waste does not meet
municipal discharge standards and requires costly further treatment. Many
generators of organic waste elect, instead, to use municipal landfill sites for
their organic waste, which is costly and has a negative impact on the
environment. The merits of Micron's technology have been successfully
demonstrated with a grocery supermarket chain located in British Columbia,
Canada, and Micron has entered into an Memorandum of Understanding with the
group to plan for additional installation of Micron's organic waste digester
units at other locations in BC.
Collaboration Agreement
Under the terms of the agreement, which the companies
anticipate finalizing soon, Micron will install its technology at one of
Aurora's cultivation facilities, where both companies will work on optimizing
Micron's digester technology to deliver a commercially-ready design specifically
for the cannabis industry.
Aurora shall have the option, upon successful completion of the
optimization program and proven viability, to sign a definitive supply agreement
with Micron for the purchase of Micron's organic waste digestion solution for
each of its cultivation facilities at a preferred pricing structure.
In consideration of Aurora's participation in the optimization
process, and pursuant to the terms of a royalty agreement to be entered into
between the parties, Micron shall pay to Aurora a royalty equal to 4% of gross
revenues generated by Micron from the sale, lease and/or support services
agreement pertaining to digesters sold to companies in the business of
cultivating or processing cannabis. Micron shall retain all intellectual
property pertaining to its digestion system.
Strategic investment & Investor Rights Agreement
Under the terms of the agreement, once finalized, Aurora will
have the right to subscribe for up to 6,000,000 shares of Micron at a
subscription price of $0.34 per share for aggregate subscription proceeds of
$2,040,000 million in accordance with the terms and conditions of a subscription
agreement to be entered into among the parties, representing a 9% interest in
the Corporation on a non-diluted basis immediately post-investment. Upon the
first successful sale of a digester within the cannabis industry, Micron shall
issue a further 2 million shares to Aurora.
Aurora shall have the right to participate in any future
offerings of equity or debt convertible into equity of Micron to allow Aurora
not to be diluted in its ownership interest of Micron.
Management Commentary
"The investment in and collaboration with Micron reflect our
commitment to innovation in the cannabis sector, aimed in this case at achieving
improved operational economics, as well as a superior, 'greener' approach to
organic waste management," said Terry Booth, CEO of Aurora. "The treatment and
disposal of organic waste in the cannabis industry is a time consuming and
costly exercise that is subject to strict regulation by Health Canada. Micron's
solution promises to be a very elegant, highly efficient and low-cost
alternative that will also have a positive impact on the environment. In making
this investment, we anticipate benefiting not only from the positive impact on
our operations, but also by being exposed to the upside potential of Micron's
commercial development. We look forward to collaborating with Micron in
furthering the market reach of this very promising technology."
Rav Mlait, CEO of Micron, added, "We are delighted to partner
with the cannabis industry's innovation leader and enter the remarkably dynamic,
fast-growing cannabis sector. Furthermore, Aurora's investment provides
additional funds to accelerate diversification into other sectors, such as
supermarkets, quick-serve restaurants, agricultural operations and hotels, which
are all faced with high organic waste disposal costs. While our goal has always
been to deliver solutions that have a positive impact on the environment, the
only way to truly make a difference is by having a value proposition that
provides a strong commercial rationale for adoption. We have proven that we have
such a solution through our demonstration project in Richmond, BC, and are well
positioned to execute on our aggressive growth strategy."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's Access to Cannabis for Medical Purposes Regulations ("ACMPR").
The Company operates a 55,200 square foot, state-of-the-art production facility
in Mountain View County, Alberta, known as "Aurora Mountain", a second 40,000
square foot high-technology production facility known as "Aurora Vie" in
Pointe-Claire, Quebec on Montreal's West Island, and is currently constructing
an 800,000 square foot production facility, known as "Aurora Sky", at the
Edmonton International Airport, as well as is completing a fourth facility in
Lachute, Quebec through its wholly owned subsidiary Aurora Larssen Projects
Ltd.
In addition, the Company holds approximately 17.23% of the
issued shares in leading extraction technology company Radient Technologies
Inc., based in Edmonton, and is in the process of completing an investment in
Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1% .
Furthermore, Aurora is the cornerstone investor with a 22.9% stake in Cann Group
Limited, the first Australian company licensed to conduct research on and
cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union,
based in Germany. The Company offers further differentiation through its
acquisition of BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens. Aurora's
common shares trade on the TSX under the symbol "ACB".
About Micron Waste Technologies Inc.
Micron Waste Technologies Inc is a well funded technology
company. The Company's organic waste digestion system is designed to manage
organic waste on-site, converting it into clean water. The Company's aerobic
digester has micro-oxygen cubicles technology to enhance the digestion
efficiency of microorganisms by up to 95%, with the remaining 5% of undigested
particles undergoing further treatment, resulting in clean water effluent that
meets municipal effluent discharge standards. Micron's technology is an ideal
solution to handle organic waste on-site in view of the drive for further cost
efficiencies, as well as ever stricter legislation being implemented to prohibit
organic waste from entering landfill sites around the world. Please visit our
website at www.micronwaste.com for further information. Micron is a public
company with listings on the CSE: MWM, OTC: MICWF, and in Frankfurt: 7FM2.
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
MICRON WASTE TECHNOLOGIES INC.
Rav Mlait
CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"), including, but not limited to, statements with
respect to the completion of the optimization process and the performance of the
Aurora and Micron. Forward-looking statements are frequently characterized by
words such as "plan", "continue", "expect", "project", "intend", "believe",
"anticipate", "estimate", "may", "will", "potential", "proposed" and other
similar words, or statements that certain events or conditions "may" or "will"
occur. These statements are only predictions. Various assumptions were used in
drawing the conclusions or making the projections contained in the
forward-looking statements throughout this news release. Forward-looking
statements are based on the opinions and estimates of management at the date the
statements are made, and are subject to a variety of risks and uncertainties and
other factors that could cause actual events or results to differ materially
from those projected in the forward-looking statements. Aurora and Micron are
under no obligation, and expressly disclaim any intention or obligation, to
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as expressly required by
applicable law.
Neither TSX or CSE, nor their Regulation Services Provider
(as that term is defined in the policies of Toronto Stock Exchange and the CSE)
accept responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/December2017/19/c7183.html
%SEDAR: 00025675E
For further information:
FOR AURORA: Cam Battley,
Executive Vice President, +1.905.864.5525, cam@auroramj.com, www.auroramj.com;
Marc Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.269.5523, marc.lakmaaker@auroramj.com; FOR MICRON: Investor Relations,
+1.844.318.8216, info@micronwaste.com, www.micronwaste.com
CO: Aurora Cannabis Inc.
CNW 07:00e 19-DEC-17
Operational Update: Aurora Cannabis Liquid Assets Exceed
$500 Million
November 2017 a Record Month for Cannabis Sales in Canada and
Germany
TSX: ACB
EDMONTON, Jan. 2, 2018 /CNW/ - Aurora Cannabis Inc. (the
"Company" or "Aurora") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
is pleased to provide the following operational update.
Exceptional balance sheet strength
As at December 31, 2017, Aurora's cash plus marketable
securities exceeded $500 million. The Company's cash position remains above $320
million, while the total value of Aurora's investments in Radient Technologies
(TSXV: RTI), Hempco Food and Fiber (TSXV: HEMP) and Cann Group of Australia
(ASX: CAN) currently stands at $179.2 million. The latter figure represents a
return of 342%, based on original investments of $40.5 million, strongly
validating the Company's strategic investment and partnership strategy. Aurora
begins 2018 with unparalleled financial strength to accelerate its aggressive
domestic and international expansion strategy.
Record monthly cannabis revenues in November 2017
For the month of November, 2017, Aurora achieved record net
cannabis revenues of $3.1 million, based on sales of 354,000 grams or gram
equivalents in Canada and through the Company's wholly owned German subsidiary
Pedanios. Pedanios established a new monthly record for weight of product sold
of 74,000 grams in November. Pedanios, based in Berlin, is the leading
distributor of medical cannabis in the European Union, supplying a network of
pharmacies that has grown from 750 when Pedanios was acquired by Aurora in May,
2017, to more than 2,000 today.
Aurora Sky
The first two growing bays, as well as the mother bay at Aurora
Sky, the Company's fully capitalized 800,000 square foot high-technology
cultivation facility located at Edmonton International Airport, have been
completed and are ready to receive plants. Aurora has submitted to Health Canada
for final inspection and licensing, subsequent to which transfer of genetics
will commence. The Company anticipates first harvest in the second calendar
quarter of 2018.
In addition, approximately 700,000 square feet of the steel
structure of Aurora Sky has been erected, with specialty glass installed on more
than 400,000 square feet of the facility, and work on the interior is
progressing rapidly. Completion of the entire facility is on track for
mid-2018.
Aurora Vie
In November, 2017, the Company commenced transfer of genetics
from its Aurora Mountain facility to Aurora Vie in Pointe-Claire, Quebec, and
cultivation has commenced, with first harvest anticipated by February, 2018.
Aurora Vie integrates many of the technologies the Company will be employing at
its Aurora Sky facility, focused predominantly on yield optimization through
customized, strain-specific control of growing conditions and plant nutrition
for each grow room.
H2 Biopharma
Following the announcement of the acquisition of H2 Biopharma,
Aurora Larssen Projects Ltd ("ALPS") has commenced work towards final completion
of the Company`s newly-acquired Lachute, Quebec facility. H2, which is Aurora's
fourth production facility, is being completed to European Union Good
Manufacturing Practices (GMP) standards, and will play an important role both in
servicing the Quebec market and providing additional capacity for Aurora`s
export markets. The Company anticipates the facility to be completed in the
second calendar quarter of 2018.
New Product Launches - 1:1 Oil and Double-Milled
Decarboxylated Powder
In response to patient demand, the Company has launched the
fourth product in its Aurora Drops line of cannabis oils. Aurora 1:1 Drops is a
balanced oil product containing 13.8 mg/ml of THC and 13.1 mg/ml of CBD. Pricing
of the new product is consistent with the Company's other Drops offerings, at
$95 per 30 ml bottle, and compassionate pricing for low-income patients at $65
per bottle.
Aurora has also launched DMD THC (Sativa) a double-milled
decarboxylated powder. Decarboxylation is a process that activates cannabinoids
so that they do not need to be smoked or vaporized, making the product easy to
use via oral consumption. DMD THC (Sativa) can be used on its own by mixing with
food or drink. Alternatively, customers can purchase Aurora's Capsule Filler and
Capsules in the Starter Capsule Bundle, which includes instructions on how to
assemble decarb capsules at home, precisely to the patient's preferred
dosage.
CanvasRx
CanvasRx closed a record year with 26 clinic locations, eight
of which were newly opened in 2017. CanvasRx is the country`s largest cannabis
counseling and outreach network, with a strong emphasis on physician and patient
education, and is hosting two Continuing Medical Education (CME) events, titled
"Medical Cannabis: Fact and Fiction", in Calgary on January 10, 2018 and
Vancouver on January 11, 2018.
At 19,559, new patient registrations in 2017 were up 55%
compared to 2016. November 2017 was a record month with 2,318 new patients
registered. To date, CanvasRx has helped nearly 36,000 patients with
registration and cannabis information, and continues to provide sector-leading
customer care to its growing base of medical cannabis patients.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport, as well as is completing a fourth facility in Lachute,
Quebec through its wholly owned subsidiary Aurora Larssen Projects Ltd.
In addition, the Company holds approximately 17.23% of the
issued shares in leading extraction technology company Radient Technologies
Inc., based in Edmonton, and is in the process of completing an investment in
Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1% .
Furthermore, Aurora is the cornerstone investor with a 22.9% stake in Cann Group
Limited, the first Australian company licensed to conduct research on and
cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union,
based in Germany. The Company offers further differentiation through its
acquisition of BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens. Aurora's
common shares trade on the TSX under the symbol "ACB".
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/January2018/02/c8294.html
%SEDAR: 00025675E
For further information:
For Aurora: Cam Battley,
Executive Vice President, +1.905.864.5525, cam@auroramj.com, www.auroramj.com;
Marc Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.269.5523, marc.lakmaaker@auroramj.com
CO: Aurora Cannabis Inc.
CNW 07:30e 02-JAN-18
Aurora and Namaste to Complete Strategic Private-Label
Software and Patient Referral Agreements
TSX: ACB CSE: N
EDMONTON and VANCOUVER, Jan. 2, 2018 /CNW/ - Aurora Cannabis
Inc. (the "Company" or "Aurora") (TSX: ACB) (OTCQX: ACBFF) (Frankfurt: 21P; WKN:
A1C4WM) and Namaste Technologies Inc. ("Namaste") (CSE: N) (FRANKFURT: M5BQ)
(OTCMKTS: NXTTF) today announced the signing of a binding term sheet towards a
final Private-Label Software Agreement ("Private Label Agreement"), whereby
Namaste will provide Aurora's wholly-owned subsidiary, CanvasRx Inc.
("CanvasRx") with a customized version of Namaste's patient acquisition tool,
NamasteMD.com ("NamasteMD"), as well as desktop and mobile applications for
Google Android and Apple iOS platforms. The companies have 30 days to complete a
final agreement.
Private Label Agreement
NamasteMD is an online telemedicine platform for patient
consultation and registration, bringing together Namaste`s tested technology
platform, including certain proprietary authentication technologies, as well as
consultation, education and medical document issuance processes. Under the terms
of the Private Label Agreement:
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Namaste will provide CanvasRx with a customized,
CanvasRx-branded version of NamasteMD
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Namaste will provide CanvasRx with a two-year exclusivity
period for the private label version of NamsteMD.com in Canada
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Namaste will initially provide the application for both
the Google Android and Apple iOS platforms
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•
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CanvasRx will require their own doctors and/or nurse
practitioners to operate the platform
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•
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Commercial terms of the agreement are not disclosed
|
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•
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In consideration of Aurora's assistance for the future
optimization of NamasteMD, Namaste has issued Aurora 500,000 stock
options, exercisable at $3.35 per common share for 48 months, vesting
quarterly over 12 months.
|
Support Services Agreement
In addition, the companies have also signed a non-binding,
non-exclusive Letter of Intent to complete a final Consultation & Support
Services Agreement ("Consultation Agreement"), whereby Namaste will provide
patient referral services to Aurora, where applicable under Canada's
Access
to Cannabis for Medical Purposes
("ACMPR") regulations. Under the terms of
the Consultation Agreement:
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•
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Namaste shall provide certain patient-focused education
and strain selection services, as well as assistance in preparing the
requisite paperwork (Medical Documentation) for registering patients with
Aurora
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•
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The Agreement is non-exclusive for a one-year term
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Namaste shall provide the services under the agreement on
preferential terms to Aurora
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•
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Commercial terms of the Consultation Agreement are not
disclosed
|
The agreements further strengthen the strategic ties between
the two companies, who already collaborate on eCommerce (sale of
Namaste-sourced, curated selection of vaporizers through Aurora website,
utilizing Namaste's technology platform), and the distribution of BC Northern
Lights products. Once completed, the new agreements will provide Namaste with
recurring revenues through the private label platform, while Aurora will be the
only licensed producer able to offer Namaste`s streamlined online patient
acquisition platform under its own (CanvasRx) brand.
Management Commentary
"NamasteMD provides an innovative and efficient extension to
our industry-leading in-person cannabis counseling and education services
provided through CanvasRx," said Terry Booth, CEO. "The new platform will enable
us to extend our industry leading patient care to areas where we currently have
no physical presence. This will allow us to leverage the strength of both the
CanvasRx and Aurora brands, without having to commit to substantial investments
in brick and mortar facilities. Namaste is a trusted partner with whom we
already successfully collaborate on two promising initiatives, and we look
forward to extending our partnership based on innovation and customer care
excellence."
Sean Dollinger, President and CEO of Namaste added, "We are
thrilled to have Aurora, the industry's most innovative and dynamic Licensed
Producer, as our preferred strategic partner. Our drive to innovate meets the
cannabis industry`s need for reliable technological solutions to improve
operational efficiencies and expand the customer experience. We are very proud
to be aligned with Aurora's team, and look forward to executing on our ongoing
collaboration."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport, as well as is completing a fourth facility in Lachute,
Quebec through its wholly owned subsidiary Aurora Larssen Projects Ltd.
In addition, the Company holds approximately 17.23% of the
issued shares in leading extraction technology company Radient Technologies
Inc., based in Edmonton, and is in the process of completing an
investment in Edmonton-based Hempco Food and Fiber for an ownership stake of up
to 50.1% . Furthermore, Aurora is the cornerstone investor with a 22.9% stake in
Cann Group Limited, the first Australian company licensed to conduct research on
and cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union,
based in Germany. The Company offers further differentiation through its
acquisition of BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens. Aurora's
common shares trade on the TSX under the symbol "ACB".
About Namaste Technologies Inc.
Namaste is the largest online retailer for medical cannabis
delivery systems globally. Namaste distributes vaporizers and smoking
accessories through e-commerce sites in 26 countries and with 5 distribution
hubs located around the world. Namaste has majority market share in Europe and
Australia, with operations in the UK, US, Canada and Germany, and has opened new
supply channels into emerging markets, including Brazil, Mexico and Chile.
Namaste, through its acquisition of Cannmart Inc., a Canadian based late-stage
applicant for a medical cannabis distribution license (under the ACMPR Program)
is pursuing a new revenue vertical in online retail of medical cannabis in the
Canadian market. Namaste intends to leverage its existing database of Canadian
medical cannabis consumers, along with its expertise in e-commerce to create an
online marketplace for medical cannabis patients, offering a larger variety of
product and a better user experience.
On behalf of the Boards of Directors
|
Terry Booth
|
Sean Dollinger
|
|
Chief Executive Officer
|
Chief Executive Officer
|
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. Aurora
and Namaste are under no obligation, and expressly disclaim any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX or CSE, nor their Regulation Services Provider
(as that term is defined in the policies of Toronto Stock Exchange and CSE)
accept responsibility for the adequacy or accuracy of this release.
SOURCE Namaste Technologies Inc.
View original content:
http://www.newswire.ca/en/releases/archive/January2018/02/c1867.html
%SEDAR: 00022439E
For further information:
For Aurora: Cam Battley,
Executive Vice President, +1.905.864.5525, cam@auroramj.com, www.auroramj.com;
Marc Lakmaaker, Director, Investor Relations and Corporate Development,
1.647.269.5523, marc.lakmaaker@auroramj.com; For Namaste: Sean Dollinger, Chief
Executive Officer, +1 (786) 389 9771, Sean@NamasteTechnologies.com,
https://www2.namastetechnologies.com
CO: Namaste Technologies Inc.
CNW 06:30e 02-JAN-18
Aurora Purchases 91,800 Shares of CanniMed Therapeutics
Inc.
TSX: ACB
EDMONTON, Jan. 4, 2018 /CNW/ - Aurora Cannabis Inc.
("
Aurora
") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
announced that today it purchased 91,800 common shares of CanniMed Therapeutics
Inc. ("
CanniMed
").
The purchases were made in connection with Aurora's previously
announced offer to purchase all of the common shares of CanniMed (the
"
Offer
"). Aurora announced its intention to purchase common shares of
CanniMed (the "
CanniMed Shares
") in its Offer to Purchase and Takeover
Bid Circular dated November 24, 2017, which is filed on SEDAR under CanniMed's
SEDAR profile. CanniMed implemented a shareholder rights plan on November 28,
2017, which prevented Aurora from commencing purchases in a timely fashion. The
Ontario Securities Commission and the Saskatchewan Financial and Consumer
Affairs Authority, in joint decisions dated December 22, 2017 and issued on
December 27, 2017, cease traded the CanniMed rights plan.
The purchases were made by Aurora in the normal course through
the facilities of the TSX.
Name of the Purchaser
Aurora Cannabis Inc.
Number of CanniMed shares purchased on January 4,
2018
91,800
Highest price paid for the CanniMed shares on January 4,
2018
$23.99
Aggregate Number of CanniMed Shares Purchased through a
published market since the Commencement of the Offer
657,800
Average price paid for the CanniMed shares purchased through
a published market since the Commencement of the Offer
$22.9817
Total Number of CanniMed Shares held by Aurora after the
Purchase
657,800
How to Tender
Aurora encourages CanniMed shareholders to read the full
details of the Offer set forth in the takeover bid circular and accompanying
offer documents, (collectively, the "
Offer Documents
"), which contain
detailed instructions on how CanniMed shareholders can tender their CanniMed
common shares to the Offer. For assistance in depositing CanniMed common shares
to the Offer, CanniMed shareholders should contact the depositary and the
Information Agent for the Offer, Laurel Hill Advisory Group at Phone:
1-877-452-7184 (North American Toll Free Phone) and 1-416-304-0211 (Outside
North America); Facsimile: 416-646-2415; and E-mail:
assistance@laurelhill.com.
About the Offer
On November 24, 2017, Aurora formally commenced its Offer to
purchase all of the issued and outstanding common shares of CanniMed for
consideration consisting of common shares of Aurora. The Offer Document,
including the takeover bid circular and related documents are available on
SEDAR.
The Offer Documents are also available on Aurora's website at
www.auroramj.com and shareholders are invited to visit cannimed.auroramj.com for
further information.
Stock Options Issued
The Company granted 300,000 stock options to an officer of the
Company exercisable at $9.60 per common share. The options shall vest quarterly
over a period of 36 months and expire five years from the date of grant.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport, as well as is completing a fourth facility in Lachute,
Quebec through its wholly owned subsidiary Aurora Larssen Projects Ltd.
In addition, the Company holds approximately 17.23% of the
issued shares in leading extraction technology company Radient Technologies
Inc., based in Edmonton, and is in the process of completing an investment in
Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1% .
Furthermore, Aurora is the cornerstone investor with a 22.9% stake in Cann Group
Limited, the first Australian company licensed to conduct research on and cultivate medical cannabis. Aurora also
owns Pedanios, a leading wholesale importer, exporter, and distributor of
medical cannabis in the European Union, based in Germany. The Company offers
further differentiation through its acquisition of BC Northern Lights Ltd. and
Urban Cultivator Inc., industry leaders, respectively, in the production and
sale of proprietary systems for the safe, efficient and high-yield indoor
cultivation of cannabis, and in state-of-the-art indoor gardening appliances for
the cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens. Aurora's common shares trade on the TSX under the symbol
"ACB".
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/January2018/04/c8331.html
%SEDAR: 00025675E
For further information:
For Aurora: Cam Battley,
Executive Vice President, +1.905.864.5525, cam@auroramj.com, www.auroramj.com;
Marc Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.269.5523, marc.lakmaaker@auroramj.com
CO: Aurora Cannabis Inc.
CNW 17:04e 04-JAN-18
Aurora Purchases 24,600 Shares of CanniMed Therapeutics
Inc.
TSX: ACB
EDMONTON, Jan. 5, 2018 /CNW/ - Aurora Cannabis Inc.
("
Aurora
") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
announced that today it purchased 24,600 common shares of CanniMed Therapeutics
Inc. ("
CanniMed
").
The purchases were made in connection with Aurora's previously
announced offer to purchase all of the common shares of CanniMed (the
"
Offer
"). Aurora announced its intention to purchase common shares of
CanniMed (the "
CanniMed Shares
") in its Offer to Purchase and Takeover
Bid Circular dated November 24, 2017, which is filed on SEDAR under CanniMed's
SEDAR profile. CanniMed implemented a shareholder rights plan on November 28,
2017, which prevented Aurora from commencing purchases in a timely fashion. The
Ontario Securities Commission and the Saskatchewan Financial and Consumer
Affairs Authority, in joint decisions dated December 22, 2017 and issued on
December 27, 2017, cease traded the CanniMed rights plan.
The purchases were made by Aurora in the normal course through
the facilities of the TSX.
Name of the Purchaser
Aurora
Cannabis Inc.
Number of CanniMed shares purchased
on January 5, 2018
24,600
Highest price paid for the CanniMed
shares on January 5, 2018
$23.99
Aggregate Number of CanniMed Shares
Purchased through a published market since the Commencement of the
Offer
682,400
Average price paid for the CanniMed
shares purchased through a published market since the Commencement of the
Offer
$23.0181
Total Number of CanniMed Shares held
by Aurora after the Purchase
682,400
How to Tender
Aurora encourages CanniMed shareholders to read the full
details of the Offer set forth in the takeover bid circular and accompanying
offer documents, (collectively, the "
Offer Documents
"), which contain
detailed instructions on how CanniMed shareholders can tender their CanniMed
common shares to the Offer. For assistance in depositing CanniMed common shares
to the Offer, CanniMed shareholders should contact the depositary and the
Information Agent for the Offer, Laurel Hill Advisory Group at Phone:
1-877-452-7184 (North American Toll Free Phone) and 1-416-304-0211 (Outside
North America); Facsimile: 416-646-2415; and E-mail:
assistance@laurelhill.com.
About the Offer
On November 24, 2017, Aurora formally commenced its Offer to
purchase all of the issued and outstanding common shares of CanniMed for
consideration consisting of common shares of Aurora. The Offer Document,
including the takeover bid circular and related documents are available on
SEDAR.
The Offer Documents are also available on Aurora's website at
www.auroramj.com and shareholders are invited to visit cannimed.auroramj.com for
further information.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport, as well as is completing a fourth facility in Lachute,
Quebec through its wholly owned subsidiary Aurora Larssen Projects Ltd.
In addition, the Company holds approximately 17.23% of the
issued shares in leading extraction technology company Radient Technologies
Inc., based in Edmonton, and is in the process of completing an investment in
Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1% .
Furthermore, Aurora is the cornerstone investor with a 22.9% stake in Cann Group
Limited, the first Australian company licensed to conduct research on and
cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union,
based in Germany. The Company offers further differentiation through its
acquisition of BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens. Aurora's common shares trade
on the TSX under the symbol "ACB".
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/January2018/05/c6580.html
%SEDAR: 00025675E
For further information:
For Aurora: Cam Battley,
Executive Vice President, +1.905.864.5525, cam@auroramj.com, www.auroramj.com;
Marc Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.269.5523, marc.lakmaaker@auroramj.com
CO: Aurora Cannabis Inc.
CNW 17:00e 05-JAN-18
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver, BC V6E 3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
January 5, 2018
A news release issued on January 5,
2018, at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis Inc. announces $200
million bought deal financing.
Full Description of Material
Change
Please see attached news release dated
January 5, 2018.
|
Item 5.
|
Full Description of Material
Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice President
Phone: (905) 878-5525
Mobile:
(905) 864-5525
Email: cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive
Officer
Mobile: (780) 722 - 8889
Email:
terry@auroramj.com
DATED January 5, 2018.
NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S.
NEWSWIRE SERVICES
Aurora Cannabis Announces $200 Million Bought Deal Financing
5.0% Unsecured Convertible Debentures;
Largest
Bought Deal Financing in Canadian Cannabis Sector
Vancouver, BC – January 5, 2018 –
Aurora Cannabis Inc. –
(the “Company” or “Aurora”) (TSX: ACB) announced today that it has entered into
an agreement with a syndicate of underwriters, led by Canaccord Genuity Corp.
("Canaccord Genuity"), pursuant to which Canaccord Genuity has agreed to
purchase, on a bought deal basis, 200,000 convertible debentures (the “Initial
Convertible Debentures”), at a price of $1,000 per Initial Convertible
Debenture, for gross proceeds of $200 million (the “Offering”).
Aurora has also granted Canaccord Genuity an option (the
"Option"), exercisable up to 30 days after closing of the Offering, to purchase
up to an additional 30,000 convertible debentures (the “Additional Convertible
Debentures” and, together with the Initial Convertible Debentures, the
“Convertible Debentures”) for additional gross proceeds of $30 million. If the
Option is exercised in full, the aggregate gross proceeds of the Offering will
be $230 million.
The Convertible Debentures will have a maturity date of two
years from the closing date of the Offering (the "Maturity Date") and will bear
interest from the date of closing at 5.0% per annum, payable semi-annually on
June 30 and December 31 of each year. The Convertible Debentures will be
convertible, at the option of the holder, into common shares of the Company
("Common Shares") at any time prior to the close of business on the last
business day immediately preceeding the Maturity Date at a conversion price of
$13.05 per Common Share (the "Conversion Price"). The Company may force the
conversion of the principal amount of the then outstanding Convertible
Debentures at the Conversion Price on not less than 30 days’ notice should the
daily volume weighted average trading price of the Common Shares be greater than
$17.00 for any 10 consecutive trading days.
“This is the largest bought deal financing to date in the
Canadian cannabis sector, and represents a tremendous vote of confidence in
Aurora’s business strategy, consistent execution and accretive deployment of
resources,” said Terry Booth, CEO. “Our unparalleled balance sheet, capital
markets strength, and consistently decreasing cost of capital position us
ideally to execute on multiple attractive opportunities in Canada and around the
world.”
Upon a change of control of the Company, holders of the
Convertible Debentures will have the right to require the Company to repurchase
their Convertible Debentures, in whole or in part, on the date that is 30 days
following the giving of notice of the change of control, at a price equal to
104% of the principal amount of the Convertible Debentures then outstanding plus
accrued and unpaid interest thereon (the "Offer Price"). If 90% or more of the
principal amount of the Convertible Debentures outstanding on the date of the
notice of the change of control have been tendered for redemption, the Company
will have the right to redeem all of the remaining Convertible Debentures at the
Offer Price.
The Offering is in the form of a bought deal public offering
(i) in each of the provinces and territories of Canada (other than Quebec), (ii)
in the United States only to Qualified Institutional Buyers (within the meaning
of Rule 144A), and in each case in compliance with the securities laws of the
applicable states of the United States, to investors that the underwriters have
reasonable grounds to believe and do believe are Qualified Institutional Buyers,
and (iii) outside Canada and the United States on a basis which does not require
the qualification or registration of any of the Convertible Debentures or Common
Shares.
Closing of the Offering is expected to occur on or about
January 31, 2018 (the "Closing Date"). The Offering is subject to certain
conditions including, but not limited to, the receipt of all necessary
regulatory and stock exchange approvals, including the approval of Toronto Stock
Exchange.
The securities being offered have not been, nor will they be,
registered under the United States
Securities Act of 1933
, as amended,
and may not be offered or sold in the United States or to, or for the account or
benefit of, U.S. persons absent registration or an applicable exemption from the
registration requirements. This press release shall not constitute an offer to
sell or the solicitation of an offer to buy nor shall there be any sale of the
securities in any State in which such offer, solicitation or sale would be
unlawful.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as “Aurora Vie” in Pointe-Claire,
Quebec on Montreal’s West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport, as well as is completing a fourth facility in Lachute,
Quebec through its wholly owned subsidiary Aurora Larssen Projects Ltd.
In addition, the Company holds approximately 17.23% of the
issued shares in leading extraction technology company Radient Technologies
Inc., based in Edmonton, and is in the process of completing an investment in
Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1% .
Furthermore, Aurora is the cornerstone investor with a 22.9% stake in Cann Group
Limited, the first Australian company licensed to conduct research on and
cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union,
based in Germany. The Company offers further differentiation through its
acquisition of BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens. Aurora's
common shares trade on the TSX under the symbol "ACB".
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
###
Further information:
|
Cam Battley
|
Marc Lakmaaker
|
|
Executive Vice President
|
Director, Investor Relations and
|
|
+1.905.864.5525
|
Corporate Development
|
|
cam@auroramj.com
|
+1.647.269.5523
|
|
www.auroramj.com
|
marc.lakmaaker@auroramj.com
|
This news release contains certain "forward-looking
statements" within the meaning of such statements under applicable securities
law. Forward-looking statements are frequently characterized by words such as
"plan", "continue", "expect", "project", "intend", "believe", "anticipate",
"estimate", "may", "will", "potential", "proposed" and other similar words, or
statements that certain events or conditions "may" or "will" occur. These
statements are only predictions. Various assumptions were used in drawing the
conclusions or making the projections contained in the forward-looking
statements throughout this news release. Forward-looking statements include, but
are not limited to, the successful completion of the Offering and the use of
proceeds of the Offering and the Company’s intention to continue international
and domestic expansion. Forward-looking statements are based on the opinions and
estimates of management at the date the statements are made, and are subject to
a variety of risks and uncertainties and other factors that could cause actual
events or results to differ materially from those projected in the
forward-looking statements. The Company is under no obligation, and expressly
disclaims any intention or obligation, to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
except as expressly required by applicable law. A more complete discussion of
the risks and uncertainties facing the Company appears in the Company’s Annual
Information Form and continuous disclosure filings, which are available at
www.sedar.com.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Aurora Cannabis Appoints Cam Battley Chief Corporate
Officer
TSX: ACB
EDMONTON, Jan. 8, 2018 /CNW/ - Aurora Cannabis Inc. (the
"Company" or "Aurora") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
is pleased to announce that Cam Battley has been promoted to Chief Corporate
Officer (CCO).
Mr. Battley joined the Company in March, 2016, and previously
held the positions of Executive Vice President and Senior Vice President with
Aurora. In his new role, he will be the lead external-facing executive of the
Company, responsible for establishing and managing relationships with
shareholders, industry analysts, news media, securities regulators, licensing
bodies, governments, other companies and organizations operating in the cannabis
sector, and other external stakeholders. He will also chair the Executive
Committee, work closely with the Company's legal counsel, act as liaison with
the Board of Directors, and ensure organizational alignment with regard to
strategic partnerships and corporate development across all of the Company's
operations, domestic and international.
Mr. Battley, who has more than 15 years of experience in the
global biopharmaceutical industry, is a member of the Board of Directors of
Cannabis Canada, the trade association for Health Canada Licensed Producers. He
also currently serves as a member of the Board of the patient advocacy group
Campaigning for Cancer (South Africa), and of Micron Waste Technologies Inc.
(CSE: MWM), a Vancouver-based developer of advanced digesters for organic waste
materials.
"Cam's experience, judgment, energy, and passion for this
business have been key drivers in Aurora's rapid emergence as a leader in the
global cannabis industry," said Terry Booth, CEO. "I am extremely proud of the
quality, competence and consistent execution of our executive team, and am
delighted that Cam will be playing a central role with Aurora as we accelerate
our domestic and international expansion."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport, as well as is completing a fourth facility in Lachute,
Quebec through its wholly owned subsidiary Aurora Larssen Projects Ltd.
In addition, the Company holds approximately 17.23% of the
issued shares in leading extraction technology company Radient Technologies
Inc., based in Edmonton, and is in the process of completing an investment in
Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1% .
Furthermore, Aurora is the cornerstone investor with a 22.9% stake in Cann Group
Limited, the first Australian company licensed to conduct research on and
cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union,
based in Germany. The Company offers further differentiation through its
acquisition of BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens. Aurora's
common shares trade on the TSX under the symbol "ACB".
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/January2018/08/c8036.html
%SEDAR: 00025675E
For further information:
For Aurora: Cam Battley, Chief
Corporate Officer, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc
Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.269.5523, marc.lakmaaker@auroramj.com
CO: Aurora Cannabis Inc.
CNW 07:00e 08-JAN-18
Aurora Cannabis Files Amendment to Final Prospectus;
Withdraws Special Warrant Exercise Notice
TSX: ACB
EDMONTON, Jan. 9, 2018 /CNW/ - On January 5, 2018, Aurora
Cannabis Inc. ("
Aurora
") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN:
A1C4WM) filed Amendment No. 1 (the "Amendment") to its prospectus dated January
2, 2018 (the "Final Prospectus") qualifying the distribution of convertible
debentures (the "Debentures") issuable upon exercise of previously issued
special warrants (the "Special Warrants"). The Amendment was filed with respect
to the material changes to Aurora announced on January 5, 2018 (as outlined
below). In addition, Aurora issued a notice of withdrawal to Computershare Trust
Company of Canada, withdrawing the notice of exercise of the Special Warrants of
Aurora and delaying the issuance of the Debentures.
On January 5, 2018, Aurora announced its $55 million investment
in The Green Organic Dutchman Holdings Ltd. and the entering into of a $200
million bought deal of convertible debentures with Canaccord Genuity Corp. and a
syndicate of underwriters. Each of these transactions constituted a material
change in the affairs of Aurora necessitating the filing of the Amendment to the
Final Prospectus and issuance of the withdrawal notice.
Aurora has received a receipt for the Amendment from the
securities regulatory authorities in the Provinces of British Columbia, Alberta
and Ontario. The Special Warrants will be deemed to be exercised and the
Debentures issued on January 12, 2018.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport, as well as is completing a fourth facility in Lachute,
Quebec through its wholly owned subsidiary Aurora Larssen Projects Ltd.
In addition, the Company holds approximately 17.23% of the
issued shares in leading extraction technology company Radient Technologies
Inc., based in Edmonton, and is in the process of completing an investment in
Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1% .
Furthermore, Aurora is the cornerstone investor with a 22.9% stake in Cann Group
Limited, the first Australian company licensed to conduct research on and
cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union,
based in Germany. The Company offers further differentiation through its
acquisition of BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens. Aurora's
common shares trade on the TSX under the symbol "ACB".
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/January2018/09/c5254.html
%SEDAR: 00025675E
For further information:
For Aurora: Cam Battley, Chief
Corporate Officer, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc Lakmaaker, Director, Investor Relations and Corporate
Development, +1.647.269.5523, marc.lakmaaker@auroramj.com
CO: Aurora Cannabis Inc.
CNW 17:00e 09-JAN-18
Aurora Cannabis Completes Strategic Investment in Micron
Waste Technologies
Companies Finalize Collaboration Agreement
TSX: ACB
EDMONTON and VANCOUVER, Jan. 15, 2018 /CNW/ - Aurora Cannabis
Inc. ("Aurora") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) and
Micron Waste Technologies Inc. ("Micron") (CSE: MWM, OTC: MICWF, Frankfurt:
7FM2), a developer of proprietary digester solutions for the treatment of
organic waste, today announced that Aurora has completed a strategic investment
in Micron and that the companies have finalized a collaboration agreement
pursuant to which both companies will collaborate on the optimization of
Micron's technology for the treatment of organic waste generated in the
cultivation and production of cannabis products.
Micron has developed a new technology, based on aerobic
digestion and subsequent treatment, that converts organic waste into clean water
that meets municipal effluent discharge standards. Currently used methods to
dispose of organic waste generally require the utilization of municipal landfill
sites, which is costly and has a negative impact on the environment. The merits
of Micron's technology have been successfully demonstrated with a grocery
supermarket chain located in British Columbia, Canada, with whom Micron has
entered into an Memorandum of Understanding to review additional
installations.
Micron will now install a digester unit at one of Aurora`s
facilities, where the companies will jointly work to optimize the digestor for
the cannabis industry. Upon successful completion of the project, Aurora intends
to acquire multiple units for its various facilities. Micron will retain the
intellectual property related to the digestor, and shall pay Aurora a 4% royalty
for every unit sold to other licensed producers globally. Upon the first
successful sale of a digestor within the cannabis industry, Micron shall issue
to Aurora 2 million common shares.
"Micron`s technology is a very elegant solution to a time
consuming and relatively costly operation at the end of our production process,"
said Terry Booth, CEO. "We love the combination of the technology`s positive
environmental impact with its cost effectiveness. Upon successful completion of
the optimization process, we will have access to yet another innovation to
improve our facilities, and we look forward to working with the Micron team to
bring this very promising technology to the cannabis sector."
Rav Mlait, CEO of Micron, added, "Aurora with its innovative
mindset is the ideal partner to develop a commercially ready unit for the
cannabis industry. Becoming part of Auroras `growing constellation of technology
partners would result in considerably expanded market reach, accelerate
development of this side of our business, and provide strong brand recognition
for Micron. We are also pleased having been able to attract additional strategic
investors in our placement, raising further funds to accelerate the development
of commercial solutions for expansion into other sectors."
Strategic investment – private placement
Aurora also completed a strategic investment in Micron, taking
a 6.46% ownership interest on a non-diluted basis, by acquiring 4.411,765 units,
for a total investment of $1.5 million, as part of a private placement. The full
placement consisted of 6,790,000 units for total gross proceeds of $2.3 million.
Each unit consists of one common share and one common share purchase warrant,
priced at $0.50, with an expiry date of 2 years following the closing of the
placement.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport, as well as is completing a fourth facility in Lachute,
Quebec through its wholly owned subsidiary Aurora Larssen Projects Ltd.
In addition, the Company holds approximately 17.23% of the
issued shares in leading extraction technology company Radient Technologies
Inc., based in Edmonton, and is in the process of completing an investment in
Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1% .
Furthermore, Aurora is the cornerstone investor with a 22.9% stake in Cann Group
Limited, the first Australian company licensed to conduct research on and
cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union,
based in Germany. The Company offers further differentiation through its
acquisition of BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens. Aurora's
common shares trade on the TSX under the symbol "ACB".
About Micron Waste Technologies Inc.
Micron Waste Technologies Inc. is a well funded technology
company. The Company's organic waste digestion system is designed to manage
organic waste on-site, converting it into clean water. The Company's aerobic
digester has micro-oxygen cubicles technology to enhance the digestion
efficiency of microorganisms by up to 95%, with the remaining 5% of undigested
particles undergoing further treatment, resulting in clean water effluent that
meets municipal effluent discharge standards. Micron's technology is an ideal
solution to handle organic waste on-site in view of the drive for further cost efficiencies, as well as ever
stricter legislation being implemented to prohibit organic waste from entering
landfill sites around the world. Please visit our website at www.micronwaste.com
for further information. Micron is a public company with listings on the CSE:
MWM, OTC: MICWF, and in Frankfurt: 7FM2.
On behalf of the Boards of Directors,
|
AURORA CANNABIS INC.
|
MICRON WASTETECHNOLOGIES INC.
|
|
Terry Booth
|
Rav Mlait
|
|
CEO
|
CEO
|
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"), including, but not limited to, statements with
respect to the successful completion of the optimization process and the market
acceptance of Micron`s solutions. Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX or CSE, nor their Regulation Services Provider
(as that term is defined in the policies of Toronto Stock Exchange and the CSE)
accept responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/January2018/15/c7186.html
%SEDAR: 00025675E
For further information:
FOR AURORA: Cam Battley, Chief
Corporate Officer, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc
Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.269.5523, marc.lakmaaker@auroramj.com; FOR MICRON: Investor Relations,
+1.844.318.8216, info@micronwaste.com, www.micronwaste.com
CO: Aurora Cannabis Inc.
CNW 07:00e 15-JAN-18
Aurora Purchases 10,800 Shares of CanniMed Therapeutics
Inc.
TSX: ACB
EDMONTON, Jan. 15, 2018 /CNW/ - Aurora Cannabis Inc.
("
Aurora
") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
announced that today it purchased 10,800 common shares of CanniMed Therapeutics
Inc. ("
CanniMed
").
The purchases were made in connection with Aurora's previously
announced offer to purchase all of the common shares of CanniMed (the
"
Offer
"). Aurora announced its intention to purchase common shares of
CanniMed (the "
CanniMed Shares
") in its Offer to Purchase and Takeover
Bid Circular dated November 24, 2017, which is filed on SEDAR under CanniMed's
SEDAR profile. CanniMed implemented a shareholder rights plan on November 28,
2017, which prevented Aurora from commencing purchases in a timely fashion. The
Ontario Securities Commission and the Saskatchewan Financial and Consumer
Affairs Authority, in joint decisions dated December 22, 2017 and issued on
December 27, 2017, cease traded the CanniMed rights plan.
The purchases were made by Aurora in the normal course through
the facilities of the TSX.
Name of the Purchaser
Aurora Cannabis Inc.
Number of CanniMed shares purchased on January 15,
2018
10,800
Highest price paid for the CanniMed shares on January 15,
2018
$23.99
Aggregate Number of CanniMed Shares Purchased through a
published market since the Commencement of the Offer
700,600
Average price paid for the CanniMed shares purchased through
a published market since the Commencement of the Offer
$23.0433
Total Number of CanniMed Shares held by Aurora after the
Purchase
700,600
How to Tender
Aurora encourages CanniMed shareholders to read the full
details of the Offer set forth in the takeover bid circular and accompanying
offer documents, (collectively, the "
Offer Documents
"), which contain
detailed instructions on how CanniMed shareholders can tender their CanniMed
common shares to the Offer. For assistance in depositing CanniMed common shares
to the Offer, CanniMed shareholders should contact the depositary and the
Information Agent for the Offer, Laurel Hill Advisory Group at Phone:
1-877-452-7184 (North American Toll Free Phone) and 1-416-304-0211 (Outside
North America); Facsimile: 416-646-2415; and E-mail:
assistance@laurelhill.com.
About the Offer
On November 24, 2017, Aurora formally commenced its Offer to
purchase all of the issued and outstanding common shares of CanniMed for
consideration consisting of common shares of Aurora. The Offer Document,
including the takeover bid circular and related documents are available on
SEDAR.
The Offer Documents are also available on Aurora's website at
www.auroramj.com and shareholders are invited to visit cannimed.auroramj.com for
further information.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport, as well as is completing a fourth facility in Lachute,
Quebec through its wholly owned subsidiary Aurora Larssen Projects Ltd.
In addition, the Company holds approximately 17.23% of the
issued shares in leading extraction technology company Radient Technologies
Inc., based in Edmonton, and is in the process of completing an investment in
Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1% .
Furthermore, Aurora is the cornerstone investor with a 22.9% stake in Cann Group
Limited, the first Australian company licensed to conduct research on and
cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union,
based in Germany. The Company offers further differentiation through its
acquisition of BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens. Aurora's common shares trade
on the TSX under the symbol "ACB".
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/January2018/15/c3316.html
%SEDAR: 00025675E
For further information:
For Aurora: Cam Battley, Chief
Corporate Officer, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc
Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.269.5523, marc.lakmaaker@auroramj.com
CO: Aurora Cannabis Inc.
CNW 17:38e 15-JAN-18
Aurora Cannabis Expands Management Team
Appoints Savior Joseph as SVP Global Marketing, and Jillian
Swainson as SVP & General Counsel
TSX: ACB
EDMONTON, Jan. 15, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today
announced that the Company has appointed Savior Joseph as its new Senior Vice
President Global Marketing. In this newly created role, reporting to the Chief
Global Business Development Officer, Mr. Joseph will be responsible for
marketing initiatives supporting all Aurora products around the world, including
building world-class brands that resonate with consumers across key markets,
expanding and overseeing the marketing team, and creating unique experiences for
all stakeholders.
Mr. Joseph comes to Aurora with over 15 years of leading-edge
international experience in both consumer and business to business marketing
communications. He was previously President of Colour, one of North America's
leading digital creative marketing firms with offices in Toronto, New York and
Halifax. In 10 years at Colour, Mr. Joseph was one of the principal leaders
responsible for building an exceptional team that helped solve complex
communications challenges for some of North America's most highly regarded
brands, including Nestlé Canada, GlaxoSmithKline (GSK) Canada, Nova Scotia
Power, Argus Group (Financial), Astra Zeneca, Agropur, POST foods, Mazda Canada,
as well as Aurora Cannabis.
Mr. Joseph has worked with a variety of Fortune 100 clients,
across both highly regulated and non-regulated industries, on the strategy and
execution of consumer centric, creative, data-driven communications programs. He
has been closely involved in digital transformation initiatives including
leveraging data analytics, content marketing and programmatic media best
practices. A large part of his work has focused on growing brand equity by
delivering a unique consumer experience, resulting in a clear and measurable
return on investment on the marketing spend. He has also planned the development
of award-winning user-centric applications, and overseen the governance as well
as the performance of large digital and social media platforms.
"Savior's innovative, results driven approach to marketing will
be a great asset to Aurora in helping us create even greater brand recognition
across the medical, adult consumer and international markets," said Neil Belot,
Chief Global Business Development Officer. "His understanding of technology
through to the consumer experience, as well as his expertise in bringing
creativity, performance and structure to all programs, are key elements in
addressing the various audiences that Aurora will be addressing on a global
scale. I have known Savior for a long time, and couldn't be more excited that he
has accepted this new challenge to lead and expand our marketing team, and drive
customer-centric communications, partnerships and retail marketing initiatives
around the world."
Mr. Joseph added, "I've been fortunate to have been working
with the team at Aurora for over a year now, and have been deeply impressed with
how the Company combines visionary leadership with exceptional execution of this
vision. I'm excited about the opportunity to help build unique, world-class
experiences for both existing and new stakeholder audiences who engage with our
brand. Aurora is the most authentic licensed producer, with a strong sense of
mission, which we will build on by leveraging new channels and technologies to
reach a growing global audience."
General Counsel
The Company is also very pleased to announce the appointment of
Jillian Swainson as Senior Vice President and General Counsel. Ms. Swainson has
worked with the Company since its inception and has accepted her new position to
focus fully on Aurora.
Ms. Swainson joins Aurora from Brownlee LLP, where she was a
Partner in the law firm's business practice and where she handled a variety of
business law matters, including corporate, commercial, intellectual property,
and securities work. In addition to her general practice of business law, over
the past several years she has developed an expertise in providing general
counsel and advisory services to clients within the heavily regulated and
increasingly complex cannabis industry. She graduated from the University of
Alberta with a Bachelor of Commerce degree in 2004, and a law degree (LL.B.) in
2007. She joined Brownlee as an articling student in 2007, and was called to the
bar in 2008. Ms. Swainson is also a Registered Trade-mark Agent.
Mr. Booth commented, "We are thrilled to have Jill on board
full time. She has supported us extensively over the past four years, and in
that time has grown to be one of our most trusted advisors. Her depth of
knowledge, competence, as well as her commitment to Aurora and insights into our
business strategy, make her the ideal person to take on this important new
position. Her appointment and that of Savior reflect the maturity of Aurora as
an internationally dominant cannabis company, and these new hires further
emphasize the professionalism and competence of our management team."
Option and Restricted Share Unit grants
As part of its long-term incentive plan, the Company has issued
options to purchase 500,000 common shares of the Company pursuant to the
Company's Stock Option Plan, exercisable at a price of $10.32 per common share
for a term of 3 years, vesting quarterly. In addition, 150,000 RSUs were
awarded, vesting quarterly over three years.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire, Quebec on Montreal's West
Island, and is currently constructing an 800,000 square foot production
facility, known as "Aurora Sky", at the Edmonton International Airport, as well
as is completing a fourth facility in Lachute, Quebec through its wholly owned
subsidiary Aurora Larssen Projects Ltd.
In addition, the Company holds approximately 17.23% of the
issued shares in leading extraction technology company Radient Technologies
Inc., based in Edmonton, and is in the process of completing an investment in
Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1% .
Furthermore, Aurora is the cornerstone investor with a 22.9% stake in Cann Group
Limited, the first Australian company licensed to conduct research on and
cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union,
based in Germany. The Company offers further differentiation through its
acquisition of BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens. Aurora's
common shares trade on the TSX under the symbol "ACB".
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"), including, but not limited to, statements with
respect to the performance of the Company. Forward-looking statements are
frequently characterized by words such as "plan", "continue", "expect",
"project", "intend", "believe", "anticipate", "estimate", "may", "will",
"potential", "proposed" and other similar words, or statements that certain
events or conditions "may" or "will" occur. These statements are only
predictions. Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking statements throughout this news
release. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accept responsibility
for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/January2018/15/c4366.html
%SEDAR: 00025675E
For further information:
For Aurora: Cam Battley, Chief
Corporate Officer, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc
Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.269.5523, marc.lakmaaker@auroramj.com
CO: Aurora Cannabis Inc.
CNW 17:49e 15-JAN-18
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SUBSCRIPTION AGREEMENT FOR SUBSCRIPTION
RECEIPTS
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TO:
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The Green Organic Dutchman Holdings Ltd.
(the “Issuer”)
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FROM:
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AURORA CANNABIS INC.
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RE:
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Purchase of Subscription Receipts of the
Issuer at CAD$1.65 Per Subscription
Receipt
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DATE:
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January 4, 2018
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The Subscriber acknowledges that the Issuer is not a
“reporting issuer” (or equivalent thereof) in any jurisdiction, that the
Subscription Receipts, Common Shares, Warrants and Warrant Shares are subject to
an indefinite restriction on resale (i.e., a “hold period”) under applicable
securities laws and that it will not be able to resell any of the Subscription
Receipts, Common Shares, Warrants and Warrant Shares until expiration of the
applicable hold period (which hold period will not commence to run until the
Issuer has become a “reporting issuer” in a jurisdiction of Canada (which the
Issuer has no obligation to become)) other than in accordance with limited
exemptions under applicable securities legislation and regulatory policy.
Unless otherwise stated, all monetary references in this
Subscription Agreement are to Canadian dollars (CAD).
- 2 -
SUBSCRIPTION AND SUBSCRIBER INFORMATION
- 3 -
ACCEPTANCE
The Issuer hereby accepts the subscription as set forth above
on the terms and conditions contained in this Subscription Agreement.
DATED
as of the 4
th
day of January, 2018.
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THE GREEN ORGANIC DUTCHMAN HOLDINGS LTD.
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Per:
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Authorized Signing Officer
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Certified cheques or bank drafts
for the
subscription funds are to be made payable to “
McMillan LLP in Trust
” may
be delivered to:
The Green Organic Dutchman Holdings Ltd.
c/o McMillan LLP
1500-1055 West Georgia Street
Vancouver, British Columbia V6E 4N7
Attn: Barbara Collins
Funds may also be wired to
DO NOT DIRECTLY DEPOSIT CHEQUES OR BANK DRAFTS INTO THE BELOW ACCOUNTS – WIRE TRANSFERS ONLY
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For all incoming wires that are being sent in
Canadian funds:
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Bank Name:
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BMO
Bank of Montreal
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Bank Address:
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First
Bank Tower, 595 Burrard St., Vancouver, BC V7X 1L7
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Bank No.
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001
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Transit No.
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00040
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Account No.
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1814-027
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Swift Code:
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BOFMCAM2
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Account Name: McMillan LLP, In Trust
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Address: 1500 Royal Centre, 1055 West Georgia Street,
Vancouver, BC V6E 4N7
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Please include the following details for all wire
transfers
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TGOD-Attn: B. Collins
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Subscriber Name: Aurora Cannabis Inc.
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Re:
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Purchase of $1.65 Subscription Receipts
Exempt from Prospectus Requirements
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1.
Definitions
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1.1
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(a) “
Accredited
Investor
” means a Subscriber resident in Canada who is an accredited
investor as defined in Section 1.1 of NI 45-106 or under the
Securities
Act
(Ontario) if the Subscriber is a resident in
Ontario;
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(b)
“
Applicable Securities Laws
” means the securities legislation having
application and the rules, policies, notices and orders issued by applicable
securities regulatory authorities having application over this Offering and the
Issuer;
(c)
“
consultant
” means, for an issuer, a person, other than an employee,
executive officer, or director of the issuer or of a related entity of the
issuer, that
(i) is engaged
to provide services to the issuer or a related entity of the issuer, other than
services provided in relation to a distribution,
(ii) provides
the services under a written contract with the issuer or a related entity of the
issuer, and
- 5 -
(iii) spends
or will spend a significant amount of time and attention on the affairs and
business of the issuer or a related entity of the issuer
and includes, for an individual
consultant, a corporation of which the individual consultant is an employee or
shareholder, and a partnership of which the individual consultant is an employee
or partner, and for a consultant that is not an individual, an employee,
executive officer, or director of the consultant, provided that the individual
employee, executive officer, or director spends or will spend a significant
amount of time and attention on the affairs and business of the issuer or a
related entity of the issuer;
(d)
“
Closing
” means a completion of an issue and sale by the Issuer and the
purchase by the Subscriber of the Subscription Receipts pursuant to this
Subscription Agreement on the Closing Date. Closings may occur on one or more
dates as the Issuer may determine;
(e) “
Closing
Date
” means one or more closing dates of the Offering as the Issuer may
determine. On the Closing Date, the Subscription Receipts will be issued and a
certificate representing the Subscription Receipts will be provided to the
Subscriber;
(f) “
Closing
Time
” means 9:00 AM (Vancouver Time) on the Closing Date;
(g) “
Common
Share
” mean the common shares in the capital of the Issuer;
(h) “
Common
Share
Lock-Up Period
” has the meaning ascribed thereto in Section 8.4
of this Agreement;
(i)
“
DRS
” mean Direct Registration Statement;
(j)
“
Exemptions
” means the exemptions from the registration and prospectus or
equivalent requirements under Applicable Securities Laws;
(k) “
Listing
Date
” means the date the Issuer’s Common Shares are listed for trading on a
national Canadian securities exchange or trading system;
(l)
“
material
” means material in relation to the Issuer and any subsidiary
considered on a consolidated basis;
(m)
“
material change
” means any change in the business, operations, assets,
liabilities, ownership or capital of the Issuer and any subsidiary considered on
a consolidated basis that would reasonably be expected to have a significant
effect on the market price or value of the Issuer’s common shares;
(n)
“
material fact
” means any fact that significantly affects or would
reasonably be expected to have a significant effect on the market price or value
of the Issuer’s common shares;
(o)
“
misrepresentation
” is as defined under Applicable Securities Laws;
(p) “
NI
45-106
” means National Instrument 45-106 –
Prospectus Exemptions
;
(q)
“
Offering
” means the sale by the Issuer, a non-brokered basis, of
Subscription Receipts of the Issuer on the terms set forth in this Subscription
Agreement;
(r)
“
person
” means and includes any individual, corporation, partnership,
firm, joint venture, syndicate, association, trust, government, governmental
agency or board or commission or authority, and any other form of entity or
organization;
(s)
“
Purchased Subscription Receipts
” has the meaning ascribed thereto in
Section 2.1 of this Agreement;
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(t)
“
Schedules
” means the schedules attached hereto and forming part hereof
and comprising of:
(i) A – Term
Sheet
(u)
“
Shareholders’ Agreement
” means the shareholders’ agreement dated
November 24, 2016 among 1092991 B.C. Ltd., 2454594 Ontario Limited, Jeannette
VanderMarel, Scott Skinner, 2449606 Ontario Inc., the Issuer and The Green
Organic Dutchman Ltd. which can be found at
https://drive.google.com/file/d/0B0Fzqx2B2-oIMGVZamN2QWlQOXM/view?usp=sharing;
(v)
“
Subscriber
” means Aurora Cannabis Inc.;
(w)
“
Subscription Agreement”
or
“Agreement
” means this subscription
agreement between the Subscriber and the Issuer, including all Schedules
incorporated by reference, as it may be amended or supplemented from time to
time;
(x)
“
Subscription Receipt
” means a subscription receipt issued by the Issuer
entitling the holder to receive, without payment of additional consideration or
further action, on the Listing Date one Common Share and one half of one
Warrant;
(y) "
Term
Sheet
" means the term sheet between the Issuer and the Subscriber attached
as Schedule "B";
(z)
“
Transfer
” has the meaning ascribed thereto in Section 8.5 of this
Agreement;
(aa) “
United
States
” means the United States of America, its territories, any State of
the United States and the District of Columbia;
(bb)
“
Warrant
” means a common share purchase warrant of the Issuer exercisable
for one Common Share at the exercise price of $3.00 per Warrant Share until the
expiry date, which is 36 months after the Closing Date;
(cc)
"
Warrant Indenture"
has the meaning ascribed thereto in Section 3.3 of
this Agreement;
(dd)
“
Warrant Share
” means a Common Share to be issued upon exercise of a
Warrant; and
(ee)
“
Warrant Share Lock-Up Period
” has the meaning ascribed thereto in
Section 8.5 of this Agreement.
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1.2
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Words and phrases which are used in this Subscription
Agreement and all Schedules thereto and which are defined in NI 45-106
will have the meaning ascribed thereto in NI 45-106, unless otherwise
specifically defined in Section 1.1 of this Subscription
Agreement.
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2.
Prospectus Exempt Subscription Commitment
2.1 The
Subscriber hereby subscribes for and agrees to purchase from the Issuer, subject
to the terms and conditions set forth herein, that number of Subscription
Receipts set out above the Subscriber’s name on the execution page of this
Subscription Agreement (the “
Purchased Subscription Receipts
”) at the
price of $1.65 per Subscription Receipt. Subject to the terms hereof, this
Subscription Agreement will be deemed to have been made and be effective only
upon its acceptance by the Issuer.
2.2
Notwithstanding anything else in this Agreement, the parties acknowledge and
agree that their intention is that the number of Common Shares and Warrant
Shares issuable pursuant to the Purchased Subscription Receipts shall equal 15%
of the issued and outstanding common shares of the Issuer, calculated on a
fully-diluted basis as of the Closing Date, and the number of Subscription
Receipts subscribed for as currently set forth on the execution page of this
Subscription Agreement and the aggregate purchase price payable by the
Subscriber shall be adjusted as necessary to give effect to such intention.
- 7 -
2.3 The
Subscriber acknowledges and agrees that the Issuer reserves the right, in its
absolute discretion, to reject this subscription for Subscription Receipts, in
whole or in part, at any time prior to the Closing Date notwithstanding prior
receipt by the Subscriber of a notice of acceptance of this subscription. Upon
the Issuer’s acceptance of this subscription, this Subscription Agreement will
constitute an agreement for the purchase by the Subscriber from the Issuer, and
for the Issuer to issue and sell to the Subscriber, the Purchased Subscription
Receipts and on the terms and conditions set out herein.
3.
Description of Securities – Subscription Receipts
3.1 The
Subscription Receipts shall automatically convert to the applicable number of
Common Shares and Warrants on the date that the Issuer completes an initial
public offering of its common shares and the Issuer’s common shares are listed
on a national Canadian stock exchange. The Subscriber acknowledges that there is
no minimum number of Subscription Receipts that must be subscribed for under the
Offering for the Offering to close and therefore the subscription amount
tendered herewith may be releasable to the Issuer on the Closing Date
notwithstanding the number of Subscription Receipts issued pursuant to the
Offering. If the Listing Date does not occur on or before July 31, 2018, then
the Subscription Receipts shall be cancelled and the Issuer shall be required to
repay to each holder of Subscription Receipts an amount equal to the aggregate
issue price of such holder’s Subscription Receipts plus an amount equal to 7.5%
of the Subscription Price (the “
Damages
”) as a genuine pre-estimate of
liquidated damages associated with the Subscriber’s costs related to
participating in the offering as well as damages associated with lost
opportunities. For clarity, the Subscriber shall not be entitled to additional
damages over and above the Damages. For greater certainty, the Issuer will not
be required to hold the proceeds of this offering in escrow or in any other
segregated fund;
3.2 The
Common Shares will be subject to a six month contractual escrow period from the
Listing Date. The Warrant Shares will be subject to a twelve month contractual
escrow period from the Listing Date. See Sections 8.4 and 8.5 of this
Subscription Agreement for a description of these transfer restrictions. The
Common Shares and the Warrant Shares may be subject to any additional escrow
period imposed by any exchange.
3.3 The
Warrants will be governed by the terms and conditions set out in the warrant
indenture (the “
Warrant Indenture
”) governing the Warrants to be entered
into with a warrant agent. The Warrant Indenture will contain, among other
things, provision for the appropriate adjustment in a class, number and exercise
price of the Warrant Shares upon the occurrence of certain events, including any
subdivision, consolidation or re-classification of the common shares of the
Issuer or payments of stock dividends or upon the merger or re-organization of
the Issuer.
3.4 The
Subscription Receipts, Common Shares, Warrants and Warrant Shares are not
qualified under the
Income Tax Act
(Canada) for registered accounts.
4.
Closing
4.1 Prior
to Closing, the Subscriber will deliver to the Issuer the aggregate subscription
funds and subscription documents, or arrange for electronic transfer of
certified funds. On request by the Issuer, the Subscriber agrees to complete and
deliver any other documents, questionnaires, notices and undertakings as may
possibly be required by regulatory authorities, stock exchanges and Applicable
Securities Laws to complete the transactions contemplated by this Agreement.
Closing will occur on the Closing Date at which time certificates representing
the Subscription Receipts will be available against payment of funds for
delivery to the Subscriber as the Subscriber will instruct. The Subscriber
hereby waives receiving any prior notice of Closing.
4.2
Conditions of Closing
The Closing and the Issuer’s and
Subscriber's participation in this Offering and purchase of the Subscription
Receipts is conditional upon the following, all of which must be met or waived
by the Subscriber and the Issuer before the respective condition dates as set
out herein:
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(a)
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on or before the Closing Date, the Issuer and the
Subscriber shall enter into an investor rights agreement that will provide
the Subscriber with the following rights:
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(i)
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as long as the Subscriber owns at least 10% of the issued
and outstanding Common Shares on a fully diluted basis (or Subscription
Receipts, or a combination of Subscription Receipts and Common Shares,
entitling the holder to receive at least 10% of the issued and outstanding
Common Shares on a fully diluted basis), allow the Subscriber to nominate
one director to the board of directors of the Issuer and as long as the
Subscriber owns at least 31% of the issued and outstanding Common Shares
on a fully diluted basis, allow the Subscriber to nominate two directors
to the board of directors of the Issuer;
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(ii)
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provide the Subscriber with the opportunity to subscribe
for additional common shares of the Issuer upon the Issuer achieving
certain milestones; and
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(iii)
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provides the Subscriber with the right to participate in
future equity financings by the Company on a pro rata basis, provided that
the Subscriber owns at least 10% of the Common Shares on a fully diluted
basis (or Subscription Receipts, or a combination of Subscription Receipts
and Common Shares, entitling the holder to receive at least 10% of the
issued and outstanding Common Shares on a fully diluted
basis),
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all as further detailed in the
Term Sheet. In addition, pursuant to such investor rights agreement, the
Subscriber shall be bound by the “standstill” provisions set out in the Term
Sheet;
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(b)
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on or before the Closing Date, the Subscriber and the
Issuer will enter into a cannabis supply agreement on the terms set out in
the Term Sheet;
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(c)
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on or before the Closing Date, the Issuer and Aurora
Larssen Projects Inc., a wholly owned subsidiary of the Subscriber, shall
enter into a consulting and maintenance services agreement on the terms
set out in the Term Sheet;
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(d)
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on or before the Closing Date, the Issuer shall provide
evidence satisfactory to the Subscriber, acting reasonably, that the
Shareholders' Agreement has been terminated; and
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(e)
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on or before the Closing Date, the Subscriber and the
Subscriber will enter into a Subscription Receipts subscription agreement
on terms satisfactory to each party and the Subscriber's board of
directors shall have approved the Subscriber's participation in this
Offering and the investor rights agreement, the cannabis supply agreement
and the consulting and maintenance services agreement referred to
above.
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For clarity, if the above noted conditions are not met on or
before January 12, 2018, then this Subscription Agreement will become void and
the parties will have no further obligations to each other pursuant to the terms
of this Subscription Agreement.
5.
Subscriber’s Acknowledgements – Regarding Risk, Restrictions,
Independent Advice and Advancement of Subscription Proceeds to the Issuer
5.1 The
Subscriber represents and warrants and acknowledges and agrees with (on its own
behalf and, if applicable, on behalf of each beneficial purchaser for whom the
Subscriber is contracting hereunder) the Issuer that:
(a) its
decision to execute this Subscription Agreement and purchase the Purchased
Subscription Receipts agreed to be purchased hereunder has not been based upon
any oral or written representation as to fact or otherwise made by or on behalf
of the Issuer;
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(b)
INTENTIONALLY DELETED
(c) no
prospectus has been filed by the Issuer with any securities commission or
similar authority, in connection with the issuance of the Purchased Subscription
Receipts, and the issuance and the sale of the Subscription Receipts is subject
to such sale being exempt from the prospectus requirements under Applicable
Securities Laws and accordingly:
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(i)
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the Subscriber is restricted from using certain of the
civil remedies available under such legislation;
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(ii)
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the Subscriber may not receive information that might
otherwise be required to be provided to it under such legislation;
and
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(iii)
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the Issuer is relieved from certain obligations that
would otherwise apply under such legislation;
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(d) the
Subscriber has been advised to consult its own legal advisors with respect to
the merits and risks of an investment in the Purchased Subscription Receipts and
with respect to applicable resale restrictions and it is solely responsible (and
the Issuer is in no way responsible) for compliance with applicable resale
restrictions;
(e) to the
knowledge of the Subscriber, the sale of the Purchased Subscription Receipts was
not accompanied by any advertisement;
(f) the offer
made by this Subscription Agreement is irrevocable (subject to the right of the
Issuer to terminate this Subscription Agreement and the conditions set out
herein) and requires acceptance by the Issuer;
(g) the
Subscriber acknowledges and consents to the collection and retention by the
Issuer of certain information, including personal information, regarding the
Subscriber and the Subscriber’s subscription, including the Subscriber’s name,
address, telephone number and email address, the number of Purchased
Subscription Receipts, and any control persons of the Subscriber. The Subscriber
acknowledges and agrees that this information will be retained on the share
register of the Issuer which may be available for inspection by the public. The
Subscriber further consents and agrees to the release of this information to the
securities regulatory authorities as required by law and regulatory policies;
(h) the
Subscriber represents that the subscription funds advanced by the Subscriber do
not represent proceeds of crime for the purposes of the
Proceeds of Crime
(Money Laundering) Act
(Canada) and the Subscriber acknowledges that the
Issuer may in the future be required by law to disclose the Subscriber’s name
and other information relating to this Agreement and the Subscriber’s
subscription pursuant to the
Proceeds of Crime (Money Laundering) Act
(Canada) and to the best of the Subscriber’s knowledge (i) none of the
subscription funds to be provided by the Subscriber (A) have been or will be
derived from or related to any activity that is deemed criminal under the law of
Canada, the United States of America, or any other jurisdiction, or (B) are
being tendered on behalf of a person or entity who has not been identified to
the Subscriber, and (ii) it shall promptly notify the Issuer if the Subscriber
discovers that any such representation ceases to be true, and to provide the
Issuer with appropriate information in connection therewith;
(i) this
Subscription Agreement is not enforceable by the Subscriber unless it has been
accepted by the Issuer and the Subscriber waives any requirement on the Issuer’s
behalf to communicate immediately its acceptance of this Subscription Agreement
to the Subscriber;
(j) the
Purchased Subscription Receipts are speculative investments which involve a
substantial degree of risk and the Subscriber may lose its entire investment in
the Purchased Subscription Receipts;
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(k) the
Subscriber is sophisticated in financial investments, has had access to and has
received all such information concerning the Issuer that the Subscriber has
considered necessary in connection with the Subscriber’s investment decision;
(l) the
subscription proceeds will be available to the Issuer on Closing and this
subscription is not conditional on any other subscription completing;
(m) no agency,
governmental authority, regulatory body, stock exchange or other entity has made
any finding or determination as to the merit for investment of, nor have any
such agencies or governmental authorities made any recommendation or endorsement
with respect to, the Purchased Subscription Receipts;
(n) the
Subscriber acknowledges that the Issuer may complete additional financings in
the future which may have a dilutive effect on existing shareholders at such
time, including the Subscriber; and
(o) the Issuer
will rely on the representations and warranties made herein or otherwise
provided by the Subscriber to the Issuer in completing the sale and issue of the
Subscription Receipts to the Subscriber.
5.2 The
Subscriber hereby acknowledges and agrees that the subscription proceeds,
together with all subscription documents completed in the manner described
herein, subject to any statutory rights of the Subscriber, will be provided to
the Issuer prior to the Closing Date.
6.
Subscriber’s Exemption Status
6.1 The
Subscriber, by its execution of this Subscription Agreement, hereby further
represents, warrants to, and covenants with, the Issuer (which representations,
warranties and covenants will survive the Closing of the Offering) that the
Subscriber is purchasing the Purchased Subscription Receipts as principal for
its own account, it is purchasing such Purchased Subscription Receipts not for
the benefit of any other person, and not with a view to the resale or
distribution of the Purchased Subscription Receipts and is an accredited
investor within the category in paragraph (m) of the definition in section 1.1
of NI 45-106 and is purchasing the Purchased Subscription Receipts pursuant to
section 2.3 of NI 45-106.
6.2 The
Subscriber, by its execution of this Subscription Agreement, hereby further
represents, warrants to, and covenants with, the Issuer and its counsel (which
representations, warranties and covenants will survive the Closing of the
Offering) that:
(a) other than
the Subscriber's investment in the Issuer and the entrance into the agreements
between the Subscriber and the Issuer as set out in Section 4.2, the Subscriber
has no knowledge of a “material fact” or “material change”, as those terms are
defined herein, in respect of the affairs of the Issuer that has not been
generally disclosed to the public;
(b) the
Subscriber (and, if applicable, any beneficial purchaser for whom it is acting)
is resident in Canada;
(c) the
Subscriber is duly incorporated and validly subsisting under the laws of its
jurisdiction of incorporation and all necessary approvals by its directors,
shareholders and others have been obtained to authorize execution of this
Subscription Agreement and the taking of all actions required pursuant hereto on
behalf of the Subscriber;
(d) the
entering into of this Subscription Agreement and the transactions contemplated
hereby do not result in the violation of any of the terms and provisions of any
law applicable to, or the constating documents of, the Subscriber or of any
agreement, written or oral, to which the Subscriber may be a party or by which
the Subscriber is or may be bound;
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(e) the
Subscriber has duly and validly authorized, executed and delivered this
Subscription Agreement and understands it is intended to constitute a valid and
binding agreement of the Subscriber enforceable against the Subscriber;
(f) the
Subscriber understands and acknowledges that the Issuer is not currently a
reporting issuer in any jurisdiction and as a result the hold period to which
the Purchased Subscription Receipts, the Common Shares, Warrants and Warrant
Shares are subject will be indefinite in every jurisdiction in which the
Purchased Subscription Receipts, the Common Shares, Warrants and Warrant Shares
are issued, until the Issuer becomes a reporting issuer in such jurisdiction
and, in addition, will be subject to such additional resale restrictions as
agreed by the Subscriber by making this subscription. There is no assurance that
the Issuer will ever become a reporting issuer in the future;
(g) in
connection with the Subscriber’s investment in the Purchased Subscription
Receipts, the Subscriber has not relied upon the Issuer for investment, legal or
tax advice, and has, in all cases sought the advice of the Subscriber’s own
personal investment advisor, legal counsel and tax advisers or has waived its
rights thereto and the Subscriber is either experienced in or knowledgeable with
regard to the affairs of the Issuer, or either alone or with its professional
advisors is capable, by reason of knowledge and experience in financial and
business matters in general, and investments in particular, of evaluating the
merits and risks of an investment in the Purchased Subscription Receipts and is
able to bear the economic risk of the investment and it can otherwise be
reasonably assumed to have the capacity to protect its own interest in
connection with the investment in the Purchased Subscription Receipts;
(h) no person
has made to the Subscriber any written or oral representations:
(i) that any
person will resell or repurchase the Purchased Subscription Receipts;
(ii) that any
person will refund the purchase price for the Purchased Subscription Receipts,
other than in accordance with Section 4.2(a)(iii);
(iii) as to
the future price or value of the Purchased Subscription Receipts or the Common
Shares or Warrants issuable thereunder; or
(iv) that the
Common Shares and Warrants issuable pursuant to the Purchased Subscription
Receipts will be listed and posted for trading on a stock exchange or that
application has been made to list and post the Common Shares and the Warrants
that form the Purchased Subscription Receipts for trading on a stock exchange;
Not a person in the United States or
a U.S. Person
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(i)
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The Subscriber represents and warrants
that:
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(i) the
Purchased Subscription Receipts are not being acquired, directly or indirectly,
for the account or benefit of a U.S. Person or a person in the United States and
the Subscriber does not have any agreement or understanding (either written or
oral) with any U.S. Person or a person in the United States respecting:
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(A)
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the transfer or assignment of any rights or interests in
any of the Purchased Subscription Receipts;
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(B)
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the division of profits, losses, fees, commissions, or
any financial stake in connection with this Subscription Agreement;
or
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(C)
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the voting of the Purchased Subscription Receipts;
and
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(ii) the
Subscriber has no intention to distribute either directly or indirectly any of
the Purchased Subscription Receipts in the United States or to U.S. Persons;
(iii) the
Subscriber represents that the current structure of this transaction and all
transactions and activities contemplated hereunder is not a scheme to avoid the
registration requirements of the U.S. Securities Act;
(iv) the
Subscriber is a not a “U.S. Person” and is not purchasing the Purchased
Subscription Receipts for the account or benefit of any U.S. Person or a person
in the United States or for offering, resale or delivery for the account or
benefit of any U.S. Person or a person in the United States;
(v) the
Subscriber was outside the United States at the time of execution and delivery
of this Subscription Agreement within the meaning of Regulation S;
(vi) no offers
to sell the Purchased Subscription Receipts were made by any person to the
Subscriber while the Subscriber was in the United States;
(vii) the
Subscriber acknowledges that the Purchased Subscription Receipts have not been
registered under the U.S. Securities Act, and may not be offered or sold in the
United States or to a U.S. Person unless an exemption from such registration
requirements is available. The Subscriber understands that the Issuer has no
obligation or present intention of filing a registration statement under the
U.S. Securities Act in respect of the Purchased Subscription Receipts; and
(viii) the
Subscriber will not engage in any directed selling efforts (as defined by
Regulation S under the U.S. Securities Act) in the United States in respect of
the Purchased Subscription Receipts, which would include any activities
undertaken for the purpose of, or that could reasonably be expected to have the
effect of conditioning the market in the United States for the resale of the
Purchased Subscription Receipts.
Compliance with Resale Laws
(j) the
Subscriber will comply with Applicable Securities Laws and, if applicable, Rule
904 of Regulation S concerning the resale of the Purchased Subscription Receipts
and all related restrictions (and the Issuer is not in any way responsible for
such compliance) and will speak and consult with its own legal advisors with
respect to such compliance;
Own Expense
(k) the
Subscriber acknowledges and agrees that all costs and expenses incurred by the
Subscriber (including any fees and disbursements of any special counsel or other
advisors retained by the Subscriber) relating to the purchase of the Purchased
Subscription Receipts will be borne by the Subscriber;
Indemnity
(l) The
foregoing acknowledgements are made by the Subscriber with the intent that they
be relied upon by the Issuer in determining its suitability as a purchaser of
the Purchased Subscription Receipts, and the Subscriber hereby agrees to
indemnify the Issuer against all losses, claims, costs, expenses and damages or
liabilities which the Issuer may suffer or incur as a result of reliance
thereon.
7.
The Issuer’s Representations
7.1 The
Issuer represents and warrants to the Subscriber that, as of the date of this
Subscription Agreement and at Closing hereunder:
- 13 -
(a) the Issuer
and any subsidiaries are valid and subsisting corporations duly incorporated and
in good standing under the laws of the jurisdictions in which they are
incorporated, continued or amalgamated;
(b) the Issuer
has complied, or will comply, with all applicable corporate and securities laws
and regulations in connection with the offer and sale of the Subscription
Receipts;
(c) the Issuer
is the beneficial owner of the properties, business and assets or the interests
in its properties, business or assets, all agreements by which the Issuer holds
an interest in a property, business or asset are in good standing according to
their terms, and the properties are in good standing under the applicable laws
of the jurisdictions in which they are situated;
(d) the sale of
the Subscription Receipts by the Issuer does not and will not conflict with and
does not and will not result in a breach of any of the terms, conditions or
provisions of its constating documents or any agreement or instrument to which
the Issuer is a party;
(e) the Common
Shares and Warrants will, at the time of issue, and the Warrant Shares will,
upon exercise and payment in accordance with their terms, be duly allotted,
created and validly issued, fully paid and non-assessable and will be free of
all liens, charges and encumbrances and the Issuer will reserve sufficient
shares in the treasury of the Issuer to enable it to issue the Common Shares and
the Warrant Shares; and
(f) this
Subscription Agreement, when accepted, will have been duly authorized by all
necessary corporate action on the part of the Issuer and, subject to acceptance
by the Issuer, will constitute a valid obligation of the Issuer legally binding
upon it and enforceable in accordance with its terms.
8.
Resale Restrictions and Legending of Subscription Receipts, Common
Shares, Warrants and Warrant Shares
8.1 The
Subscriber acknowledges that any resale of the Subscription Receipts, Common
Shares, Warrants and Warrant Shares will be subject to resale restrictions
contained in the Applicable Securities Laws applicable to the Issuer, the
Subscriber or any proposed transferee. Subscribers will receive a certificate in
respect of the Subscription Receipts, or DRS in respect of the Common Shares,
Warrants and Warrant Shares, bearing the following legends imprinted thereon:
|
For all securities:
|
|
|
|
“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE
HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE THE DATE WHICH
IS FOUR MONTHS AND ONE DAY AFTER THE LATER OF (i)
[INSERT CLOSING
DATE]
; AND (ii) THE DATE THE ISSUER BECAME A REPORTING ISSUER IN ANY
PROVINCE OR TERRITORY]”
|
|
|
|
For Common Shares:
|
|
|
|
THE COMMON SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO A CONTRACTUAL ESCROW PERIOD AND CANNOT BE TRADED UNTIL THE DATE
THAT IS SIX (6) MONTHS AFTER THE DATE THE COMMON SHARES OF THE ISSUER ARE
LISTED FOR TRADING ON A NATIONAL CANADIAN OR U.S. SECURITIES EXCHANGE OR
TRADING SYSTEM.
|
|
|
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For the Warrants Shares:
|
|
|
|
THE COMMON SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO A CONTRACTUAL ESCROW PERIOD AND CANNOT BE TRADED UNTIL THE DATE
THAT IS TWELVE (12) MONTHS AFTER THE DATE THE COMMON SHARES OF THE ISSUER
ARE LISTED FOR TRADING ON A NATIONAL CANADIAN OR U.S. SECURITIES EXCHANGE
OR TRADING SYSTEM.
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- 14 -
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For Common Shares and Warrant Shares:
|
|
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“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO THE TERMS AND CONDITIONS OF A SHAREHOLDERS’ AGREEMENT WITH RESPECT TO
THE CORPORATION MADE NOVEMBER 24, 2016, AS IT MAY BE AMENDED, WHICH
AGREEMENT CONTAINS, AMONG OTHER THINGS, RESTRICTIONS ON THE RIGHT OF THE
HOLDER HEREOF TO TRANSFER OR SELL THE SHARES. SUCH AGREEMENT IS A
UNANIMOUS SHAREHOLDER AGREEMENT FOR THE PURPOSES OF THE
CANADA
BUSINESS CORPORATIONS ACT
. A COPY OF SUCH AGREEMENT IS ON FILE AT
THE REGISTERED OFFICE OF THE CORPORATION.”
|
8.2 The
Subscriber is aware that the Subscription Receipts, Common Shares, Warrants and
Warrant Shares have not been and will not be registered under the U.S.
Securities Act or the securities laws of any state and that the Purchased
Subscription Receipts may not be offered or sold in the United States without
registration under the U.S. Securities Act or compliance with requirements of an
exemption from registration and the applicable laws of all applicable states and
acknowledges that the Issuer has no present intention of filing a registration
statement under the U.S. Securities Act in respect of the Subscription Receipts.
8.3 The
Subscriber acknowledges and agrees that, in addition to any restrictions imposed
under Applicable Securities Laws, including without limitation those set forth
in this Section 8, during the period commencing on the Closing Date and ending
on the date that is six (6) months following the Listing Date (the “
Common
Share Lock-Up Period
”), the Subscriber will not, directly or indirectly: (i)
sell, offer, assign, transfer, encumber, contract to sell, secure, pledge, grant
or sell any option, right or warrant to purchase, or otherwise lend, transfer or
dispose of (collectively, “
Transfer
”) any of the Subscription Receipts or
Common Shares; or (ii) make any short sale, engage in any hedging transaction,
or enter into any swap or other arrangement (including a monetization
arrangement) that Transfers to another or has the effect of Transferring to
another, in whole or in part, any of the economic consequences and benefits of
ownership of the Subscription Receipts or Common Shares, whether any such
transaction described herein is to be settled by the delivery of the
Subscription Receipts or Common Shares, other securities, cash or otherwise; and
the undersigned shall not announce during such period any intention to Transfer
or otherwise engage in any such transaction with respect to any such
Subscription Receipts or Common Shares or such securities during or after such
period.
8.4 The
Subscriber acknowledges and agrees that, in addition to any restrictions imposed
under Applicable Securities Laws, including without limitation those set forth
in this Section 8, during the period commencing on the Closing Date and ending
on the date that is twelve (12) months following the Listing Date (the
“
Warrant Share Lock-Up Period
”), the Subscriber will not, directly or
indirectly: (i) Transfer any of the Warrants or Warrant Shares; or (ii) make any
short sale, engage in any hedging transaction, or enter into any swap or other
arrangement (including a monetization arrangement) that Transfers to another or
has the effect of Transferring to another, in whole or in part, any of the
economic consequences and benefits of ownership of the Warrants or Warrant
Shares, whether any such transaction described herein is to be settled by the
delivery of the Warrants or Warrant Shares issued pursuant to the Offering,
other securities, cash or otherwise; and the undersigned shall not announce
during such period any intention to Transfer or otherwise engage in any such
transaction with respect to any such Warrants or Warrant Shares or such
securities during or after such period.
9.
Intentionally deleted.
9.1
INTENTIONALLY DELETED
10.
General
10.1 Time is
of the essence hereof.
- 15 -
10.2 Neither
this Subscription Agreement nor any provision hereof will be modified, changed,
discharged or terminated except by an instrument in writing signed by the party
against whom any waiver, change, discharge or termination is sought.
10.3 The
parties hereto will execute and deliver all such further documents and
instruments and do all such acts and things as may either before or after the
execution of this Subscription Agreement be reasonably required to carry out the
full intent and meaning of this Subscription Agreement.
10.4 This
Subscription Agreement will be subject to, governed by and construed in
accordance with the laws of Ontario and the laws of Canada as applicable therein
and the Subscriber hereby irrevocably attorns to the jurisdiction of the Courts
situate therein.
10.5 This
Subscription Agreement may not be assigned by any party hereto.
10.6 The
Issuer will be entitled to rely on delivery of a facsimile copy of this
Subscription Agreement, and acceptance by the Issuer of a facsimile copy of this
Subscription Agreement will create a legal, valid and binding agreement between
the Subscriber and the Issuer in accordance with its terms.
10.7 This
Subscription Agreement may be signed by the parties in as many counterparts as
may be deemed necessary, each of which so signed will be deemed to be an
original, and all such counterparts together will constitute one and the same
instrument.
10.8 This
Subscription Agreement is deemed to be entered into on the acceptance date by
Issuer, notwithstanding its actual date of execution by the Subscriber.
10.9 This
Subscription Agreement, including, without limitation, the representations,
warranties, acknowledgements and covenants contained herein, will survive and
continue in full force and effect and be binding upon the parties.
10.10 The
invalidity or unenforceability of any particular provision of this Subscription
Agreement will not affect or limit the validity or enforceability of the
remaining provisions of this Subscription Agreement.
10.11 Except
as expressly provided in this Subscription Agreement and in the agreements,
instruments and other documents contemplated or provided for herein, this
Subscription Agreement contains the entire agreement between the parties with
respect to the sale of the Purchased Subscription Receipts and there are no
other terms, conditions, representations or warranties, whether expressed,
implied, oral or written, by statute, by common law, by the Issuer, by the
Subscriber, or by anyone else. In the event that execution pages are delivered
to the Issuer without this entire Agreement, the Issuer is entitled to assume
that the Subscriber, and each beneficial purchaser for whom it is acting, has
accepted all of the terms and conditions contained in the parts of this
Subscription Agreement that are not returned, without amendment or modification.
10.12 All
monetary amounts expressed herein are Canadian Dollars.
SCHEDULE A
TERM SHEET
Aurora Exclusive Winner of First Italian Government Medical
Cannabis Tender
First Private Company to Directly Supply Cannabis to Italian
Market
TSX: ACB
VANCOUVER, Jan. 18, 2018 /CNW/ - Aurora Cannabis Inc.
("Aurora") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today
announced that, together with its wholly owned German subsidiary Pedanios GmbH,
the Company has won a highly competitive EU-wide public tender to supply medical
cannabis to the Italian government through the Ministry of Defence, who oversees
medical cannabis production and distribution in Italy.
While the Italian Ministry of Defence currently produces
medical cannabis for the domestic market, certain wholesalers are permitted to
purchase directly from the Dutch Office of Medical Cannabis, a sharp rise in
demand has led to the government seeking external parties to provide additional
supply. The EU-wide public tender process consisted of 2 rounds. In the first
round, those companies eligible to move towards the final tender round were
pre-qualified. Only two companies, including Pedanios, qualified for this final
round, in which Pedanios was ultimately chosen as the sole supplier under the
tender. Following the signing of the contact in the coming days, Aurora will
export product into Germany through Pedanios, who will supply the Italian market
through the Ministry of Defence.
"I am very proud of Aurora and the Pedanios team for the
quality of their execution in becoming the exclusive winner of this important
tender, and gaining access to one of the largest and most restricted markets in
Europe," said Neil Belot, Chief Global Business Development Officer. "Aurora
will soon supply both Germany and Italy - two of the largest EU markets, with a
total population exceeding 143 million. As the only company to have been
successful in this tender, we have an incredible first mover advantage in this
potentially tremendous growth market."
Andrea Ludwig Ferrari, responsible for sales and market
development in Italy, added, "Aurora and Pedanios' EU GMP certifications were
crucial in being successful in our bid for the tender in this demanding
jurisdiction. We are now the first private cannabis company in the world able to
supply the Italian government directly, a testament to the quality of our
operations and the standing of our organization. This win positions us
exceptionally well to continue executing successfully on our aggressive
international expansion strategy."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport, as well as is completing a fourth facility in Lachute,
Quebec through its wholly owned subsidiary Aurora Larssen Projects Ltd. The
Company owns a 17.62% interest in the Green Organic Dutchman, as well as a 51%
interest in Aurora Nordic, which is constructing a 1,000,000 hybrid greenhouse
similar to Aurora Sky. Including prorated participations, Aurora is on track for
a total production capacity of around 200,000 kg per annum.
In addition, the Company holds approximately 17.23% of the
issued shares in leading extraction technology company Radient Technologies
Inc., based in Edmonton, and is in the process of completing an investment in
Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1% .
Furthermore, Aurora is the cornerstone investor with a 22.9% stake in Cann Group
Limited, the first Australian company licensed to conduct research on and
cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union,
based in Germany. The Company offers further differentiation through its
acquisition of BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens. Aurora's
common shares trade on the TSX under the symbol "ACB".
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
Forward-Looking Statements
This news release
includes statements containing certain "forward-looking information" within the
meaning of applicable securities law ("forward-looking statements"), including,
but not limited to, statements with respect to the Italian cannabis market.
Forward-looking statements are frequently characterized by words such as "plan",
"continue", "expect", "project", "intend", "believe", "anticipate", "estimate",
"may", "will", "potential", "proposed" and other similar words, or statements
that certain events or conditions "may" or "will" occur. These statements are
only predictions. Various assumptions were used in drawing the conclusions or
making the projections contained in the forward-looking statements throughout
this news release. Forward-looking statements are based on the opinions and
estimates of management at the date the statements are made, and are subject to
a variety of risks and uncertainties and other factors that could cause actual
events or results to differ materially from those projected in the
forward-looking statements. The Company is under no obligation, and expressly
disclaims any intention or obligation, to update or revise any
forward-looking
statements, whether as a result of new information, future
events or otherwise, except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accept responsibility
for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:http://www.newswire.ca/en/releases/archive/January2018/18/c2362.html
%SEDAR: 00025675E
For further information:
For Aurora: Cam Battley, Chief
Corporate Officer, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc
Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.269.5523, marc.lakmaaker@auroramj.com
CO: Aurora Cannabis Inc.
CNW 10:37e 18-JAN-18
Aurora Cannabis Provides Update on International
Activities
TSX: ACB
EDMONTON, Jan. 23, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) is
pleased to provide the following update on the Company's international
activities.
Denmark: Acceleration to Market
Further to Aurora's January 4, 2018 news release, the Company's
Aurora Nordic joint venture will be accelerating its time to market in Denmark
with the retrofit of an existing 100,000 square foot greenhouse in Odense,
Denmark owned by Alfred Pedersen & Søn ("APS"). Subject to licensing by
Lægemiddelstyrelsen, Denmark's Medicines Agency, this will enable Aurora Nordic
to commence the cultivation of cannabis during the summer of 2018, while the
company is constructing its new purpose-built high-technology 1,000,000 square
foot production facility.
Italy: First Tender
Further to the Company's news release of January 18, 2018,
Aurora today announces that the amount of product for the first tender consists
of three lots with different cannabinoid profiles, totaling 100 kg. Further
orders by the Italian Ministry of Defense will be subject to additional tender
processes, in which Aurora and Pedanios will continue to participate. While the
first tender was set at 100kg, the Italian Ministry of Defense has the option to
increase the amount requested.
This is Aurora's first step into supplying the tightly
restricted Italian market, and provides Aurora with first mover advantage. Prior
to the new tender process, medical cannabis in Italy has been supplied through
two sources only: the Ministry of Defense, and seven distributors licensed to
procure medical cannabis from the Ministry of Defense, or source internationally
from the Dutch Office of Medicinal Cannabis. No import licenses from other
sources into the Italian market have been granted to date.
Germany: Rapid Market Growth
The German market continues to develop rapidly. During the
period covering March 2017 to end of November 2017, approximately 13,000 people
applied for reimbursement of their medical cannabis prescription, with a 65%
approval rate. Insurance company AOK Versicherung, which represents
approximately 50% of all insured people in Germany, published that in December
2017 alone, approximately 7,500 people applied for reimbursement through that
company, which implies a national figure of 15,000 for all of Germany, for that
single month.
To date, Pedanios remains the EU's largest distributor of
cannabis by volume of product sold, has completed deliveries to over 2,200
pharmacies, and continues to build market share rapidly. Pedanios remains the
only distributor to offer cannabis flower sourced from both Canada and the
Netherlands, and offers 11 of the 15 licensed varieties in Germany.
Australia: Import/Export Permit Granted
Cann Group has been granted a license to import and/or export
cannabis genetics and medicinal cannabis products by the Australian government's
Department of Health, through the Office of Drug Control (ODC). The license
enables Cann Group to import genetics from Aurora to help broaden the company`s
portfolio of medical cannabis products, pending Aurora's receipt of an export
permit from Health Canada.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport, as well as is completing a fourth facility in Lachute,
Quebec through its wholly owned subsidiary Aurora Larssen Projects Ltd.
In addition, the Company holds approximately 17.23% of the
issued shares in leading extraction technology company Radient Technologies
Inc., based in Edmonton, and is in the process of completing an investment in
Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1% .
Furthermore, Aurora is the cornerstone investor with a 22.9% stake in Cann Group
Limited, the first Australian company licensed to conduct research on and
cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union,
based in Germany. The Company offers further differentiation through its
acquisition of BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens. Aurora's
common shares trade on the TSX under the symbol "ACB".
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"), including, but not limited to, statements with
respect to the performance of the Company. Forward-looking statements are
frequently characterized by words such as "plan", "continue", "expect",
"project", "intend", "believe", "anticipate", "estimate", "may", "will",
"potential", "proposed" and other similar words, or statements that certain
events or conditions "may" or "will" occur. These statements are only
predictions. Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking statements throughout this news
release. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
expressly required by applicable law.
Neither TSX nor its Regulation Services
Provider (as that term is defined in the policies of Toronto Stock Exchange)
accept responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:http://www.newswire.ca/en/releases/archive/January2018/23/c4932.html
%SEDAR: 00025675E
For further information:
For Aurora: Cam Battley, Chief
Corporate Officer, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc
Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.269.5523,marc.lakmaaker@auroramj.com
CO: Aurora Cannabis Inc.
CNW 14:47e 23-JAN-18
FORM 51-102F3
MATERIAL CHANGE REPORT
|
Item 1:
|
Name and Address of Company
|
Aurora Cannabis Inc.
(“
Aurora
” or the “
Company
”)
1500 - 1199 West Hastings
St.
Vancouver, BC
Canada V6E 3T5
|
Item 2:
|
Date of Material Change
|
January 24, 2018.
The news release attached as Schedule
“A” was disseminated via Canada Newswire on January 24, 2018 announcing the
material change. A copy of the news release was filed on the Company’s profile
on SEDAR at www.sedar.com.
|
Item 4:
|
Summary of Material Change
|
On January 24, 2018, Aurora and
CanniMed Therapeutics Inc. (“
CanniMed
”) announced that they had entered
into a support agreement (the “
Support Agreement
”) whereby the Board of
Directors of CanniMed and the Special Committee of the CanniMed Board of
Directors agreed to support an improved offer (the “
Improved Offer
”) made
by Aurora for the acquisition of all of the issued and outstanding common shares
of CanniMed not owned by Aurora. The Support Agreement also provides that
CanniMed’s Board of Directors will recommend that CanniMed shareholders accept
the Improved Offer.
In furtherance of the Improved Offer,
Aurora will amend the previously announced offer to purchase, dated November 24,
2017, (the “
Original Offer
”) by Aurora for all of the issued and
outstanding common shares of CanniMed, as amended by the notice of change dated
January 12, 2018, by way of a notice of variation to be mailed to CanniMed
shareholders and to be filed on CanniMed’s profile on SEDAR at
www.sedar.com.
Key Transaction Highlights
Under the Improved Offer, CanniMed
shareholders will be entitled to receive in respect of each CanniMed share
tendered to the Improved Offer, one of: (i) all shares based on an exchange
ratio of 3.40 Aurora shares per CanniMed share, (ii) all cash, based on an
implied Aurora share value of $12.65 for a maximum value of $43 in cash, subject
to pro-ration, or (iii) a combination of cash and Aurora shares where any cash
portion is based on an implied Aurora share value of $12.65, subject to
pro-ration, with a maximum aggregate cash consideration under (ii) or (iii) of
$140 million. Based on an implied Aurora share price of $12.65 and the 3.40
exchange ratio, the Improved Offer would equate to $43.00, representing a 181%
premium over the closing price of CanniMed shares on November 14, 2017, the last
day prior to the public disclosure of Aurora's intention to pursue a combination
with CanniMed, and a 79% increase to the previous offer cap price of
$24.00.
1
The total consideration for CanniMed
under the Improved Offer is approximately $1.1 billion based on Aurora's implied
share price of $12.65. The maximum amount of cash available under the Improved
Offer will be $140 million, and the number of Aurora shares to be issued will be
between approximately 72 million (assuming full cash elections) and 84 million
(assuming full share elections and no cash elections). If all CanniMed
shareholders (as of January 24, 2018) elect to receive cash, then each CanniMed
shareholder would receive $5.70 in cash and 2.9493 Aurora shares.
Further details of the Improved Offer,
the consideration offered therein, and the share and cash election mechanism
will be provided by Aurora in a notice of variation to be mailed to CanniMed
shareholders and to be filed on CanniMed’s profile on SEDAR at www.sedar.com.
Support Agreement
The Support Agreement provides that
CanniMed’s Board of Directors and the Special Committee of the CanniMed Board of
Directors will support the Improved Offer and will recommend to its shareholders
in a notice of change to the director’s circular (to be mailed to CanniMed
shareholders and to be filed on CanniMed’s profile on SEDAR at www.sedar.com)
that CanniMed shareholders tender to the Improved Offer. In addition, the
Support Agreement includes customary representations and warranties, as well as
customary non-solicitation protections and a right to match in favour of Aurora
in respect of any competing proposal made to CanniMed and a $43.5 million break
fee payable to Aurora in certain circumstances. The Support Agreement also
includes a customary fiduciary out to enable CanniMed’s Board of Directors to
consider and enter into a transaction that is superior to the Improved Offer,
provided that CanniMed complies with certain terms of the Support Agreement. The
Support Agreement also provides for a $43.5 million reverse break fee in certain
events.
CanniMed has agreed to use its
reasonable commercial efforts to cause each of its directors and officers to
enter into support agreements with Aurora in respect of the Improved Offer. .
Such directors and officers of CanniMed, which include Brent Zettl, Chief
Executive Officer of CanniMed, own in the aggregate approximately 15% of the
issued and outstanding CanniMed common shares. These supporting shareholders
would be in addition to the CanniMed shareholders that entered into lock-up
agreements with Aurora in November, 2017.
As required by the Support Agreement,
CanniMed has agreed to deliver a Notice of Discontinuance regarding the lawsuit
it had commenced earlier this year against, among others, Aurora in respect of
various claims for damages of $725 million.
Termination of Arrangement Agreement
with Newstrike and Related CanniMed Special Shareholders Meeting
In connection with the Improved Offer,
CanniMed has entered into a termination agreement (the “
Termination
Agreement
”) with Newstrike Resources Ltd (“
Newstrike
”) pursuant to
which CanniMed and Newstrike agreed to terminate the arrangement agreement dated
November 17, 2017 (the “
Newstrike Agreement
”) between Newstrike and
CanniMed. The Termination Agreement requires the payment of a $9.5 million fee
to Newstrike, which was paid by Aurora pursuant to the Support Agreement.
2
As a result of entering into the
Support Agreement and the Termination Agreement, CanniMed cancelled the special
meeting of CanniMed shareholders scheduled for January 25, 2018, which was
called in connection with the Newstrike Agreement.
|
Item 5:
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Full Description of Material Change
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Please see the news release attached
as Schedule “A”.
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Item 6:
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Reliance on subsection 7.1(2) of National
Instrument 51-102
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Not applicable.
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Item 7:
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Omitted Information
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Not applicable.
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Item 8:
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Executive Officer
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Terry Booth
Chief Executive
Officer
(604) 362-5207
January 26, 2018.
3
Schedule “A”
[See Attached]
4
Aurora Cannabis and CanniMed Therapeutics Agree to Terms on
Friendly Transaction
CanniMed's Board and Special Committee Support Aurora's Offer
of Shares and Cash
TSX: ACB
TSX: CMED
EDMONTON and SASKATOON, Jan. 24, 2018 /CNW/ - Aurora Cannabis
Inc. ("Aurora") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) and
CanniMed Therapeutics Inc. ("CanniMed") (TSX: CMED) announce today that they
have entered into a support agreement (the "Support Agreement") whereby the
Board of Directors and the Special Committee of the CanniMed Board have agreed
to support a new offer made by Aurora for the acquisition of all of the issued
and outstanding shares of CanniMed not owned by Aurora. In addition to the Board
and Special Committee, the new offer ("New Offer"), as described below, will
continue to be supported by certain CanniMed shareholders (the "Locked-up
Shareholders") representing 36% of CanniMed's outstanding shares and by Brent
Zettl, President and CEO of CanniMed.
Key Transaction Highlights
Under the New Offer, CanniMed shareholders may receive in
respect of each CanniMed share, 3.40 Aurora shares or a combination of cash and
shares at the election of each CanniMed Shareholder, subject to pro-ration with
the maximum aggregate cash consideration of $140 million. Based on an implied
Aurora share price of $12.65 and the 3.40 exchange ratio, the New Offer would
equate to $43.00, representing a 181% premium over the closing price of CanniMed
Shares on November 14, 2017, the last day prior to the public disclosure of
Aurora's intention to pursue a combination with CanniMed, and a 79% increase to
the previous offer Cap Price of $24.00.
The total consideration for CanniMed under the New Offer is
approximately $1.1 billion based on Aurora's implied share price of $12.65. The
maximum amount of cash available under the amended offer will be $140 million,
and the number of Aurora shares to be issued will be between approximately 72
million (assuming full cash elections) and 84 million (assuming full share
elections and no cash elections). Assuming maximum cash elections, each CanniMed
shareholder would receive $5.70 in cash and 2.9493 Aurora shares.
Support Agreement
The Support Agreement provides that CanniMed will support the
New Offer and will recommend to its shareholders in an amended directors
circular that CanniMed Shareholders will tender to the Aurora New Offer. In
addition to the foregoing, Aurora will receive customary non-solicitation
protection and a right to match any competing proposal made to CanniMed and a
break fee payable to Aurora in certain circumstances, together with customary
representations and warranties. In addition to the Locked-up Shareholders
certain CanniMed shareholders representing approximately 15% of the issued
shares of CanniMed, including Brent Zettl, Chief Executive Officer, have agreed
to support the New Offer.
The New Offer and the transaction are subject to customary
closing conditions, including Canadian Competition Act approval.
Termination of Newstrike Arrangement Agreement
In connection with the New Offer, CanniMed has entered into a
termination agreement with Newstrike Resources Ltd. ("Newstrike"), terminating
the arrangement agreement between Newstrike and CanniMed, resulting in the
payment of a $9.5 million break fee paid to Newstrike. As a result, the CanniMed
shareholder meeting originally scheduled for January 23, 2018 and adjourned to
January 25, 2018 has been cancelled.
Management Commentary
"We are very pleased to have come to terms with CanniMed on
this powerful strategic combination that will establish a best-in-class cannabis
company with operations across Canada and around the world," said Terry Booth,
CEO of Aurora. "Market recognition of Aurora`s continued performance and
strategy execution since we first announced our intention to acquire CanniMed
allows us to share that benefit directly with CanniMed shareholders by
increasing the offer price, as well as by offering a cash component. The amended
offer includes value certainty and represents a full, compelling and immediate
75% premium over CanniMed's 20-day average price ending January 17, 2018, the
day prior to CanniMed and Aurora disclosing they were in discussions. Aurora now
invites CanniMed shareholders to share in Aurora's ongoing growth, as we
continue to create superior shareholder value, by joining with the CanniMed
Board of Directors and tendering their shares to our amended offer."
Brent Zettl, President and CEO of CanniMed, added, "A testament
to the great team at CanniMed, this transaction clearly confirms that the
Company has been highly successful in becoming a preeminent global leader in the
medical cannabis industry. In this leadership position, CanniMed has provided
invaluable education, resources, support and relief of symptoms for thousands of
patients served around the globe."
"This is an excellent outcome for both Aurora's and CanniMed's
shareholders after a hard-fought and diligently negotiated process," said Cam
Battley, Aurora's Chief Corporate Officer. "We now look forward to warmly
welcoming CanniMed's employees and forging one unified team. Together, under the
Aurora banner we'll continue to invest in domestic and international growth, and
continue executing on our strategy of building the most dynamic, innovative
integrated cannabis company in the world."
Advisors
Canaccord Genuity Corp. is acting as financial advisor to
Aurora, McMillian LLP is acting as legal advisor and Laurel Hill LLP is acting
as strategic shareholder advisor. Kingsdale Advisors is acting as strategic
shareholder and communications advisor to CanniMed, AltaCorp Capital Inc. is
acting as financial advisor to the board of CanniMed and Borden Ladner Gervais
LLP is acting as legal advisor to the board of CanniMed. Cormark Securities Inc.
is acting as financial advisor to the Special Committee of CanniMed and Stikeman
Elliott LLP is acting as legal advisor to the Special Committee.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island, and is currently constructing an 800,000
square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport, as well as is completing a fourth facility in Lachute,
Quebec through its wholly owned subsidiary Aurora Larssen Projects Ltd. The
Company owns a 17.62% interest in the Green Organic Dutchman, as well as a 51%
interest in Aurora Nordic, which is constructing a 1,000,000 hybrid greenhouse
similar to Aurora Sky. Including prorated participations, Aurora is on track for
a total production capacity of around 200,000 kg per annum.
In addition, the Company holds approximately 17.23% of the
issued shares in leading extraction technology company Radient Technologies
Inc., based in Edmonton, and is in the process of completing an investment in
Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1% .
Furthermore, Aurora is the cornerstone investor with a 22.9% stake in Cann Group
Limited, the first Australian company licensed to conduct research on and
cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union,
based in Germany. The Company offers further differentiation through its
acquisition of BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens. Aurora's
common shares trade on the TSX under the symbol "ACB".
About CanniMed
CanniMed is a Canadian-based, international plant
biopharmaceutical company and a leader in the Canadian medical cannabis
industry, with 17 years of pharmaceutical cannabis cultivation experience,
state-of-the-art, GMP-compliant production process and world class research and
development platforms with a wide range of pharmaceutical-grade cannabis
products. In addition, the Company has an active plant biotechnology research
and product development program focused on the production of plant-based
materials for pharmaceutical, agricultural and environmental applications.
The Company, through its subsidiaries, was the first producer
to be licensed under the Marihuana for Medical Purposes Regulations, the
predecessor to the current Access to Cannabis for Medical Purposes Regulations.
It was the sole supplier to Health Canada under the former medical marijuana
system for 13 years, and has been producing safe and consistent medical
marijuana for thousands of Canadian patients, with no incident of product
diversion or recalls.
For more information, please visit our websites:
www.cannimed.ca (patients) and www.cannimedtherapeutics.com (investors).
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
CanniMed Therapeutics Inc
Brent Zettl
CEO
Forward-Looking Information Cautionary Statement
This news release contains certain "forward-looking statements"
within the meaning of such statements under applicable securities law.
Forward-looking statements are frequently characterized by words such as "plan",
"continue", "expect", "project", "intend", "believe", "anticipate", "estimate",
"may", "will", "potential", "proposed" and other similar words, or statements
that certain events or conditions "may" or "will" occur. These statements are
only predictions. Forward looking statements in release include statements
regarding the improved Offer, the anticipated value of the Offer, the number of
shares to be issued and timing to complete the Offer. Various assumptions were
used in drawing the conclusions or making the projections contained in the
forward-looking statements throughout this news release, including assumptions
based upon CanniMed's publicly disclosed information, and that there will be no
change in the business, prospects or capitalization of CanniMed or Aurora.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law. A more complete discussion of the risks and
uncertainties facing the Company appears in the Company's Annual Information
Form and continuous disclosure filings, which are available at
www.sedar.com
.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release.
Cautionary Statement Respecting CanniMed Information
The information concerning CanniMed contained in this News
Release has been taken from, or is based upon, publicly available information
filed by CanniMed with securities regulatory authorities in Canada prior to the
date of this News Release and other public sources. CanniMed has not reviewed
this News Release and has not confirmed the accuracy and completeness of the
CanniMed information contained herein. Neither Aurora, nor any of the officers
or directors of Aurora, assumes any responsibility for the accuracy or
completeness of such CanniMed information or any failure by CanniMed to disclose
events or facts that may have occurred, or which may affect the significance or
accuracy of any such CanniMed information, but which are unknown to Aurora.
Aurora has no means of verifying the accuracy or completeness of any of the
CanniMed information contained in this News Release or whether there has been a
failure by CanniMed to disclose events or facts that may have occurred or may
affect the significance or accuracy of any such information.
Notice to U.S. Holders
The Offer is made for the securities of a company formed
outside of the United States. The Offer will be subject to disclosure
requirements of Canada that are different from those of the United States.
Financial statements included in the documents, if any, will be prepared in
accordance with Canadian accounting standards and may not be comparable to the
financial statements of United States companies.
It may be difficult for a securityholder in the United States
to enforce his/her/its rights and any claim a securityholder may have arising
under the U.S. federal securities laws, since the issuer is located in Canada,
and some or all of its officers or directors may be residents of Canada or
another country outside of the United States. A securityholder may not be able
to sue a Canadian company or its officers or directors in a court in Canada or
elsewhere outside of the United States for violations of U.S. securities laws.
It may be difficult to compel a Canadian company and its affiliates to subject
themselves to a U.S. court's judgment.
Securityholders should be aware that the issuer may purchase
securities otherwise than under the Offer, such as in open market or privately
negotiated purchases.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/January2018/24/c1336.html %
SEDAR: 00025675E
For further information:
For Aurora: Cam Battley, Chief
Corporate Officer, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc
Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.269.5523, marc.lakmaaker@auroramj.com; Or Laurel Hill Advisory Group:
North America Toll Free: 1-877-452-7184, Collect Calls Outside North America:
1-416-304-0211, Email: assistance@laurelhill.com; For CanniMed: Media Contact,
Dara Willis, CanniMed Therapeutics Inc., dhw@cannimed.com, 416-836-9272;
Investor Relations, CanniMed Therapeutics Inc., invest@cannimed.com; Or
Kingsdale Advisors, Ian Robertson, 416-867-2333, Executive Vice President,
Communication Strategy, irobertson@kingsdaleadvisors.com, Cell: 647-621-2646
CO: Aurora Cannabis Inc.
CNW 08:15e 24-JAN-18
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AURORA CANNABIS INC.
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and
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CANNIMED THERAPEUTICS INC.
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SUPPORT AGREEMENT
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January 24, 2018
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TABLE OF CONTENTS
3
1
SUPPORT AGREEMENT
THIS SUPPORT AGREEMENT
dated as of
January 24, 2018,
B E T W E E N:
AURORA CANNABIS INC.
, a
corporation existing under the laws of British Columbia (“
Aurora
” or the
“Offeror”
)
- and -
CANNIMED THERAPEUTICS INC.
, a
corporation existing under the laws of Canada (
“CanniMed”
)
WHEREAS
the Offeror made an offer dated November 24,
2017 (the
“Original Offer”
) to purchase all of the issued and outstanding
CanniMed Shares (as defined herein) (other than CanniMed Shares owned directly
or indirectly by the Offeror and its affiliates (as defined herein)) and any
CanniMed Shares that may become issued and outstanding after November 24, 2017
but before the Expiry Time (as defined herein) upon the conversion, exchange or
exercise of any Convertible Securities (as defined herein);
AND WHEREAS
the Offeror, subject to the entering into of
this Agreement (as defined herein), is prepared to amend the Original Offer by
increasing the consideration under the Original Offer as set out in Section
2.1(a) (the “
Improved Offer
”);
AND WHEREAS
the board of directors of CanniMed (the
“CanniMed Board of Directors”
) has determined, after consultation with
its financial and legal advisors, (i) that the consideration to be offered for
CanniMed Shares pursuant to the Improved Offer is fair, from a financial point
of view, to all CanniMed Shareholders (as defined herein) (other than the
Offeror and its affiliates), and (ii) that it is in the best interests of
CanniMed to support and facilitate the Improved Offer, enter into this Agreement
and to recommend that CanniMed Shareholders tender their CanniMed Shares to the
Improved Offer, all on the terms and subject to the conditions contained herein;
NOW THEREFORE THIS AGREEMENT WITNESSES
that, in
consideration of the mutual covenants and agreements hereinafter set forth and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by each Party (as defined herein), the Parties hereby
covenant and agree as follows:
ARTICLE 1
INTERPRETATION
In this Agreement, the following terms have the meanings set
forth below.
“Acquisition Proposal”
means, other than the
Contemplated Transaction, any offer, proposal, expression of interest, or
inquiry (written or oral) from any person or group of persons acting “jointly or
in concert” other than Offeror (or any of its affiliates) after the date of this
Agreement relating to:
2
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(a)
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any direct or indirect sale, disposition, alliance,
partnership or joint venture (or any lease, long-term supply agreement,
option, license or other arrangement having the same economic effect as a
sale), direct or indirect, in a single transaction or a series of related
transactions, of assets representing 20% or more of the consolidated
assets, or contributing 20% or more of the consolidated revenue or
earnings of CanniMed and CanniMed affiliates, in each case taken as a
whole, or of 20% or more of any class of voting, equity or other
securities or any securities exchangeable for or convertible into voting,
equity or other securities of CanniMed and CanniMed affiliates (or rights
or interests therein or thereto);
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(b)
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any direct or indirect take-over bid, tender offer,
exchange offer, treasury issuance or other transaction that, if
consummated, would result in a person or group of persons (other than the
Offeror or its affiliates) beneficially owning 20% or more of any class of
voting, equity or other securities or any other equity interests
(including securities convertible into or exercisable or exchangeable for
securities or equity interests) of CanniMed or CanniMed
affiliates;
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(c)
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any plan of arrangement, merger, amalgamation,
consolidation, share exchange, business combination, reorganization,
recapitalization, liquidation, dissolution, winding up or exclusive
license or other similar transaction involving CanniMed or CanniMed
affiliates;
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(d)
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any other similar transaction or series of related
transactions involving CanniMed or CanniMed affiliates or any other
arrangement whereby effective operating control of CanniMed or its assets
is granted to another person; or
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(e)
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any public announcement of an intention to do any of the
foregoing;
|
“Advance Ruling Certificate”
means an advance ruling
certificate issued by the Commissioner of Competition pursuant to section 102 of
the Competition Act with respect to the transactions contemplated by this
Agreement;
“affiliate”
has the meaning given to that term in
National Instrumental 45-106 –
Prospectus Exemptions
;
“Agreement”
,
“this Agreement”
,
“herein”
,
“hereto”
, and
“hereof”
and similar expressions refer to this
Agreement, including the Schedules hereto, as the same may be amended or
supplemented from time to time;
“Aurora Shares”
means the common shares of the Offeror
as currently constituted;
“business day”
means any day, other than a Saturday,
Sunday or a day on which banking institutions in Toronto, Ontario or Vancouver,
British Columbia are closed;
“CanniMed Board of Directors”
has the meaning set forth
in the recitals to this Agreement;
“
CanniMed
Financial Statements”
means (i)
the audited consolidated financial statements of CanniMed for the fiscal years
ended October 31, 2016 and 2015 including the notes thereto and auditor’s report
thereon; and (ii) the unaudited interim financial statements of CanniMed for the
nine months ended July 31, 2017 including any notes thereto;
3
“CanniMed Organizational Documents”
means the
articles of incorporation, continuance or amalgamation, memorandum of
association and, if applicable, by-laws or articles of association (or the
equivalent formation or organizational documents), together with all amendments
thereto, of CanniMed;
“CanniMed Public Disclosure Record”
means all
prospectuses, circulars, reports, schedules, forms and other filings (including
any exhibits and documents incorporated by reference and any amendments thereto)
filed by CanniMed between January 1, 2017 and the date hereof on SEDAR under the
name of CanniMed and not marked private;
“CanniMed Securityholders”
means CanniMed Shareholders,
and the other beneficial and registered holders of any Convertible Securities;
“CanniMed Shareholder”
means a registered or beneficial
holder of a CanniMed Share, as applicable;
“CanniMed Share Option”
means outstanding stock options
to acquire CanniMed Shares pursuant to the CanniMed Stock Option Plan;
“CanniMed Shares”
means the issued and outstanding
common shares of CanniMed, including all common shares of CanniMed issued on the
exercise, exchange or conversion of any Convertible Securities prior to the
Expiry Time, and “CanniMed Share” means any one common share of CanniMed;
“
CanniMed Stock Option Plan
” means the stock option plan
of CanniMed dated December 21, 2016;
“CBCA”
means the
Canada Business Corporations
Act
;
“Change of Control”
of a person (the
“Subject
Person”
) means the consummation of any transaction, including any
consolidation, arrangement, amalgamation or merger or any issue, transfer or
acquisition of voting shares, the result of which is that any other person or
group of other persons acting jointly or in concert for purposes of such
transaction becomes the beneficial owner, directly or indirectly, of more than
50% of the voting shares of the Subject Person;
“Circular”
means the take-over bid circular in respect
of the Original Offer of the Offeror dated November 24, 2017, as amended prior
to the date of this Agreement.
“Code”
means the United States
Internal Revenue Code
of 1986
;
“Commissioner of Competition”
means the Commissioner of
Competition appointed pursuant to the Competition Act or a person designated or
authorized pursuant to the Competition Act to exercise the powers and perform
the duties of the Commissioner of Competition;
“Competition Act”
means the
Competition Act
(Canada);
“Competition Act Approval”
means:
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(i)
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the issuance of an Advance Ruling Certificate and such
Advance Ruling Certificate has not been rescinded prior to the Effective
Time; or
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4
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(ii)
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the Offeror and CanniMed have given the notice required
under section 114 of the Competition Act with respect to the transactions
contemplated by this Agreement and the applicable waiting period under
section 123 of the Competition Act has expired or has been terminated in
accordance with the Competition Act; or
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(iii)
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the obligation to give the requisite notice has been
waived pursuant to paragraph 113(c) of the Competition
Act;
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and, in the case of (ii) or (iii), the
Offeror has been advised in writing by the Commissioner of Competition that, in
effect, such person does not intend to make an application under section 92 of
the Competition Act in respect of the transactions contemplated by this
Agreement (
“no
-
action letter”
);
“Competition Tribunal”
means the Competition
Tribunal established under the
Competition Tribunal Act
(Canada);
“Compulsory Acquisition”
has the meaning given to that
term in Section 15 of the Circular, “Acquisition of CanniMed Shares Not
Deposited Under the Offer – Compulsory Acquisition”;
“Confidentiality Agreement”
means the letter agreement
regarding confidential information dated January 19, 2018, between CanniMed and
the Offeror;
“Contemplated Transactions”
means the varying of the
Original Offer and the consummation of the transactions contemplated herein,
including the Improved Offer, the take-up of CanniMed Shares under the Improved
Offer, any Compulsory Acquisition and any Subsequent Acquisition Transaction;
“Contract”
means any written or oral agreement,
indenture, contract, understanding, arrangement, commitment, lease, sublease,
deed of trust, licence, option, or other legally enforceable obligation of or in
favour of the applicable party and any amendment thereto;
“Convertible Securities”
means any securities of
CanniMed exercisable or exchangeable for, convertible into or otherwise
conferring a right to acquire, any CanniMed Shares, including, any option,
warrant or convertible debenture;
“Directors’ Circular”
has the meaning set forth in
Section2.2(a)(iv);
“Effective Time”
means the time that the Offeror shall
have first taken up, acquired ownership of and paid for CanniMed Shares pursuant
to the Improved Offer;
“Employee Plans”
means all the employee benefit, fringe
benefit, deferred benefit, supplemental unemployment benefit, bonus, incentive,
profit sharing, termination, severance, change of control, pension, retirement,
stock option, stock purchase, stock appreciation, insurance, health, welfare,
medical (including out of country), dental, disability, life insurance, vacation
or vacation pay programmes, arrangements, practices or similar plans for the
benefit of or relating to any of the current or former directors, officers or
employees or consultants of CanniMed or any of its subsidiaries maintained,
sponsored, funded or otherwise contributed to or required to be contributed to,
by CanniMed or any of its subsidiaries, whether written or oral, funded or
unfunded, insured or self-insured, registered or unregistered;
5
“Environment”
means the natural environment (including
soil, land surface or subsurface strata), surface waters, groundwater, sediment,
ambient air (including all layers of the atmosphere), organic and inorganic
matter and living organisms, and any other environmental medium or natural
resource and all sewer systems;
“Environmental Laws”
means all applicable Laws
(including in the United States, the
Comprehensive Environmental Response
Compensation and Liability Act
and the
National Environmental Policy
Act
) relating to occupational or public health and safety, noise control,
pollution or the protection of the Environment or to the generation, production,
installation, use, labelling, handling, storage, treatment, transportation,
recycling, destruction, reclamation, rehabilitation, remediation, Release or
threatened Release of hazardous substances;
“Expiry Date”
means the date on which the Expiry Time
occurs;
“Expiry Time”
has the meaning set forth in the takeover
bid circular of Aurora dated November 24, 2017, as amended, as filed on SEDAR;
“Fairness Opinions”
means the opinions of the Financial
Advisors to the CanniMed Board of Directors and/or a special committee thereof
to the effect that, as of the date of such opinions, the consideration to be
offered for CanniMed Shares under the Improved Offer is fair, from a financial
point of view, to CanniMed Shareholders (other than the Offeror and its
affiliates);
“Financial Advisors”
means AltaCorp Capital Inc. and
Cormark Securities Inc.;
“Governmental Authority”
means any (i) multinational,
federal, territorial, provincial, state, municipal, local or other governmental
or public department, central bank, court, commission, board, bureau or agency,
domestic or foreign, (ii) any stock exchange or over-the-counter marketplace,
(iii) any subdivision or authority of any of the foregoing or (iv) any quasi-
governmental or private body exercising any regulatory, expropriation or taxing
authority under or for the account of any of the above;
“IFRS”
means International Financial Reporting Standards
applicable as at the date on which date such calculation is made or required to
be made in accordance with generally accepted accounting principles applied on a
basis consistent with preceding years;
“Intellectual Property”
means any inventions, patent
applications, patents, trade-marks (both registered and unregistered) and
applications for trademark registrations, trade names, copyrights (both
registered and unregistered), trade secrets, databases and all other and
proprietary information or technology;
“
Latest Mailing Time”
has the meaning set forth in
Section 2.1(b);
“Laws”
means any and all (i) laws (including common
law), constitutions, treaties, statutes, codes, ordinances, orders, decrees,
rules, regulations, by-laws, and principles of law and equity, (ii) judicial,
arbitral, administrative, ministerial, departmental or regulatory judgements,
orders, decisions, rulings or awards of any Governmental Authority, and (iii)
legally binding policies, guidelines and protocols of any Governmental
Authority, and the term “applicable” with respect to such Laws (including
Environmental Laws) and in a context that refers to one or more Parties, means
such Laws as are applicable to and legally binding on such Party or its
business, undertaking, property or securities and emanate from a person having jurisdiction over the Party or Parties or its or
their business, undertaking, property or securities;
6
“Lawsuit
” has the meaning set forth in section
5.1(e);
“Liens”
means any hypothecations, mortgages, liens,
charges, security interests, pledges, claims, Liens and adverse rights or
claims, other third party interest or Lien of any kind, whether contingent or
absolute, and any agreement, option, right or privilege (whether by Law,
contract or otherwise) capable of becoming any of the foregoing but excluding
(i) security interests, liens, charges or other Liens or imperfections in title
arising in the ordinary course of business or by operation of law, security
interests, liens, charges or other Liens arising under sales contracts with
title retention provisions or equipment leases with third parties entered into
in the ordinary course of business and (ii) security interests, liens, charges
or other Liens for Taxes or charges from a Governmental Authority which are not
due and payable or which thereafter may be paid without penalty;
“Material Adverse Change”
means any condition, event,
circumstance, change, effect, development, occurrence or state of facts which,
when considered either individually or in the aggregate, is, or would reasonably
be expected to be, material and adverse to the condition (financial or
otherwise), properties, assets, liabilities, obligations (whether absolute,
accrued, conditional or otherwise), businesses, operations, or results of
operations of CanniMed and its subsidiaries, taken as a whole, other than any
condition, event, circumstance, change, effect, development, occurrence or state
of facts resulting from (i) the announcement of the execution of this Agreement
or the transactions contemplated herein, any litigation or claim made against
CanniMed by Newstrike relating to the Newstrike Agreement or the termination
thereof, or the performance of any obligation of CanniMed required to be
performed by CanniMed hereunder, (ii) changes in general economic or political
conditions or securities, credit, financial, banking, commodity or currency
markets in general, including in Canada or the United States, (iii) changes
generally affecting the cannabis industry, (iv) any natural disaster or the
commencement or continuation of any war, armed hostilities or acts of terrorism,
(v) any change in applicable Law or IFRS, or (vi) any decrease in the trading
price or any decline in the trading volume of CanniMed Shares (it being
understood that the causes underlying such change in trading price or trading
volume (other than those in clauses (i) to (vi) above) may be taken into account
in determining whether a Material Adverse Change has occurred); unless such
condition, event, circumstance, change, effect, development, occurrence or state
of facts referred to in clause (v) primarily relates to (or has the effect of
primarily relating to) CanniMed and its subsidiaries, taken as a whole, or has a
materially disproportionate and adverse effect on CanniMed and its subsidiaries,
taken as a whole, compared to other persons operating in the industry in which
CanniMed and its subsidiaries, taken as a whole, operate;
“Material Contract” means:
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(A)
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any Contract that is in effect and was not entered into
in the ordinary course of business of CanniMed or any of its subsidiaries
since November 24, 2017;
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(B)
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any lease of real property by CanniMed or any of its
subsidiaries, as tenant, with third parties providing for annual rentals
of $1,500,000 or more;
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(C)
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any Contract (including one of indemnification, guarantee
or other like commitment or obligation to any person other than CanniMed
or a wholly- owned subsidiary of CanniMed) under which CanniMed or any of
its subsidiaries is obliged to make payments on an annual basis in excess of
$1,500,000 in the aggregate;
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7
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(D)
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any partnership, limited liability company agreement,
shareholder agreement, joint venture, alliance agreement or other similar
agreement or arrangement relating to the formation, creation, operation,
management, business or control of any person, partnership or joint
venture that is not a wholly-owned subsidiary of CanniMed (other than any
such agreement or arrangement relating to the operation or business of a
property in the ordinary course and which is not material with respect to
such property) where CanniMed’s obligations with respect to any such
partnership or joint venture exceed $1,500,000 individually;
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(E)
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any Contract (other than with or among wholly-owned
subsidiaries) under which indebtedness for borrowed money in excess of
$1,500,000 is outstanding or may be incurred or pursuant to which any
property or asset of CanniMed or any of its subsidiaries is mortgaged,
pledged or otherwise subject to a Lien;
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(F)
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Contracts entered into by CanniMed or any of its
subsidiaries relating to any outstanding commitment for capital
expenditures in excess of $1,500,000 in the aggregate;
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(G)
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any Contract that purports to limit the right of CanniMed
or any of its subsidiaries or affiliates to, in any material respect (i)
engage in any line of business related to cannabis, or (ii) compete with
any person or operate in any location in any line of business related to
cannabis;
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(H)
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any Contract entered into in the past 12 months or in
respect of which the applicable transaction has not yet been consummated
for the acquisition or disposition, directly or indirectly (by
amalgamation, merger or otherwise), of assets or capital stock or other
equity interests of another person for aggregate consideration in excess
of $1,500,000, in each case other than in the ordinary course of
business;
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(I)
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any standstill or similar Contract currently restricting
the ability of CanniMed or any of its subsidiaries to offer to purchase or
purchase the assets or equity securities of another person;
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(J)
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any agreement to license material Intellectual Property
to or from the business except off-the-shelf software; and
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(K)
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any Contract under which CanniMed or any of its
subsidiaries is obliged to make a payment, or pursuant to which the term
may be accelerated or terminated, if there is a Change of Control in
excess of $3,000,000;
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provided that, the Newstrike Agreement is not a Material
Contract;
“Newstrike”
means Newstrike Resources Ltd.;
8
“Newstrike Agreement”
means the arrangement agreement
dated as of November 17, 2017 between CanniMed and Newstrike, as may be amended,
varied or supplemented from time to time;
“Notice of Variation”
means the Notice of Variation to
be mailed to CanniMed Shareholders in accordance with this Agreement, amending
the Original Offer;
“Offer Price”
means, in respect of each CanniMed Share,
3.40 Aurora Shares or $43.00 in cash, at the election of each CanniMed
Shareholder, subject to pro-ration with the maximum aggregate cash consideration
of $140 million;
“Offeror Financial Statements”
means (i) the audited
consolidated financial statements of the Offeror for the fiscal years ended June
30, 2017 and 2016 including the notes thereto and auditor’s report thereon; and
(ii) the unaudited interim financial statements of the Offeror for the three
months ended September 30, 2017 including any notes thereto;
“Offeror Material Adverse Change”
means any condition,
event, circumstance, change, effect, development, occurrence or state of facts
which, when considered either individually or in the aggregate, is, or would
reasonably be expected to be, material and adverse to the condition (financial
or otherwise), properties, assets, liabilities, obligations (whether absolute,
accrued, conditional or otherwise), businesses, operations, or results of
operations of the Offeror and its subsidiaries, taken as a whole, other than any
condition, event, circumstance, change, effect, development, occurrence or state
of facts resulting from (i) the announcement of the execution of this Agreement
or the transactions contemplated herein, any litigation or claim made against
the Offeror by Newstrike or the performance of any obligation of the Offeror
required to be performed by the Offeror hereunder, (ii) changes in general
economic or political conditions or securities, credit, financial, banking,
commodity or currency markets in general, including in Canada or the United
States, (iii) changes generally affecting the cannabis industry, (iv) any
transaction, financing, acquisition or disposition by Aurora or its affiliates
that has been publicly announced but not completed, prior to execution of this
Agreement and is subsequently terminated, or delayed, (iv) any natural disaster
or the commencement or continuation of any war, armed hostilities or acts of
terrorism, (v) any change in applicable Law or IFRS, or (vi) any decrease in the
trading price or any decline in the trading volume of the Aurora Shares (it
being understood that the causes underlying such change in trading price or
trading volume (other than those in clauses (i) to (vi) above) may be taken into
account in determining whether a Offeror Material Adverse Change has occurred);
unless such condition, event, circumstance, change, effect, development,
occurrence or state of facts referred to in clause (v) primarily relates to (or
has the effect of primarily relating to) the Offeror and its subsidiaries, taken
as a whole, or has a materially disproportionate and adverse effect on the
Offeror and its subsidiaries, taken as a whole, compared to other persons
operating in the industry in which the Offeror and its subsidiaries, taken as a
whole, operate.
“Offeror Public Disclosure Record”
means all
prospectuses, circulars, reports, schedules, forms and other filings (including
any exhibits and documents incorporated by reference and any amendments thereto)
filed by the Offeror between January 1, 2017 and the date hereof on SEDAR under
the name of the Offeror and not marked private;
“Officer Obligations”
means any obligations or
liabilities of CanniMed or any of its subsidiaries to pay any amount to its
employees, officers and/or directors and, without limiting the generality of the
foregoing, Officer Obligations shall include the obligations of CanniMed or any
of its subsidiaries to employees, officers and/or directors for severance or
termination payments in connection with a Change of Control of CanniMed pursuant
to any employment agreements or otherwise in existence on the date hereof;
9
“Outside Date”
means the date which is 90 after the date
of the Notice of Variation; provided, however, that if the Offeror’s take up and
payment for CanniMed Shares deposited under the Improved Offer is delayed by (a)
an injunction or order made by a court or regulatory authority of competent
jurisdiction, or (b) the Offeror not having obtained any regulatory waiver,
consent or approval which is necessary to permit the Offeror to take up and pay
for CanniMed Shares deposited under the Improved Offer, then, provided that such
injunction or order is being contested or appealed or such regulatory waiver,
consent or approval is being actively sought, as applicable, the Outside Date
shall be extended until the earlier of (i) 120 days after the date the Notice of
Variation is mailed, and (ii) the tenth business day following the date on which
such injunction or order ceases to be in effect or such waiver, consent or
approval is obtained, as applicable;
“Parties”
means the Offeror and CanniMed, and
“Party”
means either of them;
“Permit”
means any license, permit, certificate,
franchise, consent, order, grant, easement, covenant, approval, classification,
registration or other authorization of or from any Governmental Authority;
“person”
includes any individual, firm, partnership,
joint venture, venture capital fund, association, trust, trustee, executor,
administrator, legal personal representative, estate, group, body corporate,
corporation, unincorporated association or organization, Governmental Authority,
syndicate or other entity, whether or not having legal status;
“Release”
has the meaning prescribed in any
Environmental Law and includes any sudden, intermittent or gradual release,
spill, leak, pumping, addition, pouring, emission, emptying, discharge,
migration, injection, escape, leaching, disposal, dumping, deposit, spraying,
burial, abandonment, incineration, seepage, placement or introduction of a
Hazardous Substance, whether accidental or intentional, into the Environment;
“Response Period”
has the meaning set forth in Section
6.2(a)(iii);
“SEC”
means the U.S. Securities and Exchanges
Commission;
“Securities Act”
means the
Securities Act
(Ontario);
“Securities Authorities”
means the TSX and the
securities commissions or similar regulatory authorities of each of the
provinces and territories of Canada, each as applicable with respect to CanniMed
and the Offeror, respectively;
“Securities Laws”
means the Securities Act, and all
other applicable Canadian provincial and federal securities laws, rules,
regulations and published policies thereunder;
“SEDAR”
means the Canadian Securities Administrators’
System for Electronic Document Analysis and Retrieval whose website is
www.sedar.com;
“Subsequent Acquisition Transaction”
has the meaning
given to that term in Section 15 of the Circular, “Acquisition of CanniMed
Shares Not Deposited Under the Offer”;
10
“Superior Proposal”
means any
bona fide
unsolicited written Acquisition Proposal made by an arm’slength third party that
is made after the date of this Agreement (and not obtained in violation of
Section 6.1 of this Agreement), to acquire all or
substantially all of the assets of CanniMed (on a consolidated basis) or 100% of
the issued and outstanding CanniMed Shares not beneficially owned by the party
making such Acquisition Proposal and any joint actor or any of their respective
affiliates, whether by way of a single or multistep transaction or a series of
related transactions, and that the CanniMed Board determines, in good faith
(after consultation with its financial advisors and outside legal counsel):
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ii.
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is reasonably capable of being completed in accordance
with its terms without undue delay, taking into account all legal,
financial, regulatory and other aspects of such proposal and the person
making such proposal;
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iii.
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is not subject to any financing condition or contingency
and in respect of which adequate arrangements have been made and have been
demonstrated to be available to ensure that the required funds or other
consideration will be available to effect payment in full for all of
CanniMed Shares or the assets of CanniMed to be acquired, as the case may
be;
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iv.
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is not subject to a due diligence condition;
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v.
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in the case of an offer to acquire all of the issued and
outstanding CanniMed Shares, is made to all CanniMed Shareholders (other
than the person making such Acquisition Proposal and any joint actor or
any of their respective affiliates) in Canada on the same terms and
conditions (including the form, the timing and the amount of
consideration);
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vi.
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would, if consummated in accordance with its terms, but
not assuming away any risk of non-completion, result in a transaction more
favourable to CanniMed Shareholders from a financial point of view than
the terms of the Improved Offer (including any adjustment to such terms
proposed by Offeror as contemplated by Section 6.2); and
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vii.
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in the event that CanniMed does not have the financial
resources to pay the CanniMed Termination Payment, the terms of such
Acquisition Proposal provide that the person making such Acquisition
Proposal shall advance or otherwise provide CanniMed with the cash for
CanniMed to make CanniMed Termination Payment, and such amount will be
advanced or provided on or before such CanniMed Termination Payment
becomes payable.
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“Tax Act”
means the
Income Tax Act
(Canada);
“Tax Returns”
means all returns, reports, declarations,
elections, notices, filings, forms, statements and other documents (whether in
tangible, electronic or other form) and including any amendments, schedules,
attachments, supplements, appendices and exhibits thereto, made, prepared, filed
or required to be made, prepared or filed by Law in respect of Taxes;
“Taxes”
means all federal, state, local, provincial,
branch, foreign or other taxes or other governmental levies, including income,
gross receipts, windfall, profits, value added, severance, ad valorem, property,
capital, net worth, production, mining, royalty, rental, sales, use, licence,
excise, franchise, employment, environmental, value added, transfer, withholding
or similar taxes, payroll taxes, employment taxes, pension plan premiums,
severance taxes, social insurance premiums, workers’ compensation premiums, employment insurance, stamp taxes, occupation taxes, premium
taxes, alternative or add-on minimum taxes, goods and services tax, harmonized
sales tax, customs duties or other taxes or other governmental levies of any
kind whatsoever imposed or charged by any Governmental Authority, together with
any interest, penalties, or additions with respect thereto and any interest in
respect of such additions or penalties; and
11
“TSX”
means the Toronto Stock Exchange.
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1.2
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Singular, Plural, etc.
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In this Agreement, words importing the singular number include
the plural and vice versa and words importing gender include the masculine,
feminine and neuter genders.
Unless otherwise expressly stated, all references to currency
herein shall be, and be deemed to be, references to Canadian currency.
The division of this Agreement into Articles, Sections and
Schedules, the provision of a table of contents hereto and the insertion of the
recitals and headings are for convenience of reference only and shall not affect
the construction or interpretation of this Agreement and, unless otherwise
stated, all references in this Agreement or in the Schedules hereto to Articles,
Sections and Schedules refer to Articles, Sections and Schedules of and to this
Agreement or of the Schedules in which such reference is made, as applicable.
In the event that any date on which any action is required to
be taken hereunder by any of the Parties is not a business day, such action
shall be required to be taken on the next succeeding day which is a business
day.
Unless otherwise specified, time periods within or following
which any payment is to be made or act is to be done shall be calculated by
excluding the day on which the period commences and including the day on which
the period ends. Where the last day of any such time period is not a business
day, such time period shall be extended to the next business day following the
day on which it would otherwise end.
Unless otherwise stated, all accounting terms used in this
Agreement shall have the meanings attributable thereto under IFRS and all
determinations of an accounting nature required to be made shall be made in a
manner consistent with IFRS.
12
The terms “including” or “includes” shall, when used in this
Agreement, be construed to mean including or includes without limitation.
References to “herein”, “hereby”, “hereunder”, “hereof’ and similar expressions
are references to this Agreement (including all Schedules to this Agreement) and
not to any particular Section of or Schedule to this Agreement.
This Agreement shall be governed, including as to validity,
interpretation and effect, by the laws of Ontario and the federal laws of Canada
applicable therein, and shall be construed and treated in all respects as an
Ontario contract. Each of the Parties hereby irrevocably attorns to the non-
exclusive jurisdiction of the Courts of the Province of Ontario in respect of
all matters arising under and in relation to this Agreement and the Improved
Offer.
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1.10
|
Statutory References
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Any reference to a statute shall mean the statute in force as
at the date of this Agreement (together with all regulations, rules and
published policies promulgated thereunder), as the same may be amended,
re-enacted, consolidated or replaced from time to time, and any successor
statute thereto, unless otherwise expressly provided.
Any reference to an action taken by a person in the ordinary
course means that such action is consistent with past practices of such person
and is taken in the ordinary course of the normal operations of such person.
In this Agreement, the phrase “to the knowledge of CanniMed” or
other similar phrases means to the best of the knowledge, information and belief
of the Chief Executive Officer or Chief Financial Officer of CanniMed, without
personal liability on the part of either of them; and the phrase “the Knowledge
of the Offeror” or other similar phrases means to the best of the knowledge,
information and belief of the Chief Executive Officer or Chief Financial Officer
of the Offeror, without personal liability of the part of either of them.
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1.13
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Incorporation of Schedules
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The Schedules attached hereto and described below shall, for
all purposes hereof, form an integral part of this Agreement.
Schedule A – Representations and
Warranties of the Offeror
Schedule B – Representations and Warranties of
CanniMed
Schedule C – Form of CanniMed Support Agreements
Schedule D –
Conditions of the Improved Offer
13
ARTICLE 2
THE IMPROVED OFFER
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(a)
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The Offeror shall promptly publicly announce its
intention to amend the Original Offer, subject to the terms and conditions
set forth below, to increase the consideration payable for all of the
issued and outstanding CanniMed Shares, and CanniMed Shares issuable upon
exercise of Convertible Securities. Under the Improved Offer, CanniMed
Shareholders will be entitled to receive Aurora Shares or cash, at their
election, subject to proration of a maximum cash component of $140
million, excluding the CannMed Shares owned by the Offeror and its
affiliates. Assuming proration of the cash among all Cannimed shareholders
(fully diluted), and excluding the CannMed Shares owned by the Offeror and
its affiliates, the result would be $5.70 in cash and 2.9493 in Aurora
Shares. Assuming an all share election a CanniMed Shareholder will receive
3.4 Aurora Shares. Provided that there has been no termination of this
Agreement, the Offeror shall not terminate or withdraw the Improved Offer
prior to the Expiry Time without the prior written consent of
CanniMed.
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(b)
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The Offeror shall prepare the Notice of Variation in both
the English and French languages. The Offeror shall mail the Notice of
Variation in accordance with applicable Securities Laws to each registered
holder of CanniMed Shares as soon as reasonably practicable and, in any
event, not later than 11:59 p.m. (Toronto time) on the day that is ten
days after date of execution of this Agreement by both the Offeror and
CanniMed (such time on such date being the
“Latest Mailing Time”
);
provided, however, that if the mailing of the Notice of Variation is
delayed by reason of CanniMed not having provided to the Offeror
the
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Directors’ Circular (defined below) as well as any
information pertaining to CanniMed that is necessary for the completion of
the Notice of Variation by the Offeror, then the Latest Mailing Time shall
be extended to 11:59 p.m. on the second business day following the date on
which CanniMed supplies such necessary documents, information or other
assistance.
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(c)
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Prior to the printing of the Notice of Variation and the
filing of the amendment to the Original Offer to purchase, the Offeror
shall provide CanniMed with a reasonable opportunity to review and comment
on such documents, recognizing that whether or not such comments are
appropriate will be determined by the Offeror, acting
reasonably.
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(d)
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The Offeror agrees to take up all of CanniMed Shares
tendered under the Improved Offer no later than 9:00 a.m. on the first
business day following the first scheduled Expiry Time if and when all the
conditions to the Improved Offer set out in Schedule A, which conditions
shall be included in the Notice of Variation and shall replace the
conditions to the Original Offer, shall have been satisfied or waived and
pay for such CanniMed Shares promptly and in any event not later than
three (3) business days following such scheduled Expiry Time.
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(e)
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The Offeror may, in its sole discretion, waive any term
or condition of the Improved Offer (other than the Statutory Minimum
Condition, but including any further extension of the Expiry Time) or
increase the consideration offered; provided that the Offeror shall not,
without the prior consent of CanniMed, otherwise amend the Improved Offer,
impose additional conditions to the Improved Offer, decrease the
consideration per CanniMed Share, decrease the cash amount of the Improved
Offer, decrease the number of CanniMed Shares in respect of which the Improved Offer is made, change
the form of consideration payable under the Improved Offer (other than to
increase the total consideration per CanniMed Share or add additional
consideration) or otherwise vary the Improved Offer or any terms or conditions
thereof in a manner which is adverse to CanniMed Shareholders.
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14
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(f)
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If the Offeror takes up any CanniMed Shares under the
Improved Offer, it shall make a public announcement of that fact and the
Offeror shall extend the Improved Offer for a period of not less than 10
days.
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(g)
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The Parties agree that Section 4 of the Mutual
Non-Disclosure Agreement between CanniMed and the Offeror dated January
19, 2018 is deleted.
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2.2
|
Conditions to Amending of the Original
Offer
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(a)
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The obligation of the Offeror to amend the Original Offer
is conditional on the prior satisfaction of the following conditions, all
of which conditions are included for the sole benefit of the Offeror and
any or all of which may be waived by the Offeror in whole or in part in
its sole discretion:
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(i)
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this Agreement shall not have been terminated pursuant to
Section 8.1;
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(ii)
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CanniMed shall have terminated the Newstrike Agreement in
accordance with its terms and paid the Newstrike Agreement Termination
Payment;
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(iii)
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CanniMed Board of Directors shall have recommended that
CanniMed Shareholders accept the Improved Offer and shall not have
withdrawn such recommendation or changed, modified or qualified such
recommendation in a manner that has substantially the same effect or taken
any other action or made any other public statement in connection with the
Improved Offer subsequent to the date of this Agreement inconsistent with
such recommendation;
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(iv)
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CanniMed Board of Directors shall have prepared and
approved in final form, printed for distribution to CanniMed Shareholders
and delivered to the Offeror for mailing with the Notice of Variation an
amended directors’ circular recommending that CanniMed Shareholders accept
the Improved Offer (the
“Directors’ Circular”
), which Directors’
Circular CanniMed will file with applicable Securities Authorities
concurrent with the mailing of the Notice of Variation;
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(v)
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CanniMed shall have complied in all material respects
with all of its covenants in this Agreement, including without limitation
those set out in Section
2.3,
to be complied with
prior to the Offeror amending the Original Offer;
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(vi)
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each of the representations and warranties of CanniMed
provided herein (a) that are qualified by a reference to Material Adverse
Change shall be true and correct at the date the Improved Offer is made
and (b) that are not qualified by a reference to Material Adverse Change
shall be true and correct unless the failure to be true or correct has
neither individually or in the aggregate with such other untrue or
incorrect representations caused or reasonably may be expected to cause, a
Material Adverse Change, at the date the Notice of Variation is
mailed;
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15
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(vii)
|
no Material Adverse Change shall have occurred since the
date of this Agreement;
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(viii)
|
no person shall have made an Acquisition Proposal after
the date hereof unless CanniMed Board of Directors has confirmed in
writing to the Offeror that such Acquisition Proposal is not a Superior
Proposal and, if requested by the Offeror, acting reasonably, publicly
stated that such Acquisition Proposal is not a Superior Proposal and has
publicly re- affirmed its recommendation in favour of the Improved
Offer;
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(ix)
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no cease trade order, injunction or other prohibition at
Law shall exist against the Offeror varying and extending the Original
Offer or taking up or paying for CanniMed Shares deposited under the
Improved Offer; and
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(x)
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prior to printing the Directors’ Circular, CanniMed shall
provide the Offeror with a reasonable opportunity to review and comment on
it, recognizing that whether or not such comments are appropriate will be
determined by CanniMed, acting reasonably. The Directors’ Circular shall
include a copy of the written Fairness
Opinions.
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(b)
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The conditions in Section 2.2(a) are for the sole benefit
of the Offeror and may be waived by it in its sole discretion in whole or
in part.
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2.3
|
Directors’ Circul
ar, Fairness Opinions and
Press Release
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(a)
|
CanniMed hereby represents and warrants, and acknowledges
that the Offeror is relying upon such representations and warranties in
entering into this Agreement, that as of the date of this
Agreement:
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|
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(i)
|
CanniMed Board of Directors has received oral Fairness
Opinions and confirmation from each of the Financial Advisors that it will
deliver written Fairness Opinions to CanniMed Board of Directors dated the
date of the oral Fairness Opinions on or before the date of the Directors’
Circular; and
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(ii)
|
CanniMed Board of Directors has determined, after
consultation with their financial and legal advisors, (A) that the
consideration to be offered for CanniMed Shares pursuant to the Improved
Offer is fair, from a financial point of view, to all CanniMed
Shareholders (other than the Offeror and its affiliates), and (B) that it
would be in the best interests of CanniMed to support and facilitate the
Improved Offer and enter into this Agreement and recommend that CanniMed
Shareholders tender their CanniMed Shares to the Improved
Offer.
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(b)
|
The CanniMed Board of Directors
shall:
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(i)
|
prior to the Offeror mailing the Notice of Variation,
prepare and approve in final form and print for distribution to CanniMed
Shareholders, the Directors’ Circular prepared in accordance with
Securities Laws recommending that CanniMed Shareholders tender all of
their CanniMed Shares to the Improved Offer, which shall attach the
written Fairness Opinions;
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16
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|
(ii)
|
deliver to the depositary of the Improved Offer, at its
offices in Toronto, Ontario (or as the Offeror may otherwise direct in
writing) in sufficient time for mailing with theNotice of Variation, a
sufficient quantity of commercial copies of the Directors’Circular;
and
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(iii)
|
issue a press release on the date of mailing the Notice
of Variation by the Offeror recommending that CanniMed Shareholders tender
all of their CanniMed Shares to the Improved Offer, which shall include
reference to the Fairness Opinions.
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Each of the Offeror and CanniMed will, in a timely manner,
furnish the other with all information regarding itself and its affiliates,
respectively, as is reasonably requested by the other or otherwise required to
be included in the Directors’ Circular or Notice of Variation under applicable
Laws or in any other filings required to be made by CanniMed or the Offeror
under applicable Laws in connection with the Contemplated Transactions. Each
Party shall also use reasonable commercial efforts to obtain any necessary
consents from any of its auditors, legal counsel and any other advisors to the
use of any financial, technical or other expert information required to be
included in the Directors’ Circular or Notice of Variation and to the identification in the Directors’
Circular or Notice of Variation of each such advisor.
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(a)
|
Subject to any required regulatory approvals, the
CanniMed Board of Directors shall resolve or have resolved to permit the
exercise or surrender of all CanniMed Share Options conditional upon, and
immediately prior to, the Offeror first taking up CanniMed Shares under
the Improved Offer and shall further resolve or have resolved that all
CanniMed Share Options contemplated under the CanniMed Stock Option Plan
shall become immediately exercisable.
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(b)
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The foregoing treatment of CanniMed Share Options shall
be described in the Directors’Circular.
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CanniMed acknowledges that, promptly upon the take-up and
payment by the Offeror pursuant to the Improved Offer of such number of CanniMed
Shares which, together with CanniMed Shares already owned by the Offeror,
represent in excess of 50% of the then outstanding CanniMed Shares plus one
CanniMed Share and from time to time thereafter, the Offeror shall be entitled
to designate such number of directors of CanniMed Board of Directors,
proportionate to the percentage of CanniMed Shares owned by the Offeror and
CanniMed shall not frustrate the attempts of the Offeror to do so and covenants
to co-operate with the Offeror, subject to applicable Law, to enable the
designees of the Offeror to be elected or appointed to CanniMed Board of
Directors, and to constitute such proportionate representation on CanniMed Board
of Directors, which for greater certainty, will be a majority of CanniMed Board
of Directors, including, without limitation, at the request of the Offeror, by
using its reasonable commercial efforts to increase the size of CanniMed Board
of Directors and reasonable commercial efforts to secure the resignations of
such directors as the Offeror may request.
17
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE
OFFEROR
The Offeror hereby represents and warrants to and in favour of
CanniMed as set out in Schedule A, and acknowledges that CanniMed is relying
upon such representations and warranties in connection with the entering into of
this Agreement:
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3.1
|
Survival of Representations and
Warranties
|
No investigation by or on behalf of CanniMed or its affiliates
or its or their Representatives, will mitigate, diminish or affect the
representations or warranties made by the Offeror in this Agreement. The
representations and warranties of the Offeror contained in this Agreement shall
not survive the Effective Time and shall expire and be terminated on the earlier
of the Effective Time and the date on which this Agreement is terminated in
accordance with its terms.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
CANNIMED
CanniMed hereby represents and warrants to and in favour of the
Offeror as set out in Schedule B, and acknowledges that the Offeror is relying
upon such representations and warranties in connection with the entering into of
this Agreement:
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4.1
|
Survival of Representations and
Warranties
|
No investigation by or on behalf of Offeror or its affiliates
or its or their Representatives, will mitigate, diminish or affect the
representations or warranties made by the Offeror in this Agreement. The
representations and warranties of the Offeror contained in this Agreement shall
not survive the Effective Time and shall expire and be terminated on the earlier
of the Effective Time and the date on which this Agreement is terminated in
accordance with its terms.
ARTICLE 5
CONDUCT OF BUSINESS
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5.1
|
Conduct of Business by
CanniMed
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CanniMed covenants and agrees that, during the period from the
date of this Agreement until such time as designees of the Offeror representing
at least a majority of the directors on CanniMed Board of Directors shall have
been appointed to CanniMed Board of Directors, unless the Offeror shall
otherwise expressly consent in writing (such consent not to be unreasonably
withheld, delayed or conditioned), and except as is otherwise permitted or
required under the terms of this Agreement or required under applicable Laws:
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(a)
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the business of CanniMed shall be conducted only, and
CanniMed shall not take any action except, in the ordinary course of
business and CanniMed shall, and shall cause its subsidiaries and its and
their Representatives, to use reasonable commercial efforts to maintain
and preserve its business organization and goodwill and assets, to keep
available the services of its directors, officers and employees, to
maintain satisfactory relationships with suppliers, distributors,
customers, employees and others having key business relationships with
them; and shall not make any material change in the business,
assets,liabilities, operations, capital or affairs of CanniMed or its
subsidiaries other than changes in the ordinary course of business or otherwise
permitted under the terms of this Agreement;
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(b)
|
without limiting the generality of Section 5.1(a),
CanniMed shall not, directly or indirectly, do or permit to occur any of
the following:
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(i)
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amend any CanniMed Organizational Documents;
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(ii)
|
amend CanniMed Stock Option Plan or the terms of any of
its outstanding securities, including any outstanding indebtedness and
credit facilities;
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(iii)
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issue, grant, sell or cause or, permit any Lien to be
created on, or agree to issue, grant, sell or cause or permit any Lien to
be created on any shares of CanniMed or its subsidiaries or securities
convertible into or exchangeable or exercisable for, or otherwise
evidencing a right to acquire, shares of CanniMed or any of its
subsidiaries, other than (A) the issuance of CanniMed Shares issuable
pursuant to the terms of the outstanding CanniMed Share Options, or other
convertible securities outstanding as of November 24, 2017, and (B)
transactions between two or more of CanniMed’s wholly-owned subsidiaries
or between CanniMed and a wholly-owned subsidiary;
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(iv)
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redeem, purchase or otherwise acquire or subject to any
Lien any of its outstanding securities or securities convertible into or
exchangeable or exercisable for any such securities, unless otherwise
required by the terms of such securities and other than in transactions
between two or more of CanniMed’s wholly-owned subsidiaries or between
CanniMed and a wholly- owned subsidiary;
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(v)
|
split, consolidate or reclassify any of the CanniMed
Shares or Convertible Securities;
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(vi)
|
amend or modify the terms of any of its
securities;
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(vii)
|
adopt a plan of liquidation or resolutions providing for
the liquidation, dissolution, merger, consolidation or reorganization of
CanniMed or any of its subsidiaries;
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(viii)
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reorganize, amalgamate or merge CanniMed with any other
person;
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(ix)
|
amend its accounting policies or adopt new accounting
policies, in each case except as required in accordance with
IFRS;
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(x)
|
make or change any material Tax election, change any
annual Tax accounting period, adopt or change any method of Tax
accounting, amend any material Tax returns or file claims for Tax refunds,
enter into (or offer to enter into) any agreement (including any waiver)
with any Governmental Authority relating to material Taxes, settle (or
offer to settle) any Tax claim, audit or assessment, or surrender any
right to claim a Tax refund, offset or other reduction in Tax
liability;
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(xi)
|
pledge, lease, license or cause or permit any material
Liens to be created on any assets which, individually or in the aggregate,
have a value in excess of $1,000,000.
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19
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(xii)
|
acquire (by merger, amalgamation, consolidation or
acquisition of shares or assets or otherwise) any corporation, partnership
or other business organization or division thereof or any property or
asset, or make any investment either by the purchase of securities,
contributions of capital (other than to wholly-owned subsidiaries),
property transfer, or purchase of any property or enter into or extend any
option to acquire, or exercise an option to acquire, any property or
assets of any other person, if any of the foregoing would individually or
in the aggregate, have a value in excess of $500,000;
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(xiii)
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incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other person,
or make any loans or advances that are, in the aggregate, in excess of
$500,000;
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(xiv)
|
commit to make new capital expenditures that, are, in the
aggregate, in excess of $500,000 other than as already committed by
CanniMed or its current budget and capital expenditure plan as approved by
the board of directors of CanniMed;
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(xv)
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pay, discharge or satisfy any claims, liabilities or
obligations which, individually or in the aggregate, are in excess of
$500,000, other than the payment, discharge or satisfaction of liabilities
(A) reflected or reserved against in the CanniMed Financial Statements,
(B) incurred in the ordinary course of business, or (C) in connection with
the Original Offer, the response of CanniMed thereto or this Agreement, or
pursuant to the Newstrike Agreement and payments thereunder;
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(xvi)
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except in the ordinary course of business, waive,
release, grant or transfer any rights which, individually or in the
aggregate, have a value in excess of $1,000,000 or settle any material
legal action except as contemplated herein;
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(xvii)
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enter into any Contract or series of Contracts, other
than in the ordinary course, resulting in a new Contract or series of
related new Contracts having a term in excess of 12 months and that would
not be terminable by CanniMed or its subsidiaries upon notice of 90 days
or less from the date of the relevant Contract, or that would impose
payment or other financial obligations on CanniMed or any of its
subsidiaries in excess of $500,000 individually;
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(xviii)
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enter into any Contract that would limit or otherwise
restrict CanniMed or any of its subsidiaries or any of their successors,
or that would, after the Expiry Time, limit or otherwise restrict the
Offeror or any of its affiliates or any of their successors, from engaging
or competing in any line of business or in any geographic area related to
cannabis;
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(xix)
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enter into any union recognition agreement, collective
bargaining agreement, works council agreement or similar agreement with
any trade union or representative body except as required by
law;
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(xx)
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except as provided for in Section 9.2, increase the
benefits payable or to become payable to CanniMed’s directors or officers
(whether from CanniMed or any of its subsidiaries), enter into or modify
any employment, severance, or similar agreements or arrangements with, or grant any bonuses, salary
increases, severance or termination pay to, any director or officer of CanniMed
other than pursuant to agreements already entered into;
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20
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(xxi)
|
Except as provided for in Section9.2, in the case of employees who are not directors or
officers of CanniMed, take any action with respect to the grant of any
bonuses, salary increases, severance or termination pay or with respect to
any increase of benefits payable in effect on the date hereof except in
the ordinary course of business;
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(xxii)
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authorize or propose any of the foregoing, or enter into
or modify any Contract to do any of the foregoing; or
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(xxiii)
|
other than in the ordinary course of business, cancel,
waive or compromise any indebtedness or claims, including any accounts
payable and receivable;
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(c)
|
Upon execution of this Agreement, CanniMed shall issue a
news release stating that the initial deposit period for the Improved
Offer will be reduced to the earliest permissible date under Securities
Laws;
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(d)
|
In the event that the Offeror desires to visit a property
owned or operated by CanniMed, CanniMed agrees that, upon reasonable
notice, it shall provide the Offeror’s representatives with reasonable
access during normal business hours to all of the facilities and
information related to all of the facilities, in order that the Offeror’s
representatives may carry out the inspections or inquiries that it
reasonably requires. For greater certainty, nothing herein shall restrict
the ability of the Offeror’s representatives to engage in discussions as
reasonably required with CanniMed’s employees, agents or representatives
in order to evaluate scientific techniques used by CanniMed, or any third
party at a property owned or operated by CanniMed, provided that the
Offeror provides reasonable notice to CanniMed and allows CanniMed to
arrange, and if desired, attend any such meetings;
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(e)
|
CanniMed shall on or prior to February 1, 2018 deliver a
Notice of Discontinuance regarding the lawsuit (the
“Lawsuit”
)
dated January 12, 2018 filed by CanniMed in the Ontario Superior Court of
Justice (Court File No. ON-18-589996-00CL) against Aurora and certain
other persons. CanniMed also agrees it shall not assign the Lawsuit, any
rights in connection with the Lawsuit or any claims with respect thereto.
For greater certainty, CanniMed agrees that it will take no action to seek
judgment under the Lawsuit and neither shall CanniMed make any filings
except for such filings which are legally necessary to withdraw the
lawsuit;
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(f)
|
CanniMed shall use its reasonable commercial efforts to
cause each of CanniMed`s directors and officers to enter into support
agreements (in the form attached hereto in Schedule C to this Agreement)
with the Offeror (the “
CanniMed Support Agreements
”) in respect of
the Improved Offer with Aurora;
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(g)
|
CanniMed shall use reasonable commercial efforts to cause
the current insurance (or re- insurance) policies of CanniMed not to be
cancelled or terminated or any of the coverage thereunder to lapse, unless
simultaneously with such termination, cancellation or lapse, replacement
policies providing coverage similar to or greater than the coverage under
the cancelled, terminated or lapsed policies for substantially
similar premiums are in full force and effect;
|
21
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|
(h)
|
CanniMed shall duly and timely file all material forms,
reports, schedules, statements and other documents required to be filed
pursuant to any applicable corporate Laws or Securities Laws;
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(i)
|
CanniMed shall promptly notify the Offeror orally and in
writing of (i) any material change (within the meaning of the Securities
Act), on a consolidated basis, in the operation of its business and of any
material governmental or third party complaints, investigations or
hearings (or communications indicating that the same may be contemplated);
and (ii) the occurrence, or failure to occur, of any event or state of
facts which occurrence or failure would or would be likely to (x) cause
any of the representations or warranties of CanniMed contained herein to
be untrue or inaccurate in any material respect; or (y) result in the
failure in any material respect of CanniMed to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied prior to
the Effective Time;
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(j)
|
CanniMed shall not create any new Officer Obligations and
CanniMed shall not grant to any officer, director or employee an increase
in compensation in any form, make any loan to any officer, director or
employee, or take any action with respect to the grant of any severance or
termination pay arising from the Improved Offer or a change of control of
CanniMed or enter into any employment agreement with, any officer or
director (other than in the ordinary course) and employees, or enter into
any other agreement with respect to any increase of benefits payable under
its current severance or termination pay or any other policies, other than
as contemplated in Section 9.2;
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(k)
|
CanniMed shall not adopt or amend or make any
contribution to any bonus, profit sharing, option, pension, retirement,
deferred compensation, insurance, incentive compensation, other
compensation or other similar plan, agreement, trust, fund or arrangements
for the benefit of employees except: (i) with respect to its obligations
under existing provisions of any of the Employee Plans; (ii) as
contemplated in Section 9.2; (iii) or as required by law or in the
ordinary course of business; and
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(l)
|
Notwithstanding any other provision of this Agreement,
nothing shall prevent CanniMed from selling up to $1,000,000 of
non-material non-core assets at fair market value to a person who is not a
competitor to CanniMed or Aurora, subject to CanniMed’s right to retain a
19.9% minority interest.
|
For the purposes of this Section 5.1(b)(xi), (xvi) and (xiv)
and 5.1(l) in so far as CanniMed is permitted to engage in any of the foregoing,
it shall deliver to Aurora a written notice no less than three business days
prior to commencing any such transaction which shall describe in reasonable
detail the assets (which are the subject of the transaction) and the identities
of the counterparties.
|
5.2
|
Conduct of Business by the
Offeror
|
The Offeror covenants and agrees that, during the period from
the date of this Agreement until completion of Subsequent Acquisition
Transaction or Compulsory Acquisition, unless a majority of the directors of
CanniMed independent of Aurora shall otherwise expressly consent in writing
(such consent not to be unreasonably withheld, delayed or conditioned):
22
|
|
(a)
|
the business of the Offeror shall be conducted only, and
the Offeror shall not take any action except, in the ordinary course of
business and the Offeror shall, and shall cause its subsidiaries and its
and their Representatives, to use reasonable commercial efforts to
maintain and preserve its business organization and goodwill and assets,
to keep available the services of its directors, officers and employees,
to maintain satisfactory relationships with suppliers, distributors,
customers, employees and others having key business relationships with
them; and shall not make any material adverse change in the business,
assets, liabilities, operations, capital or affairs of the
Offeror;
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|
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(b)
|
without limiting the generality of Section 5.2(a), the
Offeror shall not, directly or indirectly, do or permit to occur any of
the following:
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|
|
(i)
|
amend any of the Offeror Organizational
Documents;
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(ii)
|
amend the Offeror Stock Option Plan or the
terms of any of its outstanding securities, including any outstanding
indebtedness and credit facilities;
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(iii)
|
adopt a plan of liquidation or resolutions
providing for the liquidation, dissolution, merger, consolidation or
reorganization of the Offeror or any of its subsidiaries;
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(iv)
|
reorganize, amalgamate or merge the Offeror
with any other person;
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(v)
|
amend its accounting policies or adopt new
accounting policies, in each case except as required in accordance with
IFRS;
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(vi)
|
make or change any material Tax election, change any
annual Tax accounting period, adopt or change any method of Tax
accounting, amend any material Tax returns or file claims for Tax refunds,
enter into (or offer to enter into) any agreement (including any waiver)
with any Governmental Authority relating to material Taxes, settle (or
offer to settle) any Tax claim, audit or assessment, or surrender any
right to claim a Tax refund, offset or other reduction in Tax liability;
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(vii)
|
authorize or propose any of the foregoing, or
enter into or modify any Contract to do any of the foregoing; or
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(viii)
|
other than in the ordinary course of business,
cancel, waive or compromise any indebtedness or claims, including any
accounts payable and receivable;
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(ix)
|
declare or pay or make any dividend or
distribution on its common shares or engage in any capital reorganization
or repurchase any Aurora Shares.
|
In addition, the Offeror covenants that for a period of six (6)
months following the effective date of the Subsequent Acquisition Transaction or
Compulsory Acquisition it shall not terminate the employment of any employee of
CanniMed other than for cause. For the purposes of this covenant, employee does
not include persons who are members of the CanniMed Board of Directors, CanniMed
executive officers, or CanniMed “insiders” within the meaning of applicable
Securities Laws.
23
ARTICLE 6
COVENANTS OF CANNIMED
|
|
(a)
|
CanniMed shall, and shall direct and cause its
subsidiaries and its and their Representatives to, immediately cease and
cause to be terminated any existing solicitation, encouragement discussion
or negotiation with any person (other than the Offeror or its
Representatives) with respect to any potential Acquisition Proposal,
whether or not initiated by CanniMed, and in connection therewith,
CanniMed will discontinue access to any data rooms (virtual or otherwise).
CanniMed shall not amend, modify or waive any confidentiality agreement,
standstill agreement or standstill provisions contained in any agreements
entered into by CanniMed with other parties relating to a potential
Acquisition Proposal. Within 48 hours following the execution of this
Agreement, CanniMed shall request the return or destruction of all
information provided to any third parties in connection with any potential
Acquisition Proposal and shall use reasonable commercial efforts to ensure
that such requests, and any other covenants (including standstill
provision) are honoured in accordance with the terms of confidentiality
agreements, where applicable.
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(b)
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Except as otherwise provided in this Article 6, CanniMed
shall not, and shall not authorize or permit any of its subsidiaries or
its or their Representatives to, unless the Offeror has materially
breached any covenant or obligation under this Agreement or suffers a
Offeror Material Adverse Change:
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(i)
|
solicit, assist, initiate, encourage or otherwise
knowingly facilitate (including by way of furnishing information,
permitting any visit to any facilities or properties of CanniMed or any of
its subsidiaries or entering into any Contract) the initiation of any
inquiries, offers or proposals regarding an Acquisition Proposal; provided
that, for greater certainty, CanniMed may advise any person making an
unsolicited Acquisition Proposal that such Acquisition Proposal does not
constitute a Superior Proposal when the CanniMed Board of Directors has so
determined;
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(ii)
|
engage or participate in or otherwise facilitate any
discussions or negotiations with, or provide any information to any person
regarding, an Acquisition Proposal;
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(iii)
|
withdraw, modify or qualify (or propose to do so), in a
manner adverse to the Offeror, the approval or recommendation of the
CanniMed Board of Directors of the Improved Offer or this
Agreement;
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(iv)
|
approve or recommend or remain neutral or propose
publicly to approve or recommend or remain neutral with respect to any
Acquisition Proposal (it being understood that publicly taking no position
or a neutral position with respect to an Acquisition Proposal for a period
of no more than five (5) business days following the public announcement
of such Acquisition Proposal shall not be considered to be in violation of
this Section 6.1(b)(iv)), or
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(v)
|
accept, recommend, approve or enter into any letter of
intent, agreement in principle, agreement, understanding or arrangement in
respect of an Acquisition Proposal or providing for the payment of any
break, termination or other fees or expenses to any person in the event that CanniMed completes the
transactions contemplated in this Agreement or any other transaction with the
Offeror or any of its affiliates agreed to prior to any termination of this
Agreement, whether formal or informal.
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24
|
|
(c)
|
CanniMed shall, as soon as practicable and in any event
within 24 hours following receipt thereof notify the Offeror, at first
orally and then as soon as possible thereafter within such 24 hour period
in writing, of any inquiry, proposal or offer (or any amendment thereto)
or request relating to or constituting an Acquisition Proposal, any
request for discussions or negotiations, and/or any request for nonpublic
information relating to CanniMed or for access to properties, books and
records or a list of the CanniMed Shareholders or other CanniMed
Securityholders of which CanniMed, its subsidiaries, or its or their
Representatives are or become aware, or any amendments to the foregoing.
Such notice shall include the material terms and conditions of, and the
identity of the person making, any inquiry, proposal or offer (including
any amendment thereto), and shall include, in the case of a proposal or
offer, copies of any such proposal or offer or any amendment to any of the
foregoing. CanniMed shall keep the Offeror informed of the status,
including any change to the material terms, of any such proposal or offer
or any amendment to the foregoing, and will respond promptly to all
reasonable inquiries by the Offeror with respect thereto.
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(d)
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Notwithstanding Section 6.1(a) or any other provision of
this Agreement to the contrary, if after the date of this Agreement,
CanniMed receives a request for material non-public information in
connection with a potential Acquisition Proposal or receives a bona fide
Acquisition Proposal (that was not solicited, encouraged or facilitated
after the date hereof in contravention of Section 6.1(a)), and the
CanniMed Board of Directors determines in good faith after consultation
with its financial advisors and its legal counsel, that such Acquisition
Proposal would, if consummated in accordance with its terms (but not
assuming away any risk of non-completion), be a Superior Proposal, then,
and only then, CanniMed may provide such person with access to information
regarding CanniMed and its subsidiaries and engage in discussions and
negotiations with such person, subject to the execution of an appropriate
and customary confidentiality agreement (if one has not already been
entered into) providing for standstill provisions (which shall not be
waived or modified without the prior written approval of the Offeror)
other than to effect a Superior Proposal with the consent of the CanniMed
Board of Directors in compliance with this Agreement, provided however
that the Offeror is provided with access to similar information to which
such person was provided if it has not already been provided such
information.
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(e)
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CanniMed shall ensure that its subsidiaries and its and
their Representatives are aware of, and agree to be bound by, the
provisions of this Section 6.1, and CanniMed shall be responsible for any
breach of this Section 6.1 by such subsidiaries and
Representatives.
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6.2
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Notice of Superior Proposal
Determination
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(a)
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Subject to Section 6.2(b), CanniMed agrees that it will
not accept, approve, recommend or enter into any agreement, understanding
or arrangement in respect of an Acquisition Proposal (other than a
confidentiality agreement permitted by Section 6.1(d))
and/or withdraw, modify or qualify its approval or recommendation in
respect of the Improved Offer and recommend or approve the Acquisition Proposal,
unless:
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25
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(i)
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the CanniMed Board of Directors has determined that the
Acquisition Proposal constitutes a Superior Proposal;
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(ii)
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CanniMed has complied with its obligations under all
other provisions of this Article 6 and has provided the Offeror with a
copy of the Acquisition Proposal (including, if applicable, a copy of any
proposed agreement relating to such Acquisition Proposal);
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(iii)
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a period (the “
Response Period
”) of five (5)
business days shall have elapsed from the later of (A) the date on which
the Offeror received written notice from the CanniMed Board of Directors
that the CanniMed Board of Directors determined, subject to compliance
with this Section 6.2, to accept, approve, recommend or enter into a
binding agreement to proceed with the Superior Proposal, and (B) the date
the Offeror received a copy of such Acquisition Proposal;
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(iv)
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after the Response Period, the CanniMed Board of
Directors has determined in good faith, after consultation with its
financial advisors and outside counsel, that such Acquisition Proposal
continues to constitute a Superior Proposal; and
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(v)
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CanniMed concurrently terminates this Agreement pursuant
to Section 8.1(i) and has paid to the Offeror the Termination Payment
pursuant to Section 6.3(a)(ii).
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(b)
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During the Response Period, the Offeror will have the
right, but not the obligation, to offer to amend the terms of this
Agreement and the Improved Offer. The CanniMed Board of Directors will
review any proposal by the Offeror to amend the terms of the Improved
Offer in order to determine, in good faith in the exercise of its
fiduciary duties whether the Improved Offer as it is proposed by the
Offeror to be amended would, upon acceptance by CanniMed, result in the
Acquisition Proposal ceasing to be a Superior Proposal compared to the
proposed amended Improved Offer. If the CanniMed Board of Directors does
so determine, the CanniMed Board of Directors will cause CanniMed to
promptly enter into an amendment to this Agreement reflecting the amended
Improved Offer.
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(c)
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The CanniMed Board of Directors shall promptly (and in
any event within three business days) reaffirm its recommendation of the
Improved Offer by news release after the CanniMed Board of Directors
determines that the proposed amendment to the Contemplated Transactions
and the Improved Offer would result in an Acquisition Proposal that was
publicly announced not being a Superior Proposal and the Offeror has so
amended the terms of this Agreement. The Offeror and its counsel shall be
given a reasonable opportunity to review and comment on the form and
content of any such news release and CanniMed shall give reasonable
consideration to all comments made by the Offeror and its
counsel.
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(d)
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Each successive amendment to any Acquisition Proposal
that results in an increase in, or material modification of, the
consideration (or value of such consideration) to be received by the
CanniMed Shareholders shall constitute a new Acquisition Proposal for the
purposes of this Section 6.2 and the Offeror shall be afforded a new
Response Period in respect of each such Acquisition Proposal.
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(e)
|
Nothing in this Agreement shall prevent the CanniMed
Board of Directors from responding through a directors’ circular or
otherwise as required by applicable Laws, in respect of an Acquisition
Proposal that it determines is not a Superior Proposal. The Offeror and
its counsel shall be given a reasonable opportunity to review and comment
on the content of any directors’ circular prior to its printing and
CanniMed shall give reasonable consideration to all comments made by the
Offeror and its counsel.
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6.3
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Termination Payment and Expense
Reimbursement
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(a)
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The Offeror shall be entitled to a cash termination
payment (the
“Termination Payment”
) in an amount equal to
$43,500,000 upon the occurrence of any of the following events (each a
“Termination Payment Event”
), which shall be paid by CanniMed
within the time specified in respect of any such Termination Payment
Event:
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(i)
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the Offeror shall have terminated this Agreement pursuant
to Section 8.1(c)(i)(x) (
material breach or default by CanniMed
),
Section 8.1(d) (
failure to re-affirm
), or Section 8.1(e) (
change
in or failure to make recommendation
); provided that at such time (i)
the Offeror is not in default of its covenants or obligations pursuant to
this Agreement, and (ii) no Offeror Material Adverse Change shall have
occurred, in
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which case the Termination Payment
shall be paid by 4:00 pm (Toronto time) on the second business day following the
date on which this Agreement is terminated;
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(ii)
|
CanniMed proposes to terminate this Agreement pursuant to
Section 8.1(j) (
acceptance of Superior Proposal
), in which case
CanniMed shall pay the Offeror the Termination Payment prior to entering
into of the definitive agreement relating to a Superior Proposal;
or
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(iii)
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on or after the date hereof and prior to the Expiry Time
an Acquisition Proposal is publicly announced or any person has publicly
announced an intention to make an Acquisition Proposal, and such
Acquisition Proposal has not expired, been withdrawn or been publicly
abandoned, and an Acquisition Proposal is completed within 12 months
following the later of (i) the date this Agreement is terminated and (ii)
the Effective Time, in which case the Termination Payment shall be paid to
the Offeror concurrently with the completion of such Acquisition
Proposal.
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(b)
|
Unless the Termination Payment is paid, the Offeror shall
be entitled to an expense reimbursement payment of up to $9,500,000 (the
“Expense Reimbursement”
) if this Agreement is terminated pursuant
to Sections 8.1(c)(i)(y) or 8.1(c)(iii) in which case the Expense
Reimbursement shall be paid to the Offeror by 4:00 p.m. (Toronto time) on
the day on which this Agreement is terminated.
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(c)
|
Upon written notice to CanniMed, the Offeror may assign
its right to receive the Termination Payment or Expense Reimbursement to
any affiliate (the
“Offeror Assignee”
).
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(d)
|
CanniMed shall be entitled to the reverse Termination
Payment of $43,500,000 (the “
Reverse Termination Payment
”), if this
Agreement is terminated pursuant to Sections 8.1(i). The Reverse
Termination Payment shall be paid by the Offeror within three business
days of the day on which this Agreement is terminated in accordance with
Section 8.1(i).
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(e)
|
The Termination Payment or Expense Reimbursement shall be
paid by CanniMed to the Offeror or the Offeror Assignee by wire transfer
in immediately available funds to an account specified by the Offeror. The
Reverse Termination Payment shall be paid by the Offeror to CanniMed by
wire transfer in immediately available funds to an account specified by
CanniMed. For greater certainty, the obligations of CanniMed and the
Offeror under this Section 6.3shall survive the
termination of this Agreement, regardless of the circumstances
thereof.
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(f)
|
For greater certainty, CanniMed shall not be obligated to
make more than one payment of the Termination Payment under this Section
6.3 if one or more of the events specified in Section 6.3(a) occurs.
Furthermore, notwithstanding any other provision of this Agreement, if
CanniMed has made an Expense Reimbursement payment to the Offeror or the
Offeror Assignee in accordance with Section 6.3(b) and a Termination
Payment subsequently becomes payable, the Termination Payment shall be
reduced by the amount of any such Expense Reimbursement that has been
paid.
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6.4
|
Liquidated Damages and Injunctive
Relief
|
The Parties acknowledge that the payment of the Termination
Fee, Expense Reimbursement or Reverse Termination Payment is the payment of
liquidated damages that are a genuine pre-estimate of the damages the Offeror or
CanniMed, as applicable, will suffer or incur as a result of the event giving
rise to such payment and the resultant termination of this Agreement and is not
a penalty. The Parties irrevocably waives any right they may have to raise as a
defence that any such liquidated damages are excessive or punitive. For greater
certainty, the Parties agree that the right to receive payment of the amount
determined pursuant to Section 6.3(a), 6.3(b) and 6.3(d), in the manner provided
therein, is, where such amount has been paid in full, the sole monetary remedy
of the Offeror in respect of the event giving rise to such payment, other than
the right to injunctive relief in accordance with Section 10.3 hereof to
restrain any breach or threatened breach of the covenants or agreements set
forth in this Agreement or otherwise to obtain specific performance of any of
such acts, covenants or agreements, without the necessity of posting a bond or
security in connection therewith.
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6.5
|
Assistance with Prospectus and Auditor
Comfort
|
CanniMed shall provide assistance to the Offeror in the
preparation of its prospectus as reasonably required and use its reasonable
commercial efforts to deliver to the Offeror comfort letters from its auditors
in the form and substance satisfactory to the Offeror, in respect of the
foregoing.
CanniMed shall use its reasonable commercial efforts to obtain
any consent from or to provide notice to, any person, in each case in form and
substance acceptable to the Offeror, where consent is required for that person
or that person has a right to receive notice in respect of this Agreement or the
transaction contemplated hereunder.
28
Subject to the fulfillment by the directors of their fiduciary
duties and their duty of candour to shareholders, CanniMed shall cooperate with
any solicitation or information agent retained by the
Offeror, at the Offeror’ s sole expense, and shall take, or
refrain from taking, such action as may be reasonably requested by the Offeror,
in furtherance of such cooperation.
CanniMed shall use its reasonable commercial efforts to take or
cause to be taken all reasonable actions to permit an orderly transition of
CanniMed’s operations following the Effective Time, which, for greater certainty
shall include using reasonable commercial efforts to enter into employee
retention arrangements with any employees reasonably identified by the Offeror,
on terms reasonably satisfactory to the Offeror.
ARTICLE 7
MUTUAL COVENANTS
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(a)
|
Each Party will give prompt notice to the other of the
occurrence, or failure to occur, at any time from the date hereof until
the earlier to occur of the termination of this Agreement and the
Effective Time of any event or state of facts of which it is aware which
occurrence or failure would, or would be reasonably likely
to:
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(i)
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cause any of the representations or warranties of either
Party contained herein to be untrue or inaccurate in any material respect;
or
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(ii)
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result in the failure to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by
either Party hereunder prior to the Expiry Time or the Effective Time, as
applicable.
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(b)
|
Each Party will give prompt notice to the other if at any
time before the Expiry Time it becomes aware that the Notice of Variation,
the Directors’ Circular, an application for an order, any registration,
consent, circular or approval, or any other filing under applicable Laws
contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements contained therein not misleading in the light of the
circumstances in which they are made, or that otherwise requires an
amendment or supplement to the Notice of Variation , the Directors’
Circular, such application, registration, consent, circular, approval or
filing, and the Offeror and CanniMed shall co-operate in the preparation
of any amendment or supplement to theNotice of Variation , the Directors’
Circular, application, registration, consent, circular, approval or
filing, as required.
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7.2
|
Additional Agreements and
Filings
|
Subject to the terms and conditions herein provided, each of
the Parties agrees to use its reasonable commercial efforts to take, or cause to
be taken, all reasonable actions and to do, or cause to be done, all things
reasonably necessary, proper or advisable to consummate and make effective as
promptly as practicable the Contemplated Transactions and to cooperate with
each other in connection with the foregoing, including using reasonable
commercial efforts:
29
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(a)
|
to obtain all necessary or advisable consents, approvals
and authorizations as are required or advisable to be obtained under
applicable Law, including, without limitation, under the rules of the TSX
and, in the case of the Offeror to list the Aurora Shares issuable
pursuant to the Improved Offer;
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(b)
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to defend all lawsuits or other legal proceedings
challenging this Agreement or the consummation of the Contemplated
Transactions;
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(c)
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to cause to be lifted or rescinded any injunction or
restraining order or other order adversely affecting the ability of the
Parties to consummate the Contemplated Transactions;
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(d)
|
to effect all necessary registrations and other filings
and submissions of information requested by Governmental Authorities or
required under any applicable Securities Laws, or any other Law relating
to the Contemplated Transactions;
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(e)
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to effect all necessary registrations and other filings
and submissions of information requested by Governmental Authorities or
required under any applicable Securities Laws, or any other Law relating
to the Contemplated Transactions;
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(f)
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to settle the agreement providing for the issuance of the
Aurora Warrants in a form satisfactory to each of the Parties, acting
reasonably;
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(g)
|
to execute and deliver such documents as the other Party
may reasonably require; and
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(h)
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to fulfil all conditions within its power and satisfy all
provisions of this Agreement, the Improved Offer and any Compulsory
Acquisition or Subsequent Acquisition
Transaction.
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7.3
|
Preparation of Filings
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Without limiting Section 7.2(a), each of CanniMed and the
Offeror shall:
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(a)
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as soon as practicable after the execution of this
Agreement, make, or cause to be made, all such filings and submissions
under the rules of the TSX, Securities Laws and as may be required or
advisable for the Offeror to complete the Contemplated
Transactions;
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(b)
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subject to compliance at all times with applicable Law
and the other provisions of this Agreement, coordinate and cooperate with
each other in exchanging information and supplying such assistance as is
reasonably requested in connection with the foregoing including providing
each Party with all notices and information supplied to or filed with any
Governmental Authorities, and all notices and correspondence received
therefrom (including notices and information which a Party, acting
reasonably, considers highly confidential and sensitive and which may be
provided on a confidential and privileged basis only to outsidecounsel of
the other Party, provided however that nothing in this Agreement requires
any Party to share with another Party or its external legal counsel any
information that relates to the valuation of the proposed transactions
contemplated by this Agreement).
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(c)
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comply, at the earliest practicable date and after
consultation with the other Party, with any request for additional
information or documentary material received by it from such Governmental
Authorities;
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(d)
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cooperate with one another in connection with any filings
or other submission aimed at resolving any investigation or other inquiry
concerning the Contemplated Transactions initiated by such Governmental
Authorities, including providing each other, in advance, with copies of
any notifications, filings, applications and/or other submissions in draft
form and reasonable opportunity to comment thereon; to the extent that any
information or documentation contained in such drafts is competitively
sensitive or otherwise highly confidential, such information shall be
provided only to outside counsel on a confidential and privileged basis,
provided however that nothing in this Agreement requires any Party to
share with another Party or its external legal counsel any information
that relates to the valuation of the proposed transactions contemplated by
this Agreement;
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(e)
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not participate in any meeting or discussion expected to
address substantive matters related to the Contemplated Transactions
either in person or by telephone with such Governmental Authorities
unless, to the extent permitted, it gives the other Party (or its outside
counsel) the opportunity to attend and observe;
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(f)
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Subject to section 7.2., above, use reasonable commercial
efforts to cause any applicable waiting periods to terminate or expire at
the earliest possible date and to obtain any necessary approvals of the
Contemplated Transactions; provided that reasonable commercial efforts
shall not require the Offeror or any of its affiliates to proffer or
accept any order providing for the divestiture of any properties, assets,
operations or businesses; to accept any other conditions, restrictions,
limitations, or agreements affecting the
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Offeror’s or its affiliates’ full rights of ownership to
any CanniMed Shares or its assets, or to contest any lawsuits or other
legal proceedings, whether judicial or administrative, brought by or
against Governmental Authorities, challenging or supporting the Agreement
or the consummation of the Contemplated Transactions;
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(g)
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Notwithstanding any other term or provision of this
Agreement, the Offeror shall pay any filing fee in respect of the
foregoing.
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7.4
|
Consultation and Access to
Information
|
From the date hereof until the earlier of the Effective Time
and the termination of this Agreement, subject to compliance with applicable Law
and the terms of any existing Contracts, CanniMed shall, and shall cause its
subsidiaries and its and their respective Representatives to afford to the
Offeror and its subsidiaries and its and their respective Representatives such
access as the Offeror may reasonably require at all reasonable times, including
for the purpose of facilitating integration business planning, to their
respective officers, employees, agents, advisors, properties, offices, assets,
books, records and Contracts, and shall furnish the Offeror with such data and
information as the Offeror may reasonably request.
31
Each of the Offeror and CanniMed agrees that, promptly after
the entering into of this Agreement, it shall issue a press release announcing
the entering into of this Agreement, which press release shall, in each case, be
satisfactory in form and substance to the other Party, acting reasonably.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
This Agreement may be terminated prior to the Effective Time or
such other time as may be expressly stipulated in any of the subsections below:
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(a)
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by mutual written consent of the Offeror and
CanniMed;
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(b)
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by the Offeror by written notice to CanniMed if any
condition contained in Section 2.2 has not been satisfied or waived by the
Offeror, in its sole discretion, at or before the Latest Mailing Time,
except where failure to satisfy such condition is, in whole or in part, a
result of a default by the Offeror of its covenants or obligations
pursuant to this Agreement;
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(c)
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by the Offeror by written notice to CanniMed at any time
if:
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(i)
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(x) CanniMed is in material default of any covenant or
obligation in Section 6.1 or Section 6.2; or (y) CanniMed is in material
default of any covenant or obligation in Section 2.3;
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(ii)
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CanniMed has breached any other covenant or obligation
under this Agreement except for breaches that neither individually nor in
the aggregate, result or could reasonably be expected to result, in a
Material Adverse Change; or
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(iii)
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any representation or warranty of
CanniMed:
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(A)
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that is qualified by reference to a Material Adverse
Change shall be untrue or incorrect in any respect; or
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(B)
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that is not qualified by reference to a Material Adverse
Change shall be untrue or incorrect unless the failure to be true or
correct has neither individually nor in the aggregate with other such
representations being untrue or incorrect caused or reasonably may be
expected to cause, a Material Adverse Change;
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provided that in each case, such right
of termination shall not be available with respect to any breach or failure that
is capable of being cured and such breach or failure has been cured by the
earlier of the date which is five (5) business days from the date of written
notice of such breach or failure and the business day prior to the Expiry Date;
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(d)
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by the Offeror by written notice to CanniMed if CanniMed
Board of Directors fails to publicly recommend the Improved Offer as
referred to in Section 2.2(a)(iii) or reaffirm its approval
of the Improved Offer within five (5) business days of any written
request by the Offeror (or, in the event that the Improved Offer shall be
scheduled to expire within such five (5) business day period, prior to the
scheduled expiry of the Improved Offer);
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(e)
|
absent a material breach by the Offeror of any covenant
or obligation under this Agreement or an Offeror Material Adverse Change,
by the Offeror by written notice to CanniMed if CanniMed Board of
Directors or any committee thereof withdraws, amends or modifies in any
manner adverse to the Offeror or CanniMed Board of Directors fails to
publicly recommend or reaffirm its approval of the Improved Offer and
recommendation that CanniMed Shareholders tender all of CanniMed Shares
under the Improved Offer within three (3) business days of (a) the public
announcement of any Acquisition Proposal which CanniMed Board of Directors
has determined is not a Superior Proposal or (b) the written request by
the Offeror that CanniMed Board of Directors make such a recommendation or
reaffirmation;
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(f)
|
(i) By the Offeror, by written notice to CanniMed, if a
Material Adverse Change occurs, or (ii) by CanniMed, by written notice to
the Offeror, if an Offeror Material Adverse Change occurs;
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(g)
|
by CanniMed by written notice to the Offeror at any time
if any representation or warranty of the Offeror under this
Agreement:
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(i)
|
that is qualified by reference to an Offeror Material
Adverse Change shall be untrue or incorrect in any respect; or
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(ii)
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that is not qualified by reference to an Offeror Material
Adverse Change shall be untrue or incorrect unless the failure to be true
or correct has neither individually nor in the aggregate with other such
representations being untrue or incorrect caused or reasonably may be
expected to cause, an Offeror Material Adverse
Change;
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(h)
|
by CanniMed by written notice to the Offeror if: (A) the
Offeror has not mailed the Notice of Variation by the Latest Mailing Time
except where such failure is attributable, in whole or in part, to a
default by CanniMed; or (B) the Improved Offer (or any amendment thereto
other than as permitted hereunder or any amendment thereof that has been
mutually agreed to by the Parties) does not conform in all material
respects with this Agreement or any amendment thereof that has been
mutually agreed to by the Parties and such non conformity is not cured
within five (5) business days from the date of written notice to that
effect from CanniMed;
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(i)
|
by either Party by written notice to the other Party if
the Competition Act Approval is not obtained by the Outside
Date;
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(j)
|
by CanniMed by written notice to the Offeror in order to
accept, approve, recommend or enter into a binding written agreement with
respect to a Superior Proposal (other than a confidentiality agreement
permitted by Section 6.1(d)), subject to compliance with Section 6.2 and
Section 6.3;
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(k)
|
by either Party by written notice to the other of them if
the Effective Time does not occur on or prior to the Outside Date,
provided that the failure of the Effective Time to so occur is not
attributable, in whole or in part, to a breach of a representation,
warranty or covenant by the Party terminating this Agreement and provided
further that CanniMed only may terminate the Agreement pursuant to this
Section 8.1(k) if the Offeror has not waived the unsatisfied conditions
and publicly announced its intention to take up and pay for CanniMed
Shares that have been deposited pursuant to the Improved Offer;
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(l)
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by either Party by written notice to the other of them if
the Improved Offer terminates, expires or is withdrawn at the Expiry Time
without the Offeror taking up and paying for any of CanniMed Shares as a
result of the failure of any condition to the Improved Offer to be
satisfied or waived, unless the failure of such condition shall be
attributable, in whole or in part, to the failure of the Party seeking to
terminate this Agreement to perform the obligations required to be
performed by it under this Agreement; or
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(m)
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by either Party by written notice to the other of them if
any Law in force in Canada or United States (other than a judicial,
arbitral, administrative, ministerial, departmental or regulatory
judgments, orders, decisions, rulings or awards of any Governmental
Authority resulting from action inconsistent with this Agreement) makes
the completion of the Improved Offer or the Contemplated Transactions
illegal or otherwise prohibited; or
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(n)
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by CanniMed by written notice to the Offeror at any time
if the Offeror has breached any covenant or obligation under this
Agreement except for breaches that neither individually nor in the
aggregate, result or could reasonably be expected to result, in an Offeror
Material Adverse Change, provided that in each case, such right of
termination shall not be available with respect to any breach or failure
that is capable of being cured and such breach or failure has been cured
by the earlier of the date which is five (5) business days from the date
of written notice of such breach or failure and the business day prior to
the Expiry Date.
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8.2
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Effect of Termination
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In the event of the termination of this Agreement as provided
in Section 8.1, this Agreement shall forthwith have no further force or effect
and there shall be no obligation on the part of the Offeror or CanniMed
hereunder except as set forth in Article 1, Section 6.3, this Article 8 and
Article 9, which provisions shall survive the termination of this Agreement.
This Section 8.2 and the payment of the Termination Payment and Expense
Reimbursement and Reverse Termination Payment, shall not relieve or have the
effect of relieving any Party in any way from liability for damages incurred or
suffered by a Party as a result of an intentional or wilful breach of this
Agreement, including the intentional or wilful making of a misrepresentation in
this Agreement. Nothing herein shall preclude a Party from seeking injunctive
relief to restrain any breach or threatened breach of the covenants or
agreements set forth in this Agreement or otherwise to obtain specific
performance of any such covenants or agreements, without the necessity of
posting bond or security in connection therewith.
This Agreement may be amended by mutual agreement between the
Parties. It may not be amended except by an instrument in writing signed on
behalf of each of the Parties hereto.
34
Each of the Offeror, on the one hand, and CanniMed, on the
other hand, may:
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(a)
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extend the time for the performance of any of the
obligations or other acts of the other;
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(b)
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waive compliance with the other’s agreements or the
fulfilment of any conditions to its own obligations contained herein;
or
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(c)
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waive inaccuracies in any of the other’s representations
or warranties contained herein or in any document delivered by the other
Party;
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provided, however, that any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
Party.
ARTICLE 9
GENERAL PROVISIONS
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9.1
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Payment of Newstrike Agreement Termination
Payment
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|
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(a)
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Aurora shall as soon as reasonably practicable following
the execution of this Agreement by CanniMed and Aurora and the termination
of the Newstrike Agreement make a cash payment of $9.5 million to CanniMed
as directed by CanniMed, as a fee, to be paid to Newstrike in accordance
with the terms of the Newstrike Agreement, in full satisfaction of the
termination payment obligations of CanniMed
therein.
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9.2
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Employee Bonuses
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Redacted: Commercially Sensitive Information
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(a)
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CanniMed may make available a bonus pool of up to $ to be
paid to certain CanniMed employees, officers and directors (as determined
by the CanniMed Board of Directors). Such payments to be made solely in
connection with their having provided services as an employee, director or
officer of CanniMed or an affiliate.
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For the purposes of this Section 9.2 no less than 65.00%
of the bonus will be paid to individuals who are employees of
CanniMed.
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9.3
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Officers’ and Directors’ Insurance
and
Indemnification
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(a)
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On or prior to the initial take up under the Improved
Offer, CanniMed, in consultation with Aurora, will utilize its best
efforts to attain the lowest price to purchase a customary pre- paid,
non-cancellable directors’ and officers’ “trailing” or “run-off’ insurance
policy for up to $20 million coverage; provided that the premium for such
policy shall not exceed $1,000,000.
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(b)
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From and after the Effective Time, the Offeror shall
cause CanniMed (or its successor) to, indemnify and hold harmless, to the
fullest extent permitted under applicable Law, each present and former
director, officer and employee of CanniMed (each, an
“Inde
mnified
Person”
) against any costs or expenses
(including reasonable legal fees), judgements,
fines,losses, claims, damages or liabilities incurred in connection
with any claim, inquiry, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or related to
such Indemnified Person’s service as a director or officer ofCanniMed, whether
asserted or claimed prior to, at or after the Effective Time, including the
approval of this Agreement, the completion of the Improved Offer or any of the
other Contemplated Transactions arising out of or related to this Agreement and
the transactions contemplated hereby; provided that such Indemnified Person
acted honestly and in good faith with a view to the best interests of CanniMed
and, in the case of a criminal or administrative action or proceeding that is
enforced by monetary penalty, the Indemnified Person had reasonable grounds for
believing that his or her conduct was lawful. Neither the Offeror nor CanniMed
shall settle, compromise or consent to the entry of any judgement in any claim,
action, suit, proceeding or investigation or threatened claim, action, suit,
proceeding or investigation involving or naming an Indemnified Person or arising
out of or related to an Indemnified Person’s service as a director, officer or
employee of CanniMed or services performed by such persons at the request of
CanniMed at or prior to or following the Effective Time without the prior
written consent of that Indemnified Person (such consent not to be unreasonably
withheld) unless such settlement, compromise or consent includes an
unconditional release of such Indemnified Person from all liability arising out
of such claim, action, suit, proceeding or investigation.
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35
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(c)
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From and after the Effective Time, the Offeror shall
cause CanniMed (or its successor) to honour and comply with the terms of
all director and officer indemnity agreements in place between CanniMed
and the directors and officers of CanniMed as at January 19,
2018.
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(a)
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Any notice, consent, waiver, direction or other
communication required or permitted to be given under this Agreement by a
Party shall be in writing and may be given by delivering same or sending
same by facsimile transmission or by delivery addressed to the Party to
which the notice is to be given at its address for service herein. Any
notice, consent, waiver, direction or other communication aforesaid shall,
if delivered, be deemed to have been given and received on the date on
which it was delivered to the address provided herein (if a business day,
if not, then the next succeeding business day, in the place of receipt)
and if sent by facsimile transmission be deemed to have been given and
received at the time of receipt (if a business day, if not, then the next
succeeding business day) unless actually received after 5:00 p.m. (local
time in the place of receipt) at the point of receipt in which case it
shall be deemed to have been given and received on the next business
day.
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(b)
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The address for service for each of the Parties hereto
shall be as follows:
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CanniMed Therapeutics Inc.
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1 Plant Technology Road, Box 19A, RR#5
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Saskatoon, SK
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Canada S7K 3J8
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Redacted: Personal Information
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Attention:
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Donald Ching
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Facsimile:
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36
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with a copy (which shall not
constitute notice) to:
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Borden Ladner Gervais LLP
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Bay Adelaide Centre, East Tower
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22 Adelaide Street West
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Toronto, ON
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Canada M5H 4E3
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Attention:
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Philippe Tardif
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Facsimile:
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Redacted: Personal Information
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E-Mail:
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And
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Stikeman Elliott LLP
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5300 Commerce Court West, 199 Bay
Street,
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Toronto, ON
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Canada M5L 1B9
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Attention :
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Donald Belovich
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Facsimile :
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Email :
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(ii)
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if to the Offeror:
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Aurora Cannabis Inc.
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1500 - 1199 West Hastings St.
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Vancouver, BC
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Canada V6E 3T5
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Attention:
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Terry Booth
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Facsimile:
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with a copy (which shall not
constitute notice) to:
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McMillan LLP
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Suite 1500, 1055 West Georgia Street
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Vancouver, BC
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Canada V6E 4N7
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Attention:
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Desmond M. Balakrishnan
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Facsimile:
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E-Mail:
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37
ARTICLE 10
MISCELLANEOUS
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(i)
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together with the Confidentiality Agreement, constitutes
the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, between the Parties, with respect
to the subject matter hereof;
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(ii)
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shall be binding upon and enure to the benefit of the
Parties and their respective successors and assigns; and
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(iii)
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except as expressly provided in Section10.7does not give any other person any right or
recourse whatsoever.
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(b)
|
The Parties shall be entitled to rely upon delivery of an
electronic copy (portable document format (pdf)) of the Agreement, and
such electronic copy (pdf) shall be legally effective to create a valid
and binding agreement among the Parties.
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10.2
|
Binding Effect and
Assignment
|
Except as expressly permitted by the terms hereof, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by either of the Parties without the prior express written consent of
the other Party. Notwithstanding the foregoing provisions of this Section 10.2, the Offeror may assign all or any part of its rights
(but not any obligations) under this Agreement to a wholly-owned affiliate of
the Offeror, provided that if such assignment takes place, the Offeror shall
continue to be liable to CanniMed for any default in performance by the
assignee.
Each Party shall use all reasonable commercial efforts do all
such things and provide all such reasonable assurances as may be required to
consummate the Contemplated Transactions, and each Party shall provide such
further documents or instruments as reasonably required by any other Party as
necessary or desirable to effect the purpose of this Agreement and carry out its
provisions, whether before or after the Effective Time.
Except as otherwise contemplated herein, All fees, costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Party incurring such fee, cost or
expense, whether or not the Improved Offer is consummated.
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under Law. Any provision
of this Agreement that is invalid or unenforceable in any jurisdiction shall be
ineffective to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining provisions hereof, and
any such invalidity or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
38
Except as otherwise expressly set forth herein, no waiver of
any provision of this Agreement shall be binding unless it is in writing. No
indulgence or forbearance by a Party shall constitute a waiver of such Party’s
right to insist on performance in full and in a timely manner of all covenants
in this Agreement. Waiver of any provision shall not be deemed to waive the same
provision thereafter, or any other provision of this Agreement, at any other
time.
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10.7
|
Third Party Beneficiaries
|
The provisions of Sections 9.1 and 10.8 are: (a) intended for
the benefit of the persons specified therein, as and to the extent applicable in
accordance with their terms, and shall be enforceable by each of such persons
and his or her heirs, executors, administrators and other legal representatives
(collectively, the
“Third Party Beneficiaries”
) and CanniMed shall hold
the rights and benefits of Sections 9.1 and 10.8 as agent for and on behalf of
the Third Party Beneficiaries and CanniMed hereby accepts such mandate; and (b)
are in addition to, and not in substitution for, any other rights that the Third
Party Beneficiaries may have by contract or otherwise.
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10.8
|
No Personal Liability
|
Except pursuant to the CanniMed Support Agreements of the
directors and officers or CanniMed (if a director or officer has executed a
CanniMed Support Agreement), no director or officer of either Party shall have
any personal liability whatsoever to the other Party under this Agreement or any
other document delivered in connection with this Agreement or the Improved Offer
by or on behalf of that Party.
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10.9
|
Counterpart Execution
|
This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute one and the same agreement. The Parties shall be entitled to rely
upon delivery of an executed facsimile or similar executed electronic copy of
this Agreement, and such facsimile or similar executed electronic copy shall be
legally effective to create a valid and binding agreement between the Parties.
[
Signature page follows
.]
IN WITNESS WHEREOF
, CanniMed and the Offeror have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
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AURORA CANNABIS INC.
|
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Per:
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(Signed)
“Terry Booth”
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Name:
|
Terry Booth
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Title:
|
Chief Executive Officer
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CANNIMED THERAPEUTICS INC.
|
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Per:
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(Signed) “
Brent Zettl
”
|
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Name:
|
Brent Zettl
|
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Title:
|
Chief Executive Officer
|
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Per:
|
(Signed) “
John E. Knowles
”
|
|
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Name:
|
John E. Knowles
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Title:
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Chief Financial Officer
|
SCHEDULE A
REPRESENTATIONS AND WARRANTIES OF THE
OFFEROR
|
|
1.
|
Organization and
Qualification
|
The Offeror and each of its subsidiaries is a corporation or
company validly existing under the laws of its jurisdiction of incorporation,
continuance, amalgamation or formation, as the case may be, and has all
necessary corporate or other legal power, authority and capacity to own, lease,
license or otherwise hold its property and assets as now owned, leased, licensed
or otherwise held, and to carry on its business as it is now being conducted.
The Offeror and each of its subsidiaries is duly registered or otherwise
authorized and qualified to do business and each is in good standing in each
jurisdiction in which the character of its property and assets, owned, leased,
licensed or otherwise held, or the nature of its activities makes such
registration or authorization and qualification necessary except where the
failure to be so registered, authorized or in good standing would not reasonably
be expected to be material to the Offeror.
The authorized and issued capital of the Offeror consists of an
unlimited number of common voting shares without par value (also called Aurora
Shares), unlimited number of Class “A” Shares with a par value of $1.00 each;
and unlimited number of Class “B” Shares with a par value of $5.00 each, of
which 488,284,116 Aurora Shares have been validly issued and are outstanding as
fully paid and non-assessable shares as of January 23, 2018 and have not been
issued in violation of any pre-emptive rights. As of January 23, 2018, an
aggregate of up to 36,021,753 Aurora Shares are issuable upon the exercise of
outstanding stock options, share purchase warrants, and convertible securities.
The Aurora Shares to be delivered pursuant to the Contemplated Transactions will
be duly allotted for issuance and will be validly issued and outstanding as
fully paid and non-assessable securities and will not have been issued in
violation of any pre-emptive rights.
Except as disclosed in the Offeror Public Disclosure Record,
there are no options, warrants, conversion privileges, commitments (contingent
or otherwise) or other Contract or any right or privilege (whether by Law,
pre-emptive or contractual) capable of becoming an agreement, for the purchase,
allotment or issuance of, or subscription for, any securities of the Offeror, or
any securities convertible or exchangeable into, or exercisable for, or
otherwise evidencing a right to acquire, any securities of the Offeror. All
securities of the Offeror (including the stock options) have been issued in
compliance with all applicable corporate Laws and Securities Laws.
Other than the Aurora Shares, stock options and convertible
securities, there are no securities of the Offeror or of any of its subsidiaries
outstanding which have the right to vote generally (or are convertible into or
exchangeable for securities having the right to vote generally) with the
shareholders of the Offeror on any matter. There are no outstanding Contracts or
other obligations of the Offeror to (i) repurchase, redeem or otherwise acquire
any of its securities or with respect to the voting or disposition of any of its
outstanding securities, (ii) make any investment in or provide any funds to
(whether in the form of a loan, capital contribution or otherwise) any person in
excess of $5 million in the aggregate, other than a wholly-owned subsidiary of
the Offeror, or (iii) provide any guarantee with respect to any person (other
than a wholly-owned subsidiary of the Offeror). There are no outstanding bonds,
debentures or other evidences of indebtedness of the Offeror or any of its
subsidiaries having the right to vote with the holders of the outstanding the
Aurora Shares on any matters.
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|
3.
|
Ownership of Subsidiaries
|
Except as disclosed in the Offeror Public Disclosure Record,
all of the outstanding securities and other ownership interests in the Offeror’s
subsidiaries are duly authorized, validly issued, fully paid and, where the
concept exists, non-assessable, and all such securities and other ownership
interests are held directly or indirectly by the Offeror and are, except
pursuant to restrictions on transfer contained in constating documents or
pursuant to existing financing arrangements involving the Offeror or its
subsidiaries, legally and beneficially owned free and clear of all Liens and not
subject to any proxy, voting trust or other agreement relating to the voting of
such securities and other ownership interests.
Except as disclosed in the Offeror Public Disclosure Record,
there are no agreements, warrants or options, or any right or privilege (whether
by Law, pre-emptive or contractual) capable of becoming an agreement, warrant or
option, for the purchase, allotment or issuance of, or subscription for, any
securities or other ownership interests in any the Offeror’s subsidiaries, or
any securities that are convertible into, or exchangeable or exercisable for, or
otherwise evidencing a right to acquire, any securities or other ownership
interests in any of the Offeror’s subsidiaries.
Except as disclosed in the Offeror Public Disclosure Record,
there are no outstanding Contracts of any subsidiaries of the Offeror to (i)
repurchase, redeem or otherwise acquire any of its securities or other ownership
interests, or with respect to the voting or disposition of any outstanding
securities or other ownership interests of any subsidiaries of the Offeror, (ii)
make any investment in or provide any funds to (whether in the form of a loan,
capital contribution or otherwise) any person, other than a wholly-owned
subsidiary of the Offeror or (iii) provide any guarantee with respect to any
person (other than a wholly-owned subsidiary of the Offeror).
Except as disclosed in the Offeror Public Disclosure Record,
neither the Offeror nor any of its subsidiaries own, directly or indirectly, any
capital stock of, or other equity, joint venture or voting interests in, any
person.
|
|
4.
|
Authority Relative to this
Agreement
|
The Offeror has all necessary corporate power, authority and
capacity to execute, deliver and perform its obligations under this Agreement.
All necessary corporate action has been taken by the Offeror to authorize the
execution and delivery of this Agreement and the performance of its obligations
hereunder and no other corporate proceedings on the part of the Offeror are
necessary to authorize the execution and delivery by it of this Agreement or the
performance of its obligations under this Agreement.
This Agreement has been duly executed and delivered by the
Offeror and constitutes a legal, valid and binding obligation of the Offeror
enforceable against it in accordance with its terms, subject to the
qualification that such enforceability may be limited by bankruptcy, insolvency,
reorganization or other Laws of general application relating to or affecting
rights of creditors and that equitable remedies, including specific performance,
are discretionary and may not be ordered.
None of the execution and delivery of this Agreement by the
Offeror, and the performance by the Offeror of its obligations hereunder, will result in a material
violation, contravention or default (or an event which, with notice or lapse of
time or both, would constitute a default) under or require any consent, approval
or notice under any of the terms and conditions of (A) the provisions of the
constating documents of the Offeror, (B) except for compliance with the pre-
merger notification provisions of the Competition Act, any Law applicable to the
Offeror or any of its subsidiaries or any of their property, or (C) any Material
Contract to which the Offeror or any of its subsidiaries is a party or to which
the Offeror, any of its subsidiaries or any of their respective property or
assets, may be subject or by which the Offeror or any of its subsidiaries is
bound except, in each case, for such violations, contraventions or defaults
which would not, individually or in the aggregate, reasonably be expected to be
material to the Offeror.
Except as disclosed in the Offeror Public Disclosure Record,
subject to obtaining the approval of the TSX with respect to the listing of the
Aurora Shares and other than in connection with or in compliance with the
provisions of applicable corporate Laws and Securities Laws or as expressly
contemplated by this Agreement, no filing or registration with, or
authorization, consent or approval of, any Governmental Authority or stock
exchange is required on the part of the Offeror in connection with the
Contemplated Transactions, except for such filings or registrations which, if
not made, or for such authorizations, consents or approvals which, if not
received, would not reasonably be expected to prevent or materially restrict or
delay the consummation of the Contemplated Transactions.
Each of the Offeror and its subsidiaries (i) in all material
respects, has conducted its business in compliance with, and is conducting its
business in compliance with, all applicable Laws in each jurisdiction in which
it conducts business, and (ii) in all material respects, is not in default of
any filings with, or payment of any licence, registration or qualification fee
owing to, any Governmental Authority under the Laws of any jurisdiction in which
it conducts business. To the knowledge of the Offeror, none of the Offeror, any
of its subsidiaries, or their respective Representatives (a) has used or is
using any corporate funds for any illegal contributions, gifts, entertainment or
other expenses relating to political activity that would be illegal, (b) has
used or is using any corporate funds for any direct or indirect illegal payments
to any foreign or domestic governmental officials or employees, (c) has violated
or is violating any provision of the
Corruption of Foreign Public Officials
Act
(Canada) or the
United States Foreign Corrupt Practices Act of 1977
to the extent applicable, (d) has established or maintained, or is
maintaining, any illegal fund of corporate monies or other properties or (e) has
made any bribe, illegal rebate, illegal payoff, influence payment, kickback or
other illegal payment of any nature. To the knowledge of the Offeror, none of
the Offeror or any of its subsidiaries, is under investigation with respect to
the foregoing, or has received any notice that any violation of the foregoing is
being or may be alleged.
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|
7.
|
Reporting Status and Securities Law
Matters
|
The Offeror is a “reporting issuer” in all provinces of Canada
and is not on the list of reporting issuers in default (where such concept
exists) and is in compliance with all Securities Laws in all material respects.
the Aurora Shares are listed on the TSX. No delisting of, suspension of trading
in or cease trading order with respect to any securities of the Offeror, and, to
the knowledge of the Offeror, no inquiry or investigation (formal or informal)
of any Securities Authority, is in effect or ongoing or, to the knowledge of the
Offeror, has been threatened in writing in respect of the Offeror Public Disclosure Record.
Except as disclosed in the Offeror Public Disclosure Record, no
subsidiary of the Offeror is subject to the continuous disclosure requirements
under any Securities Laws or any similar requirements under the other applicable
Laws of its jurisdiction of formation.
The documents comprising the Offeror Public Disclosure Record
(i) did not, as of their respective dates or dates of amendment, if applicable,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, not
misleading in light of the circumstances under which they were made, and (ii)
complied in all material respects with applicable Securities Laws at the time
they were filed or furnished. The Offeror has timely filed or furnished or
caused to be filed or furnished with the Securities Authorities all amendments,
forms, reports, schedules, statements and other documents required to be filed
or furnished by the Offeror with the Securities Authorities since January 1,
2017. The Offeror has not filed any confidential material change report which,
at the date hereof, remains confidential. None of the information to be supplied
by or on behalf of the Offeror in connection with the Improved Offer will, at
the time such document is filed on SEDAR, at any time such document is amended
or supplemented or at the time such document is first published, sent or given
to the CanniMed Shareholders, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, not misleading in light of the circumstances in
which they were made.
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9.
|
Offeror Financial
Statements
|
The Offeror Financial Statements were prepared in accordance
with IFRS consistently applied (except (i) as otherwise indicated in such
financial statements and the notes thereto or, in the case of audited
statements, in the related report of the Offeror’s independent auditors, or (ii)
that unaudited interim consolidated financial statements are subject to normal
period-end adjustments and they may omit notes which are not required by
applicable Laws and IFRS in the unaudited statements) and fairly present in all
material respects the consolidated financial position, results of operations and
cash flows of the Offeror and its subsidiaries as of the dates thereof and for
the periods indicated therein (subject, in the case of any unaudited interim
consolidated financial statements, to normal period-end adjustments) and reflect
reserves required by IFRS in respect of all material contingent liabilities, if
any, of the Offeror and its subsidiaries on a consolidated basis.
The financial books, records and accounts of the Offeror and
each of its subsidiaries (i) have been maintained in compliance with applicable
Laws and IFRS on a basis consistent with prior years, (ii) accurately and fairly
reflect the material transactions, acquisitions and dispositions of the property
and assets of the Offeror and each of its subsidiaries, and (iii) accurately and
fairly reflect the basis for the Offeror Financial Statements. The Offeror’s
minute books and those of each of its material subsidiaries are complete and
accurate in all material respects.
The Offeror has designed and implemented a system of disclosure
controls and procedures to provide reasonable assurance that information required to be
disclosed by the Offeror in its annual filings, interim filings or other reports
filed or submitted by it under applicable Securities Laws is recorded,
processed, summarized and reported within the time periods specified in
applicable Securities Laws. Such disclosure controls and procedures include
controls and procedures designed to ensure that information required to be
disclosed by the Offeror in its annual filings, interim filings or other reports
filed or submitted under applicable Securities Laws is accumulated and
communicated to the Offeror’s management, including its Chief Executive Officer
and Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure.
The Offeror has designed and implemented a system of internal
control over financial reporting to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with IFRS, and includes policies and
procedures that (i) relate to the maintenance of records that accurately and
fairly reflect the material transactions, acquisitions and dispositions of the
property and assets of the Offeror and each of its subsidiaries; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with IFRS, and that receipts
and expenditures of the Offeror and its subsidiaries are made only in accordance
with authorizations of management and directors of the Offeror and its
subsidiaries; and (iii) provide reasonable assurance regarding prevention or
timely detection of any unauthorized acquisition, use or disposition of the
property or assets of the Offeror or any of its subsidiaries that could have a
material effect on the Offeror’s financial statements. To the knowledge of the
Offeror, as of the date of this Agreement: (A) there are no material weaknesses
in the design or operation of the internal controls over financial reporting of
the Offeror that would reasonably be expected to adversely affect the ability of
the Offeror to record, process, summarize and report financial information, and
(B) there is and has been since January 1, 2017, no fraud, whether or not
material, involving management or any other employees who have a significant
role in the internal control over financial reporting of the Offeror. Since
January 1, 2017, neither the Offeror nor any of its subsidiaries, nor any of its
or their Representatives, has received any (x) complaint, allegation, assertion
or claim in writing from any source regarding accounting, internal accounting
controls or auditing matters or (y) expression of concern from employees of the
Offeror or any of its subsidiaries regarding questionable accounting or auditing
matters.
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13.
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Whistleblower Reporting
|
No attorney representing the Offeror or any of its
subsidiaries, whether or not employed by the Offeror or any of its subsidiaries,
has reported evidence of a violation of any Securities Laws, breach of fiduciary
duty or similar violation by the Offeror or any of its subsidiaries or their
respective officers, directors, employees, agents or independent contractors to
the Offeror’s management, audit committee (or other committee designated for the
purpose) of the board of directors of the Offeror or the board of directors of
the Offeror.
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14.
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Absence of Certain Changes
|
Since January 1, 2017, except as disclosed in the Offeror
Public Disclosure Record, there has not occurred any fact, development,
circumstance, change, matter, action, condition, event or occurrence that
required the filing of a material change report under applicable Securities
Laws. The Offeror and its subsidiaries have no liability or obligation of
any nature (whether accrued, absolute, contingent or otherwise) which is
material to the Offeror and its subsidiaries, taken as a whole, including any
agreement, contract or commitment to create, assume or issue any bond,
debenture, note or other similar instrument or any agreement, contract or
commitment providing for the guarantee, indemnification, assumption or
endorsement or any similar commitment with respect to the obligations,
liabilities (contingent or otherwise) or indebtedness of any other person,
required by IFRS to be set forth in a consolidated balance sheet of the Offeror
and its subsidiaries or in the notes thereto, which individually or in the
aggregate has not been reflected in the Offeror Financial Statements, other than
liabilities, indebtedness or obligations incurred by the Offeror and its
subsidiaries in the ordinary course of business since January 1, 2017.
Other than the Lawsuit, as set forth in the Offeror Public
Disclosure Record, or otherwise disclosed to CanniMed, there are no claims,
actions, suits, demands, arbitrations, charges, indictments, orders, hearings or
other civil, criminal, administrative or investigative proceedings, or other
investigations or examinations (collectively, “
Legal Actions
”) pending
or, to the knowledge of the Offeror, threatened against, and to the knowledge of
the Offeror, no facts or circumstances exist that could reasonably be expected
to form the basis of a Legal Action against, the Offeror or any of its
subsidiaries or against any of their respective property or assets, at law or in
equity, in each case, which would, individually or in the aggregate, reasonably
be expected to be material to the Offeror.
The Offeror and each of its subsidiaries has, (A) duly and
timely filed, or caused to be filed, all Tax Returns required to be filed by it
prior to the date hereof, and all such Tax Returns are true and correct in all
material respects and have not been materially amended; (B) paid on a timely
basis all Taxes and all assessments and reassessments of Taxes due on or before
the date hereof, other than Taxes which are being or have been contested in good
faith and for which adequate reserves have been provided in the Offeror
Financial Statements; (C) duly and timely withheld, or caused to be withheld,
all Taxes required or permitted by Law to be withheld by it (including Taxes and
other amounts required or permitted to be withheld by it in respect of any
amount paid or credited or deemed to be paid or credited by it to or for the
account of any person, including any employees, officers or directors and any
non-resident person) and duly and timely remitted, or caused to be remitted, to
the appropriate Tax authority such Taxes required by Law to be remitted by it;
and (D) duly and timely collected, or caused to be collected, any sales or
transfer taxes, including goods and services, harmonized sales and provincial or
territorial sales taxes, required by Law to be collected by it and duly and
timely remitted to the appropriate Tax authority any such amounts required by
Law to be remitted by it; (ii) the unpaid Taxes of the Offeror and its
subsidiaries did not, as of the date of the Offeror Financial Statements, exceed
the reserves and provisions for Taxes accrued but not yet due as reflected in
the Offeror Financial Statements, and Taxes payable by the Offeror and its
subsidiaries as of the Effective Time will not exceed such reserves and
provisions for Taxes as adjusted through the Effective Time in accordance with
the past custom and practice of the Offeror and its subsidiaries; and (iii) no
deficiencies, litigation, proposed adjustments or matters in controversy with
respect to Taxes exist or have been asserted or have been raised by any
Governmental Authority which remain unresolved at the date hereof and which
would, individually or in the aggregate, reasonably be expected to have a the
Offeror Material Adverse Change, and (iv) no action or proceeding for assessment
or collection of Taxes has been taken, asserted, or to the knowledge of the Offeror, threatened,
against the Offeror or any of its subsidiaries or any of their respective
assets, except, in each case, as are being contested in good faith and for which
adequate reserves have been provided in the Offeror Financial Statements.
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17.
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Intellectual Property
|
The Offeror and its subsidiaries have good and valid title to,
and interest in, or a valid and enforceable license to use, all Intellectual
Property that is, individually or in the aggregate, material to the operation of
the Offeror’s business as currently conducted. There is no action, suit, or
proceeding or claim pending or, to the knowledge of the Offeror, threatened in
writing by any person challenging the Offeror’s or any of its subsidiaries’
rights in or to any Intellectual Property which is used in the conduct of the
business of the Offeror or any of its subsidiaries as it is currently conducted,
except as would not, individually or in the aggregate, reasonably be expected to
be material to the Offeror. The Offeror and its subsidiaries have the valid
right to possess and operate all computer hardware and software applications
currently material to the operation of their business.
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18.
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Regulatory Compliance
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(a)
|
The Offeror and its subsidiaries are in compliance with
the terms and conditions of all to the licences issued pursuant to the
Access to Cannabis for Medical Purposes Regulations (the
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“
ACMPR Licences
”) and all other licences required
in connection with their respective businesses and the Offeror does not
anticipate any variations or difficulties in renewing such ACMPR Licences
or any other required licence or permit. The Improved Offer will not have
any adverse impact on the ACMPR Licences or require the Offeror or any
subsidiary to obtain any new licence under the Access to Cannabis for
Medical Purposes Regulations;
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(b)
|
neither the Offeror nor any subsidiary is required to
obtain any permits or licences other than: (i) the ACMPR Licences; and
(ii) the German Licenses, pursuant to the Access to Cannabis for Medical
Purposes Regulations or any other permits from Health Canada or any
similar federal, provincial or municipal regulatory body or
self-regulatory body in connection with the current and proposed conduct
of its business;
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(c)
|
neither the Offeror nor any subsidiary of the Offeror has
received any notice or communication from any customer or Health Canada
alleging a defect or claim in respect of any products supplied or sold by
the Offeror or any subsidiary of the Offeror to a customer and, to
the
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Offeror’s knowledge, there are no circumstances that
would give rise to any reports, recalls, public disclosure, announcements
or customer communications that are required to be made by the Offeror or
any subsidiary in respect of any products supplied or sold by the Offeror
or any subsidiary;
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(d)
|
all product research and development activities,
including quality assurance, quality control, testing, and research and
analysis activities, conducted by the Offeror and each subsidiary in
connection with their business is being conducted in accordance with best
industry practices and in compliance, in all material respects, with all
industry, laboratory safety, management and training standards applicable
to the Offeror’s current and proposed business, and all such processes,
procedures and practices, required in connection with such activities are
in place as necessary and are being complied with, in all material
respects.
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19.
|
No Collateral Benefit
|
To the knowledge of Offeror, no related party of the Offeror or
its subsidiaries, together with its associated entities, beneficially owns or
exercises control or direction over 1% or more of the CanniMed Shares,
except for related parties who will not receive a “collateral benefit” (other
than as permitted under National Instrument 62-104 -
Take-Over Bids and
Issuer Bids
) as a consequence of the transactions contemplated by this
Agreement.
SCHEDULE B
REPRESENTATIONS AND WARRANTIES OF CANNIMED
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1.
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Organization and
Qualification
|
CanniMed and each of its subsidiaries is a corporation or
company validly existing under the laws of its jurisdiction of incorporation,
continuance, amalgamation or formation, as the case may be, and has all
necessary corporate or other legal power, authority and capacity to own, lease,
license or otherwise hold its property and assets as now owned, leased, licensed
or otherwise held, and to carry on its business as it is now being conducted.
CanniMed and each of its subsidiaries is duly registered or otherwise authorized
and qualified to do business and each is in good standing in each jurisdiction
in which the character of its property and assets, owned, leased, licensed or
otherwise held, or the nature of its activities makes such registration or
authorization and qualification necessary except where the failure to be so
registered, authorized or in good standing would not reasonably be expected to
be material to CanniMed.
The authorized and issued capital of CanniMed consists of an
unlimited number of common shares of which 24,673,523 CanniMed Shares have been
validly issued and are outstanding as fully paid and non-assessable shares as of
January 23, 2018 and have not been issued in violation of any preemptive rights.
As of January 23, 2018, an aggregate of up to 603,722 CanniMed Shares are
issuable upon the exercise of outstanding stock options and Convertible
Securities.
Except as disclosed in the CanniMed Public Disclosure Record,
there are no options, warrants, conversion privileges, commitments (contingent
or otherwise) or other Contract or any right or privilege (whether by Law,
pre-emptive or contractual) capable of becoming an agreement, for the purchase,
allotment or issuance of, or subscription for, any securities of CanniMed, or
any securities convertible or exchangeable into, or exercisable for, or
otherwise evidencing a right to acquire, any securities of CanniMed. All
securities of CanniMed (including the stock options and Convertible Securities)
have been issued in compliance with all applicable corporate Laws and Securities
Laws.
Other than the CanniMed Shares, stock options and Convertible
Securities, there are no securities of CanniMed or of any of its subsidiaries
outstanding which have the right to vote generally (or are convertible into or
exchangeable for securities having the right to vote generally) with the
shareholders of CanniMed on any matter. There are no outstanding Contracts or
other obligations of CanniMed to (i) repurchase, redeem or otherwise acquire any
of its securities or with respect to the voting or disposition of any of its
outstanding securities, (ii) except pursuant to the Newstrike Agreement, and the
Newstrike termination agreement dated January 24, 2018, make any investment in
or provide any funds to (whether in the form of a loan, capital contribution or
otherwise) any person in excess of $5 million in the aggregate, other than a
wholly-owned subsidiary of CanniMed, or (iii) provide any guarantee with respect
to any person (other than a wholly-owned subsidiary of CanniMed). There are no
outstanding bonds, debentures or other evidences of indebtedness of CanniMed or
any of its subsidiaries having the right to vote with the holders of the
outstanding CanniMed Shares on any matters.
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3.
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Ownership of Subsidiaries
|
Except as disclosed in the CanniMed Public Disclosure Record,
all of the outstanding securities and other ownership interests in CanniMed’s subsidiaries are duly
authorized, validly issued, fully paid and, where the concept exists,
non-assessable, and all such securities and other ownership interests are held
directly or indirectly by CanniMed and are, except pursuant to restrictions on
transfer contained in constating documents or pursuant to existing financing
arrangements involving CanniMed or its subsidiaries, legally and beneficially
owned free and clear of all Liens and not subject to any proxy, voting trust or
other agreement relating to the voting of such securities and other ownership
interests.
Except as disclosed in the CanniMed Public Disclosure Record,
there are no agreements, warrants or options, or any right or privilege (whether
by Law, pre-emptive or contractual) capable of becoming an agreement, warrant or
option, for the purchase, allotment or issuance of, or subscription for, any
securities or other ownership interests in any of CanniMed’s subsidiaries, or
any securities that are convertible into, or exchangeable or exercisable for, or
otherwise evidencing a right to acquire, any securities or other ownership
interests in any of CanniMed’s subsidiaries.
Except as disclosed in the CanniMed Public Disclosure Record,
there are no outstanding Contracts of any subsidiaries of CanniMed to (i)
repurchase, redeem or otherwise acquire any of its securities or other ownership
interests, or with respect to the voting or disposition of any outstanding
securities or other ownership interests of any subsidiaries of CanniMed, (ii)
make any investment in or provide any funds to (whether in the form of a loan,
capital contribution or otherwise) any person, other than a wholly-owned
subsidiary of CanniMed or (iii) provide any guarantee with respect to any person
(other than a wholly-owned subsidiary of CanniMed).
Except as disclosed in the CanniMed Public Disclosure Record,
neither CanniMed nor any of its subsidiaries own, directly or indirectly, any
capital stock of, or other equity, joint venture or voting interests in, any
person.
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4.
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Authority Relative to this
Agreement
|
CanniMed has all necessary corporate power, authority and
capacity to execute, deliver and perform its obligations under this Agreement.
All necessary corporate action has been taken by CanniMed to authorize the
execution and delivery of this Agreement and the performance of its obligations
hereunder and no other corporate proceedings on the part of CanniMed are
necessary to authorize the execution and delivery by it of this Agreement or the
performance of its obligations under this Agreement.
This Agreement has been duly executed and delivered by CanniMed
and constitutes a legal, valid and binding obligation of CanniMed enforceable
against it in accordance with its terms, subject to the qualification that such
enforceability may be limited by bankruptcy, insolvency, reorganization or other
Laws of general application relating to or affecting rights of creditors and
that equitable remedies, including specific performance, are discretionary and
may not be ordered.
None of the execution and delivery of this Agreement by
CanniMed, and the performance by CanniMed of its obligations hereunder, will
result in a material violation, contravention or default (or an event which,
with notice or lapse of time or both, would constitute a default) under or
require any consent, approval or notice under any of the terms and conditions of
(A) the provisions of the constating documents of CanniMed, (B) except for compliance
with the pre- merger notification provisions of the Competition Act, any Law
applicable to CanniMed or any of its subsidiaries or any of their property, or
(C) any Material Contract to which CanniMed or any of its subsidiaries is a
party or to which CanniMed, any of its subsidiaries or any of their respective
property or assets, may be subject or by which CanniMed or any of its
subsidiaries is bound except, in each case, for ( i ) such violations,
contraventions or defaults which would not, individually or in the aggregate,
reasonably be expected to be material to CanniMed; (ii) any Material Contract
that is adversely impacted by a change of control of CanniMed; and (iii) such
other obligations, terms, notices, restrictions and requirements pursuant to the
Newstrike Agreement..
Except as disclosed in the CanniMed Public Disclosure Record
other than in connection with or in compliance with the provisions of applicable
corporate Laws and Securities Laws or as expressly contemplated by this
Agreement, no filing or registration with, or authorization, consent or approval
of, any Governmental Authority or stock exchange is required on the part of
CanniMed in connection with the Contemplated Transactions, except for such
filings or registrations which, if not made, or for such authorizations,
consents or approvals which, if not received, would not reasonably be expected
to prevent or materially restrict or delay the consummation of the Contemplated
Transactions.
Each of CanniMed and its subsidiaries (i) in all material
respects, has conducted its business in compliance with, and is conducting its
business in compliance with, all applicable Laws in each jurisdiction in which
it conducts business, and (ii) in all material respects, is not in default of
any filings with, or payment of any licence, registration or qualification fee
owing to, any Governmental Authority under the Laws of any jurisdiction in which
it conducts business. To the knowledge of CanniMed, none of CanniMed, any of its
subsidiaries, or their respective Representatives (a) has used or is using any
corporate funds for any illegal contributions, gifts, entertainment or other
expenses relating to political activity that would be illegal, (b) has used or
is using any corporate funds for any direct or indirect illegal payments to any
foreign or domestic governmental officials or employees, (c) has violated or is
violating any provision of the
Corruption of Foreign Public Officials Act
(Canada) or the
United States Foreign Corrupt Practices Act of 1977
to the extent applicable, (d) has established or maintained, or is
maintaining, any illegal fund of corporate monies or other properties or (e) has
made any bribe, illegal rebate, illegal payoff, influence payment, kickback or
other illegal payment of any nature. To the knowledge of CanniMed, none of
CanniMed or any of its subsidiaries, is under investigation with respect to the
foregoing, or has received any notice that any violation of the foregoing is
being or may be alleged.
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7.
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Reporting Status and Securities Law
Matters
|
CanniMed is a “reporting issuer” in all provinces of Canada and
is not on the list of reporting issuers in default (where such concept exists)
and is in compliance with all Securities Laws in all material respects. The
CanniMed Shares are listed on the TSX. No delisting of, suspension of trading in
or cease trading order with respect to any securities of CanniMed, and, except
as disclosed in the CanniMed Public Disclosure Record, to the knowledge of
CanniMed, no inquiry or investigation (formal or informal) of any Securities
Authority, is in effect or ongoing or, to the knowledge of CanniMed, has been
threatened in writing in respect of the CanniMed Public Disclosure Record.
Except as disclosed in the CanniMed Public Disclosure Record,
no subsidiary of CanniMed is subject to the continuous disclosure requirements
under any Securities Laws or any similar requirements under the other applicable
Laws of its jurisdiction of formation.
The documents comprising the CanniMed Public Disclosure Record
(i) did not, as of their respective dates or dates of amendment, if applicable,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, not
misleading in light of the circumstances under which they were made, and (ii)
complied in all material respects with applicable Securities Laws at the time
they were filed or furnished. CanniMed has timely filed or furnished or caused
to be filed or furnished with the Securities Authorities all amendments, forms,
reports, schedules, statements and other documents required to be filed or
furnished by CanniMed with the Securities Authorities since January 1, 2017.
CanniMed has not filed any confidential material change report which, at the
date hereof, remains confidential. None of the information to be supplied by or
on behalf of CanniMed in connection with the Improved Offer will, at the time
such document is filed on SEDAR, at any time such document is amended or
supplemented or at the time such document is first published, sent or given to
CanniMed Shareholders, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, not misleading in light of the circumstances in which
they were made.
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9.
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CanniMed Financial
Statements
|
The CanniMed Financial Statements were prepared in accordance
with IFRS consistently applied (except (i) as otherwise indicated in such
financial statements and the notes thereto or, in the case of audited
statements, in the related report of CanniMed’s independent auditors, or (ii)
that unaudited interim consolidated financial statements are subject to normal
period-end adjustments and they may omit notes which are not required by
applicable Laws and IFRS in the unaudited statements) and fairly present in all
material respects the consolidated financial position, results of operations and
cash flows of CanniMed and its subsidiaries as of the dates thereof and for the
periods indicated therein (subject, in the case of any unaudited interim
consolidated financial statements, to normal period-end adjustments) and reflect
reserves required by IFRS in respect of all material contingent liabilities, if
any, of CanniMed and its subsidiaries on a consolidated basis.
The financial books, records and accounts of CanniMed and each
of its subsidiaries (i) have been maintained in compliance with applicable Laws
and IFRS on a basis consistent with prior years, (ii) accurately and fairly
reflect the material transactions, acquisitions and dispositions of the property
and assets of CanniMed and each of its subsidiaries, and (iii) accurately and
fairly reflect the basis for the CanniMed Financial Statements. CanniMed’s
minute books and those of each of its material subsidiaries are complete and
accurate in all material respects.
CanniMed has designed and implemented a system of disclosure
controls and procedures to provide reasonable assurance that information
required to be disclosed by CanniMed in its annual filings, interim filings or
other reports filed or submitted by it under applicable Securities Laws is recorded, processed, summarized and reported within the time
periods specified in applicable Securities Laws. Such disclosure controls and
procedures include controls and procedures designed to ensure that information
required to be disclosed by CanniMed in its annual filings, interim filings or
other reports filed or submitted under applicable Securities Laws is accumulated
and communicated to CanniMed’s management, including its Chief Executive Officer
and Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure.
CanniMed has designed and implemented a system of internal
control over financial reporting to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with IFRS, and includes policies and
procedures that (i) relate to the maintenance of records that accurately and
fairly reflect the material transactions, acquisitions and dispositions of the
property and assets of CanniMed and each of its subsidiaries; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with IFRS, and that receipts
and expenditures of CanniMed and its subsidiaries are made only in accordance
with authorizations of management and directors of CanniMed and its
subsidiaries; and (iii) provide reasonable assurance regarding prevention or
timely detection of any unauthorized acquisition, use or disposition of the
property or assets of CanniMed or any of its subsidiaries that could have a
material effect on CanniMed’s financial statements. To the knowledge of
CanniMed, as of the date of this Agreement: (A) other than material weaknesses
relating to reliance on end user computing for complex accounting as of October
31, 2016 and 2015 to be disclosed in CanniMed’s management’s discussion and
analysis of its consolidated operating and financial performance for the year
ended October 31, 2017 with the corresponding period of 2016, there are no
material weaknesses in the design or operation of the internal controls over
financial reporting of CanniMed that would reasonably be expected to adversely
affect the ability of CanniMed to record, process, summarize and report
financial information, and (B) there is and has been since January 1, 2017, no
fraud, whether or not material, involving management or any other employees who
have a significant role in the internal control over financial reporting of
CanniMed. Since January 1, 2017, neither CanniMed nor any of its subsidiaries,
nor any of its or their Representatives, has received any (x) complaint,
allegation, assertion or claim in writing from any source regarding accounting,
internal accounting controls or auditing matters or (y) expression of concern
from employees of CanniMed or any of its subsidiaries regarding questionable
accounting or auditing matters.
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13.
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Whistleblower Reporting
|
No attorney representing CanniMed or any of its subsidiaries,
whether or not employed by CanniMed or any of its subsidiaries, has reported
evidence of a violation of any Securities Laws, breach of fiduciary duty or
similar violation by CanniMed or any of its subsidiaries or their respective
officers, directors, employees, agents or independent contractors to CanniMed’s
management, audit committee (or other committee designated for the purpose) of
the board of directors of CanniMed or the board of directors of CanniMed.
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14.
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Absence of Certain Changes
|
Since January 1, 2017, except as disclosed in the CanniMed
Public Disclosure Record, there has not occurred any fact, development,
circumstance, change, matter, action, condition, event or occurrence that
required the filing of a material change report under applicable Securities
Laws.
CanniMed and its subsidiaries have no liability or obligation
of any nature (whether accrued, absolute, contingent or otherwise) which is
material to CanniMed and its subsidiaries, taken as a whole, including any
agreement, contract or commitment to create, assume or issue any bond,
debenture, note or other similar instrument or any agreement, contract or
commitment providing for the guarantee, indemnification, assumption or
endorsement or any similar commitment with respect to the obligations,
liabilities (contingent or otherwise) or indebtedness of any other person,
required by IFRS to be set forth in a consolidated balance sheet of CanniMed and
its subsidiaries or in the notes thereto, which individually or in the aggregate
has not been reflected in CanniMed Financial Statements, other than liabilities,
indebtedness or obligations incurred by CanniMed and its subsidiaries in the
ordinary course of business since January 1, 2017.
Other than any litigation or claim that may be made against
CanniMed by Newstrike relating to the Newstrike Agreement or the termination
thereof, or the performance of any obligation of CanniMed required to be
performed by CanniMed thereunder, as set forth in the CanniMed Public Disclosure
Record, or otherwise disclosed to the Offeror, there are no claims, actions,
suits, demands, arbitrations, charges, indictments, orders, hearings or other
civil, criminal, administrative or investigative proceedings, or other
investigations or examinations (collectively, “
Legal Actions
”) pending
or, to the knowledge of CanniMed, threatened against, and to the knowledge of
CanniMed, no facts or circumstances exist that could reasonably be expected to
form the basis of a Legal Action against, CanniMed or any of its subsidiaries or
against any of their respective property or assets, at law or in equity, in each
case, which would, individually or in the aggregate, reasonably be expected to
be material to CanniMed.
CanniMed and each of its subsidiaries has, (A) duly and timely
filed, or caused to be filed, all Tax Returns required to be filed by it prior
to the date hereof, and all such Tax Returns are true and correct in all
material respects and have not been materially amended; (B) paid on a timely
basis all Taxes and all assessments and reassessments of Taxes due on or before
the date hereof, other than Taxes which are being or have been contested in good
faith and for which adequate reserves have been provided in the CanniMed
Financial Statements; (C) duly and timely withheld, or caused to be withheld,
all Taxes required or permitted by Law to be withheld by it (including Taxes and
other amounts required or permitted to be withheld by it in respect of any
amount paid or credited or deemed to be paid or credited by it to or for the
account of any person, including any employees, officers or directors and any
non-resident person) and duly and timely remitted, or caused to be remitted, to
the appropriate Tax authority such Taxes required by Law to be remitted by it;
and (D) duly and timely collected, or caused to be collected, any sales or
transfer taxes, including goods and services, harmonized sales and provincial or
territorial sales taxes, required by Law to be collected by it and duly and
timely remitted to the appropriate Tax authority any such amounts required by
Law to be remitted by it; (ii) the unpaid Taxes of CanniMed and its subsidiaries
did not, as of the date of the CanniMed Financial Statements, exceed the
reserves and provisions for Taxes accrued but not yet due as reflected in the
CanniMed Financial Statements, and Taxes payable by CanniMed and its
subsidiaries as of the Effective Time will not exceed such reserves and
provisions for Taxes as adjusted through the Effective Time in accordance with
the past custom and practice of CanniMed and its subsidiaries; and (iii) no
deficiencies, litigation, proposed adjustments or matters in controversy with
respect to Taxes exist or have been asserted or have been raised by any Governmental Authority which remain unresolved at the date
hereof and which would, individually or in the aggregate, reasonably be expected
to have a the CanniMed Material Adverse Change, and (iv) no action or proceeding
for assessment or collection of Taxes has been taken, asserted, or to the
knowledge of CanniMed, threatened, against CanniMed or any of its subsidiaries
or any of their respective assets, except, in each case, as are being contested
in good faith and for which adequate reserves have been provided in the CanniMed
Financial Statements.
|
|
17.
|
Intellectual Property
|
CanniMed and its subsidiaries have good and valid title to, and
interest in, or a valid and enforceable license to use, all Intellectual
Property that is, individually or in the aggregate, material to the operation of
CanniMed’s business as currently conducted. There is no action, suit, or
proceeding or claim pending or, to the knowledge of CanniMed, threatened in
writing by any person challenging CanniMed’s or any of its subsidiaries’ rights
in or to any Intellectual Property which is used in the conduct of the business
of CanniMed or any of its subsidiaries as it is currently conducted, except as
would not, individually or in the aggregate, reasonably be expected to be
material to CanniMed. CanniMed and its subsidiaries have the valid right to
possess and operate all computer hardware and software applications currently
material to the operation of their business.
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18.
|
Regulatory Compliance
|
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(a)
|
CanniMed and its Subsidiaries are in compliance with the
terms and conditions of all to the licences issued pursuant to the Access
to Cannabis for Medical Purposes Regulations (the
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|
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“
ACMPR Licences
”) and all other licences required
in connection with their respective businesses and CanniMed does not
anticipate any variations or difficulties in renewing such ACMPR Licences
or any other required licence or permit. The Improved Offer will not have
any adverse impact on the ACMPR Licences or require CanniMed or any
subsidiary to obtain any new licence under the Access to Cannabis for
Medical Purposes Regulations;
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(b)
|
neither CanniMed nor any subsidiary is required to obtain
any permits or licences other than: (i) the ACMPR Licences; pursuant to
the Access to Cannabis for Medical Purposes Regulations or any other
permits from Health Canada or any similar federal, provincial or municipal
regulatory body or self-regulatory body in connection with the current and
proposed conduct of its business;
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(c)
|
neither CanniMed nor any subsidiary of CanniMed has
received any notice or communication from any customer or Health Canada
alleging a defect or claim in respect of any products supplied or sold by
CanniMed or any subsidiary of CanniMed to a customer and, to CanniMed’s
knowledge, there are no circumstances that would give rise to any reports,
recalls, public disclosure, announcements or customer communications that
are required to be made by CanniMed or any subsidiary in respect of any
products supplied or sold by CanniMed or any subisidiary;
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(d)
|
all product research and development activities,
including quality assurance, quality control, testing, and research and
analysis activities, conducted by CanniMed and each subsidiary in
connection with their business is being conducted in accordance with best
industry practices and in compliance, in all material respects, with all
industry, laboratory safety, management and training standards applicable
to CanniMed’s current and proposed business, and all
such processes, procedures and practices, required in connection
with such activities are in place as necessary and are being complied with, in
all material respects.
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19.
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No Collateral Benefit
|
To the knowledge of CanniMed, no related party of CanniMed or
its subsidiaries, together with its associated entities, beneficially owns or
exercises control or direction over 1% or more of the CanniMed Shares, except
for related parties who will not receive a “collateral benefit” (other than as
permitted under National Instrument 62-104 -
Take-Over Bids and Issuer
Bids
) as a consequence of the transactions contemplated by this Agreement.
SCHEDULE C
FORM OF CANNIMED SUPPORT AGREEMENT
|
January ___, 2018
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CanniMed Therapeutics Inc.
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1 Plant Technology Road
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Box 19A, RR#5
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Saskatoon, Saskatchewan
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S7K 3J8
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and
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Aurora Cannabis Inc.
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1500 - 1199 West Hastings St.
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Vancouver, British Columbia
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V6E 3T5
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Dear Sirs/Mesdames:
|
________________ (the “
Shareholder
”) understands that
CanniMed Therapeutics Inc. (“
CanniMed
”) and Aurora Cannabis Inc.
(“
Aurora
”) wish to enter into a support agreement dated as of the date
hereof (the “
Support Agreement
”) contemplating the support of CanniMed
for Aurora’s amended offer to purchase (the “
Offer
”) all of the issued
and outstanding common shares of CanniMed (the “
CanniMed Shares
”). One of
the conditions of the Offer is that more than 66
2/3
% or more of the
CanniMed Shares held by CanniMed shareholders have been validly tendered under
the Offer and not withdrawn. The Shareholder is the beneficial owner of the
number of common shares and options, if any, of CanniMed listed in Schedule “A”
(the “
Holder
’s
Securities
”). The name of the registered
holder of the Holder’s Securities is also set out in Schedule “A” (if different
from the Shareholder).
The Shareholder hereby agrees, in its capacity as
securityholder, from the date hereof until the earlier of: (i) the expiry date
of the Offer, (ii) the date the Support Agreement is terminated in accordance
with its terms, (iii) the date that the Offer or the terms of the Offer or the
Support Agreement are amended in any manner adverse to the Shareholder, (iv)
April 15, 2018, and (v) the date that a Superior Proposal (as defined in the
Support Agreement and determined by the board of directors of CanniMed) has been
made for all or substantially all of the CanniMed Shares or assets:
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(a)
|
to tender, deposit or cause to be tendered or deposited
under the Offer all of the Holder’s Securities together with, as
applicable, a duly completed and executed letter of transmittal as soon as
practicable and in any event no later than five (5) business days prior to
the Expiry Time of the Offer; and thereafter except as may be permitted
under this Lockup Agreement, not withdraw or permit the Holder’s
Securities to be withdrawn from the Offer;
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(b)
|
not to take any action which may in any way adversely
affect the success of the Offer;
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(c)
|
not to, directly or indirectly, make, or participate in
making, any statement or take any action of any kind, directly or
indirectly, which might reasonably be regarded as likely to reduce the
success of, or delay or interfere with the completion of, the Offer;
and
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(d)
|
not to, directly or indirectly, sell, transfer, pledge or
assign or agree to sell, transfer, pledge or assign any of the Holder’s
Securities or any interest therein, without your prior written
consent.
|
Notwithstanding any other provision of this Lockup Agreement,
if the Shareholder is a director or officer of CanniMed, CanniMed and Aurora
hereby agree and acknowledge that the Shareholder is bound hereunder solely in
his capacity as a shareholder of CanniMed and that the provisions hereof shall
not be deemed or interpreted to bind the Shareholder in his capacity as a
director or officer of CanniMed. Nothing in this Lockup Agreement shall be
construed to prohibit, limit or restrict the Shareholder from fulfilling his or
her fiduciary duties as a director or officer of CanniMed.
The Shareholder hereby represents and warrants that (a) it is
the sole beneficial owner of the Holder’s Securities, and, the Shareholder has
the sole right to tender all of the Holder’s Securities to the Offer, and (b)
the only securities of CanniMed beneficially owned, directly or indirectly, by
the Shareholder on the date hereof are the Holder’s Securities.
This Lockup Agreement shall be governed by the laws of the
Province of Saskatchewan and the federal laws of Canada applicable therein.
[remainder of page intentionally left blank]
2
If the foregoing is in accordance with your understanding and
is agreed to by you, please signify your acceptance by executing the enclosed
copies of this letter agreement where indicated below and returning the same to
the undersigned, upon which this letter agreement as so accepted shall
constitute an agreement among the Shareholder, CanniMed and Aurora.
Yours truly,
___________________________
Name of Shareholder
Per: ________________________
Accepted and agreed on this _____day of January, 2018.
|
CanniMed Therapeutics Inc.
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By :________________________
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Name:
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Title:
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Aurora Cannabis Inc.
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By :________________________
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Name:
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Title:
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TOR01: 7252653: v5
|
Schedule “A”
Holder
’s
Securities
|
Number of Securities
|
Name of Beneficial
Owner
|
Name of Registered
Holder
(e.g. Broker or Custodian)
|
|
_____________ common shares
_____________ options
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|
SCHEDULE D
CONDITIONS OF
THE IMPROVED OFFER
Subject to the provisions of this Agreement and applicable
Laws, the Offeror will have the right to withdraw the Improved Offer and not
take up, purchase or pay for, or may extend the period of time during which the
Improved Offer is open and postpone taking up and paying for any CanniMed Shares
deposited under the Improved Offer unless all of the following conditions are
satisfied or waived (other than the Statutory Minimum Condition) by the Offeror
at or prior to the Expiry Time:
|
|
a.
|
there shall have been validly deposited under the
Improved Offer and not withdrawn at the Expiry Time that number of
CanniMed Shares that constitutes more than 50% plus one of the outstanding
CanniMed Shares, excluding any CanniMed Shares beneficially owned, or over
which control or direction is exercised, by the Offeror or by any person
acting jointly or in concert with the Offeror (the “Statutory Minimum
Condition”);
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b.
|
there shall have been validly deposited under the
Improved Offer and not withdrawn at the Expiry Time that number of
CanniMed Shares that constitutes more than 66 2/3% of the outstanding
CanniMed Shares (calculated on a fully-diluted basis), excluding any
CanniMed Shares beneficially owned, or over which control or direction is
exercised, by the Offeror or by any person acting jointly or in concert
with the Offeror;
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c.
|
this Agreement shall not have been terminated in
accordance with its terms;
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d.
|
all Governmental Authority or regulatory consents,
authorizations, waivers, permits, reviews, orders, rulings, decisions,
approvals or exemptions (including pursuant to any competition or
antitrust Laws and those of any stock exchange or other Securities
Authorities) that are necessary to complete the Improved Offer, any
Compulsory Acquisition or any Subsequent Acquisition Transaction shall
have been obtained or concluded on terms and conditions reasonably
satisfactory to the Offeror and all regulatory notice and waiting or
suspensory periods in respect of the foregoing shall have expired or been
terminated, including Competition Act Approval;
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e.
|
no inquiry, act, action, suit, investigation, litigation,
objection, opposition or other proceeding (whether formal or informal)
shall have been commenced, announced, threatened or taken before or by,
and no judgment or order shall have been issued by, any Governmental
Authority, and no Law shall exist or have been proposed, enacted,
promulgated, amended or applied (including with respect to the
interpretation or administration thereof) to make illegal, enjoin,
prohibit, materially delay or impose material limitations or conditions on
the purchase by or the sale to the Offeror of the CanniMed Shares, the
right of the Offeror to own or exercise full rights of ownership of the
CanniMed Shares, or the consummation of the Improved Offer, any Compulsory
Acquisition or any Subsequent Acquisition Transaction;
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f.
|
there does not exist any prohibition at Law against the
Offeror making or maintaining the Improved Offer or taking up and paying
for any CanniMed Shares deposited under the Improved Offer or completing a
Compulsory Acquisition or a Subsequent Acquisition Transaction;
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g.
|
that there does not exist and there shall not have
occurred or been publicly disclosed since the date of the Improved Offer,
any event, change, circumstance of development or occurrence that
constitutes a Material Adverse Change;
|
A
- 1
|
|
h.
|
CanniMed will have complied in all material respects with
its covenants and obligations under this Agreement to be complied with at
or prior to the Expiry Time;
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|
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i.
|
the Offeror shall not have become aware of any untrue
statement of a material fact, or an omission to state a material fact that
is required to be stated or that is necessary to make a statement not
misleading in the light of the circumstances in which it was made and at
the date it was made (after giving effect to all subsequent filings prior
to the date of the Improved Offer in relation to all matters covered in
earlier filings), in any document filed by or on behalf of CanniMed with
any of the Securities Authorities or a similar securities regulatory
authority in the United States or elsewhere that constitutes a Material
Adverse Change;
|
The foregoing conditions (other than the Statutory Minimum
Condition) are for the exclusive benefit of the Offeror and may be asserted by
the Offeror, at any time, regardless of the circumstances giving rise to any
such condition. Except as otherwise provided in this Agreement, the Offeror may,
in the Offeror’s sole discretion, waive any of the foregoing conditions (other
than the Statutory Minimum Condition), in whole or in part, at any time and from
time to time, both before and after the Expiry Time, without prejudice to any
other rights the Offeror may have. The failure by the Offeror at any time to
exercise any of the foregoing rights will not be deemed to be a waiver of any
such right and each such right shall be considered an ongoing right which may be
asserted at any time and from time to time.
Aurora Sky Receives Cultivation License from Health
Canada
World's Largest-Ever Licensed Cannabis Facility; Second New
Aurora Cannabis Facility to Receive a License in the Last Three Months
TSX: ACB
EDMONTON, Jan. 29, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora")
(TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today announced that the
Company has received a cultivation license from Health Canada for Aurora Sky,
the Company's 800,000+ square foot hybrid greenhouse facility, under
construction at the Edmonton International Airport. Aurora Sky will be the
world's most technologically advanced and largest capacity purpose-built
cannabis facility, focused on the mass-cultivation of ultra-low cost,
high-quality cannabis.
Aurora Sky, the Company's third licensed facility, will be
capable of producing in excess of 100,000 kg of cannabis per year. The world's
only cannabis facility located on the property of an international airport,
Aurora Sky possesses numerous strategic advantages, including ample low-cost
power, water and gas, excellent security, unrivaled access to transportation,
logistical services, immediate access to international customs, as well as air
and ground domestic and international courier services.
The facility, designed by recently acquired Larssen Ltd, now
part of ALPS ("Aurora Larssen Projects Ltd"), combines proven best-in-class
horticultural technologies, never previously deployed together in a single
agricultural facility, making it not only the most advanced cannabis facility in
the world but the most advanced greenhouse of any kind. Aurora Sky is designed
to operate with unprecedented automation and to deliver optimized yields, plant
health and product quality. The Health Canada license allows Aurora to begin
cultivation immediately. Within the next week, the Company intends to commence
transfer of its award-winning genetics from its Aurora Mountain facility in
Cremona, Alberta, to start the first growing cycle at Aurora Sky. First harvest
is targeted for the second calendar quarter of 2018.
"The licensing of Aurora Sky is a game changing milestone for
the cannabis industry and an exciting inflection point in Aurora's corporate
development," said Terry Booth, CEO. "This is the world's largest cannabis
facility ever to be licensed. It marks the beginning of a rapid production
ramp-up that will see us produce over 100,000 kg of cannabis per year at this
facility alone" said Terry Booth, CEO. "This is our second new facility to
receive a cultivation license in three months - a true testament to Aurora's
industry-leading ability to execute. The additional cultivation capacity will
allow us to further expand our domestic and international market share very
quickly, and is expected to significantly accelerate revenue growth this
year."
Mr. Booth added, "I am incredibly proud of our team, our
suppliers and contractors, and grateful to the Edmonton International Airport,
Leduc County, and the Province of Alberta for their continued support, which has
enabled Aurora to achieve this milestone, on a very complex project. We now look
forward to immediately scaling up production to meet the massive demand
anticipated with the pending legalization of adult consumer use and the
continued growth of Aurora's international medical markets."
Dieter Macpherson, Vice President of Production, said, "We're
setting and successfully meeting aggressive timelines to construct our
facilities and achieve Health Canada licensing. As with all Aurora facilities,
we have adopted best practices in design and technology to ensure Aurora Sky
will meet European Union Good Manufacturing Practices (GMP) standards – the
highest production standards in the world. This will enable us to service both
domestic and international markets with very high volumes of GMP certified
cannabis products."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", and a second 40,000 square
foot high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. Aurora is also currently constructing an
800,000 square foot production facility, known as "Aurora Sky", at the Edmonton
International Airport, as well as completing a fourth facility in Lachute,
Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects Ltd.
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company offers further differentiation through its acquisition of BC
Northern Lights Ltd. and Urban Cultivator Inc., industry leaders, respectively,
in the production and sale of proprietary systems for the safe, efficient and
high-yield indoor cultivation of cannabis, and in state-of-the-art indoor
gardening appliances for the cultivation of organic microgreens, vegetables and
herbs in home and professional kitchens.
In addition, the Company holds approximately 17.23% of the
issued shares in leading extraction technology company Radient Technologies
Inc., and has a strategic investment in Hempco Food and Fiber Inc., with options
to increase ownership stake to over 50%. Aurora is also the cornerstone investor
in two other licensed producers, with a 22.9% stake in Cann Group Limited, the
first Australian company licensed to conduct research on and cultivate medical
cannabis, and a 17.62% stake in Canadian producer The Green Organic Dutchman
Ltd., with options to increase to majority ownership.
Aurora's common shares trade on the TSX under the symbol "ACB".
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"), including, but not limited to, statements with
respect to the completion of Aurora Sky. Forward-looking statements are
frequently characterized by words such as "plan", "continue", "expect",
"project", "intend", "believe", "anticipate", "estimate", "may", "will",
"potential", "proposed" and other similar words, or statements that certain
events or conditions "may" or "will" occur. These statements are only
predictions. Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking statements throughout this news
release. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accept responsibility
for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:http://www.newswire.ca/en/releases/archive/January2018/29/c3301.html
%SEDAR: 00025675E
For further information:
For Aurora, Cam Battley, Chief
Corporate Officer, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc
Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.269.5523,marc.lakmaaker@auroramj.com
CO: Aurora Cannabis Inc.
CNW 07:00e 29-JAN-18
Aurora Cannabis Launches Aurora PRO Corporate Account
Program
Business-to-Business Service Designed to Facilitate and
Accelerate Market Development for Producers and Retailers
TSX: ACB
EDMONTON, Feb. 7, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora")
(TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) announced today that it
has launched a new B2B service, Aurora PRO, for licensed producers ("LPs") and
licensed retailers ("LRs") in the forthcoming adult consumer market.
Aurora PRO is a broad service offering that leverages Aurora's
purchasing power, quality assurance processes, technological infrastructure,
cultivation know-how, distribution channels, as well as its best-in-class
customer service to help simplify the sales process and effectively deliver
products to market. Aurora PRO creates a quick, seamless, and scalable platform
to facilitate wholesale B2B transactions, while at the same time offering a
broad range of operational support services and market intelligence to private
retailers.
The execution of Aurora PRO will be by way of a secure internet
portal, with dedicated staff providing additional resources and in-person
services to producers and retailers subscribed to the service.
Aurora PRO for Producers
Aurora PRO is aimed at producers of any scale, from craft
growers, to larger bulk wholesale-focused LPs. Through transacting with Aurora,
LPs have the ability to overcome distribution barriers and minimum supply
requirements that may prevent them from gaining access to key provincial markets
and getting their product into the hands of consumers.
Additionally, Aurora and its wholly-owned subsidiary ALPS
(Aurora Larssen Projects Ltd), will be offering cultivation and operational
services to producers, including packaging, quality assurance and logistics.
Aurora PRO enables LPs to focus on what they do best, producing high-quality
cannabis, without having to invest in, and operate, large sales, support and
logistics operations.
Aurora PRO for Retailers
Through Aurora PRO, the Company also looks to partner with a
wide variety of B2C market participants, including smaller independent
retailers. Aurora intends to develop strong two-way partnerships with retailers,
whereby feedback received translates into superior service.
The offering will include operational support, such as product
and staff training, as well as consulting aimed to help optimize the retailers`
purchasing strategies. The Company will also be providing intelligence to help
retailers identify and react on market trends, as well as providing visibility
into Aurora's production pipeline.
In markets where direct transactions between LPs and LRs will
be allowed, the Company will help establish supply agreements, enabling its
customers to secure sufficient product quantities, especially important in a
market that is anticipated to be supply restricted during the period immediately
following consumer legalization. In these markets, the Company anticipates
offering a wide variety of strains, including those sourced through LPs with
Aurora PRO accounts, ensuring that its retail customers have the ability to
stock products that resonate with their respective markets.
Management Commentary
"Aurora PRO is an innovative concept designed to facilitate
win-win relationships among trusted partners," said Terry Booth, CEO. "We
believe that Aurora PRO will provide a compelling, reliable and easy to use
option for producers that are seeking market access for their products, while
providing retailers with a responsive partner to help establish, develop and
fine tune their operations. In a market expected initially to be supply
restricted, Aurora PRO partners will have significant competitive advantages
that will help them build market share and customer loyalty."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations
("
ACMPR
").
Aurora operates a 55,200 square foot production facility in Mountain View
County, Alberta, known as "Aurora Mountain", a 40,000 square foot production
facility known as "Aurora Vie" in Pointe-Claire, Quebec, and an 800,000 square
foot production facility, known as "Aurora Sky", at the Edmonton International
Airport. Aurora is also completing a fourth facility of 48,000 square feet in
Lachute, Quebec, and will shortly begin construction on a 1,000,000 square foot
production facility in Odense, Denmark, to be known as "Aurora Nordic", via a
joint venture with Alfred Pedersen & Søn ApS.
Aurora also owns Berlin-based Pedanios GmbH, the leading
wholesale importer, exporter, and distributor of medical cannabis in the
European Union. Aurora offers further differentiation through its wholly owned
subsidiaries BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens.
In addition, Aurora holds approximately 17.23% of the issued
shares in leading extraction technology company Radient Technologies Inc., and
has a strategic investment in Hempco Food and Fiber Inc., with options to
increase ownership stake to over 50%. Aurora is also the cornerstone investor in two other licensed producers, with a 22.9% stake in
Cann Group Limited, the first Australian company licensed to conduct research on
and cultivate medical cannabis, and a 17.62% stake in Canadian producer The
Green Organic Dutchman Ltd., with options to increase to majority ownership.
Aurora's common shares trade on the TSX under the symbol "ACB".
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"), including, but not limited to, statements with
respect to the performance of the Company. Forward-looking statements are
frequently characterized by words such as "plan", "continue", "expect",
"project", "intend", "believe", "anticipate", "estimate", "may", "will",
"potential", "proposed" and other similar words, or statements that certain
events or conditions "may" or "will" occur. These statements are only
predictions. Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking statements throughout this news
release. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
expressly required by applicable law.
Neither TSX nor its Regulation Services
Provider (as that term is defined in the policies of Toronto Stock Exchange)
accept responsibility for the adequacy or accuracy of this release
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/February2018/07/c6089.html
%SEDAR: 00025675E
For further information:
For Aurora: Cam Battley, Chief
Corporate Officer, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc
Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.269.5523,marc.lakmaaker@auroramj.com
CO: Aurora Cannabis Inc.
CNW 07:00e 07-FEB-18
Aurora Announces Q2 Fiscal 2018 Results
Accelerated Revenue Growth, Lower Per Gram Costs to Produce
and Sell, Continued Expansion, Diversification and Differentiation
TSX:ACB
EDMONTON, Feb. 8, 2018 /CNW/ - Aurora Cannabis Inc. (the
"Company" or "Aurora") (TSX: ACB) (OTCQX: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
today announced its financial and operational results for the second quarter of
fiscal 2018, ended December 31, 2017.
Q2 2018 Financial Highlights
|
|
|
Q2 2018
|
|
|
Q1 2018
|
|
|
Change %
|
|
|
Q2 2017
|
|
|
Change %
|
|
|
|
|
#
|
|
|
#
|
|
|
|
|
|
|
|
|
|
|
|
Active registered patients
|
|
21,718
|
|
|
19,280
|
|
|
12.6%
|
|
|
12,200
|
|
|
78.0%
|
|
|
Grams sold
|
|
1,161,809
|
|
|
889,965
|
|
|
30.5%
|
|
|
538,045
|
|
|
115.9%
|
|
|
Grams produced
|
|
1,204,259
|
|
|
1,009,585
|
|
|
19.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In CDN $000's unless
otherwise noted)
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
11,700
|
|
|
8,249
|
|
|
41.8%
|
|
|
3,884
|
|
|
201.2%
|
|
|
Average selling price per
gram
|
|
8.36
|
|
|
8.22
|
|
|
1.7%
|
|
|
5.96
|
|
|
40.3%
|
|
|
Gross margins on Aurora-produced cannabis
(1)
|
|
73.8%
|
|
|
67.6%
|
|
|
|
|
|
|
|
|
|
|
|
Cash cost of sales per
gram
(1)
|
|
1.74
|
|
|
2.16
|
|
|
-19.4%
|
|
|
|
|
|
|
|
|
Cash cost to produce per gram
(1)
|
|
1.41
|
|
|
1.87
|
|
|
-24.6%
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
350,841
|
|
|
127,915
|
|
|
174.3%
|
|
|
|
|
|
|
|
(1) Gross margins on Aurora-produced cannabis, cash cost of
sales per gram, and cash cost to produce per gram are non-IFRS financial
measures that do not have a standardized meaning under IFRS and may not be
comparable to other companies. See definitions later in this document under
"Non-IFRS Measures."
Continued Strong Patient and Revenue Growth
|
|
•
|
As at the date of this release, the Company has
over 23,000 active registered patients, up 5.9% from Q2 2018.
|
|
|
•
|
Recorded $11.7 million in revenues, up 201%
from Q2 2017 and up 41.8% sequentially from Q1 2018. Revenues were
generated as follows:
|
|
|
-Dried cannabis sold in Canada
|
$5.8 million, up 23.9% sequentially fromQ1
2018;
|
|
|
-Dried cannabis sold in Germany
|
$2.5 million, up 101.1% sequentially;
|
|
|
-Service and other revenues
|
$2.0 million, up 109.7% sequentially, and
|
Management commentary
"Exceptional, high-paced execution has delivered another
quarter with strong growth, as well as further expansion, vertical integration
and diversification," said Terry Booth, CEO. "With three production licenses,
over 240,000 kg per annum in pro-forma funded capacity, multiple distribution
channels, and the pending acquisition of CanniMed, we are well positioned to
pursue accelerated growth in the domestic and international medical markets.
Finally, our partnership with Liquor Stores N.A. shortens our time to market in
creating a large bricks-and-mortar cannabis retail network in preparation for
the adult consumer use market."
Q2 2018 and Subsequent Operational Highlights
Aurora continues to build a vertically integrated, and
geographically and horizontally diversified cannabis company. During and
subsequent to the quarter, the Company entered into a number of strategic
transactions and partnerships to drive accelerated growth.
Accelerating Growth - CanniMed Transaction
|
|
•
|
On January 24, 2018, Aurora and CanniMed Therapeutics
announced that the companies had agreed on a revised offer, supported by
the CanniMed Board, the Special Committee to the CanniMed Board and key
management and locked-up shareholders. The Company had submitted its
initial offer to the CanniMed Board on November 14, 2017, and filed a
notice of variation on February 5, 2018. Aurora anticipates the
acquisition to be materially completed, subject to regulatory approval, in
March 2018.
|
|
|
|
|
|
|
|
The combination with CanniMed would add in excess of an
additional 20,000 patients and 19,000 kg per annum in funded capacity, as
well as new drug delivery technologies and high-margin cannabis products.
The combination furthermore would benefit from an expanded international
network, an exclusive supply arrangement with national pharmacy chain
PharmaChoice, as well as a strong domestic and international medical
cannabis brands, and the addition of a team of over 200 people, including
additional depth in scientific research.
|
Capacity Expansion
Aurora continues to expand its domestic and international
production footprint with a growing number of high-technology, purpose-built,
low production cost facilities. The Company owns facilities with capacities
expected to exceed 240,000 kilograms of high quality cannabis per year. Aurora also has long term supply agreements
expected to provide a further 23,000 kilograms of high-quality organic cannabis
per year, and is working to close the acquisition of CanniMed Therapeutics Inc.
which would bring a further 7,000 kilograms of immediate annual capacity.
Total current, fully-funded capacity is expected to exceed
270,000 kilograms annually, including all of Aurora Nordic capacity.
Facility overview
|
Facility
|
Location
|
Square
Feet
|
Full Scale
Annual
Capacity
(kilograms
per
annum)
|
License Status
|
Comments
|
|
In Operation
|
Aurora
Mountain
|
Mountain View
County,
Alberta,
Canada
|
55,200
|
4,800
|
Licensed by Health Canada for the cultivation
and sale of dried cannabis and oils.
|
EU GMP certified. Facility, providing access to EU markets.
Alberta is an ideal production location due to low energy, labor and
tax costs.
|
|
Aurora
Vie
|
Pointe Claire,
Quebec,
Canada
|
40,000
|
4,000
|
License to cultivate received from
Health
Canada on October 27, 2017.
|
State-of-the-art next generation purpose-built
to EU GMP standards.
|
|
Under Construction
|
Aurora
Sky
|
Edmonton
International Airport, Alberta,
Canada
|
800,000
|
>100,000
|
License to cultivate received from
Health
Canada on January 26, 2018.
|
Expected to be world's most technologically
advanced cannabis facility, utilizing state-of-the-art cultivation
technologies. First bays planted as at February 1, 2018. Built to
EUGMPstandards. Full completion on track for mid 2018.
|
|
Lachute
|
Lachute
Quebec,
Canada
|
48,000
|
4,500
|
Pre-license
|
Acquired in November 2017 through the
acquisition of H2 Biopharma Inc. To be completed to EU GMP standards.
|
|
In Design
|
Aurora
Nordic
|
Odense,
Denmark
|
1,000,000
|
>120,000
|
Partner company received cannabis cultivation
license fromDenmark's Medicines Agency effective January 1, 2018.
|
51% ownership "Sky-type" facility (Aurora Larssen build).
Construction to be phased. Cultivation following the completion of
first 200,000 square feet expected in calendar Q3 2018.
|
|
|
|
100,000
|
8,000
|
Subject to licensing
|
Retrofit of existing greenhouse. First harvest expected in
calendar Q3 2018.
|
|
|
•
|
Aurora is participating in the tender process
in Germany to obtain a cultivation license, which would allow the Company
to construct a facility in the country. The outcome of the tender process
is anticipated for March 2018.
|
|
|
•
|
The Company acquired a 17.62% strategic interest in The
Green Organic Dutchman ("TGOD"). In addition, the companies signed a
supply agreement providing Aurora with up to 20% of TGOD's production
capacity at its Ancaster and Valleyfield facilities that, once completed,
should add approximately 23,000 kg per annum of premium organic cannabis
to Aurora's portfolio of products.
|
International
The Company continues to execute on its international expansion
strategy. The countries Aurora already operates in are characterized by strong
barriers to entry, providing an early mover advantage in these populous
markets.
|
|
•
|
Aurora's Mountain facility received its EU GMP
certification (Good Manufacturing Practices), making it one of few
companies globally with this pharma-grade designation. Having EU GMP
certification is mandatory to sell into EU medical cannabis markets,
providing Aurora with a strong early mover advantage to capture
significant market share.
|
|
|
|
|
|
|
•
|
Germany
|
|
|
º
|
Received all the required permits to import medical
cannabis products into Germany through Pedanios, which has supplied
cannabis to over 2,200 pharmacies to date, making it the EU's largest
distributor of cannabis.
|
|
|
º
|
The Company continues to ship product to
Germany. To date, Pedanios has supplied in excess of 2,200 pharmacies,
with German sales more than doubling over the previous quarter to $2.5
million.
|
|
|
º
|
Growth of the German medical cannabis market, with over
82 million people broad national insurance coverage of medically
prescribed cannabis, continues to accelerate. December applications for
insurance reimbursement were roughly equal to the cumulative applications
for the period March-November.
|
|
|
º
|
Pedanios received EU GMP certification for the import,
release and distribution of cannabis, making it one of only a few
organizations in Germany with such certification, enabling the company to
commence exports to other EU countries.
|
|
|
º
|
Pedanios won the first ever public tender to
supply medical cannabis to the Italian Ministry of Defense, who control
supply of the Italian market.
|
|
|
º
|
Pedanios was one of only two companies allowed
to tender in the final round of the process, winning all lots, totalling
100kg.
|
|
|
º
|
The Company believes that having won this first
tender provides a distinct early mover advantage in a market with over 60
million people.
|
|
|
º
|
Aurora investee, Cann Group, was granted a license to
import and/or export cannabis genetics and medicinal cannabis products by
the Australian government's Department of Health, through the Office of
Drug Control (ODC). The license enables Cann Group to import genetics from
Aurora to help broaden the company`s portfolio of medical cannabis
products, pending Aurora's receipt of an export permit from Health Canada.
|
|
|
º
|
In January 2018, Aurora increased its ownership
interest in Cann Group to 22.9%
|
|
|
º
|
The Company's Aurora Nordic joint venture will be
accelerating its time to market in Denmark through the retrofit of an
existing 100,000 square foot greenhouse in Odense, Denmark, owned by the
Company's Danish partner Alfred Pedersen & Søn. Subject to licensing
by Lægemiddelstyrelsen, Denmark's Medicines Agency, this will enable
Aurora Nordic to commence the cultivation of cannabis during the summer of
2018, while the company is constructing its new purpose-built
high-technology 1,000,000 square foot production facility, adding
approximately 8,000 kg per annum in capacity.
|
Horizontal Diversification - Product Line
Expansion
Aurora is developing a broadly diversified portfolio of
high-margin, high-quality products for the cannabis, ancillary, and adjacent
markets.
|
|
•
|
Completed the acquisition of BC Northern Lights and Urban
Cultivator, leading companies, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor
cultivation of cannabis, and in state-of-the-art indoor gardening
appliances for the cultivation of organic microgreens, vegetables and
herbs in home kitchens, endorsed, among others, by highly visible
lifestyle celebrity Martha Stewart.
|
|
|
•
|
Entered into an exclusive hardware supply agreement for
the Canadian market with Namaste Technologies Inc. ("Namaste") whereby
Aurora, through its website and mobile application, offers a specially
curated selection of industry-leading vaporizers sourced through Namaste.
|
|
|
•
|
Is in the process of completing an agreement
with CannaRoyalty through which Aurora will obtain an exclusive license on
the IP to produce and market proprietary drug delivery technologies.
|
|
|
•
|
Aurora announced the launch of its proprietary and
patent-pending live plant transporter, the Aurora Envoy
™
("Envoy"), which possesses several features that promote the health,
vigor and vegetative growth of live plant cuttings during shipment,
leading to increased transplant success rates. The Envoy is anticipated to
launch commercially in the coming months and targets the home garden
market.
|
Vertical Integration
Aurora increasingly is becoming the trusted partner of choice
for a growing constellation of companies, through a vertically integrated
offering of B2B and B2C products and services.
|
|
•
|
In preparation for the commencement of sales into the
adult consumer market, once legalized, Aurora announced a strategic
investment in Liquor Stores N.A. Ltd. by way of a private placement,
acquiring an initial 19.9% ownership interest, with an option to increase
this to up to approximately 40%. Liquor Stores intends to use the proceeds
from the placement to establish and launch a leading brand of cannabis
retail outlets. Liquor Stores will convert a number of existing locations
into cannabis retail outlets, as well as establish new locations. The
transaction will thereby create one of Canada's largest non-government
cannabis retail networks. Liquor Stores currently operates over 220
outlets, and has deep expertise in the operation and branding of a
controlled substance retail network.
|
|
|
•
|
The Company also launched its Aurora PRO offering
(https://pro.auroramj.com), creating a quick, seamless, and scalable
platform to facilitate wholesale B2B transactions, while at the same time
offering a broad range of operational support services and market
intelligence to private retailers.
|
|
|
•
|
CanvasRx, which now operates 26 facilities nationwide,
remains the leading Canadian network of cannabis counseling and outreach
centres, with more than 37,969 registered patients. Over 9,500 medical
doctors across Canada have referred patients to CanvasRx or its affiliated
medical clinics. Since the acquisition of CanvasRx, 12,821 patients have
registered with Aurora.
|
|
|
•
|
In November, Aurora and Radient Technologies Inc.
announced that they had finalized a Master Services Agreement, pursuant to
which Radient will perform certain services for the development,
commercialization and supply of standardized cannabis extracts. Radient's
technology was found to yield significantly reduced processing time and
substantially higher throughput of cannabis oil production compared to
industry benchmark technologies. At the same time, the technology retains
the cannabinoid and terpene quality profile of the original plant
material.
|
|
|
•
|
The Company acquired greenhouse consulting firm, Larssen
Ltd., now part of Aurora Larssen Projects, Ltd., responsible for the
design of Aurora Sky, further diversifying the Company's vertical offering
in the cannabis sector.
|
|
|
•
|
Signed a private-label software agreement with Namaste Technologies, pursuant to which Namaste will provide Aurora's
wholly- owned subsidiary, CanvasRx, with a customized version of
NamasteMD, an online telemedicine platform for patient consultation and
registration, providing an innovative and efficient extension to Aurora`s
in-person cannabis counseling and education services.
|
|
|
•
|
The Company made a strategic investment in Micron Waste
Technologies Inc. pursuant to which the companies will work jointly on the
optimization of Micron's digestor technology for application within the
cannabis sector. While currently organic waste disposal is costly and time
consuming, Micron's technology, which has been proven in the food sector,
promises to deliver a cost-effective solution that converts organic waste
into effluent meeting municipal effluent discharge criteria.
|
Fueling Growth - Financings
|
|
•
|
Strengthened the balance sheet and liquidity position
during the second quarter of 2018 with $316.8 million in new financings
via two private placements, as well as the exercise of warrants, options
and compensation options, as well as the conversion of convertible notes
into common shares.
|
|
|
•
|
On January 11, 2018, the Company entered into an
agreement with a syndicate of underwriters led by Canaccord Genuity Corp.
("Canaccord") pursuant to which Canaccord has agreed to purchase, on a
bought deal basis, 200,000 convertible debentures
at $1,000 per initial convertible debenture for gross proceeds
of $200 million. The debentures are convertible into common shares of Aurora at
a price of $13.05 per common share. The Company anticipates the placement to
close within the coming weeks.
|
|
|
•
|
As of February 7, 2018, approximately $115
million in additional gross cash proceeds remain available from the future
exercise of warrants and stock options.
|
Management Team Expansion and Director Change
Aurora continues to attract top talent, strengthening its
senior management team to ensure the Company has the leadership to further grow
and build shareholder value.
|
|
•
|
Mr. Darryl Vleeming was appointed as Chief
Information Officer
|
|
|
•
|
Mr. Cam Battley was promoted to Chief Corporate
Officer
|
|
|
•
|
Mr. Savior Joseph was appointed as SVP Global
Marketing
|
|
|
•
|
Ms. Jillian Swainson was appointed as SVP and
General Counsel.
|
|
|
•
|
Ms. Diane Jang, CEO of Hempco Food and Fiber,
was appointed to the Aurora Board of Directors.
|
Financial review Q2 2018
A comprehensive discussion of Aurora's financials and
operations are provided in the Company's Management Discussion & Analysis
and Financial Statements to be filed with SEDAR today and will be published on
www.sedar.com.
Revenues
|
|
|
Dec 31,
|
|
|
Sep 30,
|
|
|
Jun 30,
|
|
|
Mar 31,
|
|
|
Dec 31,
|
|
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue
(1)
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Canadian dried cannabis
|
|
5,750
|
|
|
4,641
|
|
|
4,384
|
|
|
4,336
|
|
|
3,207
|
|
|
Canadian cannabis oils
|
|
1,508
|
|
|
1,439
|
|
|
804
|
|
|
-
|
|
|
-
|
|
|
Germany dried cannabis
|
|
2,483
|
|
|
1,235
|
|
|
439
|
|
|
-
|
|
|
-
|
|
|
Service revenue
|
|
874
|
|
|
934
|
|
|
309
|
|
|
839
|
|
|
678
|
|
|
Other revenue
|
|
1,085
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Total consolidated net revenue
|
|
11,700
|
|
|
8,249
|
|
|
5,936
|
|
|
5,175
|
|
|
3,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quantity sold
|
|
#
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
Dried cannabis (grams)
|
|
1,048,882
|
|
|
802,250
|
|
|
710,155
|
|
|
653,008
|
|
|
538,045
|
|
|
Cannabis oils (bottles)
|
|
18,239
|
|
|
17,853
|
|
|
8,302
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average selling price per gram
|
$
|
8.36
|
|
$
|
8.22
|
|
$
|
7.45
|
|
$
|
6.64
|
|
$
|
5.96
|
|
Revenues for the second quarter of fiscal 2018 were $11.7
million, up 201% from the same quarter in the prior year and up 41.8%
sequentially from the previous quarter. Revenue growth was attributable mainly
to higher patient numbers, combined with a higher average sales price for dried
cannabis in Canada, exports to Germany where the Company recorded 101%
sequential growth, and the consolidation of BC Northern Lights, Urban Cultivator
and Hempco Food and Fiber. The average price of product sold increased by 40.3%
over Q2 2017 from $5.96 to $8.36 per gram, attributable mainly to increases in
cannabis oils sold and sales through Pedanios in Germany.
Total product sold for the period was 1,161,809 grams of dried
cannabis and cannabis oils, up 115.9% as compared to 538,045 grams of dried
cannabis in the second quarter of 2017, and up 30.5% from 889,965 grams in Q1
2018.
Cost of sales
Included in cost of sales for the three months ended December
31, 2017 were cost of goods sold of $4.8 million, unrealized gain on changes in
fair value of biological assets of $3.6 million, and unrealized loss on changes
in fair value of inventory of $4.0 million.
The increase in cost of goods sold during the period under
review was largely attributable to increases in production and production
yields, as well as contribution from the Company's new subsidiaries BCNL, UCI
and Hempco.
Cash costs of sales per gram of dried cannabis produced during
the quarter continued to decline, coming in at $.1.74 for Q2 2018, as compared
to $2.16 for Q1 2018.
Gross Profit
Gross profit, before the effect of changes in fair value, came
in at $6.9 million, a 374% increase from Q2 2017, attributable mainly to higher
business volume related to a strong increase in registered patient numbers and
an increase in the average price per gram of product sold, revenues generated in
Germany through the Company`s subsidiary Pedanios, as well as the contribution
from the Company`s subsidiaries BCNL, UCL and Hempco.
The gross margin on Aurora-produced cannabis improved from
67.6% to 73.8% .
Gross profit after the effect of changes in fair value was $6.5
million for the three months ended December 31, 2017, as compared to $4.4
million for the three months ended December 31, 2016. The increase was primarily
attributable to the increase in revenues as described above.
General & Administrative Costs
General and administration costs increased by $6.0 million to
$7.6 million for the quarter, as compared to Q2 2017, attributable primarily to
increases in corporate and general administrative activities as Aurora continues
to invest in growth in Canada and Germany, and expand its operations through its
newly acquired subsidiaries.
Sales & Marketing
Sales and marketing costs were $5.1 million in Q2 2018, up $2.7
million compared to Q2 2017, attributable mainly to increased service fees paid
in relation to significant growth in patient volumes serviced by CanvasRx, as
well as higher selling and client care expenses related to a substantial
increase in registered patients and resulting business volume.
Acquisition and Project Evaluation Costs
Acquisition and project evaluation costs for the quarter
increased by $1.8 million as comparted to the same quarter in the prior year.
The Company incurred legal, consulting and advisory fees relating to business
acquisitions and due diligence activities as part of its aggressive domestic and
international expansion strategy, with $1.4 million attributable to the CanniMed
Offer.
Other Income
Other income was $26.1 million in Q2 2018, up $27.8 million
from Q2 2017, due mainly from an unrealized gain on derivatives of $22.8 million
related to the exercise of warrants held in Radient Technologies.
Net Income
Net income before taxes of $10.0 million was recorded, as
compared to a net loss before taxes of $4.1 million for the same quarter in the
prior year. The improvement was due predominantly to revenue growth and a $22.8
million unrealized gain on derivative related to the Company's strategic
investment in Radient mentioned above.
Liquidity and Capital Resources
Strengthened Capital Position
Aurora strengthened its balance sheet and liquidity position
during the second quarter of 2018 with $316.8 million:
|
|
•
|
On November 2, 2017, the Company completed a
bought deal financing and concurrent private placement for a total of
25,000,000 units at $3.00 per unit for gross proceeds of $75,000.
|
|
|
•
|
On November 28, 2017, the Company completed an offering
of 115,000 special warrants for gross proceeds of $115,000. Each special
warrant is exercisable into a $1,000 principal amount of convertible
debentures of the Company following the Company obtaining a receipt from
the applicable securities regulatory authorities in Canada for a final
short form prospectus qualifying the distribution of the debentures.
|
|
|
•
|
During the three months ended December 31,
2017, the Company raised $126,774 through the exercise of warrants,
options and compensation options.
|
|
|
•
|
During the quarter, the Company also converted
$79,470 of convertible notes into common shares.
|
Cash Position, Cash Flows, and Working
Capital
For the six-month period, net cash and cash equivalents on hand
increased from $159.8 million as at June 30, 2017 to $350.8 million as at
December 31, 2017, attributable mainly to net cash generated from financing
activities of $309.3 million, offset by net cash used for operations of $9.6
million, investments and capital expenditures of $108.4 million, and adjusted by
$0.2 million from the effect of foreign exchange on cash flows.
Subsequent to the quarter, the Company announced a bought deal
private placement with a consortium of underwriters led by Canaccord Genuity
Corp, for gross proceeds of $200 million.
Working capital as of December 31, 2017 was $302.5 million, as
compared to $170.1 million at June 30, 2017. The increase in working capital of
$132.4 million was largely attributable to the increase in cash and cash
equivalents of $191.0 million and an increase in the fair value of marketable
securities of $61.6 million. The Company held marketable securities of $76.4
million at December 31, 2017, which primarily consisted of 37,643,431 common
shares of Radient at a market price of $1.76 per share, representing a 17.02%
interest in that entity. The Company also held 28,762,314 common shares in Cann
Group representing a 21.8% interest in the entity. The Company obtained
significant influence over Cann Group due to its increase in interest ownership
among other things, and accounted for these investments under the equity method.
At December 31, 2017, the market value of these shares based on Cann Group's
closing price of A$2.74 per share was $77.2 million.
The Company anticipates that it has sufficient funds to cover
future operating cash flows for at least the next twelve months, to complete the
construction of its Aurora Sky, Lachute and Aurora Nordic facilities, the cash
portion of the proposed CanniMed acquisition, the investment in Liquor Stores
N.A., and to execute its growth strategy for domestic and international
expansion based on the current capital resources available.
Outstanding Share Data
As of the date of the MD&A, the Company had the following
securities issued and outstanding:
|
Securities
|
|
February 7, 2018
|
|
|
|
|
#
|
|
|
Issued and outstanding shares
|
|
489,922,167
|
|
|
Options
|
|
23,205,223
|
|
|
Warrants
|
|
8,787,516
|
|
|
Restricted share units 50,000
|
|
2,150,000
|
|
|
Convertible debentures
|
|
428,462
|
|
Financial and Strategic Outlook
While production capacity at our Mountain View facility in
Cremona is materially fully optimized, we anticipate further growth throughout
2018 through cultivation and sales from the Company's Aurora Vie and Aurora Sky
facilities, as well as from increased shipments to our international markets,
the growth of cannabis oil production and sales, increased product availability
through strategic wholesale supply relationships, growth at BC Northern Lights
and Urban Cultivator, as well as from CanniMed, once the acquisition, which is
subject to regulatory approval, will have been completed. Further growth
throughout the year is anticipated from the Lachute facility, once completed and
licensed, as well as from our initiatives in Denmark.
Aurora's business strategy is to:
Continue accelerating its penetration of the Canadian medical
cannabis market, leverage its Health Canada sales license for derivative
products (cannabis oils), ramp up cultivation at its Aurora Sky and Aurora Vie
facilities, fully complete the Aurora Sky and Lachute (H2) facilities in Alberta
and Quebec, commence the construction of the new 1,000,000 square foot Aurora
Nordic facility in Denmark, and retrofit existing greenhouse capacity in Denmark
to commence cultivation and revenue generation in Denmark while the Aurora
Nordic facility is under construction. Upgrades are also being undertaken to the
Company's first facility in Cremona, Alberta, to further enhance production.
Aurora is also in the process of completing the acquisition of CanniMed
therapeutics, through which it will have access to additional capacity,
registered patients and international markets.
In preparation for the anticipated mid-2018 Canadian federal
legalization of adult consumer use of cannabis, the Company is building
organizational and production capacity to capture a share of the adult use
market.
Innovation and integration of technology are key components in
Aurora's growth strategy. Going forward, Aurora will continue to leverage new
technologies, aimed at:
|
|
•
|
Improving the customer experience, e.g. via
further enhancements to Aurora's unique mobile application - the world's
only mobile app for ordering legal medical cannabis;
|
|
|
•
|
Make available to its patient base novel drug
delivery technologies;
|
|
|
•
|
Delivering industry-leading per square foot
production capacity, while reducing operational expenses at its production
facilities, and
|
|
|
•
|
Substantially increasing the production of
cannabis concentrates through the Company's collaboration with Radient.
|
The Company is also focusing on delivering further product
differentiation, including through Aurora's intended strategic investment in
Hempco, its partnership with Namaste Technologies, the acquisition of homegrow
and urban garden companies BC Northern Lights and Urban Cultivator, and the
acquisition from CannaRoyalty of licenses for the exclusive use of IP related to
the production of novel, proprietary drug delivery technologies.
Finally, the Company is executing a significant international
expansion, as evidenced by the lead participation in the May 2017 Cann Group IPO
in Australia, the May 2017 acquisition of Pedanios, Germany's largest
distributor of medical cannabis, its partnership with Alfred Pedersen in Denmark
for the construction of the new Aurora Nordic facility. The Company is actively
pursuing further international opportunities.
Non-IFRS Financial Measures
The Company has included the following non-IFRS performance
measures in this press release:
|
|
•
|
Cash cost of sales of dried cannabis sold is calculated
by taking the cost of sales, which excludes the effect of changes in fair
value of biological assets and inventory, and removing non-cash production
costs, oil conversion costs, cost of accessories, cost of products
purchased from other Licensed Producers that were sold, and cost of sales
from non-cannabis production subsidiaries, all divided by the total grams
of dried cannabis sold in the period that was produced by Aurora. Cash
cost to produce dried cannabis sold per gram is equal to cash cost of
sales of dried cannabis sold less packaging costs (post- production cost)
divided by the total grams of dried cannabis sold in the period that was
produced by Aurora.
|
|
|
•
|
Grams produced in the period refers to the grams of dried
cannabis harvested from plants in the period. The Company calculates grams
produced in the period based on the weight of dried harvested buds that
have completed the drying stage, which is adjusted for the weight change
from the drying process.
|
Gross margin for Aurora-produced cannabis is calculated by
taking gross profit for Aurora-produced cannabis divided by net revenue for
Aurora-produced cannabis. Gross profit for Aurora-produced cannabis is
calculated by taking net revenue less cost of sales on Aurora-produced cannabis.
Net revenue on Aurora-produced cannabis is calculated by taking consolidated net
revenue less net revenue from non-cannabis production operations and net revenue
from products sourced from other Licensed Producers. Cost of sales on
Aurora-produced cannabis is calculated by taking consolidated cost of sales,
excluding the effects of changes in fair value of biological assets and
inventory, less cost of sales from non-cannabis production operations and cost
of sales from products sourced from other Licensed Producers.
Milestone Payment
The Company issued 118.898 common shares at a price of $10.51
per share to the vendors of CanvasRx Inc. based on the achievement of certain
performance milestones for the period ended December 31, 2017, pursuant to a
share purchase agreement announced on August 10, 2016.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations
("
ACMPR
").
Aurora operates a 55,200 square foot production facility in Mountain View
County, Alberta, known as "Aurora Mountain", a 40,000 square foot production
facility known as "Aurora Vie" in Pointe-Claire, Quebec, and an 800,000 square
foot production facility, known as "Aurora Sky", at the Edmonton International
Airport. Aurora is also completing a fourth facility of 48,000 square feet in
Lachute, Quebec, and will shortly begin construction on a 1,000,000 square foot
production facility in Odense, Denmark, to be known as "Aurora Nordic", via a
joint venture with Alfred Pedersen & Søn ApS.
Aurora also owns Berlin-based Pedanios GmbH, the leading
wholesale importer, exporter, and distributor of medical cannabis in the
European Union. Aurora offers further differentiation through its wholly owned
subsidiaries BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens.
In addition, Aurora holds approximately 17.23% of the issued
shares in leading extraction technology company, Radient Technologies Inc., and
has a strategic investment in Hempco Food and Fiber Inc., with options to
increase ownership stake to over 50%. Aurora is also the cornerstone investor in
two other licensed producers, with a 22.9% stake in Cann Group Limited, the
first Australian company licensed to conduct research on and cultivate medical
cannabis, and a 17.62% stake in Canadian producer The Green Organic Dutchman
Ltd., with options to increase to majority ownership.
Aurora's common shares trade on the TSX under the symbol "ACB".
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
AURORA CANNABIS INC.
Condensed Interim
Consolidated Statements of Financial Position
December 31, 2017 and June
30, 2017
(Unaudited – In thousands of Canadian dollars)
|
|
|
December 31, 2017
|
|
|
June 30, 2017
|
|
|
|
|
$
|
|
|
$
|
|
|
Assets
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
Cash and
cash equivalents
|
|
350,841
|
|
|
159,796
|
|
|
Short-term investments
|
|
908
|
|
|
-
|
|
|
Accounts
receivable
|
|
6,991
|
|
|
2,312
|
|
|
Marketable securities
|
|
76,400
|
|
|
14,845
|
|
|
Inventory
|
|
15,310
|
|
|
7,703
|
|
|
Biological assets
|
|
5,871
|
|
|
4,088
|
|
|
Promissory notes receivable
|
|
-
|
|
|
1,222
|
|
|
Loans receivable
|
|
3,384
|
|
|
2,096
|
|
|
Prepaid and other current assets
|
|
1,328
|
|
|
1,544
|
|
|
|
|
461,033
|
|
|
193,606
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
117,251
|
|
|
45,523
|
|
|
Convertible debenture
|
|
-
|
|
|
11,071
|
|
|
Derivatives
|
|
3,942
|
|
|
292
|
|
|
Investment in associates and
joint venture
|
|
24,152
|
|
|
-
|
|
|
Intangible assets
|
|
59,552
|
|
|
31,087
|
|
|
Goodwill
|
|
65,868
|
|
|
41,100
|
|
|
Deposits
|
|
596
|
|
|
-
|
|
|
Total assets
|
|
732,394
|
|
|
322,679
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
22,030
|
|
|
8,753
|
|
|
Deferred revenue
|
|
1,563
|
|
|
1,421
|
|
|
Special
warrant subscriptions
|
|
111,009
|
|
|
-
|
|
|
Finance lease
|
|
73
|
|
|
69
|
|
|
Contingent consideration payable
|
|
23,832
|
|
|
13,221
|
|
|
|
|
158,507
|
|
|
23,464
|
|
|
|
|
|
|
|
|
|
|
Finance lease
|
|
244
|
|
|
282
|
|
|
Convertible notes
|
|
-
|
|
|
63,536
|
|
|
Deferred gain on convertible debenture
|
|
-
|
|
|
10,206
|
|
|
Deferred gain on derivatives
|
|
1,777
|
|
|
321
|
|
|
Deferred tax liability
|
|
16,280
|
|
|
5,937
|
|
|
Total liabilities
|
|
176,808
|
|
|
103,746
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
|
|
|
Share capital
|
|
532,673
|
|
|
221,447
|
|
|
Reserves
|
|
32,834
|
|
|
25,912
|
|
|
Deficit
|
|
(16,714
|
)
|
|
(28,426
|
)
|
|
Total equity attributable to
shareholders of Aurora
|
|
548,793
|
|
|
218,933
|
|
|
Non-controlling interest
|
|
6,793
|
|
|
-
|
|
|
Total equity
|
|
555,586
|
|
|
218,933
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
732,394
|
|
|
322,679
|
|
|
AURORA CANNABIS INC.
|
|
Condensed Interim Consolidated Statements of
Comprehensive Income (Loss)
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
December 31,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Revenues
|
|
11,700
|
|
|
3,884
|
|
|
19,949
|
|
|
6,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
4,837
|
|
|
2,436
|
|
|
7,909
|
|
|
4,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit before fair
value adjustments
|
|
6,863
|
|
|
1,448
|
|
|
12,040
|
|
|
2,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized (gain) loss on
changes in fair value on sale of inventory
|
|
4,015
|
|
|
538
|
|
|
6,587
|
|
|
973
|
|
|
Unrealized (gain) loss on changes in fair value of biological
assets
|
|
(3,638
|
)
|
|
(3,450
|
)
|
|
(9,844
|
)
|
|
(3,077
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
6,486
|
|
|
4,360
|
|
|
15,297
|
|
|
4,447
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administration
|
|
7,568
|
|
|
1,550
|
|
|
10,561
|
|
|
2,597
|
|
|
Sales and marketing
|
|
5,136
|
|
|
2,411
|
|
|
8,804
|
|
|
3,981
|
|
|
Research
and development
|
|
172
|
|
|
99
|
|
|
279
|
|
|
139
|
|
|
Acquisition and project
evaluation costs
|
|
1,756
|
|
|
4
|
|
|
2,096
|
|
|
169
|
|
|
Share of
loss from investment in associate
|
|
52
|
|
|
-
|
|
|
452
|
|
|
-
|
|
|
Depreciation and
amortization
|
|
460
|
|
|
163
|
|
|
1,094
|
|
|
322
|
|
|
Share-based payments
|
|
7,456
|
|
|
2,510
|
|
|
9,942
|
|
|
2,890
|
|
|
|
|
22,600
|
|
|
6,737
|
|
|
32,828
|
|
|
10,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
(16,114
|
)
|
|
(2,377
|
)
|
|
(17,531
|
)
|
|
(5,651
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
and other income
|
|
765
|
|
|
99
|
|
|
1,355
|
|
|
127
|
|
|
Finance and other costs
|
|
(1,660
|
)
|
|
(1,800
|
)
|
|
(3,676
|
)
|
|
(4,841
|
)
|
|
Foreign
exchange
|
|
511
|
|
|
-
|
|
|
264
|
|
|
-
|
|
|
Unrealized gain on
debenture
|
|
-
|
|
|
-
|
|
|
6,937
|
|
|
-
|
|
|
Unrealized gain on marketable securities
|
|
3,700
|
|
|
-
|
|
|
3,700
|
|
|
-
|
|
|
Unrealized gain on derivatives
|
|
22,786
|
|
|
-
|
|
|
23,603
|
|
|
-
|
|
|
|
|
26,102
|
|
|
(1,701
|
)
|
|
32,183
|
|
|
(4,714
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes
|
|
9,988
|
|
|
(4,078
|
)
|
|
14,652
|
|
|
(10,365
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax recovery (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
(38
|
)
|
|
11
|
|
|
(38
|
)
|
|
19
|
|
|
Deferred, net
|
|
(2,756
|
)
|
|
1,389
|
|
|
(3,859
|
)
|
|
2,055
|
|
|
|
|
(2,794
|
)
|
|
1,400
|
|
|
(3,897
|
)
|
|
2,074
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
7,194
|
|
|
(2,678
|
)
|
|
10,755
|
|
|
(8,291
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of Aurora
|
|
7,721
|
|
|
(2,678
|
)
|
|
11,282
|
|
|
(8,291
|
)
|
|
Non-controlling interests
|
|
(527
|
)
|
|
-
|
|
|
(527
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
0.02
|
|
|
(0.01
|
)
|
|
0.03
|
|
|
(0.04
|
)
|
|
Diluted
|
|
0.02
|
|
|
(0.01
|
)
|
|
0.03
|
|
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
394,025,544
|
|
|
263,865,017
|
|
|
392,386,415
|
|
|
223,737,570
|
|
|
Diluted
|
|
406,580,775
|
|
|
263,865,017
|
|
|
398,670,592
|
|
|
223,737,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
7,194
|
|
|
(2,678
|
)
|
|
10,755
|
|
|
(8,291
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax
|
|
(99
|
)
|
|
-
|
|
|
(1,731
|
)
|
|
-
|
|
|
Unrealized gain on marketable securities
|
|
274
|
|
|
-
|
|
|
12,825
|
|
|
-
|
|
|
Foreign currency translation
|
|
29
|
|
|
-
|
|
|
25
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
7,398
|
|
|
(2,678
|
)
|
|
21,874
|
|
|
(8,291
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of Aurora
|
|
7,925
|
|
|
(2,678
|
)
|
|
22,401
|
|
|
(8,291
|
)
|
|
Non-controlling interests
|
|
(527
|
)
|
|
-
|
|
|
(527
|
)
|
|
-
|
|
|
AURORA CANNABIS INC.
|
|
Condensed Interim Consolidated Statements of Cash
Flows
|
|
Six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars)
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
$
|
|
|
$
|
|
|
Cash provided by (used in)
|
|
|
|
|
|
|
|
Operating activities
|
|
|
|
|
|
|
|
Net income
(loss) for the period
|
|
11,282
|
|
|
(8,291
|
)
|
|
Adjustments for non-cash items
|
|
|
|
|
|
|
|
Unrealized gain on changes in fair value of biological assets
|
|
(9,844
|
)
|
|
(1,168
|
)
|
|
Changes in
fair value included in inventory sold
|
|
6,587
|
|
|
-
|
|
|
Depreciation of fixed assets
|
|
886
|
|
|
471
|
|
|
Amortization of intangible assets
|
|
569
|
|
|
-
|
|
|
Share-based payments
|
|
9,942
|
|
|
2,890
|
|
|
Share of
loss from investment in associate
|
|
52
|
|
|
-
|
|
|
Unrealized gain on debentures
|
|
(6,937
|
)
|
|
-
|
|
|
Unrealized
gain on derivatives
|
|
(23,603
|
)
|
|
-
|
|
|
Unrealized gain on marketable securities
|
|
(3,700
|
)
|
|
-
|
|
|
Accrued
interest and accretion expense
|
|
2,569
|
|
|
1,503
|
|
|
Financing fees
|
|
-
|
|
|
2,121
|
|
|
Interest
and other income
|
|
(59
|
)
|
|
(2,055
|
)
|
|
Deferred tax recovery
|
|
3,859
|
|
|
-
|
|
|
Changes in non-cash working capital
|
|
|
|
|
|
|
|
GST recoverable
|
|
(2,573
|
)
|
|
(85
|
)
|
|
Accounts receivable
|
|
46
|
|
|
(1,500
|
)
|
|
Inventory
|
|
(2,653
|
)
|
|
(228
|
)
|
|
Prepaid and other current assets
|
|
450
|
|
|
(541
|
)
|
|
Accounts payable
and accrued liabilities
|
|
3,440
|
|
|
175
|
|
|
Deferred revenue
|
|
56
|
|
|
699
|
|
|
|
|
(9,631
|
)
|
|
(6,009
|
)
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
Short-term investments
|
|
(397
|
)
|
|
-
|
|
|
Marketable
securities and derivatives
|
|
(39,748
|
)
|
|
-
|
|
|
Notes receivable
|
|
(4,236
|
)
|
|
-
|
|
|
Purchase of
property, plant and equipment
|
|
(53,936
|
)
|
|
(4,842
|
)
|
|
Acquisition of businesses, net
of cash acquired
|
|
(8,522
|
)
|
|
(3,418
|
)
|
|
Acquisition of
assets, net of cash acquired
|
|
(955
|
)
|
|
-
|
|
|
Deposits
|
|
(596
|
)
|
|
-
|
|
|
|
|
(108,390
|
)
|
|
(8,260
|
)
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
Finance lease
|
|
(34
|
)
|
|
64
|
|
|
Proceeds of
convertible notes
|
|
-
|
|
|
40,000
|
|
|
Proceeds (repayment) of short
term loans
|
|
-
|
|
|
(5,549
|
)
|
|
Proceeds
(repayment) of long term loans
|
|
-
|
|
|
(4,000
|
)
|
|
Financing fees
|
|
-
|
|
|
(1,610
|
)
|
|
Special warrants
subscriptions
|
|
111,009
|
|
|
-
|
|
|
Shares issued for cash, net of
share issue costs
|
|
197,421
|
|
|
40,951
|
|
|
Acquisition of non-controlling interest
|
|
862
|
|
|
-
|
|
|
|
|
309,258
|
|
|
69,856
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange on cash and cash equivalents
|
|
(192
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash
equivalents
|
|
191,045
|
|
|
55,587
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents, beginning of period
|
|
159,796
|
|
|
259
|
|
|
Cash and cash equivalents, end of period
|
|
350,841
|
|
|
55,846
|
|
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/February2018/08/c2662.html
%SEDAR: 00025675E
For further information:
Cam Battley, Chief Corporate
Officer, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc Lakmaaker,
Director, IR & Corporate Development, marc.lakmaaker@auroramj.com,
+1.647.269.5523
CO: Aurora Cannabis Inc.
CNW 07:00e 08-FEB-18
AURORA CANNABIS INC.
Condensed Interim Consolidated Financial Statements
(Unaudited)
For the three and six months ended December 31, 2017 and 2016
(In Canadian Dollars)
|
AURORA CANNABIS INC.
|
|
Condensed Interim Consolidated Statements of Financial
Position
|
|
December 31, 2017 and June 30, 2017
|
|
(Unaudited – In thousands of Canadian dollars)
|
|
|
|
Notes
|
|
|
December 31, 2017
|
|
|
June 30, 2017
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
|
350,841
|
|
|
159,796
|
|
|
Short-term investments
|
|
3
|
|
|
908
|
|
|
-
|
|
|
Accounts
receivable
|
|
4, 20(c)
|
|
|
6,991
|
|
|
2,312
|
|
|
Marketable securities
|
|
5(b)
|
|
|
76,400
|
|
|
14,845
|
|
|
Inventory
|
|
6
|
|
|
15,310
|
|
|
7,703
|
|
|
Biological assets
|
|
7
|
|
|
5,871
|
|
|
4,088
|
|
|
Promissory notes
receivable
|
|
8
|
|
|
-
|
|
|
1,222
|
|
|
Loans receivable
|
|
10(a), 20(c)
|
|
|
3,384
|
|
|
2,096
|
|
|
Prepaid and other current assets
|
|
|
|
|
1,328
|
|
|
1,544
|
|
|
|
|
|
|
|
461,033
|
|
|
193,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
9
|
|
|
117,251
|
|
|
45,523
|
|
|
Convertible debenture
|
|
5(a)
|
|
|
-
|
|
|
11,071
|
|
|
Derivatives
|
|
5(b)
|
|
|
3,942
|
|
|
292
|
|
|
Investment in associates and
joint venture
|
|
10
|
|
|
24,152
|
|
|
-
|
|
|
Intangible assets
|
|
12
|
|
|
59,552
|
|
|
31,087
|
|
|
Goodwill
|
|
12
|
|
|
65,868
|
|
|
41,100
|
|
|
Deposits
|
|
|
|
|
596
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
732,394
|
|
|
322,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities
|
|
20(c), 23(b)(ii)
|
|
|
22,030
|
|
|
8,753
|
|
|
Deferred revenue
|
|
23(b)(ii)
|
|
|
1,563
|
|
|
1,421
|
|
|
Special warrant subscriptions
|
|
14(c)
|
|
|
111,009
|
|
|
-
|
|
|
Finance lease
|
|
13
|
|
|
73
|
|
|
69
|
|
|
Contingent consideration payable
|
|
11(a)(d)(f)(g)
|
|
|
23,832
|
|
|
13,221
|
|
|
|
|
|
|
|
158,507
|
|
|
23,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance lease
|
|
13
|
|
|
244
|
|
|
282
|
|
|
Convertible notes
|
|
14
|
|
|
-
|
|
|
63,536
|
|
|
Deferred gain on convertible
debenture
|
|
5(a)
|
|
|
-
|
|
|
10,206
|
|
|
Deferred gain on derivatives
|
|
5(b)
|
|
|
1,777
|
|
|
321
|
|
|
Deferred tax liability
|
|
|
|
|
16,280
|
|
|
5,937
|
|
|
Total liabilities
|
|
|
|
|
176,808
|
|
|
103,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
15
|
|
|
532,673
|
|
|
221,447
|
|
|
Reserves
|
|
|
|
|
32,834
|
|
|
25,912
|
|
|
Deficit
|
|
|
|
|
(16,714
|
)
|
|
(28,426
|
)
|
|
Total equity attributable to shareholders of
Aurora
|
|
|
|
|
548,793
|
|
|
218,933
|
|
|
Non-controlling interest
|
|
11(e)
|
|
|
6,793
|
|
|
-
|
|
|
Total equity
|
|
|
|
|
555,586
|
|
|
218,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
|
|
|
732,394
|
|
|
322,679
|
|
Nature of Operations (Note 1)
Commitments and Contingencies
(Note 21)
Subsequent Events (Notes 5(b)(ii), 14(c), 15(b), 21(b)(ii) and 25)
The accompanying notes are an integral part of these Condensed
Interim Consolidated Financial Statements.
|
AURORA CANNABIS INC.
|
|
Condensed Interim Consolidated Statements of
Comprehensive Income (Loss)
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
Notes
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Revenues
|
|
|
|
|
11,700
|
|
|
3,884
|
|
|
19,949
|
|
|
6,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
|
|
4,837
|
|
|
2,436
|
|
|
7,909
|
|
|
4,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit before fair
value adjustments
|
|
|
|
|
6,863
|
|
|
1,448
|
|
|
12,040
|
|
|
2,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized (gain) loss on
changes in fair value on sale of inventory
|
|
|
|
|
4,015
|
|
|
538
|
|
|
6,587
|
|
|
973
|
|
|
Unrealized (gain) loss on changes in fair value of biological
assets
|
|
7
|
|
|
(3,638
|
)
|
|
(3,450
|
)
|
|
(9,844
|
)
|
|
(3,077
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
6,486
|
|
|
4,360
|
|
|
15,297
|
|
|
4,447
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administration
|
|
17, 20(a)
|
|
|
7,568
|
|
|
1,550
|
|
|
10,561
|
|
|
2,597
|
|
|
Sales and marketing
|
|
18
|
|
|
5,136
|
|
|
2,411
|
|
|
8,804
|
|
|
3,981
|
|
|
Research and
development
|
|
|
|
|
172
|
|
|
99
|
|
|
279
|
|
|
139
|
|
|
Acquisition and project
evaluation costs
|
|
|
|
|
1,756
|
|
|
4
|
|
|
2,096
|
|
|
169
|
|
|
Share of loss
from investment in associate
|
|
10
|
|
|
52
|
|
|
-
|
|
|
52
|
|
|
-
|
|
|
Depreciation and amortization
|
|
9, 12
|
|
|
460
|
|
|
163
|
|
|
1,094
|
|
|
322
|
|
|
Share-based payments
|
|
16(a)(b), 20(b)
|
|
|
7,456
|
|
|
2,510
|
|
|
9,942
|
|
|
2,890
|
|
|
|
|
|
|
|
22,600
|
|
|
6,737
|
|
|
32,828
|
|
|
10,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
|
|
(16,114
|
)
|
|
(2,377
|
)
|
|
(17,531
|
)
|
|
(5,651
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and
other income
|
|
|
|
|
765
|
|
|
99
|
|
|
1,355
|
|
|
127
|
|
|
Finance and other costs
|
|
19
|
|
|
(1,660
|
)
|
|
(1,800
|
)
|
|
(3,676
|
)
|
|
(4,841
|
)
|
|
Foreign exchange
|
|
|
|
|
511
|
|
|
-
|
|
|
264
|
|
|
-
|
|
|
Unrealized gain on debenture
|
|
5(a)
|
|
|
-
|
|
|
-
|
|
|
6,937
|
|
|
-
|
|
|
Unrealized gain
on marketable securities
|
|
5(b)
|
|
|
3,700
|
|
|
-
|
|
|
3,700
|
|
|
-
|
|
|
Unrealized gain on derivatives
|
|
5(b)
|
|
|
22,786
|
|
|
-
|
|
|
23,603
|
|
|
-
|
|
|
|
|
|
|
|
26,102
|
|
|
(1,701
|
)
|
|
32,183
|
|
|
(4,714
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes
|
|
|
|
|
9,988
|
|
|
(4,078
|
)
|
|
14,652
|
|
|
(10,365
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax recovery (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
(38
|
)
|
|
11
|
|
|
(38
|
)
|
|
19
|
|
|
Deferred, net
|
|
|
|
|
(2,756
|
)
|
|
1,389
|
|
|
(3,859
|
)
|
|
2,055
|
|
|
|
|
|
|
|
(2,794
|
)
|
|
1,400
|
|
|
(3,897
|
)
|
|
2,074
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
|
|
|
7,194
|
|
|
(2,678
|
)
|
|
10,755
|
|
|
(8,291
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of Aurora
|
|
|
|
|
7,721
|
|
|
(2,678
|
)
|
|
11,282
|
|
|
(8,291
|
)
|
|
Non-controlling interests
|
|
|
|
|
(527
|
)
|
|
-
|
|
|
(527
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
0.02
|
|
|
(0.01
|
)
|
|
0.03
|
|
|
(0.04
|
)
|
|
Diluted
|
|
|
|
|
0.02
|
|
|
(0.01
|
)
|
|
0.03
|
|
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
394,025,544
|
|
|
263,865,017
|
|
|
392,386,415
|
|
|
223,737,570
|
|
|
Diluted
|
|
|
|
|
406,580,775
|
|
|
263,865,017
|
|
|
398,670,592
|
|
|
223,737,570
|
|
|
AURORA CANNABIS INC.
|
|
Condensed Interim Consolidated Statements of
Comprehensive Income (Loss)
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
(Continued)
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
Notes
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Net income (loss)
|
|
|
|
|
7,194
|
|
|
(2,678
|
)
|
|
10,755
|
|
|
(8,291
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax
|
|
|
|
|
(99
|
)
|
|
-
|
|
|
(1,731
|
)
|
|
-
|
|
|
Unrealized gain on marketable securities
|
|
5(b)
|
|
|
274
|
|
|
-
|
|
|
12,825
|
|
|
-
|
|
|
Foreign currency translation
|
|
|
|
|
29
|
|
|
-
|
|
|
25
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
|
|
|
7,398
|
|
|
(2,678
|
)
|
|
21,874
|
|
|
(8,291
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of Aurora
|
|
|
|
|
7,925
|
|
|
(2,678
|
)
|
|
22,401
|
|
|
(8,291
|
)
|
|
Non-controlling interests
|
|
|
|
|
(527
|
)
|
|
-
|
|
|
(527
|
)
|
|
-
|
|
The accompanying notes are an integral part of these Condensed
Interim Consolidated Financial Statements.
|
AURORA CANNABIS INC.
|
|
Condensed Interim Consolidated Statements of Changes in
Equity
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
amounts)
|
|
|
|
Share Capital
|
|
|
|
|
|
|
|
|
|
|
|
Reserves
|
|
|
|
|
|
|
|
|
|
|
|
AOCI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligation
|
|
|
Share-
|
|
|
Compensation
|
|
|
Related
|
|
|
|
|
|
|
|
|
Value and
|
|
|
Foreign
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
Common
|
|
|
|
|
|
to Issue
|
|
|
Based
|
|
|
Options/
|
|
|
Party
|
|
|
Convertible
|
|
|
Total
|
|
|
Deferred
|
|
|
Currency
|
|
|
Total
|
|
|
|
|
|
Controlling
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Compensation
|
|
|
Warrants
|
|
|
Loans
|
|
|
Notes
|
|
|
Reserves
|
|
|
Tax
|
|
|
Translation
|
|
|
AOCI
|
|
|
Deficit
|
|
|
Interests
|
|
|
Total
|
|
|
|
|
#
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Balance, June 30, 2016
|
|
135,576,365
|
|
|
17,148
|
|
|
2,335
|
|
|
608
|
|
|
1,184
|
|
|
1,403
|
|
|
200
|
|
|
5,730
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(16,916
|
)
|
|
-
|
|
|
5,962
|
|
|
Shares issued for acquisition (Note
15(b)(xiv))
|
|
17,875,000
|
|
|
11,440
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
11,440
|
|
|
Performance shares
(Note 15(b)(xvi))
|
|
20,000,000
|
|
|
2,322
|
|
|
(2,322
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2,322
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Transfer from derivative liabilities
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
98
|
|
|
-
|
|
|
-
|
|
|
98
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
98
|
|
|
Private placement (Note
15(b)(xv))
|
|
57,500,000
|
|
|
23,000
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
23,000
|
|
|
Share issue costs
|
|
-
|
|
|
(3,826
|
)
|
|
-
|
|
|
-
|
|
|
2,022
|
|
|
-
|
|
|
-
|
|
|
2,022
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,804
|
)
|
|
Warrant issued for
convertible debenture amendment
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
877
|
|
|
-
|
|
|
-
|
|
|
877
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
877
|
|
|
Conversion of notes (Note 15(b)(vi))
|
|
18,784,726
|
|
|
16,913
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,888
|
)
|
|
(1,888
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
15,025
|
|
|
Equity component of
convertible notes
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,904
|
|
|
7,904
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,904
|
|
|
Deferred tax on convertible notes
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2,055
|
)
|
|
(2,055
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2,055
|
)
|
|
Reclassification upon
repayment of related party loans
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,403
|
)
|
|
-
|
|
|
(1,403
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,403
|
|
|
-
|
|
|
-
|
|
|
Shares issued for loan (Note
15(b)(xvii))
|
|
50,000
|
|
|
24
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
24
|
|
|
Shares issued for
compensation (Note 15(b)(xiii))
|
|
25,510
|
|
|
13
|
|
|
(13
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(13
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Exercise of stock options (Note
15(b)(vii))
|
|
620,077
|
|
|
497
|
|
|
-
|
|
|
(241
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(241
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
256
|
|
|
Exercise of warrants
(Note 15(b)(viii))
|
|
31,501,931
|
|
|
19,354
|
|
|
-
|
|
|
-
|
|
|
(1,189
|
)
|
|
-
|
|
|
-
|
|
|
(1,189
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
18,165
|
|
|
Exercise of compensation options (Note
15(b)(ix))
|
|
3,234,434
|
|
|
2,439
|
|
|
-
|
|
|
-
|
|
|
(1,105
|
)
|
|
-
|
|
|
-
|
|
|
(1,105
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,334
|
|
|
Forfeited options
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(21
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(21
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
21
|
|
|
-
|
|
|
-
|
|
|
Share-based payments
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,890
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,890
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,890
|
|
|
Comprehensive loss for the period
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(8,291
|
)
|
|
-
|
|
|
(8,291
|
)
|
|
Balance, December 31, 2016
|
|
285,168,043
|
|
|
89,324
|
|
|
-
|
|
|
3,236
|
|
|
1,887
|
|
|
-
|
|
|
4,161
|
|
|
9,284
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(23,783
|
)
|
|
-
|
|
|
74,825
|
|
|
Shares issued for
acquisitions (Note 15(b)(x)(xi))
|
|
9,216,007
|
|
|
23,100
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
23,100
|
|
|
Shares issued for contingent
consideration (Note 15(v))
|
|
2,926,103
|
|
|
7,408
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,408
|
|
|
Private placements
(Note 15(b)(xii))
|
|
33,337,500
|
|
|
75,009
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
75,009
|
|
|
Share issue costs
|
|
-
|
|
|
(7,087
|
)
|
|
-
|
|
|
-
|
|
|
2,609
|
|
|
-
|
|
|
-
|
|
|
2,609
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(4,478
|
)
|
|
Deferred tax on share
issue costs
|
|
-
|
|
|
1,846
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,846
|
|
|
Conversion of notes (Note 15(b)(vi))
|
|
10,235,593
|
|
|
21,124
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2,912
|
)
|
|
(2,912
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
18,212
|
|
|
Equity component of
convertible notes
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
12,683
|
|
|
12,683
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
12,683
|
|
|
Equity component of convertible note
transaction costs
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(900
|
)
|
|
(900
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(900
|
)
|
|
Deferred tax on
convertible notes
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(3,298
|
)
|
|
(3,298
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(3,298
|
)
|
|
Exercise of stock options (Note
15(b)(vii))
|
|
1,381,623
|
|
|
902
|
|
|
-
|
|
|
(337
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(337
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
565
|
|
|
Exercise of warrants
(Note 15(b)(viii))
|
|
23,434,375
|
|
|
9,294
|
|
|
-
|
|
|
-
|
|
|
(857
|
)
|
|
-
|
|
|
-
|
|
|
(857
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
8,437
|
|
|
Exercise of compensation
options/warrants (Note 15(b)(ix))
|
|
850,000
|
|
|
527
|
|
|
-
|
|
|
-
|
|
|
(187
|
)
|
|
-
|
|
|
-
|
|
|
(187
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
340
|
|
|
Forfeited options and
warrants
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2
|
)
|
|
(32
|
)
|
|
-
|
|
|
-
|
|
|
(34
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
34
|
|
|
-
|
|
|
-
|
|
|
Share-based payments
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4,694
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4,694
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4,694
|
|
|
Comprehensive loss for the period
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5,192
|
|
|
(25
|
)
|
|
5,167
|
|
|
(4,677
|
)
|
|
-
|
|
|
490
|
|
|
Balance, June 30, 2017
|
|
366,549,244
|
|
|
221,447
|
|
|
-
|
|
|
7,591
|
|
|
3,420
|
|
|
-
|
|
|
9,734
|
|
|
20,745
|
|
|
5,192
|
|
|
(25
|
)
|
|
5,167
|
|
|
(28,426
|
)
|
|
-
|
|
|
218,933
|
|
|
AURORA CANNABIS INC.
|
|
Condensed Interim Consolidated Statements of Changes in
Equity
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
amounts)
|
|
|
|
(Continued)
|
|
|
|
Share Capital
|
|
|
|
|
|
|
|
|
Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AOCI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligation
|
|
|
Share-
|
|
|
Compensation
|
|
|
Related
|
|
|
|
|
|
|
|
|
Value and
|
|
|
Foreign
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
Common
|
|
|
|
|
|
to Issue
|
|
|
Based
|
|
|
Options/
|
|
|
Party
|
|
|
Convertible
|
|
|
Total
|
|
|
Deferred
|
|
|
Currency
|
|
|
Total
|
|
|
|
|
|
Controlling
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Compensation
|
|
|
Warrants
|
|
|
Loans
|
|
|
Notes
|
|
|
Reserves
|
|
|
Tax
|
|
|
Translation
|
|
|
AOCI
|
|
|
Deficit
|
|
|
Interests
|
|
|
Total
|
|
|
|
|
#
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2017
|
|
366,549,244
|
|
|
221,447
|
|
|
-
|
|
|
7,591
|
|
|
3,420
|
|
|
-
|
|
|
9,734
|
|
|
20,745
|
|
|
5,192
|
|
|
(25
|
)
|
|
5,167
|
|
|
(28,426
|
)
|
|
-
|
|
|
218,933
|
|
|
Shares issued for acquisition (Note
11(d)(f))
|
|
4,878,380
|
|
|
15,530
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
15,530
|
|
|
Warrants issued for
acquisition (Note 11(d))
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
136
|
|
|
-
|
|
|
-
|
|
|
136
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
136
|
|
|
Shares issued for contingent
consideration (Note 15(b)(v))
|
|
5,016,293
|
|
|
11,656
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
11,656
|
|
|
Private placements
(Note 15(b)(iii))
|
|
25,000,000
|
|
|
75,000
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
75,000
|
|
|
Share issue costs
|
|
-
|
|
|
(6,640
|
)
|
|
-
|
|
|
-
|
|
|
2,286
|
|
|
-
|
|
|
-
|
|
|
2,286
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(4,354
|
)
|
|
Conversion of notes
(Note 15(b)(vi)
|
|
25,060,747
|
|
|
76,524
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(9,734
|
)
|
|
(9,734
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
66,790
|
|
|
Deferred tax on convertible notes
|
|
-
|
|
|
4,554
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4,554
|
|
|
Exercise of stock
options (Note 15(b)(vii), 11(e))
|
|
2,312,590
|
|
|
5,813
|
|
|
-
|
|
|
(2,008
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2,008
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
123
|
|
|
3,928
|
|
|
Exercise of warrants (Note 15(b)(viii),
11(e))
|
|
38,621,631
|
|
|
121,529
|
|
|
-
|
|
|
-
|
|
|
(2,535
|
)
|
|
-
|
|
|
-
|
|
|
(2,535
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
694
|
|
|
119,688
|
|
|
Exercise of
compensation options/warrants (Note 15(b)(viii))
|
|
1,865,249
|
|
|
6,051
|
|
|
-
|
|
|
-
|
|
|
(1,854
|
)
|
|
-
|
|
|
-
|
|
|
(1,854
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4,197
|
|
|
Exercise of restricted share units
(Note 15(b)(ii)
|
|
127,128
|
|
|
1,209
|
|
|
-
|
|
|
(351
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(351
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
858
|
|
|
Forfeited options
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(430
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(430
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
430
|
|
|
-
|
|
|
-
|
|
|
Share-based payments (Note 11(e), 16)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
10,293
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
10,293
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
10,293
|
|
|
Non-controlling
interest from Hempco (Note 11(e))
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
6,503
|
|
|
6,503
|
|
|
Comprehensive loss for the period
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
11,094
|
|
|
25
|
|
|
11,119
|
|
|
11,282
|
|
|
(527
|
)
|
|
21,874
|
|
|
Balance, December 31, 2017
|
|
469,431,262
|
|
|
532,673
|
|
|
-
|
|
|
15,095
|
|
|
1,453
|
|
|
-
|
|
|
-
|
|
|
16,548
|
|
|
16,286
|
|
|
-
|
|
|
16,286
|
|
|
(16,714
|
)
|
|
6,793
|
|
|
555,586
|
|
The accompanying notes are an integral part of these Condensed
Interim Consolidated Financial Statements.
|
AURORA CANNABIS INC.
|
|
Condensed Interim Consolidated Statements of Cash
Flows
|
|
Six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars)
|
|
|
|
Notes
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
Cash provided by (used in)
Operating activities
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) for the period
|
|
|
|
|
11,282
|
|
|
(8,291
|
)
|
|
Adjustments for
non-cash items
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on
changes in fair value of biological assets
|
|
|
|
|
(9,844
|
)
|
|
(1,168
|
)
|
|
Changes in fair value included in inventory sold
|
|
|
|
|
6,587
|
|
|
-
|
|
|
Depreciation of
fixed assets
|
|
9
|
|
|
886
|
|
|
471
|
|
|
Amortization of intangible assets
|
|
12
|
|
|
569
|
|
|
-
|
|
|
Share-based
payments
|
|
16
|
|
|
9,942
|
|
|
2,890
|
|
|
Share of loss from investment in associate
|
|
|
|
|
52
|
|
|
-
|
|
|
Unrealized gain on
debentures
|
|
|
|
|
(6,937
|
)
|
|
-
|
|
|
Unrealized gain on derivatives
|
|
|
|
|
(23,603
|
)
|
|
-
|
|
|
Unrealized gain on
marketable securities
|
|
|
|
|
(3,700
|
)
|
|
-
|
|
|
Accrued interest and accretion expense
|
|
|
|
|
2,569
|
|
|
1,503
|
|
|
Financing fees
|
|
|
|
|
-
|
|
|
2,121
|
|
|
Interest and other income
|
|
|
|
|
(59
|
)
|
|
(2,055
|
)
|
|
Deferred tax
recovery
|
|
|
|
|
3,859
|
|
|
-
|
|
|
Changes in
non-cash working capital
|
|
|
|
|
|
|
|
|
|
|
GST recoverable
|
|
|
|
|
(2,573
|
)
|
|
(85
|
)
|
|
Accounts
receivable
|
|
|
|
|
46
|
|
|
(1,500
|
)
|
|
Inventory
|
|
|
|
|
(2,653
|
)
|
|
(228
|
)
|
|
Prepaid
and other current assets
|
|
|
|
|
450
|
|
|
(541
|
)
|
|
Accounts payable and
accrued liabilities
|
|
|
|
|
3,440
|
|
|
175
|
|
|
Deferred revenue
|
|
|
|
|
56
|
|
|
699
|
|
|
|
|
|
|
|
(9,631
|
)
|
|
(6,009
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
Short-term investments
|
|
3
|
|
|
(397
|
)
|
|
-
|
|
|
Marketable securities and derivatives
|
|
|
|
|
(39,748
|
)
|
|
-
|
|
|
Notes receivable
|
|
|
|
|
(4,236
|
)
|
|
-
|
|
|
Purchase of property, plant and
equipment
|
|
9
|
|
|
(53,936
|
)
|
|
(4,842
|
)
|
|
Acquisition of
businesses, net of cash acquired
|
|
11
|
|
|
(8,522
|
)
|
|
(3,418
|
)
|
|
Acquisition of assets, net of cash
acquired
|
|
11
|
|
|
(955
|
)
|
|
-
|
|
|
Deposits
|
|
|
|
|
(596
|
)
|
|
-
|
|
|
|
|
|
|
|
(108,390
|
)
|
|
(8,260
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
Finance lease
|
|
|
|
|
(34
|
)
|
|
64
|
|
|
Proceeds of convertible notes
|
|
|
|
|
-
|
|
|
40,000
|
|
|
Proceeds (repayment) of
short term loans
|
|
|
|
|
-
|
|
|
(5,549
|
)
|
|
Proceeds (repayment) of long term loans
|
|
|
|
|
-
|
|
|
(4,000
|
)
|
|
Financing fees
|
|
|
|
|
-
|
|
|
(1,610
|
)
|
|
Special warrants subscriptions
|
|
14(c)
|
|
|
111,009
|
|
|
-
|
|
|
Shares issued for cash,
net of share issue costs
|
|
|
|
|
197,421
|
|
|
40,951
|
|
|
Acquisition of non-controlling interest
|
|
|
|
|
862
|
|
|
-
|
|
|
|
|
|
|
|
309,258
|
|
|
69,856
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange on cash and cash equivalents
|
|
|
|
|
(192
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash
and cash equivalents
|
|
|
|
|
191,045
|
|
|
55,587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
|
159,796
|
|
|
259
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
|
|
|
350,841
|
|
|
55,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents consist of:
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
350,841
|
|
|
14,846
|
|
|
Guaranteed Investment
Certificates
(1)
|
|
|
|
|
-
|
|
|
41,000
|
|
|
|
|
|
|
|
350,841
|
|
|
55,846
|
|
|
(1)
|
Guaranteed investment certificates for the three months
ended December 31, 2017 were reclassified as short-term
investments.
|
|
AURORA CANNABIS INC.
|
|
Condensed Interim Consolidated Statements of Cash
Flows
|
|
Six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars)
|
|
|
|
(Continued)
|
|
Supplementary information:
|
|
|
|
|
|
|
|
Property, plant and equipment in
accounts payable
|
|
11,099
|
|
|
108
|
|
|
Depreciation in production costs
|
|
361
|
|
|
149
|
|
The accompanying notes are an integral part of these Condensed
Interim Consolidated Financial Statements.
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
Aurora Cannabis Inc. (the “Company” or
“Aurora”) was incorporated under the
Business Corporations Act
(British
Columbia). The Company’s shares are listed on the Toronto Stock Exchange (the
“Exchange”) under the symbol “ACB” and on the OTCQX under the symbol “ACBFF”.
The Company’s principal business is the
production and distribution of medical cannabis in Canada and Germany. The
Company produces and distributes dried medical cannabis and cannabis oils in
Canada pursuant to the
Access to Cannabis for Medical Purposes
Regulations
(“ACMPR”) through its wholly-owned subsidiary Aurora Cannabis
Enterprises Inc. (“ACE”), and distributes wholesale medical cannabis in the
European Union pursuant to the German Medicinal Products Act and German Narcotic
Drugs Act through its wholly-owned subsidiary, Pedanios GmbH (“Pedanios”).
The Company, through its wholly-owned
subsidiary, CanvasRx Inc. (“CanvasRx”), provides counseling and outreach service
to help patients learn about how to safely and effectively use medical cannabis,
select a strain from the hundreds available in Canada and register with their
choice of licensed producer. The Company, through its wholly-owned subsidiaries,
B.C. Northern Lights Enterprises Ltd. (“BCNL”) and Urban Cultivator Inc.
(“UCI”), is involved in the production and sale of proprietary systems for the
indoor cultivation of cannabis, organic microgreens, vegetables and herbs which
will cater to the home-growing adult-use recreational market upon legalization,
which is anticipated to occur in July 2018. The Company, through its
wholly-owned subsidiary, Aurora Larssen Projects Inc., is in the business of
consulting on the design, engineering, and construction oversight for advanced
greenhouse cultivation facilities. The Company controls Hempco Food and Fiber
Inc. (“Hempco”), a producer of industrial hemp products, hemp foods, hemp fiber
and hemp nutraceuticals.
The head office and principal address
of the Company is Suite 1500 - 1199 West Hastings Street, Vancouver, BC, Canada,
V6E 3T5. The Company’s registered and records office address is Suite 1500 -
1055 West Georgia Street, Vancouver, BC V6E 4N7.
|
2.
|
Significant Accounting
Policies
|
|
|
(a)
|
Basis of presentation
|
The condensed interim consolidated
financial statements of the Company have been prepared in accordance with
International Accounting Standards 34,
“Interim Financial Reporting”
(“IAS 34”), using accounting policies consistent with International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting Standards
Board (“IASB”) and interpretations of the IFRS Interpretations Committee
(“IFRIC”).
The condensed interim consolidated
financial statements do not include all of the information required for full
annual financial statements. The accounting policies and critical estimates
applied by the Company in these condensed interim consolidated financial
statements are the same as those applied in the Company’s annual consolidated
financial statements as at and for the year ended June 30, 2017.
The Company has reclassified certain
immaterial items on the comparative condensed interim consolidated statement of
comprehensive loss to conform with current period’s presentation and improve
clarity.
These condensed interim consolidated
financial statements were approved and authorized for issue by the Board of
Directors of the Company on February 7, 2018.
1
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
2.
|
Significant Accounting Policies
(Continued)
|
|
|
(b)
|
Basis of consolidation
|
These condensed interim consolidated
financial statements include the accounts of the Company, entities controlled by
the Company and its subsidiaries. All significant intercompany balances and
transactions were eliminated on consolidation.
The following are the Company’s
ownership interests in its subsidiaries, investments in associates and joint
venture and available for sale investments:
|
|
|
|
|
|
|
Percentage
Ownership
|
|
|
|
|
|
|
|
|
Jurisdiction of
|
|
|
December 31,
|
|
|
June 30,
|
|
|
Accounting
|
|
|
|
Entities
|
|
Incorporation
|
|
|
2017
|
|
|
2017
|
|
|
Treatment
|
|
|
|
Aurora Marijuana Inc.(“AMI”)
|
|
Alberta, Canada
|
|
|
100%
|
|
|
100%
|
|
|
Consolidation
|
|
|
|
Aurora Cannabis Enterprises Inc. ("ACE”)
|
|
Alberta, Canada
|
|
|
100%
|
|
|
100%
|
|
|
Consolidation
|
|
|
|
1769474 Alberta Ltd.
(“1769474”)
|
|
Alberta, Canada
|
|
|
100%
|
|
|
100%
|
|
|
Consolidation
|
|
|
|
Australis Capital Inc. (“ACI”)
|
|
Alberta, Canada
|
|
|
100%
|
|
|
100%
|
|
|
Consolidation
|
|
|
|
CanvasRx Inc. (“CanvasRx”)
|
|
Ontario, Canada
|
|
|
100%
|
|
|
100%
|
|
|
Consolidation
|
|
|
|
10094595 Canada Inc. (“10094595”)
|
|
Canada
|
|
|
100%
|
|
|
100%
|
|
|
Consolidation
|
|
|
|
Peloton Pharmaceuticals Inc.
(“Peloton”)
|
|
Quebec, Canada
|
|
|
100%
|
|
|
100%
|
|
|
Consolidation
|
|
|
|
Pedanios GmbH (“Pedanios”)
|
|
Germany
|
|
|
100%
|
|
|
100%
|
|
|
Consolidation
|
|
|
|
B.C. Northern Lights
Enterprises Ltd. (“BCNL”)
|
|
British
Columbia,Canada
|
|
|
100%
|
|
|
NA
|
|
|
Consolidation
|
|
|
|
Urban Cultivator Inc. (“UCI”)
|
|
British Columbia, Canada
|
|
|
100%
|
|
|
NA
|
|
|
Consolidation
|
|
|
|
H2 Biopharma Inc. (“H2”)
|
|
Quebec, Canada
|
|
|
100%
|
|
|
NA
|
|
|
Consolidation
|
|
|
|
Aurora Larssen Projects Inc. (“Aurora
Larssen”)
|
|
Alberta, Canada
|
|
|
100%
|
|
|
NA
|
|
|
Consolidation
|
|
|
|
Larssen Ltd. (“Larssen”)
|
|
Alberta, Canada
|
|
|
100%
|
|
|
NA
|
|
|
Consolidation
|
|
|
|
Hempco Food and Fiber Inc. (“Hempco”)
|
|
British Columbia, Canada
|
|
|
21.3%
|
|
|
NA
|
|
|
Consolidation
|
|
|
|
Australis Holdings LLP
(“Australis Holdings”)
|
|
Washington, USA
|
|
|
50%
|
|
|
50%
|
|
|
Equity
|
|
|
|
Cann Group Limited (“Cann Group”)
|
|
Australia
|
|
|
21.8%
|
|
|
19.9%
|
|
|
Equity
|
|
|
|
Radient Technologies Inc.
(“Radient”)
|
|
Alberta, Canada
|
|
|
17.02%
|
|
|
1.75%
|
|
|
Fair value
|
|
|
|
CanniMed Therapeutics Inc. (“CanniMed”)
|
|
Saskatchewan, Canada
|
|
|
1.84%
|
|
|
NA
|
|
|
Fair value
|
|
The condensed interim consolidated
financial statements have been prepared on a historical cost basis except for
certain financial instruments, biological assets, derivatives and acquisition
related contingent consideration which were measured at fair value.
|
|
(d)
|
Functional and presentation of foreign
currency
|
The condensed interim consolidated
financial statements are presented in Canadian dollars unless otherwise noted.
The functional currency of Pedanios is the European Euro, the functional
currency of Australis Holdings is the US dollar, the functional currency of Cann
Group is the Australian dollar and the functional currency of Aurora and its
remaining subsidiaries is the Canadian dollar.
2
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
2.
|
Significant Accounting Policies
(Continued)
|
|
|
(e)
|
Significant accounting judgments, estimates and
assumptions
|
The preparation of the Company’s
consolidated financial statements in conformity with IFRS requires management to
make judgments, estimates, and assumptions about the carrying amounts of assets
and liabilities that are not readily apparent from other sources. The estimates
and associated assumptions are based on historical experience and other factors
that are considered to be relevant. Actual results may differ from these
estimates.
The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimate is revised, if the revision
affects only that period, or in the period of the revision and future periods,
if the revision affects both current and future periods.
Significant judgments, estimates and
assumptions that have the most significant effect on the amounts recognized in
the financial statements are described below.
|
|
(i)
|
Investment in associates and joint
ventures
|
Judgement is required in the
assessment of whether the Company has control or significant influence in terms
of the variability of returns from the Company’s involvement in the investee,
the ability to use power to affect those returns and the significance of the
Company’s investment in the investee. The Company classified its investment
considering this assessment of control or significant influence. (Note 5)
Radient
As at December 31, 2017, the Company
held an aggregate of 37,643,431 common shares of Radient representing a 17%
interest ownership on an undiluted basis. The Company also held 4,541,889
warrants resulting in a 15.71% interest ownership in Radient on a fully diluted
basis.
The Company is acting as an investor
within the meaning of IAS 39, and is not involved in the strategic leadership
and tactical implementation of the business plans of Radient. Aurora has one
director on the board of Radient which consists of 9 members, and although the
Company participates in the policy-making process and decisions, it cannot
significantly influence those decisions. Radient only provides extraction
processing services to Aurora as an independent contractor and there are no
other material agreements in place. Furthermore, Aurora does not perform any
commercial and technical consulting services for Radient.
In light of the above, management has
determined that the Company does not have the ability to exercise significant
influence in Radient and continued to classify the marketable securities as
available-for-sale financial assets and share purchase warrants as
held-for-trading derivatives.
Cann Group
The Company purchased additional
shares of Cann Group, and as at December 31, 2017, held an aggregate of
28,762,314 common shares representing a 21.8% interest ownership in Cann Group.
Subsequent to December 31, 2017, the Company acquired additional shares and
further increased its ownership in Cann Group to 22.9% .
Through the extent of its share
ownership interest, seat on the board of directors and contractual arrangements
among other things, the Company has the ability to exercise significant
influence over Cann Group, and accordingly, accounted for the investments under
the equity method.
3
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
2.
|
Significant Accounting Policies
(Continued)
|
|
|
(e)
|
Significant accounting judgments, estimates and
assumptions (continued)
|
|
|
(ii)
|
Business combinations and asset
acquisitions
|
Classification of an acquisition as a
business combination or an asset acquisition depends on whether the assets
acquired constitute a business, which can be a complex judgement. Whether an
acquisition is classified as a business combination or asset acquisition can
have a significant impact on the entries made on and after acquisition.
During the period, the Company
acquired Larssen, Pedanios, BCNL and UCI. These entities are operating
companies, and have operational processes and employees in place to conduct
activities of the businesses to provide returns. As a result, these acquisitions
have been accounted for as business combinations as set out in Note 11.
The Company held a 22.3% interest
ownership in Hempco. However, the Company entered into an agreement to acquire
additional shares in Hempco that would bring the Company’s total ownership to
over 50.1% . As a result, due primarily to potential voting rights, the Company
has determined that it has control over Hempco. Accordingly, the investment has
been accounted for as a business combination, and the results of Hempco have
been consolidated in the financial statements. (Note 11(e))
|
|
(f)
|
Recent accounting pronouncements
|
There were no new standards effective
July 1, 2017 that had an impact on the Company’s condensed interim consolidated
financial statements. The following IFRS standards have been recently issued by
the IASB. Pronouncements that are not applicable or where it has been determined
do not have a significant impact to the Company have been excluded herein.
|
|
(i)
|
IFRS 7 Financial instruments:
Disclosure
|
IFRS 7
Financial instruments:
Disclosure,
was amended to require additional disclosures on transition from
IAS 39 to IFRS 9. IFRS 7 is effective on adoption of IFRS 9, which is effective
for annual periods commencing on or after January 1, 2018. The Company is
assessing the impact of this amendment on its consolidated financial statements.
|
|
(ii)
|
IFRS 9, Financial Instruments
|
In July 2014, the IASB issued the
final version of IFRS 9
Financial Instruments
, which reflects all phases
of the financial instruments project and replaces IAS 39
Financial
Instruments: Recognition and Measurement
and all previous versions of IFRS
9. The standard introduces new requirements for classification and measurement,
impairment, and hedge accounting. IFRS 9 is effective for annual periods
beginning on or after 1 January 2018, with early application permitted. The
Company is assessing the impact of this new standard on its consolidated
financial statements.
|
|
(iii)
|
IFRS 15 Revenue from Contracts with
Customers
|
The IASB replaced IAS 18
Revenue
, in its entirety with IFRS 15
Revenue from Contracts with
Customers
. The standard contains a single model that applies to contracts
with customers and two approaches to recognizing revenue: at a point in time or
over time. The model features a contract-based five-step analysis of
transactions to determine whether, how much and when revenue is recognized. IFRS
15 is effective for annual periods beginning on or after January 1, 2018, with
early application permitted.
4
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
2.
|
Significant Accounting Policies
(Continued)
|
|
|
(f)
|
Recent accounting pronouncements
(continued)
|
|
|
(iii)
|
IFRS 15 Revenue from Contracts with Customers
(continued)
|
The Company intends to adopt IFRS 15
on July 1, 2018 using the modified retrospective approach where the cumulative
impact of adoption will be recognized in retained earnings as of July 1, 2018
and comparatives will not be restated.
The Company has conducted a
preliminary assessment of the impact from this new standard. Under IFRS 15,
revenue from the sale of medicinal cannabis would be recognized at a point in
time when control over the goods have been transferred to the customer. The
Company transfers control and satisfies its performance obligation upon delivery
and acceptance by the customer, which is consistent with the Company’s current
revenue recognition policy under IAS 18.
Referral revenue earned from Licensed
Producers through CanvasRx would be recognized over a period of time as the
referred patients remain active with the Licensed Producers. This is consistent
with the Company’s current revenue recognition policy under IAS 18 where revenue
is recognized on a monthly basis over a specified period of time that the
referred patient remains an active purchaser of medical cannabis with the
Licensed Producer.
Based on the Company’s preliminary
assessment, the adoption of this new standard is not expected to have a material
impact on its consolidated financial statements.
In January 2016, the IASB issued IFRS
16
Leases
, which will replace IAS 17
Leases
. This standard
introduces a single lessee accounting model and requires a lessee to recognize
assets and liabilities for all leases with a term of more than twelve months,
unless the underlying asset is of low value. A lessee is required to recognize a
right-of-use asset representing its right to use the underlying asset and a
lease liability representing its obligation to make lease payments. The standard
will be effective for annual periods beginning on or after January 1, 2019, with
earlier application permitted for entities that apply IFRS 15
Revenue from
Contracts with Customers
at or before the date of initial adoption of IFRS
16. The Company is assessing the impact of this new standard on its consolidated
financial statements.
|
3.
|
Short-term Investments
|
Short-term investments consist of an
aggregate of $908 in guaranteed investment certificates (“GIC”) with maturity
dates between of October 29, 2018 and November 7, 2018, bearing annual interest
rates ranging from prime rate less 2.25% .
Of these GICs, $397 are restricted and
held as security against the Company’s corporate credit cards.
|
|
|
|
December 31, 2017
|
|
|
June 30, 2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Trade receivables
|
|
3,007
|
|
|
1,346
|
|
|
|
GST
recoverable
|
|
3,984
|
|
|
966
|
|
|
|
|
|
6,991
|
|
|
2,312
|
|
5
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
The Company held the following
investments as at December 31, 2017:
|
|
Financial asset hierarchy level
|
|
Level 3
|
|
|
|
|
|
Level 1
|
|
|
|
|
|
Level 3
|
|
|
|
|
|
Convertible
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial asset
|
|
Debenture
|
|
|
|
|
|
Marketable
Securities (“MS”)
|
|
|
|
|
|
Derivatives
|
|
|
|
|
|
(a)
|
|
|
|
|
|
(b)
|
|
|
|
|
|
(b)
|
|
|
|
|
|
Radient
|
|
|
Cann Group
|
|
|
CanniMed
|
|
|
Radient
|
|
|
Total MS
|
|
|
Radient
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Investment at cost
|
|
2,000
|
|
|
6,627
|
|
|
-
|
|
|
1,023
|
|
|
7,650
|
|
|
306
|
|
|
|
Unrealized gain recognized at inception
|
|
12,564
|
|
|
-
|
|
|
-
|
|
|
1,334
|
|
|
1,334
|
|
|
380
|
|
|
|
Unrealized gain (losses) on changes in fair value
|
|
(3,493
|
)
|
|
6,806
|
|
|
-
|
|
|
(945
|
)
|
|
5,861
|
|
|
(394
|
)
|
|
|
Balance, June 30, 2017
|
|
11,071
|
|
|
13,433
|
|
|
-
|
|
|
1,412
|
|
|
14,845
|
|
|
292
|
|
|
|
Reclassification to
investment in associates (Note 10(b))
|
|
-
|
|
|
(25,102
|
)
|
|
-
|
|
|
-
|
|
|
(25,102
|
)
|
|
-
|
|
|
|
Additions
|
|
-
|
|
|
-
|
|
|
10,171
|
|
|
4,199
|
|
|
14,370
|
|
|
2,083
|
|
|
|
Unrealized gain recognized at
inception
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3,700
|
|
|
3,700
|
|
|
1,838
|
|
|
|
Unrealized gain on changes in fair value
|
|
830
|
|
|
11,669
|
|
|
(24
|
)
|
|
19,870
|
|
|
31,515
|
|
|
19,122
|
|
|
|
Conversion of debenture
|
|
(11,901
|
)
|
|
-
|
|
|
-
|
|
|
7,571
|
|
|
7,571
|
|
|
4,330
|
|
|
|
Exercise of warrants
|
|
-
|
|
|
-
|
|
|
-
|
|
|
29,501
|
|
|
29,501
|
|
|
(23,723
|
)
|
|
|
Balance, December 31, 2017
|
|
-
|
|
|
-
|
|
|
10,147
|
|
|
66,253
|
|
|
76,400
|
|
|
3,942
|
|
The Company held the following number
of marketable securities and warrant derivatives as at December 31, 2017:
|
|
|
|
Marketable
Securities
|
|
|
Derivatives
|
|
|
|
|
|
Cann Group
|
|
|
CanniMed
|
|
|
Radient
|
|
|
Radient
|
|
|
|
|
|
(b)(i)
|
|
|
(b)(ii)
|
|
|
(b)(iii)
|
|
|
(a), (b)(iii)
|
|
|
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
|
Balance, June 30, 2016
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Additions
|
|
21,562,314
|
|
|
-
|
|
|
2,881,967
|
|
|
1,493,067
|
|
|
|
Balance, June 30, 2017
|
|
21,562,314
|
|
|
-
|
|
|
2,881,967
|
|
|
1,493,067
|
|
|
|
Reclassification to investment in associates
(Note 10(b))
|
|
(21,562,314
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Additions
|
|
-
|
|
|
450,000
|
|
|
4,619,429
|
|
|
4,619,429
|
|
|
|
Conversion of debenture
|
|
-
|
|
|
-
|
|
|
14,285,714
|
|
|
14,285,714
|
|
|
|
Exercise of warrants
|
|
-
|
|
|
-
|
|
|
15,856,321
|
|
|
(15,856,321
|
)
|
|
|
Balance, December 31, 2017
|
|
-
|
|
|
450,000
|
|
|
37,643,431
|
|
|
4,541,889
|
|
|
|
(a)
|
Convertible debenture
|
ACE signed a Memorandum of
Understanding (“MOU”) with Radient dated December 13, 2016, to evaluate an
exclusive partnership for the joint development and commercialization of
standardized cannabinoid extracts.
Pursuant to the terms of the MOU, on
February 13, 2017, the Company purchased a $2,000 unsecured 10% convertible
debenture of Radient, convertible into units at $0.14 per unit. Each unit
consisted of one common share and one warrant exercisable at a price of $0.33
per share expiring February 13, 2019. The debenture had a term of 2 years and
was subject to a mandatory conversion if after 5 months from the date of
issuance the volume weighted average price (“VWAP”) of Radient’s shares is equal
to or greater than $0.40 for 10 consecutive days. The Company received a
financing commission of $40.
The Company recognized an unrealized
gain on the debenture at inception of $12,564 which was being amortized over two
years. The fair value of the debenture at June 30, 2017 of $11,071 was estimated
by measuring the fair value of the shares receivable on conversion at a quoted
market price of $0.49 (inception - $0.61) and the warrants receivable on
conversion using the Black-Scholes pricing model with the following assumptions:
risk-free interest rate of 1.10% (inception – 0.75%); dividend yield of 0%
(inception – 0%); stock price volatility of 99.05% (inception – 102.52%), and an
expected life of 1.65 years (inception – 2 years).
On May 13, 2017, the Company received
104,167 units of Radient for its interest payment of $50 (Note 5(b)(iii)).
6
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
5.
|
Investments
(Continued)
|
|
|
(a)
|
Convertible debenture (continued)
|
On July 28, 2017, the Company received
14,285,714 units of Radient pursuant to the mandatory conversion of the
debenture related to the VWAP. Additionally, the Company received 77,540 units
of Radient for its final interest payment of $41 (Note 5(b)(iii)).
On conversion, the fair value of the
debenture of $11,901 was estimated by measuring the fair value of the shares at
a quoted market price of $0.53 and the warrants using the Black-Scholes pricing
model with the following assumptions: risk-free interest rate of 1.31%; dividend
yield of 0%; stock price volatility of 91.53%; and an expected life of 1.57
years. The Company recognized an unrealized gain of $830 on the debentures and
fully amortized the remaining deferred inception gain balance of $6,107 on the
shares. Note 5(b)(iii)
|
|
(b)
|
Marketable securities and
derivatives
|
On April 25, 2017, the Company
subscribed to the initial public offering of Cann Group on the Australian Stock
Exchange for 21,562,314 fully paid ordinary shares at a price of A$0.30 per
share for a total investment of $6,627 (A$6,469).
On December 11, 2017, the Company
subscribed to an additional 7,200,000 ordinary shares of Cann Group at A$2.50
per share for a total investment of $17,577 (A$18,000). Upon closing of the
investment, the Company obtained significant influence in Cann Group, and the
investment was accounted for under the equity method. As a result, the cost of
investment was reclassified to investment in associates (Note 10(b)), and the
cumulative unrealized gains on changes in fair value of marketable securities of
$18,939 and foreign exchange losses of $464 were reversed from comprehensive
income.
On November 24, 2017, the Company
formally commenced the offer to purchase all of the issued and outstanding
common shares of CanniMed (the “Offer”). CanniMed shareholders will receive for
each CanniMed share, 4.53 shares of Aurora based on a 20-day VWAP, subject to a
maximum of $24 in Aurora shares. The Offer is subject to, among other things,
the receipt of 66 2/3% of the shares of CanniMed validly tendered to the Offer
and not withdrawn. Results of the takeover offer is expected on March 9,
2018.
Subsequent to December 31, 2017, the
Company made a new offer as described in Note 25(f).
Pursuant to the Offer, the Company may
purchase up to 5% of the outstanding shares of CanniMed on the open market. On
December 29, 2017, the Company purchased an aggregate of 450,000 common shares
of CanniMed at an average price of $22.60 per share for a total cost of $10,171.
At December 31, 2017, the shares had a fair value of $10,147 based on a quoted
market price of $22.55 per share. During the three and six months ended December
31, 2017, the Company recorded an unrealized loss on changes in fair value of
these marketable securities of $24 and $24, respectively, in other comprehensive
income.
Subsequent to December 31, 2017, the
Company purchased an additional 250,600 shares of CanniMed at an average price
of $23.04 per share for a total cost of $5,973.
7
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
5.
|
Investments
(Continued)
|
|
|
(b)
|
Marketable securities and derivatives
(continued)
|
The Company acquired the following
securities of Radient:
|
|
Date
|
|
Transactions
|
|
|
Shares (#)
|
|
|
Warrants (#)
|
|
|
Cost ($)
|
|
|
|
March 9, 2017
|
|
Private placement
of units @ $0.45 per unit
(1)
(6)
|
|
|
2,777,800
|
|
|
1,388,900
|
|
|
1,250
|
|
|
|
May 13, 2017
|
|
Convertible debenture interests
(Note 5(a))
(2)
(6)
|
|
|
104,167
|
|
|
104,167
|
|
|
50
|
|
|
|
July 28, 2017
|
|
Convertible
debenture interests (Note 5(a))
(3)
(6)
|
|
|
77,540
|
|
|
77,540
|
|
|
41
|
|
|
|
July 28 2017
|
|
Debentures converted (Note 5(a))
(4)
(6)
|
|
|
14,285,714
|
|
|
14,285,714
|
|
|
2,000
|
|
|
|
Dec. 11, 2017
|
|
Private placement of units @ $1.37 per
unit
(5)
|
|
|
4,541,889
|
|
|
4,541,889
|
|
|
6,222
|
|
|
|
|
|
|
|
|
21,787,110
|
|
|
20,398,210
|
|
|
9,563
|
|
|
|
(1)
|
The warrants have an exercise price of $0.70 per share
expiring March 9, 2019.
|
|
|
(2)
|
The warrants have an exercise price of $0.48 per share
expiring February 13, 2019.
|
|
|
(3)
|
The warrants have an exercise price of $0.53 per share
expiring February 13, 2019.
|
|
|
(4)
|
The warrants have an exercise price of $0.33 per share
expiring February 13, 2019.
|
|
|
(5)
|
The warrants have an exercise price of $1.71 per share
expiring December 11, 2019.
|
|
|
(6)
|
Exercised into common shares on December 11,
2017.
|
On December 11, 2017, the Company
exercised an aggregate of 15,856,321 warrants of Radient for a total cost of
$5,777. On exercise, the aggregate fair value of the warrants of $23,723 was
estimated using the Black-Scholes pricing model with the following weighted
average assumptions: risk-free interest rate of 1.49%; dividend yield of 0%;
stock price volatility of 96.70%; and an expected life of 1.19 years. During the
three and six months ended December 31, 2017, the Company recorded unrealized
gains on changes in fair value of these derivatives of $22,786 and $19,083,
respectively, (2016 - $nil) and fully amortized the remaining deferred inception
gain of $3,856 and $4,421, respectively, related to the 15,856,321 warrants
exercised.
At December 31, 2017, the fair value
of the 37,643,431 common shares of $66,253 was based on a quoted market price of
$1.76 per share and the fair value of the 4,541,889 warrants of $3,942 was
estimated using the Black-Scholes pricing model with the following weighted
average assumptions: risk-free interest rate of 1.66%; dividend yield of 0%;
stock price volatility of 91.63%; and an expected life of 1.95 years. During the
three and six months ended December 31, 2017, the Company recognized unrealized
gains on changes in fair value of these marketable securities of $3,700 and
$3,700 respectively (2016 - $nil) and derivatives of $22,786 and $23,603
respectively (2016 - $nil).
As at June 30, 2017, the Company held
an aggregate of 2,881,9674 common shares and 1,493,0677 warrants. At June 30,
2017, the $1,412 fair value of these shares was based on a quoted market price
of $0.49 per share (inception - $0.83) and the $292 fair value of the warrants
was estimated using the Black-Scholes pricing model with the following weighted
average assumptions: risk-free interest rate of 1.10% (inception – 0.83%);
dividend yield of 0% (inception – 0%); stock price volatility of 99.05%
(inception – 101.82%); and an expected life of 1.69 years (inception – 1.98
years).
8
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
|
|
|
Capitalized
|
|
|
Biological asset
|
|
|
Carrying
|
|
|
|
|
|
cost
|
|
|
fair value adjustment
|
|
|
value
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harvested cannabis - finished goods
|
|
4,555
|
|
|
4,584
|
|
|
9,139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cannabis oils
|
|
|
|
|
|
|
|
|
|
|
|
Work-in-process
|
|
567
|
|
|
893
|
|
|
1,460
|
|
|
|
Finished goods
|
|
247
|
|
|
356
|
|
|
603
|
|
|
|
|
|
814
|
|
|
1,249
|
|
|
2,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplies and consumables
|
|
252
|
|
|
-
|
|
|
252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home cultivation systems
|
|
|
|
|
|
|
|
|
|
|
|
Raw materials
|
|
309
|
|
|
-
|
|
|
309
|
|
|
|
Work-in-process
|
|
247
|
|
|
-
|
|
|
247
|
|
|
|
Finished goods
|
|
92
|
|
|
-
|
|
|
92
|
|
|
|
|
|
648
|
|
|
-
|
|
|
648
|
|
|
|
Hemp seed food products
|
|
|
|
|
|
|
|
|
|
|
|
Raw materials
|
|
568
|
|
|
325
|
|
|
893
|
|
|
|
Work-in-process
|
|
158
|
|
|
82
|
|
|
240
|
|
|
|
Finished goods
|
|
1,429
|
|
|
646
|
|
|
2,075
|
|
|
|
|
|
2,155
|
|
|
1,053
|
|
|
3,208
|
|
|
|
Balance, December 31, 2017
|
|
9,477
|
|
|
5,833
|
|
|
15,310
|
|
|
|
|
|
Capitalized
|
|
|
Biological asset
|
|
|
Carrying
|
|
|
|
|
|
cost
|
|
|
fair value adjustment
|
|
|
value
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Harvested cannabis
|
|
|
|
|
|
|
|
|
|
|
|
Work-in-process
|
|
304
|
|
|
373
|
|
|
677
|
|
|
|
Finished goods
|
|
2,332
|
|
|
2,836
|
|
|
5,168
|
|
|
|
|
|
2,636
|
|
|
3,209
|
|
|
5,845
|
|
|
|
Cannabis oils
|
|
|
|
|
|
|
|
|
|
|
|
Work-in process
|
|
342
|
|
|
790
|
|
|
1,132
|
|
|
|
Finished goods
|
|
147
|
|
|
397
|
|
|
544
|
|
|
|
|
|
489
|
|
|
1,187
|
|
|
1,676
|
|
|
|
Supplies and consumables
|
|
182
|
|
|
-
|
|
|
182
|
|
|
|
Balance, June 30, 2017
|
|
3,307
|
|
|
4,396
|
|
|
7,703
|
|
During the three and six months ended
December 31, 2017, inventory recognized as an expense in cost of goods sold
amounted to $4,837 and $7,909, respectively ($2,436 and $4,613 during the three
and size months ended December 31, 2016).
9
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
The Company’s biological assets consist
of seeds and cannabis plants. The changes in the carrying value of biological
assets are as follows:
|
|
|
|
$
|
|
|
|
Balance at June 30, 2016
|
|
1,845
|
|
|
|
Changes in fair value less cost to sell due
to biological transformation
|
|
22,772
|
|
|
|
Transferred to inventory upon harvest
|
|
(20,529
|
)
|
|
|
Balance at June 30, 2017
|
|
4,088
|
|
|
|
Production costs capitalized
|
|
1,204
|
|
|
|
Changes in fair value less cost to sell due
to biological transformation
|
|
9,844
|
|
|
|
Transferred to inventory upon harvest
|
|
(9,265
|
)
|
|
|
Balance at December 31, 2017
|
|
5,871
|
|
The average grow cycle of plants up to
the point of harvest is approximately twelve weeks. Plants not in production are
valued at the fair market value less costs to sell. Plants in production are
plants that are in the flowering stage and are valued at fair value less cost to
complete and cost to sell, where fair value represents the Company’s selling
price per gram of dried cannabis. As of December 31, 2017, the fair value less
cost to complete and cost to sell was determined to be $7.15 per gram (June 30,
2017 - $6.52 per gram).
|
8.
|
Promissory Notes
Receivable
|
|
|
(a)
|
Pursuant to promissory notes, the Company advanced an
aggregate of $2,250 (June 30, 2017 - $750) to Hempco. The notes were
secured, bore interest of between 8% to 10% per annum and were due on
demand. On November 15, 2017, the loans and accrued interest were repaid
and applied towards the Company’s private placement subscription in Hempco
(Note 11(e)).
|
|
|
|
|
|
|
(b)
|
On September 26, 2017, the Company entered into a loan
agreement with H2 Biopharma Inc. (“H2”) in the principal amount of $3,000.
The loan is secured, bears interest at 12% per annum, and was receivable
on demand after November 2, 2017. On November 30, 2017, the Company
acquired a 100% interest in H2. The loan remains outstanding and is
eliminated on consolidation. (Note 11(f))
|
|
|
|
|
|
|
(c)
|
Aggregate promissory notes of $716 (June 30, 2017 - $472)
issued to BCNL and UCI were secured, receivable on demand and bore
interest at 8% per annum. On September 29, 2017, the Company acquired BCNL
and UCI and the loans were applied against the acquisition consideration
(Note 11(d)).
|
|
9.
|
Property, Plant and
Equipment
|
|
|
|
|
|
|
|
|
|
|
Computer
|
|
|
|
|
|
Production
|
|
|
Finance
|
|
|
|
|
|
|
|
|
Building &
|
|
|
Construction
|
|
|
Software &
|
|
|
Furniture
|
|
|
& Other
|
|
|
Lease
|
|
|
|
|
|
|
|
|
Improvements
|
|
|
in progress
|
|
|
Equipment
|
|
|
& Fixtures
|
|
|
Equipment
|
|
|
Equipment
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2016
|
|
10,831
|
|
|
-
|
|
|
444
|
|
|
109
|
|
|
1,020
|
|
|
-
|
|
|
12,404
|
|
|
|
Additions
|
|
1,944
|
|
|
26,571
|
|
|
398
|
|
|
149
|
|
|
778
|
|
|
544
|
|
|
30,384
|
|
|
|
Additions from business combinations
|
|
4,407
|
|
|
-
|
|
|
63
|
|
|
34
|
|
|
364
|
|
|
-
|
|
|
4,868
|
|
|
|
Disposals
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(12
|
)
|
|
-
|
|
|
(12
|
)
|
|
|
Balance, June 30, 2017
|
|
17,182
|
|
|
26,571
|
|
|
905
|
|
|
292
|
|
|
2,150
|
|
|
544
|
|
|
47,644
|
|
|
|
Additions
|
|
4,140
|
|
|
52,481
|
|
|
519
|
|
|
2,035
|
|
|
2,444
|
|
|
-
|
|
|
61,619
|
|
|
|
Additions from business
combinations
|
|
715
|
|
|
7,969
|
|
|
14
|
|
|
5
|
|
|
2,292
|
|
|
-
|
|
|
10,995
|
|
|
|
Foreign currency translation
|
|
-
|
|
|
-
|
|
|
4
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4
|
|
|
|
Balance, December 31, 2017
|
|
22,037
|
|
|
87,021
|
|
|
1,442
|
|
|
2,332
|
|
|
6,886
|
|
|
544
|
|
|
120,262
|
|
10
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
9.
|
Property, Plant and Equipment
(Continued)
|
|
|
|
|
|
|
|
|
|
|
Computer
|
|
|
|
|
|
Production
|
|
|
Finance
|
|
|
|
|
|
|
|
|
Building &
|
|
|
Construction
|
|
|
Software &
|
|
|
Furniture
|
|
|
& Other
|
|
|
Lease
|
|
|
|
|
|
|
|
|
Improvements
|
|
|
In Progress
|
|
|
Equipment
|
|
|
& Fixtures
|
|
|
Equipment
|
|
|
Equipment
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Accumulated Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2016
|
|
616
|
|
|
-
|
|
|
162
|
|
|
19
|
|
|
237
|
|
|
-
|
|
|
1,034
|
|
|
|
Depreciation
|
|
438
|
|
|
-
|
|
|
221
|
|
|
40
|
|
|
351
|
|
|
39
|
|
|
1,089
|
|
|
|
Disposals
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2
|
)
|
|
-
|
|
|
(2
|
)
|
|
|
Balance, June 30, 2017
|
|
1,054
|
|
|
-
|
|
|
383
|
|
|
59
|
|
|
586
|
|
|
39
|
|
|
2,121
|
|
|
|
Depreciation
|
|
256
|
|
|
-
|
|
|
179
|
|
|
101
|
|
|
311
|
|
|
39
|
|
|
886
|
|
|
|
Foreign currency translation
|
|
-
|
|
|
-
|
|
|
4
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4
|
|
|
|
Balance, December 31, 2017
|
|
1,310
|
|
|
-
|
|
|
566
|
|
|
160
|
|
|
897
|
|
|
78
|
|
|
3,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Book Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
16,128
|
|
|
26,571
|
|
|
522
|
|
|
233
|
|
|
1,564
|
|
|
505
|
|
|
45,523
|
|
|
|
December 31, 2017
|
|
20,727
|
|
|
87,021
|
|
|
876
|
|
|
2,172
|
|
|
5,989
|
|
|
466
|
|
|
117,251
|
|
The Company is constructing an 800,000
square foot production facility at the Edmonton International Airport (“EIA”).
As at December 31, 2017, costs related to the construction of this facility were
capitalized as construction in progress and not amortized. Amortization will
commence when construction is completed and the facility is available for its
intended use.
During the three and six months ended
December 31, 2017, $1,308 and $2,554 (three and six months ended December 31,
2016 - $Nil and $Nil) in borrowing costs were capitalized to construction in
progress at a weighted average rate of 20% and 21%, respectively (three and six
months ended December 31, 2016 - Nil% and Nil%).
|
10.
|
Investments in Associates and Joint
Venture
|
The investments in associates and joint
venture consist of:
|
|
|
|
December 31, 2017
|
|
|
June 30, 2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Australis Holdings LLP
|
|
-
|
|
|
-
|
|
|
|
Cann
Group Limited
|
|
24,152
|
|
|
-
|
|
|
|
|
|
24,152
|
|
|
-
|
|
|
|
(a)
|
Australis Holdings LLP
|
On April 7, 2015, ACI entered into a
Limited Liability Partnership Agreement with AJR Builders Group LLC and formed
Australis Holdings LLP, a Washington Limited Liability Partnership. Each of ACI
and AJR holds a 50% interest in Australis Holdings.
Australis Holdings purchased two
parcels of land in 2015 totaling approximately 24.5 acres (the “Property”) in
Whatcom county, Washington for USD$2,300, with the initial intention to
construct a new cannabis production and processing facility. The Company
subsequently decided not to move forward with US cannabis production and listed
the land for sale.
11
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
10.
|
Investments in Associates and Joint Venture
(Continued)
|
|
|
(a)
|
Australis Holdings LLP
(continued)
|
Pursuant to a promissory note dated
April 10, 2015, the Company through ACI loaned $1,645 to Australis Holdings to
fund the purchase of the Property. The note bears interest at a rate of 5% per
annum and had an original maturity date of October 31, 2017 which was extended
to October 31, 2018. In the event of a default, interest will be charged at 12%
per annum. The note is secured by a first mortgage on one parcel of the Property
and a second mortgage on the other title as well as a general security agreement
granting ACI security over all present and after acquired property of Australis
Holdings.
During the three and six months ended
December 31, 2017, the Company accrued interest of $10 and $21 respectively
(three and six months ended December 31, 2016 - $10 and $21) related to this
loan.
Included in loans receivable are
advances of $1,627 to Australis Holdings. The advances are unsecured,
non-interest bearing and have no fixed terms of repayment.
The following table summarizes the
financial information of Australis Holdings:
Statement of Financial Position:
|
|
|
|
December 31, 2017
|
|
|
June 30, 2017
|
|
|
|
|
|
US$
|
|
|
US$
|
|
|
|
Current assets
|
|
3
|
|
|
107
|
|
|
|
Non-current assets
|
|
2,300
|
|
|
2,300
|
|
|
|
Current liabilities
|
|
(1,266
|
)
|
|
(283
|
)
|
|
|
Non-current liabilities
|
|
(1,477
|
)
|
|
(2,415
|
)
|
|
|
Net assets (100%)
|
|
(440
|
)
|
|
(291
|
)
|
Statement of Loss and Comprehensive
Loss
|
|
Net loss and comprehensive loss (100%)
|
|
149
|
|
|
138
|
|
|
|
|
|
December 31, 2017
|
|
|
June 30, 2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Investment at cost
|
|
24,204
|
|
|
-
|
|
|
|
Income (loss) recognized on investment
|
|
(52
|
)
|
|
-
|
|
|
|
Ending balance
|
|
24,152
|
|
|
-
|
|
As of December 31, 2017, the Company’s
accounted for its investment in Cann Group under the equity method. (Note
5(b)(i))
12
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
10.
|
Investments in Associates and Joint Jenture
(Continued)
|
|
|
(b)
|
Cann Group (continued)
|
The following table summarizes the
financial information of Cann Group as at December 31, 2017, based on publicly
available financial information:
|
|
|
|
December 31, 2017
|
|
|
|
|
|
AUS $
|
|
|
|
Current assets
|
|
67,196
|
|
|
|
Non-current assets
|
|
3,546
|
|
|
|
Current liabilities
|
|
(1,149
|
)
|
|
|
Non-current liabilities
|
|
(18
|
)
|
|
|
Net assets (100%)
|
|
69,575
|
|
|
|
|
|
One month ended
|
|
|
|
|
|
December 31, 2017
|
|
|
|
Net loss and comprehensive loss (100%)
|
|
(244
|
)
|
The following table summarizes the
carrying amount of the Company’s interest in Cann Group as at December 31, 2017:
|
|
|
|
December 31, 2017
|
|
|
|
Company’s share (%)
|
|
21.8%
|
|
|
|
|
|
$
|
|
|
|
Share of net assets
|
|
15,179
|
|
|
|
Goodwill
|
|
9,025
|
|
|
|
Share of net loss and comprehensive loss
|
|
(52
|
)
|
|
|
|
|
24,152
|
|
Based on its closing share price of
A$2.74 on December 31, 2017, the Cann Group shares held by Aurora have a fair
value of approximately $77,240.
On August 17, 2016, the Company
completed the acquisition of all of the issued and outstanding shares of
CanvasRx pursuant to a Share Purchase Agreement (the “Agreement”) dated August
9, 2016, as amended and restated on August 16, 2016 (the “Acquisition”) for a
total consideration of $37,127. CanvasRx is a counseling and outreach service
provider with over 24 physical locations in the provinces of Ontario and
Alberta, Canada. The transaction was accounted for as a business combination.
|
|
|
|
$
|
|
|
|
Consideration
|
|
|
|
|
|
Cash paid at closing
|
|
1,575
|
|
|
|
Performance
milestones achieved related to patients 17,875,000 common shares issued
|
|
11,440
|
|
|
|
Cash paid
|
|
1,575
|
|
|
|
Loan to CanvasRx
|
|
450
|
|
|
|
CanvasRx transaction expenses
|
|
250
|
|
|
|
Other
liabilities assumed
|
|
18
|
|
|
|
Contingent consideration
(1)
|
|
21,819
|
|
|
|
|
|
37,127
|
|
13
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
|
(1)
|
Contingent consideration represents the estimated
discounted value of the $26,750 gross consideration to be paid out over a
20-month period on achievement of future performance milestones related to
new counseling rooms opened, patient accruals and revenue
targets.
|
|
|
|
|
|
|
|
This consideration may be satisfied, at the Company’s
sole discretion, in cash or common shares at a 15% discount to the market
price at the date of issuance, unless the market price of the Company’s
share is $0.47 or below, at which point the consideration is convertible
into a fixed number of shares. In any case, the issuance of the Company’s
shares should not result in former CanvasRx shareholders accumulating 50%
or more of the Company’s shares. If the consideration payments cannot be
satisfied in cash and the issuance of shares would result in the former
shareholders of CanvasRx accumulating 50% or more of the Company’s shares,
a convertible debenture will be issued.
|
|
|
|
|
|
|
|
During the year ended June 30, 2017, certain patient and
counselling room performance milestones were achieved, and the Company
paid $2,608 and issued 2,926,103 shares at $2.074 per share to the former
shareholders of CanvasRx.
|
|
|
|
|
|
|
|
During the six months ended December 31, 2017, the
Company issued 5,016,293 shares at weighted average price of $2.32 per
share for patient, counselling rooms and revenue milestones
achieved.
|
|
|
|
|
|
|
|
All common shares issued were accounted for at fair value
at the dates of issuance.
|
The purchase price was allocated as
follows:
|
|
|
|
$
|
|
|
|
Net liabilities acquired
|
|
(797
|
)
|
|
|
Intangible asset – customer relationships
|
|
4,250
|
|
|
|
Deferred tax liability
|
|
(836
|
)
|
|
|
Goodwill
|
|
34,510
|
|
|
|
|
|
37,127
|
|
Goodwill recognized from the
acquisition represents the expected benefit of future market share, revenue
growth, and other intangibles that do not qualify for separate recognition
including brand name and assembled workforce. None of the goodwill arising on
this acquisition is deductible for tax purposes.
The Company is indemnified from any
tax liability arising from pre-acquisition transactions of CanvasRx through
adjustments to the purchase consideration.
The customer relationships are
amortized on a straight-line basis over a period of 7 years. The Company
recorded amortization of $152 and $569 for the three and six months ended
December 31, 2017.
Fair values of the net liabilities
acquired included the following:
|
|
|
|
$
|
|
|
|
Sales tax receivable
|
|
39
|
|
|
|
Accounts receivable
|
|
212
|
|
|
|
|
|
251
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities
|
|
109
|
|
|
|
Deferred revenue
|
|
939
|
|
|
|
|
|
1,048
|
|
|
|
|
|
(797
|
)
|
14
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
11.
|
Acquisitions
(Continued)
|
Net cash outflow on the Acquisition is
as follows:
|
|
|
|
$
|
|
|
|
Cash consideration
|
|
3,400
|
|
|
|
Add:
bank overdraft
|
|
18
|
|
|
|
|
|
3,418
|
|
During the six months ended December
31, 2017, acquisition costs of $284 (2016 - $165) related to certain
post-closing and contingent consideration costs were excluded from the
consideration transferred and were recognized as an expense in the current
period.
For the year ended June 30, 2017,
CanvasRx accounted for $1,702 in net loss since August 17, 2016. This amount
included revenues of $2,145. If the acquisition had been completed on July 1,
2016, the Company estimates it would have recorded an increase of $159 in
revenues and an increase of $920 in net loss.
During the six months ended December
31, 2017, CanvasRx accounted for $1,808 in revenues and $1,191 in net loss.
|
|
(b)
|
Peloton (“Aurora Vie”)
|
On April 28, 2017, the Company,
through its wholly-owned subsidiary, 10094595 Canada Inc., acquired 100% of the
net assets of Peloton, a late-stage ACMPR applicant, out of bankruptcy
protection. The transaction was accounted for as an asset acquisition.
The Company acquired all of the common
shares of Peloton for a total consideration of $9,733 consisting of:
|
|
|
|
$
|
|
|
|
573,707 common shares
|
|
1,486
|
|
|
|
Cash
|
|
5,156
|
|
|
|
Trustee, legal fees and other
acquisition costs
|
|
2,186
|
|
|
|
Acquisition related costs - 325,518 common shares
|
|
905
|
|
|
|
|
|
9,733
|
|
The allocation of the consideration to
the fair value of the net assets acquired at the date of acquisition is as
follows:
|
|
|
|
$
|
|
|
|
Building
|
|
4,401
|
|
|
|
Office, furniture and equipment
|
|
445
|
|
|
|
Intangible asset – ACMPR license application
|
|
4,887
|
|
|
|
|
|
9,733
|
|
15
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
11.
|
Acquisitions
(Continued)
|
|
|
(b)
|
Peloton (“Aurora Vie”)
(continued)
|
In October 2017, the Company completed
construction of the former Peloton 40,000 square foot cannabis production
facility located in Pointe Claire, Quebec. The facility, to be known as Aurora
Vie, received its cultivation license from Health Canada on October 27, 2017.
Upon receipt of the ACMPR license to sell, the intangible asset will be
amortized on a straight-line basis over the useful life of the facility or lease
term.
The total consideration is subject to
change pending settlement of all claims with the previous creditors by the
bankruptcy trustee.
In May 2017, the Company completed the
acquisition of Pedanios, a registered wholesale importer, exporter and
distributor of medical cannabis in Germany. The Company acquired all of the
issued and outstanding shares of Pedanios for a total consideration of $23,728.
The transaction was accounted for as a business combination.
|
|
Consideration
|
|
$
|
|
|
|
Cash paid at
closing (€2,000)
|
|
3,019
|
|
|
|
8,316,782 common shares issued
|
|
20,709
|
|
|
|
|
|
23,728
|
|
The purchase price was allocated as
follows:
|
|
|
|
$
|
|
|
|
Net assets acquired
|
|
1,184
|
|
|
|
Intangible assets – permits and licenses
|
|
22,544
|
|
|
|
Goodwill
|
|
6,590
|
|
|
|
Deferred tax liability
|
|
(6,590
|
)
|
|
|
|
|
23,728
|
|
Goodwill reflects the deferred income
tax liability recognized for all taxable temporary differences. None of the
goodwill arising on this acquisition is deductible for tax purposes. The permits
and licenses are classified as indefinite life intangible assets and are not
amortized but are tested for impairment on an annual basis.
Fair values of the net assets acquired
included the following:
|
|
|
|
$
|
|
|
|
Cash
|
|
743
|
|
|
|
Trade receivables
|
|
358
|
|
|
|
Inventories
|
|
328
|
|
|
|
Prepaid expenses and deposits
|
|
6
|
|
|
|
Equipment
|
|
13
|
|
|
|
|
|
1,448
|
|
|
|
Accounts payables and accrued liabilities
|
|
264
|
|
|
|
|
|
1,184
|
|
16
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
11.
|
Acquisitions
(Continued)
|
Net cash outflow on the Acquisition is
as follows:
|
|
|
|
$
|
|
|
|
Cash consideration
|
|
3,019
|
|
|
|
Less: cash acquired
|
|
743
|
|
|
|
|
|
2,276
|
|
During the six months ended December
31, 2017, acquisition costs of $28 (2016 - $nil) related to certain post-closing
and contingent consideration costs were excluded from the consideration
transferred and were recognized as an expense in the current period.
For the year ended June 30, 2017,
Pedanios accounted for $294 in net loss since May 30, 2017. This amount included
revenues of $439. If the acquisition had been completed on July 1, 2016, the
Company estimates it would have recorded an increase of $1,699 in revenues and
an increase of $19 in net loss.
For the six months ended December 31,
2017, Pedanios accounted for $3,718 in revenues and $647 in net income.
|
|
(d)
|
BC Northern Lights and Urban Cultivator
Inc.
|
On September 29, 2017, the Company
completed the acquisition of BCNL and UCI. BCNL is in the business of production
and sale of proprietary systems for the safe, efficient and high-yield indoor
cultivation of cannabis and UCI is in the business of production and sale of
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home kitchens. The Company acquired all of
the issued and outstanding shares of BCNL and UCI for aggregate consideration of
$5,513. The transaction was accounted for as a business combination.
|
|
|
|
$
|
|
|
|
Consideration
|
|
|
|
|
|
Cash
|
|
4,010
|
|
|
|
89,107 common
shares
|
|
248
|
|
|
|
89,107 warrants
(1)
|
|
136
|
|
|
|
Contingent consideration
(2)
|
|
1,119
|
|
|
|
|
|
5,513
|
|
|
|
(1)
|
The warrants are exercisable at $2.8056 per share until
September 29, 2020.
|
|
|
(2)
|
Contingent consideration represents the estimated fair
value of the $4,000 gross consideration to be paid over a period of three
years on achievement of future performance milestones related to aggregate
earnings before interest, taxes, depreciation and amortization (“EBITDA”).
The consideration may be paid in cash or common
shares.
|
17
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
11.
|
Acquisitions
(Continued)
|
|
|
(d)
|
BC Northern Lights and Urban Cultivator Inc.
(continued)
|
The purchase price was allocated as
follows:
|
|
|
|
$
|
|
|
|
Net assets acquired
|
|
680
|
|
|
|
Intangible assets
|
|
|
|
|
|
Customer
relationships
|
|
105
|
|
|
|
Brand
|
|
655
|
|
|
|
Assembled
workforce
|
|
65
|
|
|
|
Design patent
|
|
521
|
|
|
|
Goodwill
|
|
3,664
|
|
|
|
Deferred tax liability
|
|
(177
|
)
|
|
|
|
|
5,513
|
|
Goodwill represents expected
synergies, future growth and other intangibles that do not qualify for separate
recognition, as well as the deferred income tax liability recognized for all
taxable temporary differences. None of the goodwill arising on this acquisition
is deductible for tax purposes.
Fair values of the net assets acquired
included the following:
|
|
|
|
$
|
|
|
|
Cash
|
|
138
|
|
|
|
Trade receivables
|
|
279
|
|
|
|
Other receivables
|
|
115
|
|
|
|
Inventories
|
|
874
|
|
|
|
Prepaid expenses and deposits
|
|
55
|
|
|
|
Equipment
|
|
149
|
|
|
|
|
|
|
|
|
|
Accounts payables and accrued liabilities
|
|
844
|
|
|
|
Deferred revenues
|
|
86
|
|
|
|
|
|
680
|
|
The gross contractual amount for trade
receivables is $389, of which $110 is expected to be uncollectible.
Net cash outflow on acquisition of
BCNL and UCI is as follows:
|
|
|
|
$
|
|
|
|
Cash consideration
|
|
4,010
|
|
|
|
Less: cash acquired
|
|
138
|
|
|
|
|
|
3,872
|
|
During the six months ended December
31, 2017, acquisition related costs of $37 were excluded from the consideration
transferred and recognized as an expense in the current period.
For the six months ended December 31,
2017, BCNL and UCI accounted for $796 in net loss since September 29, 2017. This
amount included revenues of $777. If the acquisition had been completed on July
1, 2017, the Company estimates it would have recorded an increase of $1,062 in
revenues and an increase of $41 in net loss.
18
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
11.
|
Acquisitions
(Continued)
|
|
|
(e)
|
Hempco Food and Fiber Inc.
|
On November 14, 2017, the Company
acquired a 22.3% ownership interest in Hempco by subscribing to its private
placement of 10,558,676 units at $0.3075 per unit for gross proceeds of $3,247.
Each unit consisted of one common share and one warrant exercisable at $0.41 per
share for a period of two years, subject to accelerated expiry if Hempco’s
shares trade at or above a VWAP of $0.65 for any 30-day period.
Hempco, a Canadian public company
listed on the TSX Venture Exchange, is a producer of industrial hemp products
and is developing hemp foods, hemp fiber and hemp nutraceuticals.
The Company also entered into a call
option agreement to acquire up to an aggregate of 10,754,942 shares from the
majority owners of Hempco, which, upon exercise, would bring the Company’s total
ownership interest in Hempco to over 50.1% on a fully diluted basis. As a
result, due primarily to potential voting rights, the Company has control over
Hempco, and the results of Hempco have been consolidated in these financial
statements. The non-controlling interest recognized at the acquisition date was
recorded at its proportionate share of Hempco’s fair value of identifiable net
assets.
|
|
|
|
$
|
|
|
|
Consideration
|
|
|
|
|
|
Cash paid at closing
|
|
946
|
|
|
|
Loans repayment (Note 8(a))
|
|
2,301
|
|
|
|
|
|
3,247
|
|
The following table summarizes the
estimated fair values of the assets acquired and liabilities assumed at the date
of acquisition:
|
|
|
|
$
|
|
|
|
Cash
|
|
908
|
|
|
|
Trade receivables
|
|
286
|
|
|
|
Other receivables
|
|
1,102
|
|
|
|
Short-term investments
|
|
511
|
|
|
|
Inventories
|
|
2,606
|
|
|
|
Prepaid expenses and deposits
|
|
178
|
|
|
|
Equipment
|
|
2,876
|
|
|
|
|
|
|
|
|
|
Accounts payables and accrued liabilities
|
|
968
|
|
|
|
|
|
7,499
|
|
The gross contractual amount for trade
receivables is $318, of which $32 is expected to be uncollectible.
The goodwill arising on the
acquisition is as follows:
|
|
|
|
$
|
|
|
|
Consideration transferred
|
|
3,247
|
|
|
|
Non-controlling interest (77.7%)
|
|
6,503
|
|
|
|
Net assets
|
|
(7,499
|
)
|
|
|
Goodwill
|
|
2,251
|
|
19
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
11.
|
Acquisitions
(Continued)
|
|
|
(e)
|
Hempco Food and Fiber Inc.
(continued)
|
Goodwill represents estimated future
income, synergies and other intangibles that do not qualify for separate
recognition. None the goodwill arising on this acquisition is deductible for tax
purposes.
Net cash outflow on acquisition of
Hempco is as follows:
|
|
|
|
$
|
|
|
|
Cash consideration
|
|
3,247
|
|
|
|
Less: cash acquired
|
|
(908
|
)
|
|
|
|
|
2,339
|
|
During the six months ended December
31, 2017, acquisition related costs of $49 have been excluded from the
consideration transferred and have been recognized as an expense in the current
period.
For the six months ended December 31,
2017, Hempco accounted for $470 in net loss since November 14, 2017. This amount
included revenues of $276. If the acquisition had been completed on July 1,
2017, the Company estimates that it would have recorded an increase of $305 in
revenues and an increase of $320 in net loss based on its 22.3% interest in
Hempco.
Non-controlling interest
|
|
|
|
$
|
|
|
|
Balance, June 30, 2016
|
|
-
|
|
|
|
Non-controlling interests arising on
acquisition of Hempco
|
|
3,472
|
|
|
|
Non-controlling interests
relating to outstanding Hempco vested share options and warrants
(1)
|
|
3,030
|
|
|
|
Non-controlling interests relating to
reserves on exercised Hempco share options and warrants
(1)
|
|
818
|
|
|
|
Share of profit (loss) for the period
|
|
(527
|
)
|
|
|
Balance, December 31, 2017
|
|
6,793
|
|
|
|
(1)
|
As at the acquisition date of November 14, 2017,
directors, officers, employees and consultants of Hempco held options to
purchase 2,851,000 common shares of Hempco which expire between April 2019
and April 2022. 777,917 of the outstanding stock options had vested at the
date of acquisition.
|
|
|
|
|
|
|
|
Hempco also had 2,505,120 warrants outstanding exercisable into common
shares which expire between November 2017 and March 2019.
|
|
|
|
|
|
|
|
$3,030 represents the market-based measure of these
vested options and warrants in accordance with IFRS at the date of
acquisition. During the three months ended December 31, 2017, the Company
recognized $364 share-based compensation for Hempco’s stock options vested
during the period from the date of acquisition.
|
|
|
|
|
|
|
|
During the three months ended December 31, 2017, 368,000
stock options and 1,792,275 warrants were exercised into common shares of
Hempco. Accordingly, the Company recognized stock option reserves of $157
of which, $123 was allocated to non-controlling interest, and warrant
reserves of $882 of which, $694 was allocated to non- controlling
interest.
|
The purchase price allocation is based
on management’s preliminary assessment of the fair value of the assets acquired
and liabilities assumed at the date of acquisition and is subject to change.
20
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
11.
|
Acquisitions
(Continued)
|
On November 30, 2017, the Company
acquired 100% of the net assets of H2. H2 is currently completing a
state-of-the-art, purpose-built 48,000 square foot cannabis production facility
which upon completion is projected to produce approximately 4,500 kilograms of
high-quality cannabis per annum. The facility is located on 46 acres of land
with significant expansion potential which H2 has the right to acquire for $136.
The transaction was accounted for as an asset acquisition.
The Company acquired all of the common
shares of H2 for a total consideration of $30,650 consisting of:
|
|
|
|
$
|
|
|
|
Consideration
|
|
|
|
|
|
1,910,339 common shares
|
|
15,283
|
|
|
|
Contingent
consideration
(1)
|
|
14,957
|
|
|
|
Acquisition costs
|
|
410
|
|
|
|
|
|
30,650
|
|
|
|
(1)
|
Contingent consideration payable of $14,957 represents
the discounted value of the $15,028 gross consideration to be paid out
over a five-year period on achievement of future performance milestones
related to completing the construction of the facility and obtaining the
relevant licenses to cultivate and sell cannabis. This consideration is to
be paid in common shares based on the VWAP of the Company’s shares for the
last five trading days immediately prior to the Company confirming that
the particular milestone has been achieved. On closing, the Company issued
and deposited 2,878,934 common shares into escrow for the contingent
consideration (Note 15(c)).
|
The allocation of the consideration to
the fair value of the net assets acquired and liabilities assumed at the date of
acquisition is as follows:
|
|
|
|
$
|
|
|
|
Cash
|
|
205
|
|
|
|
Taxes receivable
|
|
369
|
|
|
|
Accounts payable and accrued
liabilities
|
|
(2,167
|
)
|
|
|
Loan from Aurora
|
|
(3,000
|
)
|
|
|
Deferred tax liability
|
|
(9,129
|
)
|
|
|
|
|
(13,722
|
)
|
|
|
|
|
|
|
|
|
Building under construction
|
|
8,304
|
|
|
|
Late-stage production license
|
|
26,345
|
|
|
|
Future expansion permit
|
|
594
|
|
|
|
Goodwill
|
|
9,129
|
|
|
|
|
|
30,650
|
|
Goodwill reflects the deferred income
tax liability recognized for all taxable temporary differences. None of the
goodwill arising on this acquisition is deductible for tax purposes.
The purchase price allocation is based
on management’s preliminary assessment of the fair value of the assets acquired
and liabilities assumed at the date of acquisition and is subject to change.
21
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
11.
|
Acquisitions
(Continued)
|
On December 4, 2017, the Company,
through its wholly-owned subsidiary, Aurora Larssen, completed the acquisition
of Larssen, a Canadian company that provides consulting on the design,
engineering and construction oversight for advanced greenhouse cultivation
facilities. The Company acquired all of the issued and outstanding shares of
Larssen for aggregate consideration of $9,724. The transaction was accounted for
as a business combination.
|
|
|
|
$
|
|
|
|
Consideration
|
|
|
|
|
|
Cash paid at closing
|
|
3,500
|
|
|
|
Future cash
consideration payable
(1)
|
|
3,057
|
|
|
|
Contingent consideration
(2)
|
|
3,167
|
|
|
|
|
|
9,724
|
|
|
|
(1)
|
Future cash consideration payable represents the
estimated discounted value of the $4,000 gross consideration to be paid
out on the first and second anniversaries of the acquisition
date.
|
|
|
|
|
|
|
(2)
|
Contingent consideration represents the estimated
discounted value of the $6,000 gross consideration to be paid out on
achievement of future performance milestones related to construction
projects completed by Larssen. This consideration can be satisfied in cash
or common shares based on the VWAP of the Company’s shares on the TSX for
the first five trading days of the next calendar year when a milestone is
met.
|
As of the acquisition date, Larssen
had net assets of $nil. The purchase price was allocated as follows:
|
|
|
|
$
|
|
|
|
Net assets acquired
|
|
-
|
|
|
|
Goodwill
|
|
9,724
|
|
|
|
|
|
9,724
|
|
Goodwill represents expected
operational synergies, estimated future income and other intangibles that do not
qualify for separate recognition including intellectual capital, brand name and
assembled workforce. The Company estimates $Nil goodwill to be deductible for
tax purposes.
Net cash outflow on acquisition of
Larssen is as follows:
|
|
|
|
$
|
|
|
|
Cash consideration
|
|
9,724
|
|
|
|
Less: cash acquired
|
|
-
|
|
|
|
|
|
9,724
|
|
During the six months ended December
31, 2017, acquisition related costs of $30 have been excluded from the
consideration transferred and have been recognized as an expense in the current
period.
The acquisition did not have a
material impact to either the consolidated revenues or the consolidated net
income for the six months ended December 31, 2017.
Management continues to work on
refinement of the estimate of the contingent consideration, and the related
amounts are subject to change. The purchase price allocation relating to the
acquisition is not yet finalized and the allocation of the price to the various
assets acquired is subject to change.
22
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
12.
|
Intangible Assets and
Goodwill
|
A continuity of the intangible assets
for the six months ended December 31, 2017 is as follows:
|
|
|
|
Balance at
|
|
|
Acquisition
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
June 30, 2017
|
|
|
Additions
|
|
|
Amortization
|
|
|
Dec 31, 2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships (Note 11(a)(d))
|
|
4,250
|
|
|
105
|
|
|
(569
|
)
|
|
3,786
|
|
|
|
Permits and licenses (Notes
11(b)(c)(f))
|
|
26,837
|
|
|
27,688
|
|
|
-
|
|
|
54,525
|
|
|
|
Brand (Note 11(d))
|
|
-
|
|
|
655
|
|
|
-
|
|
|
655
|
|
|
|
Assembled workforce (Note
11(d))
|
|
-
|
|
|
65
|
|
|
-
|
|
|
65
|
|
|
|
Design patent (Note 11(d))
|
|
-
|
|
|
521
|
|
|
-
|
|
|
521
|
|
|
|
|
|
31,087
|
|
|
29,034
|
|
|
(569
|
)
|
|
59,552
|
|
A continuity of the intangible assets
for the year ended June 30, 2017 is as follows:
|
|
|
|
Balance at
|
|
|
Acquisition
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
June 30, 2016
|
|
|
Additions
|
|
|
Amortization
|
|
|
June 30, 2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships (Note 11(a))
|
|
-
|
|
|
4,250
|
|
|
-
|
|
|
4,250
|
|
|
|
Permits and licenses (Notes 11(b)(c))
|
|
-
|
|
|
26,837
|
|
|
-
|
|
|
26,837
|
|
|
|
|
|
-
|
|
|
31,087
|
|
|
-
|
|
|
31,087
|
|
A continuity of the goodwill for the
six months ended December 31, 2017 is as follows:
|
|
|
|
Balance at
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
June 30,
|
|
|
Acquisition
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
2017
|
|
|
Additions
|
|
|
Impairment
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
CanvasRx (Note 11(a))
|
|
34,510
|
|
|
-
|
|
|
-
|
|
|
34,510
|
|
|
|
Pedanios (Note 11(c))
|
|
6,590
|
|
|
-
|
|
|
-
|
|
|
6,590
|
|
|
|
BCNL / UCI (Note 11(d))
|
|
-
|
|
|
3,664
|
|
|
-
|
|
|
3,664
|
|
|
|
Hempco (Note 11(e))
|
|
-
|
|
|
2,251
|
|
|
-
|
|
|
2,251
|
|
|
|
H2 Biopharma (Note 11(f))
|
|
-
|
|
|
9,129
|
|
|
-
|
|
|
9,129
|
|
|
|
Larssen (Note 11(g))
|
|
-
|
|
|
9,724
|
|
|
-
|
|
|
9,724
|
|
|
|
|
|
41,100
|
|
|
24,768
|
|
|
-
|
|
|
65,868
|
|
A continuity of the goodwill for the
year ended June 30, 2017 is as follows:
|
|
|
|
Balance at
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
June 30,
|
|
|
Acquisition
|
|
|
|
|
|
June 30,
|
|
|
|
|
|
2016
|
|
|
Additions
|
|
|
Impairment
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
CanvasRx (Note 11(a))
|
|
-
|
|
|
34,510
|
|
|
-
|
|
|
34,510
|
|
|
|
Pedanios (Note 11(c))
|
|
-
|
|
|
6,590
|
|
|
-
|
|
|
6,590
|
|
|
|
|
|
-
|
|
|
41,100
|
|
|
-
|
|
|
41,100
|
|
23
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
The Company entered into finance lease
agreements related to three production equipment transactions totaling $543, of
which down payments of $169 were made. The finance leases are repayable over a
period of 4 to 5 years expiring January 2021 and December 2021.
|
|
|
|
December 31, 2017
|
|
|
June 30, 2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Less than 1 year
|
|
108
|
|
|
108
|
|
|
|
Between 1 and 4 years
|
|
290
|
|
|
344
|
|
|
|
Total minimum lease payments
(Note 23(b)(ii))
|
|
398
|
|
|
452
|
|
|
|
Less: amount representing interest at approximately 8.19% to
20.26%
|
|
(81
|
)
|
|
(101
|
)
|
|
|
Present value of minimum
lease payments
|
|
317
|
|
|
351
|
|
|
|
Less: current portion
|
|
(73
|
)
|
|
(69
|
)
|
|
|
|
|
244
|
|
|
282
|
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Balance, June 30, 2016
|
|
-
|
|
|
-
|
|
|
1,281
|
|
|
|
Issued
|
|
75,000
|
|
|
25,000
|
|
|
115,000
|
|
|
|
Equity
portion
|
|
(13,209
|
)
|
|
(5,271
|
)
|
|
(20,587
|
)
|
|
|
Conversion
|
|
(122
|
)
|
|
(16,745
|
)
|
|
(31,607
|
)
|
|
|
Interest
paid
|
|
(849
|
)
|
|
(989
|
)
|
|
(1,895
|
)
|
|
|
Financing fees
|
|
(2,622
|
)
|
|
(899
|
)
|
|
(3,490
|
)
|
|
|
Accretion
|
|
1,094
|
|
|
1,277
|
|
|
2,729
|
|
|
|
Accrued interest
|
|
875
|
|
|
996
|
|
|
2,105
|
|
|
|
Balance, June 30, 2017
|
|
60,167
|
|
|
3,369
|
|
|
63,536
|
|
|
|
Conversion
|
|
(63,102
|
)
|
|
(3,688
|
)
|
|
(66,790
|
)
|
|
|
Interest
paid
|
|
(2,131
|
)
|
|
(148
|
)
|
|
(2,279
|
)
|
|
|
Accretion
|
|
2,768
|
|
|
218
|
|
|
2,986
|
|
|
|
Accrued interest
|
|
2,298
|
|
|
249
|
|
|
2,547
|
|
|
|
Balance, December 31, 2017
|
|
-
|
|
|
-
|
|
|
-
|
|
The liability component of the
convertible notes was valued using Company specific interest rates assuming no
conversion features existed. The debt component is accreted to its fair value
over the term to maturity as a non-cash interest charge and the equity component
is presented in convertible notes reserve as a separate component of
shareholders’ equity.
|
|
(a)
|
On May 2, 2017, the Company completed a private placement
of a two-year unsecured convertible debentures (the “Offering”) in the
aggregate principal amount of $75,000. The debentures bore interest at 7%
per annum, payable semi-annually. The debentures were convertible into
common shares of the Company at a price of $3.29 per share subject to a
forced conversion if the VWAP of the Company’s common shares exceed ed
$4.94 per share for 10 consecutive trading days. On closing, the Company
paid the agent a commission of $2,893 and legal fees and expenses of
$289.
|
|
|
|
|
|
|
|
On November 16, 2017, the Company elected to exercise its
right pursuant to the forced conversion and converted all of the principal
amount outstanding of the remaining debentures. During the six months
ended December 31, 2017, the Company issued 22,750,747 common shares (2016
– nil shares) on the conversion of $74,850 debentures (2016 - $nil) and
paid interest of $2,131 (2016 - $nil) (Note
15(b)(vi)).
|
24
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
14.
|
Convertible Notes
(Continued)
|
|
|
(b)
|
On November 1, 2016, the Company completed a brokered
private placement of a two-year unsecured convertible debentures in the
aggregate principal amount of $25,000. The debentures bore interest at 8%
per annum, payable semi-annually. The principal amount of the debentures
was convertible into common shares of the Company at a price of $2.00 per
share subject to a forced conversion if the VWAP of the Company’s common
shares equaled or exceeded $3.00 per share for 10 consecutive trading
days. On closing, the Company paid the Agent a commission of $1,000 and
legal fees and expenses of $139.
|
|
|
|
|
|
|
|
On November 6, 2017, the Company elected to exercise its
right pursuant to the forced conversion and converted all of the principal
amount outstanding of the remaining debentures. During the six months
ended December 31, 2017, the Company issued 2,310,000 common shares (2016
– nil shares) on the conversion of $4,620 debentures (2016 - $nil) and
paid interest of $148 (2016 - $333) (Note 15(b)(vi)).
|
|
|
|
|
|
|
(c)
|
On November 28, 2017, the Company completed an offering
of 115,000 special warrants at a price of $1,000 per special warrant for
gross proceeds of $115,000. Each special warrant was exercisable into a
$1,000 principal amount of convertible debentures of the Company following
the Company obtaining a receipt from the applicable securities regulatory
authorities in Canada for a final short form prospectus qualifying the
distribution of the debentures.
|
|
|
|
|
|
|
|
On closing of the special warrant offering, the Company
paid financing fees of $3,900 comprised of underwriters’ commissions of
$3,734, legal fees of $126 and regulatory and transfer agent fees of $166.
As at December 31, 2017, $111,009 special warrant subscriptions were
received.
|
|
|
|
|
|
|
|
Subsequent to December 31, 2017, the special warrants
were exercised into a $115,000 principal amount of convertible debentures.
The debentures are unsecured, bear interest at 6% per annum and mature on
November 28, 2022. The principal amount of the debentures is convertible
into common shares of the Company at a price of $6.50 per share subject to
a forced conversion if after 4 months and 1 day following closing, the
VWAP of the Company’s common shares equals or exceeds $9.00 per share for
10 consecutive trading days.
|
Unlimited number of common voting
shares without par value;
Unlimited number of Class “A” Shares with a par
value of $1.00 each; and
Unlimited number of Class “B” Shares with a par
value of $5.00 each.
|
|
(b)
|
Issued and outstanding
|
At December 31, 2017, 469,431,262
common shares (June 30, 2017 – 366,549,244) were issued and fully paid.
On July 13, 2016, the Company entered
into an agreement for a drawdown equity facility of up to $5,000 (the “Equity
Facility”). Under the Equity Facility, the Company may sell, on a private
placement basis, units of the Company of between $100 to $500 per tranche, at a
discount of 25% to the market price or such lesser discounts as allowed by the
Exchange, over a period of eighteen months. Each unit will consist of one common
share and one-half of one common share purchase warrant. Each whole warrant will
be exercisable into one common share at a 25% premium to the market price for a
period of 5 years from the date of issuance. To date, the Company has not drawn
down on this Equity Facility. On January 13, 2018, the Equity Facility expired.
25
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
15.
|
Share Capital
(Continued)
|
|
|
(b)
|
Issued and outstanding
(continued)
|
|
|
(i)
|
On November 30, 2017, the Company issued 4,789,273 shares
at a fair value of $30,240 pursuant to the acquisition of H2 (Note
11(f)).
|
|
|
|
|
|
|
(ii)
|
On November 29, 2017, the Company issued 127,128 shares
at a fair value of $858 pursuant to the exercise of restricted share units
granted on September 29, 2017. Non-cash compensation charges of $351 were
reclassified from reserves to share capital on the exercise of these
units.
|
|
|
|
|
|
|
(iii)
|
On November 2, 2017, the Company closed a bought deal
financing of 23,000,000 units at a price of $3.00 per unit for gross
proceeds of $69,000. Each unit consisted one common share and one warrant
exercisable at a price of $4.00 per share for a period of three years.
Concurrently, the Company closed a non-brokered private placement of
2,000,000 units for gross proceeds of $6,000 having the same terms as the
bought deal financing.
|
|
|
|
|
|
|
|
Total cash share issue costs amounted to $6,640 which
consisted of underwriters’ commissions of $4,002, underwriters’ expenses
of $10, professional fees of $316 and regulatory fees of $26. In addition,
the Company issued an aggregate of 1,333,980 compensation warrants to the
underwriters at a fair value of $2,286. The compensation warrants are
exercisable into one common share at an exercise price of $3.00 per share
and expires on February 28, 2019. The fair value of the compensation
warrants at the date of grant was estimated at $1.71 per warrant based on
the following weighted average assumptions: Stock price volatility –
85.49%; Risk-free interest rate – 1.40%; Dividend yield - 0.00%; and
Expected life - 3 years.
|
|
|
|
|
|
|
(iv)
|
On September 29, 2017, the Company issued 89,107 shares
at a fair value of $248 pursuant to the acquisition of BCNL and UCI. (Note
11(d))
|
|
|
|
|
|
|
(v)
|
During the six months ended December 31, 2017, the
Company issued 5,016,293 (June 30, 2017 – 2,926,103) common shares with a
fair value of $11,656 (June 30, 2017 - $7,408) for contingent
consideration. (Note 11(a))
|
|
|
|
|
|
|
(vi)
|
During the six months ended December 31, 2017, an
aggregate of 25,060,747 (June 30, 2017 - 29,020,319) common shares were
issued on the conversion of $79,470 (June 30, 2017 - $37,580) convertible
notes. $9,734 (June 30, 2017 - $4,800) was reclassified from reserves to
share capital on the conversion of these notes (Note 14(a)(b)).
|
|
|
|
|
|
|
(vii)
|
During the six months ended December 31, 2017, 2,312,590
stock options (June 30, 2017 - 2,001,700) were exercised for gross
proceeds of $3,771 (June 30, 2017 - $821). Non-cash compensation charges
of $2,042 (June 30, 2017 - $578) were reclassified from reserves to share
capital on the exercise of these options.
|
|
|
|
|
|
|
(viii)
|
During the six months ended December 31, 2017, 38,621,631
(June 30, 2017 - 54,936,306) warrants were exercised for gross proceeds of
$118,806 (June 30, 2017 - $26,602). Non-cash compensation charges of
$2,723 (June 30, 2017 - $2,046) were reclassified from reserves to share
capital on the exercise of these warrants.
|
|
|
|
|
|
|
(ix)
|
During the six months ended December 31, 2017, 1,865,249
(June 30, 2017 – 4,084,434) compensation options were exercised for gross
proceeds of $4,197 (June 30, 2017 - $1,674). Non-cash compensation charges
of $1,854 (June 30, 2017 - $1,292) were reclassified from reserves to
share capital on the exercise of these compensation
options.
|
26
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
15.
|
Share Capital
(Continued)
|
|
|
(b)
|
Issued and outstanding
(continued)
|
|
|
(x)
|
On May 26, 2017, the Company issued 8,316,782 shares at a
fair value of $20,709 pursuant to the acquisition of Pedanios (Note
11(c)).
|
|
|
|
|
|
|
(xi)
|
In April 2017, the Company issued an aggregate of 899,225
common shares with a fair value of $2,391 pursuant to the acquisition of
Peloton. (Note 11(b))
|
|
|
|
|
|
|
(xii)
|
On February 28, 2017, the Company closed a brokered
private placement of 33,337,500 units at a price of $2.25 per unit for
gross proceeds of $75,009. Each unit consisted one common share and
one-half of one share purchase warrant of the Company. Each warrant is
exercisable into one common share at a price of $3.00 per share for a
period of two years, subject to a forced exercise provision if the
Company's VWAP equals or exceeds $4.50 for 10 consecutive trading
days.
|
|
|
|
|
|
|
|
Total cash share issue costs amounted to $4,479 which
consisted of underwriters’ commissions of $4,197, underwriters’ expenses
of $95, legal fees of $121 and regulatory fees of $66. In addition, the
Company issued an aggregate of 1,865,249 compensation warrants to the
underwriters at a fair value of $2,782. The compensation warrants have the
same terms as the private placement and expire February 28, 2019. The fair
value of the compensation warrants at the date of grant was estimated at
$0.99 per warrant based on the following weighted average assumptions:
Stock price volatility - 79%; Risk-free interest rate - 0.70%; Dividend
yield - 0.00%; and Expected life - 2 years.
|
|
|
|
|
|
|
(xiii)
|
On August 30, 2016, the Company issued 25,510 common
shares to an officer of the Company at a fair value of $13 pursuant to an
employment agreement.
|
|
|
|
|
|
|
(xiv)
|
On August 17, 2016, 17,875,000 common shares were issued
at a fair value of $11,440 pursuant to the acquisition of CanvasRx. (Note
11(a))
|
|
|
|
|
|
|
(xv)
|
In conjunction with the acquisition of CanvasRx, the
Company completed a brokered private placement of 57,500,000 subscription
receipts for aggregate gross proceeds of $23,000 (the “Offering”). Each
subscription receipt was converted into units of the Company at a price of
$0.40 per unit upon the satisfaction of the conditions precedent to the
acquisition. Each unit consisted of one common share and one-half of one
common share purchase warrant of the Company. Each whole warrant was
exercisable into one common share of the Company at an exercise price of
$0.55 per share expiring August 9, 2018. A portion of the net proceeds
from the Offering was used to satisfy the cash component of the
acquisition.
|
|
|
|
|
|
|
|
Total cash share issue costs with respect to the Offering
amounted to $1,804 which consisted of agent’s commission of $1,473,
agent’s legal, advisory fees and expenses of $219, transfer agent fees of
$16 and legal fees of $96. In addition, the Company issued aggregate
compensation warrants of 3,775,000 to the agents at a fair value of
$1,848. The compensation warrants have the same terms as the private
placement and expire August 9, 2018. The fair value of the compensation
warrants at the date of grant was estimated at $0.33 per warrant based on
the following weighted average assumptions: Stock price volatility - 79%;
Risk-free interest rate - 0.70%; Dividend yield - 0.00%; and Expected life
- 2 years.
|
|
|
|
|
|
|
(xvi)
|
On August 17, 2016, 20,000,000 common shares were issued
on achievement of performance milestones pursuant to the reverse take-over
of Prescient Mining Corp. completed on December 9, 2014 (the “RTO”). The
amount of $2,322 was reclassified from reserves to share capital on the
issuance of these shares.
|
|
|
|
|
|
|
(xvii)
|
On July 14, 2016, 50,000 common shares were issued at a
fair value of $24 for financing fees related to a loan which was settled
in the prior year.
|
27
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
15.
|
Share Capital
(Continued)
|
A summary of the status of the
escrowed securities outstanding follows:
|
|
|
|
Shares
|
|
|
Warrants
|
|
|
|
|
|
#
|
|
|
#
|
|
|
|
Balance, June 30, 2016
|
|
29,812,500
|
|
|
9,000,000
|
|
|
|
Issued (Exercised)
|
|
20,000,000
|
|
|
(8,000,000
|
)
|
|
|
Forfeited
|
|
-
|
|
|
(1,000,000
|
)
|
|
|
Released
|
|
(36,875,000
|
)
|
|
-
|
|
|
|
Balance, June 30, 2017
|
|
12,937,500
|
|
|
-
|
|
|
|
Issued
|
|
2,878,934
|
|
|
-
|
|
|
|
Released
|
|
(12,937,500
|
)
|
|
-
|
|
|
|
Balance, December 31, 2017
|
|
2,878,934
|
|
|
-
|
|
|
|
(a)
|
Pursuant to an escrow agreement dated September 18, 2014,
60,000,000 common shares of the Company were deposited into escrow with
respect to the RTO. In addition, warrants at $0.02 per share expiring
December 9, 2019 and stock options at $0.001 per share expiring December
1, 2019 were also subject to the escrow agreement. Under the escrow
agreement, 10% of the escrowed common shares were released from escrow on
December 9, 2014, the date of closing of the RTO, and 15% were released
every six months thereafter over a period of 36 months. As of December 31,
2017, all of these shares have been released from escrow.
|
|
|
|
|
|
|
(b)
|
Pursuant to an escrow agreement dated November 30, 2017,
2,878,934 common shares of the Company were deposited into escrow with
respect to the acquisition of H2 (Note 11(f)). The escrowed common shares
are to be released upon achievement of certain milestones relating to the
completion of construction of the H2 facility and receipt of relevant
licenses to cultivate and sell medical
cannabis.
|
|
|
(d)
|
Share purchase warrants
|
Each whole warrant entitles the holder
to purchase one common share of the Company. A summary of the status of the
warrants outstanding follows:
|
|
|
|
|
|
|
Weighted average
|
|
|
|
|
|
Warrants
|
|
|
exercise price
|
|
|
|
|
|
#
|
|
|
$
|
|
|
|
Balance, June 30, 2016
|
|
28,750,590
|
|
|
0.40
|
|
|
|
Issued
|
|
50,173,466
|
|
|
1.36
|
|
|
|
Forfeited
|
|
(1,000,000
|
)
|
|
0.02
|
|
|
|
Exercised
|
|
(54,936,306
|
)
|
|
0.48
|
|
|
|
Balance, June 30, 2017
|
|
22,987,750
|
|
|
2.32
|
|
|
|
Issued
|
|
27,355,709
|
|
|
3.91
|
|
|
|
Exercised
|
|
(38,621,631
|
)
|
|
3.08
|
|
|
|
Balance, December 31, 2017
|
|
11,721,828
|
|
|
3.55
|
|
During the six months ended December
31, 2017, the Company recorded share-based payments of $136 for warrants issued
related to the acquisition of BCNL and UCI (Note 11(d)), and share-based
payments of $2,286 for broker warrants issued related to the financing (Note
15(b)(iii)), respectively.
28
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
15.
|
Share Capital
(Continued)
|
|
|
(d)
|
Share purchase warrants
(continued)
|
The following table summarizes the
warrants that remain outstanding as at December 31, 2017:
|
|
Exercise Price
|
|
Warrants
|
|
|
|
|
|
Expiry Date
|
|
|
|
$
|
|
#
|
|
|
|
|
|
|
|
|
|
0.55
|
|
61,500
|
|
|
|
|
|
August 9, 2018
|
|
|
|
0.55
|
|
1,375,375
|
|
|
|
|
|
August 17, 2018
|
|
|
|
2.81
|
|
89,107
|
|
|
|
|
|
September 29,
2020
|
|
|
|
3.00
|
|
216,071
|
|
|
|
|
|
November 2, 2020
|
|
|
|
4.00
|
|
9,979,775
|
|
|
|
|
|
November 2, 2020
|
|
|
|
|
|
11,721,828
|
|
|
|
|
|
|
|
|
|
(e)
|
Compensation
options/warrants
|
Each compensation option/warrant
entitles the holder to purchase one common share and one-half of one share
purchase warrant of the Company. Each whole warrant is exercisable into one
additional common share of the Company for a period of two years. A summary of
the status of the compensation options/warrants outstanding follows:
|
|
|
|
Compensation
|
|
|
Weighted average
|
|
|
|
|
|
options/warrants
|
|
|
exercise price
|
|
|
|
|
|
#
|
|
|
$
|
|
|
|
Balance, June 30, 2016
|
|
309,434
|
|
|
0.53
|
|
|
|
Issued
|
|
5,640,249
|
|
|
1.01
|
|
|
|
Exercised
|
|
(4,084,434
|
)
|
|
0.41
|
|
|
|
Balance, June 30, 2017
|
|
1,865,249
|
|
|
2.25
|
|
|
|
Exercised
|
|
(1,865,249
|
)
|
|
2.25
|
|
|
|
Balance, December 31, 2017
|
|
-
|
|
|
-
|
|
|
16.
|
Share-based Compensation
|
On September 25, 2017, the Board
adopted a “rolling maximum” or “evergreen” plan which fixed a maximum number of
shares issuable thereunder as 10% of the issued and outstanding securities of
the Company. The number of common shares issuable under the Company’s share
compensation arrangements including Stock Options and Restricted Stock Units,
may not exceed 10% of the total number of issued and outstanding Common
Shares.
The Company has an incentive stock
option plan, which provides that the Board of Directors may from time to time,
in its discretion, and in accordance with the Exchange requirements, grant to
directors, officers, employees and consultants, non-transferable options to
purchase common shares, provided that the number of common shares reserved for
issuance under the plan and all other share compensation arrangements of the
Company, will not exceed 10% of the issued and outstanding common shares of the
Company. A summary of the status of the options outstanding follows:
29
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
16.
|
Share-based Compensation
(Continued)
|
|
|
(a)
|
Stock options
(continued)
|
|
|
|
|
Stock
|
|
|
Weighted Average
|
|
|
|
|
|
Options
|
|
|
Exercise Price
|
|
|
|
|
|
#
|
|
|
$
|
|
|
|
Balance, June 30, 2016
|
|
5,309,834
|
|
|
0.37
|
|
|
|
Granted
|
|
12,170,000
|
|
|
2.21
|
|
|
|
Exercised
|
|
(2,001,700
|
)
|
|
0.41
|
|
|
|
Forfeited
|
|
(244,568
|
)
|
|
0.74
|
|
|
|
Balance, June 30, 2017
|
|
15,233,566
|
|
|
1.84
|
|
|
|
Granted
|
|
8,650,000
|
|
|
3.99
|
|
|
|
Exercised
|
|
(2,312,590
|
)
|
|
1.63
|
|
|
|
Forfeited
|
|
(673,004
|
)
|
|
1.27
|
|
|
|
Balance, December 31, 2017
|
|
20,897,972
|
|
|
2.76
|
|
The following table summarizes the
stock options that remain outstanding as at December 31, 2017:
|
|
Exercise Price ($)
|
|
Options Outstanding
(#
)
|
|
|
|
|
|
Expiry Date
|
|
|
Options Exercisable (#)
|
|
|
|
0.295
|
|
50,000
|
|
|
|
|
|
June 2, 2020
|
|
|
50,000
|
|
|
|
0.295
|
|
101,449
|
|
|
|
|
|
August 26, 2020
|
|
|
38,949
|
|
|
|
0.30
|
|
97,400
|
|
|
|
|
|
September 8, 2018
|
|
|
75,178
|
|
|
|
0.30
|
|
240,000
|
|
|
|
|
|
August 10, 2020
|
|
|
152,500
|
|
|
|
0.30
|
|
543,929
|
|
|
|
|
|
August 14, 2020
|
|
|
358,929
|
|
|
|
0.34
|
|
120,000
|
|
|
|
|
|
May 23, 2020
|
|
|
95,000
|
|
|
|
0.40
|
|
350,000
|
|
|
|
|
|
March 10, 2019
|
|
|
350,000
|
|
|
|
0.46
|
|
600,000
|
|
|
|
|
|
May 20, 2021
|
|
|
-
|
|
|
|
0.55
|
|
80,000
|
|
|
|
|
|
February 8, 2021
|
|
|
80,000
|
|
|
|
0.58
|
|
200,000
|
|
|
|
|
|
March 14, 2021
|
|
|
168,750
|
|
|
|
0.66
|
|
14,583
|
|
|
|
|
|
August 8, 2021
|
|
|
-
|
|
|
|
1.30
|
|
1,009,576
|
|
|
|
|
|
September 23, 2021
|
|
|
838,743
|
|
|
|
2.25
|
|
2,100,000
|
|
|
|
|
|
August 25, 2021
|
|
|
1,866,667
|
|
|
|
2.27
|
|
2,500,000
|
|
|
|
|
|
March 22, 2022
|
|
|
625,000
|
|
|
|
2.39
|
|
1,234,167
|
|
|
|
|
|
August 8, 2022
|
|
|
83,750
|
|
|
|
2.49
|
|
2,409,168
|
|
|
|
|
|
May 22, 2022
|
|
|
162,501
|
|
|
|
2.56
|
|
1,912,500
|
|
|
|
|
|
January 19, 2022
|
|
|
600,000
|
|
|
|
2.76
|
|
3,120,200
|
|
|
|
|
|
September 29, 2022
|
|
|
371,450
|
|
|
|
4.64
|
|
2,865,000
|
|
|
|
|
|
November 13, 2022
|
|
|
-
|
|
|
|
7.00
|
|
50,000
|
|
|
|
|
|
December 6, 2022
|
|
|
-
|
|
|
|
7.00
|
|
850,000
|
|
|
|
|
|
December 14, 2022
|
|
|
-
|
|
|
|
7.10
|
|
100,000
|
|
|
|
|
|
December 15, 2022
|
|
|
-
|
|
|
|
7.03
|
|
350,000
|
|
|
|
|
|
December 21, 2022
|
|
|
-
|
|
|
|
|
|
20,897,972
|
|
|
|
|
|
|
|
|
5,917,417
|
|
During the three and six months ended
December 31, 2017, the Company recorded aggregate share-based payments of $6,100
and $8,575 respectively (three and six months ended December 31, 2016 - $2,510
and $2,890 respectively) for all stock options granted and vested during the
period including Hempco stock options vested from the acquisition date (Note
11(e)).
The fair value of stock options
granted during the period was determined using the following weighted average
assumptions at the time of grant using the Black-Scholes option pricing model:
30
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
16.
|
Share-based Compensation
(Continued)
|
|
|
(a)
|
Stock options
(continued)
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk-Free Annual Interest
Rate
|
|
1.48%
|
|
|
0.57%
|
|
|
|
Expected Annual Dividend Yield
|
|
0%
|
|
|
0%
|
|
|
|
Expected Stock Price
Volatility
|
|
77.88%
|
|
|
87.0%
|
|
|
|
Expected Life of Options
|
|
2.96 years
|
|
|
2.92 years
|
|
|
|
Forfeiture rate
|
|
5%
|
|
|
5%
|
|
Volatility was estimated by using the
average historical volatility of the Company and other companies that the
Company considers comparable that have trading history and volatility history.
The expected life in years represents the period of time that options granted
are expected to be outstanding. The risk-free rate is based on Canada government
bonds with a remaining term equal to the expected life of the options.
The weighted average fair value of
stock options granted during the six months ended December 31, 2017 was $2.66
(2016 - $1.11) per option. As at December 31, 2017, stock options outstanding
have a weighted average remaining contractual life of 4.19 years.
|
|
(b)
|
Restricted Share Units
|
On September 25, 2017, the Company
adopted a restricted share unit (“RSU”) plan for directors, officers, employees
and consultants of the Company (“Participants”). Under the terms of the plan,
RSU’s are issued to Participants and the shares issued vest over a period of up
to three years from the date of grant. Each RSU gives the Participant the right
to receive one common share of the Company. The Company has reserved 10,000,000
common shares for issuance under this plan. The fair market value of each RSU
granted is calculated on the date of grant based on the closing price of the
Company’s shares on the date prior to the grant, and recognized on a
straight-line basis over the vesting period.
On September 29, 2017, the Company
granted 2,127,128 RSUs to directors, officers, employees and consultants of the
Company, of which 127,128 relate to fiscal 2017 and vest immediately. The rest
of the RSUs vest annually.
A summary of the status of the RSUs
outstanding is as follows:
|
|
|
|
Compensation
|
|
|
Weighted average
|
|
|
|
|
|
options/warrants
|
|
|
exercise price
|
|
|
|
|
|
#
|
|
|
$
|
|
|
|
Balance, June 30, 2017
|
|
-
|
|
|
-
|
|
|
|
Issued
|
|
2,127,128
|
|
|
2.76
|
|
|
|
Exercised
|
|
(127,128
|
)
|
|
8.00
|
|
|
|
Balance, December 31, 2017
|
|
2,000,000
|
|
|
2.76
|
|
During the three and six months ended
December 31, 2017, the Company recorded share-based payments of $992 and $1,003,
respectively for 2,000,000 RSUs granted and vested during the period.
Share-based payments of $351 for 127,128 RSUs were accrued during the year ended
June 30, 2017.
31
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
16.
|
Share-based Compensation
(Continued)
|
|
|
(b)
|
Restricted Share Units
(continued)
|
The following table summarizes the
RSUs that remain outstanding as at December 31, 2017:
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
RSUs Outstanding
|
|
RSUs Vested
|
|
|
Expiry
|
|
|
Price per Share
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
525,000
|
|
133,767
|
|
|
September 29,
2018
|
|
|
2.76
|
|
|
|
1,475,000
|
|
229,631
|
|
|
September 29, 2020
|
|
|
2.76
|
|
|
|
2,000,000
|
|
363,398
|
|
|
|
|
|
2.76
|
|
|
|
(c)
|
Employee Share Purchase Plan
(ESPP)
|
On September 25, 2017, the Company
adopted an ESPP whereby eligible employees may contribute to the ESPP at least
1% but no more than 10% of their annual gross salary up to a maximum of $10,500,
to purchase common shares of the Company in the open market at prevailing market
prices. The Company contributes an amount equal to 50% of the employee’s
contributions which are expensed as incurred as there are no vesting
provisions.
There were no employee and employer
contributions during the six months ended December 31, 2017.
|
17.
|
General and
Administration
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Professional fees
|
|
2,313
|
|
|
696
|
|
|
3,088
|
|
|
1,141
|
|
|
|
Office and administration
|
|
1,763
|
|
|
282
|
|
|
2,611
|
|
|
455
|
|
|
|
Wages and benefits
|
|
3,492
|
|
|
572
|
|
|
4,862
|
|
|
1,001
|
|
|
|
|
|
7,568
|
|
|
1,550
|
|
|
10,561
|
|
|
2,597
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Consulting fees
|
|
1,696
|
|
|
849
|
|
|
3,138
|
|
|
1,330
|
|
|
|
Branding, public and media relations, and
tradeshows
|
|
647
|
|
|
207
|
|
|
1,019
|
|
|
446
|
|
|
|
Selling and client care
expenses
|
|
2,003
|
|
|
1,003
|
|
|
3,311
|
|
|
1,632
|
|
|
|
Wages and benefits
|
|
790
|
|
|
352
|
|
|
1,336
|
|
|
573
|
|
|
|
|
|
5,136
|
|
|
2,411
|
|
|
8,804
|
|
|
3,981
|
|
32
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
19.
|
Finance and Other
Costs
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Accretion expense
|
|
1,146
|
|
|
588
|
|
|
2,985
|
|
|
1,500
|
|
|
|
Bank charges
|
|
34
|
|
|
7
|
|
|
44
|
|
|
13
|
|
|
|
Financing fees
|
|
-
|
|
|
692
|
|
|
-
|
|
|
2,270
|
|
|
|
Interest expense
|
|
480
|
|
|
513
|
|
|
647
|
|
|
1,058
|
|
|
|
|
|
1,660
|
|
|
1,800
|
|
|
3,676
|
|
|
4,841
|
|
|
20.
|
Related Party
Transactions
|
The Company incurred the following
transactions with related parties during the six months ended December 31, 2017:
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
Consulting fees paid or
accrued to directors of ACE
|
|
60
|
|
|
58
|
|
|
113
|
|
|
106
|
|
|
|
Office, rent and administration paid or accrued to
companies owned by directors and officers and a former director of the
Company
|
|
32
|
|
|
30
|
|
|
62
|
|
|
60
|
|
|
|
Operational, administrative and service fees paid or
accrued pursuant to an agreement between CanvasRx and a company having a
director in common with the Company
|
|
1,678
|
|
|
845
|
|
|
3,142
|
|
|
1,150
|
|
|
|
Consulting fees paid to a company owned by an
officer of the Company
|
|
112
|
|
|
-
|
|
|
279
|
|
|
-
|
|
|
|
Consulting fees paid to a company controlled by a
director of the Company for scientific, research and development services
|
|
15
|
|
|
14
|
|
|
30
|
|
|
14
|
|
|
|
Consulting fees paid to a company controlled by a director of
the Company for financial and other advisory services
|
|
14
|
|
|
5
|
|
|
19
|
|
|
32
|
|
|
|
|
|
1,911
|
|
|
952
|
|
|
3,645
|
|
|
1,362
|
|
|
|
(b)
|
Compensation of key management
personnel
|
The Company’s key management personnel
have the authority and responsibility for planning, directing and controlling
the activities of the Company and consists of the Company’s executive management
team and management directors.
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Management compensation
|
|
667
|
|
|
168
|
|
|
1,153
|
|
|
297
|
|
|
|
Directors’ fees
(1)
|
|
40
|
|
|
109
|
|
|
89
|
|
|
188
|
|
|
|
Share-based payments
(2)
|
|
2,729
|
|
|
1,942
|
|
|
4,711
|
|
|
2,067
|
|
|
|
|
|
3,436
|
|
|
2,219
|
|
|
5,953
|
|
|
2,552
|
|
|
|
(1)
|
Include meeting fees and committee chair fees.
|
|
|
(2)
|
Share-based payments are the fair value of options
granted and vested to key management personnel and directors of the
Company under the Company’s stock option plan (Note
16(a)).
|
33
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
20.
|
Related Party Transactions
(Continued)
|
|
|
(c)
|
Related party balances
|
The following related party amounts
were included in (i) accounts receivable, (ii) accounts payable and accrued
liabilities, and (iii) note receivable:
|
|
|
|
|
|
|
December 31,
|
|
|
June 30,
|
|
|
|
|
|
|
|
|
2017
|
|
|
2017
|
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
(i)
|
|
A company having
a director in common
|
|
|
-
|
|
|
72
|
|
|
|
(ii)
|
|
Companies controlled by directors
and officers of the Company
(1)
|
|
|
283
|
|
|
76
|
|
|
|
(ii)
|
|
Directors and
officers and a former director and officer of the Company
(1)
|
|
|
328
|
|
|
565
|
|
|
|
(iii)
|
|
A 50% owned joint venture company (Note 10)
|
|
|
3,384
|
|
|
2,096
|
|
|
|
(1)
|
The amounts are unsecured, non-interest bearing and have
no specific repayments term.
|
|
21.
|
Commitments and
Contingencies
|
|
|
(a)
|
Office and operating leases
|
|
|
(i)
|
1769474 has an operating lease on lands located in
Cremona, Alberta (the “Lands”) for monthly rent payments of $5. The lease
expires on November 14, 2019, with an option to extend for an additional
five- year term. The Company has the option to purchase the Lands during
the additional term.
|
|
|
|
|
|
|
(ii)
|
The Company is committed under lease and sublease
agreements with respect to various office premises located in Vancouver,
British Columbia, expiring between June 30, 2018 and December 31, 2027,
office premise lease located in Berlin, Germany expiring December 31,
2022, and sublease agreements with respect to clinics located across
Canada expiring between August 1, 2019 and December 1, 2023, as
follows:
|
|
|
|
|
$
|
|
|
|
2018
|
|
2,826
|
|
|
|
2019
|
|
2,743
|
|
|
|
2020
|
|
2,654
|
|
|
|
2021
|
|
2,531
|
|
|
|
2022
|
|
2,091
|
|
|
|
Thereafter
|
|
8,147
|
|
|
|
|
|
20,992
|
|
|
|
(iii)
|
The Company entered into an agreement to lease
approximately 30 acres of land at the EIA for the development of a
production facility. The lease has a term of fifteen years with monthly
rent payments of $69 for the first five years, increasing to monthly
payments of $76 and $83 in the fifth and tenth year of the lease term,
respectively. The first monthly installment is payable on or before the
earlier of (i) the date that an occupancy permit has been issued for the
facility by Leduc County, and (ii) May 1, 2018. The Company has eight
options to renew the term of the lease, each option for an additional five
years exercisable at the Company’s discretion.
|
|
|
(b)
|
Claims and litigation
|
|
|
(i)
|
On November 29, 2017, a claim was commenced against the
Company regarding 300,000 stock options with an exercise price of $0.39
per share issued to a consultant pursuant to an agreement dated March 16,
2015. The agreement was terminated on March 8, 2016, and in accordance to
the Company’s stock option plan, the unexercised options expired 90 days
from the date of the termination of the agreement.
|
34
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
21.
|
Commitments and Contingencies
(Continued)
|
|
|
(b)
|
Claims and litigation (continued)
|
The option holder is attempting to
enforce exercise rights which the Company believes do not exist. The Company
intends to defend this claim vigorously.
The claim has no effect on the
consolidated financial statements as the Company believes the action to be
without merit, and accordingly, no provision had been recognized for the claim.
|
|
(ii)
|
On January 12, 2018, CanniMed filed a claim in the
Ontario Superior Court of Justice alleging that Aurora, several large
shareholders of CanniMed and others participated in a civil conspiracy
intended to injure the economic interests of CanniMed. The action claimed
damages of $725,000 for unlawful actions that have negatively affected the
appreciation of the value of CanniMed common shares and prevented CanniMed
from pursuing alternative change of control transactions for the benefit
of CanniMed shareholders. On January 26, 2018, the Company had been served
with a formal Notice of Discontinuance of the court action brought by
CanniMed against the Company and other named
defendants.
|
|
22.
|
Segmented Information
|
The Company operates primarily in two
segments, the production and sale of medical cannabis, and patient counselling
and outreach service.
|
|
|
|
Medical
|
|
|
Patient
|
|
|
|
|
|
|
|
|
|
|
|
Cannabis
|
|
|
Counselling
|
|
|
Others
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Three months ended December
31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
9,773
|
|
|
874
|
|
|
1,053
|
|
|
11,700
|
|
|
|
Gross profit (loss)
|
|
5,742
|
|
|
849
|
|
|
(105
|
)
|
|
6,486
|
|
|
|
Loss from operations
|
|
(13,966
|
)
|
|
(581
|
)
|
|
(1,567
|
)
|
|
(16,114
|
)
|
|
|
Net income (loss)
|
|
8,637
|
|
|
27
|
|
|
(1,470
|
)
|
|
7,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December
31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
3,206
|
|
|
678
|
|
|
-
|
|
|
3,884
|
|
|
|
Gross profit (loss)
|
|
3,628
|
|
|
678
|
|
|
-
|
|
|
4,360
|
|
|
|
Loss from operations
|
|
(2,262
|
)
|
|
(115
|
)
|
|
-
|
|
|
(2,377
|
)
|
|
|
Net loss
|
|
(2,560
|
)
|
|
(118
|
)
|
|
-
|
|
|
(2,678
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended December 31,
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
17,088
|
|
|
1,808
|
|
|
1,053
|
|
|
19,949
|
|
|
|
Gross profit
|
|
13,648
|
|
|
1,754
|
|
|
(105
|
)
|
|
15,297
|
|
|
|
Loss from operations
|
|
(14,781
|
)
|
|
(1,183
|
)
|
|
(1,567
|
)
|
|
(17,531
|
)
|
|
|
Net income (loss)
|
|
13,037
|
|
|
(812
|
)
|
|
(1,470
|
)
|
|
10,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended December 31,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
5,959
|
|
|
997
|
|
|
-
|
|
|
6,956
|
|
|
|
Gross profit
|
|
3,449
|
|
|
997
|
|
|
-
|
|
|
4,446
|
|
|
|
Loss from operations
|
|
(5,473
|
)
|
|
(178
|
)
|
|
-
|
|
|
(5,651
|
)
|
|
|
Net income (loss)
|
|
(8,558
|
)
|
|
267
|
|
|
-
|
|
|
(8,291
|
)
|
35
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
22.
|
Segmented Information
(Continued)
|
|
|
|
|
Medical
|
|
|
Patient
|
|
|
|
|
|
|
|
|
|
|
|
Cannabis
|
|
|
Counselling
|
|
|
Others
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
As at December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
720,520
|
|
|
695
|
|
|
11,179
|
|
|
732,394
|
|
|
|
Total liabilities
|
|
172,989
|
|
|
880
|
|
|
2,939
|
|
|
176,808
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
321,644
|
|
|
1,035
|
|
|
-
|
|
|
322,679
|
|
|
|
Total liabilities
|
|
102,374
|
|
|
1,372
|
|
|
-
|
|
|
103,746
|
|
The Company generates revenue in two
geographical locations, in Canada and in Germany.
|
|
|
|
Canada
|
|
|
Germany
|
|
|
Others
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Three months ended December
31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
9,004
|
|
|
2,483
|
|
|
213
|
|
|
11,700
|
|
|
|
Gross profit
|
|
5,502
|
|
|
930
|
|
|
54
|
|
|
6,486
|
|
|
|
Income (loss) from operations
|
|
(16,628
|
)
|
|
460
|
|
|
54
|
|
|
(16,114
|
)
|
|
|
Net income
|
|
6,541
|
|
|
599
|
|
|
54
|
|
|
7,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended December 31,
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
16,018
|
|
|
3,718
|
|
|
213
|
|
|
19,949
|
|
|
|
Gross profit
|
|
13,957
|
|
|
1,286
|
|
|
54
|
|
|
15,297
|
|
|
|
Income (loss) from operations
|
|
(18,053
|
)
|
|
468
|
|
|
54
|
|
|
(17,531
|
)
|
|
|
Net income
|
|
10,090
|
|
|
611
|
|
|
54
|
|
|
10,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
729,568
|
|
|
2,826
|
|
|
-
|
|
|
732,394
|
|
|
|
Total liabilities
|
|
175,570
|
|
|
1,238
|
|
|
-
|
|
|
176,808
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
321,251
|
|
|
1,428
|
|
|
|
|
|
322,679
|
|
|
|
Total liabilities
|
|
96,678
|
|
|
7,068
|
|
|
|
|
|
103,746
|
|
During the three and six months ended
December 31, 2016, all of the Company’s assets and liabilities were located in
Canada and Germany. All revenues during the three and six months ended December
31, 2016 were generated in Canada and Germany.
36
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
23.
|
Financial Instruments and Risk
Management
|
|
|
(a)
|
Fair value of financial
instruments
|
The Company’s financial instruments
consist of cash and cash equivalents, short-term investments, accounts
receivable, marketable securities, promissory notes receivable, convertible
debenture receivable, loans receivable, derivatives, accounts payable and
accrued liabilities and convertible notes. The carrying values of these
financial instruments approximate their fair values as at December 31, 2017.
Financial instruments recorded at fair
value are classified using a fair value hierarchy that reflects the significance
of the inputs to fair value measurements. The three levels of hierarchy are:
|
|
Level 1
|
–
|
Unadjusted quoted prices in active markets for
identical assets or liabilities;
|
|
|
Level 2
|
–
|
Inputs other than quoted prices that are
observable for the asset or liability, either directly or indirectly; and
|
|
|
Level 3
|
–
|
Inputs for the asset or liability that are not
based on observable market data.
|
There have been no transfers between
fair value levels during the period.
The following table summarizes the
Company’s financial instruments as at December 31, 2017:
|
|
|
|
Available-for-
|
|
|
|
|
|
Financial
|
|
|
Other
|
|
|
|
|
|
|
|
|
sale financial
|
|
|
Loans and
|
|
|
assets at
|
|
|
financial
|
|
|
|
|
|
|
|
|
assets
|
|
|
receivables
|
|
|
FVPTL
|
|
|
liabilities
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
-
|
|
|
350,841
|
|
|
-
|
|
|
-
|
|
|
350,841
|
|
|
|
Short-term
investments
|
|
-
|
|
|
908
|
|
|
-
|
|
|
-
|
|
|
908
|
|
|
|
Accounts receivable
|
|
-
|
|
|
6,991
|
|
|
-
|
|
|
-
|
|
|
6,991
|
|
|
|
Marketable
securities
|
|
76,400
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
76,400
|
|
|
|
Loans receivable
|
|
-
|
|
|
3,384
|
|
|
-
|
|
|
-
|
|
|
3,384
|
|
|
|
Derivatives
|
|
-
|
|
|
-
|
|
|
3,942
|
|
|
-
|
|
|
3,942
|
|
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
-
|
|
|
-
|
|
|
-
|
|
|
22,030
|
|
|
22,030
|
|
|
|
Deferred revenue
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,563
|
|
|
1,563
|
|
|
|
Finance lease
|
|
-
|
|
|
-
|
|
|
-
|
|
|
317
|
|
|
317
|
|
|
|
Special warrant subscriptions
|
|
-
|
|
|
-
|
|
|
-
|
|
|
111,009
|
|
|
111,009
|
|
The following is a summary of
financial assets measured at fair value segregated based on the various levels
of inputs (Note 5(b)):
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Marketable securities
|
|
76,400
|
|
|
-
|
|
|
-
|
|
|
76,400
|
|
|
|
Warrant derivatives
|
|
-
|
|
|
-
|
|
|
3,942
|
|
|
3,942
|
|
For the six months ended December 31,
2017, the Company recognized a total of $30,540 in unrealized gains on level 3
financial assets, comprised of $23,603 unrealized gains on warrant derivatives
and $6,937 unrealized gains on convertible debentures on the statement of
comprehensive loss. Of the $23,603 unrealized gain on derivatives, $19,122 was
attributable to the change in fair value of warrant derivatives and $4,481 was
attributable to the amortization of deferred unrealized inception gains. Of the
$6,937 in unrealized gain on convertible debentures, $830 was attributable to
the change in fair value of convertible debentures and $6,107 was attributable
to the amortization of deferred unrealized inception gains.
37
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
23.
|
Financial Instruments and Risk Management
(Continued)
|
|
|
(a)
|
Fair value of financial instruments
(continued)
|
Changes in level 3 financial assets
for the period were as follows:
|
|
|
|
Warrant
|
|
|
Convertible
|
|
|
|
|
|
|
|
|
Derivatives
|
|
|
Debenture
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Opening balance
|
|
292
|
|
|
11,071
|
|
|
11,363
|
|
|
|
Additions
|
|
2,083
|
|
|
-
|
|
|
2,083
|
|
|
|
Unrealized gain
|
|
20,960
|
|
|
830
|
|
|
21,790
|
|
|
|
Conversion of debenture
|
|
4,330
|
|
|
(11,901
|
)
|
|
(7,571
|
)
|
|
|
Exercise of warrants
|
|
(23,723
|
)
|
|
-
|
|
|
(23,723
|
)
|
|
|
Ending balance
|
|
3,942
|
|
|
-
|
|
|
3,942
|
|
Changes in deferred gains on
convertible debenture and derivatives measured at fair value and included in
level 3 of the fair value hierarchy were as follows:
|
|
|
|
Warrant
|
|
|
Convertible
|
|
|
|
|
|
|
|
|
Derivatives
|
|
|
Debenture
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Opening balance
|
|
321
|
|
|
10,206
|
|
|
10,527
|
|
|
|
Additions
|
|
1,838
|
|
|
-
|
|
|
1,838
|
|
|
|
Conversion of debenture
|
|
4,099
|
|
|
(4,099
|
)
|
|
-
|
|
|
|
Unrealized gains amortized
|
|
(4,481
|
)
|
|
(6,107
|
)
|
|
(10,588
|
)
|
|
|
Ending balance
|
|
1,777
|
|
|
-
|
|
|
1,777
|
|
Contingent
consideration
The Company’s liability for the
CanvasRx (Note 11(a)), BCNL and UCI (Note 11(d)), H2 (Note 11(f)), and Larssen
(Note 11(g)) (collectively, the “Subsidiaries”) contingent consideration was
measured at fair value based on unobservable inputs and was considered a level 3
financial instrument. The fair value of these liabilities determined by this
analysis was primarily driven by the Company’s expectations of the Subsidiaries’
achieving their milestones. The expected milestones were assessed probabilities
by management which was then discounted to present value in order to derive a
fair value of the contingent consideration. The primary inputs of the
calculation were the probabilities of achieving the milestones and a discount
rate.
Biological assets
The fair value of biological assets is
categorized within Level 3 on the fair value hierarchy. The significant
assumptions used in determining the fair value of biological assets include:
|
|
(a)
|
Expected yield by plant;
|
|
|
(b)
|
Wastage of plants;
|
|
|
(c)
|
Duration of the production cycle;
|
|
|
(d)
|
Percentage of costs incurred as of this date compared to
the total costs expected to be incurred;
|
|
|
(e)
|
Percentage of costs incurred for each stage of plant
growth; and
|
|
|
(f)
|
Market values.
|
The Company estimates that an effect
of a $1.00 increase or decrease in the market price per gram of dried cannabis,
as at December 31, 2017, would result in an increase or decrease of
approximately $829 (June 30, 2017 - $440) to the fair value of biological
assets. Additionally, an effect of a 10% increase or decrease in production
wages, as at December 31, 2017, would result in an increase or decrease of
approximately $65 (June 30, 2017 - $192) to the fair value of biological assets.
38
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
23.
|
Financial Instruments and Risk Management
(Continued)
|
|
|
(a)
|
Fair value of financial instruments
(continued)
|
|
|
|
|
|
|
|
As of December 31, 2017, it is expected that the
Company’s biological assets will yield approximately 829,008 grams (June
30, 2017 – 599,245 grams) of medical cannabis when harvested. The
Company’s estimates are, by their nature, subject to change and
differences from the anticipated yield will be reflected in the gain or
loss on biological assets in future periods.
|
|
|
|
|
|
|
(b)
|
Financial instruments risk
|
|
|
|
|
|
|
|
The Company is exposed in varying degrees to a variety of
financial instrument related risks. The Board mitigates these risks by
assessing, monitoring and approving the Company’s risk management
processes:
|
Credit risk is the risk of a potential
loss to the Company if a customer or third party to a financial instrument fails
to meet its contractual obligations. The Company is moderately exposed to credit
risk from its cash and cash equivalents, trade and other receivables, short-term
GIC investments, and loans receivable. The risk exposure is limited to their
carrying amounts at the statement of financial position date. The risk for cash
and cash equivalents is mitigated by holding these instruments with highly rated
Canadian financial institutions. The Company does not invest in asset-backed
deposits or investments and does not expect any credit losses. The Company
periodically assesses the quality of its investments and is satisfied with the
credit rating of the financial institutions and the investment grade of its
guaranteed investment certificates. Trade and other receivables primarily
consist of trade accounts receivable and goods and services taxes recoverable
(“GST”). Credit risk from the loans receivable arises from the possibility that
principal and/or interest due may become uncollectible. The Company mitigates
this risk by managing and monitoring the underlying business relationships.
The Company provides credit to its
customers in the normal course of business and has established credit evaluation
and monitoring processes to mitigate credit risk but has limited risk as the
majority of sales are transacted with credit cards.
As at December 31, 2017, the Company’s
aging of receivables was approximately as follows:
|
|
|
|
December 31,
|
|
|
June 30,
|
|
|
|
|
|
2017
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
0 – 60 days
|
|
3,195
|
|
|
1,534
|
|
|
|
61 –
120 days
|
|
3,796
|
|
|
778
|
|
|
|
|
|
6,991
|
|
|
2,312
|
|
Liquidity risk is the risk that the
Company will not be able to meet its financial obligations associated with
financial liabilities. The Company manages liquidity risk through the management
of its capital structure. The Company’s approach to managing liquidity is to
ensure that it will have sufficient liquidity to settle obligations and
liabilities when due.
39
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
23.
|
Financial Instruments and Risk Management
(Continued)
|
|
|
(b)
|
Financial instruments risk
(continued)
|
|
|
(ii)
|
Liquidity risk (continued)
|
In addition to the commitments
outlined in Note 21, the Company has the following contractual obligations:
|
|
|
|
Total
|
|
|
<1 year
|
|
|
1 - 3 years
|
|
|
3 -5 years
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Accounts payable and accrued
liabilities
|
|
22,030
|
|
|
22,030
|
|
|
-
|
|
|
-
|
|
|
|
Deferred revenue
|
|
1,563
|
|
|
1,563
|
|
|
-
|
|
|
-
|
|
|
|
Finance lease
|
|
398
|
|
|
108
|
|
|
290
|
|
|
-
|
|
|
|
|
|
23,991
|
|
|
23,701
|
|
|
290
|
|
|
-
|
|
The operating results and financial
position of the Company are reported in Canadian dollars. As the Company
operates in an international environment, some of the Company’s financial
instruments and transactions are denominated in currencies other than the
Canadian dollar. The results of the Company’s operations are subject to currency
transaction and translation risks.
The Company holds cash in Canadian
dollars and Euros and investments in Australian dollars. The Company’s main risk
is associated with fluctuations in the Euros and Australian dollars and assets
and liabilities are translated based on the foreign currency translation policy.
The Company has determined that an
effect of a 10% increase or decrease in the Australian dollar and Euro against
the Canadian dollar on financial assets and liabilities, as at December 31,
2017, including cash, and accounts payable and accrued liabilities denominated
in Euros and Australian dollars, would result in an increase or decrease of
approximately $158 (2016 - $Nil) to the net loss and comprehensive loss for the
six months ended December 31, 2017.
At December 31, 2017, the Company had
no hedging agreements in place with respect to foreign exchange rates. The
Company has not entered into any agreements or purchased any instruments to
hedge possible currency risks at this time.
|
|
b)
|
Interest rate risk
|
|
|
|
|
|
|
|
Interest rate risk is the risk that the fair value or
future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. Cash and cash equivalents bear interest
at market rates. The Company’s investments, loans receivables and
financial debt have fixed rates of interest and therefore expose the
Company to a limited interest rate fair value risk.
|
|
|
|
|
|
|
c)
|
Price risk
|
|
|
|
|
|
|
|
Price risk is the risk of variability in fair value due
to movements in equity or market prices. The Company’s marketable
securities and investments are susceptible to price risk arising from
uncertainties about their future values. The fair value of marketable
securities is based on quoted market prices which the shares of the
investments can be exchanged for.
|
40
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
23.
|
Financial Instruments and Risk Management
(Continued)
|
|
|
(b)
|
Financial instruments risk
(continued)
|
|
|
(iii)
|
Market risk
(continued)
|
|
|
c)
|
Price risk (continued)
|
If the fair value of these financial
assets were to increase or decrease by 10%, the Company would incur an
associated increase or decrease in net loss and comprehensive loss of
approximately $8,034 (2016 - $Nil). See note 5 for additional details regarding
the fair value of investments and marketable securities.
The Company’s objectives when managing
capital are to ensure that there are adequate capital resources to safeguard the
Company’s ability to continue as a going concern and maintain adequate levels of
funding to support its ongoing operations and development such that it can
continue to provide returns to shareholders and benefits for other stakeholders.
The capital structure of the Company
consists of items included in shareholders’ equity and debt, net of cash and
cash equivalents. The Company manages its capital structure and makes
adjustments to it in light of changes in economic conditions and the risk
characteristics of the Company’s underlying assets. The Company plans to use
existing funds, as well as funds from the future sale of products to fund
operations and expansion activities.
As at December 31, 2017, the Company is
not subject to externally imposed capital requirements.
The following events occurred
subsequent to December 31, 2017:
|
|
(a)
|
On January 2, 2018, the Company signed a binding term
sheet with Namaste Technologies Inc. (“Namaste”) toward a final
private-label software agreement whereby Namaste will provide CanvasRx
with a customized version of its patient acquisition tool, NamasteMD.com.
In consideration of the Company’s assistance to the future optimization of
NamasteMD, Namaste issued to the Company 500,000 stock options exercisable
at $3.35 per share for 48 months, vesting quarterly over twelve
months.
|
|
|
|
|
|
|
(b)
|
On January 4, 2018, the Company signed a binding term
sheet for the formation of a joint venture with Alfred Pederson & Son
(“APS”), pursuant to which Aurora will ultimately own a 51% interest in
Aurora Nordic Cannabis A/S, the joint venture company, based in Odense,
Denmark. Upon the achievement of certain milestones by the joint venture,
the companies intend to fund construction of the Aurora Nordic facility
through a combination of conventional, non-dilutive project finance, and
direct investment by Aurora and APS on a pro- rata basis.
|
|
|
|
|
|
|
(c)
|
On January 11, 2018, the Company entered into a bought
deal financing of 200,000 convertible debentures at $1,000 per initial
convertible debenture for gross proceeds of $200,000. The Company also
granted the underwriters an option to purchase up to an additional 30,000
convertible debentures for additional gross proceeds of $30,000.
|
|
|
|
|
|
|
|
The debentures will have a term of two years, bear
interest at 5% per annum, payable semi-annually, and will be convertible
at a price of $13.05 per common share. The Company may force the
conversion of the principal amount of the outstanding debentures should
the VWAP of its common shares exceed $17.00 for any 10 consecutive trading
days.
|
41
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
25.
|
Subsequent Events
(Continued)
|
|
|
(d)
|
On January 15, 2018, the Company entered into a
collaboration agreement with Micron Waste Technologies Inc. (“Micron”)
pursuant to which both companies will collaborate on the optimization of
Micron’s technology for the treatment of organic waste generated in the
cultivation and production of cannabis products.
|
|
|
|
|
|
|
|
Under the terms of the agreement, Micron will install a
digester unit at one of Aurora’s cultivation facilities, where both
companies will jointly work to optimize the digester for the cannabis
industry. Upon successful completion of the project, the Company intends
to acquire multiple units for its various facilities. Micron will retain
the intellectual property and shall pay Aurora a 4% royalty for every unit
sold to other licensed producers. Upon the first successful sale of a
digester within the cannabis industry, Micron shall issue 2 million shares
to the Company.
|
|
|
|
|
|
|
|
The Company also completed its investment and obtained a
6.46% ownership in Micron through a private placement of 4,411,765 units
of Micron for a total of $1,500. Each unit consisted of one common share
and one warrant exercisable at a price of $0.50 per share for a period of
two years.
|
|
|
|
|
|
|
(e)
|
On January 12, 2018, the Company completed its strategic
investment in The Green Organic Dutchman Holdings Ltd. (“TGOD”) pursuant
to a definitive agreement signed January 4, 2018. TGOD is a private
company licensed under the ACMPR to cultivate medical cannabis.
|
|
|
|
|
|
|
|
Under the terms of the agreement, the Company subscribed
for $55,000 subscription receipts through a private placement which will
automatically convert into 33,333,334 units of TGOD upon its listing on a
Canadian stock exchange. Each unit, priced at $1.65, consists of one
common share and one half of one share purchase warrant exercisable at
$3.00 per share for a period of 36 months. Upon conversion, the Company
will hold a 17.62% interest in TGOD on a non-diluted basis. In addition,
the companies entered into an investor rights agreement whereby upon TGOD
achieving certain corporate, operational, construction and financial
milestones, the Company will have the option to incrementally increase its
ownership interest in TGOD to over 50% by purchasing its shares at a 10%
discount to the listed market price.
|
|
|
|
|
|
|
|
In addition, the companies entered into a supply contract
providing Aurora with the right to purchase up to 20% of the TGOD’s annual
production of organic cannabis from TGOD’s facilities, approximately
23,000 kilograms of full capacity. Further, Aurora will have the right to
purchase up to 33% of TGOD’s production at its two facilities if the
Company increases its ownership interest to 31%.
|
|
|
|
|
|
|
(f)
|
On January 23, 2018, the Company further increased its
ownership interest in Cann Group from 21.8% to 22.9% by subscribing to an
additional 3,194,033 ordinary shares at A$2.50 per share for a total cost
of A$7,985.
|
|
|
|
|
|
|
(g)
|
On January 24, 2018, the Company entered into a support
agreement with the directors and special committee of the board of
CanniMed in connection with the new offer of the Company for the
acquisition of the issued and outstanding shares of CanniMed. Under the
new offer, CanniMed shareholders may receive in respect of each CanniMed
share, 3.40 Aurora shares or a combination of cash and shares at the
election of each CanniMed shareholder, subject to proration with the
maximum aggregate cash consideration of $140-million.
|
|
|
|
|
|
|
|
At the Company’s special meeting on January 15, 2018, the
shareholders of Aurora approved the resolution for the issuance of shares
of the Company to the shareholders of CanniMed pursuant to the terms of
the Offer.
|
42
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and six months ended December 31, 2017 and 2016
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
25.
|
Subsequent Events
(Continued)
|
|
|
(h)
|
On February 5, 2018, the Company announced that it has
agreed to make a strategic investment in Liquor Stores N.A. Ltd. (“Liquor
Stores”) by way of a non-brokered private placement of 6,900,000 common
shares at $15.00 per share for a total cost of $103,500, thereby obtaining
a 19.9% interest ownership in Liquor Stores on a non- diluted basis (the
“Initial Investment”).
|
|
|
|
|
|
|
|
Aurora will also subscribe for 2,300,000 subscription
receipts (the “Subscription Receipts”) of Liquor Stores at $15.00 per
subscription receipt for a total cost of $34,500, which upon completion
will increase Aurora’s interest ownership to approximately 25% on a
non-diluted basis.
|
|
|
|
|
|
|
|
Additionally, Liquor Stores will issue to Aurora for no
additional consideration, two classes of share purchase warrants: (1)
10,130,00 warrants at an exercise price of $15.75 per share to allow
Aurora to increase its pro rata equity interest to 40% on a fully diluted
basis (the "Sunshine Warrants"); and (2) up to 1,750,000 warrants
exercisable at $15.00 upon conversion of any of the outstanding 4.70%
unsecured subordinated debentures of Liquor Stores to allow Aurora to
maintain its pro rata equity interest in Liquor Stores (the "Pro Rata
Warrants”).
|
|
|
|
|
|
|
|
The Subscription Receipts, the Sunshine Warrants and the
Pro Rata Warrants are subject to approval of the shareholders of Liquor
Stores at their next annual general meeting.
|
|
|
|
|
|
|
|
Aurora and Liquor Stores have also entered into an
Investor Rights Agreement pursuant to which, among other conditions: (i)
Aurora shall be entitled to participate in future equity offerings of
Liquor Stores in order to maintain its pro rata equity interest; (ii)
Aurora shall have the right to nominate one (1) director for election to
the board of directors of Liquor Stores following the completion of the
Initial Investment (and subject to it maintaining an equity ownership of
at least 10%) and shall have the right to nominate a second director if it
increases its equity ownership in Liquor Stores to 33 1/3% or
more.
|
|
|
|
|
|
|
(i)
|
The Company granted 500,000 stock options exercisable at
$10.32 per share, vesting quarterly over three years, and awarded 150,000
RSUs, vesting annually over 3 years, to an officer of the
Company.
|
|
|
|
|
|
|
(j)
|
292,749 common shares were issued on the exercise of
292,749 stock options for gross proceeds of $239.
|
|
|
|
|
|
|
(k)
|
2,934,312 common shares were issued on the exercise of
2,934,312 warrants for gross proceeds of $8,839.
|
|
|
|
|
|
|
(l)
|
17,263,844 common shares were issued on the conversion of
$112,215 principal amount of debentures (Note
14(c)).
|
43
AURORA CANNABIS INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three and
six-month periods ended December 31, 2017
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
This Management’s Discussion and Analysis (“MD&A”) reports
on the consolidated financial condition and operating results of Aurora Cannabis
Inc. (“the Company” or “Aurora”) for the six-month period ended December 31,
2017, and has been prepared pursuant to the MD&A disclosure requirements
under National Instrument 51-102 - Continuous Disclosure Obligations (“NI
51-102”) of the Canadian Securities Administrators. The Company’s continuous
disclosure documents are available on SEDAR at
www.sedar.com
.
The MD&A should be read in conjunction with the Company’s
unaudited Condensed Interim Consolidated Financial Statements for the three and
six-month periods ended December 31, 2017 and notes thereto (the “Interim
Financial Statements”) and the audited consolidated financial statements for the
year ended June 30, 2017 and the related annual MD&A.
The Interim Financial Statements were prepared in accordance
with IAS 34 Interim Financial Reporting of the International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting Standards Board
(“IASB”) and interpretations of the IFRS Interpretations Committee (“IFRIC”),
and include the accounts of the Company, and its wholly-owned subsidiaries,
joint venture and associates. A complete list of the Company’s subsidiaries,
associates, joint venture and investments is outlined in Note 2(b) to the
Interim Financial Statements.
The Company has reclassified certain immaterial items on the
comparative condensed interim consolidated statement of comprehensive loss to
conform with current period’s presentation and improve clarity.
This MD&A has been prepared as of February 7, 2018. All
dollar amounts referred to in this MD&A are expressed in thousands of
Canadian dollars, except for share and per share amounts, and where indicated
otherwise.
2
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Agility, Innovation, Execution and Expansion: Building a
Globally Dominant Cannabis Company
Aurora continued to execute its aggressive plan to build a
leading, integrated global cannabis company.
During the three months ended December 31, 2017, the Company
achieved record revenues, grams sold, and continued to realize lower costs per
gram for the production of cannabis.
During the three months ended December 31, 2017, and in the
subsequent period up to the date of this MD&A, construction of the
world-leading Aurora Sky facility and the Lachute facility progressed on
schedule while the Company completed construction of its Aurora Vie facility in
Quebec. Aurora recently received cultivation licenses from Health Canada for its
Aurora Vie facility and completed rooms at Aurora Sky.
Aurora also raised significant additional financial resources
and expanded its business line through the Hempco strategic investment and
Larssen acquisition, worked to close its bid for the acquisition of CanniMed,
launched a new production and sales initiative based in Denmark, won the first
tender for the private company provision of medical cannabis to Italy, continued
strong German medical cannabis growth, and further strengthened its talented,
world-class production and corporate teams.
Financial and Operational Highlights
|
|
|
Q2 2018
|
|
|
Q1 2018
|
|
|
Change
|
|
|
|
|
#
|
|
|
#
|
|
|
%
|
|
|
Active registered patients
(1)
|
|
21,718
|
|
|
19,280
|
|
|
12.6
|
|
|
Grams sold
|
|
1,161,809
|
|
|
889,965
|
|
|
30.5
|
|
|
Grams produced
|
|
1,204,259
|
|
|
1,009,585
|
|
|
19.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
%
|
|
|
Revenues
|
|
11,700
|
|
|
8,249
|
|
|
41.8
|
|
|
Gross margin of
Aurora-produced cannabis
(2)
|
|
73.8%
|
|
|
67.6%
|
|
|
9.2
|
|
|
Average net selling price per gram
|
|
8.36
|
|
|
8.22
|
|
|
1.7
|
|
|
Cash cost of sales per gram
(3)
|
|
1.74
|
|
|
2.16
|
|
|
(19.4
|
)
|
|
Cash cost to produce per gram
(3)
|
|
1.41
|
|
|
1.87
|
|
|
(24.6
|
)
|
|
Cash and cash equivalents
|
|
350,841
|
|
|
127,915
|
|
|
174.3
|
|
|
Working capital
|
|
302,526
|
|
|
169,674
|
|
|
78.3
|
|
|
Cannabis inventory and
biological assets
|
|
17,325
|
|
|
16,846
|
|
|
2.8
|
|
|
Investment in capital assets
|
|
46,397
|
|
|
26,221
|
|
|
76.9
|
|
|
(1)
|
As of the date hereof, the Company has over 23,000
active
registered patients.
|
|
(2)
|
Gross margin of Aurora-produced cannabis was calculated
based on net revenue and cost of sales on cannabis that was produced by
Aurora. Gross margin of Aurora-produced cannabis is a non-IFRS financial
measure that does not have a standardized meaning under IFRS and may not
be comparable to other companies. See definitions later in this document
and reconciliation and discussion under “
Gross Profit”
.
|
|
(3)
|
Cash cost of sales and cost to produce per gram was
calculated based on cash cost of goods sold and grams sold in the period
that was produced by Aurora. Cash cost of sales per gram and cash cost to
produce per gram are non-IFRS financial measures that do not have a standardized
meaning under IFRS and may not be comparable to other companies. See definitions
later in this document and reconciliation and discussion under “
Cash Cost of
Sales of Dried Cannabis Sold.
”
|
3
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
COMPANY OVERVIEW
Aurora was incorporated in British Columbia, Canada, and its
common shares are listed on the Toronto Stock Exchange (“TSX”) under the symbol
“ACB” and on the OTCQX under the symbol “ACBFF”.
The Company’s principal business is the production and
distribution of medical cannabis in Canada and internationally. The Company
produces and distributes dried medical cannabis and cannabis oils in Canada
pursuant to the
Access to Cannabis for Medical Purposes Regulations
(“ACMPR”), through its wholly-owned subsidiary, Aurora Cannabis Enterprises Inc.
(“ACE”), and distributes wholesale medical cannabis in the European Union
pursuant to the German Medicinal Products Act and German Narcotic Drugs Act, and
in Italy through the January 2018 tender process.
Aurora is one of the world`s largest and fastest growing
cannabis companies, and has created a growing constellation of subsidiaries and
strategic partnerships that provide differentiation in terms of geographic
reach, production, technology, product offering, and execution.
With a growing number of countries adopting medical cannabis
legislation, the Company has embarked on an aggressive international expansion
strategy that currently sees Aurora with operations and investments in Germany,
Denmark, Italy, and Australia.
Aurora’s strategy and vision is to build a leading, integrated
global cannabis company through:
|
|
•
|
the construction of highly-efficient
purpose-built and greenhouse facilities that allow the Company to produce
significant volumes of low-cost, high quality cannabis,
|
|
|
•
|
aggressive and strategically focused
international expansion,
|
|
|
•
|
strong brand differentiation, broad product
diversification, and
|
|
|
•
|
industry-leading board, senior management and
operational teams.
|
Aurora expects that this strategy will deliver strong and
sustainable shareholder value as the Company gains and retains significant
market share of the domestic and international medical cannabis markets, as well
as the Canadian adult consumer use market once legalized.
Facilities
Aurora owns facilities with capacities expected to exceed
240,000 kilograms of high quality cannabis per year.
Aurora also has long term supply agreements expected to provide
a further 23,000 kilograms of high-quality organic cannabis per year, and is
working to close the acquisition of CanniMed Therapeutics Inc. which would bring
a further 7,000 kilograms of immediate annual capacity.
Total current, fully-funded capacity is expected to exceed
270,000 kilograms annually, including all of Aurora Nordic capacity.
4
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
|
Facility
|
Location
|
Square
|
Full Scale
|
|
License Status
|
Comments
|
|
|
|
Feet
|
Annual
|
|
|
|
|
|
|
|
Capacity
|
|
|
|
|
|
|
|
(kilograms)
|
|
|
|
|
In Operation
|
|
Aurora
Mountain
|
Mountain View
|
55,200
|
4,800
|
|
Licensed by Health
|
Alberta is an ideal production
|
|
|
County, Alberta,
|
|
|
|
Canada for the
|
location due to low energy,
|
|
|
Canada
|
|
|
|
cultivation and sale of
|
labor and tax costs. EU GMP
|
|
|
|
|
|
|
dried cannabis and oils.
|
certified.
|
|
|
|
|
|
|
|
|
|
Aurora
Vie
|
Pointe Claire,
|
40,000
|
4,000
|
|
License to cultivate
|
State-of-the-art next generation
|
|
|
Quebec, Canada
|
|
|
|
received from Health
|
purpose-built to EU GMP
|
|
|
|
|
|
|
Canada on October 27,
|
standards.
|
|
|
|
|
|
|
2017.
|
|
|
Under
Construction
|
|
Aurora
Sky
|
Edmonton
|
800,000
|
>100,000
|
|
License to cultivate
|
Expected to be world’s most
|
|
|
International
|
|
|
|
received from Health
|
technologically advanced
|
|
|
Airport, Alberta,
|
|
|
|
Canada on January 26,
|
cannabis facility in the world,
|
|
|
Canada
|
|
|
|
2018.
|
utilizing state-of-the-art
|
|
|
|
|
|
|
|
cultivation technologies. First
|
|
|
|
|
|
|
|
bays planted as at February 1,
|
|
|
|
|
|
|
|
2018. Built to EU GMP
|
|
|
|
|
|
|
|
standards. Full completion on
|
|
|
|
|
|
|
|
track for mid-2018.
|
|
|
|
|
|
|
|
|
|
Lachute
|
Lachute Quebec,
|
48,000
|
4,500
|
|
Pre-license
|
Acquired in November 2017
|
|
|
Canada
|
|
|
|
|
through the acquisition of H2
|
|
|
|
|
|
|
|
Biopharma Inc. To be
|
|
|
|
|
|
|
|
completed to EU GMP
|
|
|
|
|
|
|
|
standards.
|
|
In
Design
|
|
Aurora
Nordic
|
Odense,
|
1,000,000
|
>120,000
|
|
Partner company
|
51% ownership “Sky-type”
|
|
|
Denmark
|
|
|
|
received cannabis
|
facility (Aurora Larssen build).
|
|
|
|
|
|
|
cultivation license from
|
Construction to be phased.
|
|
|
|
|
|
|
Denmark’s Medicines
|
Cultivation following the
|
|
|
|
|
|
|
Agency effective January
|
completion of first 200,000
|
|
|
|
|
|
|
1, 2018.
|
square feet expected in calendar
|
|
|
|
|
|
|
|
Q3 2018.
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
8,000
|
|
Subject to licensing
|
Retrofit of existing greenhouse.
|
|
|
|
|
|
|
|
First harvest expected in
|
|
|
|
|
|
|
|
calendar Q3 2018.
|
RECENT DEVELOPMENTS (SUBSEQUENT TO DECEMBER 31, 2017)
Continued Strong Patient Growth
|
|
•
|
Aurora registered over 5,300 patients since June 30,
2017, and as of the date Company has surpassed 23,000 active registered
patients in approximately of this report, the 2 years after the Company’s
first product sale in January 2016. Management believes this to be the
fastest rate of patient registration for a Licensed Producer (“LP”) after
the launch of commercial operations.
|
5
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
|
|
•
|
CanvasRx, which now operates 26 facilities nationwide,
remains the leading Canadian network of cannabis counseling and outreach
centres, with more than 37,969 registered patients. Over 9,500 medical
doctors across Canada have referred patients to CanvasRx or its affiliated
medical clinics.
|
Expanding International Operations
Denmark and Scandinavia
Production and Sales Agreement with Alfred Pederson &
Søn
On January 4, 2018, the Company signed a binding term sheet
with Alfred Pederson & Søn (“APS”), pursuant to which Aurora will ultimately
own a 51% interest in Aurora Nordic Cannabis A/S (“Aurora Nordic”) based in
Odense, Denmark. Aurora Nordic will commence construction of an ALPS designed
1,000,000 square foot high-technology, fully automated cannabis production
facility (the “Aurora Nordic Facility”). Aurora Nordic will focus on the
cultivation and sales of cannabis in Denmark, Sweden, Norway, Finland and
Iceland through Pedanios. As capacity from the Denmark facility expands, excess
capacity will be distributed to other EU countries with the support of Pedanios.
The Aurora Nordic Facility will be largely similar to Aurora
Sky with a projected production capacity in excess of 120,000 kilograms per
annum. Construction will be phased, with cultivation commencing upon completion
of the first 200,000 square feet, which is anticipated in the third calendar
quarter of 2018. APS received its cannabis cultivation license from
Lægemiddelstyrelsen, Denmark’s Medicines Agency, effective January 1, 2018.
Aurora Nordic is one of the few companies with a license to cultivate in Europe.
In the short-term, Aurora Nordic will retrofit APS’s existing
100,000 square foot greenhouse in Odense, Denmark. Subject to licensing by
Lægemiddelstyrelsen, this will enable Aurora Nordic to commence the cultivation
of cannabis in the summer of 2018 while it is constructing the Aurora Nordic
Facility.
Germany
The Company continues to export bi-weekly shipments of dried
medical cannabis products to Pedanios, its wholly-owned Germany subsidiary.
Pedanios remains the European Union's largest distributor of cannabis by volume
of product sold, has completed deliveries to over 2,200 pharmacies, and
continues to build market share rapidly. Pedanios remains the only distributor
to offer cannabis flower sourced from both Canada and the Netherlands, and
offers 11 of the 15 licensed varieties in Germany.
The German market continues to develop rapidly. Insurance
company AOK Versicherung, which represents approximately 50 per cent of all
insured people in Germany, reported that approximately 7,500 people applied for
reimbursement in December 2017 through AOK, which implies a national figure of
15,000 for all of Germany for the single month of December 2017.
Italy
In January 2018, Pedanios won a highly competitive EU-wide
public tender to supply medical cannabis to the Italian government through the
Ministry of Defense, which oversees medical cannabis production and distribution
in Italy. Upon signing of the contract, Aurora will export product into Germany
through Pedanios, who will supply the Italian market through the Ministry of
Defense.
6
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Australia
In January 2018, Cann Group was granted a license to import
and/or export cannabis genetics and medicinal cannabis products by the
Australian government's Department of Health, through the Office of Drug Control
(ODC). The license enables Cann Group to import genetics from Aurora to help
broaden the company’s portfolio of medical cannabis products, pending Aurora's
receipt of an export permit from Health Canada. On January 23, 2018, the Company
further increased its ownership interest in Cann Group from 21.8% to 22.9% by
subscribing to an additional 3,194,033 ordinary shares at A$2.50 per share.
Domestic Expansion
Aurora Sky
To date, over 700,000 square feet of steel structure has been
erected at Aurora Sky, with specialty glass installed on more than 400,000
square feet of the facility, and work on the interior is progressing rapidly.
Completion of the entire facility is on track for mid-2018. On January 26, 2018,
Aurora Sky has received its license to cultivate from Health Canada. The Company
anticipates first harvest in the second calendar quarter of 2018.
Aurora Vie
The Company completed construction at Aurora Vie and received
its cultivation license from Health Canada in October 2017. The Company has
begun cultivation at the facility and expects first harvest in the first quarter
of calendar 2018.
Takeover Bid for CanniMed
Therapeutics Inc. (“CanniMed”)
On November 24, 2017, the Company formally commenced its
takeover offer to purchase all of the issued and outstanding common shares of
CanniMed (the “Offer”). At the special meeting of Aurora on January 15, 2018,
the shareholders voted 98.18% in favor of the share issuance resolution for the
purpose of approving the issuance of shares to the shareholders of CanniMed.
On January 24, 2018, the Company and CanniMed entered into a
support agreement whereby the Board of Directors and the Special Committee of
the CanniMed Board have agreed to support a new offer made by the Company (the
“New Offer”). Under the New Offer, CanniMed shareholders may receive in respect
of each CanniMed share, 3.40 Aurora shares or a combination of cash and shares
at the election of each CanniMed Shareholder, subject to pro-ration with the
maximum aggregate cash consideration of $140 million.
Aurora believes that the combination of the two companies
offers a significant opportunity for both companies to accelerate growth and
shareholder value creation. Among other things, the combined entity will have
over 40,000 active registered patients and 6 state-of-the-art EU GMP certifiable
facilities to service rapidly growing domestic and international markets.
7
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Strategic Investment in The Green
Organic Dutchman Holdings Ltd.
On January 16, 2018, the Company completed its strategic
investment in The Green Organic Dutchman Holdings Ltd. (“TGOD”) pursuant to the
terms of the definitive agreement the parties entered into on January 4, 2018.
TGOD is a Canadian private company licensed under the ACMPR to cultivate medical
cannabis.
Under the agreement, Aurora subscribed for $55,000 subscription
receipts through a private placement which will automatically convert into
33,333,334 units upon TGOD’s listing on a Canadian stock exchange. Upon
conversion, the Company will hold a 17.62% interest in TGOD on a non-diluted
basis. Aurora also has the option to incrementally increase its ownership
interest in TGOD to over 50% by purchasing its shares at a 10% discount to the
listed market price, upon TGOD achieving certain corporate, operational,
construction and financial milestones.
The companies entered into a supply contract providing Aurora
with the right to purchase up to 20% of the TGOD’s annual production of organic
cannabis from TGOD’s facilities, equating to approximately 23,000 kilograms at
full capacity. Additionally, Aurora will have the right to purchase up to 33% of
TGOD’s production at its two facilities if the Company increases its ownership
interest to 31%.
TGOD is currently completing the expansion of its first
production facility located in Ancaster, Ontario, and is also constructing an
820,000 square foot high-technology hybrid greenhouse, Aurora Larssen-designed
facility in Valleyfield, Quebec, with a projected production capacity in excess
of 100,000 kilograms of organic cannabis per annum. Upon completion, both
facilities combined will measure 970,000 square feet, with a total production
capacity of over 114,000 kilograms per year.
Investment in Liquor Stores N.A.
Ltd. (“Liquor Stores”)
On February 5, 2018, the Company announced it has agreed to
make a strategic investment in Liquor Stores by way of a non-brokered private
placement. The investment has been structured in two phases, with an Initial
Investment made by Aurora of $103,500 for an approximate 19.9% ownership
interest in Liquor Stores, and an additional investment that, upon Liquor Stores
shareholder approval, could bring Aurora's interest in Liquor Stores up to
approximately 40%.
Liquor Stores intends to use the net proceeds from the Private
Placement to establish and launch a leading brand of cannabis retail outlets,
whereby it will convert some number of Liquor Stores' existing retail outlets
into cannabis retail outlets and establish new cannabis retail outlets. Aurora's
brand leadership, quality products, customer care, innovation and deep product
knowledge will be a strong complement to Liquor Stores' well-established
distribution network, best practices in the retail of adult use controlled
products, commitment to regulatory compliance, and deep talent pool with over
2,000 retail employees.
Business Line Expansion
Strategic Investment in Micron
Waste Technologies Inc.
On January 15, 2018, the Company completed its strategic
investment in Micron Waste Technologies Inc. (“Micron”), taking a 6.46%
ownership interest on a non-diluted basis in the developer of proprietary
digester solutions for the treatment of organic waste. The parties also
finalized a collaboration agreement under which both companies will collaborate
on the optimization of Micron’s technology for the treatment of organic waste
generated in the cultivation and production of cannabis products. Upon
successful completion of the project, Aurora intends to acquire multiple units
for its various facilities. Micron will retain the intellectual property related
to the digester, and will pay Aurora a 4% royalty for every unit sold to other
licensed producers globally. Upon the first successful sale of a digester within
the cannabis industry, Micron shall issue to Aurora 2,000,000 common shares.
8
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Aurora PRO
In February 2018, the Company launched a new
business-to-business service, Aurora PRO, for LPs and licensed retailers in the
forthcoming adult consumer market. Aurora PRO is aimed at producers of any
scale, from craft growers, to larger bulk wholesale-focused LPs. Through
transacting with Aurora, LPs have the ability to overcome distribution barriers
and minimum supply requirements that may prevent them from gaining access to key
provincial markets and getting their product into the hands of consumers.
Through Aurora PRO, the Company also looks to partner with a wide variety of
business-to-consumer market participants, including smaller independent
retailers. The offering will include operational support, such as product and
staff training, as well as consulting aimed to help optimize the retailers’
purchasing strategies. The Company will also be providing intelligence to help
retailers identify and react on market trends, as well as providing visibility
into Aurora's production pipeline.
Financings
|
|
•
|
On January 11, 2018, the Company entered into an
agreement with a syndicate of underwriters led by Canaccord Genuity Corp.
(“Canaccord”) pursuant to which Canaccord has agreed to purchase, on a
bought deal basis, 200,000 convertible debentures at $1,000 per initial
convertible debenture for gross proceeds of $200,000. The Company also
granted Canaccord an option, exercisable up to 30 days after closing of
the offering, to purchase up to an additional 30,000 convertible
debentures for additional gross proceeds of $30,000. If the option is
exercised in full, the aggregate gross proceeds of the offering will be
$230,000.
|
|
|
|
|
|
|
|
The debentures will have a term of two years, bear
interest at 5% per annum, payable semi-annually, and will be convertible
at a price of $13.05 per common share. The Company may force the
conversion of the principal amount of the outstanding debentures should
the VWAP of its common shares exceed $17.00 for any 10 consecutive trading
days.
|
|
|
|
|
|
|
•
|
As of February 7, 2018, approximately $115
million in additional gross cash proceeds remain available from the future
exercise of warrants and stock options.
|
Management Team Expansion
|
|
•
|
On January 5, 2018, the Company promoted Cam Battley to
Chief Corporate Officer who previously served as Aurora’s Executive Vice
President. Mr. Battley will be the lead external-facing executive of the
Company, responsible for establishing and managing relationships with
shareholders and other external stakeholders while also ensuring
organizational alignment with regard to strategic partnerships and
corporate development.
|
9
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
|
|
•
|
On January 15, 2018, the Company appointed Savior Joseph
as Senior Vice President, Global Marketing and Jillian Swainson as Senior
Vice President and General Counsel. Mr. Joseph will be responsible for
marketing initiatives supporting all Aurora products around the world
including building world-class brands that resonate with consumers across
key markets, expanding and overseeing the marketing team and creating
unique experiences for all stakeholders. Ms. Swainson joins Aurora from
Brownlee LLP, where she was a Partner in the firm's business practice and,
over the past several years, has developed an expertise in the heavily
regulated and increasingly complex cannabis industry. Ms. Swainson has
worked with the Company since its inception and has accepted her new
position to focus fully on Aurora.
|
KEY DEVELOPMENTS DURING THE SECOND FISCAL QUARTER 2018
Strong Revenue and Patient Growth
|
|
•
|
Aurora generated revenues of approximately
$11,700 in Q2 2018, up 42% or approximately $3,451 from Q1 2018, and up
201% or approximately $7,815 from Q2 2017. Revenues generated were as
follows:
|
|
|
|
|
Dec 31,
|
|
|
Sep 30,
|
|
|
Jun 30,
|
|
|
Mar 31,
|
|
|
Dec 31,
|
|
|
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
2016
|
|
|
|
Net Revenue
(1)
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Canadian dried cannabis
|
|
5,750
|
|
|
4,641
|
|
|
4,384
|
|
|
4,336
|
|
|
3,207
|
|
|
|
Canadian cannabis oils
|
|
1,508
|
|
|
1,439
|
|
|
804
|
|
|
-
|
|
|
-
|
|
|
|
Germany dried cannabis
|
|
2,483
|
|
|
1,235
|
|
|
439
|
|
|
-
|
|
|
-
|
|
|
|
Service revenue
|
|
874
|
|
|
934
|
|
|
309
|
|
|
839
|
|
|
678
|
|
|
|
Other revenue
|
|
1,085
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Total consolidated net revenue
|
|
11,700
|
|
|
8,249
|
|
|
5,936
|
|
|
5,175
|
|
|
3,885
|
|
|
|
(1)
|
Net revenue is comprised of gross revenue net of
discounts, returns and allowances.
|
|
|
•
|
Aurora sold a total of 1,161,809 grams of
cannabis in Q2 compared to 889,965 grams in Q1, up 31% or 271,844 grams,
consisting of:
|
|
|
o
|
Dried cannabis
|
–
|
1,048,882 grams
|
|
|
|
|
|
|
|
|
o
|
Cannabis oils
|
–
|
112,927 grams equivalent
|
|
|
•
|
The Company added approximately 2,400 active
registered patients during Q2 2018, representing an increase of 13% during
the quarter.
|
Significant Advancements on International Expansion
|
|
•
|
Aurora received European Union (EU) Good Manufacturing
Practices (GMP) certification regarding the production, handling, storage
and packaging of cannabis flowers. The certificate granted covers both
Chapter I and Chapter II of the EU GMP regulations, certifying Aurora for
the production of active ingredients and their formulation into a
pharmaceutical drug. Additionally, Pedanios also received EU GMP
certification pertaining to the import, release and distribution of dried
cannabis flowers, also within Chapter I and Chapter II of the EU GMP
regulation.
EU GMP certification is the highest such recognition
attainable by companies in the pharmaceutical space, and is a requirement
for companies to supply the German and wider EU markets with medical cannabis. Aurora becomes only the second Canadian company with
wholly-owned subsidiaries possessing an EU GMP certification for production,
handling, storage and packaging in Canada, as well as for the import, release,
and distribution in Germany and beyond.
Pedanios passed the first stage of the tender application
process to become a licensed producer of medical cannabis in Germany. The second
and final stage of the application process involves a competitive bid proposal
and contract negotiations to cultivate, process, store, package and deliver
cannabis for medical purposes in Germany. Results of the tender process are
expected in March 2018.
|
10
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
|
|
•
|
On December 11, 2017, the Company subscribed to an
additional 7,200,000 ordinary shares in Cann Group’s financing, at A$2.50
per share for a total cost of $17,577 (A$18,000), thereby increasing
Aurora’s interest in Cann Group from 19.9% to 21.8%.
|
Strategic Investment in Hempco
Management anticipates that Hempco will provide further product
differentiation for the Company, as well as, subject to regulatory changes
anticipated for 2018, provide substantial supply of low-cost raw material for
the extraction of CBD.
On November 14, 2017, the Company acquired a 22.3% interest on
an undiluted basis in Hempco through investing in Hempco’s private placement of
10,558,676 units of Hempco at $0.3075 per unit for gross proceeds of $3,247.
Each unit consisted of one common share and one share purchase warrant
exercisable at $0.41 per share for a period of two years, subject to accelerated
expiry if Hempco’s shares trade at or above a VWAP of $0.65 for any 30-day
period. On closing of the private placement, the Company obtained 22.3% interest
on an undiluted basis and 33.4% on a fully diluted basis. As part of the
investment, the Company entered into a call option agreement to acquire up to an
aggregate of 10,754,942 shares from the majority owners of Hempco, which, upon
exercise, would bring the Company’s total ownership interest in Hempco to over
50.1% on a fully diluted basis.
Hempco is one of the world’s largest producers of industrial
hemp products and is committed to developing hemp foods, hemp fiber and hemp
nutraceuticals, a “Tri-crop” opportunity for producers and processors. Hempco is
expanding its processing ability to meet global demands in a 56,000 square foot
facility located in Nisku, Alberta.
Services Agreement with Radient Technologies Inc.
In November 2017, Aurora and Radient announced that they had
finalized a Master Services Agreement, pursuant to which Radient will perform
certain services for Aurora using its Map
TM
technology, as well as
other technologies, for the development, commercialization and supply of
standardized cannabis extracts, which may be derived from both cannabis and
hemp. Radient has applied with Health Canada to obtain Licensed Dealer and
Licensed Producer status, and is progressing well through the processes.
Upon receipt of either license, Radient will be able to
commence production of cannabis extracts. The Company expects that this
agreement will enable Aurora to accelerate the production of high-margin
cannabis derivatives through the use of Radient’s technology.
11
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
As of December 31, 2017, the Company held a 17.02% interest in
Radient on an undiluted basis and a 15.71% interest on a fully diluted
basis.
Business Line Expansion
Acquisition of Larssen Ltd.
On December 4, 2017, the Company completed the acquisition of
Larssen through its wholly-owned subsidiary, Aurora Larssen Projects Inc.
(“ALPS”). Larssen is a Canadian consulting firm that has set the industry
standard in high-tech, automated, environmentally controlled greenhouses for
over 30 years, and has consulted on the design, engineering, and construction
oversight of many of the world's most advanced greenhouse cultivation
facilities. Best known for the successful implementation of cutting-edge
automation features, proprietary design characteristics that generate
exceptional yields, and the use of advanced energy efficient materials and
technologies, Larssen has been involved with over 1,000 projects around the
globe.
ALPS is responsible for the design and engineering management
of Aurora Sky, further diversifying the Company’s vertical offering in the
cannabis sector. ALPS is presently completing design for the Aurora Nordic
Facilities, completing Aurora Sky and managing the commissioning of H2 and
Aurora Vie. ALPS is also finalizing contracts with several companies around the
world offering the full service turnkey approach to first class cannabis
production and processing facilities including engineering, design, construction
support, regulatory advice, SOP writing, commissioning, genetics, training,
nutrient delivery systems, breeding and long-term maintenance and support.
Supply of B.C. Northern Lights
Enterprises Ltd. (“BCNL”) Systems through Namaste
On November 26, 2017, BCNL and Namaste signed a hardware supply
agreement whereby Namaste will be the first third-party distributor to sell
BCNL’s premium home cultivation systems and accessories through its online
technology platform. Namaste will roll out same-day delivery service of select
BCNL products to the Greater Toronto Area, as well as next day delivery in most
other parts of Canada, to help meet the growth in demand for home gardening
systems anticipated with the passing of the federal Cannabis Act to legalize
adult consumer use, as well as continued rapid growth of the medical cannabis
market.
Strengthened Capital Position
Aurora strengthened its balance sheet and liquidity position
during the second quarter of 2018 with $316,774 in new financings as
follows:
|
|
•
|
On November 2, 2017, the Company completed a
bought deal financing and concurrent private placement for a total of
25,000,000 units at $3.00 per unit for gross proceeds of $75,000.
|
|
|
|
|
|
|
•
|
On November 28, 2017, the Company completed an offering
of 115,000 special warrants for gross proceeds of $115,000. Each special
warrant is exercisable into a $1,000 principal amount of convertible
debentures of the Company following the Company obtaining a receipt from
the applicable securities regulatory authorities in Canada for a final
short form prospectus qualifying the distribution of the debentures.
|
12
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
|
|
•
|
During the three months ended December 31,
2017, the Company raised $126,774 through the exercise of warrants,
options and compensation options.
|
|
|
|
|
|
|
•
|
During the quarter, the Company also converted
$79,470 of convertible notes into common shares.
|
As of December 31, 2017, $99,534 in additional gross cash
proceeds remain available from the future exercise of warrants and stock
options.
Strengthening of the Senior Management Team
During the three months ended December 31, 2017, Aurora
strengthened its senior management team with talented and experienced
individuals to ensure the Company has the leadership to further grow and build
shareholder value through execution of domestic and international objectives and
opportunities. In October and November 2017, the Company appointed Diane Jang as
Director, Darryl Vleeming as Chief Information Officer and Marc Lakmaaker as
Director of Investor Relations.
SUMMARY OF QUARTERLY RESULTS
The following table presents selected financial information
from continuing operations for the most recent eight quarters:
|
|
|
|
|
|
|
|
|
Basic and
|
|
|
|
|
|
|
|
Net Income
|
|
|
Diluted Earnings
|
|
|
Quarter ended
|
|
Revenue
|
|
|
(Loss)
|
|
|
(Loss) per Share
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
December 31, 2017
|
|
11,700
|
|
|
7,194
|
|
|
0.02
|
|
|
September 30, 2017
|
|
8,249
|
|
|
3,560
|
|
|
0.01
|
|
|
June 30, 2017
|
|
5,936
|
|
|
(4,816
|
)
|
|
(0.01
|
)
|
|
March 31, 2017
|
|
5,175
|
|
|
139
|
|
|
-
|
|
|
December 31, 2016
|
|
3,885
|
|
|
(2,678
|
)
|
|
(0.01
|
)
|
|
September 30, 2016
|
|
3,071
|
|
|
(5,613
|
)
|
|
(0.03
|
)
|
|
June 30, 2016
|
|
1,220
|
|
|
(7,474
|
)
|
|
(0.05
|
)
|
|
March 31, 2016
|
|
219
|
|
|
2,527
|
|
|
0.02
|
|
The net income for the quarter ended December 31, 2017 was
primarily attributable to increased revenues and to the unrealized gain on
warrant derivatives. For the three months ended December 31, 2017, 62% of the
Company’s revenues were generated from the sale of medical cannabis in Canada,
21% from sales in Germany through Pedanios, and 17% from service and other
revenues. The unrealized gain on derivatives relates to the fair value of the
Company’s warrants in Radient.
The net income for the quarter ended September 30, 2017 was
primarily attributable to increased revenues and to the unrealized gain on
convertible debentures. For the three months ended September 30, 2017, 74% of
the Company’s revenues were generated from the sale of medical cannabis in
Canada, 15% was generated from sales in Germany and 11% was generated from
service revenue. The Company began exporting medical cannabis to Germany at the
end of September 2017.
13
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
The net loss for the quarter ended June 30, 2017 was primarily
attributable to the unrealized loss on convertible debenture investments,
increased finance costs relating to convertible debenture payables, share-based
payments, acquisition and project evaluation costs, and increased expenditures
due to scaling up operations.
The net income for the quarter ended March 31, 2017 was
primarily attributable to the unrealized gain on the changes in fair value of
biological assets and unrealized gain on debenture and marketable
securities.
The net losses for the quarters ended September 30, 2016 and
June 30, 2016 were primarily due to a decrease in unrealized gain on changes in
fair value of biological assets and increased expenditures due to increased
corporate activities related to scaling up of its operations, the acquisition of
CanvasRx and various equity and debt financings.
The net income for the quarters ended March 31, 2016 was
primarily attributable to the unrealized gain on the changes in fair value of
biological assets.
RESULTS OF OPERATIONS
During the six months ended December 31, 2017, the Company
continued to advance its aggressive business and operating strategies that
included increased operational and production efficiencies realized from the
Mountain View production facility, the construction of its Aurora Sky and
Pointe-Claire facilities, continued registration and servicing of new and
existing patients, increasing plants in production to meet current and
anticipated increases in product demand, and strategic acquisitions and
investment opportunities.
During the prior period, the Company continued its efforts and
operational spending on the registration of new patients, increasing production
to meet anticipated increase in product demand and closing various equity and
debt financings.
Revenues
|
|
|
Dec 31,
|
|
|
Sep 30,
|
|
|
Jun 30,
|
|
|
Mar 31,
|
|
|
Dec 31,
|
|
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue
(1)
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Canadian dried cannabis
|
|
5,750
|
|
|
4,641
|
|
|
4,384
|
|
|
4,336
|
|
|
3,207
|
|
|
Canadian cannabis oils
|
|
1,508
|
|
|
1,439
|
|
|
804
|
|
|
-
|
|
|
-
|
|
|
Germany dried cannabis
|
|
2,483
|
|
|
1,235
|
|
|
439
|
|
|
-
|
|
|
-
|
|
|
Service revenue
|
|
874
|
|
|
934
|
|
|
309
|
|
|
839
|
|
|
678
|
|
|
Other revenue
|
|
1,085
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Total consolidated net revenue
|
|
11,700
|
|
|
8,249
|
|
|
5,936
|
|
|
5,175
|
|
|
3,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quantity sold
|
|
#
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
Dried cannabis (grams)
|
|
1,048,882
|
|
|
802,250
|
|
|
710,155
|
|
|
653,008
|
|
|
538,045
|
|
|
Cannabis oils (gram
equivalent)
|
|
112,927
|
|
|
87,715
|
|
|
44,904
|
|
|
-
|
|
|
-
|
|
|
Cannabis oils (bottles)
|
|
18,239
|
|
|
17,853
|
|
|
8,302
|
|
|
-
|
|
|
-
|
|
|
Total consolidated grams sold
|
|
1,161,809
|
|
|
889,965
|
|
|
755,059
|
|
|
653,008
|
|
|
538,045
|
|
14
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average net selling
price
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Dried cannabis (per
gram)
|
|
7.85
|
|
|
7.32
|
|
|
6.79
|
|
|
6.64
|
|
|
5.96
|
|
|
Cannabis oils (per gram equivalent)
|
|
13.35
|
|
|
16.41
|
|
|
17.91
|
|
|
-
|
|
|
-
|
|
|
Cannabis oils (per bottle)
|
|
82.68
|
|
|
80.63
|
|
|
96.87
|
|
|
-
|
|
|
-
|
|
|
Total consolidated average selling price per gram sold
|
|
8.36
|
|
|
8.22
|
|
|
7.45
|
|
|
6.64
|
|
|
5.96
|
|
|
(1)
|
Net revenue is comprised of gross revenue net of
discounts, returns and allowances.
|
Revenues for the three and six months ended December 31, 2017
were $11,700 and $19,949 respectively ($3,884 and $6,956 in the three and six
months ended December 31, 2016). The increase in revenues during the second
quarter was primarily due to the continued increase in Germany sales, increasing
number of registered patients in Canada, as well as an increase in the average
net selling price per gram of medical cannabis. In addition, the Company
generated additional revenues from its subsidiaries, Hempco, BCNL and UCI.
Revenues increased by $3,451 compared to the quarter ended
September 30, 2017. The increase was primarily attributable to continued growth
in medical clients in Canada, a 101% increase in sales from Pedanios, and
addition to additional revenues generated from Hempco, BCNL and UCI.
The average net selling price per gram equivalent of cannabis
oils sold decreased in the current period due to more grams of cannabis being
used in the production of oils to reach the specified potency and strength in
the oils. The potency and strength in the oils vary depending on strain of dried
cannabis used to produce the oils.
During the three and six months ended December 31, 2017, the
Company granted a total of $1,529 and $3,017 (three and six months ended
December 31, 2016 - $837 and $1,569) discounts on cannabis sales. The Company’s
discounts consist of a $50 credit offered to each new Aurora patient and a
compassionate pricing offered to low-income households and patients. The
compassionate pricing program helps low-income households and patients on
provincial or federal assistance programs have access to the Company’s medical
cannabis. Aurora’s dried medical cannabis are currently priced at $9.00 per gram
with compassionate pricing set at $6.00 per gram, and cannabis oils at $95.00
per 30 milliliter bottle with compassionate pricing set at $65.00 per 30
milliliter bottle. During the three and six months ended December 31, 2017,
approximately 28% and 38% of registered patients purchased medical cannabis
through the compassionate pricing program respectively (three and six months
ended December 31, 2016 – 27% and 27%).
From the commencement of sales in January 2016 to December 31,
2017, the Company has sold a total of 4,690,686 grams of medical cannabis at an
average net selling price of $7.55 per gram.
15
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Cost of Sales
Included in cost of sales for the three and six months ended
December 31, 2017 were the cost of sales of $4,837 and $7,909 (three and six
months ended December 31, 2016 - $2,436 and $4,613), unrealized gains on changes
in fair value of biological assets of $3,638 and $9,844 (three and six months
ended December 31, 2016 - $3,450 and $3,077), and unrealized losses on changes
in fair value of inventory of $4,015 and $6,587 (three and six months ended
December 31, 2016 - $538 and $973), respectively.
The increase in cost of
sales during the three and six months ended December 31, 2017 was largely
attributable to increased sales during the period, as well as cost of sales
generated by the Company’s new subsidiaries Pedanios, Hempco, BCNL and UCI in
comparison to the prior periods. The Company sold 1,161,809 grams and 2,051,774
grams of cannabis in the three and six months ended December 31, 2017, compared
to 538,045 grams and 973,765 grams sold in the three and six months ended
December 31, 2016, an increase of 116% and 111% or 623,764 grams and 1,078,009
grams respectively.
Biological assets consist of cannabis plants at various
pre-harvest stages of growth which are recorded at fair value less costs to sell
at the point of harvest. Cost to sell are primarily related to shipping costs.
At harvest, the biological assets are transferred to inventory at their fair
value which becomes the deemed cost for inventory. Costs incurred after harvest,
such as packaging and allocated overheads, are capitalized to inventory.
Overhead costs are allocated to each stage of the growing process and
capitalized to either biological assets for plants not yet harvested and to
inventory for plants that have been harvested. Inventory is later expensed to
cost of goods sold when sold.
Non-IFRS Measures
The Company has included certain non-IFRS performance measures
throughout this MD&A, including cash cost of sales of Canadian dried
cannabis sold per gram, cash cost to produce dried cannabis per gram, and grams
produced each as defined in this section. The Company employs these measures
internally to measure its operating and financial performance and to assist in
business decision making.
The Company believes that these non-IFRS financial measures, in
addition to conventional measures prepared in accordance with IFRS, enable
investors to evaluate the Company’s operating results, underlying performance
and future prospects in a manner similar to Aurora management.
As there are no standardized methods of calculating these
non-IFRS measures, the Company’s methods may differ from those used by others,
and accordingly, the use of these measures may not be directly comparable to
similarly titled measures used by others. Accordingly, these non-IFRS measures
are intended to provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared in accordance
with IFRS.
________________
Cash Cost of Sales of Dried Cannabis Sold and Cash Cost to
Produce Dried Cannabis
Cash cost of sales of dried cannabis sold is calculated by
taking the cost of sales, which excludes the effect of changes in fair value of
biological assets and inventory, and removing non-cash production costs, oil
conversion costs, cost of accessories, cost of products purchased from other
Licensed Producers that were sold, and cost of sales from non-cannabis
production subsidiaries, all divided by the total grams of dried cannabis sold
in the period that was produced by Aurora.
16
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Cash cost to produce dried cannabis sold per gram is equal to
cash cost of sales of dried cannabis sold less packaging costs (post-production
cost), divided by the total grams of dried cannabis sold in the period that was
produced by Aurora.
Management believes these measures provide useful information
as they measure the efficiency of production and may be a benchmark of the
Company against its competitors. These measures provide more clarity on the cash
cost of sales per gram based on the actual dried grams sold that were produced
by Aurora in the period.
Grams Produced and Grams Equivalent of Oil Produced
Grams produced in the period refers to the grams of dried
cannabis harvested from plants in the period. The Company calculates grams
produced in the period based on the weight of dried harvested buds that have
completed the drying stage, which is adjusted for the weight change from the
drying process.
Grams equivalent of oil produced represents the equivalent
number of dried grams that would be used by the patients from the cannabis oils.
The dried cannabis is first transformed to produce cannabis extracts (high
density solution) which is then diluted into cannabis oil. The “grams
equivalent” measure is used to disclose amount of oil sold and (or) produced in
the period as opposed to milliliters as the actual grams used the production of
cannabis oils can vary depending on the strain of dried cannabis used which
yields a different potency and strength in the oil. The Company estimates and
converts its cannabis oil inventory to equivalent grams based on the
tetrahydrocannabinol (“THC”) and cannabidiol (“CBD”) content in the cannabis
oils.
Cash Cost of Sales and Cash Cost to Produce Dried
Cannabis
The Company calculates cash cost of sales of dried cannabis
sold, on a total and per gram basis, as follows:
|
Unaudited Non-IFRS Measure
|
|
Three months ended
|
|
|
Three months ended
|
|
|
(In CDN $000’s, except gram amounts)
|
|
Dec 31 ‘17
|
|
|
Sep 30 ‘17
|
|
|
|
|
$
|
|
|
$
|
|
|
Total cost of sales
|
|
4,837
|
|
|
3,072
|
|
|
Less:
|
|
|
|
|
|
|
|
Cost of sales from
non-cannabis production subsidiaries
|
|
(1,889
|
)
|
|
(908
|
)
|
|
Cost of accessories
|
|
(267
|
)
|
|
(197
|
)
|
|
Oil conversion costs
|
|
(451
|
)
|
|
(217
|
)
|
|
Cost of products purchased from other
Licensed Producers
|
|
(536
|
)
|
|
(211
|
)
|
|
Depreciation
|
|
(203
|
)
|
|
(125
|
)
|
|
Cash
cost of sales of dried cannabis sold
|
|
1,491
|
|
|
1,414
|
|
|
|
|
|
|
|
|
|
|
Grams of dried cannabis sold in the period
produced by Aurora
|
|
855,591
|
|
|
653,242
|
|
|
Cash cost of sales per gram of dried cannabis sold
|
$
|
1.74
|
|
$
|
2.16
|
|
17
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Cash cost of sales per gram of dried cannabis sold decreased by
19% from the preceding quarter due mainly from a decrease in packaging costs
related to product sold to other LPs. Cash cost of sales per gram of dried cannabis is expected to decrease as the impact of automation,
scale, and yield expertise is realized at Aurora Sky and Aurora Nordic.
18
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Cash Cost to Produce Dried Cannabis
The Company calculates cash cost to produce Canadian dried
cannabis sold, on a total and per gram basis, as follows:
|
Unaudited Non-IFRS Measure
|
|
Three months ended
|
|
|
Three months ended
|
|
|
(
In CDN $000’s, except gram amounts
)
|
|
Dec 31 ‘17
|
|
|
Sep 30 ‘17
|
|
|
|
|
$
|
|
|
$
|
|
|
Cash cost of sales of dried
cannabis sold
|
|
1,491
|
|
|
1,414
|
|
|
Less:
|
|
|
|
|
|
|
|
Packaging costs
|
|
(283
|
)
|
|
(195
|
)
|
|
Cash
cost to produce dried cannabis sold
|
|
1,208
|
|
|
1,219
|
|
|
|
|
|
|
|
|
|
|
Grams of dried cannabis sold in the period
produced by Aurora
|
|
855,591
|
|
|
653,242
|
|
|
Cash cost to produce per gram of dried cannabis sold
|
$
|
1.41
|
|
$
|
1.87
|
|
Cash cost to produce per gram of dried cannabis sold decreased
by 25% from the preceding quarter primarily due to increased number of grams of
dried cannabis sold from the product produced by Aurora. During the first
quarter of 2018, the Mountain View facility reached optimal production capacity
and production yields are expected to remain relatively consistent until
production begins in the new Aurora facilities.
Total production costs are expected to increase as the Company
completes construction and begins producing cannabis at its new facilities in
Alberta and Quebec. However, per gram production costs are expected to decrease
materially as the efficiencies from automation, scale and yield expertise are
realized in the new Aurora facilities.
Gross Profit
Gross profit before the effect of changes in fair value was
$6,863 and $12,040 for the three and six months ended December 31, 2017 compared
to $1,448 and $2,343 for the three and six months ended December 31, 2016.
The increase of $5,415 and $9,697 for the three and six months
ended December 31, 2017 compared to the prior comparative period was primarily
attributable to increased revenues from Pedanios through the sale of medical
cannabis in Germany, as well as increased revenues generated in the current
quarter from the Company’s new subsidiaries, Hempco, BCNL and UCI. Additionally,
the number of active registered patients from Canadian medical sales increased
from 12,200 at December 31, 2016 to 21,718 at December 31, 2017.
Gross profit before the effect of changes in fair value
increased by 33% or $1,686 for the three months ended December 31, 2017 as
compared to the previous quarter, from $5,177 for the three months ended
September 30, 2017 to $6,863 for the three months ended December 31, 2017. The
increase in gross profit before the effect of changes in fair value primarily
resulted from an increase of $1,249 in revenues from Pedanios and $1,053 in
revenues from the recent acquisition of new subsidiaries.
19
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Gross profit after the effect of changes in fair value was
$6,486 and $15,297 for the three and six months ended December 31, 2017 compared
to $4,360 and $4,447 for the three months ended December 31, 2016. The increase
was attributable the increase in revenues as described above as well as the gain
on the net effect of changes in fair value of biological assets and inventory.
Non-IFRS Measure
Gross Profit and Gross Margin for Aurora-Produced
Cannabis
Gross profit for Aurora-produced cannabis is calculated by
taking net revenue less cost of sales on Aurora-produced cannabis. Net revenue
on Aurora-produced cannabis is calculated by taking consolidated net revenue
less net revenue from non-cannabis production operations and net revenue from
products sourced from other Licensed Producers. Cost of sales on Aurora-produced
cannabis is calculated by taking consolidated cost of sales, excluding the
effects of changes in fair value of biological assets and inventory, less cost
of sales from non-cannabis production operations and cost of sales from products
sourced from other Licensed Producers.
Gross margin for Aurora-produced cannabis is calculated by
taking gross profit for Aurora-produced cannabis divided by net revenue for
Aurora-produced cannabis.
Management believes this measure provides useful information as
it measures the Company’s production and distribution efficiency for its
principal business, the production and distribution of cannabis.
The Company has calculated gross profit and gross margin on
Aurora-produced cannabis as follows:
|
Unaudited Non-IFRS Measure
|
|
Three months ended
|
|
|
Three months ended
|
|
|
(
In CDN $000’s, except gram amounts
)
|
|
Dec 31 ‘17
|
|
|
Sep 30 ‘17
|
|
|
|
|
$
|
|
|
$
|
|
|
Total consolidated net
revenue
|
|
11,700
|
|
|
8,249
|
|
|
Less net revenue from non-cannabis production
operations
|
|
(1,959
|
)
|
|
(934
|
)
|
|
Less net revenue from cannabis sourced from other LPs
|
|
(1,165
|
)
|
|
(1,235
|
)
|
|
Net
revenue for Aurora-produced cannabis
|
|
8,576
|
|
|
6,080
|
|
|
|
|
|
|
|
|
|
|
Total consolidated cost of sales
|
|
4,837
|
|
|
3,072
|
|
|
Less cost of sales from
non-cannabis production operations
|
|
(1,211
|
)
|
|
(29
|
)
|
|
Less
cost of sales from cannabis sourced from other LPs
|
|
(1,382
|
)
|
|
(1,075
|
)
|
|
Cost of sales for Aurora-produced cannabis
|
|
2,244
|
|
|
1,968
|
|
|
|
|
|
|
|
|
|
|
Gross profit on
Aurora-produced cannabis
|
|
6,332
|
|
|
4,112
|
|
|
Gross margin on Aurora-produced cannabis
|
|
73.8%
|
|
|
67.6%
|
|
The increase in gross profit on Aurora-produced cannabis of
$2,220 or 54% is primarily a result of increased revenues earned on cannabis
produced in Canada and exported and sold in Germany, as well as general
increases in dried and cannabis oil sales in Canada.
20
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
General and Administration
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Professional fees
|
|
2,313
|
|
|
696
|
|
|
3,088
|
|
|
1,141
|
|
|
Office and administration
|
|
1,763
|
|
|
282
|
|
|
2,611
|
|
|
455
|
|
|
Wages and benefits
|
|
3,492
|
|
|
572
|
|
|
4,862
|
|
|
1,001
|
|
|
|
|
7,568
|
|
|
1,550
|
|
|
10,561
|
|
|
2,597
|
|
The over-all increase in general and administration costs by
$6,018 and $7,964 for the three and six months ended December 31, 2017 was
primarily attributable to increases in corporate and general administrative
activities of the Company as it continued to scale up its business operations in
both Canada and Germany and expanded its operations through the recent Hempco,
BCNL and UCI acquisitions. In the prior period, the Company began to expand
operations with the acquisition of CanvasRx and closed equity and debt
financings.
Professional fees increased by $1,617 and $1,947 during the
three and six months ended December 31, 2017. The increase resulted from various
legal, regulatory and advisory fees related to various consulting contracts,
employment agreements and other business contracts entered into to support its
increasing business operations. Regulatory fees increased from the prior period
as a result of the transfer of the Company’s listing from the TSX Venture
Exchange to the TSX.
Office and administration increased by $1,481 and $2,156 during
the three and six months ended December 31, 2017 as a result of increased rent
expenses with the expansion of office space and locations and an increase in
travel expenses related to management and employee travels between the Company’s
offices and facilities located in Vancouver, Mountain View County, Edmonton,
Pointe-Claire, Quebec, Toronto and Germany. Travel costs were also incurred as
the Company evaluated potential projects and conducted due diligence activities
as part of the Company’s aggressive expansion strategy. There was also an
increase in office and administration as a result of operations from new
subsidiaries, as well as an increase in insurance premiums as the Company
increased coverage consistent with the increase in operations.
Wages and benefits increased by $2,920 and $3,861 during the
three and six months ended December 31, 2017. The increase during the period was
primarily due to hiring of an aggregate of 28 employees since December 31, 2016
in the finance, corporate and human resources (HR) departments. During the three
months ended December 31, 2017, the Company hired a total of 16 corporate
general and administrative employees (2016 - 4). Additionally, management
compensation increased as compared to 2016 as the Company strengthened its
management team with the hiring of several senior executives to achieve its
growth objectives and execute its aggressive domestic and international
expansions strategy.
21
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Sales and Marketing
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Consulting fees
|
|
1,696
|
|
|
849
|
|
|
3,138
|
|
|
1,330
|
|
|
Branding, public and media relations, and
tradeshows
|
|
647
|
|
|
207
|
|
|
1,019
|
|
|
446
|
|
|
Selling and client care
expenses
|
|
2,003
|
|
|
1,003
|
|
|
3,311
|
|
|
1,632
|
|
|
Wages and benefits
|
|
790
|
|
|
352
|
|
|
1,336
|
|
|
573
|
|
|
|
|
5,136
|
|
|
2,411
|
|
|
8,804
|
|
|
3,981
|
|
Consulting fees increased by $847 and $1,808 during the three
and six months ended December 31, 2017. The increase was primarily attributable
to service fees accrued and paid to Canadian Cannabis Clinics (“CCC”) pursuant
to an agreement to provide operational, administrative and consulting services
to CanvasRx. The Company incurred $1,678 and $3,142 in fees to CCC during the
three and six months ended December 31, 2017 compared to $845 and $1,321 in
2016, respectively. The increase in fees to CCC was a direct result of increased
CanvasRx operations. CanvasRx revenues have increased from $678 for the six
months ended December 31, 2016 to $1,808 for the six months ended December 31,
2017. Since the acquisition of CanvasRx in August 2016, 12,821 CanvasRx patients
have registered with the Company as of December 31, 2017.
Selling and client care expenses increased by $1,000 and $1,679
during the three and six months ended December 31, 2017. Selling expenses
consist of shipping costs, sales fees and commissions and payment processing
fees. Client care expenses relate to patient registrations and maintenance, and
consist of rent, utilities, and office expenses for the client care centre. The
increase in selling and client care expenses is directly related to the increase
in sales during the periods and the expansion of the client care centre.
Wages and benefits increased by $438 and $763 during the three
and six months ended December 31, 2017 as the Company hired a total of 25 sales
and marketing employees since December 31, 2016. During the three months ended
December 31, 2017, the Company hired a total of 7 sales and marketing employees
(2016 – 16) mainly in client care, compliance, public affairs and marketing. The
increase in personnel in the client care centre is required to support the
increase in patient volume during the periods.
Research and Development
Research and development costs for the three and six months
ended December 31, 2017 was $172 and $279, respectively, compared to $99 and
$139 for the three and six months ended December 31, 2016. Expenses increased in
the period primarily due to the development of Aurora Envoy
TM
and
designing the related manufacturing process, as well as the development of new
product offerings including capsules, milled and decarboxylated cannabis.
Acquisition and Project Evaluation Costs
Acquisition and project evaluation costs increased by $1,752
from $4 during the three months ended December 31, 2016 to $1,756 for the three
months ended December 31, 2017. The Company incurred legal, consulting and advisory fees relating to business acquisitions
and due diligence activities as part of its aggressive domestic and
international expansion strategy, with $1,428 attributable to the CanniMed
Takeover Bid.
22
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Depreciation and Amortization
Depreciation and amortization were $460 and $1,094 for the
three and six months ended December 31, 2017 compared to $163 and $322 for the
three and six months ended December 31, 2016, respectively. The increase in
depreciation and amortization of $297 and $772 for the three and six months
ended December 31, 2017 was mainly from the amortization of intangible assets of
$152 and $569, respectively, related to customer relationships from the
acquisition of CanvasRx in the prior year. No amortization of intangible assets
was recorded in the prior period. Depreciation for the current year also
increased as a result of increased additions to property, plant, and equipment.
Share-based Payments
The Company recorded share-based payment expense of $7,456 and
$9,942 for stock options and restricted share units granted and vested during
three and six months ended December 31, 2017, compared to $2,510 and $2,890 for
stock options granted and vested during three and six months ended December 31,
2016. Share-based payments of $351 for the remaining 127,128 Restricted Share
Units granted on September 29, 2017 and vested immediately were recognized in
the year ended June 30, 2017.
Finance and Other Costs
Finance and other costs were $1,660 during the three months
ended December 31, 2017 compared to $1,800 for the three months ended December
31, 2016.
During the three months ended December 31, 2017, included in
finance and other costs were $1,147 accretion and interest charges from the
November 2016 and May 2017 convertible debentures, both of which have been fully
converted as of December 31, 2017.
During the three months ended December 31, 2016, included in
finance and other costs were $588 accretion expense, $680 finance charges, and
$457 interest expenses relating to the September 2016 and November 2016
convertible debentures.
Other Income (Expenses)
During the three months ended December 31, 2017, the company
recognized an unrealized gain on marketable securities of $3,700 through the
Statement of Comprehensive Loss relating to the inception gain on the Company’s
subscription to 4,541,889 shares of Radient.
The Company also recorded an unrealized gain on derivatives of
$22,786 during the three months ended December 31, 2017 related to the exercise
of warrants held in Radient.
Additionally, the Company recorded in other comprehensive
income an unrealized gain on marketable securities of $274 during the three
months ended December 31, 2017, of which $19,213 is attributable to the investment in common shares of Radient and CanniMed, offset
by the reversal of $18,939 in unrealized gains on the investment in Cann Group’s
shares. The unrealized gains in Cann Group were reversed upon the Company
obtaining significant influence in Cann Group at which point the investment was
accounted for under the equity method.
23
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Please see Note 5 to the Company’s Interim Financial Statements
for additional details on the investments.
Income Tax Recovery
During the three and six months ended December 31, 2017, the
Company recorded a deferred tax expense of $2,756 and $3,859, respectively,
primarily related to the unrealized gain on warrant derivatives, convertible
debentures and marketable securities.
During the three and six months ended December 31, 2016, the
Company recorded a deferred tax recovery of $1,389 and $2,055, respectively,
related to the issuance of $15,000 and $25,000 convertible debentures and
recovered taxes of $11 and $19 related to SR&ED claims.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended December 31, 2017, the Company
generated revenues of $19,949 from operations, and financed its current
operations, growth initiatives, and met its capital requirements from debt and
equity financings. The Company’s objectives when managing its liquidity and
capital resources are to generate sufficient cash to fund the Company’s
operating and working capital requirements for at least the next twelve
months.
Working capital as of December 31, 2017 was $302,526 as
compared to $170,142 at June 30, 2017. The increase in working capital of
$132,384 was largely attributable to the increase in cash and cash equivalents
of $191,045, $61,555 increase in the fair value of marketable securities, $4,679
increase in accounts receivables, $9,390 increase in inventory and biological
assets, offset by $111,009 net subscription proceeds from the Special Warrant
financing, a $10,611 increase in contingent consideration payable related to
performance milestones of newly acquired subsidiaries, and a $13,277 increase in
accounts payable mainly due to production facility construction.
Marketable securities of $76,400 at December 31, 2017 primarily
consisted of 37,643,431 common shares in Radient at a market price of $1.76 per
share, representing 17.02% interest in that entity.
Inventory at December 31, 2017 was $15,310 (June 30, 2017 -
$7,703) which consisted of dried cannabis of $9,139 (June 30, 2017 - $5,845),
cannabis oils of $2,063 (June 30, 2017 - $1,676), home cultivation systems of
$648 (June 30, 2017 - $nil), Hempco inventory of $3,208 (June 30, 207 - $nil),
and supplies and consumables of $252 (June 30, 2017 - $182). The increase in
inventory mainly resulted from increased production of dried cannabis and
purchases from other Licensed Producers to supplement the Company’s inventory to
meet patient demand in Canada and Germany, as well as inventory held by new
subsidiaries acquired in the period. As at December 31, 2017, included in
inventory was a provision of $2,292 (June 30, 2017 - $1,630) to reduce inventory
to net realizable value. The adjustment to net realizable value took into
account the compassionate pricing for qualifying low income patients of $6.00
per gram of dried cannabis.
24
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Biological assets at December 31, 2017 were $5,871 (June 30,
2017 - $4,088). At December 31, 2017, the Company expected that the biological
assets which consisted of plants at various stages of growth would yield
approximately 829,008 grams (June 30, 2017 – 599,245 grams) of medical cannabis
when harvested. Biological assets increased during the period as a result of an
increase in number of plants in production, higher yields, as well as an
increase in fair value.
The Company’s long-term assets mainly consisted of property,
plant and equipment of $117,251, of which $12,073 related to the existing
Mountain View facility in Alberta, $78,697 related to the ongoing construction
of the Aurora Sky facility, and $5,115 related to the construction of the
Pointe-Claire facility. Additional long-term assets include goodwill of $65,868
and intangible assets of $59,552 relating to business and asset acquisitions.
Net cash and cash equivalents on hand increased from $159,796
as at June 30, 2017 to $350,841 as at December 31, 2017. The increase in cash
and cash equivalents resulted mainly from net cash generated from financing
activities of $309,258, offset by net cash used for operations of $9,631,
investments and capital expenditures of $108,390, and adjusted by $192 from the
effect of foreign exchange on cash flows.
During the six months ended December 31, 2017, the Company
strengthened its balance sheet and liquidity position with approximately
$122,577 from the exercise of stock options and warrants as well as the
conversion of $79,470 convertible debentures into common shares. The Company
anticipates that it has sufficient funds to cover future operating cash flows
and to complete the construction of both the Aurora Sky and Pointe-Claire
facilities based on the current capital resources available.
On November 2, 2017, to support the Company’s aggressive growth
strategy, the Company raised aggregate gross proceeds of $75,000 through a
bought deal financing of 20,000,000 units at $3.00 per unit plus an
Over-Allotment option to the underwriters of 3,000,000 units and a concurrent
non-brokered private placement of 2,000,000 units having the same terms as the
bought deal financing. Additionally, on November 28, 2017, the Company completed
an offering of 115,000 special warrants at $1,000 per special warrant for gross
proceeds of $115,000. Subsequent to December 31, 2017, the special warrants were
exercised into a $115,000 principal amount of convertible debentures that are
convertible into common shares of the Company at $6.50 per share. The proceeds
from both financings will be used towards the Company’s strategic growth
initiatives for domestic and international expansion.
The Company anticipates that it will have sufficient liquidity
and capital resources to meet all of its planned expenditures for at least the
next twelve months.
Operating Activities
For the six months ended December 31, 2017, cash flows used for
operating activities were $9,631 compared to $6,009 for the six months ended
December 31, 2016. During the six months ended December 31, 2017, cash flows
used for operations resulted primarily from cash inflows of $12,040 from gross
profit before the effect of changes in fair value, offset by cash flows used for
operating expenses of $18,095, finance and other costs of $2,342 and cash
outflows of $1,234 related to changes in non-cash working capital.
25
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Investing Activities
For the six months ended December 31, 2017, the Company had net
cash outflows related to investing activities of $108,390 as compared to $8,260
for the six months ended December 31, 2016. Cash used in investing activities
during the period included the following:
|
|
•
|
construction of the new Aurora Sky facility of
$47,279, and the purchase of production equipment, computers and
furniture, and building improvements of $6,657;
|
|
|
•
|
investments of $39,748 in marketable securities
and derivatives;
|
|
|
•
|
secured loans and advances of $4,236; and
|
|
|
•
|
acquisition of business and assets of $9,477,
net of cash balance assumed.
|
Investing activities during the prior period consisted mainly
of the acquisition of CanvasRx for net consideration of $3,418, construction of
the new Aurora Sky facility of $3,736 and the purchase of production equipment,
computers and furniture, and building improvements of $1,106.
Financing Activities
Net cash flows provided by financing activities for the six
months ended December 31, 2017 were $309,258 compared to $69,856 for the six
months ended December 31, 2016. During the period, the Company raised aggregate
net cash proceeds of $308,430 as follows:
|
|
•
|
November 2017 bought deal financing of for net
proceeds of $70,647;
|
|
|
•
|
November 2017 special warrant financing for net
proceeds of $111,009;
|
|
|
•
|
the exercise of warrants, options, and
compensation options for net proceeds of $126,774.
|
Cash provided by financing activities also includes cash flows
arising from changes in the Company’s non-controlling interest in Hempco of
$862, offset by finance lease payments of $34 during the six months ended
December 31, 2017.
For the six months ended December 31, 2016, the Company raised
aggregate net cash of $79,341 from private placements, unsecured convertible
debentures and from the exercise of options and warrants. The proceeds were
offset by repayments of loans totaling $8,549 consisting of related party loans
of $4,090, a third party unsecured loan of $459 and a third party secured loan
of $4,000.
Capital Resource Measures
The Company’s major capital expenditures during the three
months ended December 31, 2017 mainly consisted of the construction of its
800,000 square foot highly-automated greenhouse in Alberta, Canada. See
“
Capacity Expansion
”. The Company believes it has sufficient cash and
resources to fund the Company’s operations and complete construction for both
its Aurora Sky and Pointe-Claire facilities for the next fiscal year.
26
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Contractual Obligations
In addition to the commitments outlined in Note 21 to the
Company’s Interim Financial Statements, the Company had the following
contractual obligations as of December 31, 2017:
|
|
|
|
|
|
Less than
|
|
|
|
|
|
After
|
|
|
Contractual Obligations
|
|
Total
|
|
|
1 year
|
|
|
1 to 3 years
|
|
|
3 years
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Accounts payable and accrued
liabilities
|
|
22,030
|
|
|
22,030
|
|
|
-
|
|
|
-
|
|
|
Deferred revenues
|
|
1,563
|
|
|
1,563
|
|
|
-
|
|
|
-
|
|
|
Finance lease
|
|
398
|
|
|
108
|
|
|
290
|
|
|
-
|
|
|
Operating lease
|
|
113
|
|
|
60
|
|
|
53
|
|
|
-
|
|
|
Office lease
|
|
20,992
|
|
|
2,826
|
|
|
5,396
|
|
|
12,770
|
|
|
Total
|
|
45,096
|
|
|
26,587
|
|
|
5,739
|
|
|
12,770
|
|
Contingencies
The Company is subject to a claim outlined in Note 21(b) to the
Company’s Condensed Interim Consolidated Financial Statements.
Investment in Australis Holdings LLP
Each of the Company’s wholly-owned subsidiary, ACI and its
joint venture partner, AJR Builders Group LLC (“AJR”), holds a 50% interest in
Australis Holdings LLP (“AHL”), a Washington Limited Liability Partnership.
AHL purchased two parcels of land totaling approximately 24.5
acres (the “Property”) in Whatcom county, Washington for USD$2,300,000 in 2015
with the initial intention to construct a new cannabis production and processing
facility. The Company subsequently decided not to move forward with US medical
cannabis production. This property is currently for sale.
Pursuant to a promissory note dated April 10, 2015, the Company
through ACI loaned CAD$1,645 to AHL to fund the purchase of the Property. The
note bears interest at a rate of 5% per annum and had an original maturity date
of October 31, 2017 which was extended to October 31, 2018. In the event of a
default, interest will be charged at 12% per annum. The note is secured by a
first mortgage on one parcel of the Property and a second mortgage on the other
title as well as a general security agreement granting ACI security over all
present and after acquired property of AHL.
OFF-BALANCE SHEET ARRANGEMENTS
As at the date of this MD&A, the Company had no material
off-balance sheet arrangements that have, or are reasonably likely to have, a
current or future effect on the financial performance or financial condition of
the Company.
27
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
TRANSACTIONS WITH RELATED PARTIES
Related Party Transactions
The Company entered into certain transactions with related
parties during the three and six months ended December 31, 2017 and 2016 as
follows:
Goods and Services
|
Name and Relationship to
Company
|
Transaction
|
Three months
ended
|
Six months
ended
|
As at
|
Dec 31,
2017
$
|
Dec 31,
2016
$
|
Dec 31,
2017
$
|
Dec 31,
2016
$
|
Dec 31,
2017
$
|
Jun 30,
2017
$
|
|
Related Party
Transactions
|
Balance
Payable
(Receivable)
(1)
|
|
Delcon Industries Ltd, a company controlled
by Dale Lesack, a director of ACE
|
Consulting fees
(2)
|
38
|
38
|
75
|
75
|
15
|
14
|
|
Evolve Concrete, a company controlled by
Chris Mayerson, a director of ACE
|
Consulting fees
(3)
|
23
|
20
|
38
|
31
|
12
|
7
|
|
Canadian Cannabis Clinics (“CCC”), a company
where Joseph del Moral, is a common director
|
Service fees
(4)
|
1,678
|
845
|
3,142
|
1,150
|
178
|
(72)
|
|
Superior Safety Codes (“Superior”), a company
controlled by Terry Booth, CEO and Steve Dobler, President of the Company
|
Rent, accounting and
administration
(5)
|
32
|
30
|
62
|
60
|
37
|
39
|
|
Belot Business Consulting Corp, a company
controlled by Neil Belot, Chief Global Business Development Office
|
Consulting fees
(6)
|
112
|
-
|
279
|
-
|
40
|
-
|
|
748086 Alberta Ltd., a company controlled by
Jason Dyck, a director of the Company
|
Consulting fees
(7)
|
15
|
14
|
30
|
14
|
-
|
5
|
|
8115966 Canada Inc. (“8115966”), a company
controlled by Michael Singer, a director of the Company
|
Consulting fees
(8)
|
14
|
9
|
19
|
32
|
-
|
-
|
|
(1)
|
The amounts are unsecured, non-interest bearing and have
no specific repayment terms.
|
|
(2)
|
Consulting fees were paid for services as Production
Facilitator.
|
|
(3)
|
Consulting fees paid for services as part-time (full-time
in the prior year) Cultivator of the Company.
|
|
(4)
|
CCC provides operational, administrative and consulting
services to CanvasRx.
|
|
(5)
|
Rent for corporate offices in Edmonton and Calgary as
well as accounting and administrative support at these offices pursuant to
an Administrative Services and Office Space Agreement dated January 1,
2016.
|
|
(6)
|
Consulting fees paid related to the CanvasRx
acquisition.
|
|
(7)
|
Consulting fees related to scientific research and
development services.
|
|
(8)
|
Consulting fees for financial and other advisory services
pursuant to a consulting agreement effective April 18, 2016 with
8115966.
|
28
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Key Management Compensation
The Company’s key management personnel have the authority and
responsibility for planning, directing and controlling the activities of the
Company and consists of the Company’s Directors, CEO, President, CFO, COO, Chief
Corporate Officer, Chief Global Business Development Officer, Chief Information
Officer, and Vice Presidents.
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Management compensation
|
|
667
|
|
|
168
|
|
|
1,153
|
|
|
297
|
|
|
Directors’ fees
(1)
|
|
40
|
|
|
109
|
|
|
89
|
|
|
188
|
|
|
Share-based payments
(2)
|
|
2,729
|
|
|
1,942
|
|
|
4,711
|
|
|
2,067
|
|
|
|
|
3,436
|
|
|
2,219
|
|
|
5,953
|
|
|
2,552
|
|
|
(1)
|
Include meeting fees and committee chair fees.
|
|
(2)
|
Share-based payments are the fair value of options
granted and vested to key management personnel and directors of the
Company under the Company’s stock option plan.
|
Related Party Balances
The following related party amounts were included in (i)
accounts receivable, (ii) accounts payable and accrued liabilities, and (iii)
note receivable:
|
|
|
|
|
|
December 31,
|
|
|
June 30,
|
|
|
|
|
|
|
|
2017
|
|
|
2017
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
(i)
|
|
A company having
a director in common
|
|
|
-
|
|
|
72
|
|
|
(ii)
|
|
Companies controlled by directors
and officers of the Company
(1)
|
|
|
283
|
|
|
76
|
|
|
(ii)
|
|
Directors and
officers and a former director and officer of the Company
(1)
|
|
|
328
|
|
|
565
|
|
|
(iii)
|
|
A 50% owned joint venture company
(2)
|
|
|
3,384
|
|
|
2,096
|
|
|
(1)
|
The amounts are unsecured, non-interest bearing and have
no specific repayments term.
|
|
(2)
|
See note 10(a) to the Interim Financial
Statements.
|
CRITICAL ACCOUNTING ESTIMATES
The preparation of the Company’s Financial Statements in
conformity with IFRS requires management to make judgments, estimates, and
assumptions about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognized in the period in
which the estimate is revised, if the revision affects only that period, or in
the period of the revision and future periods, if the revision affects both
current and future periods.
Significant judgments, estimates and assumptions that have the
most significant effect on the amounts recognized in the Financial Statements
are described in note 2(e) to the Company’s Interim Financial Statements and note 2 to the Company’s audited consolidated
financial statements for the year ended June 30, 2017.
29
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
NEW ACCOUNTING PRONOUNCEMENTS
Please see Note 2(f),
Recent Accounting Pronouncements,
to the Company’s Interim Financial Statements for a full disclosure on its
changes in accounting policies including initial adoption.
FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS
Please see Note 23,
Financial Instruments and Risk
Management
, to the Company’s Interim Financial Statements for a full
discussion of its financial instruments and risk management.
SUMMARY OF OUTSTANDING SHARE DATA
As of the date of this MD&A, the Company had the following
securities issued and outstanding:
|
Securities
(1)
|
|
February 7, 2018
|
|
|
|
|
#
|
|
|
Issued and outstanding shares
|
|
489,922,167
|
|
|
Options
|
|
23,205,223
|
|
|
Warrants
|
|
8,787,516
|
|
|
Restricted share units
|
|
2,150,000
|
|
|
Convertible debentures
|
|
428,462
|
|
|
(1)
|
See the Company’s Interim Financial Statements for a
detailed description of these securities.
|
OUTLOOK
While production capacity at our Mountain View facility in
Cremona is nearly fully optimized, we anticipate further growth throughout 2018
through cultivation and sales from the Company’s Aurora Vie and Aurora Sky
facilities, as well as from increased shipments to our international markets,
the growth of cannabis oil production and sales, increased product availability
through strategic wholesale supply relationships, growth at BC Northern Lights
and Urban Cultivator, as well as from CanniMed, once the acquisition, which is
subject to regulatory approval, will have been completed. Further growth
throughout the year is anticipated from the Lachute facility, once completed and
licensed, as well as from our initiatives in Denmark.
INTERNAL CONTROLS OVER FINANCIAL REPORTING
In accordance with National Instrument 52-109
Certification
of Disclosure in Issuers’ Annual and Interim Filings
(“NI 52-109”)
,
the establishment and maintenance of Disclosure Controls and Procedures (“DCP”)
and Internal Control Over Financial Reporting (“ICFR”) is the responsibility of
management. The DCP and ICFR have been designed by management based on the 2013
Internal Control Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”) to provide reasonable
assurance that the Company’s financial reporting is reliable and that its
financial statements have been prepared in accordance with IFRS.
30
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Pursuant to NI 52-109, the Company has limited the scope of the
design of DCP and ICFR to exclude controls, policies and procedures over
entities acquired by the Company not more than 365 days before the end of the
financial period. These recently acquired entities include Pedanios GmbH
(acquired May 29, 2017), BCNL and UCI (acquired September 29, 2017), Hempco Food
and Fiber Inc. (23% interest acquired November 14, 2017), H2 Biopharma Inc.
(acquired November 30, 2017), and Larssen Ltd. (acquired December 4, 2017).
Additionally, the Company does not have a reasonable basis for making the
representations on the adequacy of internal controls for Hempco, which is
proportionately consolidated based on the Company’s 23% ownership interest as of
December 31, 2017, as it does not have sufficient access to design and evaluate
those controls, policies and procedures carried out by that subsidiary.
Excluding goodwill and intangible assets generated from these acquisitions, on a
combined basis, Pedanios, BCNL, UCI, Hempco, H2, and Larssen represent
approximately 1.7% of the Company’s current assets, 3.5% of total assets, 13.9%
current liabilities, 1.9% total liabilities, 5.3% revenues, and 14% net loss for
the six months ended December 31, 2017.
Regardless of how well the DCP and ICFR are designed, internal
controls have inherent limitations and can only provide reasonable assurance
that the controls are meeting the Company’s objectives in providing reliable
financial reporting information in accordance with IFRS. These inherent
limitations include, but are not limited to, human error and circumvention of
controls and as such, there can be no assurance that the controls will prevent
or detect all misstatements due to errors or fraud, if any.
Based on the COSO control framework, the CEO and CFO concluded
that the design of DCP and ICFR as at December 31, 2017 provides reasonable
assurance that material information relating to the Company is made known to
them, information required to be disclosed by the Company is reported within the
required time periods as specified in such legislation, and that the Company’s
financial reporting is reliable and its financial statements have been prepared
in accordance with IFRS. The CEO and CFO are also responsible for disclosing any
changes to the Company’s internal controls during the most recent period that
have materially affected, or are reasonably likely to materially affect, its
internal control over financial reporting. There have been no changes to the
Company’s internal control over financial reporting during the three months
ended December 31, 2017 that have materially affected, or are likely to
materially affect, the Company’s internal control over financial reporting.
FORWARD-LOOKING STATEMENTS
This MD&A may contain “forward-looking information” within
the meaning of Canadian securities legislation (“forward-looking statements”).
These forward-looking statements are made as of the date of this MD&A and
Company does not intend, and does not assume any obligation, to update these
forward-looking statements, except as required under applicable securities
legislation. Forward-looking statements relate to future events or future
performance and reflect Company management’s expectations or beliefs regarding
future events. In certain cases, forward-looking statements can be identified by
the use of words such as “plans”, “expects” or “does not expect”, “is expected”,
“budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or
“does not anticipate”, or “believes”, or variations of such words and phrases or
statements that certain actions, events or results “may”, “could”, “would”,
“might” or “will be taken”, “occur” or “be achieved” or the negative of these
terms or comparable terminology. In this document, certain forward-looking
statements are identified by words including “may”, “future”, “expected”,
“intends” and “estimates”. By their very nature forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by the forward-looking statements. The Company provides no assurance
that forward-looking statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward-looking
statements.
31
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Six-Month Periods Ended December 31, 2017
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Certain forward-looking statements in this MD&A include,
but are not limited to the following:
|
|
•
|
the construction of Aurora Sky, its associated
costs, and receipt of licenses from Health Canada to produce and sell
medical cannabis from this facility;
|
|
|
•
|
the completion of construction of its facility
in Quebec and receipt of Health Canada licenses;
|
|
|
•
|
investments and capital expenditures;
|
|
|
•
|
its expectations regarding production capacity
and production yields; and
|
|
|
•
|
product sales expectation and corresponding
forecasted increase in revenues.
|
The above and other aspects of the Company’s anticipated future
operations are forward-looking in nature and, as a result, are subject to
certain risks and uncertainties. Although the Company believes that the
expectations reflected in these forward-looking statements are reasonable, undue
reliance should not be placed on them as actual results may differ materially
from the forward-looking statements. Such forward-looking statements are
estimates reflecting the Company's best judgment based upon current information
and involve a number of risks and uncertainties, and there can be no assurance
that other factors will not affect the accuracy of such forward-looking
statements. Such factors include but are not limited to the Company’s ability to
obtain the necessary financing and the general impact of financial market
conditions, the yield from marijuana growing operations, product demand, changes
in prices of required commodities, competition, government regulations and other
risks as set out under “Risk Factors” in the Company’s Annual Information Form
dated September 25, 2017 filed on SEDAR.
32
Form 52-109F2
Certification of Interim Filings
Full Certificate
I, Terry Booth, Chief Executive Officer of Aurora Cannabis
Inc., certify the following:
|
1.
|
Review:
I have reviewed the interim
financial report and interim MD&A (together, the “interim filings”) of
Aurora Cannabis Inc. (the “issuer”) for the interim period ended December
31, 2017.
|
|
|
|
|
2.
|
No misrepresentations:
Based on my
knowledge, having exercised reasonable diligence, the interim filings do
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated or that is necessary to make a
statement not misleading in light of the circumstances under which it was
made, with respect to the period covered by the interim filings.
|
|
|
|
|
3.
|
Fair presentation:
Based on my knowledge,
having exercised reasonable diligence, the interim financial report
together with the other financial information included in the interim
filings fairly present in all material respects the financial condition,
financial performance and cash flows of the issuer, as of the date of and
for the periods presented in the interim filings.
|
|
|
|
|
4.
|
Responsibility:
The issuer’s other
certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (DC&P) and internal
control over financial reporting (ICFR), as those terms are defined in
National Instrument 52-109
Certification of Disclosure in Issuers’
Annual and Interim Filings,
for the issuer.
|
|
|
|
|
5.
|
Design:
Subject to the limitations, if any,
described in paragraphs 5.2 and 5.3, the issuer’s other certifying
officer(s) and I have, as at the end of the period covered by the interim
filings
|
|
|
(a)
|
designed DC&P, or caused it to be designed under our
supervision, to provide reasonable assurance
that
|
|
|
(i)
|
material information relating to the issuer is made known
to us by others, particularly during the period in which the interim
filings are being prepared; and
|
|
|
|
|
|
|
(ii)
|
information required to be disclosed by the issuer in its
annual filings, interim filings or other reports filed or submitted by it
under securities legislation is recorded, processed, summarized and
reported within the time periods specified in securities legislation;
and
|
|
|
(b)
|
designed ICFR, or caused it to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with the issuer’s
GAAP.
|
|
5.1
|
Control framework:
The control framework
the issuer’s other certifying officer(s) and I used to design the issuer’s
ICFR is the Internal Control – Integrated Framework (COSO Framework 2013)
published by The Committee of Sponsoring Organization of the Treadway
Commission (COSO).
|
|
|
|
|
5.2
|
ICFR – material weakness relating to
design
:
N/A
|
|
|
|
|
5.3
|
Limitation on scope of design:
The issuer
has disclosed in its interim MD&A
|
1
|
|
(a)
|
the fact that the issuer’s other certifying officer(s)
and I have limited the scope of our design of DC&P and ICFR to exclude
controls, policies and procedures of
|
|
|
(i)
|
N/A
|
|
|
|
|
|
|
(ii)
|
N/A
|
|
|
|
|
|
|
(iii)
|
a business that the issuer acquired not more than 365
days before the last day of the period covered by the interim filings;
and
|
|
|
(b)
|
summary financial information about the proportionately
consolidated entity, special purpose entity or business that the issuer
acquired that has been proportionately consolidated or consolidated in the
issuer’s financial statements.
|
|
6.
|
Reporting changes in ICFR:
The issuer has
disclosed in its interim MD&A any change in the issuer’s ICFR that
occurred during the period beginning on October 1, 2017 and ended on
December 31, 2017 that has materially affected, or is reasonably likely to
materially affect, the issuer’s ICFR.
|
|
Date:
February 8, 201
8
|
|
|
|
(signed) Terry Booth
|
|
Terry Booth
|
|
Chief Executive Officer
|
2
Form 52-109F2
Certification of Interim Filings
Full Certificate
I, Glen Ibbott, Chief Financial Officer of Aurora Cannabis
Inc., certify the following:
|
1.
|
Review:
I have reviewed the interim
financial report and interim MD&A (together, the “interim filings”) of
Aurora Cannabis Inc. (the “issuer”) for the interim period ended December
31, 2017.
|
|
|
|
|
2.
|
No misrepresentations:
Based on my
knowledge, having exercised reasonable diligence, the interim filings do
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated or that is necessary to make a
statement not misleading in light of the circumstances under which it was
made, with respect to the period covered by the interim filings.
|
|
|
|
|
3.
|
Fair presentation:
Based on my knowledge,
having exercised reasonable diligence, the interim financial report
together with the other financial information included in the interim
filings fairly present in all material respects the financial condition,
financial performance and cash flows of the issuer, as of the date of and
for the periods presented in the interim filings.
|
|
|
|
|
4.
|
Responsibility:
The issuer’s other
certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (DC&P) and internal
control over financial reporting (ICFR), as those terms are defined in
National Instrument 52-109
Certification of Disclosure in Issuers’
Annual and Interim Filings,
for the issuer.
|
|
|
|
|
5.
|
Design:
Subject to the limitations, if any,
described in paragraphs 5.2 and 5.3, the issuer’s other certifying
officer(s) and I have, as at the end of the period covered by the interim
filings
|
|
|
(a)
|
designed DC&P, or caused it to be designed under our
supervision, to provide reasonable assurance
that
|
|
|
(i)
|
material information relating to the issuer is made known
to us by others, particularly during the period in which the interim
filings are being prepared; and
|
|
|
|
|
|
|
(ii)
|
information required to be disclosed by the issuer in its
annual filings, interim filings or other reports filed or submitted by it
under securities legislation is recorded, processed, summarized and
reported within the time periods specified in securities legislation;
and
|
|
|
(b)
|
designed ICFR, or caused it to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with the issuer’s
GAAP.
|
|
5.1
|
Control framework:
The control framework
the issuer’s other certifying officer(s) and I used to design the issuer’s
ICFR is the Internal Control – Integrated Framework (COSO Framework 2013)
published by The Committee of Sponsoring Organization of the Treadway
Commission (COSO).
|
|
|
|
|
5.2
|
ICFR – material weakness relating to
design
:
N/A
|
|
|
|
|
5.3
|
Limitation on scope of design:
The issuer
has disclosed in its interim MD&A
|
1
|
|
(a)
|
the fact that the issuer’s other certifying officer(s)
and I have limited the scope of our design of DC&P and ICFR to exclude
controls, policies and procedures of
|
|
|
(i)
|
N/A
|
|
|
|
|
|
|
(ii)
|
N/A
|
|
|
|
|
|
|
(iii)
|
a business that the issuer acquired not more than 365
days before the last day of the period covered by the interim filings;
and
|
|
|
(b)
|
summary financial information about the proportionately
consolidated entity, special purpose entity or business that the issuer
acquired that has been proportionately consolidated or consolidated in the
issuer’s financial statements.
|
|
6.
|
Reporting changes in ICFR:
The issuer has
disclosed in its interim MD&A any change in the issuer’s ICFR that
occurred during the period beginning on October 1, 2017 and ended on
December 31, 2017 that has materially affected, or is reasonably likely to
materially affect, the issuer’s ICFR.
|
|
Date:
February 8, 201
8
|
|
|
|
(signed) Glen Ibbott
|
|
Glen Ibbott
|
|
Chief Financial Officer
|
2
FORM 51-102F3
MATERIAL CHANGE REPORT
Aurora Cannabis Inc. (the
"
Company
")
1500 – 1199 West Hastings Street
Vancouver, BC V6E 3T5
Telephone: (604) 362-5207
|
Item 2.
|
Date of Material Change
|
February 5, 2018
A news release issued on February 5,
2018, at Vancouver, British Columbia relating to the material change described
herein was disseminated through Canada Newswire.
|
Item 4.
|
Summary of Material Change
|
Aurora Cannabis and Liquor Stores N.A.
announce investment to develop western Canadian retail cannabis business.
Full Description of Material
Change
Please see attached news release dated
February 5, 2018.
|
Item 5.
|
Full Description of Material
Change
|
See attached press release.
|
Item 6.
|
Reliance on subsection 7.1(2) or (3) of
National Instrument 51-102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None
The following senior officers of the
Issuer are knowledgeable about the material change and may be contacted by the
Commission at the address and telephone number:
Cam Battley, Executive Vice President
Phone: (905) 878-5525
Mobile: (905) 864-5525
Email: cam@auroramj.com
Nilda Rivera, Vice President of
Finance
Mobile: (604) 362-5207
Email: nilda@auroramj.com
Terry Booth, Chief Executive
Officer
Mobile: (780) 722 - 8889
Email:
terry@auroramj.com
DATED February 8, 2018.
|
February 5, 2018
|
TSX: ACBTSX: LIQ
|
|
|
|
Aurora Cannabis and Liquor Stores N.A. Announce Investment to
Develop Western Canadian
Retail Cannabis Business
Aurora to Acquire up to a 40% Equity Interest in Liquor
Stores N.A.
Edmonton, AB
, February 5, 2018 – Aurora Cannabis Inc.
("
Aurora
") (TSX:ACB) and Liquor Stores N.A. Ltd. ("
Liquor Stores
")
(TSX:LIQ) (collectively, the "
Corporations
") announced today that Aurora
has agreed to make a strategic investment in Liquor Stores by way of a
non-brokered private placement (the "
Private Placement
").
The Private Placement has been structured in two phases, with
an Initial Investment made by Aurora (described further below) of $103.5 million
for an approximate 19.9% ownership interest in Liquor Stores, with an Additional
Investment (also described further below) that could bring Aurora's interest in
Liquor Stores up to approximately 40%.
Liquor Stores intends to use the net proceeds from the Private
Placement to establish and launch a leading brand of cannabis retail outlets,
whereby it will convert some number of Liquor Stores' existing retail outlets
into cannabis retail outlets and establish new cannabis retail outlets. Liquor
Stores will also use a portion of the proceeds to continue to strengthen its
existing liquor retail brands by renovating existing liquor store outlets, and
also for general corporate purposes.
Together, the Corporations believe the benefits of the Private
Placement are significant for all shareholders. Aurora's brand leadership,
quality products, customer care, innovation and deep product knowledge will be a
strong complement to Liquor Stores' well-established distribution network, best
practices in the retail of adult use controlled products, commitment to
regulatory compliance, and deep talent pool with over 2,000 retail employees.
The Corporations therefore believe that the Private Placement will position
Liquor Stores to establish a leading retail brand in the cannabis sector, which
is anticipated to be one of the strongest growth markets in Canada's retail
sector.
"The Private Placement with Liquor Stores is transformational
in scale and scope for Aurora, Liquor Stores and the cannabis industry in
Canada, providing the opportunity for our companies to establish a leading
private retail footprint in Western Canada" said Terry Booth, CEO of Aurora.
"This is an extremely significant step in our corporate development, as we
prepare with our partners at Liquor Stores to bring the Aurora Standard in
product quality, customer care and strategy execution to the pending legal
consumer cannabis market."
"We are thrilled that our two great Alberta-based companies
have joined forces and we are honoured that Aurora has selected Liquor Stores,
through its investment, as the retailer poised to establish a leading cannabis
brand in Western Canada" said James Burns, CEO of Liquor Stores.
Terms of the Private Placement – Initial Investment
Aurora will make an initial $103.5 million investment in Liquor
Stores by subscribing for 6.9 million common shares (the "
Shares
") at a
price of $15.00 per Share (the "
Initial Investment
"). Upon completion of
the Initial Investment, Aurora will own approximately 19.9% of the Shares (on a
non-diluted basis). The Initial Investment will not require approval of Liquor
Stores' shareholders and is expected to close on or about February 14, 2018. The
subscription price of $15.00 per Share represents a 24% premium to the five-day
volume weighted average trading price of the Common Shares on the Toronto Stock
Exchange (the "
TSX
") as of February 2, 2018.
Additional Investment
In addition, Aurora will subscribe for 2.3 million subscription
receipts of Liquor Stores (the "
Subscription Receipts
") at a price of
$15.00 per Subscription Receipt for aggregate proceeds of $34.5 million. Upon
receiving approval from Liquor Stores' shareholders (other than Aurora) at its
next annual general meeting and the satisfaction of the other escrow release
conditions, the proceeds from the sale of Subscription Receipts will be released
to Liquor Stores and Aurora will increase its ownership of Shares to
approximately 25% (on a non-diluted basis).
Liquor Stores will also issue to Aurora, for no additional
consideration, two classes of Share purchase warrants: (1) 10,130,00 warrants at
an exercise price of $15.75 per Share to allow Aurora to increase its pro rata
equity interest in Liquor Stores to 40% on a fully diluted basis (the
"
Sunshine Warrants
"); and (2) up to 1,750,000 warrants exercisable by
Aurora at an exercise price of $15.00 upon any conversion of any of the
outstanding 4.70% convertible unsecured subordinated debentures of Liquor Stores
to allow Aurora to maintain its pro rata equity interest in Liquor Stores (the
"
Pro Rata Warrants
", and together with the Subscription Receipts and the
Sunshine Warrants, the "
Additional Investment
"). The exercise of each of
the Sunshine Warrants and the Pro Rata Warrants will be conditional upon the
approval of Liquor Stores shareholders (other than Aurora and its associates or
affiliates) at the next annual general meeting of Liquor Stores.
The TSX has conditionally approved the listing of the Shares
issuable pursuant to the Initial Investment and the issuance of the Subscription
Receipts, Sunshine Warrants and Pro Rata Warrants pursuant to the Additional
Investment. The TSX's conditional approval is subject to a number of conditions,
including shareholder approval of the Additional Investment as a result of its
material effect on control and dilution.
The Private Placement is subject to customary closing
conditions, including the final approval of the TSX and is not subject to any
financing or due diligence conditions. Completion of the Additional Investment
will also be subject to the receipt of required approvals under the
Competition Act
(Canada).
None of the Subscription Receipts, Sunshine Warrants nor the
Pro Rata Warrants will be transferable by Aurora and will not be listed for
trading on the TSX. If approved by the Liquor Stores' shareholders, it is
anticipated that the Additional Investment by Aurora would close shortly after
the required shareholders' meeting.
The Shares, Subscription Receipts, Sunshine Warrants and the
Pro Rata Warrants will each be subject to a hold period that will expire four
months and one day after the closing of the Private Placement. The parties have
agreed that the Shares issued pursuant to the Private Placement as well as any
Shares issuable pursuant to the conversion of the Subscription Receipts or the
exercise of the Sunshine Warrants or the Pro Rata Warrants will be subject to a
contractual escrow of twelve (12) months from the closing date of the Private
Placement. The Shares will not be registered in the United States.
Other Material Agreements
The Corporations have also entered into an Investor Rights
Agreement pursuant to which: (i) Aurora shall be entitled to participate in
future equity offerings of Liquor Stores in order to maintain its pro rata
equity interest in Liquor Stores; (ii) Aurora shall have the right to nominate
one (1) director for election to the board of directors of Liquor Stores
following the completion of the Initial Investment (and subject to it
maintaining an equity ownership of at least 10% in Liquor Stores) and shall have
the right to nominate a second director if it increases its equity ownership of
Liquor Stores to 33 1/3% or more; (iii) Aurora shall, in certain circumstances,
be granted demand and piggy-back registration rights; (iv) Aurora has agreed to
a 12 month standstill from the closing date of the Initial Investment and a 12
month restriction on any dispositions of the securities acquired pursuant to the
Private Placement; and (v) the Corporations have agreed to take certain actions
in furtherance of the development of a retail cannabis business together with
limitations on certain transactions that Liquor Stores can undertake until the
shareholder meeting.
Liquor Stores Board Recommendation
The board of directors of Liquor Stores (the "
Board
")
appointed a special committee of independent directors comprised of Ms. Karen
Prentice (chair), John Barnett and Derek Burney (the "
Independent
Committee
") to review and approve the Private Placement. The Independent
Committee, together with its legal and financial advisors, has determined that
the Private Placement is in the best interests of Liquor Stores and recommended
its approval to the Board. The Board, after considering, among other things, the
report and recommendation of the Independent Committee, approved the Private
Placement and recommends that shareholders vote in favour of the Additional
Investment.
Advisors
Eight Capital acted as Aurora's exclusive financial advisor in
connection with the Private Placement. The Independent Committee obtained a
fairness opinion dated as of February 4, 2018 from its financial advisor,
Paradigm Capital Inc., that, based upon and subject to the limitations and
qualifications therein, the terms of the Private Placement are fair, from a
financial point of view, to Liquor Stores.
About Aurora Cannabis Inc.
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations
("
ACMPR
"). The
Company operates a 55,200 square foot production facility in Mountain View
County, Alberta, known as "Aurora Mountain", a 40,000 square foot production
facility known as "Aurora Vie" in Pointe-Claire, Quebec, and an 800,000 square
foot production facility, known as "Aurora Sky", at the Edmonton International
Airport. Aurora is also completing a fourth facility of 48,000 square feet in
Lachute, Quebec, and will shortly begin construction on a 1,000,000 square foot
production facility in Odense, Denmark, to be known as "Aurora Nordic", via a
joint venture with Alfred Pedersen & Søn ApS.
Aurora also owns Berlin-based Pedanios GmbH, the leading
wholesale importer, exporter, and distributor of medical cannabis in the
European Union. The Company offers further differentiation through its wholly
owned subsidiaries BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens.
In addition, the Company holds approximately 17.23% of the
issued shares in leading extraction technology company Radient Technologies
Inc., and has a strategic investment in Hempco Food and Fiber Inc., with options
to increase ownership stake to over 50%. Aurora is also the cornerstone investor
in two other licensed producers, with a 22.9% stake in Cann Group Limited, the
first Australian company licensed to conduct research on and cultivate medical
cannabis, and a 17.62% stake in Canadian producer The Green Organic Dutchman
Ltd., with options to increase to majority ownership.
Aurora's common shares trade on the TSX under the symbol
"ACB".
About Liquor Stores N.A. Ltd.
Liquor Stores operates 231 retail liquor stores. Liquor Stores'
common shares and convertible subordinated debentures trade on the Toronto Stock
Exchange under the symbols "LIQ" and "LIQ.DB.B", respectively.
Additional information about Liquor Stores N.A. Ltd. is
available at
www.sedar.com
and its website at
www.liquorstoresna.ca
.
For further information
For Aurora Cannabis
|
Cam Battley
|
Marc Lakmaaker
|
|
Chief Corporate Officer
|
Director, Investor Relations and
|
|
+1.905.864.5525
|
Corporate Development
|
|
cam@auroramj.com
|
+1.647.269.5523
|
|
www.auroramj.com
|
marc.lakmaaker@auroramj.com
|
For Liquor Stores N.A.
Matthew Rudd
Senior Vice President and Chief Financial
Officer
Liquor Stores N.A. Ltd.
+1.780.702.7389
www.liquorstoresna.ca
Forward-Looking Statements
This press release contains information that constitutes "forward-looking information" or "forward-looking statements" (collectively, "forward-looking information") within the meaning of applicable securities legislation. The use of any of the words
"believe", "continue", "create", "deliver", "expect", "provide", "will" and similar expressions are intended to identify forward-looking information. Forward-looking information includes statements concerning: the use of the net proceeds from the
Private Placement; the anticipated benefits of the Private Placement to Liquor Stores, Aurora and their respective shareholders, including Liquor Stores' ability to establish a retail cannabis business; the anticipated growth of a cannabis retail
business in Canada and anticipated market share; regulatory risks, including risks related to the ability of, and expected timing for, Liquor Stores' and Aurora's participation in the retail adult use market for cannabis in Canada; the timing and
anticipated receipt of required government, regulatory and shareholder approvals for the Private Placement; the ability of Liquor Stores and Aurora to satisfy the other conditions to, and to complete, the Private Placement; and the timing of the
annual general meeting of the shareholders of Liquor Stores and the closing of the Private Placement.
In respect of the forward-looking statements and information concerning the anticipated completion and benefits of the proposed Private Placement and the anticipated timing for completion of the Private Placement, Liquor Stores and Aurora have
provided such in reliance on certain assumptions that they believe are reasonable at this time, including assumptions as to the implementation of legislation and a regulatory regime in respect of cannabis that will permit Liquor Stores to establish
a retail cannabis business; that under applicable laws or rules in respect of cannabis Aurora and its affiliates will be permitted to own securities of Liquor Stores and take certain actions with Liquor Stores in furtherance of the development of a
retail cannabis business together;
the time required to prepare and mail Liquor Stores shareholder meeting materials, including the required information circular; the ability of the parties to receive, in a timely manner, the required
government, regulatory, shareholder and other third party approvals required to complete the Private Placement and participate in the retail adult use market for cannabis in Canada; the assets and employees of Liquor Stores and Aurora; the plans of
Liquor Stores to establish cannabis retail outlets; and the ability of the parties to satisfy, in a timely manner, the other conditions to the closing of the Private Placement. Dates may change for a number of reasons, including unforeseen delays in
preparing meeting materials, inability to secure necessary government, regulatory, shareholder or other third party approvals in the time assumed or the need for additional time to satisfy the other conditions to the completion of the Private
Placement. In general, actual outcomes may vary from the forward-looking information contained in this press release. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this press
release.
Since forward-looking information addresses future events and conditions, by its very nature it involves inherent risks and uncertainties. Risks and uncertainties inherent in the Private Placement include, but are not limited to, the failure of
Liquor Stores or Aurora to obtain necessary government, regulatory, shareholder and other third party approvals, or to otherwise satisfy the conditions to complete the Private Placement and participate in the retail adult use market for cannabis in
Canada, in a timely manner, or at all; and the failure to successfully execute the plans regarding a retail cannabis business. The failure to obtain approvals, or the failure of Liquor Stores or Aurora to otherwise satisfy the conditions to the
Private Placement, may result in the Private Placement not being completed on the proposed terms, or at all.
Readers are cautioned that the foregoing list of risk factors is not exhaustive. Additional information on other factors that could affect the operations or financial results of Liquor Stores and Aurora are included in reports on file with
applicable securities regulatory authorities, including but not limited to: Liquor Stores' Annual Information Form for the year ended December 31, 2016 dated March 29, 2017 and Aurora's Annual Information Form for the year ended June 30, 2017 dated
September 25, 2017, as well as subsequent reports which may be filed from time to time, which may be accessed on Liquor Stores' and Aurora's respective company profiles on SEDAR at www.sedar.com.
The forward-looking information contained in this press release is made as of the date hereof and Liquor Stores and Aurora undertake no obligation to update publicly or revise any forward-looking information, whether as a result of new information,
future events or otherwise, unless so required by applicable securities legislation.
Aurora Cannabis and Liquor Stores N.A. Complete Strategic
Investment to Develop Western Canadian Retail Cannabis Business
TSX: ACB; TSX: LIQ
EDMONTON, Feb. 14, 2018 /CNW/ - Aurora Cannabis Inc.
("
Aurora
") (TSX:ACB) and Liquor Stores N.A. Ltd. ("
Liquor Stores
")
(TSX:LIQ) (collectively, the "
Corporations
") announced today the closing
of the previously announced strategic investment by Aurora in Liquor Stores by
way of a non-brokered private placement (the "
Private Placement
").
Liquor Stores intends to use the net proceeds from the Private
Placement to establish and launch a leading brand of cannabis retail outlets,
whereby it will convert some number of Liquor Stores' existing retail locations
into cannabis retail stores and establish new cannabis retail stores. Liquor
Stores will also use a portion of the proceeds to continue to strengthen its
existing liquor retail brands by renovating current liquor store locations, and
also for general corporate purposes.
"We are very pleased to be invested in Liquor Stores, one of
Alberta's most recognizable retail brands," said Terry Booth, CEO of Aurora.
"Liquor Stores' infrastructure, logistics and capacity to build and operate a
large network of retail outlets provides a great opportunity for the cannabis
industry to service what is anticipated to be a strong growth market. We look
forward to playing our part in this partnership, and help establishing a new
customer experience for adult consumers."
"Aurora has established itself as a global leader in the
cannabis sector, based in our shared home province of Alberta," said James
Burns, CEO of Liquor Stores. "Combining Aurora's expertise, insight and strong
execution with Liquor Stores' operational excellence in the retail of adult use
controlled substances is huge win not only for our companies' shareholders, but
also for ensuring that the public policy objectives for legalizing consumer use
of cannabis are met responsibly."
Terms of the Private Placement
In connection with the Private Placement, Liquor Stores has
issued an aggregate of 6.9 million common shares (the "
Shares
") at a
price of $15.00 per Share for gross proceeds of $103.5 million (the "
Initial
Investment
"). As a result of the Initial Investment, Aurora now owns
approximately 19.9% of the Shares (on a non-diluted basis).
In addition, Aurora has subscribed for 2.3 million subscription
receipts of Liquor Stores (the "
Subscription Receipts
") at a price of
$15.00 per Subscription Receipt for aggregate proceeds of $34.5 million.
Following approval from Liquor Stores' shareholders (other than Aurora, its
associates and affiliates) at its next annual general meeting and the
satisfaction of the other escrow release conditions, the proceeds from the sale
of Subscription Receipts will be released to Liquor Stores and Aurora will
increase its ownership of Shares to approximately 25% (on a non-diluted basis).
Liquor Stores has also issued to Aurora, for no additional
consideration, two classes of Share purchase warrants: (1) 10,130,000 warrants
at an exercise price of $15.75 per Share to allow Aurora to increase its pro
rata equity interest in Liquor Stores to approximately 40% on a fully diluted
basis (the "
Sunshine Warrants
"); and (2) up to 1,750,000 warrants
exercisable by Aurora at an exercise price of $15.00 upon any conversion of any
of the outstanding 4.70% convertible unsecured subordinated debentures of Liquor
Stores to allow Aurora to maintain its pro rata equity interest in Liquor Stores
(the "
Pro Rata Warrants
", and together with the Subscription Receipts and
the Sunshine Warrants, the "
Additional Investment
"). The exercise of each
of the Sunshine Warrants and the Pro Rata Warrants will be conditional upon the
approval of Liquor Stores shareholders (other than Aurora and its associates or
affiliates) at the next annual general meeting of Liquor Stores. Completion of the
Additional Investment remains subject to the receipt of required approvals under
the
Competition Act
(Canada).
Early Warning Report
Prior to the completion of the Initial Investment Aurora did
not hold any Shares. After giving effect to the Initial Investment, Aurora holds
6,900,000 Shares, representing approximately 19.88% of the issued and
outstanding Shares (on a non-diluted basis). As of the closing of the Initial
Investment, Liquor Stores has 34,709,259 Shares issued and outstanding. If the
conditions are met to convert the 2,300,000 Subscription Receipts into Shares,
Aurora will hold a total of 9,200,000 Shares, representing approximately 24.86%
of the 37,009,959 issued and outstanding Shares (on a non-diluted basis). On the
exercise of the 10,130,000 Sunshine Warrants, Aurora will hold approximately 40%
of the issued and outstanding Shares (on a fully diluted basis). The exercise of
the Pro Rata Warrants allows Aurora to maintain its pro rata equity interest in
Liquor Stores upon the conversion of any of the outstanding 4.70% convertible
unsecured subordinated debentures of Liquor Stores and therefore will not
increase Aurora's ownership interest in Liquor Stores.
Aurora acquired the securities for investment purposes. Aurora
will evaluate its investment in Liquor Stores from time to time and may, based
on such evaluation, market conditions and other circumstances, increase or
decrease its shareholdings as circumstances require through the exercise of the
Pro Rata Warrants or Sunshine Warrants, market transactions, private agreements,
or otherwise. A copy of the Early Warning report will be filed by Aurora in
connection with the Private Placement and will be available on LIQ's SEDAR
profile. In order to obtain a copy of the early warning report, please contact
Nilda Rivera, Aurora's Vice President, Finance, at telephone number:
604-362-5207. Aurora's registered office is located at 1500 - 1199 West Hastings
St. Vancouver, British Columbia, V6E 3T5.
About Aurora Cannabis Inc.
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations
("
ACMPR
"). The
Company operates a 55,200 square foot production facility in Mountain View
County, Alberta, known as "Aurora Mountain", a 40,000 square foot production
facility known as "Aurora Vie" in Pointe-Claire, Quebec, and an 800,000 square
foot production facility, known as "Aurora Sky", at the Edmonton International
Airport. Aurora is also completing a fourth facility of 48,000 square feet in
Lachute, Quebec, and will shortly begin construction on a 1,000,000 square foot
production facility in Odense, Denmark, to be known as "Aurora Nordic", via a
joint venture with Alfred Pedersen & Søn ApS.
Aurora also owns Berlin-based Pedanios GmbH, the leading
wholesale importer, exporter, and distributor of medical cannabis in the
European Union. The Company offers further differentiation through its wholly
owned subsidiaries BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens.
In addition, the Company holds approximately 17.23% of the
issued shares in leading extraction technology company Radient Technologies
Inc., and has a strategic investment in Hempco Food and Fiber Inc., with options
to increase ownership stake to over 50%. Aurora is also the cornerstone investor
in two other licensed producers, with a 22.9% stake in Cann Group Limited, the
first Australian company licensed to conduct research on and cultivate medical
cannabis, and a 17.62% stake in Canadian producer The Green Organic Dutchman
Ltd., with options to increase to majority ownership.
Aurora's common shares trade on the TSX under the symbol "ACB".
About Liquor Stores N.A. Ltd.
Liquor Stores operates 231 retail liquor stores. Liquor Stores'
common shares and convertible subordinated debentures trade on the Toronto Stock
Exchange under the symbols "LIQ" and "LIQ.DB.B", respectively.
Additional information about Liquor Stores N.A. Ltd. is
available at www.sedar.com and its website at www.liquorstoresna.ca.
Forward-Looking Statements
This press release contains information that constitutes
"forward-looking information" or "forward-looking statements" (collectively,
"forward-looking information") within the meaning of applicable securities
legislation. The use of any of the words "believe", "continue", "create",
"deliver", "expect", "provide", "will" and similar expressions are intended to
identify forward-looking information. Forward-looking information includes
statements concerning: the use of the net proceeds from the Private Placement;
the anticipated benefits of the Private Placement to Liquor Stores, Aurora and
their respective shareholders, including Liquor Stores' ability to establish a
retail cannabis business; the anticipated growth of a cannabis retail business
in Canada and anticipated market share; regulatory risks, including risks
related to the ability of, and expected timing for, Liquor Stores' and Aurora's
participation in the retail adult use market for cannabis in Canada; the timing
and anticipated receipt of required government, regulatory and shareholder
approvals for the Additional Investment; and the timing of the annual general
meeting of the shareholders of Liquor Stores and the closing of the Additional
Investment.
In respect of the forward-looking statements and information
concerning the anticipated benefits of the Private Placement and the anticipated
timing for completion of the Additional Investment, Liquor Stores and Aurora
have provided such in reliance on certain assumptions that they believe are
reasonable at this time, including assumptions as to the implementation of
legislation and a regulatory regime in respect of cannabis that will permit
Liquor Stores to establish a retail cannabis business; that under applicable
laws or rules in respect of cannabis Aurora and its affiliates will be permitted
to own securities of Liquor Stores and take certain actions with Liquor Stores
in furtherance of the development of a retail cannabis business together; the
time required to prepare and mail Liquor Stores shareholder meeting materials,
including the required information circular; the ability of the parties to
receive, in a timely manner, the required government, regulatory, shareholder
and other third party approvals required to complete the Additional Investment
and participate in the retail adult use market for cannabis in Canada; the
assets and employees of Liquor Stores and Aurora; and the plans of Liquor Stores
to establish cannabis stores. Dates may change for a number of reasons,
including unforeseen delays in preparing meeting materials, inability to secure
necessary government, regulatory, shareholder or other third party approvals in
the time assumed or the need for additional time to satisfy the other conditions
to the completion of the Additional Investment. In general, actual outcomes may
vary from the forward-looking information contained in this press release.
Accordingly, readers should not place undue reliance on the forward-looking
statements and information contained in this press release.
Since forward-looking information addresses future events
and conditions, by its very nature it involves inherent risks and uncertainties.
Risks and uncertainties inherent in the Private Placement include, but are not
limited to, the failure of Liquor Stores or Aurora to obtain necessary
government, regulatory, shareholder and other third party approvals, or to
otherwise satisfy the conditions to complete the Additional Investment and
participate in the retail adult use market for cannabis in Canada, in a timely
manner, or at all; and the failure to successfully execute the plans regarding a
retail cannabis business. The failure to obtain approvals, may result in the
Additional Investment not being completed on the proposed terms, or at all.
Readers are cautioned that the foregoing list of risk
factors is not exhaustive. Additional information on other factors that could
affect the operations or financial results of Liquor Stores and Aurora are
included in reports on file with applicable securities regulatory authorities
which may be accessed on Liquor Stores' and Aurora's respective company profiles
on SEDAR at
www.sedar.com
.
The forward-looking information contained in this press
release is made as of the date hereof and Liquor Stores and Aurora undertake no
obligation to update publicly or revise any forward-looking information,
whether as a result of new information, future events or
otherwise, unless so required by applicable securities legislation.
SOURCE Aurora Cannabis Inc.
View original content with multimedia: http://www.newswire.ca/en/releases/archive/February2018/14/c7071.html
%SEDAR: 00025675E
For further information:
For Aurora: Cam Battley, Chief
Corporate Officer, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc
Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.269.5523, marc.lakmaaker@auroramj.com; For Liquor Stores N.A.: Matthew
Rudd, Senior Vice President and Chief Financial Officer, Liquor Stores N.A.
Ltd., +1.780.702.7389, www.liquorstoresna.ca
CO: Aurora Cannabis Inc.
CNW 13:10e 14-FEB-18
FORM 51-102F3
MATERIAL CHANGE REPORT
|
Item 1:
|
Name and Address of
Company
|
Aurora Cannabis Inc. (“
Aurora
”
or the “
Company
”)
1500 - 1199 West Hastings St.
Vancouver, BC
Canada V6E 3T5
|
Item 2:
|
Date of Material
Change
|
February 6, 2018.
The news release attached as Schedule
“A” was disseminated via Canada Newswire on February 6, 2018 announcing the
material change. A copy of the news release was filed on the Company’s profile
on SEDAR at www.sedar.com.
|
Item 4:
|
Summary of Material
Change
|
On February 6, 2018, Aurora filed a
notice of variation (the “
Notice of Variation
”) to the offer to purchase
and takeover bid circular dated November 24, 2017, as amended by the notice of
change dated January 12, 2018, and CanniMed Therapeutics Inc.
(“
CanniMed
”) filed notice of change to directors’ circular (the “Notice
of Change” and together with the Notice of Variation, the “
Offer
Documents
”) in connection with Aurora’s improved offer to acquire all of the
outstanding common shares of CanniMed (“
CanniMed Shares
”) not already
owned by Aurora or its affiliates, described under “Aurora’s Notice of
Variation” below (the “
Improved Offer
”). As previously announced by the
parties on January 24, 2018, CanniMed’s board of directors (the “
CanniMed
Board
”) is unanimously recommending that CanniMed Shareholders accept the
Improved Offer.
Aurora’s Notice of Variation
Pursuant to the terms of the Improved
Offer described in the Notice of Variation, Aurora has increased the
consideration offered per CanniMed Share, at the election of each CanniMed
shareholder, to: (a) 3.40 common shares (“Aurora Shares”) of Aurora (the “Share
Alternative”); (b) $43.00 in cash (subject to proration); (the “Cash
Alternative”); or (c) any combination thereof (subject to proration of the cash
portion), (the “Share and Cash Alternative”).
The maximum amount of cash available
under the Improved Offer is $140 million (the “
Maximum Cash
Consideration
”), and the number of Aurora Shares to be issued will be
between approximately 72 million (assuming full cash elections) and 84 million
(assuming full share elections and no cash elections). CanniMed Shareholders
should note that any cash elected to be received is valued (for purposes of
determining the number of Aurora Shares to be received in addition to such cash)
based on an implied Aurora Share price of $12.65, which may be more or less than
the value of the share consideration at the time that the CanniMed Shares are
taken-up by Aurora. CanniMed Shareholders are advised to consider recent market
price quotations for Aurora Shares and to carefully review the Offer Documents
before deciding whether to tender to the Improved Offer and before making their
consideration elections.
The cash consideration of the Cash
Alternative and the Share and Cash Alternative will be prorated, to ensure that
the Maximum Cash Consideration payable is not exceeded. Assuming that all
CanniMed Shareholders elect the Cash Alternative, each CanniMed Shareholder
would receive $5.70 in cash and 2.9493 Aurora Shares for each CanniMed Share.
The full details of the proration mechanisms are provided in Aurora’s Notice of
Variation.
The Improved Offer is open until 11:59
PM (Pacific Time) on March 9, 2018, subject to acceleration, extension or
withdrawal by Aurora.
CanniMed Notice of Change
The CanniMed Board has filed a Notice
of Change to Directors’ Circular in connection with the Improved Offer. The
CanniMed Board is unanimously recommending that CanniMed Shareholders accept the
Improved Offer and tender their CanniMed Shares to the Improved Offer.
This decision follows a unanimous
determination, made by the CanniMed Board and the special committee to the
CanniMed Board (the “
Special Committee
”) that, after consultation with
their financial and legal advisors, the consideration under the Improved Offer
is fair, from a financial point of view, to CanniMed Shareholders (other than
Aurora and its affiliates) and that it would be in the best interests of
CanniMed to support and facilitate the Improved Offer.
Initial Deposit Period
In connection with the filing of the
Offer Documents, the CanniMed Board reduced the initial deposit period (being
the minimum amount of time the Improved Offer must be open for acceptance before
Aurora can begin taking up shares under the Improved Offer) to 84 days from the
commencement of the offer on November 24, 2017. This means that commencing on
the later of February 16, 2018 and the date all of the conditions to the
Improved Offer have been satisfied or waived, Aurora will be able to take up
CanniMed Shares under the Improved Offer.
The joint news release dated February
6 (attached hereto as Schedule “A”) is considered a “deposit period news
release” for the purposes of National Instrument 62-104 Take-over Bids and
Issuer Bids.
Lock – Up Agreements
Aurora entered into lock-up agreements
(the “Original Lock-Up Agreements”) on November 12, 2017 with Saskworks Venture
Fund Inc., Golden Opportunities Fund Inc., Apex Investment Limited Partnership
and Vantage Asset Management Inc. (the “Original Locked-Up Shareholders”) to
support the Original Offer (and the Improved Offer). The CanniMed Shares to be
tendered pursuant to the Original Lock-Up Agreements represent approximately 36%
of the issued and outstanding CanniMed Shares on a fully diluted basis.
In addition to the Original Locked-Up
Shareholders, certain CanniMed directors and officers holding approximately 12%
of the issued and outstanding CanniMed Shares, including Brent Zettl, Chief
Executive Officer, have agreed to support the Improved Offer and have entered to
into lock-up agreements in respect of the same (the “New Lock-Up Agreements”).
Altogether, under the Original Lock-Up
Agreements and the New Lock-Up Agreements, shareholders holding approximately
48%of the issued and outstanding CanniMed Shares have agreed to tender to the
Improved Offer. In addition, Aurora owns 700,600 CanniMed Shares, representing
approximately 2.87% of the issued and outstanding CanniMed Shares, which are not
the subject of the Improved Offer.
|
Item 5:
|
Full Description of
Material Change
|
Please see the news release attached
as Schedule “A”.
|
Item 6:
|
Reliance on subsection
7.1(2) of National Instrument
51-102
|
Not applicable.
|
Item 7:
|
Omitted
Information
|
Not applicable.
|
Item 8:
|
Executive
Officer
|
Terry Booth
Chief Executive Officer
(604) 362-5207
February 16, 2018.
Schedule “A”
[See Attached]
Aurora Cannabis and CanniMed Therapeutics File Offer
Documents for Previously Announced Friendly Acquisition
Initial Deposit Period Reduced
TSX:ACB TSX:CMED
EDMONTON and SASKATOON, Feb. 6, 2018 /CNW/ - Aurora Cannabis
Inc. (
"Aurora"
) (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
and CanniMed Therapeutics Inc. (
"CanniMed"
) (TSX: CMED) today announced
the filing of Aurora's Notice of Variation and CanniMed's Notice of Change to
Directors' Circular (collectively the
"Offer Documents"
) in connection
with Aurora's improved offer to acquire all of the outstanding common shares of
CanniMed (
"CanniMed Shares"
) not already owned by Aurora or its
affiliates, described under "Aurora's Notice of Variation" below (the
"Improved Offer"
). As previously announced by the parties on January 24,
2018, CanniMed's board of directors (the
"CanniMed Board"
) is unanimously
recommending that CanniMed's shareholders accept the Improved Offer.
Aurora's Notice of Variation
Pursuant to the terms of the Notice of Variation, Aurora has
increased the consideration offered per CanniMed Share, at the election of each
CanniMed shareholder, to: (a) 3.40 common shares (
"Aurora Shares"
) of
Aurora (the
"Share Alternative"
); (b) $43.00 in cash (subject to
proration); (the
"Cash Alternative"
); or (c) any combination thereof
(subject to proration of the cash portion), (the
"Share and Cash
Alternative"
).
The maximum amount of cash available under the Improved Offer
is $140 million (the
"Maximum Cash Consideration"
), and the number of
Aurora Shares to be issued will be between approximately 72 million (assuming
full cash elections) and 84 million (assuming full share elections and no cash
elections). CanniMed Shareholders should note that any cash elected to be
received is valued (for purposes of determining the number of Aurora Shares to
be received in addition to such cash) based on an implied Aurora Share price of
$12.65, which may be more or less than the value of the share consideration at
the time that the CanniMed Shares are taken-up under the Offer. CanniMed
Shareholders are advised to consider recent market price quotations for Aurora
Shares and to carefully review the Offer Documents before deciding whether to
tender to the Improved Offer and before making their consideration elections.
The cash consideration of the Cash Alternative and the Share
and Cash Alternative will be prorated, to ensure that the Maximum Cash
Consideration payable is not exceeded. Assuming that all CanniMed Shareholders
elect the Cash Alternative, each CanniMed Shareholder would receive $5.70 in
cash and 2.9493 Aurora Shares for each CanniMed Share. The full details of the
proration mechanisms are provided in Aurora's Notice of Variation.
The Improved Offer is open until 11:59 PM (Pacific Time) on
March 9, 2018, subject to acceleration, extension or withdrawal by Aurora.
CanniMed Notice of Change to Directors' Circular
The CanniMed Board has filed a Notice of Change to Directors'
Circular in connection with the Improved Offer. The CanniMed Board is
unanimously recommending that CanniMed Shareholders accept the Improved Offer
and tender their CanniMed Shares to the Improved Offer.
This decision follows a unanimous determination, made by the
CanniMed Board and the special committee to the CanniMed Board (the
"Special
Committee"
) that, after consultation with their financial and legal
advisors, the consideration under the Improved Offer is fair, from a financial
point of view, to CanniMed Shareholders (other than Aurora and its affiliates)
and that it would be in the best interests of CanniMed to support and facilitate
the Improved Offer. The CanniMed Board's financial advisor, AltaCorp Capital
Inc., and the financial advisor to the Special Committee, Cormark Securities
Inc., have each provided opinions that, as of January 26, 2018, and subject to
the assumptions, limitations and qualifications on which the opinions are based,
the consideration to be received under the Improved Offer is fair, from a
financial point of view, to CanniMed Shareholders other than Aurora and its
affiliates.
Initial Deposit Period
In connection with the filing of the Offer Documents, the
CanniMed Board has reduced the initial deposit period (being the minimum amount
of time the Improved Offer must be open for acceptance before Aurora can begin
taking up shares under the Improved Offer) to 84 days from the commencement of
the offer on November 24, 2017. This means that commencing on the later of
February 16, 2018 and the date all of the conditions to the Improved Offer have
been satisfied or waived, Aurora will be able to take up CanniMed Shares under the Improved Offer. This news release is a considered a
"deposit period news release" for the purposes of National Instrument 62-104
"Take-over Bids and Issuer Bids".
Lock – Up Agreements
Aurora entered into lock-up agreements (the
"Original
Lock-Up Agreements"
) on November 12, 2017 with Saskworks Venture Fund Inc.,
Golden Opportunities Fund Inc., Apex Investment Limited Partnership and Vantage
Asset Management Inc. (the
"Original Locked-Up Shareholders"
) to support
the Original Offer (and the Improved Offer). The CanniMed Shares to be tendered
pursuant to the Original Lock-Up Agreements represent approximately 36% of the
issued and outstanding CanniMed Shares on a fully diluted basis.
In addition to the Original Locked-Up Shareholders, certain
CanniMed directors and officers holding approximately 12% of the issued and
outstanding CanniMed Shares, including Brent Zettl, Chief Executive Officer,
have agreed to support the Improved Offer and have entered to into lock-up
agreements in respect of the same (the
"New Lock-Up Agreements"
).
Altogether, under the Original Lock-Up Agreements and the New
Lock-Up Agreements, shareholders holding approximately 48% of the issued and
outstanding CanniMed Shares have agreed to tender to the Improved Offer. In
addition, Aurora owns 700,600 CanniMed Shares, representing approximately 2.87%
of the issued and outstanding CanniMed Shares, which are not the subject of the
Improved Offer.
About the Improved Offer
The full details of the Improved Offer are set out in the Offer
Documents, which have been filed with the Canadian securities regulatory
authorities and are being mailed to CanniMed Shareholders. The Offering
Documents will also be available on SEDAR under CanniMed's profile at
www.sedar.com. Upon filing of the Offering Documents, the Improved Offer will be
open for no fewer than 10 days and, following any take up of CanniMed Shares,
Aurora will then further extend its offer for at least an additional 10 days in
order to allow any remaining CanniMed Shareholders to tender to the Improved
Offer. Aurora's obligation to take-up CanniMed Shares under the Improved Offer
is subject to the conditions set out in the Notice of Variation, including, but
not limited to, receipt of approval under the Canadian Competition Act.
Materials filed with the Canadian securities regulatory
authorities are available electronically without charge at www.sedar.com.
Materials filed with the SEC are available electronically without charge on
EDGAR accessible through the SEC's website at www.sec.gov. Documents related to
the original offer and the Improved Offer, including the Offer Documents, are
also available on Aurora's website at www.auroramj.com, and shareholders are
invited to visit cannimed.auroramj.com for further information.
How to Tender
CanniMed Shareholders who wish to accept the Improved Offer
must properly follow the procedures outlined in the Notice of Variation and
accompanying Amended Letter of Transmittal.
For assistance in depositing CanniMed Shares pursuant to the
Improved Offer, CanniMed Shareholders should contact the Depository and
Information Agent Laurel Hill at Phone: 1-877-452-7184 (North American Toll Free
Phone) and 1-416-304-0211 (Outside North America); Facsimile: 416-646-2415; and
E-mail: assistance@laurelhill.com.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations (
"ACMPR"
). Aurora
operates a 55,200 square foot production facility in Mountain View County,
Alberta, known as "Aurora Mountain", a 40,000 square foot production facility
known as "Aurora Vie" in Pointe-Claire, Quebec, and an 800,000 square foot
production facility, known as "Aurora Sky", at the Edmonton International
Airport. Aurora is also completing a fourth facility of 48,000 square feet in
Lachute, Quebec, and will shortly begin construction on a 1,000,000 square foot
production facility in Odense, Denmark, to be known as "Aurora Nordic", via a
joint venture with Alfred Pedersen & Søn ApS.
Aurora also owns Berlin-based Pedanios GmbH, the leading
wholesale importer, exporter, and distributor of medical cannabis in the
European Union. Aurora offers further differentiation through its wholly owned
subsidiaries BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in state-of-the-art indoor
gardening appliances for the cultivation of organic microgreens, vegetables and
herbs in home and professional kitchens.
In addition, Aurora holds approximately 17.23% of the issued
shares in leading extraction technology company Radient Technologies Inc., and
has a strategic investment in Hempco Food and Fiber Inc., with options to
increase ownership stake to over 50%. Aurora is also the cornerstone investor in
two other licensed producers, with a 22.9% stake in Cann Group Limited, the
first Australian company licensed to conduct research on and cultivate medical
cannabis, and a 17.62% stake in Canadian producer The Green Organic Dutchman
Ltd., with options to increase to majority ownership.
Aurora's common shares trade on the TSX under the symbol "ACB".
About CanniMed
CanniMed is a Canadian-based, international plant
biopharmaceutical company and a leader in the Canadian medical cannabis
industry, with 17 years of pharmaceutical cannabis cultivation experience,
state-of-the-art, GMP-compliant production process and world class research and
development platforms with a wide range of pharmaceutical-grade cannabis
products. In addition, CanniMed has an active plant biotechnology research and
product development program focused on the production of plant-based materials
for pharmaceutical, agricultural and environmental applications.
CanniMed, through its subsidiaries, was the first producer to
be licensed under the Marihuana for Medical Purposes Regulations, the
predecessor to the current Access to Cannabis for Medical Purposes Regulations.
It was the sole supplier to Health Canada under the former medical marijuana
system for 13 years, and has been producing safe and consistent medical
marijuana for thousands of Canadian patients, with no incident of product
diversion or recalls.
For more information, please visit our websites:
www.cannimed.ca (patients) and www.cannimedtherapeutics.com (investors).
On behalf of the Boards of Directors,
|
AURORA CANNABIS INC.
|
CanniMed Therapeutics Inc
|
|
Terry Booth
|
Brent Zettl
|
|
CEO
|
CEO
|
Forward-Looking Information Cautionary Statement
This news release contains certain "forward-looking
statements" within the meaning of such statements under applicable securities
law. Forward-looking statements are frequently characterized by words such as
"plan", "continue", "expect", "project", "intend", "believe", "anticipate",
"estimate", "may", "will", "potential", "proposed" and other similar words, or
statements that certain events or conditions "may" or "will" occur. These
statements are only predictions. Forward looking statements in release include
statements regarding the Improved Offer, the anticipated value of the Improved
Offer, the number of shares to be issued and timing to complete the Improved
Offer. Various assumptions were used in drawing the conclusions or making the
projections contained in the forward-looking statements throughout this news
release, including assumptions based upon CanniMed's publicly disclosed
information, and that there will be no change in the business, prospects or
capitalization of CanniMed or Aurora. Forward-looking statements are based on
the opinions and estimates of management at the date the statements are made,
and are subject to a variety of risks and uncertainties and other factors that
could cause actual events or results to differ materially from those projected
in the forward-looking statements. Neither Aurora nor CanniMed is under any
obligation, and expressly disclaims any intention or obligation, to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as expressly required by applicable law. A
more complete discussion of the risks and uncertainties facing either Aurora or
CanniMed is in their Annual Information Forms and continuous disclosure filings,
which are available at www.sedar.com.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Notice to U.S. Holders
The Offer is made for the securities of a company formed
outside of the United States. The Offer will be subject to disclosure
requirements of Canada that are different from those of the United States.
Financial statements included in the documents, if any, will be prepared in
accordance with Canadian accounting standards and may not be comparable to the
financial statements of United States companies.
It may be difficult for a securityholder in the United States
to enforce his/her/its rights and any claim a securityholder may have arising
under the U.S. federal securities laws, since the issuer is located in Canada,
and some or all of its officers or directors may be residents of Canada or
another country outside of the United States. A securityholder may not be able
to sue a Canadian company or its officers or directors in a court in Canada or
elsewhere outside of the United States for violations of U.S. securities laws.
It may be difficult to compel a Canadian company and its affiliates to subject
themselves to a U.S. court's judgment.
Securityholders should be aware that the issuer may purchase
securities otherwise than under the Offer, such as in open market or privately
negotiated purchases.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/February2018/06/c3393.html
For further information:
For Aurora: Cam Battley, Chief
Corporate Officer, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc
Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.269.5523, marc.lakmaaker@auroramj.com; Or Laurel Hill Advisory Group,
North America Toll Free: 1-877-452-7184, Collect Calls Outside North America:
1-416-304-0211, Email: assistance@laurelhill.com; For CanniMed: Media Contact:
Dara Willis, CanniMed Therapeutics Inc., dhw@cannimed.com, 416-836-9272;
Investor Relations, CanniMed Therapeutics Inc., invest@cannimed.com
CO: Aurora Cannabis Inc.
CNW 07:00e 06-FEB-18
|
February 22, 2018
|
TSX: ACB
|
|
|
|
Aurora Cannabis Appoints André Jérôme SVP Business
Integration
Edmonton, AB – February 22, 2018
– Aurora Cannabis Inc.
(“Aurora”) (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today
announced the appointment of André Jérôme as Senior Vice President, Business
Integration. In this newly created role, Mr. Jérôme will be responsible for the
integration of acquisitions, as well as for the identification of potential
synergies across existing subsidiaries and joint venture partners.
Aurora, which has completed seven acquisitions and seven
strategic investments to date, has a strong track record in the integration and
generation of value from acquisitions. The Company has implemented a replicable
protocol that provides a streamlined integration process. The program includes
dedicated staff, as well as resources from IT, Finance, Legal, Operations, HR
and Communications. With this newly created position, the Company is creating
formal dedicated executive leadership of the integration function. The
integration program was developed by Aurora’s senior leadership team, including
Dr. Debra Wilson, VP of HR, whose MBA research was focused on acquisition
integration.
Mr. Jérôme, a member of the Bar of Québec for the last 23
years, joins Aurora from H2 Biopharma Inc (“H2”), where he was CEO and
co-founder. H2 is a Quebec-based, late-stage applicant for Licensed Producer
status, which was acquired by Aurora in November 2017. Prior to his activities
in the cannabis industry, Mr. Jérôme spent over two decades in the telecoms
industry. He held various senior executive positions in corporate affairs,
playing an important role in acquisition integration with, among others,
international telecom giant Vodafone.
“Since the H2 acquisition, André has demonstrated great
leadership, a strong commitment to the Company’s success and a relentless focus
on delivering results,” said Terry Booth, CEO. “M&A and business integration
are key aspects of our expansion strategy, and with André we have found the
right person to take on leadership of this important role. His experience in
leading integrations teams on both sides of the fence within large multinational
corporations will prove an important asset in creating shareholder value from
new acquisitions. His appointment also reflects a strong commitment to our
people and our future colleagues.”
Mr. Jérôme added “I am very excited to join the Aurora team,
one of the global leaders in this transformational industry. In my short time
with the Company, I have come to witness firsthand the total commitment to
excellence, and the passion of the people. I look forward to playing my part in
helping Aurora further accelerate growth.”
Mr. Jérôme was granted 250,000 options, priced at $10.13. The
options will expire February 19, 2023, and vest quarterly over three years.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company operates a 55,200 square foot, state-of-the-art production
facility in Mountain View County, Alberta, known as "Aurora Mountain", and a
second 40,000 square foot high-technology production facility known as “Aurora
Vie” in Pointe-Claire, Quebec on Montreal’s West Island. In January 2018,
Aurora’s 800,000 square foot flagship cultivation facility, Aurora Sky, located
at the Edmonton International Airport, was licensed. Once at full capacity,
Aurora Sky is expected to produce over 100,000 kg per annum of cannabis. Aurora
is also completing a fourth facility in Lachute, Quebec utilizing its wholly
owned subsidiary Aurora Larssen Projects Ltd.
Page | 1
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company offers further differentiation through its acquisition of BC
Northern Lights Ltd. and Urban Cultivator Inc., industry leaders, respectively,
in the production and sale of proprietary systems for the safe, efficient and
high-yield indoor cultivation of cannabis, and in state-of-the-art indoor
gardening appliances for the cultivation of organic microgreens, vegetables and
herbs in home and professional kitchens.
Aurora holds a 19.88% ownership interest in Liquor Stores N.A.,
who intend developing a cannabis retail network in Western Canada. In addition,
the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc., and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian producer The Green Organic Dutchman Ltd., with options
to increase to majority ownership.
Aurora's common shares trade on the TSX under the symbol "ACB".
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
###
Further information:
For Aurora
|
Cam Battley
|
Marc Lakmaaker
|
|
Chief Corporate Officer
|
Director, Investor Relations and
|
|
+1.905.864.5525
|
Corporate Development
|
|
cam@auroramj.com
|
+1.647.269.5523
|
|
www.auroramj.com
|
marc.lakmaaker@auroramj.com
|
Page | 2
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
(“forward-looking statements”), including, but not limited to, statements with
respect to the performance of the Company. Forward-looking statements are
frequently characterized by words such as "plan", "continue", "expect",
"project", "intend", "believe", "anticipate", "estimate", "may", "will",
"potential", "proposed" and other similar words, or statements that certain
events or conditions "may" or "will" occur. These statements are only
predictions. Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking statements throughout this news
release. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accept responsibility
for the adequacy or accuracy of this release
Page | 3
Aurora Cannabis Enters into Supplier Agreement with Shoppers
Drug Mart
TSX: ACB
EDMONTON, Feb. 27, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora")
(TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today announced that the
Company has entered into an agreement to become a medical cannabis supplier to
Shoppers Drug Mart.
Subject to Health Canada's approval of Shoppers Drug Mart's
application to be a licensed producer, under the terms of the agreement the
Company will supply Shoppers Drug Mart ("Shoppers") with Aurora branded medical
cannabis products. It is expected the products will be sold online, as Canadian
regulations currently restrict the sale of medical cannabis in retail
pharmacies.
"The Shoppers and Aurora brands are trusted to deliver high
quality products and excellent customer service," said Terry Booth, CEO.
"Partnering with Shoppers Drug Mart, Canada's largest pharmacy retailer, is yet
another validation of the scale and maturity of our company, and of the demand
for Aurora's medical cannabis. Through our wholly owned subsidiary Pedanios,
Aurora already supplies a network of more than 2,000 pharmacies in Germany, and
this strategic relationship with Shoppers will further expand our market
presence and profile as one of the world's leading medical cannabis brands."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", and a second 40,000 square
foot high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is also completing a fourth
facility in Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen
Projects Ltd.
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company offers further differentiation through its acquisition of BC
Northern Lights Ltd. and Urban Cultivator Inc., industry leaders, respectively,
in the production and sale of proprietary systems for the safe, efficient and
high-yield indoor cultivation of cannabis, and in state-of-the-art indoor
gardening appliances for the cultivation of organic microgreens, vegetables and
herbs in home and professional kitchens.
In addition, the Company holds approximately 17.23% of the
issued shares in leading extraction technology company Radient Technologies
Inc., and has a strategic investment in Hempco Food and Fiber Inc., with options
to increase ownership stake to over 50%. Aurora is also the cornerstone investor
in two other licensed producers, with a 22.9% stake in Cann Group Limited, the
first Australian company licensed to conduct research on and cultivate medical
cannabis, and a 17.62% stake in Canadian producer The Green Organic Dutchman
Ltd., with options to increase to majority ownership. As part of the Company's
strategy to enter the adult consumer use market, Aurora owns a 19.9% ownership
interest in Liquor Stores N.A.
Aurora's common shares trade on the TSX under the symbol "ACB".
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"), including, but not limited to, statements with
respect to the performance of the Company. Forward-looking statements are
frequently characterized by words such as "plan", "continue", "expect",
"project", "intend", "believe", "anticipate", "estimate", "may", "will",
"potential", "proposed" and other similar words, or statements that certain
events or conditions "may" or "will" occur. These statements are only
predictions. Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking statements throughout this news
release. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accept responsibility
for the adequacy or accuracy of this release
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/February2018/27/c4812.html
%SEDAR: 00025675E
For further information:
For Aurora: Cam Battley, Chief
Corporate Officer, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc
Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.269.5523, marc.lakmaaker@auroramj.com
CO: Aurora Cannabis Inc.
CNW 07:00e 27-FEB-18
INVESTOR RIGHTS AGREEMENT
AURORA CANNABIS INC.
and
THE GREEN ORGANIC DUTCHMAN HOLDINGS LTD.
and
ROBERT ANDERSON
___________________________
January 12, 2018
___________________________
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (this “
Agreement
”) is
made the 12th day of January, 2018.
BETWEEN:
AURORA CANNABIS INC.
(the “
Investor
”)
- and -
THE GREEN ORGANIC DUTCHMAN HOLDINGS
LTD.
(the “
Company
”)
WHEREAS
the Company and the Investor have entered into a subscription
agreement dated January 4, 2018 (the “
Subscription Agreement
”) whereby
the Investor purchased subscription receipts to acquire common shares and
warrants of the Company, which when issued would represent approximately 15% of
the Company’s issued and outstanding common shares on a fully diluted basis
(based on the Company’s outstanding common shares at the issue date);
AND
WHEREAS
in consideration of the Investor’s agreement to enter into and
complete the transactions contemplated by the Subscription Agreement, the
Company has agreed to grant the Investor certain additional rights as set out
herein;
THIS
AGREEMENT WITNESSES THAT
in consideration of the respective covenants and
agreements of the Parties herein contained and for other good and valuable
consideration (the receipt and sufficiency of which are acknowledged by each
Party), the Parties agree as follows:
ARTICLE 1
INTERPRETATION
For the purposes of this Agreement, unless the context
otherwise requires, the following terms shall have the respective meanings set
out below and grammatical variations of such terms shall have corresponding
meanings:
“
Act
” means the
Canada
Business Corporations Act
;
“
Affiliate
” has the meaning
ascribed to such term in the Act, as in effect on the date of this Agreement;
“
Board
” means the board of
directors of the Company;
- 3 -
“
Business Day
” means any day,
other than (i) a Saturday, Sunday or statutory holiday in the Province of
Ontario; and (ii) a day on which banks are generally closed in the Province of
Ontario;
“
Canadian Securities Laws
” means
the applicable securities legislation of each of the provinces and territories
of Canada and all published regulations, policy statements, orders, rules,
instruments, rulings and interpretation notes issued thereunder or in relation
thereto, as the same may hereafter be amended from time to time or replaced;
“
Common Shares
” means the common
shares in the capital of the Company issued and outstanding from time to time
and includes any common shares that may be issued hereafter;
“
Exchange
” means the Toronto
Stock Exchange, TSX Venture Exchange, or such other stock exchange in Canada
where the Common Shares may be listed from time to time;
“
Exercise Notice
” shall have the
meaning set out in Section 2.3;
“
fully diluted basis
” with
reference to the Investor’s percentage ownership interest in the Company means a
basis assuming exercise of all warrants and other securities convertible or
exchangeable into common shares of the Company held by the Investor and
conversion of all subscription receipts held by the Investor (and exercise of
all warrants held by the Investor pursuant to conversion of such subscription
receipts);
“
Governmental Authority
” means
any (a) multinational, federal, provincial, state, regional, municipal, local or
other government, governmental or public department, ministry, central bank,
court, tribunal, arbitral body, bureau or agency, domestic or foreign, (b)
subdivision, agent, commission, board, or authority of any of the foregoing, or
(c) quasi-governmental or private body exercising any regulatory, expropriation
or taxing authority under or for the account of any of the foregoing, including
any stock exchange or self-regulatory authority and, for greater certainty, the
securities regulatory authorities and the Exchange;
“
Issuance
” shall have the
meaning set out in Section 2.1;
“
Listing Date
” means the date
that the Common Shares are listed on an Exchange;
“
Milestone Notice
” shall have
the meaning set out in Section 3.2;
“
Notice Period
” shall have the
meaning set out in Section 2.3;
“
Offered Securities
” any equity
or voting securities, or securities convertible into or exchangeable for equity
or voting securities, of the Company;
“
Offering
” shall have the
meaning set out in Section 2.1;
“
Offering Notice
” shall have the
meaning set out in Section 2.1;
- 4 -
“
Participation
Right
”
shall have the meaning set out in Section 2.2;
“
Parties
” means the parties to
this Agreement and “
Party
” means one of them;
“
Person
” means any individual,
sole proprietorship, partnership, unincorporated association, unincorporated
syndicate, unincorporated organization, trust, company, corporation or other
body corporate, union, Governmental Authority and a natural person in his
capacity as trustee, executor, administrator, or other legal representative;
“
Quebec Project
” means the
Company’s construction of a cannabis production facility in Valleyfield, Quebec;
and
“
Subscription Agreement
” has the
meaning set out in the recitals hereto.
|
1.2
|
Rules of Construction
|
Except as may be otherwise specifically provided in this
Agreement and unless the context otherwise requires, in this Agreement:
|
|
(a)
|
the terms “Agreement”, “this Agreement”, “the Agreement”,
“hereto”, “hereof”, “herein”, “hereby”, “hereunder” and similar
expressions refer to this Agreement in its entirety and not to any
particular provision hereof;
|
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|
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|
(b)
|
references to an “Article” or “Section” followed by a
number or letter refer to the specified Article or Section to this
Agreement;
|
|
|
|
|
|
|
(c)
|
the division of this Agreement into articles and sections
and the insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation of this
Agreement;
|
|
|
|
|
|
|
(d)
|
words importing the singular number only shall include
the plural and vice versa and words importing the use of any gender shall
include all genders;
|
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|
|
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|
|
(e)
|
the word “including” is deemed to mean “including without
limitation”;
|
|
|
|
|
|
|
(f)
|
any reference to this Agreement means this Agreement as
amended, modified, replaced or supplemented from time to time;
|
|
|
|
|
|
|
(g)
|
any reference to a statute, regulation or rule shall be
construed to be a reference thereto as the same may from time to time be
amended, re-enacted or replaced, and any reference to a statute shall
include any regulations or rules made thereunder;
|
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|
|
(h)
|
all dollar amounts refer to Canadian dollars;
|
|
|
|
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|
|
(i)
|
all references to a percentage ownership of shares shall
be calculated on a non- diluted basis, unless otherwise
indicated;
|
- 5 -
|
|
(j)
|
any time period within which a payment is to be made or
any other action is to be taken hereunder shall be calculated excluding
the day on which the period commences and including the day on which the
period ends; and
|
|
|
|
|
|
|
(k)
|
whenever any action is required to be taken or period of
time is to expire on a day other than a Business Day, such action shall be
taken or period shall expire on the next following Business
Day.
|
This Agreement constitute the entire agreement between the
Parties with respect to the subject matter hereof and thereof and supersedes all
prior agreements, understandings, negotiations and discussions, whether written
or oral. There are no conditions, covenants, agreements, representations,
warranties or other provisions, express or implied, collateral, statutory or
otherwise, relating to the subject matter hereof except as provided in the
aforesaid agreements.
Time shall be of the essence of this Agreement.
|
1.5
|
Governing Law and Submission to
Jurisdiction
|
This Agreement shall be interpreted and enforced in accordance
with, and the respective rights and obligations of the Parties shall be governed
by, the laws of the Province of Ontario and the federal laws of Canada
applicable in that province.
Each of the Parties irrevocably and unconditionally (i) submits
to the exclusive jurisdiction of the courts of the Province of Ontario in the
City of Toronto over any action or proceeding arising out of or relating to this
Agreement, (ii) waives any objection that it might otherwise be entitled to
assert to the jurisdiction of such courts and (iii) agrees not to assert that
such courts are not a convenient forum for the determination of any such action
or proceeding.
If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid, illegal or unenforceable in any respect,
all other provisions of this Agreement shall nevertheless remain in full force
and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to either
Party hereto. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the Parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the Parties hereto as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
- 6 -
ARTICLE 2
PARTICIPATION RIGHT
Subject to Section 2.5, if the Company proposes to issue (an
“
Issuance
”) any Offered Securities for cash consideration pursuant to a
public offering or a private placement (an “
Offering
”) at any time after
the date hereof, the Company will, as soon as possible after the public
announcement of the Issuance (or, if no public announcement is to be made, as
soon as possible following board approval of the proposed Issuance), but in any
event not later than two Business Days following such public announcement or
board approval, and at least ten Business Days prior to the expected completion
date of the Issuance, give written notice of the Issuance (the “
Offering
Notice
”) to the Investor including, to the extent known by the Company, full
particulars of the Offering, including the number of Offered Securities, the
rights, privileges, restrictions, terms and conditions of the Offered
Securities, the price per Offered Security to be issued under the Offering, the
expected use of proceeds of the Offering and the expected closing date of the
Offering. Notwithstanding that an Issuance may be contingent, the Investor
acknowledges that the fact that the Company is contemplating an Offering may
constitute material information regarding the Company, and that the requirements
of Canadian securities laws or other applicable laws or rules, including the
rules of any Exchange, may restrict disclosure of the information and trading in
securities of the Company by those with knowledge of that information. If the
Offering Notice is being delivered in connection with a proposed best-efforts or
fully underwritten public offering (including an offering proposed on a “bought
deal” basis) through an agent or underwriter, the Offering Notice may include a
range for the size of the Offering (expressed in number of Offered Securities or
a dollar value), rather than a fixed number of Offered Securities, and may state
that the actual price per Offered Security shall be the offering price to be
agreed upon by the Company in the agency agreement, bid letter or underwriting
agreement, as the case may be, relating to the Offering.
|
2.2
|
Grant of Participation
Right
|
The Company agrees that, subject to Section 2.5 hereof, until
the Investor (directly or through an Affiliate) ceases to own at least 10% of
the Common Shares (calculated on a fully diluted basis), the Investor (directly
or through an Affiliate) has the right (the “
Participation Right
”), to
subscribe for and to be issued as part of an Offering at the subscription price
per Offered Security pursuant to the Offering and otherwise on substantially the
terms and conditions of the Offering, including that the purchase and sale of
the Offered Securities pursuant to the Participation Right shall close on the
same date as the completion of the Offering, unless otherwise agreed by the
Parties, and provided that, if the Investor is prohibited by Canadian securities
laws, Exchange rules or other applicable laws or rules from participating on
substantially the terms and conditions of the Offering, the Company shall use
commercially reasonable efforts to enable the Investor to participate on terms
and conditions that are as substantially similar as circumstances permit:
|
|
(a)
|
in the case of an Offering of Common Shares, up to such
number of Common Shares that will allow the Investor and its Affiliates,
on an aggregate basis, to maintain the percentage ownership interest in
the Common Shares held by the Investor and its Affiliates, on an aggregate
basis, prior to the Offering, after giving effect to such Offering
assuming conversion, exercise or exchange of all of
the convertible, exercisable or exchangeable securities of the
Company held by the Investor and its Affiliates; and
|
- 7 -
|
|
(b)
|
in the case of an Offering of Offered Securities (other
than Common Shares), up to such number of Offered Securities that will
(after giving effect to the Offering and assuming conversion, exercise or
exchange of all of the convertible, exercisable or exchangeable Offered
Securities issued in connection with the Offering and issuable pursuant to
this Section 2.2) allow the Investor and its Affiliates, on an aggregate
basis, to acquire, or maintain, as applicable, a percentage ownership
interest in the Common Shares that is equal to the percentage ownership
interest in the Common Shares held by the Investor prior to such Offering
(assuming conversion, exercise or exchange of all of the convertible,
exercisable or exchangeable securities of the
Company).
|
If the Investor wishes to exercise the Participation Right, the
Investor shall give written notice to the Company (the “
Exercise Notice
”)
of its intention to exercise such right and of the number of Offered Securities
the Investor wishes to purchase, and shall subscribe to the Offering within five
Business Days after the date of receipt of an Offering Notice, or in the case of
a public offering that is a “bought deal”, within two Business Days of receipt
of an Offering Notice (the “
Notice Period
”), failing which the Investor
will not be entitled to exercise the Participation Right in respect of such
Offering or Issuance.
|
2.4
|
Issuance of Participation Right Offered
Securities
|
|
|
(a)
|
If the Company receives an Exercise Notice from the
Investor within the Notice Period, then the Company
shall:
|
|
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(i)
|
subject to the receipt and continued effectiveness of all
required approvals (including any applicable approval(s) of the Exchange,
any required approvals under Canadian Securities Laws and any required
shareholder approval);
|
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|
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(ii)
|
subject to the issuance to the Investor or its Affiliate
of Common Shares or other Offered Securities being exempt from prospectus
and registration requirements under Canadian Securities Laws;
and
|
|
|
|
|
|
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(iii)
|
subject to the completion of the relevant
Offering,
|
issue to the Investor or its
Affiliate, against payment of the subscription price payable in respect thereof,
that number of Common Shares or other Offered Securities, as applicable, set
forth in the Exercise Notice. The parties agree that the issuance of any Common
Shares or other Offered Securities to the Investor pursuant to this Section 2.4
shall occur concurrently with the completion of the relevant Offering.
- 8 -
|
|
(b)
|
If the Company is required by the Exchange (if
applicable) or otherwise to seek shareholder approval for the issuance of
the Offered Securities to the Investor or its Affiliate, then the Company
shall call and hold a meeting of its shareholders to consider the issuance
of the Offered Securities to the Investor or its Affiliate as soon as
reasonably practicable, and in any event such meeting shall be held within
75 days after the date that the Company is advised that it will require
shareholder approval, and shall recommend approval of the issuance of the
Offered Securities and shall solicit proxies in support
thereof.
|
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2.5
|
Issuances Not Subject to Participation
Rights
|
The following Issuances will not give rise to a Participation
Right:
|
|
(a)
|
Issuances for compensatory purposes to directors,
officers, employees of or consultants to the Company and its Affiliates
pursuant to a security-based compensation plan of the Company that
complies, as applicable, with the requirements of the Exchange;
|
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(b)
|
pursuant to the exercise of convertible securities of the
Company issued in an Offering in respect of which the Investor had a
Participation Right or that have been issued and granted as of the date
hereof; or
|
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(c)
|
pursuant to any plan of arrangement, merger, business
combination, take-over bid or other acquisition of the business,
securities or assets of a third party.
|
ARTICLE 3
MISCELLANEOUS
|
3.1
|
Nomination of Director(s)
|
For as long as the Investor owns at least 10% of the Common
Shares of the Company (calculated on a fully diluted basis), the Investor shall
be entitled to nominate one (1) director to the Board and for so long as the
Investor owns greater than or equal to 31% of the Common Shares of the Company
(calculated on a fully diluted basis), the Investor shall be entitled to
nominate two (2) persons to the Board, provided that each director nominee shall
be a Canadian resident and shall meet the requirements of applicable corporate,
securities and other laws and the rules of the Exchange. If permitted by
applicable law and Exchange rules, the Company shall appoint such director(s) to
the board. In respect of any meeting of shareholders at which directors are to
be elected, the Company shall take all actions necessary and advisable to ensure
that (i) proxies are solicited by or on behalf of the Company in favour of the
election of the director nominees nominated in accordance with this Section 3.1
and (ii) every such nominee is endorsed and recommended in the applicable
management information circular and other proxy solicitation materials provided
by or on behalf of the Company to shareholders. The Company shall take all other
commercially reasonable actions necessary to permit the election or appointment
to the Board of such nominees. The Company shall notify the Investor when such
thresholds are achieved, and at least 20 Business Days prior to the
dissemination of materials for an annual meeting of shareholders, to allow the
Investor to identify its nominees (which the Investor shall provide to the Company at least five (5) Business Days prior to
the dissemination of such materials).
- 9 -
The Investor shall have the option to purchase additional
Common Shares (the “
Milestone Options
”) from treasury of the Company upon
the achievement of the following milestones (the “
Milestones
”):
|
|
(a)
|
a number of Common Shares equal to 8% of the issued and
outstanding Common Shares (calculated on a fully diluted basis), three (3)
months after the Listing Date;
|
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(b)
|
a number of Common Shares equal to 8% of the issued and
outstanding Common Shares (calculated on a fully diluted basis) if the
Company’s Quebec Project is permitted and construction of the Quebec
Project has reached 50% completion, as determined based on the
construction budget of the Quebec Project;
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(c)
|
a number of Common Shares equal to 8% of the Common
Shares (calculated on a fully diluted basis) upon the Quebec Project
receiving a license to cultivate cannabis in accordance with the Access to
Cannabis for
Medical Purposes Regulations
or the
Cannabis
Act
; and
|
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(d)
|
a number of Common Shares equal to 12% of the Common
Shares (calculated on a fully diluted basis) when the Company completes an
aggregate of $100,000,000 in sales.
|
In addition, the option pursuant to Milestones (b) through (d)
shall be conditional on achievement of a second trigger, being that they cannot
be exercise prior to the Listing Date; therefore, each of such Milestones will
be considered achieved when (i) the applicable event respectively specified in
Milestones (b) through (d) has occurred, and (ii) the Company’s Common Shares
are listed on the Exchange. The price for Common Shares issued pursuant to this
Section 3.2 shall be based on: (i) if the Milestone is achieved after the
Listing Date, the volume-weighted average trading price for the 10 consecutive
trading days following the achievement of the relevant Milestone; or (ii) if the
Milestone is achieved prior to the Listing Date, the volume-weighted average
trading price for the 20 consecutive trading days following the Listing Date, in
either case minus a discount of 10%.
The Company shall provide a notice (the “
Milestone
Notice
”) to the Investor within five (5) Business Days of the achievement of
each Milestone. If the Investor does not exercise any one of the Milestone
Options within 30 days after the date of the Milestone Notice, then that
Milestone Option and all remaining Milestone Options will expire.
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3.3
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Right of First Refusal
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Robert Anderson (the “
ROFR Party
”) has a right of first
refusal to acquire any Common Shares proposed to be sold by the Investor or any
of its Affiliates for a period of three (3) years from the date of the closing
of the Offering.
- 10 -
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(a)
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If at any time the Investor proposes to sell, assign,
encumber, hypothecate, pledge, convey in trust, gift, transfer by bequest,
devise or descent, or other transfer or disposition of any kind,
including, without limitation, transfers to receivers, levying creditors,
trustees or receivers in bankruptcy proceedings or general assignees for
the benefit of creditors, whether voluntarily, involuntarily or by
operation of law, directly or indirectly (“
Transfer
”), any Common
Shares or securities of the Company convertible into or exchangeable or exercisable
for Common Shares, then the Investor shall promptly give the Company and
the ROFR Party written notice of the Investor’s intention (the
“
Transfer Notice
”). The Transfer Notice shall include (i) a
description of the securities to be transferred (the “
Transferred
Securities
”), (ii) the name(s) and address(es) of the prospective
transferee(s), if known, (iii) the purchase price and form of
consideration proposed to be received for the Transferred Securities, or
an approximation thereof if not certain, and (iv) the other material terms
and conditions upon which the proposed Transfer is to be made. The
Transfer Notice shall include a copy of any written proposal, term sheet
or letter of intent or other agreement relating to the proposed
Transfer.
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(b)
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The ROFR Party shall have an option for a period of ten
(10) Business Days from delivery of the Transfer Notice to elect to
purchase the Transferred Securities at the same price and subject to the
same material terms and conditions as described in the Transfer Notice.
The ROFR Party may exercise such purchase option and purchase all or any
portion of the Transferred Securities by notifying the Investor in writing
before expiration of such period as to the number of Transferred
Securities that he (and such other designated shareholders as contemplated
by Section 3.3(d) hereof) wishes to purchase. If the ROFR Party gives the
Investor notice that he and/or his designees desire to purchase such
shares, then payment for the Transferred Securities shall be made by bank
draft or wire transfer against delivery of the Transferred Shares to be
purchased at a time and place agreed upon between the ROFR Party and the
Investor, which time shall be no later than thirty (30) days after
delivery to the ROFR Party of the Transfer Notice, unless the Transfer
Notice contemplated a later closing with the prospective transferee(s) or
unless the value of the consideration to be paid for the Transferred
Shares has not yet been established pursuant to Section 3.3(c). For
greater certainty, if the ROFR Party does not notify the Investor in
writing of its decision to exercise the right of first refusal set forth
in this Section 3.3 within the 10 Business Day period contemplated hereby,
such right shall expire in respect of the Transfer contemplated by the
Transfer Notice and the Investor may proceed to Transfer the Transferred
Securities to the prospective transferee(s) specified in the Transfer
Notice.
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(c)
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Should the purchase price specified in the Transfer
Notice be payable in a form of consideration other than cash or evidences
of indebtedness, the ROFR Party and/or his designees, as applicable, shall
have the right to pay such purchase price in an amount of cash equal to
the fair market value of such consideration. If the ROFR Party and the
Investor cannot agree on such fair market value within ten (10) days after
delivery to the ROFR Party of the Transfer Notice, the valuation shall be
made by an appraiser of recognized standing selected by the Investor and
the ROFR Party or, if they cannot agree on an appraiser within twenty (20)
days after delivery to the ROFR Party of the Transfer Notice, each shall select an
appraiser of recognized standing and those appraisers shall designate a third
appraiser of recognized standing, whose appraisal shall be determinative of such
value. The cost of such appraisal shall be shared equally by the Investor and
the ROFR Party. If the time for the closing of the ROFR Party’s purchase has
expired but the determination of the value of the purchase price offered by the
prospective transferee(s) has not been finalized, then such closing shall be
held on or prior to the fifth Business Day after such valuation shall have been
made pursuant to this Section 3.3(c) .
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- 11 -
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(d)
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The Investor intends to constitute the ROFR Party as
trustee, in respect of the rights contained in this Section 3.3, for such
shareholders of the Company as the ROFR Party shall, in his sole
discretion, designate, and the ROFR Party agrees to hold those rights in
trust and to enforce such rights on behalf of such
shareholders.
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Except with the prior written consent of the Board, which
consent may be given on such terms and conditions as the Board may determine,
for a period 18 months from the Listing Date, neither the Investor nor any of
its Affiliates shall:
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(a)
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in any manner acquire, agree to acquire or make any
proposal or offer to acquire, directly or indirectly, any unissued or
outstanding securities of the Company;
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(b)
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propose or offer to enter into, directly or indirectly,
any amalgamation, plan of arrangement, merger or business combination
involving the Company or to purchase, directly or indirectly, a material
portion of the property or assets of the Company;
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(c)
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directly or indirectly “solicit” or participate or join
with any person in the “solicitation” of any “proxies” (as such terms are
defined in the
Securities Act
(Ontario)) to vote, or seek to influence any person with
respect to the voting of, any voting securities of the Company;
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(d)
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otherwise act alone or jointly or in concert with others
to seek to control or to influence the management, the board of directors
or policies of the Company;
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(e)
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make any public or private disclosure of any
consideration, intention, plan or arrangement inconsistent with any of the
foregoing; or
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(f)
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advise, assist, encourage or act jointly or in concert
with any other person in connection with any of the
foregoing.
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This Agreement shall terminate on the date that Investor and
its Affiliates collectively own, directly or indirectly, less than 10% of the
issued and outstanding Common Shares (calculated on a fully diluted basis).
- 12 -
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(a)
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Any notice or other communication required or permitted
to be given hereunder shall be in writing and shall be delivered in
person, transmitted by e-mail or similar means of recorded electronic
communication or sent by registered mail, charges prepaid, addressed as
follows:
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(i)
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in the case of the Investor:
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Aurora Cannabis Inc.
1500 1199
West Hastings Street
Vancouver, BC V6E 3T5
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Attention:
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Terry Booth
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Email:
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terry@auroramj.com
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With a copy to:
Brownlee LLP
2200 10155 102
St.
Edmonton, AB T5J 4G8
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Attention:
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Jillian Swainson
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Email:
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jswainson@brownleelaw.com
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(ii)
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in the case of the Company:
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The Green Organic Dutchman Holdings
Ltd.
6205 Airport Rd., 3rd Floor
Mississauga, ON L4V 1E1
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Attention:
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Rob Anderson
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Email:
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randerson@tgod.ca
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With a copy to:
Torys LLP
79 Wellington St. W.,
Suite 3000
TD South Tower, Toronto, ON M5K 1N2
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Attention:
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Scott Cochlan
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Email:
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scochlan@torys.com
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(b)
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Any such notice or other communication shall be deemed to
have been given and received on the day on which it was delivered or
transmitted (or, if such day is not a Business Day or if delivery or
transmission is made on a Business Day after 5:00 p.m. local time at the
place of receipt, then on the next following Business Day) or, if mailed,
on the third Business Day following the date of
mailing; provided, however, that if at the time of mailing or within
three Business Days thereafter there is or occurs a labour dispute or other
event which might reasonably be expected to disrupt the delivery of documents by
mail, any notice or other communication hereunder shall be delivered or
transmitted by means of recorded electronic communication as aforesaid.
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- 13 -
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(c)
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Any Party may at any time change its address for service
from time to time by giving notice to the other Party in accordance with
this Section 3.6.
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3.7
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Amendments and Waivers
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No amendment or waiver of any provision of this Agreement shall
be binding on any Party unless consented to in writing by such Party. No waiver
of any provision of this Agreement shall constitute a waiver of any other
provision, nor shall any waiver of any provision of this Agreement constitute a
continuing waiver unless otherwise expressly provided.
No Party may assign any of its rights or benefits under this
Agreement, or delegate any of its duties or obligations, except with the prior
written consent of the other Parties, such consent to be in their sole
discretion. Notwithstanding the forgoing, the Parties agree that Investor may
assign this Agreement to an Affiliate provided that Investor agrees to remain
bound by the terms of this Agreement.
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3.9
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Successors and Assigns
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This Agreement shall enure to the benefit of and shall be
binding on and enforceable by and against the Parties and their respective
successors or heirs, executors, administrators and other legal personal
representatives, and permitted assigns.
Except as otherwise expressly provided in this Agreement, each
Party will pay for its own costs and expenses incurred in connection with the
negotiation, preparation, execution and performance of this Agreement and the
transactions contemplated herein, including the fees and expenses of legal
counsel, financial advisors, accountants, consultants and other professional
advisors.
Each of the Parties hereto shall, from time to time hereafter
and upon any reasonable request of the other, promptly do, execute, deliver or
cause to be done, executed and delivered all further acts, documents and things
as may be required or necessary for the purposes of giving effect to this
Agreement.
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3.12
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Right to Injunctive Relief
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The Parties agree that any breach of the terms of this
Agreement by any of the Parties may result in immediate and irreparable injury
and damage to the other Parties which may not be adequately compensated by damages. The Parties therefore also agree that
in the event of any such breach or any anticipated or threatened breach by the
defaulting Party, the other Parties shall be entitled to seek equitable relief,
including by way of temporary or permanent injunction or specific performance,
in addition to any other remedies (including damages) to which such other
Parties may be entitled at law or in equity.
- 14 -
This Agreement may be executed and delivered in any number of
counterparts, by facsimile copy, by electronic or digital signature or by other
written acknowledgement of consent and agreement to be legally bound by its
terms. Each counterpart when executed and delivered will be considered an
original but all counterparts taken together constitute one and the same
instrument.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF this Agreement has been executed by the
Parties on the date first above written.
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AURORA CANNABIS INC.
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By:
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Name:
Terry
Booth
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Title: Chief Executive
Officer
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THE GREEN ORGANIC DUTCHMAN
HOLDINGS LTD.
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By:
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Name: Robert Anderson
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Title: Chief Executive Officer
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Robert Anderson
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INVESTOR RIGHTS AGREEMENT
IN WITNESS WHEREOF this Agreement has been executed by the
Parties on the date first above written.
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AURORA CANNABIS INC.
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By:
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Name: Terry Booth
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Title: Chief Executive Officer
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THE GREEN ORGANIC DUTCHMAN
HOLDINGS LTD.
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By:
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Name: Robert
b A
Anderson
d
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Title: Chief Executive Officer
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Robert Anderson
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INVESTOR RIGHTS AGREEMENT
Aurora Cannabis Makes Key Leadership Appointments for
Science Division
Dr. Shane Morris Appointed Vice President Product Development
and Regulatory Affairs
Dr. Kelly Narine Appointed Vice President of
Research
TSX: ACB
EDMONTON, March 1, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora")
(TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today announced the
appointments of Dr. Shane Morris as Vice President Product Development and
Regulatory Affairs, and that of Dr. Kelly Narine as Vice President of
Research.
The appointments are part of Aurora`s continued initiative to
develop a dedicated scientific division, tasked with the development and launch
of new technologies and products, as well as to conduct advanced scientific
research. Aurora expects that the division's initiatives will create novel,
higher-margin products and revenue streams that are safe and backed by rigorous
scientific research/testing.
Vice President Product Development and Regulatory
Affairs
In this newly created role, Dr. Morris will be responsible for
the development and market introduction of new cannabis products, as well as
provide strategic, regulatory leadership on all new cannabis products. The
appointment of Dr. Morris reflects Aurora`s commitment to rigorous science-based
innovation, driving the launch of higher-margin cannabis-based products for both
the medical market and the adult consumer use market, once legalized. The
Company, which is one of the leading suppliers to the Canadian and international
medical cannabis markets, anticipates strong growth, driven in part by new
adopters of cannabis-based products, and believes that new formulations and drug
delivery methods will be key elements in driving competitive
differentiation.
Dr. Morris, an experienced executive in the cannabis industry
since 2015, was previously part of the senior leadership team at Hydropothecary,
a Quebec based licensed producer. His proven expertise in quality assurance,
cannabis operations, regulatory affairs and science will prove essential in
bringing new cannabis products to market efficiently and effectively. Prior to
his activities in the cannabis industry, Dr. Morris had fifteen years of
experience at the science and policy interface, working on high-profile risk
issues within the Canadian Federal Government. He has held senior positions
and/or executive appointments at the Canadian Food Inspection Agency, Public
Health Agency of Canada, Natural Resources Canada and Treasury Board
Secretariat, where he advised cabinet on regulatory issues. Dr. Morris holds a
doctorate from the National University of Ireland in biotechnology and
publishes/lectures widely on regulation, risk and policy.
Vice President of Research
Dr. Narine will be leading the Company's research innovation
and research partnerships portfolios. Her work will be focused on human health
outcomes, product safety, plant biotechnology, and early product development
& testing. Dr. Narine has deep expertise in successfully translating
promising research into positive human health outcomes. Her appointment and the
initiatives that the Company intends on undertaking will drive the development
of a significant pipeline of science-based and -backed offerings, which
management believes will resonate strongly with the large and rapidly growing
domestic and international cannabis markets.
Dr. Narine received her PhD in Medical Genetics from the
University of Alberta where she studied molecular and cellular changes in
pathways of carcinogenesis. Subsequently, she worked in the life sciences
industry in Edmonton in the areas of clinical affairs and quality assurance,
ultimately as Director of Clinical Affairs at Afexa Life Sciences, Inc.
Transitioning back into academia at the University of Alberta, Kelly managed two
province-wide interdisciplinary research and education programs, the first in
Cardiology and the subsequent program in Oncology. Most recently, she was the
Director of Operations for two Translational Science Institutes at the
University of Alberta: the Neuroscience and Mental Health Institute and the
Cancer Research Institute of Northern Alberta.
CanniMed – Aurora Medical Cannabis Centre of
Excellence
With completion of the CanniMed acquisition anticipated
shortly, the Company will be able to accelerate the build up of its medical
science division. The Company intends for CanniMed's Saskatchewan operations to
become Aurora`s Medical Cannabis Centre of Excellence. Dr. Morris and Dr. Narine
will co-ordinate efforts and work closely with the CanniMed science team on new
medical initiatives.
Management commentary
"These key appointments reflect our commitment to a
science-based approach to innovation, product and technology development," said
Terry Booth, CEO. "Our intention is to develop a strong pipeline of new,
higher-margin revenue streams to capitalize on the tremendous opportunity in the
medical cannabis and adult consumer use markets. Science and innovation are
cornerstones of our global growth strategy, and with Shane and Kelly we now have
highly experienced leadership for the science division. Furthermore, once
completed, the CanniMed acquisition will provide a strong foundation to build
our medical science division on, and help further differentiate and diversify
our product offering."
Dr. Morris added "I am thrilled to join the Aurora team, a
frontrunner in the cannabis industry in Canada and globally. I look forward to
the exciting opportunity to develop and launch new products for existing and new
markets across the globe, and help Aurora's continued rapid growth."
Dr. Narine added, "To join the innovation leader in this
sector, and help develop new offerings with positive human health outcomes, as
well as work on the early-stage development of new technologies for a market
that has proven to be exceptionally receptive, is extremely exciting. I look
forward to working with the Aurora team and helping to advance our scientific
leadership in the sector.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", and a second 40,000 square
foot high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a fourth facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Ltd.
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company owns 51% of Aurora Nordic, which will be constructing a 1,000,000
square foot hybrid greenhouse in Odense, Denmark. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens.
Aurora holds a 19.88% ownership interest in Liquor Stores N.A.,
who intend developing a cannabis retail network in Western Canada. In addition,
the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc., and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian producer The Green Organic Dutchman Ltd., with options
to increase to majority ownership.
Aurora's common shares trade on the TSX under the symbol "ACB".
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"), including, but not limited to, statements with
respect to the performance of the Company. Forward-looking statements are
frequently characterized by words such as "plan", "continue", "expect",
"project", "intend", "believe", "anticipate", "estimate", "may", "will",
"potential", "proposed" and other similar words, or statements that certain
events or conditions "may" or "will" occur. These statements are only
predictions. Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking statements throughout this news
release. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accept responsibility
for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:http://www.newswire.ca/en/releases/archive/March2018/01/c8898.html
%SEDAR: 00025675E
For further information:
For Aurora: Cam Battley, Chief
Corporate Officer, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc
Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.269.5523, marc.lakmaaker@auroramj.com
CO: Aurora Cannabis Inc.
CNW 17:00e 01-MAR-18
Aurora completes $230 million convertible debenture
offering
TSX: ACB
VANCOUVER, March 9, 2018 /CNW/ - Aurora Cannabis Inc.
("
Aurora
") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today
announced that, further to its news release dated January 5, 2018, the Company
has completed its bought deal offering for gross proceeds of $230
million, including the exercise, in full, of the Underwriters' over-allotment
option (the "Offering"), comprised of 5% unsecured convertible debentures (the
"Debentures") of Aurora at the issue price of $1,000 per Debenture, with
a syndicate of underwriters, led by Canaccord Genuity Corp. and PI Financial
Corp., including Beacon Securities Limited, Eight Capital, GMP Securities L.P.
and Mackie Research Capital Corporation (collectively, the "Underwriters").
The Convertible Debentures will have a maturity date of two
years from the closing date of the Offering (the "Maturity Date") and will bear
interest from the date of closing at 5.0% per annum, payable semi-annually on
June 30 and December 31 of each year. The Convertible Debentures will be
convertible, at the option of the holder, into common shares of the Company
("Common Shares") at any time prior to the close of business on the last
business day immediately preceding the Maturity Date at a conversion price of
$13.05 per Common Share (the "Conversion Price"). The Company may force the
conversion of the principal amount of the then outstanding Convertible
Debentures at the Conversion Price on not less than 30 days' notice should the
daily volume weighted average trading price of the Common Shares be greater than
$17.00 for any 10 consecutive trading days. Further details on the debentures
can be found in the Company's filings on www.sedar.com.
The Company intends to use the net proceeds of the Offering for
various investment purposes to drive further growth, including part of the cash
portion of the CanniMed Therapeutics Inc. acquisition, part of the Company's
contribution to the construction cost of the planned 1,000,000 square foot
cannabis production facility Aurora Nordic in Denmark, as well as other domestic
and international opportunities.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", and a second 40,000 square
foot high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a fourth facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Ltd.
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company owns 51% of Aurora Nordic, which will be constructing a 1,000,000
square foot hybrid greenhouse in Odense, Denmark. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens.
Aurora holds a 19.88% ownership interest in Liquor Stores N.A.,
who intend to develop a cannabis retail network in Western Canada. In addition,
the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc., and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian producer The Green Organic Dutchman Ltd., with options
to increase to majority ownership.
Aurora's Common Shares trade on the TSX under the symbol "ACB".
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this
release.
SOURCE Aurora Cannabis Inc.
View original content:http://www.newswire.ca/en/releases/archive/March2018/09/c3876.html
%SEDAR: 00025675E
For further information:
Cam Battley, Chief Corporate
Officer, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc Lakmaaker,
Director, Investor Relations and Corporate Development, +1.647.269.5523, marc.lakmaaker@auroramj.com
CO:Aurora Cannabis Inc.
CNW 08:31e 09-MAR-18
Aurora Cannabis Added to S&P/TSX Composite Index
EDMONTON, March 12, 2018 /CNW/ - Aurora Cannabis Inc.
("
Aurora
") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today
announced that the Company, effective Monday March 19, 2018, will be added to
the S&P/TSX Composite Index, the primary gauge for Canadian-based, Toronto
Stock Exchange listed companies.
The S&P/TSX Composite Index consists of the largest
Canadian companies by market capitalization and liquidity. Inclusion in the
index broadens a company's addressable institutional investor universe,
including index tracker funds and similar vehicles.
"Inclusion in the index just over two years after commencing
commercial operations is a reflection of our exceptional pace of growth and
shareholder value creation, and a testament to the Aurora Standard, which
represents excellence in execution and customer care," said Terry Booth, CEO.
"This latest milestone will further expand our retail and institutional investor
audience and further enhance Aurora's liquidity, as we continue to execute
diligently on our global expansion strategy."
For more information on the S&P/TSX Composite Index go to
https://ca.spindices.com/indices/equity/sp-tsx-composite-index
Director Resignation
Aurora also announced today that Joseph del Moral has resigned
his position as Director of the Company to pursue a non-cannabis related
opportunity. Mr. del Moral, who also resigned from his position as CEO of
CanvasRx, will continue to assist both Aurora and CanvasRx during a
transitionary period, and will remain available to the Company as an
advisor.
"We are sad to see Joseph leave but are grateful for the
important role he has played in the development of Aurora, and are pleased that
he has agreed to continue supporting Aurora as an advisor," said Terry Booth.
"We wish Joseph great success with his new venture."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", and a second 40,000 square
foot high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a fourth facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Ltd.
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company owns 51% of Aurora Nordic, which will be constructing a 1,000,000
square foot hybrid greenhouse in Odense, Denmark. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens.
Aurora holds a 19.88% ownership interest in Liquor Stores N.A.,
who intend to develop a cannabis retail network in Western Canada. In addition,
the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc., and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian producer The Green Organic Dutchman Ltd., with options
to increase to majority ownership.
Aurora's Common Shares trade on the TSX under the symbol "ACB".
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:http://www.newswire.ca/en/releases/archive/March2018/12/c7388.html
%SEDAR: 00025675E
For further information:
Cam Battley, Chief Corporate
Officer, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc Lakmaaker,
Director, Investor Relations and Corporate Development, +1.647.269.5523,marc.lakmaaker@auroramj.com
CO:Aurora Cannabis Inc.
CNW 07:00e 12-MAR-18
Cannabis Exports Dried Cannabis Flower and Oils to Australia
for Novel Nose-to-Brain Drug Delivery Research by PreveCeutical
TSX: ACB CSE: PREVE
EDMONTON and VANCOUVER, March 13, 2018 /CNW/ - Aurora Cannabis
Inc. ("
Aurora
") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
and PreveCeutical Medical Inc. ("
PreveCeutical
") (CSE: PREV, OTCQB:
PRVCF, Frankfurt: 18H) today announced the grant of three permits by the
Australian Government, Department of Health, for the importation of cannabis
into Australia for research purposes (the "
Permits
"). The Permits were
granted to the Pharmacy Australia Centre of Excellence ("
PACE
") at the
University of Queensland ("
UQ
") and allow PACE to import shipments of
cannabis plant material for research purposes. Aurora, in turn, has received the
required Canadian permits to export the cannabis to PACE.
The cannabis will be shipped from Canada by Aurora and used for
PreveCeutical's soluble gel ("
Sol-gel
") drug delivery research program
(the "
Program
"), which is being conducted by PreveCeutical's research
partner UniQuest Pty Inc. and led by PreveCeutical's Chief Research Officer, Dr.
Harendra Parekh. The Program aims to develop a system that will increase the
bioavailability of drugs by using a nose-to-brain delivery system.
PreveCeutical intends to apply Sol-gel technology to
cannabinoids to develop therapies for relief from a range of symptoms, including
pain, inflammation, seizures and neurological disorders (see news release dated
April 24, 2017). The Permits will enable PreveCeutical to test an array of
cannabis strains for the development and commercialisation of cannabinoid-based
Sol-gels. The advantages of Sol-gels over conventional liquid nasal sprays
relate to longer therapeutic effects, reduced dosage requirements, and reduced
irritation and other negative side effects.
In consideration of the shipment, Aurora has received certain
rights, including the option to either license, on a non-exclusive basis, the
technology for Canada and Australia, or to opt for a royalty arrangement on
product sales, as well as to purchase shares in PreveCeutical.
"We see an important market for cannabis-based products that
are more narrowly targeted at specific therapeutic areas but that are higher
value add and being involved with initiatives such as PreveCeutical's is part of
our strategy to gain access to these types of products," said Terry Booth, CEO
of Aurora.
PreveCeutical's CEO and Chairman, Mr. Stephen Van Deventer
added, "We are extremely excited to receive the Permits, allowing us to further
our Sol-gel research program with the high quality cannabis products provided by
Aurora. The goal of the Program is to cultivate a range of therapies that will
benefit people with ailments such as epilepsy, pain and inflammation, safely and
economically."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", and a second 40,000 square
foot high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a fourth facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Ltd.
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company owns 51% of Aurora Nordic, which will be constructing a 1,000,000
square foot hybrid greenhouse in Odense, Denmark. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens.
Aurora holds a 19.88% ownership interest in Liquor Stores N.A.,
who intend to develop a cannabis retail network in Western Canada. In addition,
the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc., and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian producer The Green Organic Dutchman Ltd., with options
to increase to majority ownership.
Aurora's Common Shares trade on the TSX under the symbol
"ACB".
About PreveCeutical
PreveCeutical is a health sciences company that develops
innovative options for preventive and curative therapies utilizing organic and
nature identical products.
PreveCeutical aims to be a leader in preventive health sciences
and currently has five research and development programs, including: dual
gene therapy for curative and prevention therapies for diabetes and
obesity; the Sol-gel Program; Nature Identical
™
peptides for
treatment of various ailments; non-addictive analgesic peptides as a replacement
to the highly addictive analgesics such as morphine, fentanyl and oxycodone; and
a therapeutic product for treating athletes who suffer from concussions (mild
traumatic brain injury).
PreveCeutical sells CELLB9
®
, an Immune System
Booster. CELLB9
®
is an oral solution containing polarized and
potentiated essential minerals extracted from a novel peptide obtained from
Caribbean Blue Scorpion venom. This product is available on the Company's
website.
For more information about PreveCeutical, please visit
https://preveceutical.com/, follow us on Twitter:
https://twitter.com/PreveCeuticals and Facebook:
www.facebook.com/PreveCeutical.
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
PREVECEUTICAL MEDICAL INC.
Stephen Van Deventer
Chairman & CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/March2018/13/c6493.html
%SEDAR: 00025675E
For further information:
Aurora - Cam Battley, Chief
Corporate Officer, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc
Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.269.5523, marc.lakmaaker@auroramj.com; PreveCeutical -Deanna Kress,
Director of Corporate Communications & Investor Relations, +1.778.999.6063,
deanna@PreveCeutical.com
CO: Aurora Cannabis Inc.
CNW 08:00e 13-MAR-18
Aurora Acquires CanniMed and Commences Integration
TSX: ACB
EDMONTON, March 15, 2018 /CNW/ - Aurora Cannabis Inc.
("
Aurora
") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
announced today that it has completed its initial take up of the common shares
("
CanniMed Shares
") of CanniMed Therapeutics Inc. ("
CanniMed
")
pursuant to its offer (the "
Offer
") to purchase all of the issued and
outstanding CanniMed Shares.
On March 12, 2018, Aurora took up 21,309,517 CanniMed Shares
representing 86.8% of the total outstanding CanniMed Shares on a fully diluted
basis which, together with shares purchased in the market prior to the expiry of
the Offer by Aurora, represents 87.1% of the outstanding CanniMed Shares. In
consideration for the CanniMed Shares taken up on March 12, 2018, Aurora issued
approximately 62.8 million Aurora common shares as share consideration and paid
cash consideration of approximately $121.5 million.
Shareholders of CanniMed who tendered before the original
expiry of the Offer on March 9, 2018, predominantly elected to receive cash.
Based on shares tendered before the original expiry date, shareholders who
elected all cash will, on a pro rated basis, receive approximately $5.9952 per
share in cash and approximately 2.9253 common shares of Aurora. If not already
received, former CanniMed shareholders should receive their Aurora shares and
cash payments in the next few days.
Remaining shareholders of CanniMed must tender their CanniMed
Shares under the Offer by 11:59 pm (Pacific Time) on March 25, 2018. There is no
guarantee that Aurora will further extend the Offer after March 25, 2018, and
CanniMed shareholders are encouraged to tender as soon as possible.
Integration of CanniMed
With Aurora now owning a controlling interest in CanniMed,
integration into the Aurora organization has commenced under the leadership of
Andre Jerome, SVP Business Integration. Mr. Jerome is working with the
integration section heads at Aurora and their respective counterparts at
CanniMed to facilitate a smooth, seamless and rapid integration, and to execute
quickly on realizing the strategic synergies identified.
The objective for the integration is to leverage the best
practices, capabilities, resources, distribution networks, partnerships and
technologies available through Aurora to accelerate development of CanniMed's
strategic initiatives. Conversely, CanniMed's strong medical presence, science
base and product development capabilities will form the foundation of the
combined companies' Medical Cannabis Centre of Excellence. Aurora anticipates
that execution on these objectives will drive strong growth of the Company's
activities in the domestic and international medical cannabis markets.
Management commentary
"Having completed our initial uptake for an acquisition we
anticipate to be strongly accretive, we are issuing approximately 25% fewer
shares than would have been the case under our original offer, had all CanniMed
shareholders elected the all-share consideration option," said Terry Booth, CEO.
"Our integration efforts will focus on four key areas to drive further growth:
increase production, develop new, commercially valuable intellectual property,
drive growth of our international business, and accelerate patient registration
in Canada. We are very excited about the combination, and having met with the
talented, energetic and motivated team at CanniMed, we are confident of
executing the integration to the Aurora Standard."
CanniMed, has a nearly two-decade track record servicing the
medical cannabis market. Its consistently high product quality, education
efforts, clinical trials, and product development have resulted in a strong
brand recognition among physicians. Aurora will now accelerate a number of
strategic initiatives, the key objectives of which are to:
|
1.
|
Rapidly Increase Production Capacity, including
derivatives.
|
|
|
a.
|
Increase current production capacity by leveraging
Aurora`s best practices.
|
|
|
b.
|
Leverage the capabilities of ALPS (Aurora Larssen
Projects Ltd) to accelerate construction and commissioning of CanniMed`s
expansion that, at full capacity, should result in an estimated 17,000 kg
to 21,000 kg per annum of total production capacity.
|
|
|
c.
|
Accelerate construction of the previously announced (by
CanniMed) cannabis oils processing facility, with a design capacity of up
to 720,000 liters of annual oil production. Leveraging this capacity and
the extraction capabilities of RTI will position Aurora as leader in
cannabis and hemp extraction capacity.
|
|
2.
|
Complete EU GMP certification of CanniMed's existing
facility. Aurora will apply its experience through ALPS and Pedanios to
fast track EU GMP certification, which would enable Aurora to significantly
increase shipments of cannabis for the international medical
markets.
|
|
3.
|
Leverage CanniMed's and Aurora's international
distribution networks to develop existing and penetrate new international
markets. To date, the companies are active in Canada, Germany, Denmark,
Italy, Cayman Islands, Australia and South Africa, and actively pursuing
market entry into additional countries.
|
|
4.
|
Accelerate CanniMed's patient registration through
CanvasRx.
|
|
5.
|
Conversely, leverage CanniMed's relationship with over
5,000 physicians to broaden market reach for Aurora's medical products.
Unlike most other licensed producers, CanniMed has not used patient
aggregators, but, over the years, built a network of physicians
prescribing CanniMed oils through outreach and education. This organic
growth has proven very cost effective and has built a very solid base
fromwhich to drive further growth.
|
|
6.
|
Market and develop new, high-margin, standardized dosage
forms, including capsules, sub-lingual wafers and topical applications
(CanniMed recently successfully launched a topical cream).
|
|
7.
|
Engage in clinical and scientific research to develop
new, high value-add product lines and increase the recognition of the
combined entity among the international medical community.
|
|
8.
|
Leverage the combined entity's expanded genetics
portfolio to provide complimentary products to both companies' patient
bases.
|
|
9.
|
Evaluate opportunities to leverage CanniMed`s
Saskatchewan presence for penetration of the adult consumer use market in
the province.
|
The combined entity
The transaction creates one of the largest Licensed Producers
with an expanding international footprint. The table below provides key data on
the combined entity.
|
Funded capacity
|
283,000 kg per year
|
|
Patients
|
45,804
|
|
Last reported quarter -
combined revenues
|
$16.5M
|
|
Employees
|
> 750
|
|
Geographic presence
|
7 countries and expanding
|
|
Revenue market share of top 15 public LPs
(latest comparable
publicly disclosed quarter)
|
23.1%
|
|
Genetics
|
Expanded genetics portfolio
|
|
Clinical research
|
5 studies
|
The Company will provide more information as the integration
process progresses.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", and a second 40,000 square
foot high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a fourth facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Ltd.
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company owns 51% of Aurora Nordic, which will be constructing a 1,000,000
square foot hybrid greenhouse in Odense, Denmark. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens.
Aurora holds a 19.88% ownership interest in Liquor Stores N.A.,
who intend to develop a cannabis retail network in Western Canada. In addition,
the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc., and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian producer The Green Organic Dutchman Ltd., with options
to increase to majority ownership.
Aurora's Common Shares trade on the TSX under the symbol "ACB".
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
This news release ("News Release") includes statements
containing certain "forward-looking information" within the meaning of
applicable securities law ("forward-looking statements"). Forward-looking
statements are frequently characterized by words such as "plan", "continue",
"expect", "project", "intend", "believe", "anticipate", "estimate", "may",
"will", "potential", "proposed" and other similar words, or statements that
certain events or conditions "may" or "will" occur. These statements are only
predictions. Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking statements throughout this news
release. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. Aurora is under no obligation, and expressly disclaims any intention
or obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
In particular, this News Release contains forward-looking
information concerning: (a) integration of CanniMed into Aurora, (b)
expectations for future growing capacity, (c) the expected benefits of the
acquisition of CanniMed, (d) expectations with respect to business and
geographical diversification of the Aurora after the acquisition of CanniMed (e)
the key business objectives to drive further growth, Aurora's initiatives to
achieve such growth, and the expected results thereof, (f) the expectations with
respect to the size, scope and scale of Aurora after the acquisition of
CanniMed(e) (f) expectations with respect to future production, sales and
marketing costs, (g) expectations with respect to volume of patients, (h) any
commentary related to the expected benefits of the acquisition; and (i) the
expected creation of the Medical Cannabis Centre of Excellence Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release,
including assumptions that there will be no change in the business, prospects or
capitalization of CanniMed or Aurora.
Forward-looking statements necessarily involve known and
unknown risks, including, without limitation, risks associated with general
economic conditions; adverse industry events; loss of markets; future
legislative and regulatory developments. The expected benefits of
the acquisition of CanniMed are based on a number of
assumptions, including that Aurora will be able to acquire 100% of the
outstanding shares of CanniMed. Readers are cautioned that the foregoing list is
not exhaustive. A more complete discussion of the risks and uncertainties
appears in Aurora's Annual Information Form and other continuous disclosure
filings, which are available at
www.sedar.com
.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Notice to U.S. Holders
The Offer is made for the securities of a company formed
outside of the United States. The Offer is subject to disclosure requirements of
Canada that are different from those of the United States. Financial statements
included in the documents, if any, will be prepared in accordance with Canadian
accounting standards and may not be comparable to the financial statements of
United States companies. It may be difficult for a securityholder in the United
States to enforce his/her/its rights and any claim a securityholder may have
arising under the U.S. federal securities laws, since the issuer is located in
Canada, and some or all of its officers or directors may be residents of Canada
or another country outside of the United States. A securityholder may not be
able to sue a Canadian company or its officers or directors in a court in Canada
or elsewhere outside of the United States for violations of U.S. securities
laws. It may be difficult to compel a Canadian company and its affiliates to
subject themselves to a U.S. court's judgment.
SOURCE Aurora Cannabis Inc.
View original content:http://www.newswire.ca/en/releases/archive/March2018/15/c2739.html
%SEDAR: 00025675E
For further information:
Cam Battley, Chief Corporate
Officer, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc Lakmaaker,
Director, Investor Relations and Corporate Development, +1.647.269.5523,
marc.lakmaaker@auroramj.com; Laurel Hill Advisory Group, North America Toll
Free: 1-877-452-7184, Collect Calls Outside North America: 1-416-304-0211,
Email: assistance@laurelhill.com
CO: Aurora Cannabis Inc.
CNW 18:22e 15-MAR-18
Changes to CanniMed Therapeutics Board Following Share
Take-Up by Aurora Cannabis
TSX: ACB TSX: CMED
EDMONTON and SASKATOON, March 15, 2018 /CNW/ - Aurora Cannabis
Inc. ("
Aurora
") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
and CanniMed Therapeutics Inc. ("
CanniMed
") (TSX: CMED) announced today
that following the successful take up and payment of approximately 86.8% of the
issued and outstanding of CanniMed Shares, three Aurora Cannabis appointees will
join the CanniMed Board of Directors, effective immediately.
The CanniMed Board of Directors will now be comprised of:
Mr. John Knowles
(Legacy CanniMed Board Member, CFO
CanniMed): Mr. Knowles has over 30 years of experience with Canadian and
international resource companies and has served as a director, CEO or CFO of
more than ten companies listed on the major Canadian and U.S. stock exchanges.
He is a Chartered Professional Accountant and holds a Bachelor of Commerce from
Queen's University.
Mr. André Jérôme
(Senior Vice President, Business
Integration, Aurora): In the newly created role of Business Integration, Mr.
Jérôme is responsible for the integration of acquisitions, as well as for the
identification of potential synergies across existing subsidiaries and joint
venture partners. Mr. Jérôme, a member of the Bar of Québec for the last 23
years, joined Aurora from H2 Biopharma Inc ("H2"), where he was CEO and
co-founder.
Mr. Michael Scott Dowty
(Chief Revenue Officer, Apriva):
Mr. Dowty has over 25 years of experience evaluating companies and markets to
identify key business drivers, spur rapid revenue and profit growth, and
maximize the value proposition in competitive global markets. Mr. Dowty has held
senior executive and corporate officer positions with organizations such as CIBC
Card Products, First Data International, Global Cash Access and CardConnect.
Mr. Michel Lamontagne
(Advisor and Corporate Director):
Member of the Quebec bar since 1973, Mr. Lamontagne is an experienced corporate
director who serves on the board of directors of a number of companies and
organizations in the life sciences, technology and financial sectors. His
expertise covers corporate governance, government relations, public affairs,
philanthropy and planned giving.
In addition to the above-mentioned Board appointments, the
following CanniMed Board Members have resigned their position as director.
CanniMed would like to thank this group for their years of service to the
Company's Board:
|
|
•
|
Donald Ching
|
|
|
•
|
Brent Zettl
|
|
|
•
|
Marianne Grier
|
|
|
•
|
Richard Hoyt
|
|
|
•
|
Dwayne Lashyn
|
|
|
•
|
Bruce Mackler
|
|
|
•
|
Brandon Price
|
Mr. Brent Zettl is pleased to be staying on as CEO to ensure a
successful transition for CanniMed and its employees.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", and a second 40,000 square
foot high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a fourth facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Ltd.
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company owns 51% of Aurora Nordic, which will be constructing a 1,000,000
square foot hybrid greenhouse in Odense, Denmark. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens.
Aurora holds a 19.88% ownership interest in Liquor Stores N.A.,
who intend to develop a cannabis retail network in Western Canada. In addition,
the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc., and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian producer The Green Organic Dutchman Ltd., with options
to increase to majority ownership.
Aurora's Common Shares trade on the TSX under the symbol
"ACB".
About CanniMed Therapeutics
CanniMed is a Canadian-based, international plant
biopharmaceutical company and a leader in the Canadian medical cannabis
industry, with 17 years of pharmaceutical cannabis cultivation experience,
state-of-the-art, GMP-compliant production process and world class research and
development platforms with a wide range of pharmaceutical-grade cannabis
products.
CanniMed, through its subsidiaries, was the first producer to
be licensed under the Marihuana for Medical Purposes Regulations, the
predecessor to the current Access to Cannabis for Medical Purposes Regulations.
It was the sole supplier to Health Canada under the former medical marijuana
system for 13 years and has been producing safe and consistent medical marijuana
for thousands of Canadian patients, with no incident of product diversion or
recalls.
For more information, please visit our websites:
www.cannimed.ca (patients) and www.cannimedtherapeutics.com (investors).
Forward looking statement
This news release
includes statements containing certain "forward-looking information" within the
meaning of applicable securities law ("forward-looking statements").
Forward-looking statements are frequently characterized by words such as "plan",
"continue", "expect", "project", "intend", "believe", "anticipate", "estimate",
"may", "will", "potential", "proposed" and other similar words, or statements
that certain events or conditions "may" or "will" occur. These statements are
only predictions. Various assumptions were used in drawing the conclusions or
making the projections contained in the forward-looking statements throughout
this news release. Forward-looking statements are based on the opinions and
estimates of management at the date the statements are made, and are subject to
a variety of risks and uncertainties and other factors that could cause actual
events or results to differ materially from those projected in the
forward-looking statements. The Company is under no obligation, and expressly
disclaims any intention or obligation, to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
AURORA CANNABIS INC.
Terry Booth
CEO
CanniMed Therapeutics Inc
Brent Zettl
CEO
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/March2018/15/c8945.html
%SEDAR: 00025675E
For further information:
For Aurora: Cam Battley, Chief
Corporate Officer, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc
Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.269.5523, marc.lakmaaker@auroramj.com; Or Laurel Hill Advisory Group,
North America Toll Free: 1-877-452-7184, Collect Calls Outside North America:
1-416-304-0211, Email: assistance@laurelhill.com; For CanniMed: Media Contact,
Dara Willis, CanniMed Therapeutics Inc., dhw@cannimed.com, 416-836-9272;
Investor Relations, CanniMed Therapeutics Inc.,invest@cannimed.com
CO: Aurora Cannabis Inc.
CNW 18:49e 15-MAR-18
FORM 51-102F3
MATERIAL CHANGE REPORT
|
Item 1:
|
Name and Address of Company
|
Aurora Cannabis Inc. (“
Aurora
”
or the “
Company
”)
1500 - 1199 West Hastings St.
Vancouver,
BC
Canada V6E 3T5
|
Item 2:
|
Date of Material Change
|
March 9, 2018.
The news release attached as Schedule
“A” was disseminated via Canada Newswire on March 9, 2018 announcing the
material change. A copy of the news release was filed on the Company’s profile
on SEDAR at
www.sedar.com
.
|
Item 4:
|
Summary of Material Change
|
On March 9, 2018, Aurora announced the
success of its offer (the “
Offer
”) to purchase all of the issued and
outstanding common shares of CanniMed Therapeutics Inc. (“
CanniMed
”). The
number of CanniMed common shares (the “
CanniMed Shares
”) tendered as at
the close of business on March 8, 2018 totaled 17,847,341, representing
approximately 70.66% of the total outstanding CanniMed Shares on a fully diluted
basis.
Aurora announced that, given that all
of the conditions to the Offer had been met, they will begin to take up the
tendered CanniMed Shares and pay for those shares as soon as possible, and in
any event not later than 3 business days after the CanniMed Shares are taken up.
Aurora announced that it will issue a total of approximately 50.6 million Aurora
common shares and pay a total of approximately $98 million in cash for the
CanniMed Shares tendered as of March 8, 2018. Terry Booth, Chief Executive
Officer of Aurora, also announced that following the aforementioned take up of
CanniMed Shares, Aurora will commence its integration of CanniMed into the
Aurora organization to begin capitalizing on strategic synergies.
Mandatory Extension
Aurora also announced that, pursuant
to applicable Canadian securities laws, they had extended the period that
shareholders of CanniMed have to tender their shares under the Offer by 15 days
to 11:59 pm (Pacific Time) on March 25, 2018. Aurora announced that it had
provided notice of the extension to Laurel Hill Advisory Group (the
“
Depositary and Information Agent
”) effective March 9, 2018 and that
there is no guarantee that Aurora will further extend the Offer after March 24,
2018. CanniMed shareholders were encouraged to tender as soon as possible.
Aurora announced that details of the extension of the period during which
additional CanniMed Shares may be tendered under the Offer would be included in
a notice of variation and extension (the “
Notice of Variation and
Extension
”), which Aurora expected to file on SEDAR and mail to registered
CanniMed Shareholders on or prior to March 9, 2018.
|
Item 5:
|
Full Description of Material Change
|
Please see the news release attached
as Schedule “A”.
|
Item 6:
|
Reliance on subsection 7.1(2) of National
Instrument 51-102
|
Not applicable.
|
Item 7:
|
Omitted Information
|
Not applicable.
|
Item 8:
|
Executive Officer
|
Terry Booth
Chief Executive
Officer
(604) 362-5207
March 19, 2018.
Schedule “A”
[
See Attached
]
Aurora Cannabis Succeeds in Bid for CanniMed - Takes Up
Shares
Announces Mandatory Extension of Tender Period
TSX: ACB
EDMONTON, March 9, 2018 /CNW/ - Aurora Cannabis Inc.
("
Aurora
") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
announced today that the Company has been successful in its offer (the
"
Offer
") for all the issued and outstanding common shares for CanniMed
Therapeutics Inc. ("
CanniMed
").
The number of CanniMed common shares (the "
CanniMed
Shares
") tendered as at the close of business on March 8, 2018 totals
17,847,341, representing approximately 70.66% of the total outstanding CanniMed
Shares on a fully diluted basis. All of the conditions to the Offer having been
met, Aurora will take up the tendered CanniMed Shares and pay for those shares
as soon as possible, and in any event not later than 3 business days after the
CanniMed Shares are taken up. Aurora will issue a total of approximately 50.6
million Aurora common shares and pay a total of approximately $98 million in
cash for the CanniMed Shares tendered as of March 8, 2018.
"Following the take up, we will immediately commence with the
integration of CanniMed into the Aurora organization and start executing on
realizing the strategic synergies we have identified," said Terry Booth, CEO.
"Combining two of the leading international cannabis brands creates a company
that is exceptionally well positioned to capitalize on the tremendous
opportunities in the domestic and international medical markets, as well as the
Canadian adult consumer use market, once legalized. We look forward to working
closely with our new colleagues to establish Aurora's Medical Cannabis Centre of
Excellence."
Mandatory Extension
In addition, pursuant to applicable Canadian securities laws
requiring Aurora to extend its Offer, the Company has extended the period
shareholders of CanniMed have to tender their shares under the Offer by 15 days
to 11.59 pm (Pacific Time) March 25, 2018. Aurora has provided notice of the
extension to Laurel Hill Advisory Group (the "
Depositary and Information
Agent
") effective March 9, 2018. There is no guarantee that Aurora will
further extend the Offer after March 24, 2018, and CanniMed shareholders are
encouraged to tender as soon as possible.
Full details of the extension of the period during which
additional CanniMed Shares may be tendered under the Offer will be included in a
notice of variation and extension (the "
Notice of Variation and
Extension
"), which Aurora expects to file on SEDAR (under CanniMed's
profile) at www.sedar.com and mail to registered CanniMed Shareholders on or
prior to March 9, 2018.
How to Tender
Aurora encourages CanniMed shareholders to read the full
details of the Offer set forth in its original offer and takeover bid circular
dated November 24, 2017 (as amended by its notice of change dated January 12,
2018), and its notice of variation dated February 5, 2018 and March 9, 2018, and
accompanying offer documents (collectively, the "
Offer Documents
"), which
contain detailed instructions on how CanniMed shareholders can tender their
CanniMed Common Shares to the Offer. For assistance in depositing CanniMed
Common Shares to the Offer, CanniMed shareholders should contact the Depository
and Information Agent for the Offer, Laurel Hill Advisory Group at Phone:
1-877-452-7184 (North American Toll Free Phone) and 1-416-304-0211 (Outside
North America); Facsimile: 416-646-2415; and E-mail:
assistance@laurelhill.com.
About the Offer
The full details of the Offer are set out in the Offer
Documents, which have been filed with the Canadian securities regulatory
authorities and have been mailed to CanniMed shareholders. The Offer Documents
are also available on SEDAR under CanniMed's profile at www.sedar.com. Materials
filed with the Canadian securities regulatory authorities are available
electronically without charge at www.sedar.com. Materials filed with the SEC are
available electronically without charge on EDGAR accessable through the SEC's
website at www.sec.gov. Documents related to the Offer, including the Offer
Documents, are also available on Aurora's website at www.auroramj.com and
shareholders are invited to visit cannimed.auroramj.com for further
information.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", and a second 40,000 square
foot high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a fourth facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Ltd.
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European
Union.
The Company owns 51% of Aurora Nordic, which will be
constructing a 1,000,000 square foot hybrid greenhouse in Odense, Denmark. The
Company offers further differentiation through its acquisition of BC Northern
Lights Ltd. and Urban Cultivator Inc., industry leaders, respectively, in the
production and sale of proprietary systems for the safe, efficient and
high-yield indoor cultivation of cannabis, and in state-of-the-art indoor
gardening appliances for the cultivation of organic microgreens, vegetables and
herbs in home and professional kitchens.
Aurora holds a 19.88% ownership interest in Liquor Stores N.A.,
who intend developing a cannabis retail network in Western Canada. In addition,
the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc., and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian producer The Green Organic Dutchman Ltd., with options
to increase to majority ownership.
Aurora's common shares trade on the TSX under the symbol "ACB".
On behalf of the Boards of Directors,
|
AURORA CANNABIS
INC.
Terry Booth
CEO
Shareholder Questions
Questions may be directed to Aurora's Information Agent at:
Laurel Hill Advisory Group
North America Toll Free:
1-877-452-7184
Collect Calls Outside North America: 1-416-304-0211
Email:
assistance@laurelhill.com
Forward-Looking Information Cautionary Statement
This news release contains certain "forward-looking
statements" within the meaning of such statements under applicable securities
law. Forward-looking statements are frequently characterized by words such as
"plan", "continue", "expect", "project", "intend", "believe", "anticipate",
"estimate", "may", "will", "potential", "proposed" and other similar words, or
statements that certain events or conditions "may" or "will" occur. These
statements are only predictions. Forward looking statements in release include
statements regarding the proposed integration of CanniMed with Aurora, the
expected benefits of that integration, the timing of the take up and payment for
the CanniMed Shares, and whether there will be any further extension of the
Offer. Various assumptions were used in drawing the conclusions or making the
projections contained in the forward-looking statements throughout this news
release, including assumptions based upon CanniMed's publicly disclosed
information, and that there will be no change in the business, prospects or
capitalization of CanniMed or Aurora. Forward-looking statements are based on
the opinions and estimates of management at the date the statements are made,
and are subject to a variety of risks and uncertainties and other factors that
could cause actual events or results to differ materially from those projected
in the forward-looking statements. The Company is under no obligation, and
expressly disclaims any intention or obligation, to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as expressly required by applicable law. A more
complete discussion of the risks and uncertainties facing the Company appears in
the Company's Annual Information Form and continuous disclosure filings, which
are available at
www.sedar.com
. Neither TSX nor its Regulation
Services Provider (as that term is defined in the policies of Toronto Stock
Exchange) accepts responsibility for the adequacy or accuracy of this
release.
Notice to U.S. Holders
The Offer is made for the securities of a company formed
outside of the United States. The Offer will be subject to disclosure
requirements of Canada that are different from those of the United States.
Financial statements included in the documents, if any, will be prepared in
accordance with Canadian accounting standards and may not be comparable to the
financial statements of United States companies.
It may be difficult for a securityholder in the United
States to enforce his/her/its rights and any claim a securityholder may have
arising under the U.S. federal securities laws, since the issuer is located in
Canada, and some or all of its officers or directors may be residents of Canada
or another country outside of the United States. A securityholder may not be
able to sue a Canadian company or its officers or directors in a court in Canada
or elsewhere outside of the United States for violations of U.S. securities
laws. It may be difficult to compel a Canadian company and its affiliates to
subject themselves to a U.S. court's judgment.
Securityholders should be aware that the issuer may purchase
securities otherwise than under the Offer, such as in open market or privately
negotiated purchases.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/March2018/09/c7040.html %SEDAR:
00025675E
For further information:
For Aurora: Cam Battley, Chief
Corporate Officer, +1.905.864.5525, cam@auroramj.com, www.auroramj.com; Marc
Lakmaaker, Director, Investor Relations and Corporate Development,
+1.647.269.5523, marc.lakmaaker@auroramj.com
CO: Aurora Cannabis Inc.
CNW 08:37e 09-MAR-18
Aurora Cannabis Increases Stake in Hempco to 35%
TSX: ACB TSX-V: HEMP
EDMONTON and VANCOUVER, March 26, 2018 /CNW/ - Aurora Cannabis
Inc. ("
Aurora
") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
and Hempco Food and Fiber Inc ("
Hempco
") (TSX-V: HEMP) announced today
that Aurora has exercised 10,558,676 warrants to purchase common shares of
Hempco for total proceeds of $4.3 million to Hempco. Consequent the warrant
exercise, Aurora now owns 21,117,352 Hempco common shares, reflecting an
ownership interest of approximately 35%.
"With this further investment by Aurora we are now very well
capitalized to accelerate our various strategic initiatives to drive growth at
Hempco," said Diane Jang, CEO of Hempco. "Since taking the helm at Hempco, we
have made a number of tactical and strategic moves that position the company
well to take advantage of a number of opportunities in the health lifestyle food
supplements market, as well as for the pet and equine markets. Additionally,
with the positive vote on the second reading of Bill C-45 in the Senate,
implementation of the new Cannabis Act is that much closer, which would position
us very well for whole-plant utilization and further acceleration of our
business plan. These funds, and the presence of a large, stable shareholder,
puts Hempco in a strong position to pursue a multitude of opportunities and
create further shareholder value."
Terry Booth, CEO of Aurora, added, "This additional investment
in Hempco was anticipated from Day 1 of our strategic partnership. We are
pleased with the work done by Diane and her team, and look forward to supporting
Hempco's growth initiatives and capitalizing on the multiple opportunities this
partnership creates for us. In addition to the warrants exercised, we intend
exercising our option to buy founder shares, and take our position to north of
50%.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", and a second 40,000 square
foot high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Inc.
Aurora is close to completion of the acquisition of all the
outstanding shares of CanniMed Therapeutics Inc, Canada's most experienced
licensed producer of medical cannabis, adding over 20,000 kg per annum in funded
capacity, as well as Canada's strongest medical cannabis brand.
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company owns 51% of Aurora Nordic, which will be constructing a 1,000,000
square foot hybrid greenhouse in Odense, Denmark. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens.
Aurora holds a 19.88% ownership interest in Liquor Stores N.A.,
("LIQ") who are developing a cannabis retail network in Western Canada. In
addition, the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc, and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian producer The Green Organic Dutchman Ltd., with options
to increase to majority ownership.
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index
About Hempco
For more than 12 years Hempco has been a
trusted and respected pioneer, innovator and provider of premier hemp based
foods. Hempco is committed to developing hemp foods, hemp fiber and hemp
nutraceuticals. Hempco is expanding its processing ability to meet global
demands in a 56,000 sq. ft. facility located at Nisku, Alberta. Hempco's common
shares trade on the TSX Venture Exchange under the symbol "HEMP".
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
HEMPCO FOOD AND FIBER INC
Diane Jang
CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue",
"expect", "project", "intend", "believe", "anticipate",
"estimate", "may", "will", "potential", "proposed" and other similar words, or
statements that certain events or conditions "may" or "will" occur. These
statements are only predictions. Various assumptions were used in drawing the
conclusions or making the projections contained in the forward-looking
statements throughout this news release. Forward-looking statements are based on
the opinions and estimates of management at the date the statements are made,
and are subject to a variety of risks and uncertainties and other factors that
could cause actual events or results to differ materially from those projected
in the forward-looking statements. The Company is under no obligation, and
expressly disclaims any intention or obligation, to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as expressly required by applicable law.
Neither TSX, TSX-V, nor their Regulation Services Provider
(as that term is defined in the policies of Toronto Stock Exchange) accept
responsibility for the adequacy or accuracy of this release.
SOURCE Hempco Food and Fiber Inc.
View original content:http://www.newswire.ca/en/releases/archive/March2018/26/c3232.html
%SEDAR: 00025252E
For further information:
For Aurora: Marc Lakmaaker,
Director, Investor Relations and Corporate Development, +1.647.269.5523,
marc.lakmaaker@auroramj.com, www.auroramj.com; Craig MacPhail, NATIONAL Equicom,
+1 416-586-1938, cmacphail@national.ca; For Hempco: John Ross, Chief Financial
Officer, +1.647.291.4234, john@hempcocanada.com
CO: Hempco Food and Fiber Inc.
CNW 06:30e 26-MAR-18
Aurora Cannabis Finalizes Largest Acquisition in Cannabis
Industry History
Transaction Establishes Global Medical Cannabis
Leader
TSX: ACB
EDMONTON, March 28, 2018 /CNW/ - Aurora Cannabis Inc.
("
Aurora
" or the "
Company
") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt:
21P; WKN: A1C4WM) announced today that with the second take-up under its offer
to acquire all of the outstanding shares of CanniMed Therapeutics Inc.
("
CanniMed
") (TSX: CMED), the Company now owns approximately 95.9% of
CanniMed common shares (the "
CanniMed Shares
"). The Company intends to
acquire the remaining outstanding shares it does not already own through a
compulsory share acquisition, pursuant to the Canada Business Corporations
Act.
The transaction unites Aurora, one of the world's largest and
fastest growing cannabis companies, with CanniMed, a pioneering cannabis company
that has been operating in the industry longer than any other competitor, and
whose brand strongly resonates with the medical community. The combined entity,
under the Aurora banner, creates a global medical cannabis leader, and will
continue to pursue an aggressive strategy of rapid technological and product
innovation, and international expansion.
Management Commentary
"We are delighted to have finalized the largest transaction to
date in the cannabis industry," said Terry Booth, CEO. "We are now combining
CanniMed, the pioneer of the Canadian cannabis industry, with Aurora's best
practices, innovations, funded production capacity, distribution network, and
rapidly growing international footprint. This acquisition and the resulting
synergies transform Aurora into a leading company in the global medical cannabis
space. We believe that our combined assets, capabilities, and brand strength, as
well as our consistent execution, position us very well to gain significant
share of the global market. We have commenced integrating the organizations, and
look forward to reporting on our progress, innovations and other corporate
developments in the coming months as we continue to execute our growth
strategy."
Track Record and Reputation with Medical Community Create
Platform for Accelerated Growth
CanniMed (previously Prairie Plant Systems Inc.), was granted a
contract in 2000 by Health Canada to produce medical cannabis, making it the
longest standing federally regulated producer in Canada.
With an 18-year track-record, 13 of which as the sole supplier
to Health Canada, and not a single product recall, CanniMed has built an
impressive reputation with the Canadian and international medical community, and
has developed, organically, a network of over 5,000 referring physicians. Aurora
management believes that CanniMed produces and distributes the most
physician-prescribed cannabis oil in the Canadian medical cannabis system.
CanniMed's standing with the cannabis community will also be
rapidly elevated following its successful integration with Aurora, through the
company-wide adoption of the Aurora Standard, harnessing Aurora's industry
leading best practices, and an inclusive, compassionate, and enlightened
approach to cannabis culture and community.
By leveraging Aurora's ability to accelerate facility expansion
and licensing projects, as well as increasing access to additional global
distribution channels, the combined Company creates a strengthened platform from
which to drive further growth for patients, physicians, and shareholders
alike.
Medical Cannabis Centre of Excellence in Saskatoon
Aurora intends to invest significant capital and human
resources in developing a Medical Cannabis Centre of Excellence ("MCCE") in
Saskatoon to accelerate penetration of jurisdictions with existing or planned
medical cannabis systems One of the key objectives for the MCCE is to develop a
significant pipeline of higher-margin therapeutic products that will unlock new
markets and enhance the Company's brand and reputation internationally.
CanniMed was the first cannabis company to conduct a Health
Canada approved clinical study. Beginning in June 2015, the double-blind,
placebo-controlled clinical trial focused on medical cannabis therapy in adults
with osteoarthritis of the knee. Since then, CanniMed, through various levels of
participation, has engaged in four further clinical trials in a range of
therapeutic areas.
The Company intends to leverage the staff and scientific
know-how and capabilities of both Aurora and CanniMed to continue to develop new
drug delivery technologies, and identify additional strategic partners to
collaborate with on the introduction of new dosage forms and novel product
types.
To date, CanniMed has developed a highly regarded line of
ingestible cannabis oils, cannabis oil capsules, a line of transdermal topical
creams, and has product development partnerships including a sub-lingual
dissolvable cannabis infused wafer.
Growing Capacity – EU GMP Certification
The combined entity has funded production capacity exceeding
280,000 kg per year. In addition to its already EU GMP certified Mountain
facility, Aurora is pursuing EU GMP certification for all of its new facilities,
and will help accelerate certification of the CanniMed facility. EU GMP certification requirements are a significant barrier to entry,
providing Aurora with a pronounced early mover advantage to establish
significant market share in the rapidly growing European medical cannabis
markets.
International Presence
Aurora currently supplies cannabis products and/or is building
licensed facilities in countries including Canada, Germany, Italy, Denmark, and
Australia, while CanniMed has delivered product or has supply agreements in
Canada, Australia, Cayman Islands, and South Africa. This makes the combined
entity one of the world's most geographically diversified cannabis companies.
Both companies are currently actively pursuing entry into new jurisdictions
through additional export arrangements, distribution partnerships, and licensed
production opportunities. The companies' existing and potential target markets
have a combined population of nearly 800 million people.
Distribution Channels
CanniMed and Aurora combined have supply and distribution
agreements in place with Shoppers Drug Mart and PharmaChoice, two of the leading
pharmacy brands in Canada. Through its wholly owned subsidiary Pedanios GmbH,
Aurora has supplied well over 2,000 pharmacies in Germany. The combined entity
is actively pursuing additional such relationships around the globe. The
Company's experience in EU GMP certified production is an important strategic
advantage that management anticipates will continue to make the combined entity
a leading partner of choice for governments, patients, physicians, pharmacies
and distributors, in both existing and emerging medical cannabis markets.
Take-up Details
The Company has taken up approximately 23.5 million CanniMed
Shares pursuant to Aurora's November 24, 2017 bid for all of the outstanding
shares of CanniMed (the "
Offer
"), representing 93.1% of the outstanding
CanniMed Shares as of the expiry time of the Offer on March 24, 2018 Aurora
issued approximately 69.3 million common shares and paid approximately $134
million for the CanniMed Shares taken-up. The Offer has now expired. Aurora now
owns approximately 95.9% of the outstanding CanniMed Shares (including CanniMed
Shares acquired in market purchases).
Aurora currently intends to effect a subsequent acquisition
transaction to acquire the CanniMed Shares not tendered to the Offer, which it
anticipates completing through the compulsory share acquisition procedures set
out in the Canada Business Corporations Act.
CanniMed shareholders will have the opportunity to receive the
same consideration in the subsequent acquisition transaction as they were
entitled to receive from the Offer. Following the completion of such subsequent
acquisition transaction, Aurora intends for CanniMed to apply to the Toronto
Stock Exchange (the "
TSX
") to delist the CanniMed shares from trading on
the TSX and, if permitted by applicable law, cause CanniMed to cease to be a
reporting issuer (or equivalent) under applicable Canadian securities laws.
Aurora anticipates completing the subsequent acquisition transaction and
delisting towards the middle of the second calendar quarter of 2018.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", and a second 40,000 square
foot high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Inc.
Aurora is close to completion of the acquisition of all the
outstanding shares of CanniMed Therapeutics Inc, Canada's most experienced
licensed producer of medical cannabis, adding over 20,000 kg per annum in funded
capacity, as well as Canada's strongest medical cannabis brand.
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company owns 51% of Aurora Nordic, which will be constructing a 1,000,000
square foot hybrid greenhouse in Odense, Denmark. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens.
Aurora holds a 19.88% ownership interest in Liquor Stores N.A.,
("LIQ") who are developing a cannabis retail network in Western Canada. In
addition, the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc, and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian producer The Green Organic Dutchman Ltd., with options
to increase to majority ownership.
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index
About CanniMed Therapeutics
CanniMed is a Canadian-based, international plant
biopharmaceutical company and a leader in the Canadian medical cannabis
industry, with 17 years of pharmaceutical cannabis cultivation experience,
state-of-the-art, GMP-compliant production process and world class research
and development platforms with a wide range of pharmaceutical-grade
cannabis products.
CanniMed, through its subsidiaries, was the first producer to
be licensed under the Marihuana for Medical Purposes Regulations, the
predecessor to the current Access to Cannabis for Medical Purposes Regulations.
It was the sole supplier to Health Canada under the former medical marijuana
system for 13 years and has been producing safe and consistent medical marijuana
for thousands of Canadian patients, with no incident of product diversion or
recalls.
For more information, please visit our websites:
www.cannimed.ca (patients) and www.cannimedtherapeutics.com (investors).
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
Shareholder Questions
Questions may be directed to Aurora's Information Agent at:
Laurel Hill Advisory Group
North America Toll Free:
1-877-452-7184
Collect Calls Outside North America: 1-416-304-0211
Email:
assistance@laurelhill.com
Forward-Looking Information Cautionary Statement
This news release contains certain "forward-looking
statements" within the meaning of such statements under applicable securities
law
.
Forward-looking statements are frequently characterized by
words such as "plan", "continue", "expect", "project", "intend", "believe",
"anticipate", "estimate", "may", "will", "potential", "proposed" and other
similar words, or statements that certain events or conditions "may" or "will"
occur. These statements are only predictions. Forward looking statements in
release include statements regarding the proposed completion of a subsequent
acquisition transaction. Various assumptions were used in drawing the
conclusions or making the projections contained in the forward-looking
statements throughout this news release. Forward-looking statements are based on
the opinions and estimates of management at the date the statements are made,
and are subject to a variety of risks and uncertainties and other factors that
could cause actual events or results to differ materially from those projected
in the forward-looking statements. The Company is under no obligation, and
expressly disclaims any intention or obligation, to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as expressly required by applicable law. A more
complete discussion of the risks and uncertainties facing the Company appears in
the Company's Annual Information Form and continuous disclosure filings, which
are available at
www.sedar.
com
.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release
.
Notice to U.S
.
Holders
The Offer is made for the securities of a company formed
outside of the United States. The Offer will be subject to disclosure
requirements of Canada that are different from those of the United States.
Financial statements included in the documents, if any, will be prepared in
accordance with Canadian accounting standards and may not be comparable to the
financial statements of United States companies.
It may be difficult for a securityholder in the United
States to enforce his/her/its rights and any claim a securityholder may have
arising under the U.S. federal securities laws, since the issuer is located in
Canada, and some or all of its officers or directors may be residents of Canada
or another country outside of the United States. A securityholder may not be
able to sue a Canadian company or its officers or directors in a court in Canada
or elsewhere outside of the United States for violations of U.S. securities
laws. It may be difficult to compel a Canadian company and its affiliates to
subject themselves to a U.S. court's judgment.
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/March2018/28/c7224.html
%SEDAR: 00025675E
For further information:
Marc Lakmaaker, Director,
Investor Relations and Corporate Development, +1.647.269.5523,
marc.lakmaaker@auroramj.com, www.auroramj.com; Craig MacPhail, NATIONAL Equicom,
+1 416-586-1938,cmacphail@national.ca
CO: Aurora Cannabis Inc.
CNW 07:00e 28-MAR-18
Andr Jérôme Appointed Interim CEO of CanniMed
Resigning CEO Brent Zettl to Provide Advisory
Services
TSX: ACB TSX: CMED
EDMONTON and SASKATOON, April 2, 2018 /CNW/ - Aurora Cannabis
Inc. ("
Aurora
") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
and CanniMed Therapeutics Inc. ("
CanniMed
") (TSX: CMED) announced today
that Mr. Brent Zettl has resigned from his position as CEO of CanniMed,
effective immediately, to pursue other opportunities. Mr. Zettl has agreed to
remain available to CanniMed and Aurora in an advisory capacity to assist during
the integration period.
"On behalf of the CanniMed board, I would like to express our
gratitude to Brent for his leadership of CanniMed over the past three decades,"
stated John Knowles, CFO and Director of CanniMed. "CanniMed is the pioneer in
the Canadian medical cannabis industry and this is in no small part thanks to
Brent and the huge contributions he has made to the development of the sector.
We wish Brent well with his future ventures."
Mr. Andrc Jerome was appointed as Interim CEO. Mr. Jérôme is SVP
Business Integration at Aurora, where he is responsible for the integration of
acquisitions, as well as for the identification of potential synergies across
existing subsidiaries and joint venture partners. Mr. Jérôme, a member of the Bar of
Québec for the last 23 years, joined Aurora from H2 Biopharma Inc
("H2"), where he was CEO and co-founder. Mr. Jérôme was
already tasked with heading up the integration of CanniMed into the Aurora
organization.
Mr. Terry Booth, Aurora CEO, added, "Andr is the right person
to take on the role of Interim CEO at CanniMed. He is a consummate business
professional and team leader with an excellent track record in accelerating
growth. We are also very pleased that Brent has agreed to remain available to us
as an advisor, which will provide additional support to ensure the transition
proceeds smoothly. The integration of Aurora and CanniMed is well underway, and
we anticipate updating the market frequently on developments as CanniMed is
aligned with the Aurora Standard and expands its footprint in the domestic and
international medical cannabis sectors."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", and a second 40,000 square
foot high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a fourth facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Inc.
Aurora is close to completion of the acquisition of all the
outstanding shares of CanniMed Therapeutics Inc, Canada's most experienced
licensed producer of medical cannabis, adding over 20,000 kg per annum in funded
capacity, as well as Canada's strongest medical cannabis brand.
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company owns 51% of Aurora Nordic, which will be constructing a 1,000,000
square foot hybrid greenhouse in Odense, Denmark. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens.
Aurora holds a 19.88% ownership interest in Liquor Stores N.A.,
who intend to develop a cannabis retail network in Western Canada. In addition,
the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc., and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian producer The Green Organic Dutchman Ltd., with options
to increase to majority ownership.
Aurora's Common Shares trade on the TSX under the symbol
"ACB".
About CanniMed Therapeutics
CanniMed is a Canadian-based, international plant
biopharmaceutical company and a leader in the Canadian medical cannabis
industry, with 17 years of pharmaceutical cannabis cultivation experience,
state-of-the-art, GMP-compliant production process and world class research and
development platforms with a wide range of pharmaceutical-grade cannabis
products.
CanniMed, through its subsidiaries, was the first producer to
be licensed under the Marihuana for Medical Purposes Regulations, the
predecessor to the current Access to Cannabis for Medical Purposes Regulations.
It was the sole supplier to Health Canada under the former medical marijuana
system for 13 years and has been producing safe and consistent medical marijuana
for thousands of Canadian patients, with no incident of product diversion or
recalls.
For more information, please visit our websites:
www.cannimed.ca (patients) and www.cannimedtherapeutics.com (investors).
Forward looking statement
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
|
AURORA CANNABIS INC.
|
CanniMed Therapeutics Inc
|
|
Terry Booth
|
Andr Jérôme
|
|
CEO
|
InterimCEO
|
SOURCE Aurora Cannabis Inc.
View original content:http://www.newswire.ca/en/releases/archive/April2018/02/c3658.html
%SEDAR: 00025675E
For further information:
For Aurora: Marc Lakmaaker,
Director, Investor Relations and Corporate Development, +1.647.269.5523,
marc.lakmaaker@auroramj.com, www.auroramj.com; Craig MacPhail, NATIONAL Equicom,
+1 416 586-1938,cmacphail@national.ca
CO: Aurora Cannabis Inc.
CNW 07:00e 02-APR-18
CanniMed Signs Letter of Intent with Pharmasave
TSX: ACB TSX: CMED
EDMONTON and SASKATOON, April 4, 2018 /CNW/ - Aurora Cannabis
Inc. ("
Aurora
") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
and CanniMed Therapeutics Inc. ("
CanniMed
") (TSX: CMED) announced today
that CanniMed has entered into a Letter of Intent to become a preferred supplier
of medical cannabis to Pharmasave. A member governed cooperative of more than
650 independently owned community pharmacies across the country, Pharmasave is
one of Canada's leading independent community pharmacies.
Subject to changes to regulations that would allow such
distribution, CanniMed and Aurora will supply and distribute high-quality
medical cannabis, produced at the companies' GMP compliant and GMP certified
facilities, through Pharmasave pharmacists across Canada.
Pharmasave recognized some time ago that pharmacists need to be
prepared to fulfil their role as medication experts in the area of medical
cannabis. As such, for more than a year, Pharmasave has been educating
Pharmasave pharmacists to ensure they are prepared to support patients and
physicians in medication management. This includes how medical cannabis may
affect other medications the patient may take, any health conditions they might
have, and insights on how to identify and address mental health and addiction
concerns in patients. CanniMed has supported this commitment to understanding
medical cannabis with product information, access to medical experts and updates
on the latest research and clinical information available. In addition to
supplying Pharmasave pharmacists with medical cannabis once permitted, CanniMed
and Aurora will continue to provide pharmacists with education related to
medical cannabis.
"Canadians trust pharmacists to help guide them to the right
information and products to treat their conditions," said Terry Booth, Aurora
CEO, "and now Pharmasave joins two other national pharmacy chains in showing
their trust in us to provide them with medical cannabis products and education.
These supply agreements allow us strong penetration into what is likely to be a
sizable portion of the medical cannabis market, and they highlight the strength
of our organizations, the scale of our operations and the world-class
operational standards that both Aurora and CanniMed practice. We're proud to
partner with Pharmasave and expand our ability to help Canadians in need find
the relief they are seeking."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", and a second 40,000 square
foot high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a fourth facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Inc.
Aurora is close to completion of the acquisition of all the
outstanding shares of CanniMed Therapeutics Inc, Canada's most experienced
licensed producer of medical cannabis, adding over 20,000 kg per annum in funded
capacity, as well as Canada's strongest medical cannabis brand.
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company owns 51% of Aurora Nordic, which will be constructing a 1,000,000
square foot hybrid greenhouse in Odense, Denmark. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens.
Aurora holds a 19.88% ownership interest in Liquor Stores N.A.,
who intend to develop a cannabis retail network in Western Canada. In addition,
the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc., and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian producer The Green Organic Dutchman Ltd., with options
to increase to majority ownership.
Aurora's Common Shares trade on the TSX under the symbol
"ACB".
About CanniMed Therapeutics
CanniMed is a Canadian-based, international plant
biopharmaceutical company and a leader in the Canadian medical cannabis
industry, with 17 years of pharmaceutical cannabis cultivation experience,
state-of-the-art, GMP-compliant production process and world class research and
development platforms with a wide range of pharmaceutical-grade cannabis
products.
CanniMed, through its subsidiaries, was the first producer to
be licensed under the Marihuana for Medical Purposes Regulations, the
predecessor to the current Access to Cannabis for Medical Purposes Regulations.
It was the sole supplier to Health Canada under the former medical marijuana
system for 13 years and has been producing safe and consistent medical cannabis
for thousands of Canadian patients, with no incident of product diversion or
recalls.
For more information, please visit our websites:
www.cannimed.ca
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
|
AURORA CANNABIS INC.
|
CanniMed Therapeutics Inc
|
|
Terry Booth
|
André Jérôme
|
|
CEO
|
InterimCEO
|
SOURCE Aurora Cannabis Inc.
View original content:http://www.newswire.ca/en/releases/archive/April2018/04/c1597.html
%SEDAR: 00025675E
For further information:
Marc Lakmaaker, Director,
Investor Relations and Corporate Development, +1.647.269.5523,
marc.lakmaaker@auroramj.com, www.auroramj.com; Craig MacPhail, NATIONAL Equicom,
+1 416 586-1938,cmacphail@national.ca
CO: Aurora Cannabis Inc.
CNW 07:00e 04-APR-18
Aurora Cannabis Completes Agreement with the Société des
Alcools du Québec to Supply Cannabis for Quebec Adult Consumer Market
TSX: ACB
EDMONTON, April 11, 2018 /CNW/ - Further to its news release of
February 14, 2018, Aurora Cannabis Inc. ("Aurora") (TSX: ACB) (OTCQB: ACBFF)
(Frankfurt: 21P; WKN: A1C4WM) today announced that the Company has completed a
final agreement with the Société des Alcools du Québec ("SAQ") to supply a
minimum of 5,000 kg of cannabis per annum for the Quebec adult consumer market,
once legalized.
Under the terms of the agreement, Aurora will supply the Quebec
market, on a monthly basis, with a wide variety of premium product from its
facilities in Quebec, and elsewhere if demand requires. Supply quantities will
be determined based on demand on a month by month basis, with a minimum of 5,000
for the first year, but no set maximum. The initial term of the contract is to
August 31, 2021.
"This agreement reflects our commitment to service the Quebec
market with our range of high-quality products, once adult consumer sales will
be legalized," stated Terry Booth, CEO. "With two facilities, as well as a
supply agreement with the Green Organic Dutchman, we have a strong local
presence, which we believe will contribute to increased visibility in this
important market. We look forward to establishing the Aurora Standard as the
benchmark for quality and customer service in Canada's second most populous
province."
The agreement is conditional on the adoption by the federal and
provincial governments of the necessary regulatory framework.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", and a second 40,000 square
foot high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a fourth facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Inc.
Aurora is close to completion of the acquisition of all the
outstanding shares of CanniMed Therapeutics Inc, Canada's most experienced
licensed producer of medical cannabis, adding over 20,000 kg per annum in funded
capacity, as well as Canada's strongest medical cannabis brand.
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company owns 51% of Aurora Nordic, which will be constructing a 1,000,000
square foot hybrid greenhouse in Odense, Denmark. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens.
Aurora holds a 19.88% ownership interest in Liquor Stores N.A.,
who intend to develop a cannabis retail network in Western Canada. In addition,
the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc., and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian producer The Green Organic Dutchman Ltd., with options
to increase to majority ownership.
Aurora's Common Shares trade on the TSX under the symbol
"ACB".
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
AURORA CANNABIS INC.
Terry Booth
CEO
SOURCE Aurora Cannabis Inc.
View original content:http://www.newswire.ca/en/releases/archive/April2018/11/c4717.html
%SEDAR: 00025675E
For further information:
Marc Lakmaaker, Director,
Investor Relations and Corporate Development, +1.647.269.5523,
marc.lakmaaker@auroramj.com, www.auroramj.com; Craig MacPhail, NATIONAL Equicom,
+1 416 586-1938,cmacphail@national.ca
CO: Aurora Cannabis Inc.
CNW 07:00e 11-APR-18
Aurora Cannabis Commences Compulsory Acquisition of
Remaining CanniMed Shares
TSX: ACB TSX: CMED
EDMONTON, April 13, 2018 /CNW/ - Aurora Cannabis Inc.
("
Aurora
") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
announced today that the Company has exercised its right under the compulsory
acquisition provisions in Section 206 of the
Canada Business Corporations
Act
(the "
Act
") to acquire all of the outstanding common shares (the
"
CanniMed Shares
") of CanniMed Therapeutics Inc. (TSX: CMED)
("
CanniMed
") that it did not acquire under its recently completed offer
(the "
Offer
") to acquire all of the issued and outstanding CanniMed
Shares, by mailing a notice of compulsory acquisition (the "
Notice of
Compulsory Acquisition
") to all remaining registered holders of CanniMed
Shares. The compulsory acquisition is expected to be completed shortly after
April 30, 2018. Intermediaries on behalf of beneficial holders will receive a
notice from CDS.
Under the compulsory share acquisition, CanniMed shareholders
must make an election no later than 5:00 p.m. on April 30, 2018 in accordance
with the procedures in the Notice of Compulsory Acquisition mailed to registered
shareholders, a copy of which is available under CanniMed's profile at
www.SEDAR.com, and Section 206 of the Act.
To elect to receive the same consideration as that provided
pursuant to the Offer, consisting of either 3.40 common shares of Aurora (the
"
Aurora Shares
") (the "
Share Alternative
") or $43.00 in cash,
subject to pro-ration (the "
Cash Alternative
"), per CanniMed Share, or
any combination of Aurora Shares and cash based on a maximum of $43.00 in cash
per CanniMed Share, with the cash being subject to the same pro-ration as the
Cash Alternative (the "
Share and Cash Alternative
"), CanniMed
shareholders must complete the letter of transmittal accompanying the Notice of
Compulsory Acquisition and deliver it with the certificate(s) representing such
shareholder's CanniMed Shares to Laurel Hill Advisory Group ("
Laurel
Hill
") prior to 5:00 p.m. on April 30, 2018. Cash proration will be based on
maximum cash available of approximately $6.0 million.
Shareholders who fail to elect will be deemed to have
elected to receive Aurora Shares on the basis of 3.40 Aurora Shares for each
CanniMed Share held.
Beneficial holders of CanniMed Shares must contact their broker
for assistance in making their election. Questions and requests for assistance,
including requests for additional copies of the Notice of Compulsory Acquisition
and related letter of transmittal may be directed to Laurel Hill at
1-877-452-7184 for North America Toll Free or at 1-416-304-0211 for Collect
Calls Outside North America (assistance@laurelhill.com).
Aurora has taken up and
paid for 23,512, 487 CanniMed Shares held by those shareholders who accepted the
Offer and which represent approximately 93.1% of the outstanding CanniMed
Shares. Aurora also purchased 700,600 CanniMed Shares in the open market during
the period of the Offer, and in aggregate holds 95.9% of the outstanding
CanniMed Shares.
Upon completion of the compulsory acquisition, Aurora intends
to take the necessary steps to delist the CanniMed Shares from the TSX V and to
have CanniMed cease to be a reporting issuer (or equivalent) under applicable
Canadian securities law.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", and a second 40,000 square
foot high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a fourth facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Inc.
Aurora is close to completion of the acquisition of all the
outstanding shares of CanniMed Therapeutics Inc, Canada's most experienced
licensed producer of medical cannabis, adding over 20,000 kg per annum in funded
capacity, as well as Canada's strongest medical cannabis brand.
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company owns 51% of Aurora Nordic, which will be constructing a 1,000,000
square foot hybrid greenhouse in Odense, Denmark. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens.
Aurora holds a 19.88% ownership interest in Liquor Stores N.A.,
who intend to develop a cannabis retail network in Western Canada. In addition,
the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc., and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian producer The Green Organic Dutchman Ltd., with options
to increase to majority ownership.
Aurora's Common Shares trade on the TSX under the symbol
"ACB".
About CanniMed Therapeutics
CanniMed is a Canadian-based, international plant
biopharmaceutical company and a leader in the Canadian medical cannabis
industry, with 17 years of pharmaceutical cannabis cultivation experience,
state-of-the-art, GMP-compliant production process and world class research and
development platforms with a wide range of pharmaceutical-grade cannabis
products.
CanniMed, through its subsidiaries, was the first producer to
be licensed under the Marihuana for Medical Purposes Regulations, the
predecessor to the current Access to Cannabis for Medical Purposes Regulations.
It was the sole supplier to Health Canada under the former medical marijuana
system for 13 years and has been producing safe and consistent medical cannabis
for thousands of Canadian patients, with no incident of product diversion or
recalls.
For more information, please visit our websites:
www.cannimed.ca
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
companies are under no obligation, and expressly disclaim any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
|
AURORA CANNABIS INC.
|
CanniMed Therapeutics Inc
|
|
Terry Booth
|
André Jérôme
|
|
CEO
|
InterimCEO
|
SOURCE CanniMed Therapeutics Inc.
View original content: http://www.newswire.ca/en/releases/archive/April2018/13/c8780.html
%SEDAR: 00040256E
For further information:
Marc Lakmaaker, Director,
Investor Relations and Corporate Development, +1.647.269.5523,
marc.lakmaaker@auroramj.com, www.auroramj.com; Craig MacPhail, NATIONAL Equicom,
+1 416 586-1938, cmacphail@national.ca; Or Laurel Hill Advisory Group, North
America Toll Free: 1-877-452-7184, Collect Calls Outside North America:
1-416-304-0211, Email: assistance@laurelhill.com
CO: CanniMed Therapeutics Inc.
CNW 06:30e 13-APR-18
Aurora Cannabis Completes First Ever Private Export of
Medical Cannabis to Italy
TSX: ACB
EDMONTON, April 13, 2018 /CNW/ - Aurora Cannabis Inc.
("
Aurora
") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today
announced the successful delivery of the first ever batch of privately exported
medical cannabis from Canada to the Italian government through its wholly-owned
German subsidiary Pedanios GmbH. Following the successful delivery, the products
have now been distributed to Italian Pharmacies.
Today's announcement follows the company's press release of
January 18, 2018, which announced that Aurora and Pedanios had won a
highly-competitive EU-wide public tender to supply 100kg of medical cannabis to
the Italian government through the Italian Ministry of Defense, who oversee
medical cannabis production and distribution in Italy.
"The Italian government has entrusted Aurora as the only
direct, foreign non-government supplier to the Department of Defense in response
to its first ever public tender to help support the growing demand on its
strictly-regulated medical cannabis program," said Terry Booth, CEO. "We take
this responsibility very seriously, and will be supporting the growing number of
patients in the Italian system with high-quality products, as well as
educational support initiatives for both the general public and physicians. The
Aurora Standard reflects a level of professionalism, product quality and patient
care that is increasingly recognized by a growing number of international
governments, physicians, pharmacies and patients."
Aurora's Chief Global Business Development Officer, Neil Belot,
added, "We are extremely proud to become the first non-government supplier to
the Italian market. This historic first shipment of premium quality, EU
GMP-certified medical cannabis provides Aurora with a first and highly visible
foothold in a market with over 60 million people. With nation-wide coverage in
place for the cost of cannabis, we anticipate rapid growth, and look forward to
establishing the Aurora Standard as the benchmark in this exciting market."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", and a second 40,000 square
foot high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Inc.
Aurora is close to completion of the acquisition of all the
outstanding shares of CanniMed Therapeutics Inc, Canada's most experienced
licensed producer of medical cannabis, adding over 20,000 kg per annum in funded
capacity, as well as Canada's strongest medical cannabis brand.
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company owns 51% of Aurora Nordic, which will be constructing a 1,000,000
square foot hybrid greenhouse in Odense, Denmark. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens.
Aurora holds a 19.88% ownership interest in Liquor Stores N.A.,
("LIQ") who are developing a cannabis retail network in Western Canada. In
addition, the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc, and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian producer The Green Organic Dutchman Ltd., with options
to increase to majority ownership.
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those
projected in the forward-looking statements. The Company is
under no obligation, and expressly disclaims any intention or obligation, to
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as expressly required by
applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:http://www.newswire.ca/en/releases/archive/April2018/13/c8363.html
%SEDAR: 00025675E
For further information:
Marc Lakmaaker Director,
Investor Relations and Corporate Development, +1.647.269.5523,
marc.lakmaaker@auroramj.com, www.auroramj.com; Craig MacPhail, NATIONAL Equicom,
+1 416-586-1938, cmacphail@national.ca
CO: Aurora Cannabis Inc.
CNW 07:30e 13-APR-18
Aurora Cannabis Gains Exclusive License to Novel Patented
Sub-Lingual Wafer Technology from CTT Pharmaceutical
Convenient, High Bioavailability, Rapid Onset of Action Drug
Delivery
TSX: ACB TSX: CMED OTC: CTTH
EDMONTON, SASKATOON and HAMILTON, ON, April 16, 2018 /CNW/ -
Aurora Cannabis Inc. ("
Aurora
") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt:
21P; WKN: A1C4WM), CanniMed Therapeutics Inc. ("
CanniMed
") (TSX: CMED)
and CTT Pharmaceutical Holdings, Inc., ("
CTT
") (OTC:CTTH) announced today
that further to the CanniMed/CTT news release of February 17, 2017, the
companies have entered into a three-way agreement that provides Aurora, through
its ownership of CanniMed, with joint exclusivity on the distribution in Canada
of CTT's novel, patented drug delivery technologies.
This collaboration includes the licensing by CTT to CanniMed
and Aurora of six patents related to cannabinoid delivery for pain management
that will enable CanniMed and Aurora to exclusively develop and commercialize
this unique, sub-lingual (beneath the tongue) wafer, drug delivery system in
Canada.
Orally Dissolvable Thin Film ("ODF") Wafers are a proprietary
drug delivery mechanism in the form of paper-thin polymer films used as carriers
for pharmaceutical agents, with the following benefits:
|
|
•
|
ODF Wafer is taken orally but does not require
water or swallowing
|
|
|
•
|
ODF Wafers dissolve quickly in the oral cavity
(5-15 seconds), with the active ingredient rapidly absorbed and diffused
for direct access to the bloodstream.
|
|
|
•
|
The active ingredient, once absorbed, can
bypass the liver's first-pass effect, improving therapeutic outcomes and
efficacy through improved bioavailability and facilitates excellent
patient compliance.
|
|
|
•
|
ODF Wafers are suitable for a wide range of
patients, including for geriatric and pediatric patients who experience
difficulty swallowing.
|
The companies are currently working together toward obtaining
Health Canada approval prior to marketing and distributing the sub-lingual
wafer.
"Aurora is rapidly developing new product forms and delivery
technologies, to provide our Canadian and international patients with a wide
range of convenient, reliable and effective means of using medical cannabis,"
stated Terry Booth, CEO of Aurora. "We believe that a significant segment of the
medical cannabis market remains untapped, as it requires novel drug delivery
technologies such as these to address as yet unmet needs. Through our
acquisition of CanniMed, we are now able to accelerate growth of both companies
by combining improved access to medical innovations and our well-developed
domestic and international distribution channels."
Dr. Pankaj Modi, CEO of CTT Pharma, added, "We are excited
about the growth potential that our exclusive Canadian partnership with CanniMed
and Aurora offers. Their large and rapidly growing patient base, both in Canada
and around the world represent a significant distribution opportunity for our
sub-lingual wafer technology, and with the establishment of CanniMed as the
heart of Aurora's Medical Cannabis Centre of Excellence, we anticipate that
Aurora's proven track record of execution will accelerate market development for
our products."
Aurora is accelerating a number of strategic initiatives,
including the key objective of marketing and developing new, high margin,
standardized dosage forms including the oral wafer technology licensed by
CanniMed from CTT Pharmaceuticals.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", and a second 40,000 square
foot high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a fourth facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Inc.
Aurora is close to completion of the acquisition of all the
outstanding shares of CanniMed Therapeutics Inc, Canada's most experienced
licensed producer of medical cannabis, adding over 20,000 kg per annum in funded
capacity, as well as Canada's strongest medical cannabis brand.
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company owns 51% of Aurora Nordic, which will be constructing a 1,000,000
square foot hybrid greenhouse in Odense, Denmark. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens.
Aurora holds a 19.88% ownership interest in Liquor Stores N.A.,
who intend to develop a cannabis retail network in Western Canada. In addition,
the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc., and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a 17.62% stake in Canadian
producer The Green Organic Dutchman Ltd., with options to increase to majority
ownership.
Aurora's Common Shares trade on the TSX under the symbol
"ACB".
About CanniMed Therapeutics
CanniMed is a Canadian-based, international plant
biopharmaceutical company and a leader in the Canadian medical cannabis
industry, with 17 years of pharmaceutical cannabis cultivation experience,
state-of-the-art, GMP-compliant production process and world class research and
development platforms with a wide range of pharmaceutical-grade cannabis
products.
CanniMed, through its subsidiaries, was the first producer to
be licensed under the Marihuana for Medical Purposes Regulations, the
predecessor to the current Access to Cannabis for Medical Purposes Regulations.
It was the sole supplier to Health Canada under the former medical marijuana
system for 13 years and has been producing safe and consistent medical cannabis
for thousands of Canadian patients, with no incident of product diversion or
recalls.
For more information, please visit our websites:
www.cannimed.ca
About CTT Pharmaceutical Holdings, Inc.
CTTH's principal asset is a unique and novel patented drug
delivery technology, an orally administered, fast dissolving thin film (the
"Wafer"). This technology platform will target both the human and veterinarian
(pet) markets for treatment of many diseases. The Company believes that its
Wafer technology will be one of the first to gain use in major markets such as
pain management. Several Canadian and U.S. patents protect the Oral Thin Film
(Wafer) formulation.
CTTH's oral fast dissolving drug delivery systems consists of
edible Wafers that dissolve without water and within a few seconds after
placement in the mouth. The majority of drugs administered using our drug
delivery system mirror injections in that they have the ability to enter the
bloodstream quickly, are convenient and discrete, and can be administered
anywhere. A faster absorption rate is achieved because the mouth contains a very
thin mucosa and is extremely vascular. There is no bitter taste, no smoke
inhalation, less degradation of medication (by bypassing the stomach) and most
importantly lower dosage units are required given the efficacy of absorption.
Patient compliance is also improved especially with those who have a fear of
choking or difficulty swallowing, and/or are pediatric, geriatric or
incapacitated.
For more information, please visit our website:
www.cttpharmaceuticals.com
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
companies are under no obligation, and expressly disclaim any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
|
AURORA CANNABIS INC.
|
CanniMed Therapeutics Inc
|
|
Terry Booth
|
André Jérôme
|
|
CEO
|
InterimCEO
|
SOURCE CanniMed Therapeutics Inc.
View original content:http://www.newswire.ca/en/releases/archive/April2018/16/c7615.html
%SEDAR: 00040256E
For further information:
For Aurora: Marc Lakmaaker,
Director, Investor Relations and Corporate Development, +1.647.269.5523,
marc.lakmaaker@auroramj.com, www.auroramj.com; Craig MacPhail, NATIONAL Equicom,
+1.416.586.1938, cmacphail@national.ca; For CTT: Dr. Pankaj Modi,
info@cttpharmaceuticals.com, +1.866.803.8386
CO: CanniMed Therapeutics Inc.
CNW 07:00e 16-APR-18
Aurora Cannabis to Build "Aurora Sun", 1.2 Million Square
Foot Facility in Medicine Hat, Alberta
150,000+ kg Per Year, High-Technology, Ultra Efficient,
Low-Cost Facility Designed and Engineered by Aurora Larssen Projects
(ALPS)
TSX: ACB
EDMONTON, April 16, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today
announced it is acquiring approximately 71 acres of land in Medicine Hat,
Alberta, where the Company intends shortly to commence construction on a new
high-technology hybrid greenhouse cannabis production facility. To this end, the
Company has signed a memorandum of understanding with the City of Medicine Hat,
concerning terms and a general understanding of potential transactions,
including a prospective 10-year, 42 MW energy supply agreement.
The new facility, to be designed and engineered by the
Company's wholly owned Aurora Larssen Projects Inc. division, will be named
"Aurora Sun" in recognition of Medicine Hat's status as the sunniest city in
Canada, with more than 2,500 hours of sunshine per year. At 1,200,000 square
foot, or over 21 football fields, the footprint of Aurora Sun will be 50% larger
than Aurora's Sky, a 100,000+ kg per year Health Canada licensed facility the
Company is completing at Edmonton International Airport.
To date, Aurora has approximately 280,000 kg per year of funded
capacity. With the addition of Aurora Sun, total capacity will increase to over
430,000 kg per year. In addition to the domestic medical cannabis market, in
which the Company already services approximately 45,000 patients, the new
facility is intended to serve both the pending legal Canadian adult consumer
market, and the quickly expanding international market.
The global market is experiencing a massive excess of demand
over supply for legal, regulated medical cannabis, with extremely rapid growth.
This situation is expected to continue for a number of years, and only a small
number of producers around the world have the experience in regulated
cultivation, the production capacity and the access to capital to successfully
exploit this opportunity. Aurora, currently exporting to Germany and Italy, with
a combined population in excess of 140 million, intends to supply additional
European medical cannabis markets now coming online, and will devote a
significant proportion of its increasing production capacity to export the
Company's high-quality cannabis products into these undersupplied high-margin
markets.
Facility Characteristics
Like Aurora Sky, currently the world's most advanced cannabis
production facility, and Aurora Nordic, soon to begin construction in Denmark,
Aurora Sun will be a high-technology, highly automated facility designed to
deliver massive capacity, high production efficiency, ultra-low operating costs
and robust margins.
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•
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The facility measures 1,200,000 square feet,
the size of more than 21 football fields, and is readily expandable to
1,500,000 square feet
|
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•
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The facility will have approximately 850,000
square feet of flowering space, larger than the entire Aurora Sky facility
|
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•
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Like all Aurora facilities, Aurora Sun will be built in
compliance with European Union (EU) Good Manufacturing Practices (GMP)
standards, ensuring product from the facility can be exported anywhere in
the world where cannabis is nationally legal for medical or (in future)
adult usage purposes
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•
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The facility will be characterized by the use
of advanced technologies, such as:
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Forced air, positive pressure (closed system),
minimizing risk of contamination
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º
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The closed system conserves energy
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Fully automated plant and bench movement, maximizes plant
density, accelerates crop turnover, minimizes human plant interaction
(reduced contamination risks), and ultimately results in increased yield
per square foot and superior economic efficiencies (costs per gram)
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Robotized internal logistics, resulting in
improved workflow through the facility and allowing a further increase in
plant density
|
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Specialty glass ensuring optimal light
penetration, shadow reduction and diffusion to support plant growth, and,
ultimately reducing electrical consumption
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Specialized, custom nutrient delivery systems,
optimized for each respective strain growing in the facility at any time.
Furthermore, the irrigation system reduces waste and supports plant health
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Best-in-class HVAC system ensuring optimized
climate conditions
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Precipitation collection for reuse within the
facility and irrigation processes
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Low-carbon footprint design
|
Key Project Metrics and Timelines
|
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•
|
Due to the high degree of automation, high plant density,
rapid turnover of crops and optimized grow conditions, the new facility
will be ultra-efficient. Management anticipates production costs to fall
to well below $1 per gram at full capacity.
|
|
|
•
|
Based on the experience gained during the
construction of Aurora Sky, the Company anticipates an accelerated
construction timeline, shortening time to market.
|
|
|
•
|
Site preparation and construction will commence
in the coming weeks.
|
|
|
•
|
Management anticipates first planting in the
first half of calendar 2019, and completion of the full facility in the
second half of calendar 2019.
|
Medicine Hat
Following a thorough review of potential locations across a
broad set of parameters, management selected Medicine Hat, Alberta, as the home
for Aurora Sun. The chosen location provides a number of key advantages:
|
|
•
|
Medicine Hat is located in the sunniest area
(sunbelt) of Canada, which by comparison offers approximately 12.5% more
annual sunlight hours than Ontario's Niagara region, resulting in
significant power savings.
|
|
|
•
|
Medicine Hat offers low-cost electricity prices
and affordable taxes.
|
|
|
•
|
Medicine Hat has a "business friendly"
attitude, ensuring a smooth, efficient and rapid permitting process.
|
|
|
•
|
Medicine Hat owns its own power, gas, water and
sewage utilities.
|
Commentary
"Aurora Sun exemplifies our cultivation and production
philosophy focused on purpose-built, high technology, highly automated
facilities with industry-leading efficiency, resulting in ultra-low production
costs to ensure robust margins in all our markets," said Terry Booth, CEO. "We
have significantly differentiated Aurora from our peers by investing in and
rapidly building the world's most advanced model of cannabis production on a
mass scale. We believe the Aurora Standard of cannabis production represents the
most effectively replicable and scalable system to establish a successful global
footprint."
Mr. Booth added, "We are grateful to the City of Medicine Hat,
which has proven to be a very agile, capable and pro-active partner in making
this project possible. We look forward to establishing ourselves both as an
important local investor and employer, with more than 450 full time jobs
anticipated, and a significant impact on the local economy for years to come."
Ted Clugston, Mayor of Medicine Hat, added, "With Aurora, we
look forward to welcoming a growing international company committed to creating
significant employment in our city. Medicine Hat's stable and reliable
cost-competitive electricity and business-friendly environment are attracting
high-technology operations, such as Aurora Sun. The Memorandum of Understanding
signals our intention to work with Aurora to arrive at a mutually beneficial
agreement that will best serve the residents of Medicine Hat."
The Honourable Deron Bilous, Minister of Economic Development
and Trade for Alberta, added, "Large-scale capital investments – like Aurora's –
are essential for driving diversification and giving more Albertans an
opportunity to earn a good living for themselves and their families. Aurora is
making our province proud attracting international attention and investment as
we work together to build an economic recovery that lasts."
ALPS
Aurora Sun is designed by Aurora's in-house facility design,
engineering and construction oversight division Aurora Larssen Projects (ALPS),
the world's leading authority in advanced greenhouse design for the cannabis
industry. ALPS currently is engaged in 15 cannabis greenhouse projects globally,
including: Aurora sky, an 800,000 square foot facility under construction in
Edmonton, Alberta, Aurora Nordic, a 1,000,000 square foot facility to be
constructed as a joint venture in Odense, Denmark, and an 850,000 square foot
Valleyfield, Quebec facility for The Green Organic Dutchman (TGOD), in which
Aurora holds a 17.62% ownership interest.
Suppliers
Aurora anticipates working with the group of suppliers and
contractors that have been involved with the construction of Aurora Sky. The
close working relationship established during this project, the quality of the
products, technology and workmanship, and the shared experience are anticipated
to result in accelerated project delivery.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", and a second 40,000 square
foot high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a fourth facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Inc.
Aurora is close to completion of the acquisition of all the
outstanding shares of CanniMed Therapeutics Inc, Canada's most experienced
licensed producer of medical cannabis, adding over 20,000 kg per annum in funded
capacity, as well as Canada's strongest medical cannabis brand.
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company owns 51% of Aurora Nordic, which will be constructing a 1,000,000
square foot hybrid greenhouse in Odense, Denmark. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens.
Aurora holds a 19.88% ownership interest in Liquor Stores N.A.,
who intend to develop a cannabis retail network in Western Canada. In addition,
the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc., and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed producers, with a 22.9% stake in
Cann Group Limited, the first Australian company licensed to conduct research on
and cultivate medical cannabis, and a 17.62% stake in Canadian producer The
Green Organic Dutchman Ltd., with options to increase to majority ownership.
Aurora's Common Shares trade on the TSX under the symbol
"ACB".
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. Forward looking statements made in this
release include: (i) statements regarding the expected commencement of
construction of Aurora sun; (ii) statements regarding the potential power supply
agreement; (iii) statements regarding the facility characteristics including its
size, growing and capacity; (iv) statements regarding the rapid growth of
international markets, Aurora's intention to supply those markets, and Aurora's
intention to use products grown at Aurora Sky to supply those markets and the
Canadian marketplace;and (v) information regarding key metrics including
predicted production costs. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Certain of the assumptions relied upon include: (i) the assumption that Aurora
will be able to complete land acquisition in Medicine Hat, obtain necessary
zoning changes, building permits, and commence construction; (ii) that Aurora
will conclude a power supply agreement with the City of Medicine Hat; (iii) that
the facility as permitted and constructed will meet the design characteristics
described in this news release, (iv) that international markets for cannabis
will continue to grow, and Aurora will be able to obtain necessary licenses and
permits not only for the Aurora Sky facility, but to be able to sell its
products in such international markets; and (v) that the facility will perform
in line with Aurora's past practices and expected design parameters.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements.
Factors that could cause actual results to vary from those made in this news
release include risks that: (i) the Company is unable to obtain all necessary
regulatory approvals and licenses for construction and operation of the
facility; (ii) the Company's zoning application is denied or requires amendment;
(iii) the facility isnot completed to design capacity; (iv) the market for
cannabis does not develop as expected. The Company is under no obligation, and
expressly disclaims any intention or obligation, to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
AURORA CANNABIS INC.
Terry Booth
CEO
SOURCE Aurora Cannabis Inc.
View original content:http://www.newswire.ca/en/releases/archive/April2018/16/c5328.html
%SEDAR: 00025675E
For further information:
Marc Lakmaaker, Director,
Investor Relations and Corporate Development, +1.647.269.5523,
marc.lakmaaker@auroramj.com, www.auroramj.com; Craig MacPhail, NATIONAL Equicom,
+1 416 586-1938, cmacphail@national.ca; For Medicine Hat: City of Medicine Hat,
Ted Clugston, Mayor, +1.403.529.8181; For the Ministry of Economic Development
and Trade: Jean-Marc Prevost, Press Secretary, +1 780 644-8554, jean-marc.prevost@gov.ab.ca
CO: Aurora Cannabis Inc.
CNW 22:30e 16-APR-18
Aurora Cannabis Responds to Australian Media Speculation on
Cann Group Transaction
TSX: ACB
EDMONTON, April 30, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today
responds to speculation published in the Australian Financial Review in regard
to a potential takeover by the Company of Cann Group Limited ("Cann"), in which
Aurora holds a 22.9% ownership interest.
Aurora wishes to advise that while it has had preliminary
discussions with Cann in relation to a potential transaction, no offer has been
submitted, and there is no certainty that any formal offer or transaction will
eventuate. The Company will update the market in the event of any material
developments.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", and a second 40,000 square
foot high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a fourth facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Inc.
Aurora is close to completion of the acquisition of all the
outstanding shares of CanniMed Therapeutics Inc, Canada's most experienced
licensed producer of medical cannabis, adding over 20,000 kg per annum in funded
capacity, as well as Canada's strongest medical cannabis brand.
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company owns 51% of Aurora Nordic, which will be constructing a 1,000,000
square foot hybrid greenhouse in Odense, Denmark. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens.
Aurora holds a 19.88% ownership interest in Liquor Stores N.A.,
who intend to develop a cannabis retail network in Western Canada. In addition,
the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc., and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian producer The Green Organic Dutchman Ltd., with options
to increase to majority ownership.
Aurora's Common Shares trade on the TSX under the symbol
"ACB".
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise, except as expressly required by
applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
AURORA CANNABIS INC.
Terry Booth
CEO
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/April2018/30/c3592.html
%SEDAR: 00025675E
For further information:
For Aurora: Marc Lakmaaker,
Director, Investor Relations and Corporate Development, +1.647.269.5523,
marc.lakmaaker@auroramj.com, www.auroramj.com; Craig MacPhail, NATIONAL Equicom,
+1.416.586.1938, cmacphail@national.ca
CO: Aurora Cannabis Inc.
CNW 07:00e 30-APR-18
Aurora Cannabis and Mitacs to Fund Research Project on
Health and Economic Outcomes of Cannabis-Based Therapies
TSX: ACB
EDMONTON, April 30, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today
announced that the Company and Mitacs, a national, not-for-profit research and
training organization, have partnered to fund a University of Alberta research
program studying the health outcomes associated with cannabis use.
Despite a rapidly growing body of scientific and anecdotal
evidence supporting the therapeutic benefits of cannabis, comprehensive patient
cohort studies into health outcomes related to cannabis use are lacking.
Consequently, many physicians who are attempting to accommodate requests from
patients have limited information to support decision making in regard to
prescribing cannabis-based therapies.
The research project will study the health outcomes of a
significant data repository that combines patient-reported outcome measures and
physician-based medical assessments, collected from 29,000 Canadian patients who
have been prescribed medical cannabis. The researchers intend to perform
multiple population-based observational studies to characterize the population,
acute and chronic conditions, the exposure of medical cannabis, participant
ratings of symptom improvement and satisfaction with treatment, as well as side
effects, adverse events and long-term beneficial or detrimental effects.
The project, furthermore, intends to determine how medical
cannabis influences the economic impact of other factors, such as the use of
other medications, health insurance claims, hospitalizations, doctor
appointments, accident claims, etc.
Further objectives of the project are to:
1) Establish a
research infrastructure to track the health outcomes of eventual non-medical
consumers, and
2) Identify potential long-term health impacts of medical
cannabis use that should be monitored in non-medical groups.
Upon completion of the research project, the results are
intended to be submitted for publication by an accredited journal.
Funding, Mitacs and Project Leadership
The project, expected to last approximately three years, will
be co-funded by Aurora and Mitacs, which is a national not-for-profit
organization that has designed and delivered research and training programs in
Canada for nearly 20 years. Working with over 60 universities, thousands of
companies, and federal and provincial governments, the organization builds
partnerships that support industrial and social innovation in Canada.
The funds will be used to support two post-doctoral trainees
(post-PhD), a PhD student and an MSc student. Researchers will be supervised by
University of Alberta researchers Dr. Dean Eurich and Dr. Jason Dyck.
Dr. Eurich is the Program Director for the Clinical
Epidemiology program within the School of Public Health (U of A) and a Canada
Research Chair in Chronic Disease Prevention and Management. Dr. Dyck is a
Professor in the Department of Pediatrics, the Director of the Cardiovascular
Research Centre (U of A), and a Canada Research Chair in Molecular Medicine.
Management Commentary
"While our deep experience in servicing over 45,000 patients
has provided us with significant insight into the efficacy of cannabis as a
medical therapy, extensive scientific studies into health outcomes and wider
economic impact are lacking," said Terry Booth, CEO. "With this program, Aurora,
Mitacs and the University of Alberta are demonstrating leadership in providing
data to support both the domestic and international medical communities with
respect to the prescription of cannabis-based therapies, and to ensure
scientific rigour in the evaluation of patients' health and economic
outcomes".
Dr. Alejandro Adem, CEO and Scientific Director of Mitacs,
added, "Our partnership with the University of Alberta and Aurora Cannabis
emphasizes the importance of building research networks between universities and
industry in Canada's emerging cannabis sector. Researchers at the university
will have opportunities to receive professional experience while contributing to
this timely and important research."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises
Inc., is a licensed producer of medical cannabis pursuant to Health Canada's
Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The Company
operates a 55,200 square foot, state-of-the-art production facility in Mountain
View County, Alberta, known as "Aurora Mountain", and a second 40,000 square
foot high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a fourth facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Inc.
Aurora is close to completion of the acquisition of all the
outstanding shares of CanniMed Therapeutics Inc, Canada's most experienced
licensed producer of medical cannabis, adding over 20,000 kg per annum in funded
capacity, as well as Canada's strongest medical cannabis brand.
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European
Union.
The Company owns 51% of Aurora Nordic, which will be
constructing a 1,000,000 square foot hybrid greenhouse in Odense, Denmark. The
Company offers further differentiation through its acquisition of BC Northern
Lights Ltd. and Urban Cultivator Inc., industry leaders, respectively, in the
production and sale of proprietary systems for the safe, efficient and
high-yield indoor cultivation of cannabis, and in state-of-the-art indoor
gardening appliances for the cultivation of organic microgreens, vegetables and
herbs in home and professional kitchens.
Aurora holds a 19.88% ownership interest in Liquor Stores N.A.,
who intend to develop a cannabis retail network in Western Canada. In addition,
the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc., and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian producer The Green Organic Dutchman Ltd., with options
to increase to majority ownership.
Aurora's Common Shares trade on the TSX under the symbol
"ACB".
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. Forward looking statements made in this
release include: (i) statements regarding the expected commencement and
completion of the research program; (ii) statements regarding the expected
outcome of the research program; and (iii) statements made in relation to the
objectives of the research program. These statements are only predictions.
Various assumptions were used in drawing the conclusions or making the
projections contained in the forward-looking statements throughout this news
release. Certain of the assumptions relied upon include. the assumption that the
research program will be completed in accordance with the parties' current
objectives. Forward-looking statements are based on the opinions and estimates
of management at the date the statements are made, and are subject to a variety
of risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. Factors that could cause actual results to vary from those made in
this news release include risks that the researchers are unable to complete the
research program. The Company is under no obligation, and expressly disclaims
any intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
AURORA CANNABIS INC.
Terry Booth
CEO
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/April2018/30/c6156.html
%SEDAR: 00025675E
For further information:
For Aurora: Marc Lakmaaker,
Director, Investor Relations and Corporate Development, +1.647.269.5523,
marc.lakmaaker@auroramj.com, www.auroramj.com; Craig MacPhail, NATIONAL Equicom,
+1.416.586.1938, cmacphail@national.ca; For Mitacs: Heather Young, Director,
Communications, Mitacs, hyoung@mitacs.ca, +1.604.818.0020, www.mitacs.ca;
Chelsea Dibble, Senior Communications Specialist, Mitacs, cdibble@mitacs.ca,
+1.604.827.3094,www.mitacs.ca
CO: Aurora Cannabis Inc.
CNW 08:00e 30-APR-18
Aurora Completes CanniMed Acquisition
CanniMed Shares Delisted from TSX
TSX: ACB TSX: CMED
EDMONTON, May 1, 2018 /CNW/ - Aurora Cannabis Inc.
("
Aurora
" or the "
Company
") (TSX:ACB) (OTCQB:ACBFF) (Frankfurt:
21P; WKN:A1C4WM) and CanniMed Therapeutics Inc. (TSX:CMED) ("
CanniMed
")
today announced that Aurora has completed the acquisition of all issued and
outstanding shares of CanniMed Therapeutics Inc. (
"CanniMed")
that it did
not already own.
"We have now fully completed the largest acquisition in the
history of the cannabis sector and continue to progress well with our
integration activities to accelerate growth of both Aurora and CanniMed," said
Terry Booth. "CanniMed, which will operate as a wholly-owned subsidiary of
Aurora, will be spearheading a number of initiatives such as scientific
research, education and product development. The capabilities and reputation of
the CanniMed team in the medical market are very strong, which we will leverage
to further grow our penetration of this rapidly growing segment of the
international cannabis market."
The shares were acquired pursuant to the compulsory acquisition
procedures of the
Canada Business Corporations Act
(the "
Compulsory
Acquisition
"), and relates to those CanniMed shares that were not tendered
to Aurora's offer to acquire all of the CanniMed Shares dated November 24, 2017,
as amended by the notice of change dated January 12, 2018, the notice of
variation dated February 5, 2018 (the "
Notice of Variation
") and the
notice of variation and extension dated March 9, 2018 (the "
Offer
"). The
Offer expired at 11:59 p.m. (Pacific Time) on March 24, 2018.
The approximately 1.2 million CanniMed Shares were acquired for
a consideration of approximately 3.4 million Aurora shares and $1.7 million in
cash. The CanniMed Shares were de-listed from the Toronto Stock Exchange
("
TSX
") as at the close of business on May 1, 2018.
CanniMed intends to make an application to the applicable
Canadian securities regulatory authorities as soon as practicable to cease to be
a reporting issuer in each province in which it is currently a reporting
issuer.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Enterprises Inc., is a
licensed producer of medical cannabis pursuant to Health Canada's Access to
Cannabis for Medical Purposes Regulations ("ACMPR"). The Company operates a
55,200 square foot, state-of-the-art production facility in Mountain View
County, Alberta, known as "Aurora Mountain", and a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Inc.
The Company's wholly-owned subsidiary CanniMed Therapeutics
Inc. is Canada's most experienced licensed producer of medical cannabis, with
over 20,000 kg per annum in funded capacity. CanniMed forms the hear of Aurora's
Medical Cannabis Centre of Excellence, aimed at product and market
development.
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company owns 51% of Aurora Nordic, which will be constructing a 1,000,000
square foot hybrid greenhouse in Odense, Denmark. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens.
Aurora holds a 19.88% ownership interest in Liquor Stores N.A.,
("LIQ") who are developing a cannabis retail network in Western Canada. In
addition, the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc, and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian producer The Green Organic Dutchman Ltd., with options
to increase to majority ownership.
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index
On behalf of the Boards of Directors,
|
AURORA CANNABIS INC.
|
CanniMed Therapeutics Inc
|
|
Terry Booth
|
André Jérôme
|
|
CEO
|
InterimCEO
|
Forward-Looking Information Cautionary Statement
This news release contains certain "forward-looking
statements" within the meaning of such statements under applicable securities
law. Forward-looking statements are frequently characterized by words such as
"plan", "continue", "expect", "project", "intend",
"believe", "anticipate", "estimate", "may", "will",
"potential", "proposed" and other similar words, or statements that certain
events or conditions "may" or "will" occur
.
These statements are
only predictions. Forward looking statements in release include statements
regarding the proposed completion of a subsequent acquisition transaction.
Various assumptions were used in drawing the conclusions or making the
projections contained in the forward-looking statements throughout this news
release. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
expressly required by applicable law. A more complete discussion of the risks
and uncertainties facing the Company appears in the Company's Annual Information
Form and continuous disclosure filings, which are available at
www.
sedar.com
.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/May2018/01/c8749.html
%SEDAR: 00025675E
For further information:
Marc Lakmaaker, Director,
Investor Relations and Corporate Development, +1.647.269.5523,
marc.lakmaaker@auroramj.com, www.auroramj.com; Craig MacPhail, NATIONAL Equicom,
+1 416-586-1938,cmacphail@national.ca
CO: Aurora Cannabis Inc.
CNW 18:52e 01-MAY-18
Aurora Cannabis Participates in IPO for The Green Organic
Dutchman
TSX: ACB
EDMONTON, May 2, 2018 /CNW/ - Aurora Cannabis Inc.
("
Aurora
" or the "
Company
") (TSX:ACB) (OTCQB:ACBFF) (Frankfurt:
21P; WKN:A1C4WM), today announced the Company is participating in the IPO of The
Green Organic Dutchman ("TGOD") (TSX: TGOD), purchasing 17.5% of the IPO issue,
or 6.3 million units, priced at $3.65 per unit, for a total investment of $23.1
million. Each unit consists of one common share and one half of one common share
purchase warrant exercisable at $7.00 per common share.
The investment follows an earlier strategic investment
completed in January 2018, and upon completion, Aurora will hold a total of 39.7
million common shares. The Company furthermore owns 16.7 million share purchase
warrants exercisable at $3.00, and will add a further 3.2 million share purchase
warrants exercisable at $7.00 per share. This reflects an ownership interest of
17.6% on an undiluted basis. Aurora has an option to increase its ownership to
over 50% in relation to TGOD achieving certain operational and financial
milestones.
TGOD is currently completing a 14,000 kg per year facility in
Ancaster, as well as is constructing an 820,000 square foot, 104,000 kg per
annum, ALPS-designed (Aurora Larssen Projects Inc.) high-technology cannabis
facility in Valleyfield, Quebec. As announced in the companies' press release of
January 16, 2018, the companies have also entered into a supply contract,
providing Aurora with the right to purchase 20% of TGOD's annual production of
organic cannabis from TGOD's Ancaster and Valleyfield facilities. Consequently,
Aurora anticipates being able to procure in excess of 23,000 kg per annum of
premium organic products once TGOD's Valleyfield and Ancaster facilities are
completed and at full capacity. If the Company increases its ownership interest
further, Aurora has the right to also increase the supply quantities sourced
from TGOD.
Management commentary
"With over 23,000 kg per annum of premium organic product
secured, and a significant appreciation of our original investment, our partial
ownership of TGOD is both strategically and financially very beneficial for
Aurora shareholders," said Terry Booth, CEO. "We believe the TGOD team is
executing on a well-diversified strategy that we are proud to support and help
de-risk through the involvement of ALPS. The ALPS-designed TGOD facility will
meet the "Sky Class" standard established by Aurora - applied in the
construction of the Aurora Sky, Aurora Nordic and Aurora Sun facilities -
designed to deliver large-scale production of consistently high product quality,
at ultra-low production costs."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Enterprises Inc., is a
licensed producer of medical cannabis pursuant to Health Canada's Access to
Cannabis for Medical Purposes Regulations ("ACMPR"). The Company operates a
55,200 square foot, state-of-the-art production facility in Mountain View
County, Alberta, known as "Aurora Mountain", and a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Inc.
The Company's wholly-owned subsidiary CanniMed Therapeutics
Inc. is Canada's most experienced licensed producer of medical cannabis, with
over 20,000 kg per annum in funded capacity. CanniMed forms the hear of Aurora's
Medical Cannabis Centre of Excellence, aimed at product and market
development.
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company owns 51% of Aurora Nordic, which will be constructing a 1,000,000
square foot hybrid greenhouse in Odense, Denmark. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens.
Aurora holds a 19.88% ownership interest in Liquor Stores N.A.,
("LIQ") who are developing a cannabis retail network in Western Canada. In
addition, the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc, and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian producer The Green Organic Dutchman Ltd., with options
to increase to majority ownership.
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
Forward-Looking Information Cautionary Statement
This news release contains certain "forward-looking
statements" within the meaning of such statements under applicable securities
law
.
Forward-looking statements are frequently characterized by
words such as "plan", "continue", "expect", "project", "intend", "believe",
"anticipate", "estimate", "may", "will", "potential", "proposed" and other
similar words, or statements that certain events or conditions "may" or "will"
occur. These statements are only predictions. Forward looking statements in
release include statements regarding the proposed completion of a subsequent
acquisition transaction. Various assumptions were used in drawing the
conclusions or making the projections contained in the forward-looking
statements throughout this news release. Forward-looking statements are based on
the opinions and estimates of management at the date the statements are made,
and are subject to a variety of risks and uncertainties and other factors that
could cause actual events or results to differ materially from those projected
in the forward-looking statements. The Company is under no obligation, and
expressly disclaims any intention or obligation, to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as expressly required by applicable law. A more
complete discussion of the risks and uncertainties facing the Company appears in
the Company's Annual Information Form and continuous disclosure filings, which
are available at
www.
sedar.com
.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/May2018/02/c8443.html
%SEDAR: 00025675E
For further information:
Marc Lakmaaker, Director,
Investor Relations and Corporate Development, +1.647.269.5523,
marc.lakmaaker@auroramj.com, www.auroramj.com; Craig MacPhail, NATIONAL Equicom,
+1 416-586-1938, cmacphail@national.ca
CO: Aurora Cannabis Inc.
CNW 08:00e 02-MAY-18
Form 51-102F4
Business Acquisition Report
Item 1 Identity of Company
|
1.1
|
Name and Address of the
Company
|
Aurora Cannabis Inc. (“
Aurora
”
or the “
Company
”)
Suite 1500, 1199 West Hastings Street
Vancouver, British Columbia V6E 4N7
The following individual is
knowledgeable about the particulars described in this business acquisition
report:
Glen Ibbott
,
Chief Financial
Officer
Ph: 604-202-4958
Item 2 Details of Acquisition
|
2.1
|
Nature of the Business
Acquired
|
The Company completed the acquisition
of common shares of CanniMed Therapeutics Inc. (“
CanniMed
”) pursuant to a
takeover bid made by the Company to purchase all of the outstanding common
shares of CanniMed.
On November 24, 2017, the Company
commenced a formal offer to purchase all of the issued and outstanding common
shares of CanniMed on the basis of 4.52586207 Common Shares for each outstanding
common share of CanniMed (the “
CanniMed Shares
”), subject to a maximum of
$24 in Common Shares determined based on the 20-day volume weighted average
price of the Common Shares on the date that all of the conditions to the offer
were satisfied (the “
Original Offer
”). The Original Offer was commenced
by advertisement and a formal takeover bid circular was mailed to all of the
shareholders of CanniMed (“
CanniMed Shareholders
”). The Original Offer
was not supported by the CanniMed Board of Directors (the “
CanniMed
Board
”) but was supported by shareholders of CanniMed representing
approximately 36% of the then-outstanding CanniMed Shares (the “
Locked-Up
Shareholders
”).
CanniMed is a Canadian-based and
TSX-listed international plant biopharmaceutical company and a leader in the
Canadian medical cannabis industry, with 17 years of pharmaceutical cannabis
cultivation experience, a state-of-the-art, GMP-compliant plant production
process, including 281 points of quality control, and world class research and
development platforms with a wide range of pharmaceutical-grade cannabis
products. In addition, CanniMed has an active plant biotechnology research and
product development program focused on the production of plant-based materials
for pharmaceutical, agricultural and environmental applications.
Each of CanniMed’s wholly owned
subsidiaries, Prairie Plant Systems Inc. (“
PPS
”) and CanniMed, Ltd.
(“
CMED
”) is a Licensed Producer under the Access to Cannabis for Medical
Purposes Regulations (“
ACMPR
”) by continuation of the Licenses granted to
PPS and CMED under the Marihuana for Medical Purposes Regulations
(“
MMPR
”) and the exemptions granted pursuant to section 56 of the
Controlled Drugs and Substances Act (Canada). PPS was also the sole producer of
cannabis for the Government of Canada for more than 13 years under the
predecessor Marihuana Medical Access Regulations (“
MMAR
”).
CanniMed cultivates and sells
pharmaceutical-grade cannabis products in both dried herbal and oil form to
Canadians registered under the ACMPR. CanniMed is also a leader in the
development of pharmaceutical products containing phytocannabinoids and other
compounds found in cannabis. CanniMed believes the emergence of cannabis-based
products, particularly cannabis oils and capsules, will have a significant
impact on the global pain management market and represents a significant
commercial opportunity for CanniMed. CanniMed staff has extensive experience in
a number of biopharmaceutical areas, providing CanniMed with a wide base of
capabilities to develop new cannabis products, improve existing technologies and
to service patients and customers.
CanniMed has developed a proprietary
cloning technique, which it currently uses in its propagation techniques for
many nutraceutical plants including cannabis.
CanniMed also has the capability to
manufacture a variety of plant-based active pharmaceutical ingredients, such as
high-value proteins (including enzymes and cytokines) and phytochemicals
(including purified phytocannabinoids). CanniMed has sold these compounds as
research chemicals and is currently optimizing a multiple expression platform
for cultivating human and nonhuman proteins in transgenic plants.
CanniMed was established in 1988 as a
privately-held plant biotechnology company with a focus on research and
development. CanniMed’s initial research goal was to develop fruit trees hardy
enough to survive and thrive in the harsh Canadian climate.
In December 2000, Health Canada awarded
PPS a five-year contract to develop comprehensive operations for the growing and
cultivation of medical cannabis.
This began CanniMed’s long history of
cannabis cultivation, with the first crops being grown in a biosecure
underground growth chamber in Flin Flon, Manitoba. In 2001, PPS became a
Licensed Dealer under the Narcotic Control Regulations (“
NCR
”) and the
sole authorized source of dried marijuana for Health Canada under the MMAR. After being awarded its
license, CanniMed engaged in an extensive research and development effort to
gain a detailed understanding of cannabis genealogy, to identify, catalogue and
cultivate an extensive number of cannabis strains, to design and build
proprietary growing technologies and to refine its cultivation process to ensure
consistent output and maximize yields. CanniMed began selling dried marijuana to
the Government of Canada in early 2004.
As CanniMed’s research and development
efforts continued as a Licensed Dealer, management of CanniMed recognized the
potential for medical cannabis to aid patients in dealing with a large number of
medical conditions, including chronic pain. In particular, management of
CanniMed believed that medical cannabis products that were manufactured to a
pharmaceutical-grade standard would ultimately be accepted in the medical
community as a safe and effective treatment option that offers fewer side
effects than existing, more aggressive, medications such as opiates that are
frequently used to manage chronic pain.
Between 2009 and 2011, CanniMed
employed seven patented growing technologies, processes and other trade secrets,
and expanded its cultivation infrastructure with a newly constructed 35,000 sq.
ft. above-ground facility in Saskatoon, Saskatchewan. Production in this
facility is compliant with the same standards and procedures that pharmaceutical
companies adhere to in manufacturing their products in North America.
The MMPR came into force on June 19,
2013 and on September 19, 2013, CanniMed’s subsidiaries, PPS and CanniMed Ltd.,
became the first two Licensed Producers under the MMPR.
CanniMed operates biosecure growth
facilities located in Saskatoon, Saskatchewan, comprised of two above-ground
production facilities with an aggregate of 97,000 sq. ft. and a 96,000 sq. ft.
support building. The two production facilities together house 30 large
individual production growth chambers and have a total growing capacity of 7,000
kilograms per annum. The 96,000 sq. ft. support building houses CanniMed’s
administrative infrastructure, including laboratories, quality control
facilities, maintenance areas, a customer care centre and shipping and
distribution facilities. The Saskatoon facility is equipped with a robust
state-of-the-art security system, with over 400 separate security devices,
including over 160 cameras capturing approximately five terabytes of recorded
data per month. In compliance with the ACMPR, the footage recorded by CanniMed’s
cameras is stored for two years. The Saskatoon facility also houses five
separate Level 7 security compliant vaults, which are required for the storage
of controlled substances.
The facility in Saskatoon is focused
primarily on the commercialization of medical cannabis, as well as the research
and development of new strains of cannabis. The procedures at this
facility place a heavy emphasis on patient safety, with a 281-point quality
control process.
While traditional growing methods,
including greenhouses, are limited by soil conditions and climate, CanniMed’s
facilities are unique in the industry in that all crops are grown in its
patented biosecure growth chambers, resulting in several key benefits:
|
|
•
|
Controlled Environment: Conditions are completely
controlled through automation of light, heat and water. With no drought,
floods, wind, insects or harsh natural elements, plants are afforded
uninterrupted and optimized growing cycles, resulting in maximal product
yields and consistent product quality on a continuous basis;
|
|
|
•
|
Rapid Plant Growth: Plants often grow faster and stronger
in biosecure facilities than they do in fields or greenhouses, potentially
as a result of slightly higher carbon dioxide levels in biosecure
facilities;
|
|
|
•
|
Quality Control: The stable environment facilitates
CanniMed’s thorough application of GMP, “Good Agricultural Practices”,
“Good Production Practices” and “Good Laboratory Practices”;
|
|
|
•
|
Pesticides or Herbicides: With no threat of insect,
pests, or the plant diseases they can carry, there is no need for
pesticides or herbicides and no residues on unpurified bulk material from
the CanniMed’s plants. This provides at least two benefits. First,
facilitating regulatory compliance by eliminating the need to quantify
unwanted material residue throughout the production process, also
resulting in cost savings. Second, end- user/consumer perception that
CanniMed’s customers may have a preference for material prepared without
any contact with pesticides or herbicides; and
|
|
|
•
|
Secrecy: CanniMed’s Saskatoon facility incorporates
extensive security features and provides a limited number of secure entry
and exit points. These features facilitate protecting trade secrets and
other intellectual property relating to high-value plants. Advanced
intrusion alarm systems further ensure plant safety.
|
CanniMed has commenced a capital
project to increase its current cannabinoid oils processing capacity by
constructing a new facility on the existing site. The planned EU-GMP-compliant
extraction facility is designed to have the initial capacity to supply the
equivalent of 12 million 60 ml bottles of CanniMed oil per year. The project is
estimated to employ 85 full-time employees during a 20-month construction
schedule to commissioning and to create 25 new employment full-time positions.
The facility has been designed to accommodate further modular increases in
capacity in up to three subsequent phases. Aurora plans to accelerate the
certification of CanniMed’s facility.
March 15, 2018 (approximately 84%) and
March 26, 2018 (approximately 9%).
On February 5, 2018, Aurora filed a
Notice of Variation to the Original Offer providing for an improved offer (the
“
Improved Offer
”) for all of the outstanding CanniMed Shares not owned by
Aurora.
The Improved Offer provided CanniMed
Shareholders with the right to elect to receive, for each CanniMed Share: (i)
3.40 common shares of the Company (“
Common Shares
”); (ii) $0.43 in cash;
or (iii) any combination of Common Shares and cash, subject to proration of a
maximum aggregate cash amount of $140,000,000. The Improved Offer was based on
24,673,523 CanniMed Shares outstanding on a non-diluted basis and 25,277,245
CanniMed Shares outstanding on a fully-diluted basis as of the close of business
on February 5, 2018. The 700,600 CanniMed Shares purchased in the market and
owned by the Company as at February 5, 2018 were excluded from the Improved
Offer.
The Company completed an initial take
up of CanniMed Shares on March 15, 2018, and a final take up of CanniMed Shares
on March 26, 2018. On March 15, 2018, the Company took up 21,309,517 CanniMed
Shares, representing approximately 84% of the outstanding CanniMed Shares for
consideration of 62,833,216 Aurora common shares and $121,479,347 cash. On March
26, 2018, Aurora took up a further 2,202,970 CanniMed Shares, representing
approximately 9% of the outstanding CanniMed Shares on a fully diluted basis for
consideration of 6,495,679 Aurora common shares and $12,558,534 cash. In
addition, The Company acquired a total of 700,600 CanniMed Shares in the open
market for a cost of $16,144,176. As of March 26, 2018, Aurora held 24,213,087
CanniMed Shares, representing approximately 96% of the outstanding CanniMed
Shares. On March 28, 2018, Aurora announced that the Improved Offer had expired,
and that it would complete the acquisition of the remaining outstanding CanniMed
Shares through the compulsory acquisition procedures of the Canada Business
Corporations Act. On April 6, 2018 Aurora commenced the compulsory acquisition
procedures, and expects to acquire the remaining CanniMed Shares on May 1, 2018.
CanniMed shareholders have the opportunity to receive the same consideration and
in the same form as they were entitled to receive under the Improved Offer.
The cash consideration for the Improved
Offer was provided through $55 million of the funds received from the Company’s
offering of Special Warrants completed November 28, 2017 and $85 million of the
funds received from the offering of convertible debentures which was completed
on March 9, 2018. Neither of the offerings were conducted for the specific
purposes of completing the Improved Offer.
|
2.4
|
Effect on Financial
Position
|
On March 2, 2018 prior to the
completion of the acquisition, CanniMed completed the sale of certain non-core
assets, including: (i) SubTerra LLC (“SubTerra”), which operated a facility
located in White Pine, Michigan and has applied for a State of Michigan Class C
Grower License and State of Michigan Processor License, for the production and
processing of cannabis, respectively, (ii) assets relating to CanniMed’s “Fruit
Tree” business, and (iii) the assets known as the Interleukin Platform, for the
processing of Interleukin 37 protein. None of the assets sold currently relate
to cannabis production. The purchase price for the assets was $1.0 million.
CanniMed has initially retained a 19.9% interest in SubTerra and in the
Interleukin Platform.
CanniMed’s assets will be integrated
into Aurora’s current business structure in order to bolster Aurora’s industry
standing, market share and global presence. Aurora has already begun integration
of CanniMed’s assets.
Aurora is not aware of any prior
valuations of CanniMed required by securities legislation or any stock exchange.
|
2.6
|
Parties to Transaction
|
The parties to the transaction
are Aurora Cannabis Inc. and the shareholders of CanniMed. Aurora acted at arm’s
length to all of the CanniMed Shareholders. Aurora entered into lock up
agreements with the holders of 36% of the outstanding CanniMed Shares pursuant
to which the Locked Up Shareholders agreed to tender their CanniMed Shares to
the Original Offer (and the Improved Offer, once it was made) before commencing
the Original Offer. In addition, in connection with the Improved Offer, holders
of an additional 15% of the outstanding CanniMed Shares entered into support
agreements with Aurora, agreeing to tender their shares to the Improved Offer.
All CanniMed Shareholders subject to Lock Up agreements or support agreements
tendered their CanniMed Shares before the initial take up on March 15, 2018.
April 30, 2018
Item 3 Financial Statements
As required by Part 8 of National
Instrument 51-102 –
Continuous Disclosure Obligations,
the following
financial statements are attached hereto:
Appendix A: CanniMed’s annual audited
financial statements for the years ended October 31, 2017 and 2016, with the
report of the auditor thereon;
Appendix B: CanniMed’s unaudited
condensed consolidated interim financial statements for the three months ended
January 31, 2018 and 2017; and
Appendix C: Aurora Cannabis Inc.’s pro
forma consolidated financial statements that give effect to the acquisition of
CanniMed, including:
|
|
(i)
|
pro forma condensed consolidated statement of financial
position as at December 31, 2017
|
|
|
|
|
|
|
(ii)
|
pro forma condensed interim consolidated statement of
comprehensive income (loss) for the six months ended December 31,
2017;
|
|
|
|
|
|
|
(iii)
|
pro forma condensed consolidated statement of
comprehensive income (loss) for the twelve months ended June 30, 2017;
and
|
|
|
|
|
|
|
(iv)
|
Notes thereon.
|
APPENDIX A
C
ANNI
M
ED
’
S ANNUAL AUDITED
FINANCIAL STATEMENTS FOR THE YEARS ENDED
O
CTOBER
31,
2017
AND
2016,
WITH THE REPORT OF
THE AUDITOR THEREON
C
ONSOLIDATED
F
INANCIAL
S
TATEMENTS
O
CTOBER
31,
2017
F
OR FURTHER INFORMATION PLEASE CONTACT
:
CanniMed Therapeutics Inc.
#1 Plant Technology
Road
Saskatoon, Saskatchewan
Canada S7K 3J8
media@cannimed.com
invest@cannimed.com
www.cannimedtherapeutics.com
T
RADING
S
YMBOL
:
TSX – CMED
MANAGEMENT'S RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL
STATEMENTS
The accompanying consolidated financial statements of CanniMed
Therapeutics Inc. are the responsibility of Management and have been approved by
the Board of Directors.
The consolidated financial statements have been prepared by
Management in conformity with International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board ("IASB"). The
consolidated financial statements include amounts that are based on estimates
and judgments. Financial information used elsewhere in the annual report is
consistent with that in the financial statements.
The Management of the Company, in furtherance of the integrity
and objectivity of data in the financial statements, has developed and maintains
a system of internal accounting controls. These internal accounting controls
provide reasonable assurance that financial records are reliable, form a proper
basis for preparation of financial statements and that assets are properly
accounted for and safeguarded. The internal accounting control process includes
Management's communication to employees of policies which govern ethical
business conduct.
The Board of Directors carries out its responsibility for the
consolidated financial statements in this annual report principally through its
audit committee, consisting of independent directors. The audit committee
reviews the Company's annual consolidated financial statements and recommends
their approval to the Board of Directors. The shareholders' auditors have full
access to the audit committee, with and without Management being present.
These consolidated financial statements have been audited by
the shareholders' auditors, Deloitte LLP, in accordance with Canadian generally
accepted auditing standards.
|
/s/
“Brent
Zettl”
|
|
/s/
“John Knowles, CPA, CA”
|
|
Chief Executive Officer
|
|
Chief Financial Officer
|
Date: January 29, 2018
Page 1
|
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Deloitte LLP
|
|
122 1st Ave. S.
|
|
Suite 400
|
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|
Saskatoon SK S7K 7E5
|
|
|
Canada
|
|
|
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|
Tel: +13063434400
|
|
|
Fax: +13063434480
|
|
|
www.deloitte.ca
|
Independent Auditor’s Report
To the Shareholders of
CanniMed Therapeutics Inc.
We have audited the accompanying consolidated financial
statements of CanniMed Therapeutics Inc. which comprise the consolidated
statements of financial position as at October 31, 2017 and 2016, and the
consolidated statements of operations and comprehensive loss, changes in
shareholders’ equity and cash flows for the years then ended, and a summary of
significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial
Statements
Management is responsible for the preparation and fair
presentation of these consolidated financial statements in accordance with
International Financial Reporting Standards, and for such internal control as
management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to
fraud or error.
Auditor’s Responsibility
Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits. We conducted our audits in accordance with Canadian generally accepted
auditing standards. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditor’s judgment, including
the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the consolidated financial statements in
order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made
by management, as well as evaluating the overall presentation of the
consolidated financial statements.
We believe that the audit evidence we have obtained in our
audits is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial
position of CanniMed Therapeutics Inc. as at October 31, 2017 and 2016, and its
financial performance and its cash flows for the years then ended in accordance
with International Financial Reporting Standards.
Chartered Professional Accountants
Licensed Professional
Accountants
January 29, 2018
Saskatoon, Canada
Consolidated Statements of Financial Position
(In
thousands of Canadian dollars)
|
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|
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October 31,
|
|
|
October 31,
|
|
|
As at
|
|
Note
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
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|
(As restated - Note
2
|
)
|
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ASSETS
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
$
|
48,378
|
|
$
|
2,002
|
|
|
Accounts receivable
|
|
7
|
|
|
1,065
|
|
|
1,135
|
|
|
Inventories
|
|
8
|
|
|
9,033
|
|
|
7,979
|
|
|
Biological assets
|
|
9
|
|
|
1,451
|
|
|
481
|
|
|
Prepaid expenses and other assets
|
|
10
|
|
|
58
|
|
|
1,183
|
|
|
|
|
|
|
|
59,985
|
|
|
12,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible debenture receivable
|
|
11
|
|
|
1,003
|
|
|
-
|
|
|
Derivative assets
|
|
11
|
|
|
3,398
|
|
|
-
|
|
|
Property, plant and equipment
|
|
12
|
|
|
38,622
|
|
|
37,365
|
|
|
Intangible assets
|
|
13
|
|
|
2,654
|
|
|
2,134
|
|
|
Goodwill
|
|
|
|
|
492
|
|
|
492
|
|
|
|
|
|
|
$
|
106,154
|
|
$
|
52,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
Accounts
payables and accrued liabilities
|
|
14
|
|
$
|
3,063
|
|
$
|
4,114
|
|
|
Deferred revenue
|
|
|
|
|
136
|
|
|
-
|
|
|
Loans and borrowings
|
|
15
|
|
|
2,558
|
|
|
3,657
|
|
|
|
|
|
|
|
5,757
|
|
|
7,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and borrowings
|
|
15
|
|
|
11,166
|
|
|
25,938
|
|
|
Derivative liability relating
to convertible debt
|
|
15
|
|
|
-
|
|
|
9,673
|
|
|
Deferred income tax liabilities
|
|
|
|
|
57
|
|
|
666
|
|
|
Deferred revenue
|
|
|
|
|
-
|
|
|
101
|
|
|
|
|
|
|
|
11,223
|
|
|
36,378
|
|
|
|
|
|
|
|
16,980
|
|
|
44,149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
17
|
|
|
109,103
|
|
|
22,783
|
|
|
Warrants
|
|
17
|
|
|
100
|
|
|
107
|
|
|
Share-based compensation
reserves
|
|
18
|
|
|
3,673
|
|
|
3,493
|
|
|
Accumulated
other comprehensive income
|
|
|
|
|
52
|
|
|
96
|
|
|
Accumulated deficit
|
|
|
|
|
(23,754
|
)
|
|
(17,857
|
)
|
|
|
|
|
|
|
89,174
|
|
|
8,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
106,154
|
|
$
|
52,771
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
Approved by the Board:
|
/s/ "
Don
Ching, LL.B, B.A."
|
|
/s/
"Dwayne Lashyn"
|
|
|
Director
|
|
Director
|
|
Page 4
Consolidated Statements of Operations and Comprehensive
Loss
(In thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve
Months Ended
|
|
|
|
|
|
|
|
October
31
|
|
|
|
|
Note
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
(As restated - Note
2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
$
|
16,687
|
|
$
|
9,797
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain from changes
in fair value of biological assets
|
|
9
|
|
|
(9,780
|
)
|
|
(4,503
|
)
|
|
Inventory expensed to cost of sales
|
|
|
|
|
11,732
|
|
|
5,155
|
|
|
Production costs
|
|
|
|
|
3,579
|
|
|
1,130
|
|
|
Cost
of sales, net of the unrealized gain on changes in fair value of
biological assets
|
|
|
|
|
5,531
|
|
|
1,782
|
|
|
Gross margin, including the unrealized gain on changes in
fair value of biological assets
|
|
|
|
|
11,156
|
|
|
8,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
|
|
5,394
|
|
|
2,795
|
|
|
Sales and marketing
|
|
|
|
|
4,096
|
|
|
3,310
|
|
|
Freight and distribution
|
|
|
|
|
1,449
|
|
|
831
|
|
|
Research and
development
|
|
|
|
|
1,484
|
|
|
1,555
|
|
|
Foreign exchange loss
|
|
|
|
|
221
|
|
|
207
|
|
|
Research and
development tax credits
|
|
|
|
|
-
|
|
|
(151
|
)
|
|
Loss on derivative instruments
|
|
|
|
|
1,896
|
|
|
8,038
|
|
|
Depreciation and
amortization
|
|
|
|
|
939
|
|
|
832
|
|
|
Share-based compensation
|
|
18
|
|
|
995
|
|
|
435
|
|
|
|
|
|
|
|
16,474
|
|
|
17,852
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations before the following
|
|
|
|
|
(5,318
|
)
|
|
(9,837
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
|
|
188
|
|
|
552
|
|
|
Interest income
|
|
|
|
|
418
|
|
|
2
|
|
|
Finance costs
|
|
|
|
|
(1,571
|
)
|
|
(1,489
|
)
|
|
|
|
|
|
|
(965
|
)
|
|
(935
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from continuing operations before income tax
|
|
|
|
|
(6,283
|
)
|
|
(10,772
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax:
|
|
|
|
|
|
|
|
|
|
|
Deferred tax recovery
|
|
19
|
|
|
386
|
|
|
560
|
|
|
|
|
|
|
|
386
|
|
|
560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss from continuing operations
|
|
|
|
$
|
(5,897
|
)
|
$
|
(10,212
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss from discontinued operations, net of taxes
|
|
20
|
|
|
-
|
|
|
(12,870
|
)
|
|
Net loss for the year
|
|
|
|
$
|
(5,897
|
)
|
$
|
(23,082
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be
reclassified subsequently to profit or loss
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation realized
on disposal of subsidiary
|
|
|
|
|
-
|
|
|
(4,952
|
)
|
|
Foreign currency translation adjustment
|
|
|
|
|
(44
|
)
|
|
211
|
|
|
Comprehensive loss
|
|
|
|
$
|
(5,941
|
)
|
$
|
(27,823
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share from continuing operations
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
21
|
|
$
|
(0.28
|
)
|
$
|
(0.70
|
)
|
|
Diluted
|
|
21
|
|
$
|
(0.28
|
)
|
$
|
(0.70
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
21
|
|
$
|
(0.28
|
)
|
$
|
(1.57
|
)
|
|
Diluted
|
|
21
|
|
$
|
(0.28
|
)
|
$
|
(1.57
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
21,281
|
|
|
14,664
|
|
|
Diluted
|
|
|
|
|
21,281
|
|
|
14,664
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
Page 5
Consolidated Statements of Changes in Shareholders'
Equity
(In thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
|
|
|
other
|
|
|
|
|
|
|
|
|
|
|
Share
|
|
|
|
|
|
compensation
|
|
|
comprehensive
|
|
|
Accumulated
|
|
|
Total
|
|
|
|
|
capital
|
|
|
Warrants
|
|
|
reserves
|
|
|
income
|
|
|
deficit
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - October 31,
2015(As restated - Note 2)
|
$
|
30,859
|
|
$
|
107
|
|
$
|
3,073
|
|
$
|
4,837
|
|
$
|
5,225
|
|
$
|
44,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(23,082
|
)
|
|
(23,082
|
)
|
|
Foreign currency translation realized
on disposal of subsidiary
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(4,952
|
)
|
|
-
|
|
|
(4,952
|
)
|
|
Exchange differences on translating foreign
operations
|
|
-
|
|
|
-
|
|
|
-
|
|
|
211
|
|
|
-
|
|
|
211
|
|
|
Total comprehensive loss for the year
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(4,741
|
)
|
|
(23,082
|
)
|
|
(27,823
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued (
Class "A"
shares
)
|
|
18
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
18
|
|
|
Transfer from
share-based compensation reserve
|
|
15
|
|
|
-
|
|
|
(15
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Common shares redeemed (
Class "A"
shares
)
|
|
(30,892
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(30,892
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued (
Class "D"
shares
)
|
|
22,783
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
22,783
|
|
|
Share-based compensation
|
|
-
|
|
|
-
|
|
|
435
|
|
|
-
|
|
|
-
|
|
|
435
|
|
|
Balance - October 31, 2016
|
$
|
22,783
|
|
$
|
107
|
|
$
|
3,493
|
|
$
|
96
|
|
$
|
(17,857
|
)
|
$
|
8,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(5,897
|
)
|
|
(5,897
|
)
|
|
Exchange differences on translating foreign operations
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(44
|
)
|
|
-
|
|
|
(44
|
)
|
|
Total comprehensive
loss for the year
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(44
|
)
|
|
(5,897
|
)
|
|
(5,941
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued
pursuant to initial public offering, including overallotment option, net
of issue costs
|
|
62,924
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
62,924
|
|
|
Common shares issued pursuant to
debenture conversion
|
|
21,830
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
21,830
|
|
|
Common shares issued
pursuant to warrant exercise
|
|
73
|
|
|
(7
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
66
|
|
|
Common shares issued pursuant to stock
option exercise
|
|
1,493
|
|
|
-
|
|
|
(815
|
)
|
|
-
|
|
|
-
|
|
|
678
|
|
|
Share-based compensation
|
|
-
|
|
|
-
|
|
|
995
|
|
|
-
|
|
|
-
|
|
|
995
|
|
|
Balance - October 31, 2017
|
$
|
109,103
|
|
$
|
100
|
|
$
|
3,673
|
|
$
|
52
|
|
$
|
(23,754
|
)
|
$
|
89,174
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
Page 6
Consolidated Statements of Cash Flows
(In
thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31
|
|
|
October 31
|
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
(As restated - Note 2
|
)
|
|
Cash flows (used in) from
operating activities
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
|
|
|
(5,897
|
)
|
$
|
(23,082
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Items not affecting cash:
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain from changes in fair value of biological
assets
|
|
|
|
|
(9,780
|
)
|
|
(4,503
|
)
|
|
Depreciation of property, plant and equipment
|
|
|
|
|
2,127
|
|
|
1,132
|
|
|
Interest receivable
|
|
|
|
|
29
|
|
|
-
|
|
|
Amortization of intangible assets
|
|
|
|
|
160
|
|
|
256
|
|
|
Share-based compensation
|
|
|
|
|
995
|
|
|
435
|
|
|
Deferred income tax expense (recovery)
|
|
|
|
|
(386
|
)
|
|
(4,022
|
)
|
|
Loss on derivatives
|
|
|
|
|
1,943
|
|
|
8,038
|
|
|
Impairment loss on discontinued operations
|
|
|
|
|
-
|
|
|
19,357
|
|
|
Interest payable
|
|
|
|
|
1,571
|
|
|
1,489
|
|
|
Interest receivable
|
|
|
|
|
(418
|
)
|
|
(2
|
)
|
|
Cash flows used in
operating activities before working capital changes
|
|
|
|
|
(9,656
|
)
|
|
(902
|
)
|
|
Changes in non-cash working capital
|
|
22
|
|
|
6,942
|
|
|
(965
|
)
|
|
Cash used in continuing
operations
|
|
|
|
|
(2,714
|
)
|
|
(1,867
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows (used in) from
investing activities
|
|
|
|
|
|
|
|
|
|
|
Interest received
|
|
|
|
|
418
|
|
|
2
|
|
|
Purchase of
convertible debenture
|
|
11
|
|
|
(4,000
|
)
|
|
-
|
|
|
Purchase of property, plant and
equipment
|
|
12
|
|
|
(2,363
|
)
|
|
(1,998
|
)
|
|
Investment in deferred development costs
|
|
13
|
|
|
(681
|
)
|
|
(512
|
)
|
|
Cash
used in investing activities
|
|
|
|
|
(6,626
|
)
|
|
(2,508
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows (used in) from financing
activities
|
|
|
|
|
|
|
|
|
|
|
Proceeds from
issuance of common shares, net of issue costs
|
|
17
|
|
|
63,621
|
|
|
18
|
|
|
Net cash outflow on disposal of
subsidiaries
|
|
|
|
|
-
|
|
|
(371
|
)
|
|
Interest paid
|
|
|
|
|
(1,571
|
)
|
|
(1,489
|
)
|
|
Proceeds from loans and
borrowings
|
|
|
|
|
-
|
|
|
9,357
|
|
|
Repayment of
loans and borrowings
|
|
15
|
|
|
(6,326
|
)
|
|
(2,861
|
)
|
|
Repayment of finance leases
|
|
15
|
|
|
(8
|
)
|
|
(68
|
)
|
|
Cash from financing activities
|
|
|
|
|
55,716
|
|
|
4,586
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in cash
|
|
|
|
|
46,376
|
|
|
211
|
|
|
Cash, beginning of year
|
|
|
|
|
2,002
|
|
|
1,791
|
|
|
Cash and cash equivalents, end of year
|
$
|
|
|
|
48,378
|
|
$
|
2,002
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
Page 7
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
CanniMed Therapeutics Inc. (“CanniMed”) is a company
incorporated in Canada, with its registered and head office located at #1 Plant
Technology Road, Saskatoon, SK., Canada, S7K 3J8.
The principal business activities of CanniMed and its
subsidiaries (collectively “the Company”) are plant biotechnology research,
product development and the production of plant based materials for
biopharmaceutical, agricultural and environmental market applications. The
Company is a licensed producer and distributor of medical cannabis pursuant to
the provisions of the Access to Cannabis for Medical Purposes Regulations
(“ACMPR”) and the Controlled Drugs and Substances Act and its Regulations.
|
2.
|
Correction of an Immaterial
Error
|
During the fourth quarter, the Company completed a review of
its inventory and biological asset model (“Model”), including the estimates and
assumptions within the Model. During this review, Management identified an
immaterial error that impacts 2016 and years prior to 2016. Specifically,
opening Inventories and Biological assets in 2016 were overstated by $1.6
million. In addition, in conjunction with this review, a related immaterial tax
error was also identified and corrected. Accordingly, the Company has recorded
an adjustment to opening retained earnings for fiscal 2016. The Company has
restated the Consolidated Statement of Financial Position, Consolidated
Statement of Changes in Shareholders’ Equity, Consolidated Statement of
Operations and Comprehensive loss and the Consolidated Statement of Cash Flows
to correct the error.
The following table presents the impact on fiscal 2016’s
opening retained earnings:
|
|
|
As at
|
|
|
|
|
|
As at
|
|
|
|
|
October 31, 2015
|
|
|
Adjustment
|
|
|
October 31, 2015
|
|
|
|
|
(Previously
Reported)
|
|
|
|
|
|
(As Restated)
|
|
|
Accumulated retained earnings
|
|
|
|
|
|
|
|
|
|
|
Inventories and Biological assets
|
|
|
|
$
|
(1,552
|
)
|
|
|
|
|
Deferred tax, net
|
|
|
|
$
|
(187
|
)
|
|
|
|
|
|
$
|
6,964
|
|
|
(1,739
|
)
|
|
5,225
|
|
The following table presents the balances previously reported
and as restated in the Consolidate Statement of Financial Position and
Consolidated Statement of Changes in Shareholders’ Equity:
|
|
|
As at
|
|
|
|
|
|
As at
|
|
|
|
|
October 31, 2016
|
|
|
Adjustment
|
|
|
October 31, 2016
|
|
|
|
|
(Previously
Reported)
|
|
|
|
|
|
(As Restated)
|
|
|
Inventories
|
$
|
9,938
|
|
$
|
(1,959
|
)
|
$
|
7,979
|
|
|
Biological assets
|
$
|
428
|
|
$
|
53
|
|
$
|
481
|
|
|
Total current assets
|
$
|
14,686
|
|
$
|
(1,906
|
)
|
$
|
12,780
|
|
|
Deferred tax liability
|
$
|
(568
|
)
|
$
|
(98
|
)
|
$
|
(666
|
)
|
|
Accumulated deficit
|
$
|
(15,853
|
)
|
$
|
(2,004
|
)
|
$
|
(17,857
|
)
|
|
Total liabilities and shareholders’ equity
|
$
|
54,677
|
|
$
|
(1,906
|
)
|
$
|
52,771
|
|
Page 8
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
The following table presents the amounts as previously reported
and as restated in the Consolidated Statement of Operations and Comprehensive
loss for the year ended October 31, 2016:
|
|
|
Twelve Months
Ended
|
|
|
|
|
|
Twelve Months
Ended
|
|
|
|
|
October 31, 2016
|
|
|
Adjustment
|
|
|
October 31, 2016
|
|
|
|
|
(Previously
Reported)
|
|
|
|
|
|
(As Restated)
|
|
|
Unrealized gain on changes in
fair value
|
$
|
(3,797
|
)
|
$
|
(706
|
)
|
$
|
(4,503
|
)
|
|
of biological assets
|
|
|
|
|
|
|
|
|
|
|
Inventory expensed to cost of
sales
|
$
|
4,218
|
|
$
|
937
|
|
$
|
5,155
|
|
|
Gross margin
|
$
|
8,246
|
|
$
|
(231
|
)
|
$
|
8,015
|
|
|
Research and development
|
|
1,432
|
|
|
123
|
|
|
1,555
|
|
|
Loss from continuing operations
|
$
|
(10,418
|
)
|
$
|
(354
|
)
|
$
|
(10,772
|
)
|
|
Deferred tax recovery
|
|
471
|
|
|
89
|
|
|
560
|
|
|
Loss from continuing operations, net of tax
|
$
|
(9,947
|
)
|
$
|
(265
|
)
|
$
|
(10,212
|
)
|
The Company previously reported a loss per share from
continuing operations of $0.68 for the year ended October 31, 2016. As restated,
the loss per share became to $0.70.
Statement of compliance
These consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (“IFRS”), as issued
by the International Accounting Standards Board.
These consolidated financial statements were authorized for
issue by the Company’s Board of Directors on January 26, 2018.
Details of the Company’s accounting policies, including future
changes, are included in Notes 4 and 5.
Corporate reorganization
Since acquiring all of the shares of Prairie Plant Systems Inc.
(“PPS”) on November 1, 2016, PPS has been a wholly-owned subsidiary of CanniMed.
On October 31, 2016, prior to its acquisition by CanniMed, PPS completed a
corporate reorganization (the “Reorganization”).
Prior to the Reorganization, shareholders of PPS held 3,667,695
Class “A” common shares in the capital of PPS (the “Old Shares”) and PPS owned
all of the shares of PPS USA Holdings, Inc. Also, prior to the Reorganization,
PPS created a new wholly-owned subsidiary, PM Power Group Holdings Ltd. (“PM
Power”) which acquired all of the shares of PPS USA Holdings, Inc. Another
holding company, CanniMed, was also created. Pursuant to a share exchange
agreement entered into with each of its shareholders (the “Share Exchange
Agreements”), PPS amended its capital by filing articles of amendment to create
an unlimited number of Class “D” shares, and PPS shareholders then transferred
to PPS their Old Shares effective on October 31, 2016 in exchange for one Class
“D” share of PPS (the “New Shares”) and one common share of PM Power (the “PM
Shares”) for each Old Share held by the PPS shareholders.
On November 1, 2016, CanniMed acquired 100 percent of the Class
“D” shares of PPS by executing a share exchange transaction on a 4:1 basis where
CanniMed issued 14,670,780 CanniMed common shares to PPS’ shareholders in
exchange for their 3,667,695 Class “D” shares of PPS. As a result of this
transaction, former shareholders of PPS held 100 percent of the common shares of
CanniMed, and CanniMed became the holder of 100 percent of the issued and
outstanding shares of PPS.
Page 9
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
In relation to the transaction whereby CanniMed acquired 100%
of the PPS Class D shares, CanniMed is considered the acquirer and the PPS the
acquiree. The acquisition was recorded using the previous carrying values of
PPS’s assets and liabilities as the acquisition of the shares did not result in
a substantial change in ownership. Moreover, the consolidated financial
statements are under the name of CanniMed; however, they are a continuation of
the financial statements of PPS, which had a financial year end of October 31,
2016. As a result, the comparative figures presented are those of PPS.
Basis of measurement
These consolidated financial statements have been prepared on
the historical cost basis except for biological assets and certain financial
instruments, which are measured at fair value.
Historical cost is generally based on the fair value of the
consideration given in exchange for assets.
Functional and presentation currency
These consolidated financial statements are presented in
Canadian dollars, which is CanniMed’s functional and presentation currency. The
subsidiary located in the United States of America has a U.S. dollar functional
currency and the subsidiaries located in Canada have a Canadian dollar
functional currency.
Basis of consolidation
These consolidated financial statements incorporate the
accounts of CanniMed and entities controlled by it. Control exists when CanniMed
has the power to govern the financial and operating policies of an entity so as
to obtain benefits from its activities. In assessing control, potential voting
rights that currently are exercisable are taken into account. The accounts of
subsidiaries are included in the consolidated financial statements of the
Company from the date that control commences until the date that control ceases.
Specifically, income and expenses of the subsidiary acquired or disposed of
during the year are included in the consolidated statement of profit or loss and
other comprehensive income from the date the Company gains control until the
date when the Company ceases to control the subsidiary.
When the Company loses control of a subsidiary, a gain or loss
is recognized in the profit or loss and is calculated as the difference between
(i) the aggregate of the fair value of the consideration received and the fair
value of any retained interest and (ii) the previous carrying amount of the
assets (including goodwill), and liabilities of the subsidiary interest. All
amounts previously recognized in other comprehensive income in relation to that
subsidiary are accounted for as if the Company had directly disposed of the
related assets or liabilities.
At October 31, 2017, the Company had the following wholly-owned
subsidiary corporations: Prairie Plant Systems Inc. (operating in Canada),
CanniMed Ltd. (operating in Canada), SubTerra (operating in the US), 10420484
Canada Inc. (operating in Canada) and CanniMed International Ltd. (a holding
company incorporated in Canada). Intercompany balances and transactions, and any
unrealized income and expenses arising from intercompany transactions, are
eliminated in preparing the consolidated financial statements.
|
4.
|
Significant accounting
policies
|
The significant accounting policies utilized by the Company
have been applied consistently to all periods presented in these consolidated
financial statements.
Transactions in foreign currencies are translated to the
respective functional currencies of each entity at monthly average exchange
rates. Monetary assets and liabilities denominated in foreign currencies at the
consolidated statement of financial position date are translated to each
entity’s functional currency at the foreign exchange rate applicable at that date. Non-monetary
assets and liabilities that are measured in terms of historical cost in a
foreign currency are translated using the foreign exchange rate at the date of
the transaction. Realized and unrealized exchange gains and losses are
recognized in the consolidated statement of operations. Foreign currency gains
and losses are reported on a net basis.
Page 10
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
The assets and liabilities of the Company’s foreign operations
are translated into Canadian dollars, CanniMed’s functional currency, using
exchange rates prevailing at the reporting period. The income and expense
transactions of foreign operations are translated to Canadian dollars at the
monthly average exchange rates, unless exchange rates fluctuate significantly
during that period, in which case the exchange rates at the dates of the
transactions are used. Foreign currency differences on translation to the
reporting currency are recognized directly in accumulated other comprehensive
income.
On the disposal of a foreign operations (i.e. a disposal of the
Group’s entire interest in a foreign operations), all of the exchange difference
accumulated in equity in respect of that operation attributable to the owners of
the Company are reclassified to profit or loss.
|
(b)
|
Business combinations
|
The acquisition method of accounting is used to account for
acquisitions of subsidiaries and assets that meet the definition of a business
under IFRS. The cost of an acquisition is measured as the fair value of the
assets given, equity instruments issued and liabilities incurred or assumed at
the date of acquisition. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured initially
at their fair values at the acquisition date. The excess of the cost of
acquisition over the fair value of the identifiable assets, liabilities and
contingent liabilities acquired is recorded as goodwill. If the cost of an
acquisition is less than the fair value of the net assets of the subsidiary
acquired, the difference is recognized immediately in the statement of
operations as a bargain purchase gain. Associated transaction costs are expensed
when incurred.
|
(c)
|
Cash and cash equivalents
|
Cash and cash equivalents consists of cash held at banks and
restricted cash.
Inventories of materials and supplies are valued at the lower
of cost and net realizable value. Inventories of harvested plants are
transferred from biological assets at their fair value at harvest, which becomes
deemed cost. Any subsequent post-harvest costs are capitalized to inventory to
the extent that cost is less than net realizable value. Net realizable value is
determined as the estimated selling price in the ordinary course of business
less the estimated costs of completion and the estimated costs necessary to make
the sale. Cost is determined using average cost.
The Company measures biological assets, consisting of plants,
at fair value less cost to sell up to the point of harvest. Agricultural produce
consisting of plant produce is measured at fair value less cost to sell at the
point of harvest, which becomes the basis for the cost of finished goods
inventories after harvest.
Unrealized gains or losses arising from changes in fair value
less cost to sell during the year, including the impact on the carrying amount
of inventory, are included in the consolidated statement of operations and
comprehensive income.
Page 11
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
|
(f)
|
Convertible debenture
receivable
|
The Company’s note receivable is presented separately from the
conversion feature and warrants. The Company estimates the carrying value of the
note receivable component using a discounted cash flow model, and estimated the
fair value of the conversion feature and warrants using the Black-Scholes option
pricing model. The value of the conversion feature is remeasured at each
reporting date until settlement, with changes in the fair value recorded in the
consolidated statements of (loss) income.
|
(g)
|
Property, plant and
equipment
|
Property, plant and equipment are measured at cost less
accumulated amortization and impairment losses. Amortization is provided on a
straight line basis as follows:
|
|
Buildings
|
5% to 10%
|
|
|
Production equipment
|
|
|
|
• Growing equipment
|
20% to 30%
|
|
|
• Power equipment
|
10% to 20%
|
|
|
Office and other equipment
|
20% to 100%
|
|
|
Assets under finance lease
|
5%
|
An asset's residual value, useful lives and amortization method
are reviewed at each reporting period and, if appropriate, adjusted on a
prospective basis as a change in estimate. When parts of an item of property,
plant and equipment have different useful lives, they are accounted for as
separate items (major components) of property, plant and equipment.
Gains and losses on disposal of an item are determined by
comparing the proceeds from disposal with the carrying amount of the property,
plant and equipment and are recognized in profit or loss.
Intangible assets with finite useful lives are comprised of
costs incurred to acquire patent protection and internally generated project
development costs, both of which are recorded at cost less accumulated
amortization and accumulated impairment losses. The deferred patents costs are
amortized on a straight-line basis over the life of the related patent once the
patent has been awarded. Development costs are amortized on a straight-line
basis over 10 years. The estimated useful life and amortization method are
reviewed at the end of each reporting period, with the effect of any changes in
estimate being accounted for on a prospective basis.
Research costs are expensed as incurred. Development
expenditures are capitalized only if development costs can be measured reliably,
the product or process is technically and commercially feasible, future economic
benefits are probable, and the Company intends to and has sufficient resources
to complete development to use or sell the asset. Other development expenditures
are recognized as general and administrative expenses in the consolidated
statement of operations and comprehensive loss as incurred.
Intangible assets with indefinite useful lives are tested for
impairment at least annually, and whenever there is an indication that the asset
may be impaired.
|
(i)
|
Impairment of long-lived
assets
|
Long-lived assets, including property plant and equipment and
intangible assets are reviewed to determine whether there is any indicators of
impairment at each consolidated statement of financial position date or whenever
events or changes in circumstances indicate that the carrying amount of an asset
exceeds its recoverable amount. For the purposes of impairment testing, assets
that cannot be tested individually are grouped together into the smallest group
of assets that generates cash inflows from continuing use that
are largely independent of the cash inflows of other assets or groups of assets
(the cash-generating unit, or “CGU”). The recoverable amount of an asset or a
CGU is the higher of its fair value less costs to sell and its value in use. If
the carrying amount of an asset exceeds its recoverable amount, an impairment
charge is recognized immediately in profit or loss by the amount by which the
carrying amount of the asset exceeds the recoverable amount. Where an impairment
loss subsequently reverses, the carrying amount of the asset is increased to the
lessor of the revised estimate of recoverable amount, and the carrying amount
that would have been recorded had no impairment loss been recognized previously.
Page 12
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
Goodwill arising on an acquisition of a business is carried at
cost as established at the date of acquisition of the business less accumulated
impairment losses, if any.
Goodwill is evaluated for impairment annually or more often if
events or circumstances indicate there may be an impairment. Impairment is
determined for goodwill by assessing if the carrying value of a CGU, including
the allocated goodwill, exceeds its recoverable amount determined as the greater
of the estimated fair value less costs to sell and the value in use. Impairment
losses recognized in respect of a CGU are first allocated to the carrying value
of goodwill and any excess is allocated to the carrying amount of assets in the
CGU. Any goodwill impairment is recorded in profit or loss in the period in
which the impairment is identified. Impairment losses on goodwill are not
subsequently reversed. For the purposes of impairment testing, goodwill is
allocated to each of the Company's CGUs, or groups of CGUs, expected to benefit
from the synergies of the combination.
On disposal of the relevant CGU, the attributable amount of
goodwill is included in the determination of the profit or loss on disposal.
A provision is recognized if, as a result of a past event, the
Company has a present obligation or constructive obligation that can be
estimated reliably and it is probable that an outflow of economic benefits will
be required to settle the obligation. Provisions are determined by discounting
the expected future cash flows at a pre-tax risk free rate.
Government grants are not recognized until there is reasonable
assurance that the Company will comply with the conditions attached to the
grants and that the grants will be received.
Government grants are recognized in profit or loss on a
systematic basis over the periods in which the Company recognizes as expenses
the related costs for which the grants are intended to compensate. Government
grants whose primary condition is that the Company purchase, construct or
otherwise acquire non-current assets are recognized as deferred revenue in the
consolidated statement of financial position and transferred to profit or loss
on a systematic and rational basis over the useful lives of the related assets.
Leases are classified as an operating lease whenever the terms
of the lease do not transfer substantially all of the risks and rewards of
ownership to the lessee, in which case the lease is classified as a finance
lease and the asset is treated as if it had been purchased outright.
Operating leases payments are recognized as an expense on a
straight-line basis over the lease term, except where another systematic basis
is more representative of the time pattern in which the economic benefits are
consumed.
Page 13
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
For finance leases, the amount initially recognized as an asset
is the lower of the fair value of the leased property and the value of the
minimum lease payments payable over the term of the lease. The corresponding
lease commitment is shown as a liability. Lease payments are analyzed between
finance expenses and reduction of the lease obligation. The interest element is
charged to the consolidated statement of operations over the period of the lease
and is calculated so that it represents a constant proportion of the lease
liability. The capital element reduces the balance owed to the lessor.
|
(n)
|
Discontinued operation – Non-current assets held for
sale
|
A discontinued operation is a component of the Company’s
business, the operations and cash flows of which can be clearly distinguished
from the Company and which:
|
|
•
|
Represents a separate major line of business or
geographical area of operations;
|
|
|
•
|
Is part of a single coordinated plan to dispose of a
separate major line of business or geographical area of operations; or
|
|
|
•
|
Is a subsidiary acquired exclusively with a view to re-
sale.
|
Classification as a discontinued operation occurs on disposal
by sale, closure or abandonment or when the operation meets the criteria to be
held-for-sale, if earlier.
With the classification of PM Power Group ("PMPG”) as a
discontinued operation, the comparative statement of operations and
comprehensive (loss) income has been reclassified as if the operation had been
discontinued from the start of the comparative year.
Non-current assets (and disposal groups) classified as a
discontinued operation are measured at lower of the carrying amount and fair
value less cost to sell.
Revenue is measured at the fair value of the consideration
received or receivable. Revenue from the sale of goods is recognized when the
Company has transferred the significant risks and rewards of ownership to the
customer, the amount of revenue can be reliably measured and it is probable that
the economic benefits of the transaction will flow to the Company. Significant
risks and rewards are generally considered to be transferred when the Company
has shipped the product to customers.
A former subsidiary of the Company, PMPG, receives revenue from
the sale of power; PMPG ceased being a subsidiary of the Company on October 31,
2016. The Company considered the detailed criteria for the recognition of
revenue from the sale of power set out in IAS 18, specifically whether the
amount of revenue can be measured reliably. Under a negotiated annual agreement
with the Midcontinent Independent System Operator (“MISO”), the entity is
awarded compensation according to a schedule of costs, including anticipated
capital repairs and related projects, which reflects the MISO tariff in place
during the settlement period, for the cost of operating and maintaining its
natural gas power plant. MISO pays the entity a monthly allocation during the
term of the agreement along with supplemental payments prorated for any partial
monthly availability for service as a System Support Resource (“SSR”) unit. Each
monthly SSR payment is made regardless of dispatch of the SSR Unit during that
month. Revenue is recognized according to the consideration that the entity
expects to be entitled to from MISO over the term of the agreement and on an
accrual basis.
PMPG also has a Michigan Licensed Alternative Electric Supply
business, UP Power Marketing, LLC (“UPPM”), fully licensed within the State of
Michigan to sell retail electric energy. The energy revenue is recognized upon
delivery of electricity to the customers. These contributions
are recognized immediately in profit or loss as revenue under UPPM.
Page 14
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
Short-term Employee Benefits
Short-term employee benefit obligations are expensed as the
related service is provided. A liability is recognized for the amount expected
to be paid under short-term cash bonus plans if the Company has a present legal
or constructive obligation to pay this amount as a result of past service
provided by the employee and the obligation can be estimated reliably.
Group RSP / Deferred Profit Sharing Plan
The Company has a group registered savings plan (“Group RSP”).
Employees are required to participate in the Group RSP plan after six months of
employment. Pursuant to the Group RSP, the Company provides a two percent match
to those employed between six months and two years and a three percent match to
those who have over two years of continuous employment. The employer portion of
the Deferred Profit Sharing Plan will vest after the employee has completed two
years of plan membership.
Share-based compensation
The Company has an employee stock option plan. The Company
measures equity settled share-based payments based on their fair value at the
grant date and recognizes compensation expense over the vesting period based on
the Company’s estimate of equity instruments that will eventually vest. Fair
value is measured using the Black-Scholes option pricing model. Expected
forfeitures are estimated at the date of grant and subsequently adjusted if
further information indicates actual forfeitures may vary from the original
estimate. The impact of the revision of the original estimate is recognized in
profit or loss such that the cumulative expense reflects the revised estimate.
Consideration paid by employees on the exercise of stock
options is recorded as share capital and the related share-based compensation is
transferred from stock-based compensation reserves to share capital.
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are assets that
necessarily take a substantial period of time to get ready for their intended
use or sale, are added to the cost of those assets, until such time as the
assets are substantially ready for their intended use or sale.
All other borrowing costs are recognized in profit or loss in
the period in which they are incurred.
Income tax expense (recovery) represents the sum of the tax
currently payable and deferred tax.
The current tax expense (recovery) is based on taxable profit
for the year. Taxable profit differs from income (loss) as reported in the
consolidated statements of operations and comprehensive income because of items
of income or expense that are taxable or deductible in other years and items
that are never taxable or deductible. The Company’s current tax is calculated
using tax rates that have been enacted or substantively enacted by the end of
the year.
Deferred tax is recognized on temporary differences between the
carrying amounts of assets and liabilities in the consolidated financial
statements and the corresponding tax bases used in the computation of taxable
profit. Deferred tax liabilities are generally recognized for all taxable
temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences
to the extent that it is probable that taxable profits will be available against
which those deductible temporary differences can be utilized. Such deferred tax
assets and liabilities are not recognized if the temporary difference arises
from the initial recognition (other than in a business combination) of assets
and liabilities in a transaction that affects neither the taxable profit nor the
accounting profit. In addition, deferred tax liabilities are not recognized if
the temporary difference arises from the initial recognition of goodwill.
Deferred income tax is charged or credited to net income (loss), except when
related to items charged or credited to either other comprehensive income or
directly to equity.
Page 15
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
The carrying amount of deferred tax assets is reviewed at the
end of each reporting period and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part
of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax
rates that are expected to apply in the period in which the liability is settled
or the asset realized, based on tax rates (and tax laws) that have been enacted
or substantively enacted by the end of the year.
The measurement of deferred tax liabilities and assets reflects
the tax consequences that would follow from the manner in which the Company
expects, at the end of the year, to recover or settle the carrying amount of its
assets and liabilities.
The Company presents basic and diluted earnings per share data
for its common shares. Basic earnings per share is calculated by dividing the
earnings attributable to common shareholders of the Company by the weighted
average number of common shares outstanding during the year. Diluted earnings
per share is determined by adjusting the earnings attributable to common
shareholders and the weighted average number of common shares outstanding, for
the effects of all dilutive potential common shares, relating to warrants and
share options issued.
|
(t)
|
Financial instruments
|
Financial assets and financial liabilities are recognized when
a Company entity becomes a party to the contractual provisions of the
instruments.
Financial assets and financial liabilities are initially
measured at fair value on the date that they are originated. The Company
derecognizes a financial asset when the contractual rights to the cash flows
from the asset expire, or it transfers the rights to receive the contractual
cash flows on the financial asset in a transaction in which substantially all
the risks and rewards of ownership of the financial asset are transferred. Any
interest in transferred assets that is created or retained by the Company is
recognized as a separate asset or liability. The Company derecognizes a
financial liability when its contractual obligations are discharged or cancelled
or expire.
Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial liabilities, other than
financial assets and financial liabilities at fair value through profit or loss,
are added to or deducted from the fair value of the financial assets or
financial liabilities, as appropriate, on initial recognition. Transaction costs
directly attributable to the acquisition of financial assets or financial
liabilities at fair value through profit or loss are recognized immediately in
profit or loss.
Financial assets
The Company classifies its financial assets as financial assets
at fair value through profit or loss, loans and receivables, or available for
sale. A financial asset is classified at fair value through profit or loss if it
is classified as held for trading or is designated as such upon initial
recognition. Financial assets are designated at fair value through profit or
loss if the Company manages such investments and makes purchase and sale
decisions based on their fair value in accordance with the Company’s documented
risk management or investment strategy. Financial assets at fair value through
profit or loss are measured at fair value, and changes therein are recognized in
profit or loss.
Page 16
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
Loans and receivables are financial assets with fixed or
determinable payments that are not quoted in an active market. Such assets are
recognized initially at fair value. Subsequent to initial recognition loans and
receivables are measured at amortized cost using the effective interest method,
less any impairment losses.
Available for sale financial assets are non-derivatives that
are either designated as available for sale or are not classified as:
|
|
(a)
|
loans and receivables,
|
|
|
(b)
|
held-to-maturity investments; or
|
|
|
(c)
|
financial assets at fair value through profit or
loss.
|
Financial liabilities and equity instruments
The Company classifies its financial liabilities as either
financial liabilities at fair value through profit or loss or other liabilities.
Subsequent to initial recognition other liabilities are measured at amortized
cost using the effective interest method. Financial liabilities at fair value
are stated at fair value with changes being recognized in profit or loss.
The effective interest method is a method of calculating the
amortized cost of a financial instrument and of allocating interest over the
relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash payments through the expected life of the financial
instrument to the net carrying amount on initial recognition.
Debt and equity instruments issued by the Company are
classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangements and the definitions of a financial
liability and an equity instrument.
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its liabilities.
Equity instruments issued by an entity are recognized at the proceeds received,
net of direct issue costs.
Repurchase of the Company's own equity instruments is
recognized and deducted directly in equity. No gain or loss is recognized in
profit or loss on the purchase, sale, issue or cancellation of the Company's own
equity instruments.
Classification of financial instruments
The Company classifies it financial assets and liabilities
depending on the purpose for which the financial instruments were acquired,
their characteristics, and management intent as outlined below:
|
Classification
|
|
|
Cash and cash equivalents
|
Loans and receivable
|
|
Accounts receivable
|
Loans and
receivable
|
|
Convertible debenture receivable
|
Loans and receivable
|
|
Derivable asset
|
Fair value
through profit and loss
|
|
Accounts payable and accrued liabilities
|
Other liabilities
|
|
Derivative instrument
liabilities
|
Fair value
through profit and loss
|
|
Loans and borrowings
|
Other liabilities
|
Page 17
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
Derivative financial instruments
The Company enters into a variety of derivative financial
instruments to manage its exposure to interest rate transactions. Derivatives
are initially recognized at fair value at the date the derivative contracts are
entered into and subsequently re-measured at fair value at the end of each
reporting date. The resulting gain or loss is recognized in the profit or
loss.
Transaction costs are netted against the proceeds received. The
liability portion of the debenture has been designated as other financial
liability and is initially recognized at fair value. Subsequent to initial
recognition, the debenture is measured at amortized cost using the effective
interest method. The common share purchase warrants are initially recognized at
fair value and are not re-measured subsequent to initial recognition.
Impairment of financial assets
Financial assets, other than those at fair value through profit
or loss, are assessed for indicators of impairment at the end of each reporting
period. Financial assets are considered to be impaired when there is objective
evidence that, as a result of one or more events that occurred after the initial
recognition of the financial asset, the estimated future cash flows of the
investment have been affected.
Changes in Accounting Policies
The Company has adopted the following new standards, along with
any consequential amendments, effective November 1, 2016. These changes were
made in accordance with the applicable transitional provisions.
Amendments to IAS 16 and IAS 41 Agriculture: Bearer
Plants
This amendment provides guidance regarding the accounting for
bearer plants by providing a definition of bearer plants and brings bearer
plants within the scope of IAS 16 from IAS 41. The amendment is effective for
annual reporting periods beginning on or after January 1, 2016, and has been
applied retrospectively. The amendment did not have a significant impact on the
Company’s consolidated financial statements as the carrying cost of bearer
plants is negligible.
Disclosure Initiative (Amendments to IAS 1)
On December 18, 2014, the IASB issued amendments to IAS 1
Presentation of Financial Statements as part of its major initiative to improve
presentation and disclosure in financial statements. The amendments are
effective for annual periods beginning on or after January 1, 2016. These
amendments did not have a significant impact on the Company’s consolidated
financial statements.
IFRS 10 Consolidated Financial Statements
In September 2014, IFRS 10 was amended to clarify an
inconsistency between this standard and IAS 28,
Investments in Associates and
Joint Ventures
. The amendment requires that a full gain or loss is
recognized when a transaction involves a business (whether it is housed in a
subsidiary or not). A partial gain or loss is recognized when a transaction
involves assets that do not constitute a business, even if the assets are housed
in a subsidiary. The amendment is effective for annual reporting periods
beginning on or after January 1, 2016. This amendment did not have an impact on
the consolidated financial statements of the Company.
Page 18
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
Future Changes in Accounting Policies
These are the changes that the Company reasonably expects will
have an impact on its disclosures, financial position or performance when
applied at a future date. The Company intends to adopt these standards, if
applicable, when they become effective.
IFRS 15 Revenue from Contracts with Customers
In May 2014, IFRS 15 was issued by the International Accounting
Standards Board (“IASB”) which provides a comprehensive framework for
recognition, measurement, and disclosure of revenue from contracts with
customers, excluding contracts within the scope of the standards on leases,
insurance contracts and financial instruments. IFRS 15 is effective for annual
periods beginning on or after January 1, 2018, with early application permitted.
Entities have the option of using either a full retrospective or a modified
retrospective approach to adopt the guidance. The Company is currently assessing
the potential impacts of IFRS 15.
IFRS 9 Financial Instruments
IFRS 9 was issued by IASB in November 2009 and October 2010 and
will replace IAS 39. IFRS 9 uses a single approach to determine whether a
financial asset is measured at amortized cost or fair value, replacing the
multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity
manages its financial instruments in the context of its business model and the
contractual cash flow characteristics of the financial assets. Two measurement
categories continue to exist to account for financial liabilities in IFRS 9,
fair value through profit or loss and amortized cost. Financial liabilities
held-for-trading are measured at fair value through profit or loss, and all
other financial liabilities are measured at amortized cost unless the fair value
option is applied. The treatment of embedded derivatives under the new standard
is consistent with IAS 39 and is applied to financial liabilities and
non-derivative hosts not within the scope of the standard. IFRS 9 is effective
for annual periods beginning on or after January 1, 2018, with early application
permitted. The Company is currently assessing the potential impact of IFRS
9.
IFRS 16 Leases
In January 2016, the IASB issued IFRS 16, which specifies how
an IFRS reporter will recognize, measure, present and disclose leases. The
standard provides a single lessee accounting model, requiring lessees to
recognize assets and liabilities for all leases unless the lease term is 12
months or less or the underlying asset has a low value. Lessors continue to
classify leases as operating or finance, with IFRS 16’s approach to lessor
accounting substantially unchanged from its predecessor, IAS 17. IFRS 16 is
effective for annual reporting periods beginning on or after January 1, 2019,
and a lessee shall either apply IFRS 16 with full retrospective effect or
alternatively not restate comparative information but recognize the cumulative
effect of initially applying IFRS 16 as an adjustment to opening equity at the
date of initial application. The Company is currently assessing the potential
impact of IFRS 16.
IFRS 2 Share-Based Payment
In June 2016, the IASB issued amendments to IFRS 2. These
amendments provide clarification on how to account for certain types of
share-based payment transactions. The amendments are effective for the annual
period beginning on or after January 1, 2018. The extent of the impact of the
adoption of the amendments has not yet been determined.
IAS 7 Statement of Cash Flows
As part of their disclosure initiative, the IASB has issued
amendments to IAS 7 Statement of Cash Flows requiring a reconciliation of
liabilities arising from financing activities to enable users of the financial
statements to evaluate both cash flow and non-cash changes in the net debt of a
Company. The amendments to IAS 7 are effective for annual periods beginning on or after January 1, 2017. The
Company will adopt these amendments in its financial statements for the year
beginning on November 1, 2017. The extent of the impact of adoption of the
amendments has not yet been determined.
Page 19
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
IAS 12 Income Taxes
In January 2016, the IASB issued amendments to IAS 12 to
provide clarification on the requirements relating to the recognition of
deferred tax assets for unrealized losses on debt instruments measured at fair
value. Adoption of the amendments to IAS 12 is required for the annual period
beginning on or after January 1, 2017. The Company will adopt these amendments
in its financial statements for the year beginning on November 1, 2017. The
extent of the impact of adoption of the amendments has not yet been determined.
|
6.
|
Critical accounting estimates and
judgements:
|
The preparation of the consolidated financial statements in
conformity with IFRS requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results may differ
from these estimates. Estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognized in the year in
which the estimates are revised and in any future years affected.
Critical judgements in applying accounting policies
Revenue recognition
In relation to its discontinued operation, the Company
considered the detailed criteria for the recognition of revenue from the sale of
power set out in IAS 18, specifically whether the amount of revenue could be
measured reliably. As a result, management made judgements regarding whether the
amount of revenue could be measured reliably and determined that the revenue
recognized under these contracts could be measured reliably.
Key sources of estimation uncertainty
Valuation of biological assets and inventories
Biological assets consisting of cannabis plants are measured at
fair value less costs to sell up to the point of harvest. Determination of the
fair values of the biological assets requires the Company to make assumptions
about how market participants assign fair values to these assets. These
assumptions primarily relate to the level of effort required to bring the
cannabis plants up to the point of harvest, costs to convert the harvested
plants to finished goods, sales price, risk of loss, expected remaining future
yields for the plants, and estimating values during the growth cycle.
The valuation of biological assets at the point of harvest is
the cost basis for all cannabis based inventory and thus any critical estimates
and judgements related to the valuation of biological assets are also applicable
for inventory. The valuation of work in process and finished goods also requires
the estimate of conversion costs incurred, which become part of the carrying
amount for the inventory. The Company must also determine if the cost of any
inventory exceeds its net realizable value, such as cases where prices have
decreased, or inventory has spoiled or has otherwise been damaged. See Note 8
for additional information with respect to the estimates contained within
biological assets.
Estimated useful lives and amortization of property plant
and equipment and intangible assets
Amortization of property, plant and equipment and finite-life
intangible assets are dependent upon estimates of useful lives, which are
determined through the exercise of judgement. The assessment of any impairment
of these assets is dependent upon estimates of recoverable amounts that
take into account factors such as economic and market conditions and the useful
lives of assets.
Page 20
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
Impairment of goodwill, intangibles and long-lived assets
Determining whether impairment relating to goodwill,
intangibles and long-lived assets exists requires an estimation of the
recoverable amount of cash generating units (“CGUs”). Determining a CGU’s
recoverable amount requires the determination of the higher of the value in use
of the CGU and the fair value less cost to sell of the CGU. The determination of
the recoverable amount requires the Company to estimate future cash flows,
discount rates and salvage values, as applicable.
Convertible debenture receivable
Management is required to make many estimates when determining
the valuation of its convertible debenture receivable. The convertible debenture
receivable, and the associated conversion feature and warrants (which comprise
the Derivative asset on the Statement of Financial Position), required option
pricing models that involved various estimates and assumptions.
Share-based compensation
In calculating the share-based compensation expense, key
estimates such as the value of the common shares, the rate of forfeiture of
options granted, the expected life of the option and the risk-free interest rate
are used.
Warrants
In calculating the value of the warrants, key estimates such as
the value of the common shares and the risk-free interest rate are used.
Taxes
Deferred tax assets are recognized for all unused tax losses to
the extent that it is probable that taxable profit will be available against
which the losses can be utilized. Significant management judgement is required
to determine the amount of deferred tax assets that can be recognized, based
upon the likely timing and the level of future taxable profits together with tax
planning strategies.
Derivative liability relating to convertible debt
Determination of the fair value of the Company’s derivative
liabilities requires the Company to establish estimates of unobservable inputs
such as the fair value of the Company’s shares.
|
As at October 31,
|
|
2017
|
|
|
2016
|
|
|
Trade receivables
|
$
|
940
|
|
$
|
786
|
|
|
Scientific Research and Experimental Development investment tax
credits
|
|
125
|
|
|
349
|
|
|
|
$
|
1,065
|
|
$
|
1,135
|
|
Trade receivables disclosed above include amounts that are past
due but not impaired at the end of the reporting period for which the Company
has not recognized an allowance for doubtful accounts because there has not been
a significant change in credit quality and the amounts are still considered
recoverable. At October 31, 2017, these past due amounts were $0.06 million
(October 31, 2016 - $0.1 million).
Page 21
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
|
As at October 31,
|
|
2017
|
|
|
2016
|
|
|
Finished goods
|
$
|
8,533
|
|
$
|
7,311
|
|
|
Materials and supplies
|
|
500
|
|
|
668
|
|
|
|
$
|
9,033
|
|
$
|
7,979
|
|
Inventories expensed through cost of sales during the year
ended October 31, 2017 was $11.7 million (2016 - $5.2 million).
Biological assets consist of medical cannabis plants.
|
As at October 31,
|
|
2017
|
|
|
2016
|
|
|
Biological assets, beginning
of year
|
$
|
481
|
|
$
|
380
|
|
|
Change in fair value due to
biological transformation
|
|
9,780
|
|
|
4,503
|
|
|
Transfers to inventory upon harvest
|
|
(8,810
|
)
|
|
(4,402
|
)
|
|
Biological assets, end of year
|
$
|
1,451
|
|
$
|
481
|
|
All plants are harvested for the sale of consumable product and
take approximately fourteen to sixteen weeks to grow prior to harvest.
The significant assumptions and estimates used in determining
the fair value of biological assets are as follows:
|
|
•
|
wastage of plants based on their various stages
of biological transformation;
|
|
|
•
|
fair value less cost to sell at the point of
harvest;
|
|
|
•
|
amounts of depreciation and overhead incurred
and allocated to biological assets.
|
|
10.
|
Prepaid expenses and other
assets
|
|
As at October 31,
|
|
2017
|
|
|
2016
|
|
|
Other assets
|
$
|
-
|
|
$
|
1,133
|
|
|
Prepaid expenses
|
|
58
|
|
|
50
|
|
|
|
$
|
58
|
|
$
|
1,183
|
|
Other assets as at October 31, 2016 consisted of costs related
to the Company’s contribution to the support of its initial public offering,
which was completed on December 29, 2016. Subsequent to the initial public
offering, these amounts were netted against the proceeds of the Company’s equity
offering.
|
11.
|
Convertible debenture
receivable
|
|
(a)
|
Convertible debenture
receivable
|
On September 29, 2017, a subsidiary of CanniMed purchased a
secured convertible debenture (the “Debenture”) in the principal amount of $4.0
million from Newstrike Resources Inc. (“Newstrike”), a company listed on the
TSXV (TSXV: HIP). The Debenture will mature in three years and bears interest at
the rate of 8% per annum, payable quarterly. The Debenture is convertible at the
option of CanniMed into common shares of Newstrike, at a price per of $0.365 per
common share. In the event of a change of control, the principal under the
Debenture, plus accrued and unpaid interest and a premium of 10% of the
principal, will be payable. In such event, the premium and accrued interest are convertible at the option of the lender into
common shares of Newstrike, at the higher of $0.365 or the market price at the
time of conversion.
Page 22
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
|
As at October 31,
|
|
2017
|
|
|
2016
|
|
|
Convertible debenture receivable, beginning
of year
|
$
|
-
|
|
$
|
-
|
|
|
Principal amount
|
|
4,000
|
|
|
-
|
|
|
Fair value of conversion feature adjustment,
inception (Note 11(b))
|
|
(1,573
|
)
|
|
-
|
|
|
Fair value of warrants,
inception (Note 11(b))
|
|
(1,452
|
)
|
|
-
|
|
|
Interest receivable attributable to effective interest method
(1)
|
|
28
|
|
|
-
|
|
|
Convertible debenture receivable, end of year
|
$
|
1,003
|
|
$
|
-
|
|
|
(1)
|
Effective interest rate of
22%.
|
Details of the Company’s derivative assets are as follows:
Derivative assets are comprised of the conversion feature of
the Debenture and of the warrants associated with the debenture. The fair value
of these derivative assets was calculated as follows:
|
As at October 31,
|
|
2017
|
|
|
2016
|
|
|
Fair value of conversion
feature, inception
|
$
|
1,573
|
|
$
|
-
|
|
|
Mark
to market derivative gain
|
|
198
|
|
|
-
|
|
|
|
$
|
1,771
|
|
$
|
-
|
|
|
|
|
|
|
|
-
|
|
|
Fair value of warrants,
inception
|
$
|
1,452
|
|
$
|
-
|
|
|
Mark
to market derivative gain
|
|
175
|
|
|
-
|
|
|
|
$
|
1,627
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Total derivative asset
|
$
|
3,398
|
|
$
|
-
|
|
The change in the fair value of the conversion feature and
warrants resulted in a decrease in the Company’s net loss, due to an increase of
$0.4 million in the fair value for the year ended October 31, 2017.
Black-Scholes Assumptions
The fair value of the conversion feature and common share
purchase warrants were determined using the Black-Scholes option pricing model
under the following assumptions:
|
|
|
October 31,
|
|
|
September 29,
|
|
|
|
|
2017
|
|
|
2017
|
|
|
Expected dividend yield (%)
|
|
0%
|
|
|
0%
|
|
|
Average risk-free interest rate (%)
|
|
1.5%
|
|
|
1.6%
|
|
|
Expected life (years)
|
|
2.9
|
|
|
3.0
|
|
|
Expected volatility (%)
|
|
72.0%
|
|
|
76.5%
|
|
Page 23
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
|
12.
|
Property, plant and
equipment
|
Details of the Company’s property, plant and equipment are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office and
|
|
|
under
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production
|
|
|
other
|
|
|
finance
|
|
|
|
|
|
|
|
Land
|
|
|
Buildings
|
|
|
equipment
|
|
|
equipment
|
|
|
lease
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At November 1, 2015
|
$
|
1,067
|
|
$
|
38,102
|
|
$
|
61,346
|
|
$
|
3,513
|
|
$
|
370
|
|
$
|
104,398
|
|
|
Additions
|
|
9
|
|
|
1,312
|
|
|
549
|
|
|
128
|
|
|
-
|
|
|
1,998
|
|
|
Currency translation adjustment
|
|
13
|
|
|
117
|
|
|
20
|
|
|
3
|
|
|
-
|
|
|
153
|
|
|
Impairment
|
|
-
|
|
|
-
|
|
|
(13,541
|
)
|
|
-
|
|
|
-
|
|
|
(13,541
|
)
|
|
Disposal of subsidiary (Note 20)
|
|
(433
|
)
|
|
(4,340
|
)
|
|
(40,750
|
)
|
|
(1,222
|
)
|
|
-
|
|
|
(46,745
|
)
|
|
At October 31, 2016
|
$
|
656
|
|
$
|
35,191
|
|
$
|
7,624
|
|
$
|
2,422
|
|
$
|
370
|
|
$
|
46,263
|
|
|
Additions
|
|
-
|
|
|
1,776
|
|
|
890
|
|
|
438
|
|
|
-
|
|
|
3,104
|
|
|
Currency translation adjustment
|
|
44
|
|
|
218
|
|
|
92
|
|
|
(5
|
)
|
|
-
|
|
|
349
|
|
|
At October 31, 2017
|
$
|
700
|
|
$
|
37,185
|
|
$
|
8,606
|
|
$
|
2,855
|
|
$
|
370
|
|
$
|
49,716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At November 1, 2015
|
$
|
-
|
|
$
|
6,043
|
|
$
|
41,856
|
|
$
|
2,543
|
|
$
|
91
|
|
$
|
50,533
|
|
|
Depreciation and amortization
|
|
-
|
|
|
561
|
|
|
325
|
|
|
232
|
|
|
14
|
|
|
1,132
|
|
|
Currency
translation adjustment
|
|
-
|
|
|
19
|
|
|
9
|
|
|
2
|
|
|
-
|
|
|
30
|
|
|
Disposal of subsidiary (Note 20)
|
|
-
|
|
|
(2,120
|
)
|
|
(39,627
|
)
|
|
(1,050
|
)
|
|
-
|
|
|
(42,797
|
)
|
|
At October 31, 2016
|
$
|
-
|
|
$
|
4,503
|
|
$
|
2,563
|
|
$
|
1,727
|
|
$
|
105
|
|
$
|
8,898
|
|
|
Depreciation and amortization
|
|
-
|
|
|
1,398
|
|
|
482
|
|
|
234
|
|
|
13
|
|
|
2,127
|
|
|
Currency translation adjustment
|
|
-
|
|
|
34
|
|
|
23
|
|
|
12
|
|
|
-
|
|
|
69
|
|
|
At October 31, 2017
|
$
|
-
|
|
$
|
5,935
|
|
$
|
3,068
|
|
$
|
1,973
|
|
$
|
118
|
|
$
|
11,094
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31, 2016
|
$
|
656
|
|
$
|
30,688
|
|
$
|
5,061
|
|
$
|
695
|
|
$
|
265
|
|
$
|
37,365
|
|
|
October 31, 2017
|
$
|
700
|
|
$
|
31,250
|
|
$
|
5,538
|
|
$
|
882
|
|
$
|
252
|
|
$
|
38,622
|
|
Production costs
During the year ended October 31, 2017, included in production
costs was depreciation of $1.2 million (2016 - $0.5 million).
Security
The Company’s Senior Secured Credit Facilities consisting of a
Revolving Tranche and a Term Loan Tranche (Note 15) are secured by a general
security agreement covering all of the Company's assets.
Page 24
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
Intangible assets consists of the following:
|
|
|
|
|
|
Deferred
|
|
|
Discontinued
|
|
|
|
|
|
|
|
Deferred
|
|
|
patent costs
|
|
|
Operation -
|
|
|
|
|
|
|
|
development
|
|
|
(2
|
)
|
|
Power Utility
|
|
|
|
|
|
|
|
costs
(1
|
)
|
|
|
|
|
intangibles
(3
|
)
|
|
Total
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At October 31, 2015
|
$
|
2,839
|
|
$
|
120
|
|
$
|
6,037
|
|
$
|
8,996
|
|
|
Additions
|
|
512
|
|
|
-
|
|
|
-
|
|
|
512
|
|
|
Currency translation adjustment
|
|
4
|
|
|
-
|
|
|
155
|
|
|
159
|
|
|
Impairment
|
|
-
|
|
|
-
|
|
|
(5,197
|
)
|
|
(5,197
|
)
|
|
Disposal of subsidiary
|
|
-
|
|
|
-
|
|
|
(995
|
)
|
|
(995
|
)
|
|
At October 31, 2016
|
$
|
3,355
|
|
$
|
120
|
|
$
|
-
|
|
$
|
3,475
|
|
|
Additions
|
|
681
|
|
|
-
|
|
|
-
|
|
|
681
|
|
|
Currency translation adjustment
|
|
(6
|
)
|
|
-
|
|
|
-
|
|
|
(6
|
)
|
|
At October 31, 2017
|
$
|
4,030
|
|
$
|
120
|
|
$
|
-
|
|
$
|
4,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At October 31, 2015
|
$
|
1,201
|
|
$
|
8
|
|
$
|
394
|
|
$
|
1,603
|
|
|
Amortization
|
|
127
|
|
|
2
|
|
|
127
|
|
|
256
|
|
|
Currency
translation adjustment
|
|
3
|
|
|
-
|
|
|
12
|
|
|
15
|
|
|
Impairment
|
|
-
|
|
|
-
|
|
|
(533
|
)
|
|
(533
|
)
|
|
At October 31, 2016
|
$
|
1,331
|
|
$
|
10
|
|
$
|
-
|
|
$
|
1,341
|
|
|
Amortization
|
|
158
|
|
|
2
|
|
|
-
|
|
|
160
|
|
|
Currency translation adjustment
|
|
(5
|
)
|
|
-
|
|
|
-
|
|
|
(5
|
)
|
|
At October 31, 2017
|
$
|
1,484
|
|
$
|
12
|
|
$
|
-
|
|
$
|
1,496
|
|
|
(1)
|
Internally generated and relating to the Company’s
bio-pharmaceutical operations.
|
|
(2)
|
Relates to pending patent applications and issued patents
for various technologies.
|
|
(3)
|
Related to interconnection agreement of grid, water
access rights and various supply agreements.
|
Carrying amounts
|
At October 31, 2016
|
$
|
2,024
|
|
$
|
110
|
|
$
|
-
|
|
$
|
2,134
|
|
|
At October 31, 2017
|
$
|
2,546
|
|
$
|
108
|
|
$
|
-
|
|
$
|
2,654
|
|
|
14.
|
Accounts payable and accrued
liabilities
|
|
As at October 31,
|
|
2017
|
|
|
2016
|
|
|
Trade payables
|
$
|
2,222
|
|
$
|
1,948
|
|
|
Accrued liabilities
|
|
687
|
|
|
1,751
|
|
|
|
$
|
2,909
|
|
$
|
3,699
|
|
|
Derivative instrument liabilities (Note 24)
|
|
154
|
|
|
415
|
|
|
Total trade payables and accrued liabilities
|
$
|
3,063
|
|
$
|
4,114
|
|
Page 25
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
|
As at October 31,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
Current portion
|
|
|
|
|
|
|
|
|
|
|
Line of credit
|
|
(a)
|
|
$
|
-
|
|
$
|
-
|
|
|
Finance lease
liabilities
|
|
|
|
|
-
|
|
|
8
|
|
|
Capital loan (4.20%, based
on interest at the Bank’s Prime rate plus 1.00% per annum).
|
|
|
|
|
250
|
|
|
375
|
|
|
Term loans
|
|
(b)
|
|
|
1,108
|
|
|
1,832
|
|
|
Debentures
|
|
(c)
|
|
|
1,138
|
|
|
1,349
|
|
|
Other
|
|
(d)
|
|
|
62
|
|
|
93
|
|
|
|
|
|
|
$
|
2,558
|
|
$
|
3,657
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
|
|
Term loans
|
|
(b)
|
|
$
|
9,646
|
|
$
|
13,702
|
|
|
Debentures
|
|
(c)
|
|
|
1,241
|
|
|
12,001
|
|
|
Other
|
|
(d)
|
|
|
279
|
|
|
235
|
|
|
|
|
|
|
$
|
11,166
|
|
$
|
25,938
|
|
|
Total loans and borrowings
|
|
|
|
$
|
13,724
|
|
$
|
29,595
|
|
Line of Credit
The Company has access to a Canadian and US operating line of
credit with a maximum of $1.0 million (October 31, 2016 - $1.0 million) and $0.5
million (October 31, 2016 - $0.5 million), respectively. These operating lines
of credit were undrawn as at October 31, 2017 and October 31, 2016.
|
As at October 31,
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
2.83% to 2.94% capital loan,
due for renewal November 2018
(1)
|
$
|
8,135
|
|
$
|
8,613
|
|
Capital loan, payable in blended monthly
instalments of $60,
due for renewal November 2018 (4.95%, based on
interest at the
Bank’s Prime rate plus 1.75% per annum).
|
|
2,619
|
|
|
3,217
|
|
|
USD loan
(2)
|
|
-
|
|
|
3,704
|
|
|
|
|
10,754
|
|
|
15,534
|
|
|
Current Portion
|
|
(1,108
|
)
|
|
(1,832
|
)
|
|
|
$
|
9,646
|
|
$
|
13,702
|
|
|
(1)
|
The derivative instrument liabilities on the capital loan
are included in accounts payable and accrued liabilities $0.2 million
(October 31, 2016 - $0.4 million), as disclosed in Note 24.
|
|
(2)
|
During 2017, the Company repaid the remaining principal
on the USD loan related to the PM Power business unit, which had been
divested on October 31, 2016.
|
Covenants
At October 31, 2017 and October 31, 2016, the Company is bound
by and has met all covenants on its credit facilities.
Page 26
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
|
As at October 31,
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Convertible debentures,
amortized cost
|
$
|
-
|
|
$
|
10,201
|
|
|
Debt issue costs, net of accretion
|
|
-
|
|
|
(385
|
)
|
|
Non-converted convertible
debentures, 12% interest
|
|
195
|
|
|
-
|
|
|
Debentures, 12% interest
|
|
-
|
|
|
173
|
|
|
Debentures, 5% interest
|
|
2,184
|
|
|
3,277
|
|
|
Manitoba Hydro debenture
|
|
-
|
|
|
84
|
|
|
|
|
2,379
|
|
|
13,350
|
|
|
Current Portion
|
|
(1,138
|
)
|
|
(1,349
|
)
|
|
|
$
|
1,241
|
|
$
|
12,001
|
|
Conversion of Convertible Debentures (2016 and 2015
offerings)
During January 2017, certain debenture holders converted $11.3
million (principal balance) of convertible debentures into 514,265 fully paid
Class “A” common shares of PPS. Pursuant to the Reorganization, the Class “A”
common shares of PPS, pursuant to these conversions, were converted into Class
“D” common shares of PPS and the resulting Class “D” common shares of PPS were
then exchanged on a 4:1 basis for shares of CanniMed, for a total of 2,057,060
common shares of CanniMed. The right to convert into equity expired on January
31, 2017. Debentures that were not converted into equity, representing a
principal sum of $0.2 million, now carry an interest rate of 12% per annum. The
outstanding balance of the principal sum is repayable in twenty equal quarterly
payments, commencing April 30, 2017. The remaining debentures are subject to a
prepayment option on the part of the Company; any principal sum subject to a
prepayment shall include a prepayment penalty equal to six months’ interest
(based on the prescribed rate of 12%).
Derivative Liability Relating to Convertible Debt
On the Statement of Financial Position, related to the
convertible debentures noted above, was a non-current derivative liability
relating to the conversion to equity feature of the convertible debentures. For
the 2016 and 2015 debenture offerings, the right to convert into equity expired
on January 31, 2017; as such, the fair value of the embedded derivative is $nil
as at October 31, 2017 (October 31, 2016 - $9.7 million).
Debenture Repayments
Subsequent to October 31, 2016, the Company has made principal
payments totaling $1.1 million on debentures outstanding.
|
As at October 31,
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Various loans, interest at
5.1% to 7.04%, payable in monthly
|
$
|
341
|
|
$
|
328
|
|
|
instalments of $5 US with varying due dates.
|
|
|
|
|
|
|
|
Current portion
|
|
(62
|
)
|
|
(93
|
)
|
|
|
$
|
279
|
|
$
|
235
|
|
Page 27
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
|
16.
|
Commitments and
contingencies
|
Legal claims and Regulatory Matters
There were no existing claims or regulatory matters against the
Company that could have a material impact on the consolidated financial
statements as at October 31, 2017 or October 31, 2016. The Company is
occasionally named as a party in various claims and legal proceedings that arise
during the normal course of its business. The Company reviews each of these
claims, including the nature of the claim, the amount in dispute or claimed, and
the availability of insurance coverage. There can be no assurance that any
particular claim will be resolved in the Company’s favor or that such claims may
not have a material effect on the Company. Inquiries from regulatory bodies may
also arise in the normal course of business, to which the Company responds as
required.
Authorized
At October 31, 2017, the authorized share capital of the
Company consists of Class “A” common shares. The rights, privileges,
restrictions and conditions attached to each series of shares are determined by
the Board of Directors at the time of creation of such series. The common shares
of the Company are entitled to vote at all meetings of the shareholders and,
upon dissolution or any other distribution of assets, to receive such assets of
the Company as are distributable to the holders of the common shares.
|
Issued
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
Note
|
|
|
Common Shares
|
|
|
Consideration
|
|
|
Outstanding, October 31, 2016
|
|
17
|
(a)
|
|
1
|
|
$
|
nil
|
|
|
Reorganization
|
|
17
|
(b)
|
|
14,670,780
|
|
|
22,783
|
|
|
Equity offering,
net of
issue costs
|
|
17
|
(c)
|
|
5,750,000
|
|
|
62,924
|
|
|
Exercise of convertible debentures
|
|
17
|
(d)
|
|
2,057,060
|
|
|
21,830
|
|
|
Exercise of warrants
|
|
17
|
(e)
|
|
12,087
|
|
|
73
|
|
|
Exercise of stock options
|
|
17
|
(f)
|
|
474,999
|
|
|
1,493
|
|
|
Outstanding, October 31, 2017
|
|
|
|
|
22,964,927
|
|
$
|
109,103
|
|
Issuance of shares
|
(a)
|
Equity Issue on
Incorporation
|
On October 31, 2016, CanniMed issued a single common share upon
incorporation.
On November 1, 2016, as a result of the Reorganization of PPS,
CanniMed issued 14,670,780 common shares as consideration for the sale by former
shareholders of PPS of all of their shares of PPS to CanniMed.
|
(c)
|
Initial Public Offering and Exercise of Over-allotment
Option
|
On December 29, 2016, CanniMed completed an initial public
offering of its common shares (the “Offering”). In connection with the Offering,
CanniMed issued 5,000,000 common shares at a price of $12.00 per common share.
CanniMed granted the underwriters an over-allotment option,
exercisable in whole or in part, for a period of 30 days following the closing
of the Offering, to purchase up to an additional 750,000 common shares at $12.00
per common share; this option was exercised in full on January 30, 2017.
Page 28
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
|
(d)
|
Conversion of Convertible
Debentures
|
During 2017, CanniMed issued 2,057,060 common shares upon
conversion convertible debentures.
During 2017, CanniMed issued 12,087 common shares upon exercise
of warrants. Subsequent to October 31, 2017, an addition 171,801 common shares
were issued upon exercise of warrants.
|
(f)
|
Exercise of Stock Options
|
During 2017, CanniMed issued 474,999 common shares upon
exercise of stock options (Note 18). Subsequent to October 31, 2017, an
additional 1,619,927 common shares were issued upon the exercise of stock
options.
Warrants and other equity
As a result of the Reorganization of PPS, and subsequent to the
exercise of the warrants to purchase shares of PPS, the respective warrant
holder for the PPS warrants will hold four Common Shares of CanniMed. The terms
of the warrants are set forth in the following table:
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CanniMed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Therapeutics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares
|
|
|
CanniMed
|
|
|
|
|
Securities
|
|
|
|
|
|
into which PPS
|
|
|
Therapeutics
|
|
|
Number of PPS
|
|
Underlying
|
|
|
|
|
|
Warrants may be
|
|
|
Exercise Price per
|
|
|
Warrants
|
|
Warrants
|
|
|
Expiry Date
|
|
|
Exercised
|
|
|
Common Share
(1
|
)
|
|
43,632
|
|
Common Shares
|
|
|
December 15,
2018
|
|
|
174,528
|
|
$
|
5.50
|
|
|
(1)
|
Exercise price reflects the 4:1 share exchange ratio
pursuant to the corporate reorganization of PPS. Subsequent to October 31,
2017, a total of 171,801 warrants were
exercised.
|
|
18.
|
Share-based compensation
|
The Company has established a stock option plan under which
common share purchase options may be granted to directors, officers and key
employees. The maximum number of common shares available for option under the
stock option plan is outlined in the stock options agreement. Options granted
have an exercise price comparable to the market prices of CanniMed shares, as
determined by the Company’s Board of Directors. All options are settled by
physical delivery of shares. Vesting periods of options granted under the
Company’s stock option plan vary on a grant by grant basis, at the discretion of
the Company’s Board of Directors.
The following table summarizes movements in stock options
during the years ended October 31, 2017 and 2016:
|
|
|
October 31,
2017
|
|
|
October 31, 2016
|
(1)
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
Number of
|
|
|
average
|
|
|
Number of
|
|
|
average
|
|
|
|
|
options
|
|
|
exercise price
|
|
|
options
|
|
|
exercise price
|
|
|
Beginning of year
(1)
|
|
2,532,788
|
|
$
|
1.95
|
|
|
2,052,000
|
|
$
|
1.16
|
|
|
Granted
|
|
180,000
|
|
$
|
9.64
|
|
|
567,988
|
|
$
|
4.68
|
|
|
Forfeited
|
|
(20,000
|
)
|
$
|
4.68
|
|
|
(80,000
|
)
|
$
|
1.18
|
|
|
Exercised
|
|
(474,999
|
)
|
$
|
1.43
|
|
|
(7,200
|
)
|
$
|
1.68
|
|
|
Expired
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
End
of year
|
|
2,217,789
|
|
$
|
2.66
|
|
|
2,532,788
|
|
$
|
1.95
|
|
|
Exercisable
|
|
1,855,121
|
|
$
|
1.79
|
|
|
1,802,800
|
|
$
|
1.27
|
|
Page 29
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
|
(1)
|
In conjunction with the corporate reorganization of PPS,
the option agreements for PPS were exchanged for options agreements with
CanniMed. Stock option data for the 2016 fiscal year reflects the impact
of an exchange of PPS stock options for CanniMed stock options which took
place on November 1, 2016.
|
The weighted average market share price at the date of exercise
for stock options exercised during the year ended October 31, 2017 was
$10.22.
The weighted average fair value of stock options granted during
2017 was $3.30 and was estimated using the Black-Scholes option pricing model
with assumptions of a 5-year weighted average expected option life, volatility
of 43.7% and an interest rate of 1.6% . The weighted average fair value of stock
options granted during 2016 was $5.36 and was estimated using the Black-Scholes
option pricing model with assumptions of a two-year weighted average expected
option life, volatility of 70% and an interest rate of 0.6% . Subsequent to
October 31, 2016, in conjunction with the corporate Reorganization of PPS, the
option agreements for the foregoing options were exchanged for option agreements
with CanniMed Therapeutics.
For stock options outstanding at October 31, 2017, the range of
exercise prices, the weighted average exercise price and the weighted average
remaining contractual life are as follows:
|
|
|
Options Outstanding
|
|
|
|
|
|
Options Exercisable (Vested)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
Weighted
|
|
|
Average
|
|
|
|
|
|
Weighted
|
|
|
Average
|
|
|
|
|
|
|
|
Average
|
|
|
Exercise
|
|
|
|
|
|
Average
|
|
|
Exercise
|
|
|
Option Price Per Share
|
|
Quantity
|
|
|
Remaining Life
|
|
|
Price
|
|
|
Quantity
|
|
|
Remaining Life
|
|
|
Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$0.68 - $1.00
|
|
940,000
|
|
|
0.65
|
|
$
|
0.85
|
|
|
940,000
|
|
|
0.65
|
|
$
|
0.85
|
|
|
$1.01 - $1.68
|
|
589,800
|
|
|
0.98
|
|
$
|
1.68
|
|
|
589,800
|
|
|
0.98
|
|
$
|
1.68
|
|
|
$1.69 - $4.68
|
|
507,989
|
|
|
1.00
|
|
$
|
4.68
|
|
|
325,321
|
|
|
1.00
|
|
$
|
4.68
|
|
|
$4.69 - $9.64
|
|
180,000
|
|
|
4.86
|
|
$
|
9.64
|
|
|
-
|
|
|
-
|
|
$
|
-
|
|
|
|
|
2,217,789
|
|
|
1.16
|
|
$
|
2.66
|
|
|
1,855,121
|
|
|
0.82
|
|
$
|
1.79
|
|
The foregoing options have expiry dates ranging from June 26,
2018 to September 8, 2022. Subsequent to October 31, 2017, in conjunction with
the proposed acquisition of CanniMed by Aurora, CanniMed’s Board of Directors
approved a resolution that accelerated the vesting of all unvested stock
options, making them fully exercisable by the holders. Subsequent to October 31,
2017, a total of 1.6 million stock options have been exercised.
Rate reconciliation
The income tax expense for the year is reconciled to the
accounting net income as at October 31 as follows:
|
|
|
2017
|
|
|
2016
|
|
|
(Loss) income before income tax from continuing operations
|
$
|
(6,283
|
)
|
$
|
(10,772
|
)
|
|
Income tax recovery calculated at 25%
|
|
(1,571
|
)
|
|
(2,693
|
)
|
|
Non-deductible share-based
compensation expense
|
|
249
|
|
|
109
|
|
|
Non-deductible loss on derivatives
|
|
632
|
|
|
2,047
|
|
|
Deferred tax asset not
recognized in current year
|
|
369
|
|
|
(154
|
)
|
|
Effect of tax rates of subsidiaries operating
in other jurisdictions
|
|
(56
|
)
|
|
37
|
|
|
Other
|
|
(9
|
)
|
|
94
|
|
|
Net
current and deferred income tax recovery recognized in the year
|
$
|
(386
|
)
|
$
|
(560
|
)
|
|
Effective tax rate (%)
|
|
6%
|
|
|
5%
|
|
Page 30
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
Income tax recognized in earnings of continuing operations
The income tax expense for the year includes the following as
at October 31:
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Current income tax recovery
|
$
|
-
|
|
$
|
-
|
|
|
Deferred income tax recovery
|
|
(386
|
)
|
|
(560
|
)
|
|
Net current and deferred income tax recovery recognized in
the year
|
$
|
(386
|
)
|
$
|
(560
|
)
|
Deferred taxes
Deferred taxes recognized in the statement of financial
position for the year includes the following at October 31:
|
As at
October 31,
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Deferred tax asset
|
$
|
-
|
|
$
|
-
|
|
|
Deferred
tax liabilities
|
|
(57
|
)
|
|
(666
|
)
|
|
|
$
|
(57
|
)
|
$
|
(666
|
)
|
|
|
|
|
|
|
|
|
|
Effects of
|
|
|
|
|
|
|
|
Opening
|
|
|
Recognized in
|
|
|
Balance Sheet
|
|
|
Closing
|
|
|
2017
|
|
balance
|
|
|
earnings
|
|
|
Reclass
|
|
|
Balance
|
|
|
Deferred tax assets
(liabilities) in relation to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property plant and equipment
|
$
|
(1,076
|
)
|
$
|
994
|
|
$
|
-
|
|
$
|
(82
|
)
|
|
Intangible assets
|
|
-
|
|
|
(657
|
)
|
|
-
|
|
|
(657
|
)
|
|
Inventory
|
|
(390
|
)
|
|
(66
|
)
|
|
-
|
|
|
(456
|
)
|
|
Income tax losses
|
|
696
|
|
|
99
|
|
|
-
|
|
|
795
|
|
|
Scientific Research and
|
|
-
|
|
|
-
|
|
|
223
|
|
|
223
|
|
|
Experimental Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
investment tax credits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
104
|
|
|
16
|
|
|
-
|
|
|
120
|
|
|
Deferred tax assets (liabilities), net
|
$
|
(666
|
)
|
$
|
386
|
|
$
|
223
|
|
$
|
(57
|
)
|
Page 31
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effects of
|
|
|
Effects of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
|
|
|
business
|
|
|
|
|
|
2016
|
|
Opening
|
|
|
Recognized
|
|
|
Sheet
|
|
|
disposal of
|
|
|
Closing
|
|
|
|
|
balance
|
|
|
in earnings
|
|
|
Reclass
|
|
|
subsidiary
|
|
|
Balance
|
|
|
Deferred tax assets
(liabilities) in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
relation to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property plant and equipment
|
$
|
(3,521
|
)
|
$
|
309
|
|
$
|
-
|
|
$
|
2,136
|
|
$
|
(1,076
|
)
|
|
Intangible assets
|
|
(2,002
|
)
|
|
-
|
|
|
-
|
|
|
2,002
|
|
|
-
|
|
|
Inventory
|
|
(71
|
)
|
|
(319
|
)
|
|
-
|
|
|
-
|
|
|
(390
|
)
|
|
Other
|
|
171
|
|
|
(87
|
)
|
|
-
|
|
|
20
|
|
|
104
|
|
|
Income tax losses
|
|
6,334
|
|
|
4,208
|
|
|
-
|
|
|
(9,846
|
)
|
|
696
|
|
|
Deferred tax assets (liabilities), net
|
$
|
911
|
|
$
|
4,111
|
|
$
|
-
|
|
$
|
(5,688
|
)
|
$
|
(666
|
)
|
Income tax losses
At October 31, 2017 the Company has income tax losses carried
forward of $4.1 million from Canadian operations and $2.4 million from US
operations, respectively (2016 - $2.8 million from Canadian operations and $2.2
million from US operations, respectively). These losses are available to reduce
future taxable income. Carry forward losses as at October 31, 2017 expire as
follows:
|
|
|
Canadian
|
|
|
US
|
|
|
Total
|
|
|
2022
|
|
-
|
|
$
|
122
|
|
$
|
122
|
|
|
2023
|
|
-
|
|
|
138
|
|
|
138
|
|
|
2024
|
|
-
|
|
|
178
|
|
|
178
|
|
|
2025
|
|
-
|
|
|
249
|
|
|
249
|
|
|
2026
|
|
-
|
|
|
176
|
|
|
176
|
|
|
2027
|
|
-
|
|
|
247
|
|
|
247
|
|
|
2028
|
|
-
|
|
|
205
|
|
|
205
|
|
|
2029
|
|
-
|
|
|
269
|
|
|
269
|
|
|
2030
|
|
-
|
|
|
321
|
|
|
321
|
|
|
2031
|
|
-
|
|
|
108
|
|
|
108
|
|
|
2032
|
|
-
|
|
|
11
|
|
|
11
|
|
|
2033
|
|
-
|
|
|
97
|
|
|
97
|
|
|
2034
|
|
26
|
|
|
27
|
|
|
53
|
|
|
2035
|
|
132
|
|
|
73
|
|
|
205
|
|
|
2036
|
|
2,627
|
|
|
-
|
|
|
2,627
|
|
|
2037
|
|
1,348
|
|
|
177
|
|
|
1,525
|
|
|
Total
|
$
|
4,133
|
|
$
|
2,398
|
|
$
|
6,531
|
|
A deferred tax asset has not been recognized in respect of $1.6
million of the US losses (2016 - $2.0 million) and Canadian losses of $0.9
million (2016 - $nil) as it is not considered probable that there will be
sufficient future taxable profit available for which the unused tax losses can
be utilized.
A deferred tax asset has not been recognized in respect of $0.4
million (2016 - $0.4 million) of realized capital losses in Canada as it is not
considered probable that there will be sufficient future taxable capital gains
available for which the unused capital losses can be utilized.
Page 32
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
A deferred tax asset has not been recognized in respect of $5.3
million (2016 - $nil) of finance and share issuance costs in Canada as it is not
considered probable that there will be sufficient taxable profit available for
which the unused deferred tax asset can be utilized.
|
20.
|
Discontinued Operations and Impairment
Loss
|
Discontinued Operations
During the fourth quarter of 2016, the Company adopted a formal
plan to dispose of its power division in conjunction with a corporate
restructuring and, on October 31, 2016, PPS completed the Reorganization. Prior
to the Reorganization, shareholders of PPS held 3,667,695 Class “A” common
shares in the capital of PPS and PPS owned all of the shares of PPS USA
Holdings, Inc., the parent company of P.M. Power Group Holdings, Inc. Also,
prior to the Reorganization, PPS created a new subsidiary, PM Power Group
Holdings Ltd. (“PM Power”), which acquired all of the shares of PPS USA
Holdings, Inc.
Effective October 31, 2016, the Reorganization resulted in the
Company distributing, to the same shareholders existing prior to the
Reorganization, all of the shares of PM Power. The assets and liabilities
associated with PM Power were transferred at their carrying values at October
31, 2016 due to the transfer happening with PPS’s shareholders.
The combined results of the discontinued operations included in
the loss for the year ended October 31, 2016 are set out below; there are no
results of discontinued operations for the year ended October 31, 2017 as PM
Power is not part of the continuing operations of CanniMed.
The results of this discontinued operation were as
follows:
|
For the years ended October
31,
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
-
|
|
$
|
10,287
|
|
|
Other income
|
|
-
|
|
|
376
|
|
|
|
|
-
|
|
|
10,663
|
|
|
Expenses
|
|
-
|
|
|
(12,679
|
)
|
|
Impairment loss
|
|
-
|
|
|
(19,357
|
)
|
|
Foreign currency translation realized on disposal of subsidiary
|
|
-
|
|
|
4,952
|
|
|
(Loss) income before tax
|
|
-
|
|
|
(16,421
|
)
|
|
Deferred tax recovery
|
|
-
|
|
|
3,551
|
|
|
(Loss) income from discontinued operations attributable to
the owners of the Company
|
$
|
-
|
|
$
|
(12,870
|
)
|
The cash flows provided by discontinued operations were
as follows:
|
For the years ended October
31,
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Net cash inflows from
operating activities
|
$
|
-
|
|
$
|
1,337
|
|
|
Net
cash inflows from investing activities
|
|
-
|
|
|
(1,196
|
)
|
|
Net cash inflows (outflows)
|
$
|
-
|
|
$
|
141
|
|
Page 33
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
Loss per share for the years ended October 31, 2017 and 2016
was calculated based on the following:
Continuing operations
|
For the years ended October 31,
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income from
continuing operations attributable to common shareholders
|
$
|
(5,897
|
)
|
$
|
(10,212
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding (basic)
|
|
21,281
|
|
|
14,664
|
|
|
Dilutive effect of stock options and warrants
(3)
|
|
-
|
|
|
-
|
|
|
Weighted average shares outstanding (diluted)
(3)
|
|
21,281
|
|
|
14,664
|
|
|
(Loss) earnings per share (basic)
|
$
|
(0.28
|
)
|
$
|
(0.70
|
)
|
|
(Loss) earnings per share (diluted)
|
$
|
(0.28
|
)
|
$
|
(0.70
|
)
|
Continuing and discontinued operations
|
For the years ended October 31,
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
attributable to common shareholders
|
$
|
(5,897
|
)
|
$
|
(23,082
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding (basic)
|
|
21,281
|
|
|
14,664
|
|
|
Dilutive effect of stock options and warrants
(3)
|
|
-
|
|
|
-
|
|
|
Weighted average shares outstanding (diluted)
(3)
|
|
21,281
|
|
|
14,664
|
|
|
(Loss) earnings per share (basic)
|
$
|
(0.28
|
)
|
$
|
(1.57
|
)
|
|
(Loss) earnings per share (diluted)
|
$
|
(0.28
|
)
|
$
|
(1.57
|
)
|
|
(1)
|
Results for the year ended October 31, 2016 include the
discontinued operation PM Power; there are no results of discontinued
operations for the year ended October 31, 2017 as PM Power is not part of
the continuing operations of CanniMed.
|
|
(2)
|
Per share data for the 2016 fiscal year has been
retroactively adjusted to reflect the impact of a 4:1 share exchange of
PPS shares for CanniMed shares.
|
|
(3)
|
For the years ended October 31, 2017 and 2016, there was
no effect of applying the treasury-stock method to the weighted average
number of shares outstanding as all of the stock options and warrants
outstanding were anti- dilutive.
|
|
22.
|
Cash Flow Information
|
|
For the years ended October 31,
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Trade and other receivables
|
$
|
70
|
|
$
|
402
|
|
|
Inventories
|
|
7,756
|
|
|
1,854
|
|
|
Income taxes receivable /
payable
|
|
-
|
|
|
(510
|
)
|
|
Prepaid expenses and deposits
|
|
1,125
|
|
|
(1,090
|
)
|
|
Accounts payables and accrued
liabilities
|
|
(1,560
|
)
|
|
1,170
|
|
|
Tax
|
|
(224
|
)
|
|
-
|
|
|
Deferred revenue
|
|
35
|
|
|
(31
|
)
|
|
Foreign exchange translation
|
|
(260
|
)
|
|
(2,760
|
)
|
|
Change in non-cash working capital
|
$
|
6,942
|
|
$
|
(965
|
)
|
Page 34
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
|
23.
|
Related party transactions
|
Key management personnel
Compensation of key management personnel of the Company:
|
For the years ended October 31,
|
|
2017
|
|
|
2016
|
|
|
Salary and short term
benefits
|
$
|
1,049
|
|
$
|
527
|
|
|
Share-based payments
|
|
534
|
|
|
184
|
|
|
Other long-term benefits
|
|
41
|
|
|
17
|
|
|
Total compensation paid to key management personnel
|
$
|
1,624
|
|
$
|
728
|
|
The Company’s Executive Leadership Team (consisting of the
Chief Executive Officer, Chief Financial Officer, Vice President of Corporate
Development and Investor Relations, Chief Research Officer and Vice President of
Regulatory Affairs and Business Development) are considered to be Key Management
Personnel. In addition, members of the Company’s Board of Directors are included
in this definition, as defined by IAS 24,
Related Party Disclosures.
Compensation of the Company’s key management personnel is determined by the
Compensation Committee having regard to the performance of individuals and
market trends. Compensation includes salaries, non-cash benefits and board fees.
SubTerra
During 2017, SubTerra and PPS were parties to an Operating
Agreement. The purpose of the operating agreement is for SubTerra’s to plant and
grow biomass in its Underground Growth Chamber (“UGC)” and to harvest and ship
plant biomass which PPS can use to develop a plant based manufacturing platform
for the production of medical compounds. Subject to the terms of the Agreement,
PPS has agreed to pay SubTerra a flat rate of thirty-five thousand United States
Dollars ($35,000 USD) per full month of services rendered and reimbursement of
various other expenses incurred by SubTerra that relate to the planting, growth,
harvesting and shipping of plant biomass for PPS. During 2017, a total of $0.4
million USD was paid to SubTerra (2016 - $0.4 million USD). These payments are
intercompany in nature and are eliminated on the consolidated results of
operations of the Company.
Power Purchase Contract
The Company’s Chief Executive Officer is also the Chief
Executive Officer of PM Power. In addition, members of the Company’s Board of
Directors are shareholders of PM Power and collectively hold, either
individually or via organizations that they represent, approximately 51% of the
issued and outstanding shares of PM Power.
In connection with the Reorganization noted above, SubTerra
entered into an agreement (“the Power Purchase Contract”), pursuant to which PM
Power Group, Inc. has agreed to distribute electricity to the SubTerra facility.
There have been no transactions between SubTerra and PM Power with respect to
the Power Purchase Contract.
Construction Services Agreement
During the second quarter of 2017, SubTerra entered into a
Construction Services Agreement (the “Agreement”) whereby PM Power shall provide
project management services for the growth chamber expansion project (the
“Expansion Project”) occurring at SubTerra’s White Pine facility. Subject to the
terms of the Agreement, SubTerra has agreed to pay PM Power a flat rate of
thirty-five thousand United States Dollars ($35,000 USD) per full month of
services rendered and reimbursement of various other expenses incurred by PM
Power that relate to the Expansion Project; a total of $0.2 million USD was paid
to PM Power during 2017. This Agreement was terminated during the fourth quarter
of 2017.
Page 35
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
Loan Agreement
During the third quarter of 2017, PPS (the “Lender”) entered
into a Loan Agreement (the “Loan”) with PM Power Group Inc. (the “Borrower”) for
one hundred fifty thousand United States Dollars ($150,000 USD), together with
interest commencing July 6, 2017 at a rate of 1.25% per month, calculated daily
and compounded monthly. The loan was initially scheduled to mature on October
31, 2017; however, an extension was granted to this deadline in exchange for an
increased interest rate of 1.75% . Full repayment of the Loan was received in
December 2017.
In addition to the Loan, the Borrower was indebted to the
Lender in the additional amount of one hundred eight thousand three hundred
thirty-five United States Dollars ($108,334 USD) which was repayable in full on
or before October 31, 2017. An extension was granted to this deadline and full
repayment was received in December 2017.
To secure obligations of the Borrower to pay the principal
amount, interest and any and all other amounts owing to the Lender or its
affiliates and related parties, the Borrower agreed to grant the Lender a
primary security interest over all real and personal property of the Borrower
(the “Security”). The Security ranked ahead of any security provided by the
Borrower to other parties and shall be further evidenced by a general security
agreement. This primary security interest was removed after payment was received
in full.
|
24.
|
Financial risk management and financial
instruments
|
The Company is exposed to various risks through its financial
instruments, as follows:
Capital Management
The Company manages its capital to provide sufficient liquidity
for it operating and growth activities. In order to achieve this objective the
Company prepares annual budgets and capital requirements to manage its capital
structure.
The capital structure of the Company consists of loans and
borrowings (Note 15) and equity, comprised of issued capital stock, share-based
payments, accumulated and other comprehensive income and retained earnings.
Credit Risk
Credit risk is the risk that a counterparty will not meet its
obligations under a financial instrument or customer contract, leading to a
financial loss. The Company is exposed to credit risk from its operating
activities (primarily for trade receivables and convertible debenture
receivable) and from its financing activities, including deposits with banks and
financial institutions, foreign exchange transactions and derivatives.
The Company does not hold any collateral as security but
mitigates this risk by dealing only with what management believes to be
financially sound counterparties and, accordingly, does not anticipate
significant loss for non-performance. The exposure on trade receivables is
minimal since the majority of the amount noted is due from government agencies
or insurers. There is no material exposure to credit risk on cash and cash
equivalents, accounts receivable or convertible debenture receivable on the
statement of financial position.
Liquidity
The Company’s exposure to liquidity risk is dependent on the
collection of accounts receivable and the raising of funds to meet commitments
and sustain operations. The Company controls liquidity risk by management of
working capital, cash flows and the issuance of share capital. The Company has
access to lines of credit with available borrowings of $1.5 million at October
31, 2017 and cash and cash equivalents totaling $48.4 million (October 31, 2016
- $2.0 million).
The Company has the following principal payments / commitments
at October 31, 2017:
Page 36
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY 2021
|
|
|
|
|
Total
|
|
|
FY 2018
|
|
|
FY 2019
|
|
|
FY 2020
|
|
|
and after
|
|
|
Demand loans
|
$
|
250
|
|
$
|
250
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
Long-term debt
|
|
10,754
|
|
|
1,108
|
|
|
1,166
|
|
|
1,196
|
|
|
7,284
|
|
|
Debentures *
|
|
2,380
|
|
|
1,138
|
|
|
1,138
|
|
|
46
|
|
|
58
|
|
|
Other
|
|
340
|
|
|
62
|
|
|
62
|
|
|
62
|
|
|
154
|
|
|
Total
|
$
|
13,724
|
|
$
|
2,558
|
|
$
|
2,366
|
|
$
|
1,304
|
|
$
|
7,496
|
|
In addition to the above, at October 31, 2017, the Company had
$3.3 million of construction commitments relating to its capital expansion
projects.
Market
Market risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of changes in market
prices. Market risk comprises three types of risk: currency rate risk, interest
rate risk and commodity price risk.
Foreign currency risk
Foreign currency risk is the risk to the Company’s earnings
that arise from fluctuations of foreign exchange rates, specifically the U.S.
Dollar. Currency risk arises as a result of the Company's investment in
SubTerra. Management believes this risk is reduced by the fact that this U.S.
subsidiary operates in a politically and economically stable foreign country.
The Company’s exposure to foreign currency changes is considered to be not
material.
Interest rate risk
Interest rate risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of changes in market
interest rates. The Company’s exposure to the risk of changes in market interest
rates relates primarily to the loans and borrowings obligations with floating
interest rates. The Company has entered into interest rate swaps to fix its
exposure to variable interest rates on approximately one half of its long-term
debt. In addition, the Company has a convertible debenture receivable with a
fixed interest rate.
Categories of financial instruments
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market
participants at the measurement date, regardless of whether that price is
directly observable or estimated using another valuation technique. In
estimating the fair value of an asset or a liability, the Company takes into
account the characteristics of the asset or liability if market participants
would take those characteristics into account when pricing the asset or
liability at the measurement date.
In addition, for financial reporting purposes, fair value
measurements are categorized into Level 1, 2 and 3 based on the degree to which
the fair value measurement are observable and the significance of the inputs to
the fair value measurement in its entirety, which are described as follows:
Level 1 inputs are from quoted prices (unadjusted) in active
markets for identical assets and liabilities that the entity can access at the
measurement date;
Level 2 inputs are inputs, other than quoted prices included
within Level 1 that are observable for assets and liabilities, either directly
or indirectly;
Level 3 inputs are the unobservable inputs for assets and
liabilities.
The following table provides information with respect to
financial instruments held as at:
Page 37
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
|
October 31, 2017
|
|
Classification
|
|
|
Carrying Amount
|
|
|
Fair Value
|
|
|
Cash and cash equivalents
|
|
Loans and
receivables
|
|
$
|
48,378
|
|
$
|
48,378
|
|
|
Accounts receivable
|
|
Loans and receivables
|
|
$
|
1,065
|
|
$
|
1,065
|
|
|
Convertible debenture
receivable
|
|
Loans and
receivables
|
|
$
|
1,003
|
|
$
|
1,003
|
|
|
Derivative asset (conversion feature)
|
|
Other financial asset
|
|
$
|
1,771
|
|
$
|
1,771
|
|
|
|
|
(“OFA”)
|
|
|
|
|
|
|
|
|
Derivative asset (warrants)
|
|
Other financial asset
|
|
$
|
1,627
|
|
$
|
1,627
|
|
|
|
|
(“OFA”)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities
|
|
Other financial
liabilities (“OFL”)
|
|
$
|
2,909
|
|
$
|
2,909
|
|
|
Derivative instrument
liabilities
(1)
|
|
Fair value through profit or
loss
|
|
$
|
154
|
|
$
|
154
|
|
|
Derivative instrument
liabilities
(2)
|
|
Fair value
through profit or loss
|
|
|
-
|
|
|
-
|
|
|
Loans and borrowings
|
|
OFL
|
|
$
|
13,724
|
|
$
|
13,724
|
|
|
October 31, 2016
|
|
Classification
|
|
|
Carrying Amount
|
|
|
Fair Value
|
|
|
Cash and cash equivalents
|
|
Loans and
receivables
|
|
$
|
2,002
|
|
$
|
2,002
|
|
|
Accounts receivable
|
|
Loans and receivables
|
|
$
|
1,135
|
|
$
|
1,135
|
|
|
Accounts payable and accrued
liabilities
|
|
Other financial
liabilities (“OFL”)
|
|
$
|
3,699
|
|
$
|
3,699
|
|
|
Derivative instrument
liabilities
(1)
|
|
Fair value through profit or
loss
|
|
$
|
415
|
|
$
|
415
|
|
|
Derivative instrument
liabilities
(2)
|
|
Fair value
through profit or loss
|
|
$
|
9,673
|
|
$
|
9,673
|
|
|
Loans and borrowings
|
|
OFL
|
|
$
|
29,595
|
|
$
|
32,991
|
|
|
(1)
|
Balance is included within accounts payable and accrued
liabilities on the Statement of financial position.
|
|
(2)
|
On the Statement of financial position, related to the
convertible debentures noted above, is a non-current derivative liability
relating to the conversion to equity feature of the convertible
debentures.
|
There were no transfers between Level 1 and Level 2 during the
year.
Derivatives
Interest Rate Swaps
The Company enters into derivative contracts to fix its risk
associated with interest rates. At October 31, 2017 and October 31, 2016, the
fair value of the following derivatives contracts were included in the statement
of financial position in accounts payable and accrued liabilities (Note 14). The
derivatives are Level 2 financial instruments.
|
|
|
|
|
|
October 31,
2017
|
|
|
October 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sum of
|
|
|
|
|
|
|
|
|
Sum of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
derivative
|
|
|
|
|
|
Derivative
|
|
|
derivative
|
|
|
Interest rate
|
|
Average
|
|
|
Notional
|
|
|
Derivative
|
|
|
instrument
|
|
|
Notional
|
|
|
instrument
|
|
|
instrument
|
|
|
swaps
|
|
fixed rate
|
|
|
Value
|
|
|
instrument
|
|
|
liabilities
|
|
|
Value
|
|
|
liabilities
|
|
|
liabilities
|
|
|
|
|
|
|
|
|
|
|
liabilities
|
|
|
and notional
|
|
|
|
|
|
|
|
|
and notional
|
|
|
|
|
|
|
|
|
|
|
|
|
|
value
|
|
|
|
|
|
|
|
|
value
|
|
|
|
|
2.88%
|
|
$
|
8,135
|
|
$
|
154
|
|
$
|
8,289
|
|
$
|
8,613
|
|
$
|
415
|
|
$
|
9,028
|
|
Page 38
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
Convertible Debenture Receivable
Derivative assets on the Statement of Financial Position are
comprised of the conversion feature and warrants associated with the Company’s
convertible debenture receivable. These derivates are Level 2 financial
instruments.
Certain prior period balances have been reclassified to conform
to the current period’s financial statement presentation.
CanniMed Therapeutics Inc. and Aurora Cannabis Agree to
Terms on Friendly Transaction
On January 24, 2018, CanniMed Therapeutics Inc. and Aurora
Cannabis Inc. (“Aurora”) (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
announced that they have entered into a support agreement (the “Support
Agreement”) whereby the Board of Directors and the Special Committee of the
CanniMed Board have agreed to support a new offer (“New Offer”) made by Aurora
for the acquisition of all of the issued and outstanding shares of CanniMed not
owned by Aurora.
Under the New Offer, CanniMed shareholders may receive in
respect of each CanniMed share, 3.40 Aurora shares or a combination of cash and
shares at the election of each CanniMed Shareholder, subject to pro-ration with
the maximum aggregate cash consideration of $140 million. Based on an implied
Aurora share price of $12.65 and the 3.40 exchange ratio, the New Offer would
equate to $43.00, representing a 181% premium over the closing price of CanniMed
Shares on November 14, 2017, the last day prior to the public disclosure of
Aurora’s intention to pursue a combination with CanniMed, and a 79% increase to
the previous offer Cap Price of $24.00.
The total consideration for CanniMed under the New Offer is
approximately $1.1 billion based on Aurora’s implied share price of $12.65 and
the maximum amount of cash of $140 million. The number of Aurora shares to be
issued will be between approximately 72 million (assuming full cash elections)
and 84 million (assuming full share elections and no cash elections). Assuming
maximum cash elections, each CanniMed shareholder would receive $5.70 in cash
and 2.9493 Aurora shares.
Support Agreement
The Support Agreement provides that CanniMed will support the
New Offer and will recommend to its shareholders in an amended directors
circular that CanniMed Shareholders will tender to the Aurora New Offer. In
addition to the foregoing, Aurora will receive customary non-solicitation
protection and a right to match any competing proposal made to CanniMed and a
break fee payable to Aurora in certain circumstances, together with customary
representations and warranties. In addition to the locked-up shareholders
certain CanniMed shareholders representing approximately 15% of the issued
shares of CanniMed, including Brent Zettl, Chief Executive Officer, have agreed
to support the New Offer.
The New Offer and the transaction are subject to customary
closing conditions, including Canadian Competition Act Approval.
Page 39
|
CanniMed Therapeutics Inc.
|
|
Notes to the Consolidated Financial Statements
|
|
For the years ended October 31, 2017 and 2016
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
Termination of Newstrike Arrangement Agreement
In connection with the New Offer, CanniMed has entered into a
termination agreement with Newstrike, terminating the arrangement agreement
between Newstrike and CanniMed, resulting in the payment of a $9.5 million break
fee paid to Newstrike by Aurora on behalf of the Company.
Conversion of Newstrike Convertible Debenture and
Warrants
The Company has notified Newstrike that it intends to convert
its convertible debenture receivable into 10,958,904 shares of Newstrike,
exercise the warrants to purchase an additional 10,958,904 shares of Newstrike
and to liquidate its resulting position in the Newstrike shares in an orderly
manner. Proceeds on liquidation will be subject to market conditions at the time
the Newstrike shares are offered for sale.
Page 40
APPENDIX B
C
ANNI
M
ED
’
S UNAUDITED
CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS FOR THE THREE MONTHS
ENDED
J
ANUARY
31,
2018
AND
2017
Q1 2018
C
ONDENSED
C
ONSOLIDATED
I
NTERIM
F
INANCIAL
S
TATEMENTS
(U
NAUDITED
)
J
ANUARY
31,
2018
F
OR FURTHER INFORMATION PLEASE CONTACT
:
CanniMed Therapeutics Inc.
#1 Plant Technology
Road
Saskatoon, Saskatchewan
Canada S7K 3J8
media@cannimed.com
invest@cannimed.com
www.cannimedtherapeutics.com
T
RADING
S
YMBOL
:
TSX – CMED
Condensed Consolidated Interim Statements of Financial
Position
(In thousands of Canadian dollars - Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 31,
|
|
|
October 31,
|
|
|
As
at
|
|
Note
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
|
|
|
42,321
|
|
$
|
48,378
|
|
|
Accounts receivable
|
|
|
|
|
749
|
|
|
1,065
|
|
|
Marketable securities
|
|
7
|
|
|
13,918
|
|
|
-
|
|
|
Derivative assets
|
|
7
|
|
|
11,828
|
|
|
-
|
|
|
Inventories
|
|
8
|
|
|
10,322
|
|
|
9,033
|
|
|
Biological assets
|
|
9
|
|
|
1,396
|
|
|
1,451
|
|
|
Prepaid expenses and other assets
|
|
|
|
|
236
|
|
|
58
|
|
|
|
|
|
|
|
80,770
|
|
|
59,985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible debenture receivable
|
|
7
|
|
|
-
|
|
|
1,003
|
|
|
Derivative assets
|
|
7
|
|
|
-
|
|
|
3,398
|
|
|
Property, plant and equipment
|
|
|
|
|
40,258
|
|
|
38,622
|
|
|
Intangible assets
|
|
|
|
|
2,734
|
|
|
2,654
|
|
|
Goodwill
|
|
|
|
|
492
|
|
|
492
|
|
|
|
$
|
|
|
|
124,254
|
|
$
|
106,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
Accounts payables and accrued
liabilities
|
$
|
|
|
|
10,611
|
|
$
|
3,063
|
|
|
Deferred revenue
|
|
|
|
|
214
|
|
|
136
|
|
|
Income taxes payable
|
|
|
|
|
20
|
|
|
-
|
|
|
Loans
and borrowings
|
|
10
|
|
|
2,563
|
|
|
2,558
|
|
|
|
|
|
|
|
13,408
|
|
|
5,757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and borrowings
|
|
10
|
|
|
9,725
|
|
|
11,166
|
|
|
Deferred income
tax liabilities
|
|
|
|
|
2,943
|
|
|
57
|
|
|
|
|
|
|
|
12,668
|
|
|
11,223
|
|
|
|
|
|
|
|
26,076
|
|
|
16,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
12
|
|
|
115,408
|
|
|
109,103
|
|
|
Warrants
|
|
12
|
|
|
2
|
|
|
100
|
|
|
Share-based compensation
reserves
|
|
13
|
|
|
1,177
|
|
|
3,673
|
|
|
Accumulated other comprehensive income
|
|
|
|
|
21
|
|
|
52
|
|
|
Accumulated deficit
|
|
|
|
|
(18,430
|
)
|
|
(23,754
|
)
|
|
|
|
|
|
|
98,178
|
|
|
89,174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
124,254
|
|
$
|
106,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subsequent events
|
|
19
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
condensed consolidated interim financial statements.
Approved by the Board:
|
/s/ "
Don Ching,
LL.B, B.A."
|
|
/s/
"Dwayne Lashyn"
|
|
|
Director
|
|
Director
|
|
Page 1
Condensed Consolidated Interim Statements of Operations and
Comprehensive Income (Loss)
(In thousands of Canadian dollars -
Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
|
|
|
|
|
|
January 31,
|
|
|
January 31,
|
|
|
|
|
Note
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
(As restated - Note
2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
$
|
4,818
|
|
$
|
3,411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain from changes
in fair value of biological assets
|
|
9
|
|
|
(3,722
|
)
|
|
(2,324
|
)
|
|
Inventory expensed to cost of sales
|
|
|
|
|
3,224
|
|
|
3,150
|
|
|
Production costs
|
|
|
|
|
1,088
|
|
|
759
|
|
|
Cost
of sales, net of the unrealized gain on changes in fair value of
biological assets
|
|
|
|
|
590
|
|
|
1,585
|
|
|
Gross margin, including the unrealized gain on changes in
fair value of biological assets
|
|
|
|
|
4,228
|
|
|
1,826
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
|
|
1,686
|
|
|
786
|
|
|
Transaction costs
|
|
|
|
|
13,088
|
|
|
-
|
|
|
Sales and marketing
|
|
|
|
|
1,017
|
|
|
865
|
|
|
Freight and
distribution
|
|
|
|
|
354
|
|
|
291
|
|
|
Research and development
|
|
|
|
|
350
|
|
|
314
|
|
|
Foreign exchange loss
|
|
|
|
|
206
|
|
|
44
|
|
|
Research and development tax credits
|
|
|
|
|
(28
|
)
|
|
(33
|
)
|
|
(Gain) loss on
derivative instruments
|
|
7
|
|
|
(23,604
|
)
|
|
2,444
|
|
|
Mark to market loss on marketable
securities
|
|
7
|
|
|
2,191
|
|
|
-
|
|
|
Depreciation and
amortization
|
|
|
|
|
239
|
|
|
235
|
|
|
Share-based compensation
|
|
13
|
|
|
394
|
|
|
398
|
|
|
|
|
|
|
|
(4,107
|
)
|
|
5,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from operations before the following
|
|
|
|
|
8,335
|
|
|
(3,518
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
|
|
13
|
|
|
114
|
|
|
Interest income
|
|
|
|
|
204
|
|
|
1
|
|
|
Finance costs
|
|
|
|
|
(322
|
)
|
|
(620
|
)
|
|
|
|
|
|
|
(105
|
)
|
|
(505
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before income tax
|
|
|
|
|
8,230
|
|
|
(4,023
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax:
|
|
|
|
|
|
|
|
|
|
|
Current tax expense
|
|
|
|
|
(20
|
)
|
|
-
|
|
|
Deferred tax (expense) recovery
|
|
|
|
|
(2,886
|
)
|
|
143
|
|
|
|
|
|
|
|
(2,906
|
)
|
|
143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
|
|
|
$
|
5,324
|
|
$
|
(3,880
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be
reclassified subsequently to profit or loss
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
|
|
(31
|
)
|
|
(92
|
)
|
|
Comprehensive income (loss)
|
|
|
|
$
|
5,293
|
|
$
|
(3,972
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
14
|
|
$
|
0.22
|
|
$
|
(0.23
|
)
|
|
Diluted
|
|
14
|
|
$
|
0.22
|
|
$
|
(0.23
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
24,109
|
|
|
16,909
|
|
|
Diluted
|
|
|
|
|
24,533
|
|
|
16,909
|
|
The accompanying notes are an integral part of these
condensed consolidated interim financial statements.
Page 2
Condensed Consolidated Interim Statements of Changes in
Shareholders' Equity
(In thousands of Canadian dollars -
Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
|
|
|
other
|
|
|
|
|
|
|
|
|
|
|
Share
|
|
|
|
|
|
compensation
|
|
|
comprehensive
|
|
|
Accumulated
|
|
|
Total
|
|
|
|
|
capital
|
|
|
Warrants
|
|
|
reserves
|
|
|
income
|
|
|
deficit
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - October 31, 2016
(As restated - Note 2)
|
$
|
22,783
|
|
$
|
107
|
|
$
|
3,493
|
|
$
|
96
|
|
$
|
(17,857
|
)
|
$
|
8,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(3,880
|
)
|
|
(3,880
|
)
|
|
Exchange differences on translating foreign operations
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(92
|
)
|
|
-
|
|
|
(92
|
)
|
|
Total comprehensive
loss for the period
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(92
|
)
|
|
(3,880
|
)
|
|
(3,972
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued
pursuant to initial public offering, including overallotment option, net
of issue costs
|
|
63,202
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
63,202
|
|
|
Common shares issued pursuant to
debenture conversion
|
|
21,937
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
21,937
|
|
|
Common shares issued
pursuant to warrant exercise
|
|
56
|
|
|
(6
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
50
|
|
|
Share-based compensation
|
|
-
|
|
|
-
|
|
|
398
|
|
|
-
|
|
|
-
|
|
|
398
|
|
|
Balance - January 31, 2017
|
$
|
107,978
|
|
$
|
101
|
|
$
|
3,891
|
|
$
|
4
|
|
$
|
(21,737
|
)
|
$
|
90,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - October 31, 2017
|
|
109,103
|
|
|
100
|
|
|
3,673
|
|
|
52
|
|
|
(23,754
|
)
|
|
89,174
|
|
|
Net earnings
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5,324
|
|
|
5,324
|
|
|
Exchange differences on translating foreign operations
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(31
|
)
|
|
-
|
|
|
(31
|
)
|
|
Total comprehensive
loss for the period
|
|
109,103
|
|
|
100
|
|
|
3,673
|
|
|
21
|
|
|
(18,430
|
)
|
|
94,467
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued
pursuant to warrant exercise
|
|
1,041
|
|
|
(98
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
943
|
|
|
Common shares issued pursuant to stock
option exercise
|
|
5,264
|
|
|
-
|
|
|
(2,890
|
)
|
|
-
|
|
|
-
|
|
|
2,374
|
|
|
Share-based compensation
|
|
-
|
|
|
-
|
|
|
394
|
|
|
-
|
|
|
-
|
|
|
394
|
|
|
Balance - January 31, 2018
|
$
|
115,408
|
|
$
|
2
|
|
$
|
1,177
|
|
$
|
21
|
|
$
|
(18,430
|
)
|
$
|
98,178
|
|
The accompanying notes are an integral part of these
condensed consolidated interim financial statements.
Page 3
Condensed Consolidated Interim Statements of Cash
Flows
(In thousands of Canadian dollars - Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 31,
|
|
|
January 31,
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
(As restated - Note
2
|
)
|
|
Cash flows (used in) from
operating activities
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
$
|
|
|
|
5,324
|
|
$
|
(3,880
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Items not affecting cash:
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain from changes in fair value of biological
assets
|
|
|
|
|
(3,722
|
)
|
|
(2,324
|
)
|
|
Depreciation of property, plant and equipment
|
|
|
|
|
547
|
|
|
499
|
|
|
Amortization of intangible assets
|
|
|
|
|
41
|
|
|
65
|
|
|
Share-based compensation
|
|
|
|
|
394
|
|
|
398
|
|
|
Deferred income tax expense (recovery)
|
|
|
|
|
2,886
|
|
|
(143
|
)
|
|
(Gain) loss on derivatives
|
|
|
|
|
(23,604
|
)
|
|
2,444
|
|
|
Market to market loss on marketable securities
|
|
|
|
|
2,191
|
|
|
-
|
|
|
Interest payable
|
|
|
|
|
322
|
|
|
620
|
|
|
Interest
receivable
|
|
|
|
|
(204
|
)
|
|
(1
|
)
|
|
Cash flows used in operating activities
before working capital changes
|
|
|
|
|
(15,825
|
)
|
|
(2,322
|
)
|
|
Changes in non-cash working capital
|
|
15
|
|
|
9,943
|
|
|
2,562
|
|
|
Cash (used in) from continuing operations
|
|
|
|
|
(5,882
|
)
|
|
240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows (used in) from investing
activities
|
|
|
|
|
|
|
|
|
|
|
Interest
received
|
|
|
|
|
204
|
|
|
1
|
|
|
Purchase of property, plant and
equipment
|
|
|
|
|
(1,796
|
)
|
|
(339
|
)
|
|
Investment in deferred development costs
|
|
|
|
|
(123
|
)
|
|
(100
|
)
|
|
Cash
used in investing activities
|
|
|
|
|
(1,715
|
)
|
|
(438
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
Proceeds from
issuance of common shares, net of issue costs
|
|
12
|
|
|
3,317
|
|
|
63,202
|
|
|
Interest paid
|
|
|
|
|
(322
|
)
|
|
(620
|
)
|
|
Repayment of
loans and borrowings
|
|
10
|
|
|
(1,455
|
)
|
|
(1,947
|
)
|
|
Repayment of finance leases
|
|
|
|
|
-
|
|
|
(8
|
)
|
|
Cash from financing activities
|
|
|
|
|
1,540
|
|
|
60,627
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Decrease) increase in cash
|
|
|
|
|
(6,057
|
)
|
|
60,429
|
|
|
Cash, beginning of period
|
|
|
|
|
48,378
|
|
|
2,002
|
|
|
Cash and cash equivalents, end of period
|
$
|
|
|
|
42,321
|
|
$
|
62,431
|
|
The accompanying notes are an integral part of these
condensed consolidated interim financial statements.
Page 4
|
CanniMed Therapeutics Inc.
|
|
Notes to the Condensed Consolidated Interim Financial
Statements (unaudited)
|
|
For the three months ended January 31, 2018
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
CanniMed Therapeutics Inc. (“CanniMed”) is a company
incorporated in Canada, with its registered and head office located at #1 Plant
Technology Road, Saskatoon, SK., Canada, S7K 3J8.
The principal business activities of CanniMed and its
subsidiaries (collectively “the Company”) are plant biotechnology research,
product development and the production of plant based materials for
biopharmaceutical, agricultural and environmental market applications. The
Company is a licensed producer and distributor of medical cannabis pursuant to
the provisions of the Access to Cannabis for Medical Purposes Regulations
(“ACMPR”) and the Controlled Drugs and Substances Act and its Regulations.
|
2.
|
Correction of an Immaterial
Error
|
During the fourth quarter of 2017, the Company completed a
review of its inventory and biological asset model (“Model”), including the
estimates and assumptions within the Model. During this review, Management
identified an immaterial error that impacted 2016 and years prior to 2016.
Specifically, opening Inventories and Biological assets in 2016 were overstated
by $1.6 million. In addition, in conjunction with this review, a related
immaterial tax error was also identified and corrected. Accordingly, the Company
recorded an adjustment to opening retained earnings for fiscal 2016. As a
result, the Company has restated the Consolidated Statement of Financial
Position, Consolidated Statement of Changes in Shareholders’ Equity,
Consolidated Statement of Operations and Comprehensive loss and the Consolidated
Statement of Cash Flows for fiscal 2016, as reported in the Company’s audited
annual financial statements for 2017, and for the quarterly results of fiscal
2017, noted below, to correct the error.
First Quarter 2017
The following table presents the balances previously reported
and as restated in the Consolidate Statement of Financial Position and
Consolidated Statement of Changes in Shareholders’ Equity as at January 31,
2017:
|
|
|
As at
|
|
|
|
|
|
As at
|
|
|
|
|
January 31,
|
|
|
|
|
|
January 31,
|
|
|
|
|
2017
|
|
|
Adjustment
(1)
|
|
|
2017
|
|
|
|
|
(Previously Reported)
|
|
|
|
|
|
(As Restated)
|
|
|
Inventories
|
$
|
10,731
|
|
$
|
(2,634
|
)
|
$
|
8,097
|
|
|
Biological assets
|
$
|
456
|
|
$
|
135
|
|
$
|
591
|
|
|
Total current assets
|
$
|
75,622
|
|
$
|
(2,499
|
)
|
$
|
73,123
|
|
|
Deferred tax liability
|
$
|
(425
|
)
|
$
|
(98
|
)
|
$
|
(523
|
)
|
|
Accumulated deficit
|
$
|
(19,140
|
)
|
$
|
(2,597
|
)
|
$
|
(21,737
|
)
|
|
Total liabilities and shareholders’ equity
|
$
|
115,308
|
|
$
|
(2,499
|
)
|
$
|
112,809
|
|
|
(1)
|
Figures are inclusive of adjustments made to the fiscal
years 2015 and 2016.
|
Page 5
|
CanniMed Therapeutics Inc.
|
|
Notes to the Condensed Consolidated Interim Financial
Statements (unaudited)
|
|
For the three months ended January 31, 2018
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
The following table presents the amounts as previously reported
and as restated in the Consolidated Statement of Operations and Comprehensive
loss for the three months ended January 31, 2017:
|
|
|
Three Months Ended
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
January 31, 2017
|
|
|
Adjustment
|
|
|
January 31, 2017
|
|
|
|
|
(Previously
Reported)
|
|
|
|
|
|
(As Restated)
|
|
|
Unrealized gain on changes in
fair value of biological assets
|
$
|
(1,362
|
)
|
$
|
(962
|
)
|
$
|
(2,324
|
)
|
|
Inventory expensed to cost of sales
|
$
|
1,522
|
|
$
|
1,628
|
|
$
|
3,150
|
|
|
Production costs
|
$
|
832
|
|
$
|
(73
|
)
|
$
|
759
|
|
|
Cost of sales, net of the unrealized gain on
changes in fair value of biological assets
|
$
|
992
|
|
$
|
593
|
|
$
|
1,585
|
|
|
Gross margin
|
$
|
2,419
|
|
$
|
(593
|
)
|
$
|
1,826
|
|
|
Loss from operations before tax
|
$
|
(3,430
|
)
|
$
|
(593
|
)
|
$
|
(4,023
|
)
|
|
Loss from continuing
operations, net of tax
|
$
|
(3,287
|
)
|
$
|
(593
|
)
|
$
|
(3,880
|
)
|
The Company previously reported a loss per share from
operations of $(0.19) for the period ended January 31, 2017. As restated, the
loss per share became $(0.23) .
Second Quarter 2017
The following table presents the balances previously reported
and as restated in the Consolidate Statement of Financial Position and
Consolidated Statement of Changes in Shareholders’ Equity as at April 30, 2017:
|
|
|
As at
|
|
|
|
|
|
As at
|
|
|
|
|
April 30, 2017
|
|
|
Adjustment
(1)
|
|
|
April 30, 2017
|
|
|
|
|
(Previously Reported)
|
|
|
|
|
|
(As Restated)
|
|
|
Inventories
|
$
|
10,543
|
|
$
|
(1,884
|
)
|
$
|
8,659
|
|
|
Biological assets
|
$
|
460
|
|
$
|
127
|
|
$
|
587
|
|
|
Total current assets
|
$
|
72,137
|
|
$
|
(1,757
|
)
|
$
|
70,380
|
|
|
Deferred tax liability
|
$
|
-
|
|
$
|
(98
|
)
|
$
|
(98
|
)
|
|
Accumulated deficit
|
$
|
(20,989
|
)
|
$
|
(1,855
|
)
|
$
|
(22,844
|
)
|
|
Total liabilities and shareholders’ equity
|
$
|
112,150
|
|
$
|
(1,757
|
)
|
$
|
110,393
|
|
|
(1)
|
Figures are inclusive of adjustments made to the fiscal
years 2015 and 2016.
|
|
The following table presents the amounts as
previously reported and as restated in the Consolidated Statement of
Operations and Comprehensive loss for the three months ended April 30,
2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
April 30, 2017
|
|
|
Adjustment
|
|
|
April 30, 2017
|
|
|
|
|
(Previously Reported)
|
|
|
|
|
|
(As Restated)
|
|
|
Unrealized gain on changes in fair value of
biological assets
|
$
|
(1,038
|
)
|
$
|
(701
|
)
|
$
|
(1,739
|
)
|
|
Inventory expensed to cost of sales
|
$
|
2,075
|
|
$
|
32
|
|
$
|
2,107
|
|
|
Production costs
|
$
|
929
|
|
$
|
(73
|
)
|
$
|
856
|
|
|
Cost of sales, net of the unrealized gain on changes in
fair value of biological assets
|
$
|
1,966
|
|
$
|
(742
|
)
|
$
|
1,224
|
|
|
Gross margin
|
$
|
1,722
|
|
$
|
742
|
|
$
|
2,464
|
|
|
Loss from operations before tax
|
$
|
(1,849
|
)
|
$
|
742
|
|
$
|
(1,107
|
)
|
|
Loss from continuing operations, net of tax
|
$
|
(1,849
|
)
|
$
|
742
|
|
$
|
(1,107
|
)
|
The Company previously reported a loss per share of $(0.08) for
the three months ended April 30, 2017. As restated, the loss per share became
$(0.05) .
Page 6
|
CanniMed Therapeutics Inc.
|
|
Notes to the Condensed Consolidated Interim Financial
Statements (unaudited)
|
|
For the three months ended January 31, 2018
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
The following table presents the amounts as previously reported
and as restated in the Consolidated Statement of Operations and Comprehensive
loss for the six months ended April 30, 2017:
|
|
|
Six Months Ended
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
April 30, 2017
|
|
|
Adjustment
|
|
|
April 30, 2017
|
|
|
|
|
(Previously Reported)
|
|
|
|
|
|
(As Restated)
|
|
|
Unrealized gain on changes in
fair value of biological assets
|
$
|
(2,400
|
)
|
$
|
(1,663
|
)
|
$
|
(4,063
|
)
|
|
Inventory expensed to cost of sales
|
$
|
3,597
|
|
$
|
1,660
|
|
$
|
5,257
|
|
|
Production costs
|
$
|
1,761
|
|
$
|
(146
|
)
|
$
|
1,615
|
|
|
Cost of sales, net of the unrealized gain on
changes in fair value of biological assets
|
$
|
2,958
|
|
$
|
(149
|
)
|
$
|
2,809
|
|
|
Gross margin
|
$
|
4,141
|
|
$
|
149
|
|
$
|
4,290
|
|
|
Loss from operations before tax
|
$
|
(5,279
|
)
|
$
|
149
|
|
$
|
(5,130
|
)
|
|
Loss from continuing
operations, net of tax
|
$
|
(5,136
|
)
|
$
|
149
|
|
$
|
(4,987
|
)
|
The Company previously reported a loss per share of $(0.26) for
the six months ended April 30, 2017. As restated, the loss per share became
$(0.25) .
Third Quarter 2017
The following table presents the balances previously reported
and as restated in the Consolidate Statement of Financial Position and
Consolidated Statement of Changes in Shareholders’ Equity as at July 31, 2017:
|
|
|
As at
|
|
|
|
|
|
As at
|
|
|
|
|
July 31, 2017
|
|
|
Adjustment
(1)
|
|
|
July 31, 2017
|
|
|
|
|
(Previously Reported)
|
|
|
|
|
|
(As Restated)
|
|
|
Inventories
|
$
|
10,552
|
|
$
|
(2,372
|
)
|
$
|
8,180
|
|
|
Biological assets
|
$
|
640
|
|
$
|
164
|
|
$
|
804
|
|
|
Total current assets
|
$
|
67,052
|
|
$
|
(2,208
|
)
|
$
|
64,844
|
|
|
Deferred tax liability
|
$
|
-
|
|
$
|
(98
|
)
|
$
|
(98
|
)
|
|
Accumulated deficit
|
$
|
(22,345
|
)
|
$
|
(2,306
|
)
|
$
|
(24,651
|
)
|
|
Total liabilities and shareholders’ equity
|
$
|
107,661
|
|
$
|
(2,208
|
)
|
$
|
105,453
|
|
|
(1)
|
Figures are inclusive of adjustments made to the fiscal
years 2015 and 2016.
|
The following table presents the amounts as previously reported
and as restated in the Consolidated Statement of Operations and Comprehensive
loss for the three months ended July 31, 2017:
|
|
|
Three Months Ended
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
July 31, 2017
|
|
|
Adjustment
|
|
|
July 31, 2017
|
|
|
|
|
(Previously Reported)
|
|
|
|
|
|
(As Restated)
|
|
|
Unrealized gain on changes in
fair value of biological assets
|
$
|
(1,450
|
)
|
$
|
(359
|
)
|
$
|
(1,809
|
)
|
|
Inventory expensed to cost of
sales
|
$
|
2,232
|
|
$
|
883
|
|
$
|
3,115
|
|
|
Production costs
|
$
|
1,345
|
|
$
|
(73
|
)
|
$
|
1,272
|
|
|
Cost of sales, net of the
unrealized gain on changes in fair value of biological assets
|
$
|
2,127
|
|
$
|
451
|
|
$
|
2,578
|
|
|
Gross margin
|
$
|
2,643
|
|
$
|
(451
|
)
|
$
|
2,192
|
|
|
Loss from operations before tax
|
$
|
(1,356
|
)
|
$
|
(451
|
)
|
$
|
(1,807
|
)
|
|
Loss from continuing
operations, net of tax
|
$
|
(1,356
|
)
|
$
|
(451
|
)
|
$
|
(1,807
|
)
|
The Company previously reported a loss per share of $(0.06) for
the three months ended April 30, 2017. As restated, the loss per share became
$(0.08) .
Page 7
|
CanniMed Therapeutics Inc.
|
|
Notes to the Condensed Consolidated Interim Financial
Statements (unaudited)
|
|
For the three months ended January 31, 2018
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
The following table presents the amounts as previously reported
and as restated in the Consolidated Statement of Operations and Comprehensive
loss for the nine months ended July 31, 2017:
|
|
|
Nine Months Ended
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
July 31, 2017
|
|
|
Adjustment
|
|
|
July 31, 2017
|
|
|
|
|
(Previously
Reported)
|
|
|
|
|
|
(As Restated)
|
|
|
Unrealized gain on changes in
fair value of biological assets
|
$
|
(3,850
|
)
|
$
|
(2,022
|
)
|
$
|
(5,872
|
)
|
|
Inventory expensed to cost of sales
|
$
|
5,829
|
|
$
|
2,543
|
|
$
|
8,372
|
|
|
Production costs
|
$
|
3,106
|
|
$
|
(219
|
)
|
$
|
2,887
|
|
|
Cost of sales, net of the unrealized gain on
changes in fair value of biological assets
|
$
|
5,085
|
|
$
|
302
|
|
$
|
5,387
|
|
|
Gross margin
|
$
|
6,784
|
|
$
|
(302
|
)
|
$
|
6,482
|
|
|
Loss from operations before tax
|
$
|
(6,635
|
)
|
$
|
(302
|
)
|
$
|
(6,937
|
)
|
|
Loss from continuing
operations, net of tax
|
$
|
(6,492
|
)
|
$
|
(302
|
)
|
$
|
(6,794
|
)
|
The Company previously reported a loss per share from
operations of $(0.31) for the nine months ended July 31, 2017. As restated, the
loss per share became $(0.33) .
Statement of compliance
These condensed consolidated interim financial statements for
the three months ended January 31, 2018 and 2017 have been prepared in
accordance with International Accounting Standard 34, Interim Financial
Reporting (“IAS 34”), following the same accounting policies and methods of
application as those used in preparing the audited consolidated financial
statements for the year ended October 31, 2017. These condensed consolidated
interim financial statements do not include all of the information required for
full annual financial statements and should be read in conjunction with the
Company’s 2017 annual consolidated financial statements prepared in accordance
with International Financial Reporting Standards (“IFRS”).
These condensed consolidated interim financial statements were
authorized for issue by the Company’s Board of Directors on March 16, 2018.
Details of the Company’s accounting policies, including future
changes, are included in Notes 4 and 5.
Basis of measurement
These consolidated financial statements have been prepared on
the historical cost basis except for biological assets and certain financial
instruments, which are measured at fair value.
Historical cost is generally based on the fair value of the
consideration given in exchange for assets.
Functional and presentation currency
These consolidated financial statements are presented in
Canadian dollars, which is CanniMed’s functional and presentation currency. The
subsidiary located in the United States of America has a U.S. dollar functional
currency and the subsidiaries located in Canada have a Canadian dollar
functional currency.
Basis of consolidation
These consolidated financial statements incorporate the
accounts of CanniMed and entities controlled by it. Control exists when CanniMed
has the power to govern the financial and operating policies of an entity so as
to obtain benefits from its activities. In assessing control, potential
voting rights that currently are exercisable are taken into account. The
accounts of subsidiaries are included in the consolidated financial statements
of the Company from the date that control commences until the date that control
ceases. Specifically, income and expenses of the subsidiary acquired or disposed
of during the year are included in the consolidated statement of profit or loss
and other comprehensive income from the date the Company gains control until the
date when the Company ceases to control the subsidiary.
Page 8
|
CanniMed Therapeutics Inc.
|
|
Notes to the Condensed Consolidated Interim Financial
Statements (unaudited)
|
|
For the three months ended January 31, 2018
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
When the Company loses control of a subsidiary, a gain or loss
is recognized in the profit or loss and is calculated as the difference between
(i) the aggregate of the fair value of the consideration received and the fair
value of any retained interest and (ii) the previous carrying amount of the
assets (including goodwill), and liabilities of the subsidiary interest. All
amounts previously recognized in other comprehensive income in relation to that
subsidiary are accounted for as if the Company had directly disposed of the
related assets or liabilities.
At January 31, 2018, the Company had the following wholly-owned
subsidiary corporations: Prairie Plant Systems Inc. (operating in Canada),
CanniMed Ltd. (operating in Canada), SubTerra (operating in the US), 10420484
Canada Inc. (a holding company operating in Canada) and CanniMed International
Ltd. (a holding company incorporated in Canada).
Intercompany balances and transactions, and any unrealized
income and expenses arising from intercompany transactions, are eliminated in
preparing the consolidated financial statements.
|
4.
|
Significant accounting
policies
|
These condensed consolidated interim financial statements are
prepared, except as noted below (Note 5), using accounting policies consistent
with the Company’s annual consolidated financial statements and notes thereto
for the year ended October 31, 2017. The accounting policies utilized by
Management for the Company and its wholly-owned subsidiaries have been applied
consistently to all periods presented in these condensed consolidated interim
financial statements, unless otherwise indicated.
Changes in Accounting Policies
The Company has adopted the following new standards, along with
any consequential amendments, effective November 1, 2017. These changes were
made in accordance with the applicable transitional provisions.
IAS 7 Statement of Cash Flows
As part of their disclosure initiative, the IASB has issued
amendments to IAS 7 Statement of Cash Flows requiring a reconciliation of
liabilities arising from financing activities to enable users of the financial
statements to evaluate both cash flow and non-cash changes in the net debt of a
Company. The amendments to IAS 7 are effective for annual periods beginning on
or after January 1, 2017. The Company adopted these amendments in its financial
statements for the year beginning on November 1, 2017. The amendments did not
have a significant impact on the Company’s consolidated financial
statements.
IAS 12 Income Taxes
In January 2016, the IASB issued amendments to IAS 12 to
provide clarification on the requirements relating to the recognition of
deferred tax assets for unrealized losses on debt instruments measured at fair
value. Adoption of the amendments to IAS 12 is required for the annual period
beginning on or after January 1, 2017. The Company adopted these amendments in
its financial statements for the year beginning on November 1, 2017. The
amendments did not have a significant impact on the Company’s consolidated
financial statements.
Page 9
|
CanniMed Therapeutics Inc.
|
|
Notes to the Condensed Consolidated Interim Financial
Statements (unaudited)
|
|
For the three months ended January 31, 2018
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
Future Changes in Accounting Policies
These are the changes that the Company reasonably expects will
have an impact on its disclosures, financial position or performance when
applied at a future date. The Company intends to adopt these standards, if
applicable, when they become effective.
IFRS 15 Revenue from Contracts with Customers
In May 2014, IFRS 15 was issued by the International Accounting
Standards Board (“IASB”) which provides a comprehensive framework for
recognition, measurement, and disclosure of revenue from contracts with
customers, excluding contracts within the scope of the standards on leases,
insurance contracts and financial instruments. IFRS 15 is effective for annual
periods beginning on or after January 1, 2018, with early application permitted.
Entities have the option of using either a full retrospective or a modified
retrospective approach to adopt the guidance. The Company is currently assessing
the potential impacts of IFRS 15.
IFRS 9 Financial Instruments
IFRS 9 was issued by IASB in November 2009 and October 2010 and
will replace IAS 39. IFRS 9 uses a single approach to determine whether a
financial asset is measured at amortized cost or fair value, replacing the
multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity
manages its financial instruments in the context of its business model and the
contractual cash flow characteristics of the financial assets. Two measurement
categories continue to exist to account for financial liabilities in IFRS 9,
fair value through profit or loss and amortized cost. Financial liabilities
held-for-trading are measured at fair value through profit or loss, and all
other financial liabilities are measured at amortized cost unless the fair value
option is applied. The treatment of embedded derivatives under the new standard
is consistent with IAS 39 and is applied to financial liabilities and
non-derivative hosts not within the scope of the standard. IFRS 9 is effective
for annual periods beginning on or after January 1, 2018, with early application
permitted. The Company is currently assessing the potential impact of IFRS
9.
IFRS 16 Leases
In January 2016, the IASB issued IFRS 16, which specifies how
an IFRS reporter will recognize, measure, present and disclose leases. The
standard provides a single lessee accounting model, requiring lessees to
recognize assets and liabilities for all leases unless the lease term is 12
months or less or the underlying asset has a low value. Lessors continue to
classify leases as operating or finance, with IFRS 16’s approach to lessor
accounting substantially unchanged from its predecessor, IAS 17. IFRS 16 is
effective for annual reporting periods beginning on or after January 1, 2019,
and a lessee shall either apply IFRS 16 with full retrospective effect or
alternatively not restate comparative information but recognize the cumulative
effect of initially applying IFRS 16 as an adjustment to opening equity at the
date of initial application. The Company is currently assessing the potential
impact of IFRS 16.
IFRS 2 Share-Based Payment
In June 2016, the IASB issued amendments to IFRS 2. These
amendments provide clarification on how to account for certain types of
share-based payment transactions. The amendments are effective for the annual
period beginning on or after January 1, 2018. The extent of the impact of the
adoption of the amendments has not yet been determined.
|
6.
|
Critical accounting estimates and
judgements:
|
The preparation of the consolidated financial statements in
conformity with IFRS requires Management to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results may
differ from these estimates. Estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are recognized in the
year in which the estimates are revised and in any future years affected.
Page 10
|
CanniMed Therapeutics Inc.
|
|
Notes to the Condensed Consolidated Interim Financial
Statements (unaudited)
|
|
For the three months ended January 31, 2018
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
Valuation of biological assets and inventories
Biological assets consisting of cannabis plants are measured at
fair value less costs to sell up to the point of harvest.
Determination of the fair values of the biological assets
requires the Company to make assumptions about how market participants assign
fair values to these assets. These assumptions primarily relate to the level of
effort required to bring the cannabis plants up to the point of harvest, costs
to convert the harvested plants to finished goods, sales price, risk of loss,
expected remaining future yields for the plants, and estimating values during
the growth cycle.
The valuation of biological assets at the point of harvest is
the cost basis for all cannabis based inventory and thus any critical estimates
and judgements related to the valuation of biological assets are also applicable
for inventory. The valuation of work in process and finished goods also requires
the estimate of conversion costs incurred, which become part of the carrying
amount for the inventory. The Company must also determine if the cost of any
inventory exceeds its net realizable value, such as cases where prices have
decreased, or inventory has spoiled or has otherwise been damaged. See Note 9
for additional information with respect to the estimates contained within
biological assets.
Estimated useful lives and amortization of property plant
and equipment and intangible assets
Amortization of property, plant and equipment and finite-life
intangible assets are dependent upon estimates of useful lives, which are
determined through the exercise of judgement. The assessment of any impairment
of these assets is dependent upon estimates of recoverable amounts that take
into account factors such as economic and market conditions and the useful lives
of assets.
Impairment of goodwill, intangibles and long-lived assets
Determining whether impairment relating to goodwill,
intangibles and long-lived assets exists requires an estimation of the
recoverable amount of cash generating units (“CGUs”). Determining a CGU’s
recoverable amount requires the determination of the higher of the value in use
of the CGU and the fair value less cost to sell of the CGU. The determination of
the recoverable amount requires the Company to estimate future cash flows,
discount rates and salvage values, as applicable.
Convertible debenture receivable and associated financial
instruments
Management is required to make many estimates when determining
the valuation of its convertible debenture receivable. The valuation of the
convertible debenture receivable, and the associated conversion feature and
warrants (which comprise the Derivative asset on the Statement of Financial
Position), requires the use of option pricing models that involve various
estimates and assumptions.
Share-based compensation
In calculating the share-based compensation expense, key
estimates such as the value of the common shares, the rate of forfeiture of
options granted, the expected life of the option and the risk-free interest rate
are used.
Warrants
In calculating the value of the warrants, key estimates such as
the value of the common shares and the risk-free interest rate are used.
Page 11
|
CanniMed Therapeutics Inc.
|
|
Notes to the Condensed Consolidated Interim Financial
Statements (unaudited)
|
|
For the three months ended January 31, 2018
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
Taxes
Deferred tax assets are recognized for all unused tax losses to
the extent that it is probable that taxable profit will be available against
which the losses can be utilized. Significant management judgement is required
to determine the amount of deferred tax assets that can be recognized, based
upon the likely timing and the level of future taxable profits together with tax
planning strategies.
|
7.
|
Marketable securities and Convertible
debenture
|
|
(a)
|
Marketable securities
|
During 2017, a subsidiary of CanniMed purchased a secured
convertible debenture (the “Debenture”) in the principal amount of $4.0 million
from Newstrike Resources Ltd. (TSXV: HIP, “Newstrike”). On January 24, 2018, the
Debenture was converted into 10,958,904 common shares of Newstrike at a
conversion price of $0.365 per common share. At January 31, 2018, the Company
had 10,958,904 common shares of Newstrike with a value of $13.9 million (October
31, 2017 – NA).
|
|
|
JAN 31,
|
|
|
OCT 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
Conversion from convertible
debenture receivable (Note 7(b))
|
$
|
1,003
|
|
$
|
-
|
|
|
Transfer from derivative assets (Note 7(c))
|
|
15,106
|
|
|
-
|
|
|
Marketable securities,
inception value
|
|
16,109
|
|
|
-
|
|
|
Mark
to market loss
|
|
(2,191
|
)
|
|
|
|
|
Marketable securities, end of period
|
$
|
13,918
|
|
$
|
-
|
|
The change in the fair value of the Company’s Marketable
securities from the date of conversion to January 31, 2018 was a decrease of
$2.1 million (Year ended October 31, 2017 - $nil). This loss has been recorded
in the Statement of Operations.
|
(b)
|
Convertible debenture
receivable
|
|
|
|
JAN 31,
|
|
|
OCT 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Principal amount at issuance
|
$
|
N/A
|
|
$
|
4,000
|
|
|
Carrying value, beginning of period
|
|
1,003
|
|
|
N/A
|
|
|
Fair value of conversion
feature adjustment, inception (Note 7(c))
|
|
N/A
|
|
|
(1,573
|
)
|
|
Fair value of warrants, inception (Note 7(c))
|
|
N/A
|
|
|
(1,452
|
)
|
|
Interest receivable
attributable to effective interest method
(1)
|
|
-
|
|
|
28
|
|
|
Conversion into common shares of Newstrike (Note 7(a))
|
|
(1,003
|
)
|
|
N/A
|
|
|
Convertible debenture receivable, end of period
|
$
|
-
|
|
$
|
1,003
|
|
|
(1)
|
Effective interest rate of 22%.
|
Subsequent to January 31, 2018, the Company exercised its
warrants to purchase an additional 10,958,904 shares of Newstrike (Note 7(c)).
Subsequent to January 31, 2018 (Note 19), all of the Company’s shares in
Newstrike were sold.
Derivative assets comprise the conversion feature of the
Debenture and the warrants associated with the debenture.
Page 12
|
CanniMed Therapeutics Inc.
|
|
Notes to the Condensed Consolidated Interim Financial
Statements (unaudited)
|
|
For the three months ended January 31, 2018
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
Conversion Feature of Debenture
The fair value of the conversion feature was calculated as
follows:
|
|
|
JAN 24,
|
|
|
OCT 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
Fair value of conversion
feature, beginning of period
|
$
|
1,771
|
|
$
|
1,573
|
|
|
Mark to market derivative gain
|
|
13,335
|
|
|
198
|
|
|
Transfer to Marketable securities (Note 7(a))
|
|
(15,106
|
)
|
|
-
|
|
|
Fair value of conversion feature, end of period
|
$
|
-
|
|
$
|
1,771
|
|
Warrants
The fair value of Newstrike warrants was calculated as follows:
|
|
|
JAN 31,
|
|
|
OCT 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
Fair value of warrants,
beginning of period
|
$
|
1,627
|
|
$
|
1,452
|
|
|
Mark
to market derivative gain
|
|
10,201
|
|
|
175
|
|
|
Total derivative asset, end of period
|
$
|
11,828
|
|
$
|
1,627
|
|
The change in the fair value of the warrants resulted in a
decrease in the Company’s net loss, due to an increase of $10.2 million in the
fair value for the three months ended January 31, 2018 (Year ended October 31,
2017 – increase of $0.2 million).
Black-Scholes Assumptions (Warrants)
The fair value of the conversion feature and common share
purchase warrants were determined using the Black-Scholes option pricing model
under the following assumptions:
|
|
|
JAN 31,
|
|
|
OCT 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Expected dividend yield (%)
|
|
0%
|
|
|
0%
|
|
|
Average risk-free interest rate (%)
|
|
1.9%
|
|
|
1.5%
|
|
|
Expected life (years)
|
|
2.6
|
|
|
2.9
|
|
|
Expected volatility (%)
(1)
|
|
142.7%
|
|
|
72.0%
|
|
|
(1)
|
Based on historical
volatility.
|
|
(d)
|
Convertible debenture
payable
|
During the first quarter of 2017, $11.3 million of the
Company’s convertible debentures were converted to equity. These conversions
resulted in a loss on derivative instruments of $2.4 million attributable to the
increased value of the embedded derivative liability relating to the conversion
to equity option contained within the convertible debentures. This option
expired at the end of the first quarter of 2017.
Page 13
|
CanniMed Therapeutics Inc.
|
|
Notes to the Condensed Consolidated Interim Financial
Statements (unaudited)
|
|
For the three months ended January 31, 2018
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
|
|
|
JAN 31,
|
|
|
OCT 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Finished goods
|
$
|
9,767
|
|
$
|
8,533
|
|
|
Materials and supplies
|
|
555
|
|
|
500
|
|
|
|
$
|
10,322
|
|
$
|
9,033
|
|
Inventories expensed through cost of sales during the
three-month period ended January 31, 2018 were $3.2 million (Q1 2017 - $3.2
million).
Biological assets consist of medical cannabis plants.
|
|
|
JAN 31,
|
|
|
OCT 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Biological assets, beginning
of year
|
$
|
1,451
|
|
$
|
481
|
|
|
Change in fair value due to
biological transformation
|
|
3,667
|
|
|
9,780
|
|
|
Transfers to inventory upon harvest
|
|
(3,722
|
)
|
|
(8,810
|
)
|
|
Biological assets, end of period
|
$
|
1,396
|
|
$
|
1,451
|
|
All plants are harvested for the sale of consumable product and
take approximately fourteen to sixteen weeks to grow prior to harvest.
The significant assumptions and estimates used in determining
the fair value of biological assets are as follows:
|
|
•
|
wastage of plants based on their various stages
of biological transformation;
|
|
|
•
|
fair value less cost to sell at the point of
harvest;
|
|
|
•
|
amounts of depreciation and overhead incurred
and allocated to biological assets.
|
|
|
|
|
|
|
JAN 31,
|
|
|
OCT 31,
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Current portion
|
|
|
|
|
|
|
|
|
|
|
Line of credit
|
|
(a)
|
|
$
|
-
|
|
$
|
-
|
|
|
Capital
loan (4.20%, based on interest at the Bank’s Prime rate plus 1.00% per
annum).
|
|
|
|
|
219
|
|
|
250
|
|
|
Term loans
|
|
(b)
|
|
|
1,133
|
|
|
1,108
|
|
|
Debentures
|
|
(c)
|
|
|
1,138
|
|
|
1,138
|
|
|
Other
|
|
(d)
|
|
|
73
|
|
|
62
|
|
|
|
|
|
|
$
|
2,563
|
|
$
|
2,558
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
|
|
Term loans
|
|
(b)
|
|
$
|
9,351
|
|
$
|
9,646
|
|
|
Debentures
|
|
(c)
|
|
|
138
|
|
|
1,241
|
|
|
Other
|
|
(d)
|
|
|
236
|
|
|
279
|
|
|
|
|
|
|
$
|
9,725
|
|
$
|
11,166
|
|
|
Total loans and borrowings
|
|
|
|
$
|
12,288
|
|
$
|
13,724
|
|
Page 14
|
CanniMed Therapeutics Inc.
|
|
Notes to the Condensed Consolidated Interim Financial
Statements (unaudited)
|
|
For the three months ended January 31, 2018
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
Line of Credit
The Company has access to a Canadian and US operating line of
credit with a maximum of $1.0 million (October 31, 2017 - $1.0 million) and $0.5
million (October 31, 2017 - $0.5 million), respectively. These operating lines
of credit were undrawn as at January 31, 2018 and October 31, 2017.
|
|
|
JAN 31,
|
|
|
OCT 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
2.83% to 2.94% capital loan,
due for renewal November 2018
(1)
|
$
|
8,013
|
|
$
|
8,135
|
|
Capital loan, payable in blended monthly instalments of $60,
due for renewal November 2018 (4.95%, based on interest at the
Bank’s Prime rate plus 1.75% per annum).
|
|
2,471
|
|
|
2,619
|
|
|
|
|
10,484
|
|
|
10,754
|
|
|
Current Portion
|
|
(1,133
|
)
|
|
(1,108
|
)
|
|
|
$
|
9,351
|
|
$
|
9,646
|
|
|
(1)
|
The derivative instrument liabilities on the capital loan
are included in accounts payable and accrued liabilities $0.1 million
(October 31, 2017 - $0.2 million), as disclosed in Note
17.
|
Covenants
At January 31, 2018 and October 31, 2017, the Company is bound
by and has met all covenants on its credit facilities.
|
|
|
JAN 31,
|
|
|
OCT 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
Debentures, 12% interest
|
$
|
184
|
|
$
|
195
|
|
|
Debentures, 5% interest
|
|
1,092
|
|
|
2,184
|
|
|
|
|
1,276
|
|
|
2,379
|
|
|
Current Portion
|
|
(1,138
|
)
|
|
(1,138
|
)
|
|
|
$
|
138
|
|
$
|
1,241
|
|
|
|
|
JAN 31,
|
|
|
OCT 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
Various loans, interest at
5.1% to 7.04%, payable in monthly instalments of $5 US with varying due
dates.
|
$
|
309
|
|
$
|
341
|
|
|
Current portion
|
|
(73
|
)
|
|
(62
|
)
|
|
|
$
|
236
|
|
$
|
279
|
|
Page 15
|
CanniMed Therapeutics Inc.
|
|
Notes to the Condensed Consolidated Interim Financial
Statements (unaudited)
|
|
For the three months ended January 31, 2018
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
|
11.
|
Commitments and
contingencies
|
Legal claims and Regulatory Matters
There were no existing claims or regulatory matters against the
Company that could have a material impact on the consolidated financial
statements as at January 31, 2018 or October 31, 2017. The Company is
occasionally named as a party in various claims and legal proceedings that arise
during the normal course of its business. The Company reviews each of these
claims, including the nature of the claim, the amount in dispute or claimed, and
the availability of insurance coverage. There can be no assurance that any
particular claim will be resolved in the Company’s favor or that such claims may
not have a material effect on the Company. Inquiries from regulatory bodies may
also arise in the normal course of business, to which the Company responds as
required.
Other
At January 31, 2018, the Company had approximately $1.6 million
of construction commitments (October 31, 2017 - $3.3 million) relating to its
capital expansion projects.
Authorized
At October 31, 2017, the authorized share capital of the
Company consists of Class “A” common shares. The rights, privileges,
restrictions and conditions attached to each series of shares are determined by
the Board of Directors at the time of creation of such series. The common shares
of the Company are entitled to vote at all meetings of the shareholders and,
upon dissolution or any other distribution of assets, to receive such assets of
the Company as are distributable to the holders of the common shares.
|
Issued
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
Note
|
|
|
Common Shares
|
|
|
Consideration
|
|
|
Outstanding, October 31, 2017
|
|
|
|
|
22,964,927
|
|
$
|
109,103
|
|
|
Exercise of warrants
|
|
12
|
(a)
|
|
171,801
|
|
|
1,041
|
|
|
Exercise of stock options
|
|
12
|
(b)
|
|
1,619,927
|
|
|
5,264
|
|
|
Outstanding, January 31, 2018
|
|
|
|
|
24,756,655
|
|
$
|
115,408
|
|
Issuance of shares
During the three months ended January 31, 2018, CanniMed issued
171,801 common shares upon exercise of warrants. Subsequent to January 31, 2018,
an additional 2,728 common shares were issued upon exercise of warrants.
|
(b)
|
Exercise of Stock Options
|
During the first quarter of 2018, CanniMed issued 1,619,927
common shares upon exercise of stock options (Note 13). Subsequent to January
31, 2018, an additional 507,862 common shares were issued upon the exercise of
stock options.
|
13.
|
Share-based compensation
|
The Company has established a stock option plan under which
common share purchase options may be granted to directors, officers and key
employees. The maximum number of common shares available for option under the
stock option plan is outlined in the stock options agreement. Options granted
have an exercise price comparable to the market prices of CanniMed shares, as determined by the
Company’s Board of Directors. All options are settled by physical delivery of
shares. Vesting periods of options granted under the Company’s stock option plan
vary on a grant by grant basis, at the discretion of the Company’s Board of
Directors.
Page 16
|
CanniMed Therapeutics Inc.
|
|
Notes to the Condensed Consolidated Interim Financial
Statements (unaudited)
|
|
For the three months ended January 31, 2018
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
The following table summarizes movements in stock options
during the period ended January 31, 2018 and the year ended October 31, 2017:
|
|
|
January 31,
2018
|
|
|
October 31, 2017
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
Number of
|
|
|
average
|
|
|
Number of
|
|
|
average
|
|
|
|
|
options
|
|
|
exercise price
|
|
|
options
|
|
|
exercise price
|
|
|
Beginning of year
|
|
2,217,789
|
|
$
|
2.66
|
|
|
2,532,788
|
|
$
|
1.95
|
|
|
Granted
|
|
-
|
|
|
-
|
|
|
180,000
|
|
$
|
9.64
|
|
|
Forfeited
|
|
(80,000
|
)
|
$
|
9.64
|
|
|
(20,000
|
)
|
$
|
4.68
|
|
|
Exercised
|
|
(1,619,927
|
)
|
$
|
1.43
|
|
|
(474,999
|
)
|
$
|
1.43
|
|
|
Expired
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
End
of period
|
|
517,862
|
|
$
|
5.33
|
|
|
2,217,789
|
|
$
|
2.66
|
|
|
Exercisable
|
|
517,862
|
|
$
|
5.33
|
|
|
1,855,121
|
|
$
|
1.79
|
|
The weighted average market share price at the date of exercise
for stock options exercised during the period ended January 31, 2018 was
$20.55.
For stock options outstanding at January 31, 2018, the range of
exercise prices, the weighted average exercise price and the weighted average
remaining contractual life are as follows:
|
|
|
Options Outstanding
|
|
|
|
|
|
Options Exercisable (Vested)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
Weighted
|
|
|
Average
|
|
|
|
|
|
Weighted
|
|
|
Average
|
|
|
|
|
|
|
|
Average
|
|
|
Exercise
|
|
|
|
|
|
Average
|
|
|
Exercise
|
|
|
Option Price Per Share
|
|
Quantity
|
|
|
Remaining Life
|
|
|
Price
|
|
|
Quantity
|
|
|
Remaining Life
|
|
|
Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$1.01 - $1.68
|
|
53,800
|
|
|
0.75
|
|
$
|
1.68
|
|
|
53,800
|
|
|
0.75
|
|
$
|
1.68
|
|
|
$1.69 - $4.68
|
|
364,062
|
|
|
0.75
|
|
$
|
4.68
|
|
|
364,062
|
|
|
0.75
|
|
$
|
4.68
|
|
|
$4.69 - $9.64
|
|
100,000
|
|
|
4.61
|
|
$
|
9.64
|
|
|
100,000
|
|
|
4.61
|
|
$
|
9.64
|
|
|
|
|
517,862
|
|
|
1.49
|
|
$
|
5.33
|
|
|
517,862
|
|
|
1.49
|
|
$
|
5.33
|
|
The foregoing options have expiry dates ranging from October
31, 2018 to September 8, 2022. During the first quarter of 2018, in conjunction
with the proposed acquisition of CanniMed by Aurora, CanniMed’s Board of
Directors approved a resolution that accelerated the vesting of all unvested
stock options, making them fully exercisable by the holders.
There were no stock options granted during the first quarter of
2018. The weighted average fair value of stock options granted during 2017 was
$3.30 and was estimated using the Black-Scholes option pricing model with
assumptions of a 5.0 year weighted average expected option life, a five percent
expected forfeiture rate, 44 percent volatility and an interest rate 1.6
percent.
Share-based compensation for the three months ended January 31,
2018 was $0.4 million (Q1 2017 - $0.4 million).
The expected volatility used in the Black-Scholes option
pricing model is based on this historical volatility of the Company’s shares
over the weighted average expected option life.
Subsequent to January 31, 2018, a total of 0.5 million stock
options have been exercised.
Page 17
|
CanniMed Therapeutics Inc.
|
|
Notes to the Condensed Consolidated Interim Financial
Statements (unaudited)
|
|
For the three months ended January 31, 2018
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
|
14.
|
Earnings (loss) per share
|
Earnings (loss) per share for the three months ended January
31, 2018 and 2017 was calculated based on the following:
Continuing operations
|
For the three months ended January 31,
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
attributable to common shareholders
|
$
|
5,324
|
|
$
|
(3,880
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding (basic)
|
|
24,109
|
|
|
16,909
|
|
|
Dilutive effect of stock options and warrants
|
|
424
|
|
|
-
|
|
|
Weighted average shares outstanding (diluted)
|
|
24,533
|
|
|
16,909
|
|
|
Earnings (loss) per share (basic)
|
$
|
0.22
|
|
$
|
(0.23
|
)
|
|
Earnings (loss) per share (diluted)
|
$
|
0.22
|
|
$
|
(0.23
|
)
|
Included in the computation of diluted earnings per share for
the period ended January 31, 2018 were stock options and warrants outstanding on
0.4 million common shares with an average exercise price less than the average
market price of the Company’s common shares.
For the three months ended January 31, 2017, there was no
effect of applying the treasury-stock method to the weighted average number of
shares outstanding as all of the stock options and warrants outstanding were
anti-dilutive.
|
15.
|
Cash Flow Information
|
|
For
the three months ended January 31,
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
Trade and other receivables
|
$
|
316
|
|
$
|
(715
|
)
|
|
Inventories
|
|
2,488
|
|
|
2,096
|
|
|
Prepaid expenses and deposits
|
|
(178
|
)
|
|
1,029
|
|
|
Accounts payables and accrued liabilities
|
|
6,984
|
|
|
28
|
|
|
Tax
|
|
20
|
|
|
-
|
|
|
Deferred revenue
|
|
78
|
|
|
36
|
|
|
Foreign exchange translation
|
|
235
|
|
|
88
|
|
|
Change in non-cash
working capital
|
$
|
9,943
|
|
$
|
2,562
|
|
|
16.
|
Related party transactions
|
Power Purchase Contract
The Company’s Chief Executive Officer is also the Chief
Executive Officer of PM Power. In addition, members of the Company’s Board of
Directors are shareholders of PM Power and collectively hold, either
individually or via organizations that they represent, a minority interest in
the issued and outstanding shares of PM Power.
SubTerra and PM Power are parties to an agreement (“the Power
Purchase Contract”), pursuant to which PM Power Group, Inc. has agreed to
distribute electricity to the SubTerra facility. There have been no transactions
between SubTerra and PM Power with respect to the Power Purchase Contract.
Page 18
|
CanniMed Therapeutics Inc.
|
|
Notes to the Condensed Consolidated Interim Financial
Statements (unaudited)
|
|
For the three months ended January 31, 2018
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
Non-core asset sale
Subsequent to January 31, 2018 (Note 19), as a result of the
acquisition of CanniMed by Aurora, an agreement was reached by the Company to
sell certain non-core assets to the Company’s Chief Executive Officer. These
assets consist of:
|
|
•
|
80.1% of its shares in SubTerra;
|
|
|
•
|
80.1% of certain plant based protein research;
and
|
|
|
•
|
certain assets relating to its fruit tree
business.
|
Proceeds from the sale will total $1.0 million. At January 31,
2018, the net carrying value of these assets was $2.4 million; as such, this
transaction will result in a loss on sale.
|
17.
|
Financial risk management and financial
instruments
|
The Company is exposed to various risks through its financial
instruments, as follows:
Capital Management
The Company manages its capital to provide sufficient liquidity
for it operating and growth activities. In order to achieve this objective the
Company prepares annual budgets and capital requirements to manage its capital
structure. The capital structure of the Company consists of loans and borrowings
(Note 10) and equity, comprised of issued capital stock, share-based payments,
accumulated and other comprehensive income and retained earnings.
Credit Risk
Credit risk is the risk that a counterparty will not meet its
obligations under a financial instrument or customer contract, leading to a
financial loss. The Company is exposed to credit risk from its operating
activities (primarily for trade receivables and convertible debenture
receivable) and from its financing activities, including deposits with banks and
financial institutions, foreign exchange transactions and derivatives.
The Company does not hold any collateral as security but
mitigates this risk by dealing only with what management believes to be
financially sound counterparties and, accordingly, does not anticipate
significant loss for non-performance. The exposure on trade receivables is
minimal since the majority of the amount noted is due from government agencies
or insurers. There is no material exposure to credit risk on cash and cash
equivalents, accounts receivable or convertible debenture receivable on the
statement of financial position.
Liquidity
The Company’s exposure to liquidity risk is dependent on the
collection of accounts receivable and the raising of funds to meet commitments
and sustain operations. The Company controls liquidity risk by management of
working capital, cash flows and the issuance of share capital. The Company has
access to lines of credit with available borrowings of $1.5 million at January
31, 2018 and cash and cash equivalents totaling $42.3 million (October 31, 2017
- $48.4 million). Other than the scheduled principal payments of debt, the
principal payments / commitments of the Company have not materially changed
since those disclosed within the consolidated financial statements as at October
31, 2017.
Market
Market risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of changes in market
prices. Market risk comprises three types of risk: currency rate risk, interest
rate risk and commodity price risk.
Page 19
|
CanniMed Therapeutics Inc.
|
|
Notes to the Condensed Consolidated Interim Financial
Statements (unaudited)
|
|
For the three months ended January 31, 2018
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
Foreign currency risk
Foreign currency risk is the risk to the Company’s earnings
that arise from fluctuations of foreign exchange rates, specifically the U.S.
Dollar. Currency risk arises as a result of the Company's investment in
SubTerra. Management believes this risk is reduced by the fact that this U.S.
subsidiary operates in a politically and economically stable foreign country.
The Company’s exposure to foreign currency changes is considered to be not
material.
Interest rate risk
Interest rate risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of changes in market
interest rates. The Company’s exposure to the risk of changes in market interest
rates relates primarily to the loans and borrowings obligations with floating
interest rates. The Company has entered into interest rate swaps to fix its
exposure to variable interest rates on approximately one half of its long-term
debt. In addition, the Company has a convertible debenture receivable with a
fixed interest rate.
Categories of financial instruments
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market
participants at the measurement date, regardless of whether that price is
directly observable or estimated using another valuation technique. In
estimating the fair value of an asset or a liability, the Company takes into
account the characteristics of the asset or liability if market participants
would take those characteristics into account when pricing the asset or
liability at the measurement date.
In addition, for financial reporting purposes, fair value
measurements are categorized into Level 1, 2 and 3 based on the degree to which
the fair value measurement are observable and the significance of the inputs to
the fair value measurement in its entirety, which are described as follows:
Level 1 inputs are from quoted prices (unadjusted) in active
markets for identical assets and liabilities that the entity can access at the
measurement date;
Level 2 inputs are inputs, other than quoted prices included
within Level 1 that are observable for assets and liabilities, either directly
or indirectly;
Level 3 inputs are the unobservable inputs for assets and
liabilities.
The following table provides information with respect to
financial instruments held as at:
|
January 31, 2018
|
|
Classification
|
|
|
Carrying Amount
|
|
|
Fair Value
|
|
|
Cash and cash equivalents
|
|
Loans and
receivables
|
|
$
|
42,321
|
|
$
|
42,321
|
|
|
Accounts receivable
|
|
Loans and receivables
|
|
$
|
749
|
|
$
|
749
|
|
|
Marketable securities
|
|
Held for trading
|
|
$
|
13,918
|
|
$
|
13,918
|
|
|
Derivative asset (warrants)
|
|
Other financial asset (“OFA”)
|
|
$
|
11,828
|
|
$
|
11,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
Other financial liabilities
(“OFL”)
|
|
$
|
10,525
|
|
$
|
10,525
|
|
|
Derivative instrument
liabilities
(1)
|
|
Fair value
through profit or loss
|
|
$
|
86
|
|
$
|
86
|
|
|
Loans and borrowings
|
|
OFL
|
|
$
|
12,288
|
|
$
|
12,288
|
|
Page 20
|
CanniMed Therapeutics Inc.
|
|
Notes to the Condensed Consolidated Interim Financial
Statements (unaudited)
|
|
For the three months ended January 31, 2018
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
|
October 31, 2017
|
|
Classification
|
|
|
Carrying Amount
|
|
|
Fair Value
|
|
|
Cash and cash equivalents
|
|
Loans and
receivables
|
|
$
|
48,378
|
|
$
|
48,378
|
|
|
Accounts receivable
|
|
Loans and receivables
|
|
$
|
1,065
|
|
$
|
1,065
|
|
|
Convertible debenture
receivable
|
|
Loans and
receivables
|
|
$
|
1,003
|
|
$
|
1,003
|
|
|
Derivative asset (conversion feature)
|
|
Other financial asset (“OFA”)
|
|
$
|
1,771
|
|
$
|
1,771
|
|
|
Derivative asset (warrants)
|
|
Other financial asset (“OFA”)
|
|
$
|
1,627
|
|
$
|
1,627
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities
|
|
Other financial
liabilities (“OFL”)
|
|
$
|
2,909
|
|
$
|
2,909
|
|
|
Derivative instrument
liabilities
(1)
|
|
Fair value through profit or
loss
|
|
$
|
154
|
|
$
|
154
|
|
|
Loans and borrowings
|
|
OFL
|
|
$
|
13,724
|
|
$
|
13,724
|
|
|
(1)
|
Balance is included within accounts payable and accrued
liabilities on the Statement of financial
position.
|
There were no transfers between Level 1 and Level 2 during the
year.
Derivatives
Interest Rate Swaps
The Company enters into derivative contracts to fix its risk
associated with interest rates. At January 31, 2018 and October 31, 2017, the
fair value of the following derivatives contracts were included in the statement
of financial position in accounts payable and accrued liabilities. The
derivatives are Level 2 financial instruments.
|
|
|
|
|
|
January 31,
2018
|
|
|
October 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sum of
|
|
|
|
|
|
|
|
|
Sum of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
derivative
|
|
|
|
|
|
Derivative
|
|
|
derivative
|
|
|
Interest rate
|
|
Average
|
|
|
Notional
|
|
|
Derivative
|
|
|
instrument
|
|
|
Notional
|
|
|
instrument
|
|
|
instrument
|
|
|
swaps
|
|
fixed rate
|
|
|
Value
|
|
|
instrument
|
|
|
liabilities
|
|
|
Value
|
|
|
liabilities
|
|
|
liabilities
|
|
|
|
|
|
|
|
|
|
|
liabilities
|
|
|
and notional
|
|
|
|
|
|
|
|
|
and notional
|
|
|
|
|
|
|
|
|
|
|
|
|
|
value
|
|
|
|
|
|
|
|
|
value
|
|
|
|
|
2.88%
|
|
$
|
8,013
|
|
$
|
86
|
|
$
|
8,099
|
|
$
|
8,135
|
|
$
|
154
|
|
$
|
8,289
|
|
Convertible Debenture Receivable
Derivative assets on the Statement of Financial Position are
comprised of the conversion feature and warrants associated with the Company’s
convertible debenture receivable. These derivates are Level 2 financial
instruments.
Certain prior period balances have been reclassified to conform
to the current period’s financial statement presentation.
Page 21
|
CanniMed Therapeutics Inc.
|
|
Notes to the Condensed Consolidated Interim Financial
Statements (unaudited)
|
|
For the three months ended January 31, 2018
|
|
Expressed in Thousands of Canadian Dollars, except share
data or as otherwise noted
|
|
|
Aurora Cannabis Announces Success in Bid for CanniMed
Therapeutics through the Take-Up of Shares
On March 9, 2018, Aurora Cannabis Inc. (“Aurora”) announced
that it has been successful in its offer (the “Offer”) for the issued and
outstanding common shares of the Company.
The number of CanniMed common shares (the “CanniMed Shares”)
tendered as at the close of business on March 8, 2018 totals 17,847,341,
representing approximately 70.66% of the total outstanding CanniMed Shares on a
fully diluted basis. All of the conditions to the Offer having been met, Aurora
will take up the tendered CanniMed Shares and pay for those shares as soon as
possible, and in any event not later than 3 business days after the CanniMed
Shares are taken up.
In addition, pursuant to applicable Canadian securities laws
requiring Aurora to extend its Offer, Aurora has extended the period
shareholders of CanniMed have to tender their shares under the Offer by 15 days
to 11:59 pm (Pacific Time) March 25, 2018.
Newstrike Warrants
Subsequent to January 31, 2018, the Company exercised its
Newstrike warrants and completed the sale of all of its common shares in
Newstrike.
Sale of non-core assets
Subsequent to January 31, 2018, the Company completed sales of
its SubTerra division, Fruit Tree business and certain plant based protein
research to a related party. At January 31, 2018, the net carrying value of
these assets was $2.4 million; as such, this transaction will result in a loss
on sale.
Merger and Acquisition Activity
With respect to the Company’s acquisition by Aurora, additional
expenditures incurred for investment bankers, legal, consulting and bonuses are
estimated to be between $29 and $31 million.
Page 22
APPENDIX C
U
NAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
OF
A
URORA
C
ANNABIS
I
NC
.
AURORA CANNABIS INC.
Pro forma Interim
Consolidated Statement of Financial Position
As at December 31, 2017
(Unaudited – In thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma
|
|
|
Pro forma
|
|
|
|
|
Aurora
|
|
|
CanniMed
|
|
|
Notes
|
|
|
Adjustments
|
|
|
Consolidated
|
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
$
|
|
|
$
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
350,841
|
|
|
42,321
|
|
|
3
|
(a)
|
|
(149,500
|
)
|
|
237,349
|
|
|
|
|
|
|
|
|
|
|
3
|
(a)
|
|
(5,973
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
(a)
|
|
(340
|
)
|
|
|
|
|
Short-term investments
|
|
908
|
|
|
-
|
|
|
|
|
|
-
|
|
|
908
|
|
|
Accounts
receivable
|
|
6,991
|
|
|
749
|
|
|
3
|
(a)
|
|
1,022
|
|
|
8,762
|
|
|
Marketable securities
|
|
76,400
|
|
|
13,918
|
|
|
3
|
(a)
|
|
5,651
|
|
|
80,170
|
|
|
|
|
|
|
|
|
|
|
3
|
(a)
|
|
(15,799
|
)
|
|
|
|
|
Derivative assets
|
|
-
|
|
|
11,828
|
|
|
|
|
|
-
|
|
|
11,828
|
|
|
Inventory
|
|
15,310
|
|
|
10,322
|
|
|
3
|
(a)
|
|
(440
|
)
|
|
25,192
|
|
|
Biological assets
|
|
5,871
|
|
|
1,396
|
|
|
|
|
|
-
|
|
|
7,267
|
|
|
Loans receivable
|
|
3,384
|
|
|
-
|
|
|
|
|
|
-
|
|
|
3,384
|
|
|
Prepaid and other current assets
|
|
1,328
|
|
|
236
|
|
|
|
|
|
-
|
|
|
1,564
|
|
|
|
|
461,033
|
|
|
80,770
|
|
|
|
|
|
(165,379
|
)
|
|
376,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
117,251
|
|
|
40,258
|
|
|
3
|
(a)
|
|
(5,017
|
)
|
|
152,492
|
|
|
Derivatives
|
|
3,942
|
|
|
-
|
|
|
|
|
|
-
|
|
|
3,942
|
|
|
Investment in associates
|
|
24,152
|
|
|
-
|
|
|
3
|
(a)
|
|
213
|
|
|
24,365
|
|
|
Intangible assets
|
|
59,552
|
|
|
2,734
|
|
|
3
|
(a)
|
|
(1,586
|
)
|
|
60,700
|
|
|
Goodwill
|
|
65,868
|
|
|
492
|
|
|
3
|
(a)
|
|
(492
|
)
|
|
834,396
|
|
|
|
|
|
|
|
|
|
|
3
|
(a)
|
|
768,528
|
|
|
|
|
|
Deposits
|
|
596
|
|
|
-
|
|
|
|
|
|
-
|
|
|
596
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
732,394
|
|
|
124,254
|
|
|
|
|
|
596,267
|
|
|
1,452,915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
and accrued liabilities
|
|
22,030
|
|
|
10,611
|
|
|
3
|
(a)
|
|
(87
|
)
|
|
72,774
|
|
|
|
|
|
|
|
|
|
|
3
|
(b)
|
|
9,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
(b)
|
|
31,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
(c)
|
|
220
|
|
|
|
|
|
Deferred revenue
|
|
1,563
|
|
|
214
|
|
|
|
|
|
-
|
|
|
1,777
|
|
|
Special warrant subscriptions
|
|
111,009
|
|
|
-
|
|
|
|
|
|
-
|
|
|
111,009
|
|
|
Finance lease
|
|
73
|
|
|
-
|
|
|
|
|
|
-
|
|
|
73
|
|
|
Income taxes payable
|
|
-
|
|
|
20
|
|
|
|
|
|
|
|
|
20
|
|
|
Loans and
borrowings
|
|
-
|
|
|
2,563
|
|
|
|
|
|
-
|
|
|
2,563
|
|
|
Contingent consideration payable
|
|
23,832
|
|
|
-
|
|
|
|
|
|
-
|
|
|
23,832
|
|
|
|
|
158,507
|
|
|
13,408
|
|
|
|
|
|
40,133
|
|
|
212,048
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance lease
|
|
244
|
|
|
-
|
|
|
|
|
|
-
|
|
|
244
|
|
|
Loans and borrowings
|
|
-
|
|
|
9,725
|
|
|
3
|
(a)
|
|
(310
|
)
|
|
9,415
|
|
|
Deferred gain on derivative
|
|
1,777
|
|
|
-
|
|
|
|
|
|
-
|
|
|
1,777
|
|
|
Deferred tax liability
|
|
16,280
|
|
|
2,943
|
|
|
|
|
|
-
|
|
|
19,223
|
|
|
|
|
176,808
|
|
|
26,076
|
|
|
|
|
|
39,823
|
|
|
242,707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
532,673
|
|
|
115,408
|
|
|
3
|
(a)
|
|
695,164
|
|
|
1,227,617
|
|
|
|
|
|
|
|
|
|
|
3
|
(a)
|
|
(115,408
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
(c)
|
|
(220
|
)
|
|
|
|
|
Reserves
|
|
32,834
|
|
|
1,200
|
|
|
3
|
(a)
|
|
(1,200
|
)
|
|
32,858
|
|
|
|
|
|
|
|
|
|
|
3
|
(a)
|
|
(322
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
(a)
|
|
346
|
|
|
|
|
|
Deficit
|
|
(16,714
|
)
|
|
(18,430
|
)
|
|
3
|
(a)
|
|
18,430
|
|
|
(57,060
|
)
|
|
|
|
|
|
|
|
|
|
3
|
(a)
|
|
(346
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
(b)
|
|
(9,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
(b)
|
|
(31,000
|
)
|
|
|
|
|
Total equity attributable to Aurora
shareholders
|
|
548,793
|
|
|
98,178
|
|
|
|
|
|
556,444
|
|
|
1,203,415
|
|
|
Non-controlling interest
|
|
6,793
|
|
|
-
|
|
|
|
|
|
-
|
|
|
6,793
|
|
|
Total equity
|
|
555,586
|
|
|
98,178
|
|
|
|
|
|
556,444
|
|
|
1,210,208
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
732,394
|
|
|
124,254
|
|
|
|
|
|
596,267
|
|
|
1,452,915
|
|
See accompanying notes to the unaudited pro forma interim
consolidated financial statements.
1
AURORA CANNABIS INC.
Pro forma Interim
Consolidated Statement of Comprehensive Income (Loss)
Six months ended
December 31, 2017
(Unaudited
–
In thousands of Canadian
dollars, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma
|
|
|
Pro forma
|
|
|
|
|
Aurora
|
|
|
CanniMed
|
|
|
Notes
|
|
|
Adjustments
|
|
|
Consolidated
|
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
$
|
|
|
$
|
|
|
Revenue
|
|
19,949
|
|
|
9,636
|
|
|
|
|
|
-
|
|
|
29,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on changes in
fair value of biological assets
|
|
(9,844
|
)
|
|
(9,652
|
)
|
|
|
|
|
-
|
|
|
(19,496
|
)
|
|
Unrealized loss on changes in fair value on
sale of inventory
|
|
6,587
|
|
|
-
|
|
|
|
|
|
-
|
|
|
6,587
|
|
|
Inventory expensed to cost of
sales
|
|
7,909
|
|
|
9,127
|
|
|
|
|
|
-
|
|
|
17,036
|
|
|
Production costs
|
|
-
|
|
|
1,561
|
|
|
|
|
|
-
|
|
|
1,561
|
|
|
Cost of sales
|
|
4,652
|
|
|
1,036
|
|
|
|
|
|
-
|
|
|
5,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
15,297
|
|
|
8,600
|
|
|
|
|
|
-
|
|
|
23,897
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administration
|
|
10,561
|
|
|
3,597
|
|
|
|
|
|
-
|
|
|
14,158
|
|
|
Sales and
marketing
|
|
8,804
|
|
|
2,844
|
|
|
|
|
|
-
|
|
|
11,648
|
|
|
Research and development
|
|
279
|
|
|
1,167
|
|
|
|
|
|
-
|
|
|
1,446
|
|
|
Acquisition and
project evaluation costs
|
|
2,096
|
|
|
13,088
|
|
|
|
|
|
-
|
|
|
15,184
|
|
|
Share of loss from investment in
associate
|
|
52
|
|
|
-
|
|
|
|
|
|
-
|
|
|
52
|
|
|
Depreciation and
amortization
|
|
1,094
|
|
|
378
|
|
|
|
|
|
-
|
|
|
1,472
|
|
|
Share-based payments
|
|
9,942
|
|
|
616
|
|
|
|
|
|
-
|
|
|
10,558
|
|
|
|
|
32,828
|
|
|
21,690
|
|
|
|
|
|
-
|
|
|
54,518
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
(17,531
|
)
|
|
(13,090
|
)
|
|
|
|
|
-
|
|
|
(30,621
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income
|
|
1,355
|
|
|
462
|
|
|
|
|
|
-
|
|
|
1,817
|
|
|
Finance and
other costs
|
|
(3,676
|
)
|
|
(547
|
)
|
|
|
|
|
-
|
|
|
(4,223
|
)
|
|
Foreign exchange
|
|
264
|
|
|
(68
|
)
|
|
|
|
|
-
|
|
|
196
|
|
|
Unrealized gain
on debenture
|
|
6,937
|
|
|
-
|
|
|
|
|
|
-
|
|
|
6,937
|
|
|
Unrealized gain on marketable
securities
|
|
3,700
|
|
|
(2,191
|
)
|
|
|
|
|
-
|
|
|
1,509
|
|
|
Unrealized gain on derivative
|
|
23,603
|
|
|
24,016
|
|
|
|
|
|
-
|
|
|
47,619
|
|
|
|
|
32,183
|
|
|
21,672
|
|
|
|
|
|
-
|
|
|
53,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
14,652
|
|
|
8,582
|
|
|
|
|
|
-
|
|
|
23,234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
(38
|
)
|
|
(20
|
)
|
|
|
|
|
-
|
|
|
(58
|
)
|
|
Deferred, net
|
|
(3,859
|
)
|
|
(2,643
|
)
|
|
|
|
|
-
|
|
|
(6,502
|
)
|
|
|
|
(3,897
|
)
|
|
(2,663
|
)
|
|
|
|
|
-
|
|
|
(6,560
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
10,755
|
|
|
5,919
|
|
|
|
|
|
-
|
|
|
16,674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of Aurora
|
|
11,282
|
|
|
5,919
|
|
|
|
|
|
-
|
|
|
17,201
|
|
|
Non-controlling interest
|
|
(527
|
)
|
|
-
|
|
|
|
|
|
-
|
|
|
(527
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.03
|
|
$
|
0.25
|
|
|
|
|
|
|
|
$
|
0.04
|
|
|
Diluted
|
$
|
0.03
|
|
$
|
0.24
|
|
|
|
|
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
392,386,415
|
|
|
24,109,000
|
|
|
|
|
|
|
|
|
464,799,355
|
|
|
Diluted
|
|
398,670,592
|
|
|
24,533,000
|
|
|
|
|
|
|
|
|
471,670,425
|
|
See accompanying notes to the unaudited pro forma interim
consolidated financial statements.
2
AURORA CANNABIS INC.
Pro forma Consolidated
Statement of Comprehensive Loss
Twelve months ended June 30, 2017
(Unaudited – In thousands of Canadian dollars, except share and per share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma
|
|
|
Pro forma
|
|
|
|
|
Aurora
|
|
|
CanniMed
|
|
|
Notes
|
|
|
Adjustments
|
|
|
Consolidated
|
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
$
|
|
|
$
|
|
|
Revenue
|
|
18,067
|
|
|
15,031
|
|
|
|
|
|
-
|
|
|
33,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on changes in
fair value of biological assets
|
|
(7,469
|
)
|
|
(4,294
|
)
|
|
|
|
|
-
|
|
|
(11,763
|
)
|
|
Inventory expensed to cost of sales
|
|
3,472
|
|
|
7,523
|
|
|
|
|
|
-
|
|
|
10,995
|
|
|
Production costs
|
|
6,008
|
|
|
2,581
|
|
|
|
|
|
-
|
|
|
8,589
|
|
|
Cost
of sales
|
|
2,011
|
|
|
5,810
|
|
|
|
|
|
-
|
|
|
7,821
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
16,056
|
|
|
9,221
|
|
|
|
|
|
-
|
|
|
25,277
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administration
|
|
6,813
|
|
|
4,438
|
|
|
|
|
|
-
|
|
|
11,251
|
|
|
Sales and marketing
|
|
10,270
|
|
|
5,228
|
|
|
|
|
|
-
|
|
|
15,498
|
|
|
Research and
development
|
|
314
|
|
|
1,096
|
|
|
|
|
|
-
|
|
|
1,410
|
|
|
Acquisition and project evaluation
costs
|
|
1,551
|
|
|
-
|
|
|
3(b)
|
|
|
9,000
|
|
|
10,551
|
|
|
Depreciation and
amortization
|
|
716
|
|
|
1,081
|
|
|
|
|
|
-
|
|
|
1,797
|
|
|
Share-based payments
|
|
7,584
|
|
|
960
|
|
|
|
|
|
-
|
|
|
8,544
|
|
|
|
|
27,248
|
|
|
12,803
|
|
|
|
|
|
9,000
|
|
|
49,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
(11,192
|
)
|
|
(3,582
|
)
|
|
|
|
|
(9,000
|
)
|
|
(23,774
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income
|
|
861
|
|
|
516
|
|
|
|
|
|
-
|
|
|
1,377
|
|
|
Finance and other costs
|
|
(6,582
|
)
|
|
(1,942
|
)
|
|
|
|
|
-
|
|
|
(8,524
|
)
|
|
Foreign exchange
|
|
(215
|
)
|
|
(609
|
)
|
|
|
|
|
-
|
|
|
(824
|
)
|
|
Unrealized loss on
debenture
|
|
(1,135
|
)
|
|
-
|
|
|
|
|
|
-
|
|
|
(1,135
|
)
|
|
Unrealized gain (loss) on marketable
securities
|
|
1,334
|
|
|
-
|
|
|
3(a)
|
|
|
(346
|
)
|
|
988
|
|
|
Unrealized loss on derivative
|
|
(335
|
)
|
|
(10,446
|
)
|
|
|
|
|
-
|
|
|
(10,781
|
)
|
|
|
|
(6,072
|
)
|
|
(12,481
|
)
|
|
|
|
|
(346
|
)
|
|
(18,899
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
(17,264
|
)
|
|
(16,063
|
)
|
|
|
|
|
(9,346
|
)
|
|
(42,673
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax recovery
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
19
|
|
|
-
|
|
|
|
|
|
-
|
|
|
19
|
|
|
Deferred, net
|
|
4,277
|
|
|
680
|
|
|
|
|
|
-
|
|
|
4,957
|
|
|
|
|
4,296
|
|
|
680
|
|
|
|
|
|
-
|
|
|
4,976
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from continuing
operations
|
|
(12,968
|
)
|
|
(15,383
|
)
|
|
|
|
|
(9,346
|
)
|
|
(37,697
|
)
|
|
Net
loss from discontinued operations
|
|
-
|
|
|
(13,247
|
)
|
|
|
|
|
-
|
|
|
(13,247
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
(12,968
|
)
|
|
(28,630
|
)
|
|
|
|
|
(9,346
|
)
|
|
(50,944
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
$
|
(0.05
|
)
|
$
|
(1.26
|
)
|
|
|
|
|
|
|
$
|
(0.14
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
279,029,226
|
|
|
22,741,000
|
|
|
|
|
|
|
|
|
351,442,166
|
|
See accompanying notes to the unaudited pro forma
consolidated financial statements.
3
|
AURORA CANNABIS INC.
|
|
Notes to the Pro forma Consolidated Financial
Statements
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
1.
|
Description of the
Transaction
|
On November 13, 2017, Aurora Cannabis
Inc. (“Aurora” or the “Company”) submitted a proposal to the board of directors
of CanniMed Therapeutics Inc. (“CanniMed”) to acquire all of the issued and
outstanding shares of CanniMed (the “Acquisition”), a licensed producer and
distributor of medical cannabis pursuant to the
Access to Cannabis for
Medical Purposes Regulations
(“ACMPR”). CanniMed is involved in plant
biotechnology research, product development and the production of plant-based
materials for biopharmaceutical, agricultural and environmental market
applications. CanniMed’s and Aurora’s common shares are listed on the Toronto
Stock Exchange (“TSX”) under the symbol “CMED” and “ACB”, respectively.
On January 24, 2018, the Company and
CanniMed entered into a support agreement whereby the Board of Directors (the
“CanniMed Board”) and the Special Committee of the CanniMed Board agreed to
support a new offer (the “New Offer”) made by Aurora for the acquisition of all
of the issued and outstanding CanniMed common shares not owned by Aurora.
Pursuant to the New Offer, Aurora will
acquire all of the issued and outstanding shares of CanniMed on the basis that
each CanniMed shareholder has the right to elect to receive for each CanniMed
share (i) 3.40 common shares of Aurora; (ii) $0.43 in cash; or (iii) any
combination of cash and shares subject to pro-ration with a maximum aggregate
cash consideration of $140,000. The exchange ratio represents a maximum of
$43.00 per share and a premium of 181% over the closing price of CanniMed shares
on November 14, 2017, the day prior to Aurora’s announcement of its intention to
pursue a combination with CanniMed.
On March 15, 2018 Aurora acquired
approximately 84.4% of CanniMed’s common shares pursuant to the New Offer. On
March 26, 2018, Aurora acquired an additional 8.7% of CanniMed’s common shares
will acquire the remaining outstanding shares not tendered to the New Offer
through a compulsory share acquisition pursuant to the
Canada Business
Corporations Act
. CanniMed shareholders will have the opportunity to receive
the same consideration in the subsequent acquisition transaction as they were
entitled to receive from the New Offer. Aurora previously held 2.8% of
CanniMed’s common shares purchased in the open market.
The unaudited pro forma consolidated
statement of financial position as at December 31, 2017, the unaudited pro forma
interim consolidated statement of comprehensive income (loss) for the six months
ended December 31, 2017, and the unaudited pro forma consolidated statement of
comprehensive income (loss) for the twelve months ended June 30, 2017 of Aurora
were prepared in
compliance with National Instrument
51-102
Continuous Disclosure Obligations
(“NI 51-102”) to reflect the
Company’s proposal to purchase all of CanniMed’s issued and outstanding common
shares.
The unaudited pro forma consolidated
statement of financial position and the unaudited pro forma consolidated
statements of comprehensive income (loss) of Aurora are comprised of information
derived from:
|
|
•
|
the unaudited condensed interim consolidated financial
statements of Aurora for the three and six months ended December 31, 2017;
|
|
|
|
|
|
|
•
|
the audited consolidated financial statements of CanniMed
for the year ended October 31, 2017;
|
|
|
|
|
|
|
•
|
the unaudited condensed interim consolidated financial
statements of CanniMed for the three months ended January 31, 2018;
|
|
|
|
|
|
|
•
|
the audited consolidated financial statements of Aurora
for the year ended June 30, 2017;
|
|
|
|
|
|
|
•
|
the unaudited condensed interim consolidated financial
statements of CanniMed for the three and nine months ended July 31, 2017;
|
|
|
|
|
|
|
•
|
the audited consolidated financial statements of CanniMed
for the year ended October 31, 2016; and
|
|
|
|
|
|
|
•
|
the unaudited condensed interim consolidated financial
statements of CanniMed for the three and nine months ended July 31, 2016.
|
5
|
AURORA CANNABIS INC.
|
|
Notes to the Pro forma Consolidated Financial
Statements
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
2.
|
Basis of Presentation
(Continued)
|
The unaudited pro forma consolidated
financial statements do not include all of the information disclosures required
by International Financial Reporting Standards (“IFRS”) and should be read in
conjunction with the unaudited condensed interim consolidated financial
statements of Aurora as at and for the three and six months ended December 31,
2017, the audited consolidated financial statements of Aurora for the year ended
June 30, 2017, the unaudited condensed interim consolidated financial statements
of CanniMed for the three months ended January 31, 2018, and the audited
consolidated financial statements of CanniMed for the year ended October 31,
2017.
The pro forma consolidated statement of
comprehensive loss for the twelve months ended June 30, 2017 and for the six
months ended December 31, 2017 of CanniMed has been constructed using the
audited consolidated financial statements of CanniMed for the twelve months
ended October 31, 2017, the unaudited condensed interim consolidated financial
statements for the three months ended January 31, 2018, the unaudited condensed
interim consolidated financial statements of CanniMed for the three and nine
months ended July 31, 2017, the audited consolidated financial statements of
CanniMed for the year ended October 31, 2016 and the unaudited condensed interim
consolidated financial statements of CanniMed for the nine months ended July 31,
2016.
The unaudited pro forma interim
consolidated statement of financial position gives effect to the acquisition of
CanniMed as if it had occurred on December 31, 2017. The unaudited pro forma
consolidated statements of comprehensive loss for the six months ended December
31, 2017 and the twelve months ended June 30, 2017 give effect to the
acquisition as if it had occurred at July 1, 2016.
The accounting policies used in the
preparation of the unaudited pro forma consolidated financial statements are
consistent with those described in the audited consolidated financial statements
of Aurora for the year ended June 30, 2017. There were no adjustments necessary
to align CanniMed’s accounting policies with Aurora’s accounting policies.
Certain historical CanniMed amounts have been reclassified to conform to
Aurora’s presentation.
The unaudited pro forma consolidated
financial statements are not necessarily indicative of the results of operations
that would have occurred had the acquisition of CanniMed been effected on the
dates indicated, nor are the unaudited pro forma consolidated financial
statements indicative of future periods. Actual amounts recorded upon
consummation of the acquisition will differ from such unaudited pro forma
consolidated financial statements. Since the pro forma consolidated financial
statements have been developed to retroactively show the effect of a transaction
that is expected to complete at a later date, there are limitations inherent in
the very nature of such pro forma data.
6
|
AURORA CANNABIS INC.
|
|
Notes to the Pro forma Consolidated Financial
Statements
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
3.
|
Pro forma Consolidation
Adjustments
|
The unaudited pro forma interim
consolidated statement of financial position of Aurora as at December 31, 2017
has been adjusted as if the acquisition of CanniMed had been completed on
December 31, 2017:
|
|
(a)
|
The Acquisition will be accounted for as a business
combination under IFRS 3. The estimated fair value of net assets acquired
were adjusted for the write down of certain receivables and the
disposition of CanniMed’s SubTerra division, Fruit Tree business and
certain plant-based protein research for an estimated total consideration
of $1,027 which has been recorded as accounts receivable. The carrying
values of the disposed assets at January 31, 2018 were deconsolidated and
the remaining 19.9% interest in SubTerra and the investment in plant-based
protein research were recorded to investment in associates. The estimated
fair value of net assets acquired and consideration paid for 100%
ownership of CanniMed is allocated as follows:
|
|
|
|
|
|
|
|
|
|
|
Adjusted
|
|
|
|
|
|
Jan 31, 2018
|
|
|
Adjustment
|
|
|
Jan 31, 2018
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Cash and cash equivalents
|
|
42,321
|
|
|
(340
|
)
|
|
41,981
|
|
|
|
Accounts receivable
|
|
749
|
|
|
1,022
|
|
|
1,771
|
|
|
|
Marketable securities
|
|
13,918
|
|
|
-
|
|
|
13,918
|
|
|
|
Derivative assets
|
|
11,828
|
|
|
-
|
|
|
11,828
|
|
|
|
Inventories
|
|
10,322
|
|
|
(440
|
)
|
|
9,882
|
|
|
|
Biological assets
|
|
1,396
|
|
|
-
|
|
|
1,396
|
|
|
|
Prepaid expenses and other
assets
|
|
236
|
|
|
-
|
|
|
236
|
|
|
|
Property, plant and equipment
|
|
40,258
|
|
|
(5,017
|
)
|
|
35,241
|
|
|
|
Investment in associates
|
|
-
|
|
|
213
|
|
|
213
|
|
|
|
Intangible assets
|
|
2,734
|
|
|
(1,586
|
)
|
|
1,148
|
|
|
|
Goodwill
|
|
492
|
|
|
(492
|
)
|
|
-
|
|
|
|
Total assets
|
|
124,254
|
|
|
(6,640
|
)
|
|
117,614
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
10,611
|
|
|
(87
|
)
|
|
10,524
|
|
|
|
Deferred revenue
|
|
214
|
|
|
-
|
|
|
214
|
|
|
|
Income taxes payable
|
|
20
|
|
|
-
|
|
|
20
|
|
|
|
Loans and borrowings –
current
|
|
2,563
|
|
|
-
|
|
|
2,563
|
|
|
|
Loans and borrowings – long term
|
|
9,725
|
|
|
(310
|
)
|
|
9,415
|
|
|
|
Deferred income tax liabilities
|
|
2,943
|
|
|
-
|
|
|
2,943
|
|
|
|
Total liabilities
|
|
26,076
|
|
|
(397
|
)
|
|
25,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets acquired
|
|
98,178
|
|
|
(6,243
|
)
|
|
91,935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration paid
|
|
|
|
|
|
|
|
860,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
|
|
|
|
|
768,528
|
|
On March 15, 2018 Aurora acquired
approximately 84.4% of CanniMed’s common shares pursuant to the NewOffer. On
March 26, 2018, Aurora acquired an additional 8.7% of CanniMed’s common shares.
In addition to the 2.8% of CanniMed shares purchased by Aurora on the open
market, the Company increased its total shareholdings in CanniMed to
approximately 95.9% and will acquire the remaining outstanding shares through a
compulsory share acquisition. The total estimated consideration of $860,463 is
comprised of the issuance of approximately 72,412,940 shares at $9.60 per share,
being the fair value of Aurora’s shares on December 31, 2017 based on a
combination of cash and shares at the election of each CanniMed Shareholder, a
payment of the maximum aggregate cash consideration of $140,000, the $15,799
fair value of 700,600 CanniMed shares purchased by Aurora in the open market,
and a $9,500 cash payment for CanniMed’s Newstrike Resources Ltd termination
fee.
As of December 31, 2017, Aurora held
450,000 CanniMed shares purchased in the open market at a cost of $10,172 and
recognized an unrealized loss on marketable securities of $24 for the three and
six months ended December 31, 2017. In January 2018, the Company purchased an
additional 250,600 CanniMed shares in the open market at a cost of $5,973. Based
on the fair value of $22.55 per CanniMed share on December 31, 2017, the Company
adjusted $346 for the cumulative unrealized loss on CanniMed marketable
securities in the pro forma consolidated statement of comprehensive loss.
7
|
AURORA CANNABIS INC.
|
|
Notes to the Pro forma Consolidated Financial
Statements
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
3.
|
Pro forma Consolidation Adjustments
(Continued)
|
In accordance with IFRS 3, the fair
value of equity securities issued as part of the consideration transferred will
be measured on the closing date of the acquisition at the then-current market
price. Accordingly, it is likely that Aurora’s share price used to determine
purchase consideration on closing of the acquisition will differ from the share
price used in the estimate of purchase consideration, and that difference may be
material. Aurora’s historical share price volatility was approximately 67%.
Accordingly, it is reasonable to expect that Aurora’s share price on closing of
the Acquisition may differ from the common share price used in these financial
statements by an amount up to at least this share price volatility. A change in
Aurora’s share price of 67% results in an increase or decrease to the estimate
of purchase consideration totaling approximately $465,239, with a corresponding
increase or decrease to goodwill.
The pro forma purchase price is
subject to change based on the finalization of purchase price adjustments and
completion of management’s assessment of the fair values of the assets and
liabilities acquired. Due to the timing of the announcement of the Acquisition,
Aurora has not yet obtained sufficient information to accurately determine the
fair market value of CanniMed’s net assets by category and has therefore
allocated the January 31, 2018 book values of the net assets acquired as a proxy
of fair value, except for the elimination of CanniMed’s historical goodwill of
$492. Goodwill represents the amount by which the purchase price exceeds the
book value, being a proxy of fair value of the assets acquired and liabilities
assumed. The final calculation and allocation of the purchase price will be
based on the net assets purchased as of the closing date of the Acquisition and
other information available at that time. There may be material differences from
this pro forma purchase price allocation as a result of finalizing the
valuation. Based on management’s preliminary estimates, the goodwill may be
allocated to other items such as certain identified intangible assets, including
customer lists, licenses, patents and a deferred tax asset.
As a result of the Acquisition,
CanniMed’s equity accounts were eliminated on the pro forma consolidated
statement of financial position and the pro forma interim consolidated statement
of comprehensive loss.
|
|
(b)
|
Estimated acquisition related costs of approximately
$9,000 consisting of investment banker, legal and accounting fees to be
expensed on completion of the Acquisition. These costs have been recorded
in deficit of the pro forma consolidated statement of financial position
as at December 31, 2017 and reflected in the pro forma consolidated
statements of comprehensive loss for the twelve month period ended June
30, 2017.
|
|
|
|
|
|
|
|
Additional transaction costs of approximately $31,000 for
investment bankers, legal, consulting and bonuses incurred by CanniMed
prior to acquisition were accrued on the pro forma consolidated statement
of financial position.
|
|
|
|
|
|
|
(c)
|
Estimated share issuance costs of approximately $220
consisting of regulatory and transfer agent fees related to the issuance
of shares for the Acquisition have been recorded against share capital on
the pro forma consolidated statement of financial
position.
|
|
4.
|
Other Material Transactions Not Reflected in the Pro
Forma
|
On February 14, 2018, the Company
subscribed for 6,900,000 common shares of Liquor Stores N.A. Ltd. (“Liquor
Stores”) at $15.00 per share for a cost of $103,500, representing a 19.9%
interest in the issued and outstanding common shares of Liquor Stores. In
addition, the Company subscribed for 2,300,000 subscription receipts of Liquor
Stores at $15.00 per subscription receipt for a cost of $34,500. The closing of
the subscription receipts is subject to approval of the shareholders of Liquor
Stores at its next annual general meeting and on closing, Aurora’s interest
ownership in Liquor Stores will increase to approximately 25% on an undiluted
basis. The investment in Liquor Stores constitutes a significant transaction
under NI 51-102.
8
|
AURORA CANNABIS INC.
|
|
Notes to the Pro forma Consolidated Financial
Statements
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
5.
|
Pro forma Net Income (Loss) Per
Share
|
The pro forma basic net income (loss)
per share for the six months ended December 31, 2017 and the year ended June 30,
2017 is as follows:
|
|
|
|
Six Months Ended
|
|
|
Twelve Months Ended
|
|
|
|
|
|
Dec 31, 2017
|
|
|
June 30, 2017
|
|
|
|
Pro forma net income (loss)
|
$
|
16,674
|
|
$
|
(50,944
|
)
|
|
|
Weighted average number of shares outstanding
of Aurora
|
|
392,386,415
|
|
|
279,029,226
|
|
|
|
Pro forma shares issued to CanniMed
|
|
72,412,940
|
|
|
72,412,940
|
|
|
|
Pro forma weighted average shares outstanding
- basic
|
|
464,799,355
|
|
|
351,442,166
|
|
|
|
Pro forma net income (loss) per share - basic
|
$
|
0.04
|
|
$
|
(0.14
|
)
|
The pro forma diluted net income (loss)
per share for the six months ended December 31, 2017 and the year ended June 30,
2017 is as follows:
|
|
|
|
Six Months Ended
|
|
|
Twelve Months Ended
|
|
|
|
|
|
Dec 31, 2017
|
|
|
June 30, 2017
|
|
|
|
Pro forma net income (loss)
|
$
|
16,674
|
|
$
|
(50,944
|
)
|
|
|
Dilutive effect on income
|
|
-
|
|
|
-
|
|
|
|
Pro forma net income (loss) -
diluted
|
$
|
16,674
|
|
$
|
(50,944
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma weighted average
shares outstanding – basic
|
|
464,799,355
|
|
|
351,442,166
|
|
|
|
Dilutive effect
|
|
6,871,070
|
|
|
-
|
|
|
|
Pro forma weighted average
shares outstanding – diluted
|
|
471,670,425
|
|
|
351,442,166
|
|
|
|
Pro
forma net income (loss) per share – diluted
|
$
|
0.04
|
|
$
|
(0.14
|
)
|
9
Aurora Cannabis Responds to Media Reports Concerning
Rumoured Transaction with MedReleaf
TSX: ACB
EDMONTON, May 3, 2018 /CNW/ - Aurora Cannabis Inc.
("
Aurora
" or the "
Company
") (TSX:ACB) (OTCQB:ACBFF) (Frankfurt:
21P; WKN:A1C4WM), today is responding to a request from the Investment Industry
Regulatory Organization of Canada ("IIROC") regarding media reports with respect
to a potential transaction with MedReleaf Corp. ("MedReleaf"). The Company's
policy is not to comment on speculative media reports. The Company does confirm
that it engages in discussions with industry participants from time to time,
including MedReleaf. At this time the Company confirms there is no agreement,
understanding or arrangement with respect to any transaction with MedReleaf.
In accordance with applicable disclosure requirements, Aurora
will advise the market of material changes when they occur.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Enterprises Inc., is a
licensed producer of medical cannabis pursuant to Health Canada's Access to
Cannabis for Medical Purposes Regulations ("ACMPR"). The Company operates a
55,200 square foot, state-of-the-art production facility in Mountain View
County, Alberta, known as "Aurora Mountain", and a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Inc.
The Company's wholly-owned subsidiary CanniMed Therapeutics
Inc. is Canada's most experienced licensed producer of medical cannabis, with
over 20,000 kg per annum in funded capacity. CanniMed forms the hear of Aurora's
Medical Cannabis Centre of Excellence, aimed at product and market
development.
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company owns 51% of Aurora Nordic, which will be constructing a 1,000,000
square foot hybrid greenhouse in Odense, Denmark. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens.
Aurora holds a 19.88% ownership interest in Liquor Stores N.A.,
("LIQ") who are developing a cannabis retail network in Western Canada. In
addition, the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc, and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian producer The Green Organic Dutchman Ltd., with options
to increase to majority ownership.
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
Forward-Looking Information Cautionary Statement
This news release contains certain "forward-looking
statements" within the meaning of such statements under applicable securities
law. Forward-looking statements are frequently characterized by words such as
"plan", "continue", "expect", "project", "intend", "believe", "anticipate",
"estimate", "may", "will", "potential", "proposed" and other similar words, or
statements that certain events or conditions "may" or "will" occur. These
statements are only predictions. Forward looking statements in release include
statements regarding the proposed completion of a subsequent acquisition
transaction. Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking statements throughout this news
release. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
expressly required by applicable law. A more complete discussion of the risks
and uncertainties facing the Company appears in the Company's Annual Information
Form and continuous disclosure filings, which are available at
www.
sedar.
com
.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:http://www.newswire.ca/en/releases/archive/May2018/03/c3458.html
%SEDAR: 00025675E
For further information:
Marc Lakmaaker, Director,
Investor Relations and Corporate Development, +1.647.269.5523,
marc.lakmaaker@auroramj.com, www.auroramj.com; Craig MacPhail, NATIONAL Equicom,
+1 416-586-1938,cmacphail@national.ca
CO: Aurora Cannabis Inc.
CNW 13:09e 03-MAY-18
AURORA CANNABIS INC.
Condensed Interim Consolidated Financial Statements
(Unaudited)
For the three and nine months ended March 31, 2018 and 2017
(In Canadian Dollars)
AURORA CANNABIS INC.
Condensed Interim
Consolidated Statements of Financial Position
March 31, 2018 and June
30, 2017
(Unaudited – In thousands of Canadian dollars)
|
|
|
Notes
|
|
|
March 31, 2018
|
|
|
June 30, 2017
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
3
|
|
|
231,023
|
|
|
159,796
|
|
|
Short-term investments
|
|
4
|
|
|
690
|
|
|
-
|
|
|
Accounts
receivable
|
|
5, 22(c)
|
|
|
13,094
|
|
|
2,312
|
|
|
Marketable securities
|
|
6(b)
|
|
|
57,409
|
|
|
14,845
|
|
|
Share
subscriptions
|
|
6(c)
|
|
|
55,000
|
|
|
-
|
|
|
Inventory
|
|
7
|
|
|
26,779
|
|
|
7,703
|
|
|
Biological
assets
|
|
8
|
|
|
5,583
|
|
|
4,088
|
|
|
Promissory notes receivable
|
|
9
|
|
|
-
|
|
|
1,222
|
|
|
Loans receivable
|
|
11(a), 22(c)
|
|
|
3,400
|
|
|
2,096
|
|
|
Prepaid and other current assets
|
|
|
|
|
1,644
|
|
|
1,544
|
|
|
|
|
|
|
|
394,622
|
|
|
193,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
10
|
|
|
191,239
|
|
|
45,523
|
|
|
Convertible debenture
|
|
6(a)
|
|
|
-
|
|
|
11,071
|
|
|
Derivatives
|
|
6(b)
|
|
|
3,977
|
|
|
292
|
|
|
Investment in associates and joint venture
|
|
11
|
|
|
136,555
|
|
|
-
|
|
|
Intangible assets
|
|
13
|
|
|
59,958
|
|
|
31,087
|
|
|
Goodwill
|
|
13
|
|
|
883,071
|
|
|
41,100
|
|
|
Deposits
|
|
|
|
|
1,978
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
1,671,400
|
|
|
322,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
and accrued liabilities
|
|
22(c),
25(b)(ii)
|
|
|
28,905
|
|
|
8,753
|
|
|
Income taxes payable
|
|
|
|
|
774
|
|
|
-
|
|
|
Deferred revenue
|
|
25(b)(ii)
|
|
|
1,324
|
|
|
1,421
|
|
|
Finance lease
|
|
14
|
|
|
281
|
|
|
69
|
|
|
Loans and
borrowings
|
|
16
|
|
|
2,279
|
|
|
-
|
|
|
Contingent consideration payable
|
|
12(a)(d)(f)(g)
|
|
|
22,583
|
|
|
13,221
|
|
|
|
|
|
|
|
56,146
|
|
|
23,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance lease
|
|
14
|
|
|
226
|
|
|
282
|
|
|
Convertible notes
|
|
15
|
|
|
197,092
|
|
|
63,536
|
|
|
Loans and borrowings
|
|
16
|
|
|
9,295
|
|
|
-
|
|
|
Deferred gain on convertible debenture
|
|
6(a)
|
|
|
-
|
|
|
10,206
|
|
|
Deferred gain on derivatives
|
|
6(b)
|
|
|
2,634
|
|
|
321
|
|
|
Deferred tax liability
|
|
|
|
|
19,234
|
|
|
5,937
|
|
|
Total liabilities
|
|
|
|
|
284,627
|
|
|
103,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
17
|
|
|
1,416,124
|
|
|
221,447
|
|
|
Reserves
|
|
|
|
|
(4,134
|
)
|
|
25,912
|
|
|
Deficit
|
|
|
|
|
(35,921
|
)
|
|
(28,426
|
)
|
|
Total equity attributable to
shareholders of Aurora
|
|
|
|
|
1,376,069
|
|
|
218,933
|
|
|
Non-controlling interest
|
|
18(e)(h)
|
|
|
10,704
|
|
|
-
|
|
|
Total equity
|
|
|
|
|
1,386,773
|
|
|
218,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
|
|
|
1,671,400
|
|
|
322,679
|
|
Nature of Operations (Note 1)
Commitments and Contingencies (Note 23)
Subsequent Events (Notes 6(c), 11(c), 12(h), 15(c)(d), and 27)
The accompanying notes are an integral part of these Condensed
Interim Consolidated Financial Statements.
AURORA CANNABIS INC.
Condensed Interim
Consolidated Statements of Comprehensive Income (Loss)
Three and nine
months ended March 31, 2018 and 2017
(Unaudited – In thousands of Canadian
dollars, except share and per share amounts)
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
|
Notes
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Revenues
|
|
|
|
|
16,100
|
|
|
5,175
|
|
|
36,049
|
|
|
12,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
|
|
6,827
|
|
|
2,241
|
|
|
14,736
|
|
|
6,853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit before fair
value adjustments
|
|
|
|
|
9,273
|
|
|
2,934
|
|
|
21,313
|
|
|
5,278
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on changes in
fair value on sale of inventory
|
|
|
|
|
4,164
|
|
|
1,688
|
|
|
10,751
|
|
|
2,661
|
|
|
Unrealized gain on changes in fair value of biological assets
|
|
8
|
|
|
(2,506
|
)
|
|
(4,516
|
)
|
|
(12,350
|
)
|
|
(7,592
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
7,615
|
|
|
5,762
|
|
|
22,912
|
|
|
10,209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administration
|
|
19, 22(a)
|
|
|
9,847
|
|
|
2,037
|
|
|
20,408
|
|
|
4,633
|
|
|
Sales and marketing
|
|
20
|
|
|
5,880
|
|
|
2,684
|
|
|
14,684
|
|
|
6,668
|
|
|
Research and
development
|
|
|
|
|
477
|
|
|
52
|
|
|
756
|
|
|
191
|
|
|
Acquisition and project
evaluation costs
|
|
|
|
|
5,543
|
|
|
11
|
|
|
7,639
|
|
|
180
|
|
|
Share of loss
from investment in associate
|
|
11
|
|
|
879
|
|
|
-
|
|
|
931
|
|
|
-
|
|
|
Depreciation and amortization
|
|
10, 13
|
|
|
873
|
|
|
178
|
|
|
1,967
|
|
|
500
|
|
|
Share-based payments
|
|
18(a)(b), 22(b)
|
|
|
15,872
|
|
|
2,632
|
|
|
25,814
|
|
|
5,522
|
|
|
|
|
|
|
|
39,371
|
|
|
7,594
|
|
|
72,199
|
|
|
17,694
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
|
|
(31,756
|
)
|
|
(1,832
|
)
|
|
(49,287
|
)
|
|
(7,485
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and
other income
|
|
|
|
|
833
|
|
|
239
|
|
|
2,188
|
|
|
366
|
|
|
Finance and other costs
|
|
21
|
|
|
(1,889
|
)
|
|
(1,282
|
)
|
|
(5,565
|
)
|
|
(6,123
|
)
|
|
Foreign exchange
|
|
|
|
|
(430
|
)
|
|
-
|
|
|
(166
|
)
|
|
-
|
|
|
Gain on disposition of
subsidiary
|
|
|
|
|
35
|
|
|
-
|
|
|
35
|
|
|
-
|
|
|
Unrealized gain
on debenture
|
|
6(a)
|
|
|
-
|
|
|
2,004
|
|
|
6,937
|
|
|
2,004
|
|
|
Unrealized gain on marketable
securities
|
|
6(b)
|
|
|
12,593
|
|
|
1,333
|
|
|
16,293
|
|
|
1,333
|
|
|
Unrealized gain
(loss) on derivatives
|
|
6(b)
|
|
|
(1,678
|
)
|
|
(182
|
)
|
|
21,925
|
|
|
(182
|
)
|
|
Share-based compensation income
|
|
6(b), 25(a)
|
|
|
324
|
|
|
-
|
|
|
324
|
|
|
-
|
|
|
|
|
|
|
|
9,788
|
|
|
2,112
|
|
|
41,971
|
|
|
(2,602
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes
|
|
|
|
|
(21,968
|
)
|
|
280
|
|
|
(7,316
|
)
|
|
(10,087
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax recovery (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
(736
|
)
|
|
-
|
|
|
(774
|
)
|
|
19
|
|
|
Deferred, net
|
|
|
|
|
1,909
|
|
|
(139
|
)
|
|
(1,950
|
)
|
|
1,916
|
|
|
|
|
|
|
|
1,173
|
|
|
(139
|
)
|
|
(2,724
|
)
|
|
1,935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
|
|
|
(20,795
|
)
|
|
141
|
|
|
(10,040
|
)
|
|
(8,152
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of Aurora
|
|
|
|
|
(19,215
|
)
|
|
141
|
|
|
(7,933
|
)
|
|
(8,152
|
)
|
|
Non-controlling interests
|
|
|
|
|
(1,580
|
)
|
|
-
|
|
|
(2,107
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
(0.04
|
)
|
$
|
0.00
|
|
$
|
(0.02
|
)
|
$
|
(0.03
|
)
|
|
Diluted
|
|
|
|
$
|
(0.04
|
)
|
$
|
0.00
|
|
$
|
(0.02
|
)
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
478,918,568
|
|
|
313,129,033
|
|
|
427,180,423
|
|
|
253,099,730
|
|
|
Diluted
|
|
|
|
|
478,918,568
|
|
|
313,129,033
|
|
|
427,180,423
|
|
|
253,099,730
|
|
AURORA CANNABIS INC.
Condensed Interim
Consolidated Statements of Comprehensive Income (Loss)
Three and nine
months ended March 31, 2018 and 2017
(Unaudited – In thousands of Canadian
dollars, except share and per share amounts)
(Continued)
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
|
Notes
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Net income (loss)
|
|
|
|
|
(20,795
|
)
|
|
141
|
|
|
(10,040
|
)
|
|
(8,152
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax
|
|
|
|
|
1,613
|
|
|
-
|
|
|
(118
|
)
|
|
-
|
|
|
Unrealized gain (loss) on marketable securities
|
|
6(b)
|
|
|
(11,951
|
)
|
|
(472
|
)
|
|
874
|
|
|
(472
|
)
|
|
Foreign currency translation
|
|
|
|
|
40
|
|
|
-
|
|
|
65
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
|
|
|
(31,093
|
)
|
|
(331
|
)
|
|
(9,219
|
)
|
|
(8,624
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of Aurora
|
|
|
|
|
(29,513
|
)
|
|
(331
|
)
|
|
(7,112
|
)
|
|
(8,624
|
)
|
|
Non-controlling interests
|
|
|
|
|
(1,580
|
)
|
|
-
|
|
|
(2,107
|
)
|
|
-
|
|
The accompanying notes are an integral part of these Condensed
Interim Consolidated Financial Statements.
AURORA CANNABIS INC.
Condensed Interim
Consolidated Statements of Changes in Equity
Three and nine months ended
March 31, 2018 and 2017
(Unaudited – In thousands of Canadian dollars,
except share amounts)
|
|
|
Share Capital
|
|
|
Reserves
|
|
|
AOCI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligation
|
|
|
Share-
|
|
|
Compensation
|
|
|
Related
|
|
|
|
|
|
|
|
|
Value and
|
|
|
Foreign
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
Common
|
|
|
|
|
|
to Issue
|
|
|
Based
|
|
|
Options/
|
|
|
Party
|
|
|
Convertible
|
|
|
Total
|
|
|
Deferred
|
|
|
Currency
|
|
|
Total
|
|
|
|
|
|
Controlling
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Compensation
|
|
|
Warrants
|
|
|
Loans
|
|
|
Notes
|
|
|
Reserves
|
|
|
Tax
|
|
|
Translation
|
|
|
AOCI
|
|
|
Deficit
|
|
|
Interests
|
|
|
Total
|
|
|
|
|
#
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Balance, June 30, 2016
|
|
135,576,365
|
|
|
17,148
|
|
|
2,335
|
|
|
608
|
|
|
1,184
|
|
|
1,403
|
|
|
200
|
|
|
5,730
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(16,916
|
)
|
|
-
|
|
|
5,962
|
|
|
Shares issued for acquisition (Note
17(b)(xv))
|
|
17,875,000
|
|
|
11,440
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
11,440
|
|
|
Shares issued for
contingent consideration (Note 17(vi))
|
|
1,845,499
|
|
|
4,706
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4,706
|
|
|
Performance shares (Note 17(b)(xvii))
|
|
20,000,000
|
|
|
2,322
|
|
|
(2,322
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2,322
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Transfer from
derivative liabilities
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
98
|
|
|
-
|
|
|
-
|
|
|
98
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
98
|
|
|
Private placement (Note
17(b)(xiii)(xi))
|
|
90,837,500
|
|
|
98,009
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
98,009
|
|
|
Share issue costs
|
|
-
|
|
|
(11,484
|
)
|
|
-
|
|
|
-
|
|
|
5,215
|
|
|
-
|
|
|
-
|
|
|
5,215
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(6,269
|
)
|
|
Warrant issued for convertible
debenture amendment
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
877
|
|
|
-
|
|
|
-
|
|
|
877
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
877
|
|
|
Conversion of notes
(Note 17(b)(vii))
|
|
19,789,226
|
|
|
18,842
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2,223
|
)
|
|
(2,223
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
16,619
|
|
|
Equity component of convertible notes
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,904
|
|
|
7,904
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,904
|
|
|
Deferred tax on
convertible notes
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2,055
|
)
|
|
(2,055
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2,055
|
)
|
|
Reclassification upon repayment of
related party loans
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,403
|
)
|
|
-
|
|
|
(1,403
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,403
|
|
|
-
|
|
|
-
|
|
|
Shares issued for loan
(Note 17(b)(xviii))
|
|
50,000
|
|
|
24
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
24
|
|
|
Shares issued for compensation (Note
17(b)(xiv))
|
|
25,510
|
|
|
13
|
|
|
(13
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(13
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Exercise of stock
options (Note 17(b)(viii))
|
|
1,432,872
|
|
|
1,082
|
|
|
-
|
|
|
(458
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(458
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
624
|
|
|
Exercise of warrants (Note 17(b)(ix))
|
|
52,172,681
|
|
|
27,183
|
|
|
-
|
|
|
-
|
|
|
(2,071
|
)
|
|
-
|
|
|
-
|
|
|
(2,071
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
25,112
|
|
|
Exercise of
compensation options (Note 17(b)(x))
|
|
4,084,434
|
|
|
3,082
|
|
|
-
|
|
|
-
|
|
|
(1,408
|
)
|
|
-
|
|
|
-
|
|
|
(1,408
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,674
|
|
|
Forfeited options
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(23
|
)
|
|
(32
|
)
|
|
-
|
|
|
-
|
|
|
(55
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
55
|
|
|
-
|
|
|
-
|
|
|
Share-based payments
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5,522
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5,522
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5,522
|
|
|
Comprehensive loss for the period
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(472
|
)
|
|
-
|
|
|
(472
|
)
|
|
(8,152
|
)
|
|
-
|
|
|
(8,624
|
)
|
|
Balance, March 31, 2017
|
|
343,689,087
|
|
|
172,367
|
|
|
-
|
|
|
5,649
|
|
|
3,863
|
|
|
-
|
|
|
3,826
|
|
|
13,338
|
|
|
(472
|
)
|
|
-
|
|
|
(472
|
)
|
|
(23,610
|
)
|
|
-
|
|
|
161,623
|
|
|
Shares issued for acquisitions (Note
17(b)(xi)(xii))
|
|
9,216,007
|
|
|
23,100
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
23,100
|
|
|
Shares issued for
contingent consideration (Note 17(vi))
|
|
1,080,604
|
|
|
2,702
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,702
|
|
|
Share issue costs
|
|
-
|
|
|
571
|
|
|
-
|
|
|
-
|
|
|
(584
|
)
|
|
-
|
|
|
-
|
|
|
(584
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(13
|
)
|
|
Deferred tax on share
issue costs
|
|
-
|
|
|
1,846
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,846
|
|
|
Conversion of notes (Note 17(b)(vii))
|
|
9,231,093
|
|
|
19,195
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2,577
|
)
|
|
(2,577
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
16,618
|
|
|
Equity component of
convertible notes
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
12,683
|
|
|
12,683
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
12,683
|
|
|
Equity component of convertible note
transaction costs
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(900
|
)
|
|
(900
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(900
|
)
|
|
Deferred tax on
convertible notes
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(3,298
|
)
|
|
(3,298
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(3,298
|
)
|
|
Exercise of stock options (Note
17(b)(viii))
|
|
568,828
|
|
|
317
|
|
|
-
|
|
|
(120
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(120
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
197
|
|
|
Exercise of warrants
(Note 17(b)(ix))
|
|
2,763,625
|
|
|
1,465
|
|
|
-
|
|
|
-
|
|
|
25
|
|
|
-
|
|
|
-
|
|
|
25
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,490
|
|
|
Exercise of compensation
options/warrants (Note 17(b)(x))
|
|
-
|
|
|
(116
|
)
|
|
-
|
|
|
-
|
|
|
116
|
|
|
-
|
|
|
-
|
|
|
116
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Share-based payments
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,062
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,062
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,062
|
|
|
Comprehensive loss for the period
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5,664
|
|
|
(25
|
)
|
|
5,639
|
|
|
(4,816
|
)
|
|
-
|
|
|
823
|
|
|
Balance, June 30, 2017
|
|
366,549,244
|
|
|
221,447
|
|
|
-
|
|
|
7,591
|
|
|
3,420
|
|
|
-
|
|
|
9,734
|
|
|
20,745
|
|
|
5,192
|
|
|
(25
|
)
|
|
5,167
|
|
|
(28,426
|
)
|
|
-
|
|
|
218,933
|
|
AURORA CANNABIS INC.
Condensed Interim
Consolidated Statements of Changes in Equity
Three and nine months ended
March 31, 2018 and 2017
(Unaudited – In thousands of Canadian dollars,
except share amounts)
(Continued)
|
|
|
Share Capital
|
|
|
Reserves
|
|
|
AOCI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligation
|
|
|
Share-
|
|
|
Compensation
|
|
|
|
|
|
Change in
|
|
|
|
|
|
Value and
|
|
|
Foreign
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
Common
|
|
|
|
|
|
to Issue
|
|
|
Based
|
|
|
Options/
|
|
|
Convertible
|
|
|
Ownership
|
|
|
Total
|
|
|
Deferred
|
|
|
Currency
|
|
|
Total
|
|
|
|
|
|
Controlling
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Compensation
|
|
|
Warrants
|
|
|
Notes
|
|
|
Interest
|
|
|
Reserves
|
|
|
Tax
|
|
|
Translation
|
|
|
AOCI
|
|
|
Deficit
|
|
|
Interests
|
|
|
Total
|
|
|
|
|
#
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June
30, 2017
|
|
366,549,244
|
|
|
221,447
|
|
|
-
|
|
|
7,591
|
|
|
3,420
|
|
|
9,734
|
|
|
-
|
|
|
20,745
|
|
|
5,192
|
|
|
(25
|
)
|
|
5,167
|
|
|
(28,426
|
)
|
|
-
|
|
|
218,933
|
|
|
Shares issued for
acquisition (Note 12(d)(f)(h))
|
|
74,207,275
|
|
|
787,382
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
787,382
|
|
|
Warrants
issued for acquisition (Note 12(d))
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
136
|
|
|
-
|
|
|
-
|
|
|
136
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
136
|
|
|
Shares issued for
contingent consideration (Note 17(b)(vi))
|
|
5,135,191
|
|
|
12,907
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
12,907
|
|
|
Private
placements (Note 17(b)(iv))
|
|
25,000,000
|
|
|
75,000
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
75,000
|
|
|
Share issue costs
|
|
-
|
|
|
(6,643
|
)
|
|
-
|
|
|
-
|
|
|
2,285
|
|
|
-
|
|
|
-
|
|
|
2,285
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(4,358
|
)
|
|
Equity
component of convertible notes
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
52,500
|
|
|
|
|
|
52,500
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
52,500
|
|
|
Conversion of notes (Note
17(b)(vii)
|
|
42,378,292
|
|
|
180,229
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(27,048
|
)
|
|
-
|
|
|
(27,048
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
153,181
|
|
|
Deferred
tax on convertible notes
|
|
-
|
|
|
(1,923
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,923
|
)
|
|
Exercise of stock options
(Note 17(b)(viii), 12(e))
|
|
4,016,424
|
|
|
9,373
|
|
|
-
|
|
|
(3,529
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(3,529
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
259
|
|
|
6,103
|
|
|
Exercise
of warrants (Note 17(b)(ix), 12(e))
|
|
41,728,111
|
|
|
131,092
|
|
|
-
|
|
|
-
|
|
|
(3,092
|
)
|
|
-
|
|
|
-
|
|
|
(3,092
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
921
|
|
|
128,921
|
|
|
Exercise of compensation
options/warrants (Note 17(b)(x))
|
|
1,865,249
|
|
|
6,051
|
|
|
-
|
|
|
-
|
|
|
(1,854
|
)
|
|
-
|
|
|
-
|
|
|
(1,854
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4,197
|
|
|
Exercise
of restricted share units (Note 17(b)(iii)
|
|
127,128
|
|
|
1,209
|
|
|
-
|
|
|
(351
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(351
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
858
|
|
|
Forfeited options
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(438
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(438
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
438
|
|
|
-
|
|
|
-
|
|
|
Share-based payments (Note 12(e), 18)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
26,165
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
26,165
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
26,165
|
|
|
Non-controlling interest
from Hempco (Note 12(e))
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
6,503
|
|
|
6,503
|
|
|
Non-controlling interest from Aurora Nordic
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
56
|
|
|
56
|
|
|
Non-controlling interest
from CanniMed (Note 12(h))
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
6,969
|
|
|
6,969
|
|
|
Change in
ownership interests in subsidiaries (Note 12(e)(h))
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(75,646
|
)
|
|
(75,646
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,891
|
)
|
|
(77,537
|
)
|
|
Comprehensive income (loss) for the period
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
801
|
|
|
25
|
|
|
826
|
|
|
(7,933
|
)
|
|
(2,113
|
)
|
|
(9,219
|
)
|
|
Balance, March 31, 2018
|
|
561,006,914
|
|
|
1,416,124
|
|
|
-
|
|
|
29,438
|
|
|
895
|
|
|
35,186
|
|
|
(75,646
|
)
|
|
(10,127
|
)
|
|
5,993
|
|
|
-
|
|
|
5,993
|
|
|
(35,921
|
)
|
|
10,704
|
|
|
1,386,773
|
|
The accompanying notes are an integral part of these Condensed
Interim Consolidated Financial Statements.
AURORA CANNABIS INC.
Condensed Interim
Consolidated Statements of Cash Flows
Three and nine months ended March
31, 2018 and 2017
(Unaudited – In thousands of Canadian dollars)
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
|
Notes
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
Cash provided by (used
in)
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) for
the period
|
|
|
|
|
(19,215
|
)
|
|
141
|
|
|
(7,933
|
)
|
|
(8,152
|
)
|
|
Adjustments for non-cash items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on changes in fair value of biological assets
|
|
|
|
|
(2,506
|
)
|
|
(4,516
|
)
|
|
(12,350
|
)
|
|
(7,592
|
)
|
|
Changes in fair
value included in inventory sold
|
|
|
|
|
4,164
|
|
|
1,688
|
|
|
10,751
|
|
|
2,661
|
|
|
Depreciation of fixed assets
|
|
10
|
|
|
1,055
|
|
|
281
|
|
|
1,941
|
|
|
752
|
|
|
Amortization of
intangible assets
|
|
13
|
|
|
159
|
|
|
-
|
|
|
728
|
|
|
-
|
|
|
Share-based payments
|
|
18
|
|
|
15,872
|
|
|
2,632
|
|
|
25,814
|
|
|
5,522
|
|
|
Share of loss from
investment in associate
|
|
|
|
|
879
|
|
|
-
|
|
|
931
|
|
|
-
|
|
|
Unrealized gain on debentures
|
|
|
|
|
-
|
|
|
(2,004
|
)
|
|
(6,937
|
)
|
|
(2,004
|
)
|
|
Unrealized (gain)
loss on derivatives
|
|
|
|
|
1,678
|
|
|
182
|
|
|
(21,925
|
)
|
|
182
|
|
|
Share-based compensation income
|
|
25(a)
|
|
|
(324
|
)
|
|
-
|
|
|
(324
|
)
|
|
-
|
|
|
Unrealized gain on
marketable securities
|
|
|
|
|
(12,593
|
)
|
|
(1,333
|
)
|
|
(16,293
|
)
|
|
(1,333
|
)
|
|
Accrued interest and accretion expense
|
|
|
|
|
2,466
|
|
|
398
|
|
|
5,035
|
|
|
1,901
|
|
|
Financing fees
|
|
|
|
|
-
|
|
|
252
|
|
|
-
|
|
|
2,373
|
|
|
Interest and other income
|
|
|
|
|
-
|
|
|
-
|
|
|
(59
|
)
|
|
-
|
|
|
Deferred tax
expense (recovery)
|
|
|
|
|
(1,909
|
)
|
|
139
|
|
|
1,950
|
|
|
(1,916
|
)
|
|
Changes in
non-cash working capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GST recoverable
|
|
|
|
|
(778
|
)
|
|
(181
|
)
|
|
(3,351
|
)
|
|
(266
|
)
|
|
Accounts
receivable
|
|
|
|
|
(2,093
|
)
|
|
787
|
|
|
(2,047
|
)
|
|
(713
|
)
|
|
Inventory
|
|
|
|
|
(2,571
|
)
|
|
(307
|
)
|
|
(5,224
|
)
|
|
400
|
|
|
Biological assets
|
|
|
|
|
1,447
|
|
|
-
|
|
|
1,447
|
|
|
-
|
|
|
Prepaid and other current
assets
|
|
|
|
|
(94
|
)
|
|
(6,992
|
)
|
|
356
|
|
|
(7,533
|
)
|
|
Accounts
payable and accrued liabilities
|
|
|
|
|
(13,056
|
)
|
|
739
|
|
|
(9,616
|
)
|
|
916
|
|
|
Income taxes payable
|
|
|
|
|
742
|
|
|
-
|
|
|
742
|
|
|
-
|
|
|
Deferred revenue
|
|
|
|
|
(238
|
)
|
|
(1,089
|
)
|
|
(182
|
)
|
|
(390
|
)
|
|
|
|
|
|
|
(26,915
|
)
|
|
(9,183
|
)
|
|
(36,546
|
)
|
|
(15,192
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investments
|
|
4
|
|
|
218
|
|
|
-
|
|
|
(179
|
)
|
|
-
|
|
|
Marketable securities and derivatives
|
|
|
|
|
(15,457
|
)
|
|
(1,250
|
)
|
|
(55,205
|
)
|
|
(1,250
|
)
|
|
Share subscriptions
|
|
|
|
|
(55,000
|
)
|
|
-
|
|
|
(55,000
|
)
|
|
-
|
|
|
Convertible debenture
|
|
|
|
|
-
|
|
|
(2,000
|
)
|
|
-
|
|
|
(2,000
|
)
|
|
Notes receivable
|
|
|
|
|
-
|
|
|
(191
|
)
|
|
(4,236
|
)
|
|
(191
|
)
|
|
Purchase of property, plant and
equipment
|
|
10
|
|
|
(43,736
|
)
|
|
(8,124
|
)
|
|
(97,672
|
)
|
|
(12,966
|
)
|
|
Acquisition of
businesses, net of cash acquired
|
|
12
|
|
|
(110,148
|
)
|
|
(1,223
|
)
|
|
(118,670
|
)
|
|
(4,641
|
)
|
|
Acquisition of assets
|
|
12
|
|
|
578
|
|
|
-
|
|
|
(377
|
)
|
|
-
|
|
|
Investment in
associates
|
|
|
|
|
(105,086
|
)
|
|
-
|
|
|
(105,086
|
)
|
|
-
|
|
|
Contingent consideration payable
|
|
|
|
|
6,192
|
|
|
-
|
|
|
6,192
|
|
|
-
|
|
|
Deposits
|
|
|
|
|
(1,382
|
)
|
|
-
|
|
|
(1,978
|
)
|
|
-
|
|
|
|
|
|
|
|
(323,821
|
)
|
|
(12,788
|
)
|
|
(432,211
|
)
|
|
(21,048
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance lease
|
|
|
|
|
191
|
|
|
(241
|
)
|
|
157
|
|
|
(177
|
)
|
|
Proceeds of convertible notes
|
|
|
|
|
345,000
|
|
|
-
|
|
|
345,000
|
|
|
40,000
|
|
|
Repayment of short term
loans
|
|
|
|
|
(252
|
)
|
|
(666
|
)
|
|
(252
|
)
|
|
(6,215
|
)
|
|
Repayment of long term loans
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(4,000
|
)
|
|
Financing fees
|
|
|
|
|
(11,873
|
)
|
|
(50
|
)
|
|
(11,873
|
)
|
|
(1,660
|
)
|
|
Special warrant subscriptions
|
|
|
|
|
(111,009
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Shares issued for cash,
net of share issue costs
|
|
|
|
|
11,262
|
|
|
78,198
|
|
|
208,683
|
|
|
119,149
|
|
|
Acquisition of non-controlling interest
|
|
|
|
|
(2,446
|
)
|
|
-
|
|
|
(1,584
|
)
|
|
-
|
|
|
|
|
|
|
|
230,873
|
|
|
77,241
|
|
|
540,131
|
|
|
147,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange on cash and cash equivalents
|
|
|
|
|
45
|
|
|
-
|
|
|
(147
|
)
|
|
-
|
|
|
Increase (decrease) in cash and cash
equivalents
|
|
|
|
|
(119,818
|
)
|
|
55,270
|
|
|
71,227
|
|
|
110,857
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
|
350,841
|
|
|
55,846
|
|
|
159,796
|
|
|
259
|
|
|
Cash
and cash equivalents, end of period
|
|
|
|
|
231,023
|
|
|
111,116
|
|
|
231,023
|
|
|
111,116
|
|
AURORA CANNABIS INC.
Condensed Interim
Consolidated Statements of Cash Flows
Nine months ended March 31, 2018
and 2017
(Unaudited – In thousands of Canadian dollars)
(Continued)
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Supplementary information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment in
accounts payable
|
|
6,301
|
|
|
2,021
|
|
|
6,301
|
|
|
2,021
|
|
|
Depreciation in production costs
|
|
249
|
|
|
103
|
|
|
610
|
|
|
252
|
|
The accompanying notes are an integral part of these Condensed
Interim Consolidated Financial Statements.
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
Aurora Cannabis Inc. (the “Company” or
“Aurora”) was incorporated under the
Business Corporations Act
(British
Columbia). The Company’s shares are listed on the Toronto Stock Exchange (the
“Exchange”) under the symbol “ACB” and on the OTCQX under the symbol “ACBFF”.
The head office and principal address
of the Company is Suite 1500 - 1199 West Hastings Street, Vancouver, BC, Canada,
V6E 3T5. The Company’s registered and records office address is Suite 1500 -
1055 West Georgia Street, Vancouver, BC V6E 4N7.
The Company’s principal business is the
production and distribution of medical cannabis in Canada pursuant to the
Access to Cannabis for Medical Purposes Regulations
(“ACMPR”) and the
distribution of wholesale medical cannabis in the European Union pursuant to the
German Medicinal Products Act and German Narcotic Drugs Act
.
|
2.
|
Significant Accounting
Policies
|
|
|
(a)
|
Basis of presentation
|
The condensed interim consolidated
financial statements of the Company have been prepared in accordance with
International Accounting Standards 34,
“Interim Financial Reporting”
(“IAS 34”), using accounting policies consistent with International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting Standards
Board (“IASB”) and interpretations of the IFRS Interpretations Committee
(“IFRIC”).
The condensed interim consolidated
financial statements do not include all of the information required for full
annual financial statements. The accounting policies and critical estimates
applied by the Company in these condensed interim consolidated financial
statements are the same as those applied in the Company’s annual consolidated
financial statements as at and for the year ended June 30, 2017.
The Company has reclassified certain
immaterial items on the comparative condensed interim consolidated statement of
comprehensive loss to conform with current period’s presentation and improve
clarity.
These condensed interim consolidated
financial statements were approved and authorized for issue by the Board of
Directors of the Company on May 7, 2018.
|
|
(b)
|
Basis of consolidation
|
These condensed interim consolidated
financial statements include the accounts of the Company and its majority-owned
subsidiaries. Subsidiaries over which the Company has control are fully
consolidated from the date control commences until the date control ceases.
Control exists when the Company is exposed, or has rights, to variable returns
from its involvement with the entity and has the ability to affect those returns
through its power over the entity. In assessing control, potential voting rights
that are currently exercisable are taken into account. All intercompany balances
and transactions are eliminated on consolidation.
1
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
2.
|
Significant Accounting Policies
(Continued)
|
|
|
(b)
|
Basis of consolidation
(continued)
|
Subsidiaries over which the Company
has significant influence (investments in joint ventures and associates) are
accounted for under the equity method. Significant influence is assumed when the
Company has 20%-50% ownership interest, unless qualitative factors overcome this
assumption. Investments in associates are recognized initially at cost,
inclusive of transaction costs. The consolidated financial statements include
the Company's share of the income and expenses and equity movement of equity
accounted investees, from the date significant influence commences until the
date significant influence ceases.
The condensed interim consolidated
financial statements have been prepared on a historical cost basis except for
certain financial instruments, biological assets, derivatives and acquisition
related contingent consideration which are measured at fair value.
|
|
(d)
|
Functional and presentation of foreign
currency
|
The condensed interim consolidated
financial statements are presented in Canadian dollars unless otherwise noted.
The functional currencies of the Company and its subsidiaries are as follows:
Pedanios GmbH and CanniMed Germany are
the European Euro;
Aurora Nordic Cannabis A/S is the Danish Krone;
Australis Holdings LLP and SubTerra LLC are the US dollar;
Cann Group
Limited is the Australian dollar; and
Aurora and remaining subsidiaries are
the Canadian dollar.
|
|
(e)
|
Significant accounting judgments, estimates and
assumptions
|
The preparation of the Company’s
consolidated financial statements in conformity with IFRS requires management to
make judgments, estimates, and assumptions about the carrying amounts of assets
and liabilities that are not readily apparent from other sources. The estimates
and associated assumptions are based on historical experience and other factors
that are considered to be relevant. Actual results may differ from these
estimates.
The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimate is revised, if the revision
affects only that period, or in the period of the revision and future periods,
if the revision affects both current and future periods.
Significant judgments, estimates and
assumptions that have the most significant effect on the amounts recognized in
the financial statements are described below.
|
|
(i)
|
Investment in associates and joint
ventures
|
Judgement is required in the
assessment of whether the Company has control or significant influence in terms
of the variability of returns from the Company’s involvement in the investee,
the ability to use power to affect those returns and the significance of the
Company’s investment in the investee. The Company classified its investments
considering this assessment of control or significant influence. (Note 6)
2
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
2.
|
Significant Accounting Policies
(Continued)
|
|
|
(e)
|
Significant accounting judgments, estimates and
assumptions (continued)
|
|
|
(ii)
|
Business combinations and asset
acquisitions
|
Classification of an acquisition as a
business combination or an asset acquisition depends on whether the assets
acquired constitute a business, which can be a complex judgement. Whether an
acquisition is classified as a business combination or asset acquisition can
have a significant impact on the entries made on and after acquisition. (Note
12)
In a business combination, all
identifiable assets, liabilities and contingent liabilities acquired are
recorded at their fair values. One of the most significant estimates relates to
the determination of the fair value of these assets and liabilities. The
contingent consideration is measured at its acquisition-date fair value and
included as part of the consideration transferred in a business combination.
Contingent consideration that is classified as equity is not remeasured at
subsequent reporting dates and its subsequent settlement is accounted for within
equity. Contingent consideration that is classified as an asset or a liability
is remeasured at subsequent reporting dates in accordance with IAS 39, or IAS 37
Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with
the corresponding gain or loss being recognized in profit or loss. For any
intangible asset identified, depending on the type of intangible asset and the
complexity of determining its fair value, an independent valuation expert or
management may develop the fair value, using appropriate valuation techniques,
which are generally based on a forecast of the total expected future net cash
flows. The evaluations are linked closely to the assumptions made by management
regarding the future performance of the assets concerned and any changes in the
discount rate applied.
Certain fair values may be estimated
at the acquisition date pending confirmation or completion of the valuation
process. Where provisional values are used in accounting for a business
combination, they may be adjusted retrospectively in subsequent periods.
However, the measurement period will last for one year from the acquisition
date.
|
|
(iii)
|
Goodwill and intangible asset
impairment
|
The Company performs an annual test
for goodwill impairment in the fourth quarter for each of the cash generating
units (CGUs with goodwill allocated), and whenever events or circumstances make
it more likely than not that an impairment may have occurred, such as a
significant adverse change in the business climate or a decision to sell or
dispose all or a portion of a reporting unit. Determining whether an impairment
has occurred requires valuation of the respective CGU, which we estimate using a
discounted cash flow method. When available and as appropriate, we use
comparative market multiples to corroborate discounted cash flow results. In
applying this methodology, we rely on a number of factors, including actual
operating results, future business plans, economic projections and market data.
The Company tests intangible assets with indefinite lives annually for
impairment using a fair value method such as discounted cash flows.
3
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
2.
|
Significant Accounting Policies
(Continued)
|
|
|
(e)
|
Significant accounting judgments, estimates and
assumptions (continued)
|
|
|
(iv)
|
Convertible instruments
|
Convertible notes are compound
financial instruments which are accounted for separately by their components: a
financial liability and an equity instrument. The financial liability, which
represents the obligation to pay coupon interest on the convertible notes in the
future, is initially measured at its fair value and subsequently measured at
amortized cost. The residual amount is accounted for as an equity instrument at
issuance. The identification of convertible notes components is based on
interpretations of the substance of the contractual arrangement and therefore
requires judgment from management. The separation of the components affects the
initial recognition of the convertible debenture at issuance and the subsequent
recognition of interest on the liability component. The determination of the
fair value of the liability is also based on a number of assumptions, including
contractual future cash flows, discount rates and the presence of any derivative
financial instruments.
|
|
(f)
|
Recent accounting pronouncements
|
There were no new standards effective
July 1, 2017 that had an impact on the Company’s condensed interim consolidated
financial statements. The following IFRS standards have been recently issued by
the IASB. Pronouncements that are not applicable or where it has been determined
do not have a significant impact to the Company have been excluded herein.
|
|
(i)
|
IFRS 7 Financial instruments:
Disclosure
|
IFRS 7
Financial instruments:
Disclosure,
was amended to require additional disclosures on transition from
IAS 39 to IFRS 9. IFRS 7 is effective on adoption of IFRS 9, which is effective
for annual periods commencing on or after January 1, 2018. The Company is
assessing the impact of this amendment on its consolidated financial statements.
|
|
(ii)
|
IFRS 9, Financial Instruments
|
In July 2014, the IASB issued the
final version of IFRS 9
Financial Instruments
, which reflects all phases
of the financial instruments project and replaces IAS 39
Financial
Instruments: Recognition and Measurement
and all previous versions of IFRS
9. The standard introduces new requirements for classification and measurement,
impairment, and hedge accounting. IFRS 9 is effective for annual periods
beginning on or after 1 January 2018, with early application permitted. The
Company is assessing the impact of this new standard on its consolidated
financial statements.
|
|
(iii)
|
IFRS 15 Revenue from Contracts with
Customers
|
The IASB replaced IAS 18
Revenue
, in its entirety with IFRS 15
Revenue from Contracts with
Customers
. The standard contains a single model that applies to contracts
with customers and two approaches to recognizing revenue: at a point in time or
over time. The model features a contract-based five-step analysis of
transactions to determine whether, how much and when revenue is recognized. IFRS
15 is effective for annual periods beginning on or after January 1, 2018, with
early application permitted.
The Company intends to adopt IFRS 15
on July 1, 2018 using the modified retrospective approach where the cumulative
impact of adoption will be recognized in retained earnings as of July 1, 2018
and comparatives will not be restated.
4
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
2.
|
Significant Accounting Policies
(Continued)
|
|
|
(f)
|
Recent accounting pronouncements
(continued)
|
|
|
(iii)
|
IFRS 15 Revenue from Contracts with Customers
(continued)
|
The Company has conducted a
preliminary assessment of the impact from this new standard. Under IFRS 15,
revenue from the sale of medicinal cannabis would be recognized at a point in
time when control over the goods have been transferred to the customer. The
Company transfers control and satisfies its performance obligation upon delivery
and acceptance by the customer, which is consistent with the Company’s current
revenue recognition policy under IAS 18.
Referral revenues earned from Licensed
Producers through CanvasRx are recognized over a period of time as the referred
patients remain active with the Licensed Producers. This is consistent with the
Company’s current revenue recognition policy under IAS 18 where revenue is
recognized on a monthly basis over a specified period of time that the referred
patient remains an active purchaser of medical cannabis with the Licensed
Producer.
Based on the Company’s preliminary
assessment, the adoption of this new standard is not expected to have a material
impact on its consolidated financial statements.
In January 2016, the IASB issued IFRS
16
Leases
, which will replace IAS 17
Leases
. This standard
introduces a single lessee accounting model and requires a lessee to recognize
assets and liabilities for all leases with a term of more than twelve months,
unless the underlying asset is of low value. A lessee is required to recognize a
right-of-use asset representing its right to use the underlying asset and a
lease liability representing its obligation to make lease payments. The standard
will be effective for annual periods beginning on or after January 1, 2019, with
earlier application permitted for entities that apply IFRS 15
Revenue from
Contracts with Customers
at or before the date of initial adoption of IFRS
16. The Company is assessing the impact of this new standard on its consolidated
financial statements.
|
3.
|
Cash and cash equivalents
|
As of March 31, 2018, $34,500 cash was
in a legal trust reserved for the LIQ subscription receipts subject to LIQ
shareholder approval (Note 11(c)), and $5,962 cash was in trust reserved for the
CanniMed acquisition (Note 11(h)).
|
4.
|
Short-term Investments
|
Short-term investments consist of an
aggregate of $690 in guaranteed investment certificates (“GIC”) with maturity
dates between of October 29, 2018 and November 7, 2018, bearing annual interest
rates ranging from prime rate less 2.25% . The GICs are restricted and held as
security against the Company’s corporate credit cards.
|
|
|
|
March 31, 2018
|
|
|
June 30, 2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Trade receivables
|
|
8,333
|
|
|
1,346
|
|
|
|
GST
recoverable
|
|
4,761
|
|
|
966
|
|
|
|
|
|
13,094
|
|
|
2,312
|
|
5
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
|
(a)
|
Convertible debenture
|
|
|
Financial asset hierarchy level
|
|
Level 3
|
|
|
|
|
|
Radient
|
|
|
|
|
|
$
|
|
|
|
Investment at cost
|
|
2,000
|
|
|
|
Unrealized gain recognized at inception
|
|
12,564
|
|
|
|
Unrealized gain (losses) on changes in fair value
|
|
(3,493
|
)
|
|
|
Balance, June 30, 2017
|
|
11,071
|
|
|
|
Unrealized gain on changes in
fair value
|
|
830
|
|
|
|
Conversion of debenture
|
|
(11,901
|
)
|
|
|
Balance, March 31, 2018
|
|
-
|
|
On February 13, 2017, the Company
purchased a $2,000 unsecured 10% convertible debenture of Radient, convertible
into units at $0.14 per unit. Each unit consisted of one common share and one
warrant exercisable at a price of $0.33 per share expiring February 13, 2019.
On July 28, 2017, the Company received
14,285,714 units of Radient pursuant to the mandatory conversion of the
debenture. The Company also received an aggregate of 181,707 units of Radient
for its interest payments of $91.
On conversion, the Company recognized
an unrealized gain of $830 on the debentures and fully amortized the remaining
deferred inception gain balance of $6,107 on the shares. The fair value of the
debenture of $11,901 on conversion was estimated by measuring the fair value of
the shares at a quoted market price of $0.53 and the warrants using the
Black-Scholes pricing model with the following assumptions: risk-free interest
rate of 1.31%; dividend yield of 0%; stock price volatility of 91.53%; and an
expected life of 1.57 years. Note 6(b)(iv)
6
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
6.
|
Investments
(Continued)
|
|
|
(b)
|
Marketable securities and
derivatives
|
The Company held the following value
of marketable securities and derivative investments as at March 31, 2018:
|
|
Financial asset hierarchy
|
|
Level 1
|
|
|
Level 3
|
|
|
|
|
|
Marketable Securities (“MS”)
|
|
|
Derivatives
|
|
|
|
Financial assets
|
|
Cann Group
|
|
|
CanniMed
|
|
|
Micron
|
|
|
Radient
|
|
|
Total MS
|
|
|
Micron
|
|
|
Radient
|
|
|
Namaste
|
|
|
Total
|
|
|
|
|
|
(i)
|
|
|
(ii)
|
|
|
(iii)
|
|
|
(iv)
|
|
|
|
|
|
(iii)
|
|
|
(iv)
|
|
|
(v)
|
|
|
Derivatives
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Balance, June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
6,627
|
|
|
-
|
|
|
-
|
|
|
1,023
|
|
|
7,650
|
|
|
-
|
|
|
306
|
|
|
-
|
|
|
306
|
|
|
|
Unrealized gain recognized at
inception
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,334
|
|
|
1,334
|
|
|
-
|
|
|
380
|
|
|
-
|
|
|
380
|
|
|
|
Unrealized gain (losses) on changes in fair value
|
|
6,806
|
|
|
-
|
|
|
-
|
|
|
(945
|
)
|
|
5,861
|
|
|
-
|
|
|
(394
|
)
|
|
-
|
|
|
(394
|
)
|
|
|
Balance, June 30, 2017
|
|
13,433
|
|
|
-
|
|
|
-
|
|
|
1,412
|
|
|
14,845
|
|
|
-
|
|
|
292
|
|
|
-
|
|
|
292
|
|
|
|
Additions at cost
|
|
-
|
|
|
16,144
|
|
|
962
|
|
|
4,199
|
|
|
21,305
|
|
|
538
|
|
|
2,083
|
|
|
-
|
|
|
2,621
|
|
|
|
Share-based compensation
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
325
|
|
|
325
|
|
|
|
Unrealized gain recognized at inception
|
|
-
|
|
|
-
|
|
|
2,170
|
|
|
3,700
|
|
|
5,870
|
|
|
1,213
|
|
|
1,837
|
|
|
-
|
|
|
3,050
|
|
|
|
Unrealized gain on changes in
fair value
|
|
11,669
|
|
|
10,423
|
|
|
(1,059
|
)
|
|
8,953
|
|
|
29,986
|
|
|
(893
|
)
|
|
17,971
|
|
|
4
|
|
|
17,082
|
|
|
|
Reclassification to investment in associates
(Note 11(b))
|
|
(25,102
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(25,102
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Acquisition of control (Note
12(h))
|
|
-
|
|
|
(26,567
|
)
|
|
-
|
|
|
-
|
|
|
(26,567
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Conversion of debenture
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,571
|
|
|
7,571
|
|
|
-
|
|
|
4,330
|
|
|
-
|
|
|
4,330
|
|
|
|
Exercise of warrants
|
|
-
|
|
|
-
|
|
|
-
|
|
|
29,501
|
|
|
29,501
|
|
|
-
|
|
|
(23,723
|
)
|
|
-
|
|
|
(23,723
|
)
|
|
|
Balance, March 31, 2018
|
|
-
|
|
|
-
|
|
|
2,073
|
|
|
55,336
|
|
|
57,409
|
|
|
858
|
|
|
2,790
|
|
|
329
|
|
|
3,977
|
|
The Company held the following number
of marketable securities and derivatives as at March 31, 2018:
|
|
|
|
Marketable Securities
|
|
|
Warrant Derivatives
|
|
|
Option
|
|
|
|
|
|
Derivatives
|
|
|
|
|
|
Cann Group
|
|
|
CanniMed
|
|
|
Micron
|
|
|
Radient
|
|
|
Micron
|
|
|
Radient
|
|
|
Namaste
|
|
|
|
|
|
(i)
|
|
|
(ii)
|
|
|
(iii)
|
|
|
(iv)
|
|
|
(iii)
|
|
|
(iv)
|
|
|
(v)
|
|
|
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
|
Balance, June 30, 2016
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Additions
|
|
21,562,314
|
|
|
-
|
|
|
-
|
|
|
2,881,967
|
|
|
-
|
|
|
1,493,067
|
|
|
-
|
|
|
|
Balance, June 30, 2017
|
|
21,562,314
|
|
|
-
|
|
|
-
|
|
|
2,881,967
|
|
|
-
|
|
|
1,493,067
|
|
|
-
|
|
|
|
Additions
|
|
-
|
|
|
700,600
|
|
|
4,411,765
|
|
|
4,619,429
|
|
|
4,411,765
|
|
|
4,619,429
|
|
|
500,000
|
|
|
|
Reclassification to investment in
associates (Note 11(b))
|
|
(21,562,314
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Acquisition of control (Note 12(h))
|
|
-
|
|
|
(700,600
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Conversion of debenture
|
|
-
|
|
|
-
|
|
|
-
|
|
|
14,285,714
|
|
|
-
|
|
|
14,285,714
|
|
|
-
|
|
|
|
Exercise of
warrants
|
|
-
|
|
|
-
|
|
|
-
|
|
|
15,856,321
|
|
|
-
|
|
|
(15,856,321
|
)
|
|
-
|
|
|
|
Balance, March 31, 2018
|
|
-
|
|
|
-
|
|
|
4,411,765
|
|
|
37,643,431
|
|
|
4,411,765
|
|
|
4,541,889
|
|
|
500,000
|
|
7
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
6.
|
Investments
(Continued)
|
|
|
(b)
|
Marketable securities and derivatives
(continued)
|
|
|
(i)
|
Cann Group Limited
(“Cann
Group”)
|
On April 25, 2017, the Company
subscribed to the initial public offering of Cann Group on the Australian Stock
Exchange for 21,562,314 fully paid ordinary shares at a price of A$0.30 per
share for a total investment of $6,627 (A$6,469).
On December 11, 2017, the Company
acquired an additional 7,200,000 shares of Cann Group at A$2.50 per share for a
total investment of $17,577 (A$18,000), bringing the Company’s total ownership
interest to 21.8% . As a result, the Company obtained significant influence in
Cann Group, and the investment was accounted for under the equity method. The
cost of the investment was reclassified to investment in associates (Note
11(b)), and the cumulative unrealized gains on changes in fair value of
marketable securities of $18,939 and foreign exchange losses of $464 were
reversed from comprehensive income.
|
|
(ii)
|
CanniMed Therapeutics Inc.
(“CanniMed”)
|
On November 24, 2017, the Company
formally commenced an offer to purchase all of the issued and outstanding common
shares of CanniMed. During the nine months ended March 31, 2018, the Company
purchased an aggregate of 700,600 common shares of CanniMed at an average price
of $23.04 per share for a total cost of $16,144.
On March 15, 2018, the Company
acquired control of CanniMed. On acquisition of control, the Company recognized
an unrealized gain on changes in fair value of the investments of $10,423 and
the total fair value of $26,567 has been transferred to goodwill. (Note 12(h))
|
|
(iii)
|
Micron Waste Technologies Inc.
(“Micron”)
|
On January 12, 2018, the Company
subscribed to 4,411,765 units of Micron at $0.34 per unit for a total investment
of $1,500. Each unit consists of one common share and one common share purchase
warrant exercisable at $0.50 per share expiring January 12, 2020.
At March 31, 2018, the fair value of
the shares of $2,073 was based on quoted market prices of $0.47 (inception -
$0.71) and the fair value of the warrants was estimated using the Black-Scholes
pricing model with the following assumptions: risk-free interest rate of 1.76%
(inception – 1.71%); dividend yield of 0% (inception – 0%); stock price
volatility of 83.31% (inception – 85.65%); and an expected life of 1.79 years
(inception – 2 years).
8
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
6.
|
Investments
(Continued)
|
|
|
(b)
|
Marketable securities and derivatives
(continued)
|
|
|
(iv)
|
Radient Technologies Inc.
(“Radient”)
|
The Company acquired the following
securities of Radient:
|
|
|
|
|
|
Warrant
|
|
|
|
|
|
|
|
Exercise
|
|
|
|
Date
|
Transactions
|
Shares (#)
|
Warrants (#)
|
Price ($)
|
Cost
($)
|
|
|
March 9, 2017
|
Private placement of units @ $0.45 per unit
|
2,777,800
|
1,388,900
|
0.70
|
1,250
|
|
|
May 13, 2017
|
Convertible debenture interests (Note 5(a))
|
104,167
|
104,167
|
0.48
|
50
|
|
|
July 28, 2017
|
Convertible debenture interests (Note 5(a))
|
77,540
|
77,540
|
0.53
|
41
|
|
|
July 28 2017
|
Debentures converted (Note 5(a))
|
14,285,714
|
14,285,714
|
0.33
|
2,000
|
|
|
Dec.
11, 2017
|
Private placement of units @ $1.37 per unit
|
4,541,889
|
4,541,889
|
1.71
|
6,222
|
|
|
|
|
21,787,110
|
20,398,210
|
|
9,563
|
On December 11, 2017, the Company
exercised an aggregate of 15,856,321 warrants of Radient for a total cost of
$5,777. On exercise, the Company recorded unrealized gains on changes in fair
value of the derivatives of $22,678 and fully amortized the remaining deferred
inception gain of $3,856. The aggregate fair value of the exercised warrants of
$23,723 was estimated using the Black-Scholes pricing model with the following
weighted average assumptions: risk-free interest rate of 1.49%; dividend yield
of 0%; stock price volatility of 96.70%; and an expected life of 1.19 years.
At March 31, 2018, the fair value of
the 37,643,431 common shares of $55,336 was based on a quoted market price of
$1.47 per share and the fair value of the 4,541,889 warrants of $2,790 was
estimated using the Black-Scholes pricing model with the following weighted
average assumptions: risk-free interest rate of 1.76%; dividend yield of 0%;
stock price volatility of 91.99%; and an expected life of 1.70 years.
As at June 30, 2017, the Company held
an aggregate of 2,881,967 common shares and 1,493,067 warrants. At June 30,
2017, the $1,412 fair value of these shares was based on a quoted market price
of $0.49 per share (inception - $0.83) and the $292 fair value of the warrants
was estimated using the Black-Scholes pricing model with the following weighted
average assumptions: risk-free interest rate of 1.10% (inception – 0.83%);
dividend yield of 0% (inception – 0%); stock price volatility of 99.05%
(inception – 101.40%); and an expected life of 1.69 years (inception – 2.00
years).
|
|
(v)
|
Namaste Technologies Inc.
(“Namaste”)
|
The Company entered into a
Private-Label Software Agreement with Namaste whereby NamasteMD.com, Namaste’s
online telemedicine platform for patient consultation and registration, will
provide CanvasRx with a customized CanvasRx-branded version of the software.
In consideration of the Company’s
assistance for the future optimization of NamasteMd, Namaste issued
500,000 stock options to the Company exercisable at $3.35 per share for 48
months, vesting quarterly over 12 months.
At March 31, 2018, the fair value of
the options of $329 was estimated using the Black-Scholes pricing model with the
following weighted average assumptions: risk-free interest rate of 1.77%;
dividend yield of 0%; stock price volatility of 125%; and an expected life of
3.75 years.
9
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
6.
|
Investments
(Continued)
|
On January 12, 2018, the Company
subscribed to 33,333,334 subscription receipts of The Green Organic Dutchman
Holdings Ltd. (“TGOD”) at $1.65 per subscription receipt for a total cost of
$55,000. On May 2, 2018, TGOD completed its IPO and the subscription receipts
were converted into units of TGOD consisting of one common share and one-half of
one share purchase warrant, with each whole warrant exercisable at $3.00 per
share and expiring on the earlier of February 28, 2021 and the date that is 36
months after TGOD’s common shares are listed for trading on an exchange.
Pursuant to an investor rights
agreement entered into with TGOD, the Company subscribed to TGOD’s IPO of
6,341,250 units at a price of $3.65 per unit for a total investment of $23,146.
Each unit consists of one common share and one-half of one share purchase
warrant of TGOD. Each whole warrant is exercisable at $7.00 per share and
expires 24 months from closing, subject to accelerated expiry if TGOD’s shares
trade at or above a VWAP of $9.00 for any 10 consecutive trading day period.
The Company provides design and
construction consulting to TGOD and generated $950 from these services during
the nine months ended March 31, 2018.
The Company held the following
inventory as of March 31, 2018:
|
|
|
|
Capitalized
|
|
|
Biological asset
|
|
|
Carrying
|
|
|
|
|
|
cost
|
|
|
fair value adjustment
|
|
|
value
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harvested cannabis
|
|
|
|
|
|
|
|
|
|
|
|
Finished goods
|
|
7,084
|
|
|
12,365
|
|
|
19,449
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cannabis oils
|
|
|
|
|
|
|
|
|
|
|
|
Work-in-process
|
|
619
|
|
|
942
|
|
|
1,561
|
|
|
|
Finished goods
|
|
730
|
|
|
1,103
|
|
|
1,833
|
|
|
|
|
|
1,349
|
|
|
2,045
|
|
|
3,394
|
|
|
|
Capsules
|
|
|
|
|
|
|
|
|
|
|
|
Work-in-process
|
|
7
|
|
|
16
|
|
|
23
|
|
|
|
Finished goods
|
|
8
|
|
|
21
|
|
|
29
|
|
|
|
|
|
15
|
|
|
37
|
|
|
52
|
|
|
|
Home cultivation systems
|
|
|
|
|
|
|
|
|
|
|
|
Raw materials
|
|
407
|
|
|
-
|
|
|
407
|
|
|
|
Work-in-process
|
|
178
|
|
|
-
|
|
|
178
|
|
|
|
Finished goods
|
|
3
|
|
|
-
|
|
|
3
|
|
|
|
|
|
588
|
|
|
-
|
|
|
588
|
|
|
|
Hemp seed food products
|
|
|
|
|
|
|
|
|
|
|
|
Work-in-process
|
|
501
|
|
|
39
|
|
|
540
|
|
|
|
Finished goods
|
|
1,769
|
|
|
303
|
|
|
2,072
|
|
|
|
|
|
2,270
|
|
|
342
|
|
|
2,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplies and consumables
|
|
636
|
|
|
-
|
|
|
636
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accessories
|
|
48
|
|
|
-
|
|
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2018
|
|
11,990
|
|
|
14,789
|
|
|
26,779
|
|
10
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
The Company held the following
inventory as of June 30, 2017:
|
|
|
|
Capitalized
|
|
|
Biological asset
|
|
|
Carrying
|
|
|
|
|
|
cost
|
|
|
fair value adjustment
|
|
|
value
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Harvested cannabis
|
|
|
|
|
|
|
|
|
|
|
|
Work-in-process
|
|
304
|
|
|
373
|
|
|
677
|
|
|
|
Finished goods
|
|
2,332
|
|
|
2,836
|
|
|
5,168
|
|
|
|
|
|
2,636
|
|
|
3,209
|
|
|
5,845
|
|
|
|
Cannabis oils
|
|
|
|
|
|
|
|
|
|
|
|
Work-in process
|
|
342
|
|
|
790
|
|
|
1,132
|
|
|
|
Finished goods
|
|
147
|
|
|
397
|
|
|
544
|
|
|
|
|
|
489
|
|
|
1,187
|
|
|
1,676
|
|
|
|
Supplies and consumables
|
|
182
|
|
|
-
|
|
|
182
|
|
|
|
Balance, June 30, 2017
|
|
3,307
|
|
|
4,396
|
|
|
7,703
|
|
During the three and nine months ended
March 31, 2018, inventory recognized as an expense in cost of goods sold
amounted to $6,827 and $14,736, respectively ($2,241 and $6,853 during the three
and nine months ended March 31, 2017).
The Company’s biological assets consist
of seeds and cannabis plants. The changes in the carrying value of biological
assets are as follows:
|
|
|
|
$
|
|
|
|
Balance at June 30, 2016
|
|
1,845
|
|
|
|
Changes in fair value less cost to sell due
to biological transformation
|
|
22,772
|
|
|
|
Transferred to inventory upon harvest
|
|
(20,529
|
)
|
|
|
Balance at June 30, 2017
|
|
4,088
|
|
|
|
Production costs capitalized
|
|
4,487
|
|
|
|
Biological assets acquired from CanniMed
(Note 12(h))
|
|
1,447
|
|
|
|
Changes in fair value less
cost to sell due to biological transformation
|
|
12,350
|
|
|
|
Transferred to inventory upon harvest
|
|
(16,789
|
)
|
|
|
Balance at March 31, 2018
|
|
5,583
|
|
The average grow cycle of plants up to
the point of harvest is approximately twelve weeks. Plants not in production are
valued at the fair market value less costs to sell. Plants in production are
plants that are in the flowering stage and are valued at fair value less cost to
complete and cost to sell, where fair value represents the Company’s selling
price per gram of dried cannabis. As of March 31, 2018, the weighted average
fair value less cost to complete and cost to sell was $8.06 per gram (June 30,
2017 - $6.52 per gram).
The fair value of biological assets is
categorized within Level 3 on the fair value hierarchy. The significant
assumptions used in determining the fair value of biological assets include:
|
|
(a)
|
Expected yield by plant;
|
|
|
(b)
|
Wastage of plants;
|
|
|
(c)
|
Duration of the production cycle;
|
|
|
(d)
|
Percentage of costs incurred as of this date compared to
the total costs expected to be incurred;
|
|
|
(e)
|
Percentage of costs incurred for each stage of plant
growth; and
|
|
|
(f)
|
Market values.
|
11
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
8.
|
Biological Assets
(Continued)
|
The Company estimates that an effect of
a $1.00 increase or decrease in the market price per gram of dried cannabis, as
at March 31, 2018, would result in an increase or decrease of approximately $407
(June 30, 2017 - $440) to the fair value of biological assets. Additionally, an
effect of a 10% increase or decrease in production wages, as at March 31, 2018,
would result in an increase or decrease of approximately $34 (June 30, 2017 -
$192) to the fair value of biological assets.
As of March 31, 2018, it was expected
that the Company’s biological assets would yield approximately 1,173,827 grams
(June 30, 2017 – 599,245 grams) of medical cannabis when harvested. The
Company’s estimates are, by their nature, subject to change and differences from
the anticipated yield will be reflected in the gain or loss on biological assets
in future periods.
|
9.
|
Promissory Notes
Receivable
|
|
|
(a)
|
Pursuant to promissory notes, the Company advanced an
aggregate of $2,250 (June 30, 2017 - $750) to Hempco. The notes were
secured, bore interest of between 8% to 10% per annum and were due on
demand. On November 15, 2017, the loans and accrued interest were repaid
and applied towards the Company’s private placement subscription in
Hempco. (Note 12(e))
|
|
|
|
|
|
|
(b)
|
On September 26, 2017, the Company entered into a loan
agreement with H2 Biopharma Inc. (“H2”) in the principal amount of $3,000.
The loan is secured and bears interest at 12% per annum. On November 30,
2017, the Company acquired a 100% interest in H2. The loan remains
outstanding and is eliminated on consolidation. (Note 12(f))
|
|
|
|
|
|
|
(c)
|
Aggregate promissory notes of $716 (June 30, 2017 - $472)
issued to BCNL and UCI were secured, receivable on demand and bore
interest at 8% per annum. On September 29, 2017, the Company acquired BCNL
and UCI and the loans were applied against the acquisition consideration.
(Note 12(d))
|
|
10.
|
Property, Plant and
Equipment
|
|
|
|
|
|
|
|
|
|
|
Computer
|
|
|
|
|
|
Production
|
|
|
Finance
|
|
|
|
|
|
|
|
|
Building
&
|
|
|
Construction
|
|
|
Software &
|
|
|
Furniture
|
|
|
& Other
|
|
|
Lease
|
|
|
|
|
|
|
|
|
Improvements
|
|
|
in progress
|
|
|
Equipment
|
|
|
& Fixtures
|
|
|
Equipment
|
|
|
Equipment
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2016
|
|
10,831
|
|
|
-
|
|
|
444
|
|
|
109
|
|
|
1,020
|
|
|
-
|
|
|
12,404
|
|
|
|
Additions
|
|
1,944
|
|
|
26,571
|
|
|
398
|
|
|
149
|
|
|
778
|
|
|
544
|
|
|
30,384
|
|
|
|
Additions from business combinations
|
|
4,407
|
|
|
-
|
|
|
63
|
|
|
34
|
|
|
364
|
|
|
-
|
|
|
4,868
|
|
|
|
Disposals
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(12
|
)
|
|
-
|
|
|
(12
|
)
|
|
|
Balance, June 30, 2017
|
|
17,182
|
|
|
26,571
|
|
|
905
|
|
|
292
|
|
|
2,150
|
|
|
544
|
|
|
47,644
|
|
|
|
Additions
|
|
9,068
|
|
|
82,305
|
|
|
1,580
|
|
|
2,631
|
|
|
5,337
|
|
|
-
|
|
|
100,921
|
|
|
|
Additions from business
combinations
|
|
30,540
|
|
|
7,969
|
|
|
33
|
|
|
829
|
|
|
7,129
|
|
|
247
|
|
|
46,747
|
|
|
|
Disposals
|
|
-
|
|
|
(14
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
-
|
|
|
-
|
|
|
(17
|
)
|
|
|
Foreign currency translation
|
|
-
|
|
|
-
|
|
|
5
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5
|
|
|
|
Balance, March 31, 2018
|
|
56,790
|
|
|
116,831
|
|
|
2,521
|
|
|
3,751
|
|
|
14,616
|
|
|
791
|
|
|
195,300
|
|
12
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
10.
|
Property, Plant and Equipment
(Continued)
|
|
|
|
|
|
|
|
|
|
|
Computer
|
|
|
|
|
|
Production
|
|
|
Finance
|
|
|
|
|
|
|
|
|
Building
&
|
|
|
Construction
|
|
|
Software &
|
|
|
Furniture
|
|
|
& Other
|
|
|
Lease
|
|
|
|
|
|
|
|
|
Improvements
|
|
|
In Progress
|
|
|
Equipment
|
|
|
& Fixtures
|
|
|
Equipment
|
|
|
Equipment
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Accumulated
Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2016
|
|
616
|
|
|
-
|
|
|
162
|
|
|
19
|
|
|
237
|
|
|
-
|
|
|
1,034
|
|
|
|
Depreciation
|
|
438
|
|
|
-
|
|
|
221
|
|
|
40
|
|
|
351
|
|
|
39
|
|
|
1,089
|
|
|
|
Disposals
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2
|
)
|
|
-
|
|
|
(2
|
)
|
|
|
Balance, June 30, 2017
|
|
1,054
|
|
|
-
|
|
|
383
|
|
|
59
|
|
|
586
|
|
|
39
|
|
|
2,121
|
|
|
|
Depreciation
|
|
557
|
|
|
-
|
|
|
285
|
|
|
209
|
|
|
729
|
|
|
69
|
|
|
1,849
|
|
|
|
Disposals
|
|
-
|
|
|
88
|
|
|
(1
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
87
|
|
|
|
Foreign currency translation
|
|
-
|
|
|
-
|
|
|
4
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4
|
|
|
|
Balance, March 31, 2018
|
|
1,611
|
|
|
88
|
|
|
671
|
|
|
268
|
|
|
1,315
|
|
|
108
|
|
|
4,061
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Book Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
16,128
|
|
|
26,571
|
|
|
522
|
|
|
233
|
|
|
1,564
|
|
|
505
|
|
|
45,523
|
|
|
|
March 31, 2018
|
|
55,179
|
|
|
116,743
|
|
|
1,850
|
|
|
3,483
|
|
|
13,301
|
|
|
683
|
|
|
191,239
|
|
The Company is constructing an 800,000
square foot production facility at the Edmonton International Airport (“EIA”).
As at March 31, 2018, costs related to the construction of this facility were
capitalized as construction in progress and not amortized. Amortization will
commence when construction is completed, and the facility is available for its
intended use.
During the three and nine months ended
March 31, 2018, $1,444 and $3,998 (three and nine months ended March 31, 2017 -
$Nil and $Nil) in borrowing costs were capitalized to construction in progress
at a weighted average rate of 20% and 20%, respectively (three and nine months
ended March 31, 2017 - Nil% and Nil%).
|
11.
|
Investments in Associates and Joint
Venture
|
The investments in associates and joint
venture consist of:
|
|
|
|
March 31, 2018
|
|
|
June 30, 2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
(a) Australis Holdings LLP
(“Australis Holdings”)
|
|
-
|
|
|
-
|
|
|
|
(b) Cann Group Limited (“Cann Group”)
|
|
31,972
|
|
|
-
|
|
|
|
(c) Liquor Stores N.A. Ltd.
(“LIQ”)
|
|
104,371
|
|
|
-
|
|
|
|
(d)
SubTerra LLC (“SubTerra”) and 10647594 Canada Inc. (“10647594”)
|
|
212
|
|
|
-
|
|
|
|
|
|
136,555
|
|
|
-
|
|
On April 7, 2015, the Company’s
wholly-owned subsidiary, Australis Capital Inc. (“ACI”), entered into a Limited
Liability Partnership Agreement with AJR Builders Group LLC and formed Australis
Holdings, a Washington Limited Liability Partnership. Each of ACI and AJR holds
a 50% interest in Australis Holdings.
Australis Holdings purchased two
parcels of land in 2015 totaling approximately 24.5 acres (the “Property”) in
Whatcom county, Washington for USD$2,300, with the initial intention to
construct a new cannabis production and processing facility. The Company
subsequently decided not to move forward with US cannabis production and listed
the land for sale.
13
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
11.
|
Investments in Associates and Joint Venture
(Continued)
|
|
|
(a)
|
Australis Holdings
(continued)
|
Pursuant to a promissory note dated
April 10, 2015, the Company through ACI loaned $1,645 to Australis Holdings to
fund the purchase of the Property. The note bears interest at a rate of 5% per
annum and had an original maturity date of October 31, 2017 which was extended
to October 31, 2018. In the event of a default, interest will be charged at 12%
per annum. The note is secured by a first mortgage on one parcel of the Property
and a second mortgage on the other title as well as a general security agreement
granting ACI security over all present and after acquired property of Australis
Holdings.
During the three and nine months ended
March 31, 2018, the Company accrued interest of $16 and $37 respectively (three
and nine months ended March 31, 2017 - $10 and $31) related to this loan.
Included in loans receivable are
advances of $1,627 to Australis Holdings. The advances are unsecured,
non-interest bearing and have no fixed terms of repayment.
The following table summarizes the
financial information of Australis Holdings:
Statement of Financial Position:
|
|
|
|
March 31, 2018
|
|
|
June 30, 2017
|
|
|
|
|
|
US$
|
|
|
US$
|
|
|
|
Current assets
|
|
1
|
|
|
107
|
|
|
|
Non-current assets
|
|
2,300
|
|
|
2,300
|
|
|
|
Current liabilities
|
|
(1,266
|
)
|
|
(283
|
)
|
|
|
Non-current liabilities
|
|
(1,503
|
)
|
|
(2,415
|
)
|
|
|
Net assets (100%)
|
|
(468
|
)
|
|
(291
|
)
|
Statement of Loss and Comprehensive
Loss
|
|
Net loss and comprehensive loss (100%)
|
|
177
|
|
|
138
|
|
|
|
|
|
March 31, 2018
|
|
|
June 30, 2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Investment at cost
|
|
32,188
|
|
|
-
|
|
|
|
Loss
recognized on investment
|
|
(216
|
)
|
|
-
|
|
|
|
Ending balance
|
|
31,972
|
|
|
-
|
|
As of March 31, 2018, the Company held
31,956,347 shares of Cann Group for a total cost of $32,188, representing a
22.9% ownership interest. (Note 6(b)(i))
14
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
11.
|
Investments in Associates and Joint Venture
(Continued)
|
|
|
(b)
|
Cann Group (continued)
|
The following table summarizes the
financial information of Cann Group as at December 31, 2017, based on most
recent publicly available financial information:
|
|
|
|
December 31, 2017
|
|
|
|
|
|
AUS $
|
|
|
|
Current assets
|
|
67,196
|
|
|
|
Non-current assets
|
|
3,546
|
|
|
|
Current liabilities
|
|
(1,149
|
)
|
|
|
Non-current liabilities
|
|
(18
|
)
|
|
|
Net assets (100%)
|
|
69,575
|
|
|
|
|
|
Six months ended
|
|
|
|
|
|
December 31, 2017
|
|
|
|
Net loss and comprehensive loss (100%)
|
|
(1,463
|
)
|
The following table summarizes the
carrying amount of the Company’s interest in Cann Group as at March 31, 2018:
|
|
|
|
March 31, 2018
|
|
|
|
Company’s share (%)
|
|
22.9%
|
|
|
|
|
|
$
|
|
|
|
Share of net assets
|
|
15,890
|
|
|
|
Goodwill
|
|
16,298
|
|
|
|
Share of net loss and comprehensive loss
|
|
(216
|
)
|
|
|
|
|
31,972
|
|
Based on Cann Group’s closing price of
A$2.98 on March 31, 2018, the shares held by the Company have a fair value of
approximately $94,973 (A$95,230).
On February 14, 2018, the Company
subscribed to LIQ’s non-brokered private placement for 6,900,000 common shares
at $15.00 per share for a total cost of $103,500, representing a 19.9% interest
in LIQ. Management determined that the Company has significant influence over
LIQ and accounted for the investment under the equity method.
The Company also subscribed to
2,300,000 subscription receipts of LIQ at $15.00 per subscription receipt for a
total cost of $34,500 which upon conversion to common shares will increase the
Company’s ownership to approximately 25% on an undiluted basis. As of March 31,
2018, the $34,500 paid for the subscription receipts remains in a trust account
(Note 3).
For no additional consideration, the
Company also received 11,880,000 share purchase warrants of LIQ which will allow
the Company to increase its pro rata equity interest to approximately 40% on a
fully diluted basis. The share purchase warrants are exercisable between $15.00
and $15.75 per share and expiring between August 14, 2019 and January 31, 2022.
The subscription receipts and share purchase warrants are subject to the
approval of LIQ’s shareholders at its annual general meeting in May 2018.
15
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
11.
|
Investments in Associates and Joint Venture
(Continued)
|
|
|
|
|
March 31, 2018
|
|
|
June 30, 2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Investment at cost
|
|
103,500
|
|
|
-
|
|
|
|
Transaction costs
|
|
1,585
|
|
|
|
|
|
|
Loss recognized on investment
|
|
(714
|
)
|
|
-
|
|
|
|
Ending balance
|
|
104,371
|
|
|
-
|
|
The following table summarizes the
financial information of LIQ as at December 31, 2017, based on most recent
publicly available financial information on February 14, 2018:
|
|
|
|
December 31, 2017
|
|
|
|
|
|
$
|
|
|
|
Current assets
|
|
117,654
|
|
|
|
Non-current assets
|
|
238,748
|
|
|
|
Current liabilities
|
|
(53,397
|
)
|
|
|
Non-current liabilities
|
|
(109,220
|
)
|
|
|
Net assets (100%)
|
|
193,785
|
|
|
|
|
|
Year Ended
|
|
|
|
|
|
December 31, 2017
|
|
|
|
Net loss and comprehensive loss (100%)
|
|
(28,753
|
)
|
The following table summarizes the
carrying amount of the Company’s interest in LIQ as at March 31, 2018:
|
|
|
|
March 31, 2018
|
|
|
|
Company’s share (%)
|
|
19.9%
|
|
|
|
|
|
$
|
|
|
|
Share of net assets
|
|
38,523
|
|
|
|
Goodwill
|
|
66,562
|
|
|
|
Share of net loss and comprehensive loss
(1)
|
|
(714
|
)
|
|
|
|
|
104,371
|
|
|
|
(1)
|
Based on LIQ’s most
recent publicly available financial information for the period ended December
31, 2017.
|
Subsequent to March 31, 2018, the
Company received a dividend of $621 from LIQ.
|
|
(d)
|
SubTerra LLC and 10647594
|
Pursuant to the acquisition of
CanniMed (Note 12(h)), the Company acquired a 19.9% interest in SubTerra and a
19.9% interest in 10647594 which hold certain assets known as the Interleukin 37
protein.
|
|
|
|
March 31, 2018
|
|
|
June 30, 2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Investment acquired from business combination
|
|
212
|
|
|
-
|
|
No income or loss was recognized on
the investment from acquisition date to period end.
16
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
|
(a)
|
CanvasRx
Inc.
(“CanvasRx”)
|
On August 17, 2016, the Company
completed the acquisition of all of the issued and outstanding shares of
CanvasRx pursuant to a Share Purchase Agreement dated August 9, 2016, as amended
and restated on August 16, 2016 for a total consideration of $37,127. CanvasRx
is a counseling and outreach service provider with over 24 physical locations in
the provinces of Ontario and Alberta, Canada. The transaction was accounted for
as a business combination.
|
|
|
|
$
|
|
|
|
Consideration
|
|
|
|
|
|
Cash paid at
closing
|
|
1,575
|
|
|
|
Performance
milestones achieved related to patients 17,875,000 common shares issued
|
|
11,440
|
|
|
|
Cash paid
|
|
1,575
|
|
|
|
Loan to CanvasRx
|
|
450
|
|
|
|
CanvasRx
transaction expenses
|
|
250
|
|
|
|
Other
liabilities assumed
|
|
18
|
|
|
|
Contingent consideration
(1)
|
|
21,819
|
|
|
|
|
|
37,127
|
|
|
|
(1)
|
Contingent consideration represents the estimated
discounted value of the $26,750 gross consideration to be paid out over a
20-month period on achievement of future performance milestones related to
new counseling rooms opened, patient accruals and revenue
targets.
|
|
|
|
|
|
|
|
This consideration may be satisfied, at the Company’s
sole discretion, in cash or common shares at a 15% discount to the market
price at the date of issuance, unless the market price of the Company’s
share is $0.47 or below, at which point the consideration is convertible
into a fixed number of shares. In any case, the issuance of the Company’s
shares should not result in former CanvasRx shareholders accumulating 50%
or more of the Company’s shares. If the consideration payments cannot be
satisfied in cash and the issuance of shares would result in the former
shareholders of CanvasRx accumulating 50% or more of the Company’s
shares, a convertible debenture will be issued.
|
|
|
|
|
|
|
|
During the year ended June 30, 2017, certain patient and
counselling room performance milestones were achieved, and the Company
paid $2,608 and issued 2,926,103 shares at $2.074 per share to the former
shareholders of CanvasRx.
|
|
|
|
|
|
|
|
During the nine months ended March 31, 2018, the Company
issued 5,135,191 shares at weighted average price of $2.51 per share for
patient, counselling rooms and revenue milestones achieved.
|
|
|
|
|
|
|
|
All common shares issued were accounted for at fair value
at the dates of issuance.
|
17
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
12.
|
Acquisitions
(Continued)
|
The purchase price was allocated as
follows:
|
|
|
|
$
|
|
|
|
Net liabilities acquired
|
|
(797
|
)
|
|
|
Intangible asset – customer relationships
|
|
4,250
|
|
|
|
Deferred tax liability
|
|
(836
|
)
|
|
|
Goodwill
|
|
34,510
|
|
|
|
|
|
37,127
|
|
Goodwill recognized from the
acquisition represents the expected benefit of future market share, revenue
growth, and other intangibles that do not qualify for separate recognition
including brand name and assembled workforce. None of the goodwill arising on
this acquisition is deductible for tax purposes.
The Company is indemnified from any
tax liability arising from pre-acquisition transactions of CanvasRx through
adjustments to the purchase consideration.
The customer relationships are
amortized on a straight-line basis over a period of 7 years. The Company
recorded amortization of $152 and $721 for the three and nine months ended March
31, 2018.
Fair values of the net liabilities
acquired included the following:
|
|
|
|
$
|
|
|
|
Sales tax receivable
|
|
39
|
|
|
|
Accounts receivable
|
|
212
|
|
|
|
|
|
251
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities
|
|
109
|
|
|
|
Deferred revenue
|
|
939
|
|
|
|
|
|
1,048
|
|
|
|
|
|
(797
|
)
|
Net cash outflow on the acquisition is
as follows:
|
|
|
|
$
|
|
|
|
Cash consideration
|
|
3,400
|
|
|
|
Add:
bank overdraft
|
|
18
|
|
|
|
|
|
3,418
|
|
During the nine months ended March 31,
2018, acquisition costs of $224 (2017 - $165) related to certain contingent
consideration and post-closing costs were excluded from the consideration
transferred and were recognized as an expense in the current period.
For the year ended June 30, 2017,
CanvasRx accounted for $1,702 in net loss since August 17, 2016. This amount
included revenues of $2,145. If the acquisition had been completed on July 1,
2016, the Company estimates it would have recorded an increase of $159 in
revenues and an increase of $920 in net loss for the year ended June 30,
2017.
18
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
12.
|
Acquisitions
(Continued)
|
|
|
(b)
|
Peloton Pharmaceuticals Inc. (
“Peloton” or
“
Aurora Vie
”
)
|
On April 28, 2017, the Company,
through its wholly-owned subsidiary, 10094595 Canada Inc., acquired 100% of the
net assets of Peloton, a late-stage ACMPR applicant, out of bankruptcy
protection. The transaction was accounted for as an asset acquisition.
The Company acquired all of the common
shares of Peloton for a total consideration of $9,733 consisting of:
|
|
|
|
$
|
|
|
|
573,707 common shares
|
|
1,486
|
|
|
|
Cash
|
|
5,156
|
|
|
|
Trustee, legal fees and other
acquisition costs
|
|
2,186
|
|
|
|
Acquisition related costs - 325,518 common shares
|
|
905
|
|
|
|
|
|
9,733
|
|
The allocation of the consideration to
the fair value of the net assets acquired at the date of acquisition is as
follows:
|
|
|
|
$
|
|
|
|
Building
|
|
4,401
|
|
|
|
Office, furniture and equipment
|
|
445
|
|
|
|
Intangible asset – ACMPR license application
|
|
4,887
|
|
|
|
|
|
9,733
|
|
In October 2017, the Company completed
construction of the former Peloton 40,000 square foot cannabis production
facility located in Pointe Claire, Quebec. The facility, known as Aurora Vie,
received its cultivation license from Health Canada on October 27, 2017. Upon
receipt of the ACMPR license to sell, the intangible asset will be amortized on
a straight-line basis over the useful life of the facility or lease term.
The total consideration is subject to
change pending settlement of all claims with the previous creditors by the
bankruptcy trustee.
|
|
(c)
|
Pedanios
GmbH
(“Pedanios”)
|
In May 2017, the Company completed the
acquisition of Pedanios, a registered wholesale importer, exporter and
distributor of medical cannabis in Germany. The Company acquired all of the
issued and outstanding shares of Pedanios for a total consideration of $23,728.
The transaction was accounted for as a business combination.
|
|
Consideration
|
|
$
|
|
|
|
Cash paid at
closing (€2,000)
|
|
3,019
|
|
|
|
8,316,782 common shares issued
|
|
20,709
|
|
|
|
|
|
23,728
|
|
19
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
12.
|
Acquisitions
(Continued)
|
The purchase price was allocated as
follows:
|
|
|
|
$
|
|
|
|
Net assets acquired
|
|
1,184
|
|
|
|
Intangible assets – permits and licenses
|
|
22,544
|
|
|
|
Goodwill
|
|
6,590
|
|
|
|
Deferred tax liability
|
|
(6,590
|
)
|
|
|
|
|
23,728
|
|
Goodwill reflects the deferred income
tax liability recognized for all taxable temporary differences. None of the
goodwill arising on this acquisition is deductible for tax purposes. The permits
and licenses are classified as indefinite life intangible assets and are not
amortized but are tested for impairment on an annual basis.
Fair values of the net assets acquired
included the following:
|
|
|
|
$
|
|
|
|
Cash
|
|
743
|
|
|
|
Trade receivables
|
|
358
|
|
|
|
Inventories
|
|
328
|
|
|
|
Prepaid expenses and deposits
|
|
6
|
|
|
|
Equipment
|
|
13
|
|
|
|
|
|
1,448
|
|
|
|
Accounts payables and accrued liabilities
|
|
264
|
|
|
|
|
|
1,184
|
|
Net cash outflow on the Acquisition is
as follows:
|
|
|
|
$
|
|
|
|
Cash consideration
|
|
3,019
|
|
|
|
Less: cash acquired
|
|
743
|
|
|
|
|
|
2,276
|
|
During the nine months ended March 31,
2018, acquisition costs of $28 (2016 - $nil) related to certain post-closing and
contingent consideration costs were excluded from the consideration transferred
and were recognized as an expense in the current period.
For the year ended June 30, 2017,
Pedanios accounted for $294 in net loss since May 30, 2017. This amount included
revenues of $439. If the acquisition had been completed on July 1, 2016, the
Company estimates it would have recorded an increase of $1,699 in revenues and
an increase of $19 in net loss for the year ended June 30, 2017.
|
|
(d)
|
BC Northern Lights
Enterprises Ltd. (“BCNL”)
and Urban Cultivator Inc.
(“UCI”)
|
On September 29, 2017, the Company
completed the acquisition of BCNL and UCI. BCNL is in the business of production
and sale of proprietary systems for the safe, efficient and high-yield indoor
cultivation of cannabis and UCI is in the business of production and sale of
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home kitchens. The Company acquired all of
the issued and outstanding shares of BCNL and UCI for aggregate consideration of
$5,513. The transaction was accounted for as a business combination.
20
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
12.
|
Acquisitions
(Continued)
|
|
|
(d)
|
BCNL and UCI
(continued)
|
|
|
|
|
$
|
|
|
|
Consideration
|
|
|
|
|
|
Cash
|
|
4,010
|
|
|
|
89,107 common
shares
|
|
248
|
|
|
|
89,107 warrants
(1)
|
|
136
|
|
|
|
Contingent consideration
(2)
|
|
1,119
|
|
|
|
|
|
5,513
|
|
|
|
(1)
|
The warrants are exercisable at $2.8056 per share until
September 29, 2020.
|
|
|
|
|
|
|
(2)
|
Contingent consideration represents the estimated fair
value of the $4,000 gross consideration to be paid over a period of three
years on achievement of future performance milestones related to aggregate
earnings before interest, taxes, depreciation and amortization (“EBITDA”).
The consideration may be paid in cash or common
shares.
|
The purchase price was allocated as
follows:
|
|
|
|
$
|
|
|
|
Net assets acquired
|
|
680
|
|
|
|
Intangible assets
|
|
|
|
|
|
Customer
relationships
|
|
105
|
|
|
|
Brand
|
|
655
|
|
|
|
Assembled
workforce
|
|
65
|
|
|
|
Design patent
|
|
521
|
|
|
|
Goodwill
|
|
3,664
|
|
|
|
Deferred tax liability
|
|
(177
|
)
|
|
|
|
|
5,513
|
|
Goodwill represents expected
synergies, future growth and other intangibles that do not qualify for separate
recognition, as well as the deferred income tax liability recognized for all
taxable temporary differences. None of the goodwill arising on this acquisition
is deductible for tax purposes.
Fair values of the net assets acquired
included the following:
|
|
|
|
$
|
|
|
|
Cash
|
|
138
|
|
|
|
Trade receivables
|
|
279
|
|
|
|
Other receivables
|
|
115
|
|
|
|
Inventories
|
|
874
|
|
|
|
Prepaid expenses and deposits
|
|
55
|
|
|
|
Equipment
|
|
149
|
|
|
|
|
|
|
|
|
|
Accounts payables and accrued liabilities
|
|
844
|
|
|
|
Deferred revenues
|
|
86
|
|
|
|
|
|
680
|
|
The gross contractual amount for trade
receivables is $389, of which $110 is expected to be uncollectible.
21
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
12.
|
Acquisitions
(Continued)
|
|
|
(d)
|
BCNL and UCI (continued)
|
Net cash outflow on acquisition of
BCNL and UCI is as follows:
|
|
|
|
$
|
|
|
|
Cash consideration
|
|
4,010
|
|
|
|
Less: cash acquired
|
|
138
|
|
|
|
|
|
3,872
|
|
During the nine months ended March 31,
2018, acquisition related costs of $65 were excluded from the consideration
transferred and recognized as an expense in the current period.
For the nine months ended March 31,
2018, BCNL and UCI accounted for $842 in net loss since September 29, 2017. This
amount included revenues of $1,675. If the acquisition had been completed on
July 1, 2017, the Company estimates it would have recorded an increase of $1,062
in revenues and an increase of $41 in net loss for the nine months ended March
31, 2018.
|
|
(e)
|
Hempco Food and Fiber Inc.
(“Hempco”)
|
On November 14, 2017, the Company
acquired a 22.3% ownership interest in Hempco by subscribing to its private
placement of 10,558,676 units at $0.3075 per unit for gross proceeds of $3,247.
Each unit consisted of one common share and one warrant exercisable at $0.41 per
share for a period of two years, subject to accelerated expiry if Hempco’s
shares trade at or above a VWAP of $0.65 for any 30-day period.
Hempco, a Canadian public company
listed on the TSX Venture Exchange, is a producer of industrial hemp products
and is developing hemp foods, hemp fiber and hemp nutraceuticals.
The Company also entered into a call
option agreement to acquire up to an aggregate of 10,754,942 shares from the
majority owners of Hempco, which upon exercise, would bring the Company’s total
ownership interest in Hempco to over 50.1% on a fully diluted basis. As a
result, due primarily to potential voting rights, the Company has control over
Hempco, and the results of Hempco have been consolidated in these financial
statements. The non-controlling interest recognized at the acquisition date was
recorded at its proportionate share of Hempco’s fair value of identifiable net
assets.
|
|
|
|
$
|
|
|
|
Consideration
|
|
|
|
|
|
Cash paid at closing
|
|
946
|
|
|
|
Loans repayment (Note 9(a))
|
|
2,301
|
|
|
|
|
|
3,247
|
|
22
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
12.
|
Acquisitions
(Continued)
|
The following table summarizes the
estimated fair values of the assets acquired and liabilities assumed at the date
of acquisition:
|
|
|
|
$
|
|
|
|
Cash
|
|
908
|
|
|
|
Trade receivables
|
|
286
|
|
|
|
Other receivables
|
|
1,102
|
|
|
|
Short-term investments
|
|
511
|
|
|
|
Inventories
|
|
2,606
|
|
|
|
Prepaid expenses and deposits
|
|
178
|
|
|
|
Equipment
|
|
2,876
|
|
|
|
|
|
|
|
|
|
Accounts payables and accrued liabilities
|
|
968
|
|
|
|
|
|
7,499
|
|
The gross contractual amount for trade
receivables is $318, of which $32 is expected to be uncollectible.
The goodwill arising on the
acquisition is as follows:
|
|
|
|
$
|
|
|
|
Consideration transferred
|
|
3,247
|
|
|
|
Non-controlling interest at acquisition
(77.7%)
|
|
6,503
|
|
|
|
Net assets
|
|
(7,499
|
)
|
|
|
Goodwill
|
|
2,251
|
|
Goodwill represents estimated future
income, synergies and other intangibles that do not qualify for separate
recognition. None the goodwill arising on this acquisition is deductible for tax
purposes.
Net cash outflow on acquisition of
Hempco is as follows:
|
|
|
|
$
|
|
|
|
Cash consideration
|
|
3,247
|
|
|
|
Less: cash acquired
|
|
(908
|
)
|
|
|
|
|
2,339
|
|
During the nine months ended March 31,
2018, acquisition related costs of $49 have been excluded from the consideration
transferred and have been recognized as an expense in the current period.
For the nine months ended March 31,
2018, Hempco accounted for $3,144 in net loss since November 14, 2017. This
amount included revenues of $999. If the acquisition had been completed on July
1, 2017, the Company estimates that it would have recorded an increase of $305
in revenues and an increase of $320 in net loss based on its 22.3% interest in
Hempco.
Non-controlling interest
On March 22, 2018, the Company
increased its ownership interest in Hempco to 35.12% through the exercise of
10,558,676 share purchase warrants at $0.41 for a total cost of $4,329. As a
result, the non-controlling interest was reduced proportionately for Aurora’s
increase in ownership.
23
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
12.
|
Acquisitions
(Continued)
|
|
|
|
|
$
|
|
|
|
Balance, June 30, 2017
|
|
-
|
|
|
|
Non-controlling interests arising on
acquisition of Hempco
|
|
3,472
|
|
|
|
Non-controlling interests
relating to outstanding Hempco vested share options and warrants
(1)
|
|
3,030
|
|
|
|
Non-controlling interests relating to
exercised Hempco share options and warrants
(1)
|
|
1,133
|
|
|
|
Non-controlling interest
adjustment for Aurora’s increase in ownership
|
|
(1,192
|
)
|
|
|
Share of profit (loss) for the period
|
|
(2,038
|
)
|
|
|
Balance, March 31, 2018
|
|
4,405
|
|
|
|
(1)
|
As at the acquisition date of November 14, 2017,
directors, officers, employees and consultants of Hempco held options to
purchase 2,851,000 common shares of Hempco which expire between April 2019
and April 2022. 777,917 of the outstanding stock options had vested at the
date of acquisition. Hempco also had 2,505,120 warrants outstanding
exercisable into common shares which expire between November 2017 and
March 2019.
|
|
|
|
|
|
|
|
$3,030 represents the market-based measure of these
vested options and warrants in accordance with IFRS at the date of
acquisition. During the nine months ended March 31, 2018, the Company
recognized share-based payments of $974 for Hempco’s stock options vested
during the period from the date of acquisition.
|
|
|
|
|
|
|
|
During the nine months ended March 31, 2018, 439,666
stock options and 12,450,951 warrants were exercised into common shares of
Hempco. Of the 12,450,951 warrants exercised, 10,558,676 were exercised by
Aurora. Accordingly, the Company recognized total stock option reserves of
$212 which was allocated to non-controlling interest, and warrant reserves
of $921 which was allocated to non-controlling
interest.
|
The purchase price allocation is based
on management’s preliminary assessment of the fair value of the assets acquired
and liabilities assumed at the date of acquisition and is subject to change.
|
|
(f)
|
H2 Biopharma Inc.
(“H2”)
|
On November 30, 2017, the Company
acquired 100% of the net assets of H2. H2 is currently completing a
purpose-built 48,000 square foot cannabis production facility, which upon
completion, is projected to produce approximately 4,500 kilograms of cannabis
per annum. The facility is located on 46 acres of land with significant
expansion potential which H2 has the right to acquire for $136. The transaction
was accounted for as an asset acquisition.
The Company acquired all of the common
shares of H2 for a total consideration of $30,666 consisting of:
|
|
|
|
$
|
|
|
|
Consideration
|
|
|
|
|
|
1,910,339 common shares
|
|
15,283
|
|
|
|
Contingent
consideration
(1)
|
|
14,957
|
|
|
|
Acquisition costs
|
|
426
|
|
|
|
|
|
30,666
|
|
|
|
(1)
|
Contingent consideration payable of $14,957 represents
the discounted value of the $15,028 gross consideration to be paid out
over a five-year period on achievement of future performance milestones
related to completing the construction of the facility and obtaining the
relevant licenses to cultivate and sell cannabis. This consideration is to
be paid in common shares based on the VWAP of the Company’s shares for the
last five trading days immediately prior to the Company confirming that the particular milestone has been
achieved. On closing, the Company issued and deposited 2,878,934 common
shares into escrow for the contingent consideration. (Note
17(c))
|
24
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
12.
|
Acquisitions
(Continued)
|
The allocation of the consideration to
the fair value of the net assets acquired and liabilities assumed at the date of
acquisition is as follows:
|
|
|
|
$
|
|
|
|
Cash
|
|
205
|
|
|
|
Taxes receivable
|
|
369
|
|
|
|
Accounts payable and accrued
liabilities
|
|
(2,167
|
)
|
|
|
Loan from Aurora
|
|
(3,000
|
)
|
|
|
Deferred tax liability
|
|
(9,129
|
)
|
|
|
|
|
(13,722
|
)
|
|
|
|
|
|
|
|
|
Building under construction
|
|
8,304
|
|
|
|
Late-stage production license
|
|
26,346
|
|
|
|
Future expansion permit
|
|
594
|
|
|
|
Goodwill
|
|
9,144
|
|
|
|
|
|
30,666
|
|
Goodwill reflects the deferred income
tax liability recognized for all taxable temporary differences. None of the
goodwill arising on this acquisition is deductible for tax purposes.
|
|
(g)
|
Larssen Ltd.
(“Larssen”)
|
On December 4, 2017, the Company,
through its wholly-owned subsidiary, Aurora Larssen Projects Inc, completed the
acquisition of Larssen, a Canadian company that provides consulting on the
design, engineering and construction oversight for advanced greenhouse
cultivation facilities. The Company acquired all of the issued and outstanding
shares of Larssen for aggregate consideration of $9,724. The transaction was
accounted for as a business combination.
|
|
|
|
$
|
|
|
|
Consideration
|
|
|
|
|
|
Cash paid at closing
|
|
3,500
|
|
|
|
Future cash
consideration payable
(1)
|
|
3,057
|
|
|
|
Contingent consideration
(2)
|
|
3,167
|
|
|
|
|
|
9,724
|
|
|
|
(1)
|
Future cash consideration payable represents the
estimated discounted value of the $4,000 gross consideration to be paid
out on the first and second anniversaries of the acquisition
date.
|
|
|
|
|
|
|
(2)
|
Contingent consideration represents the estimated
discounted value of the $6,000 gross consideration to be paid out on
achievement of future performance milestones related to construction
projects completed by Larssen. This consideration can be satisfied in cash
or common shares based on the VWAP of the Company’s shares on the TSX for
the first five trading days of the next calendar year when a milestone is
met.
|
As of the acquisition date, Larssen
had net assets of $nil. The purchase price was allocated as follows:
|
|
|
|
$
|
|
|
|
Net assets acquired
|
|
-
|
|
|
|
Goodwill
|
|
9,724
|
|
|
|
|
|
9,724
|
|
25
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
12.
|
Acquisitions
(Continued)
|
Goodwill represents expected
operational synergies, estimated future income and other intangibles that do not
qualify for separate recognition including intellectual capital, brand name and
assembled workforce. The Company estimates $nil goodwill to be deductible for
tax purposes.
Net cash outflow on acquisition of
Larssen is as follows:
|
|
|
|
$
|
|
|
|
Cash consideration
|
|
9,724
|
|
|
|
Less: cash acquired
|
|
-
|
|
|
|
|
|
9,724
|
|
During the nine months ended March 31,
2018, acquisition related costs of $30 have been excluded from the consideration
transferred and have been recognized as an expense in the current period.
For the nine months ended March 31,
2018, Larssen accounted for $2,365 in net income since December 4, 2017. This
amount included revenues of $2,979.
Management continues to work on
refinement of the estimate of the contingent consideration, and the related
amounts are subject to change. The purchase price allocation relating to the
acquisition is not yet finalized and the allocation of the price to the various
assets acquired is subject to change.
|
|
(h)
|
CanniMed Therapeutics Inc.
(“CanniMed”)
|
On March 15, 2018, the Company
acquired an 87.2% ownership interest in CanniMed pursuant to an offer (the
“Offer”) to acquire all of the issued and outstanding CanniMed Shares not owned
by Aurora. The Offer provides CanniMed shareholders with the right to elect to
receive for each CanniMed share:
|
|
(i)
|
3.40 common shares of Aurora;
|
|
|
(ii)
|
$0.43 in cash; or
|
|
|
(iii)
|
any combination of common shares and cash, subject to
proration of a maximum aggregate cash amount of
$140,000.
|
CanniMed, a Canadian public company
listed on the TSX, is in the business of production and distribution of medical
cannabis pursuant to the ACMPR.
|
|
|
|
$
|
|
|
|
Consideration paid pursuant
to the Offer on the acquisition date:
|
|
|
|
|
|
Cash
|
|
130,979
|
|
|
|
62,833,216 common shares
|
|
706,874
|
|
|
|
|
|
837,853
|
|
26
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
12.
|
Acquisitions
(Continued)
|
The following table summarizes the
estimated fair values of the assets acquired and liabilities assumed at the date
of acquisition:
|
|
|
|
$
|
|
|
|
Cash and cash equivalents
|
|
38,883
|
|
|
|
Accounts receivable
|
|
3,233
|
|
|
|
Inventory
|
|
10,269
|
|
|
|
Biological assets
|
|
1,447
|
|
|
|
Prepaid expenses and other
assets
|
|
223
|
|
|
|
Investments in associates
|
|
213
|
|
|
|
Property, plant, equipment
|
|
35,753
|
|
|
|
Intangible assets
|
|
1,151
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
25,143
|
|
|
|
Loans and borrowings
|
|
11,825
|
|
|
|
|
|
54,204
|
|
The gross contractual amount for trade
receivables is $3,233, of which $nil is expected to be uncollectible.
The goodwill arising on the
acquisition is as follows:
|
|
|
|
$
|
|
|
|
Consideration transferred
pursuant to the Offer
|
|
837,853
|
|
|
|
Fair value of previously held equity interest
(Note 6(b)(ii))
|
|
26,567
|
|
|
|
Non-controlling interest at
acquisition (12.8%)
|
|
6,971
|
|
|
|
Net
assets acquired
|
|
(54,204
|
)
|
|
|
Goodwill
|
|
817,187
|
|
Goodwill represents expected
synergies, estimated income, future growth, and other intangibles that do not
qualify for separate recognition. None of the goodwill arising on this
acquisition is deductible for tax purposes.
The non-controlling interest
recognized at the acquisition date was recorded at its proportionate share of
CanniMed’s fair value of identifiable net assets.
Net cash outflow on acquisition of
CanniMed is as follows:
|
|
|
|
$
|
|
|
|
Cash consideration
|
|
130,979
|
|
|
|
Less: cash acquired
|
|
(39
|
)
|
|
|
|
|
130,940
|
|
During the nine months ended March 31,
2018, acquisition related costs of $6,983 have been excluded from the
consideration transferred and have been recognized as an expense in the current
period.
For the nine months ended March 31,
2018, CanniMed accounted for $208 in net income since March 15, 2018. This
amount included revenues of $762. If the acquisition had been completed on July
1, 2017, the Company estimates that it would have recorded an increase of
$11,710 in revenues and an increase of $37,640 in net loss based on its initial
87.2% interest in CanniMed.
27
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
12.
|
Acquisitions
(Continued)
|
Non-controlling interest
On March 26, 2018, the Company
increased its ownership interest in CanniMed to 95.9% by acquiring an additional
8.69% of the issued and outstanding shares of CanniMed. The Company paid $77,537
comprised of $12,559 in cash and 6,495,679 common shares of Aurora with a fair
value of $64,978. As a result, the non-controlling interest was reduced
proportionately for Aurora’s increase in ownership. The $76,838 difference
between the proportionate change in non-controlling interest and the fair value
of the consideration paid was recognized in equity attributable to the Aurora.
|
|
|
|
$
|
|
|
|
Balance, June 30, 2017
|
|
-
|
|
|
|
Non-controlling interests arising on
acquisition of CanniMed
|
|
6,951
|
|
|
|
Non-controlling interests
relating to outstanding CanniMed vested share options
(1)
|
|
18
|
|
|
|
Non-controlling interests relating to
exercised CanniMed share options
(1)
|
|
47
|
|
|
|
Non-controlling interest
adjustment for Aurora’s increase in ownership
|
|
(700
|
)
|
|
|
Share of profit (loss) for the period
|
|
9
|
|
|
|
Balance, March 31, 2018
|
|
6,325
|
|
|
|
(1)
|
As at the acquisition date of March 15, 2018, an employee
of CanniMed held fully vested options to purchase 10,000 common shares of
CanniMed expiring October 31, 2018. $18 represents the market-based
measure of these vested options in accordance with IFRS at the date of
acquisition. During the nine months ended March 31, 2018, the remaining
10,000 stock options were exercised into common shares of CanniMed and
accordingly, the Company recognized total stock option reserves of $47
which was allocated to non-controlling interest.
|
The purchase price allocation is based
on management’s preliminary assessment of the fair value of the assets acquired
and liabilities assumed at the date of acquisition and is subject to change.
On May 1, 2018, the Company acquired
the remaining issued and outstanding shares of CanniMed. The common shares of
CanniMed were delisted from the TSX effective as of the closing of market on May
1, 2018, and CanniMed will apply to cease to be a reporting issuer under
applicable Canadian securities laws.
|
13.
|
Intangible Assets and
Goodwill
|
A continuity of the intangible assets
for the nine months ended March 31, 2018 is as follows:
|
|
|
|
Balance at
|
|
|
Acquisition
|
|
|
Other
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
Jun 30, 2017
|
|
|
Additions
|
|
|
Additions
|
|
|
Amortization
|
|
|
Mar 31, 2018
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships (Note 12(a)(d))
|
|
4,250
|
|
|
105
|
|
|
-
|
|
|
(721
|
)
|
|
3,634
|
|
|
|
Permits and licenses (Notes
12(b)(c)(f))
|
|
26,837
|
|
|
27,095
|
|
|
-
|
|
|
-
|
|
|
53,932
|
|
|
|
Brand (Note 12(d))
|
|
-
|
|
|
655
|
|
|
-
|
|
|
-
|
|
|
655
|
|
|
|
Assembled workforce (Note
12(d))
|
|
-
|
|
|
65
|
|
|
-
|
|
|
-
|
|
|
65
|
|
|
|
Design patent (Note 12(d))
|
|
-
|
|
|
521
|
|
|
-
|
|
|
-
|
|
|
521
|
|
|
|
Deferred development (Note 12(h))
|
|
-
|
|
|
1,150
|
|
|
8
|
|
|
(7
|
)
|
|
1,151
|
|
|
|
|
|
31,087
|
|
|
29,591
|
|
|
8
|
|
|
(728
|
)
|
|
59,958
|
|
28
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
13.
|
Intangible Assets and Goodwill
(Continued)
|
A continuity of the intangible assets
for the year ended June 30, 2017 is as follows:
|
|
|
|
Balance at
|
|
|
Acquisition
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
Jun 30, 2016
|
|
|
Additions
|
|
|
Amortization
|
|
|
Jun 30, 2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships (Note 12(a))
|
|
-
|
|
|
4,250
|
|
|
-
|
|
|
4,250
|
|
|
|
Permits and licenses (Notes 12(b)(c))
|
|
-
|
|
|
26,837
|
|
|
-
|
|
|
26,837
|
|
|
|
|
|
-
|
|
|
31,087
|
|
|
-
|
|
|
31,087
|
|
A continuity of the goodwill for the
nine months ended March 31, 2018 is as follows:
|
|
|
|
Balance at
|
|
|
Acquisition
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
Jun 30, 2017
|
|
|
Additions
|
|
|
Impairment
|
|
|
Mar 31, 2018
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
CanvasRx (Note 12(a))
|
|
34,510
|
|
|
-
|
|
|
-
|
|
|
34,510
|
|
|
|
Pedanios (Note 12(c))
|
|
6,590
|
|
|
-
|
|
|
-
|
|
|
6,590
|
|
|
|
BCNL / UCI (Note 12(d))
|
|
-
|
|
|
3,664
|
|
|
-
|
|
|
3,664
|
|
|
|
Hempco (Note 12(e))
|
|
-
|
|
|
2,251
|
|
|
-
|
|
|
2,251
|
|
|
|
H2 Biopharma (Note 12(f))
|
|
-
|
|
|
9,145
|
|
|
-
|
|
|
9,145
|
|
|
|
Larssen (Note 12(g))
|
|
-
|
|
|
9,724
|
|
|
-
|
|
|
9,724
|
|
|
|
CanniMed (Note 12(h))
|
|
-
|
|
|
817,187
|
|
|
-
|
|
|
817,187
|
|
|
|
|
|
41,100
|
|
|
841,971
|
|
|
-
|
|
|
883,071
|
|
A continuity of the goodwill for the
year ended June 30, 2017 is as follows:
|
|
|
|
Balance at
|
|
|
Acquisition
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
Jun 30, 2016
|
|
|
Additions
|
|
|
Impairment
|
|
|
Jun 30, 2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
CanvasRx (Note 12(a))
|
|
-
|
|
|
34,510
|
|
|
-
|
|
|
34,510
|
|
|
|
Pedanios (Note 12(c))
|
|
-
|
|
|
6,590
|
|
|
-
|
|
|
6,590
|
|
|
|
|
|
-
|
|
|
41,100
|
|
|
-
|
|
|
41,100
|
|
The Company entered into finance lease
agreements related to three production equipment transactions totaling $543, of
which down payments of $169 were made. The finance leases are repayable over a
period of 3 to 4 years expiring January 2021 and December 2021.
As part of the CanniMed acquisition
(Note 12(h)), the Company acquired a finance lease with monthly principal
payments of $10. All amounts outstanding under the loan are repayable on demand,
unless and until otherwise demanded, in monthly installments of principal plus
interest at prime rate plus 1.00% per annum. Each advance under the finance
lease is repayable in full 48 months after the initial advance.
|
|
|
|
March 31, 2018
|
|
|
June 30, 2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Less than 1 year
|
|
232
|
|
|
108
|
|
|
|
Between 1 and 4 years
|
|
347
|
|
|
344
|
|
|
|
Total minimum lease payments
(Note 25(b)(ii))
|
|
579
|
|
|
452
|
|
|
|
Less: amount representing interest at approximately 8.19% to
20.26%
|
|
(72
|
)
|
|
(101
|
)
|
|
|
Present value of minimum
lease payments
|
|
507
|
|
|
351
|
|
|
|
Less: current portion
|
|
(281
|
)
|
|
(69
|
)
|
|
|
|
|
226
|
|
|
282
|
|
29
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
15.
|
Convertible Debentures
|
|
|
|
|
Nov 2016
|
|
|
May 2017
|
|
|
Nov 2017
|
|
|
Mar 2018
|
|
|
|
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Balance, June 30, 2016
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,281
|
|
|
|
Issued
|
|
25,000
|
|
|
75,000
|
|
|
-
|
|
|
-
|
|
|
115,000
|
|
|
|
Equity
portion
|
|
(5,271
|
)
|
|
(13,209
|
)
|
|
-
|
|
|
-
|
|
|
(20,587
|
)
|
|
|
Conversion
|
|
(16,745
|
)
|
|
(122
|
)
|
|
-
|
|
|
-
|
|
|
(31,607
|
)
|
|
|
Interest
paid
|
|
(989
|
)
|
|
(849
|
)
|
|
-
|
|
|
-
|
|
|
(1,895
|
)
|
|
|
Financing fees
|
|
(899
|
)
|
|
(2,622
|
)
|
|
-
|
|
|
-
|
|
|
(3,490
|
)
|
|
|
Accretion
|
|
1,277
|
|
|
1,094
|
|
|
-
|
|
|
-
|
|
|
2,729
|
|
|
|
Accrued interest
|
|
996
|
|
|
875
|
|
|
-
|
|
|
-
|
|
|
2,105
|
|
|
|
Balance, June 30, 2017
|
|
3,369
|
|
|
60,167
|
|
|
-
|
|
|
-
|
|
|
63,536
|
|
|
|
Issued
|
|
-
|
|
|
-
|
|
|
115,000
|
|
|
230,000
|
|
|
345,000
|
|
|
|
Equity
portion
|
|
-
|
|
|
-
|
|
|
(25,101
|
)
|
|
(29,257
|
)
|
|
(54,358
|
)
|
|
|
Conversion
|
|
(3,688
|
)
|
|
(63,102
|
)
|
|
(86,202
|
)
|
|
(190
|
)
|
|
(153,182
|
)
|
|
|
Interest
paid
|
|
(148
|
)
|
|
(2,131
|
)
|
|
(1,013
|
)
|
|
-
|
|
|
(3,292
|
)
|
|
|
Financing fees
|
|
-
|
|
|
-
|
|
|
(3,188
|
)
|
|
(6,804
|
)
|
|
(9,992
|
)
|
|
|
Accretion
|
|
218
|
|
|
2,768
|
|
|
589
|
|
|
1,310
|
|
|
4,885
|
|
|
|
Accrued interest
|
|
249
|
|
|
2,298
|
|
|
990
|
|
|
958
|
|
|
4,495
|
|
|
|
Balance, March 31, 2018
|
|
-
|
|
|
-
|
|
|
1,075
|
|
|
196,017
|
|
|
197,092
|
|
The liability component of the
convertible notes was valued using Company specific interest rates assuming no
conversion features existed. The debt component is accreted to its fair value
over the term to maturity as a non-cash interest charge and the equity component
is presented in convertible notes reserve as a separate component of
shareholders’ equity.
|
|
(a)
|
On November 1, 2016, the Company completed a brokered
private placement of a two-year unsecured convertible debentures in the
aggregate principal amount of $25,000. The debentures bore interest at 8%
per annum, payable semi-annually. The principal amount of the debentures
was convertible into common shares of the Company at a price of $2.00 per
share subject to a forced conversion if the VWAP of the Company’s common
shares equaled or exceeded $3.00 per share for 10 consecutive trading
days. On closing, the Company paid the Agent a commission of $1,000 and
legal fees and expenses of $139.
|
|
|
|
|
|
|
|
On November 6, 2017, the Company elected to exercise its
right pursuant to the forced conversion and converted all of the principal
amount outstanding of the remaining debentures. During the nine months
ended March 31, 2018, the Company issued 2,310,000 common shares (2016 –
nil shares) on the conversion of $4,620 debentures (2016 - $nil) and paid
interest of $148 (2016 - $333). (Note 17(b)(vii))
|
|
|
|
|
|
|
(b)
|
On May 2, 2017, the Company completed a private placement
of a two-year unsecured convertible debentures in the aggregate principal
amount of $75,000. The debentures bore interest at 7% per annum, payable
semi-annually. The debentures were convertible into common shares of the
Company at a price of $3.29 per share subject to a forced conversion if
the VWAP of the Company’s common shares exceeded $4.94 per share for 10
consecutive trading days. On closing, the Company paid the agent a
commission of $2,893 and legal fees and expenses of $289.
|
|
|
|
|
|
|
|
On November 16, 2017, the Company elected to exercise its
right pursuant to the forced conversion and converted all of the principal
amount outstanding of the remaining debentures. During the nine months
ended March 31, 2018, the Company issued 22,750,747 common shares (2016 –
nil shares) on the conversion of $74,850 debentures (2016 - $nil) and paid
interest of $2,131 (2016 - $nil). (Note
17(b)(vii))
|
30
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
15.
|
Convertible Notes
(Continued)
|
|
|
(c)
|
On November 28, 2017, the Company completed an offering
of 115,000 special warrants exercisable into convertible debentures for
gross proceeds of $115,000. The Company paid financing fees of $4,077
comprised of underwriters’ commissions of $3,734, legal fees of $304 and
regulatory and transfer agent fees of $39.
|
|
|
|
|
|
|
|
On January 12, 2018, the special warrants were exercised
into $115,000 principal amount of convertible debentures. The debentures
are unsecured, bear interest at 6% per annum and mature on November 28,
2022. The principal amount of the debentures is convertible into common
shares of the Company at $6.50 per share subject to a forced conversion if
after 4 months and 1 day following closing, the VWAP of the Company’s
common shares equals or exceeds $9.00 per share for 10 consecutive trading
days.
|
|
|
|
|
|
|
|
During the three and nine months ended March 31, 2018,
the Company paid interest of $1,013 and issued 17,300,306 common shares on
partial conversion of $112,452 debentures. (Note 17(b)(vii)) Subsequent to
March 31, 2018, the Company issued 54,613 common shares on partial
conversion of $355 debentures.
|
|
|
|
|
|
|
(d)
|
On March 9, 2018, the Company completed a private
placement of a two-year unsecured convertible debentures in the aggregate
principal amount of $230,000. The debentures bear interest at 5% per
annum, payable semi- annually. The debentures are convertible into common
shares of the Company at a price of $13.05 per share subject to a forced
conversion if the VWAP of the Company’s common shares exceeded $17.00 per
share for 10 consecutive trading days. On closing, the Company paid the
agent a commission and expenses of $7,473, legal fees of $322 and
regulatory fees of $18.
|
|
|
|
|
|
|
|
During the nine months ended March 31, 2018, the Company
issued 17,241 common shares on partial conversion of $225 principal amount
of debentures and paid interest of $nil. (Note 17(b)(vii)) Subsequent to
March 31, 2018, the Company issued 229 common shares on partial conversion
of $3 debentures.
|
As at March 31, 2018, the Company held
the following loans and borrowings acquired from CanniMed:
|
|
|
|
|
|
|
March 31,
|
|
|
June 30,
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Line of credit
|
|
(a)
|
|
|
-
|
|
|
-
|
|
|
|
Term loans
|
|
(b)
|
|
|
10,298
|
|
|
-
|
|
|
|
Debentures
|
|
(c)
|
|
|
1,276
|
|
|
-
|
|
|
|
|
|
|
|
|
11,574
|
|
|
-
|
|
|
|
Current portion
|
|
|
|
|
(2,279
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
|
|
|
|
|
9,295
|
|
|
-
|
|
The Company has access to a Canadian
and US operating line of credit with a maximum of $1,000 (June 30, 2017 - $nil)
and US $500 (June 30, 2017 - $nil), respectively. The Canadian and US operating
lines of credit bear interest at bank prime rate plus 0.75% and at US base rate
plus 0.75%, respectively. The lines of credit are secured by a general security
agreement covering all assets of the Company and can be accessed to the lesser
of the maximum available credit or the aggregate of 90% of Government of Canada
receivables, 85% of undoubted receivables and 75% of acceptable receivables,
less intercompany and priority claim amounts. These operating lines of credit
were undrawn as of March 31, 2018.
31
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
16.
|
Loans and borrowings
(Continued)
|
Term loans consist of the following:
|
|
|
|
March 31,
|
|
|
June 30,
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
2.83% to 2.94% capital loan,
due for renewal November 2018
(1)
|
|
7,927
|
|
|
-
|
|
|
|
Capital loan, payable in blended monthly instalments of $60,
due for renewal November 2018 (4.95%, based on interest at the Bank’s
Prime rate plus 1.75% per annum).
|
|
2,371
|
|
|
-
|
|
|
|
|
|
10,298
|
|
|
-
|
|
|
|
Current portion
|
|
(1,141
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,157
|
|
|
-
|
|
|
|
(1)
|
The derivative instrument liabilities of $82 on the
capital loan are included in accounts payable and accrued liabilities, as
disclosed in Note 24(a).
|
The term loans are secured by a
general security agreement covering all of CanniMed’s assets.
Covenants
As of March 31, 2018, the Company had met all covenants on its credit
facilities.
|
|
|
|
Prescribed
|
|
|
|
|
|
March 31,
|
|
|
June 30,
|
|
|
|
|
|
Rate
|
|
|
Maturity Date
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Debentures
|
|
5%
|
|
|
December 1, 2018
|
|
|
1,092
|
|
|
-
|
|
|
|
Debentures
|
|
12%
|
|
|
January 31, 2022
|
|
|
184
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
1,276
|
|
|
-
|
|
|
|
Current portion
|
|
|
|
|
|
|
|
(1,138
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
138
|
|
|
-
|
|
The debentures are secured by all
present and after-acquired property of CanniMed and are subordinate to all of
CanniMed’s other loans and borrowings.
32
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
Unlimited number of common voting
shares without par value;
Unlimited number of Class “A” Shares
with a par value of $1.00 each; and
Unlimited number of Class “B” Shares
with a par value of $5.00 each.
|
|
(b)
|
Issued and outstanding
|
At March 31, 2018, 561,006,914 common
shares (June 30, 2017 – 366,549,244) were issued and fully paid.
On July 13, 2016, the Company entered
into an agreement for a drawdown equity facility of up to $5,000 (the “Equity
Facility”). Under the Equity Facility, the Company may sell, on a private
placement basis, units of the Company of between $100 to $500 per tranche, at a
discount of 25% to the market price or such lesser discounts as allowed by the
Exchange, over a period of eighteen months. Each unit will consist of one common
share and one-half of one common share purchase warrant. Each whole warrant will
be exercisable into one common share at a 25% premium to the market price for a
period of 5 years from the date of issuance. To date, the Company has not drawn
down on this Equity Facility. On January 13, 2018, the Equity Facility expired.
|
|
(i)
|
On March 15 and 26, 2018, the Company issued 63,330,347
and 5,998,548 shares with a fair value of $712,466 and $59,386,
respectively, pursuant to the acquisition of CanniMed. (Note
12(h))
|
|
|
|
|
|
|
(ii)
|
On November 30, 2017, the Company issued 4,789,273 shares
at a fair value of $30,240 pursuant to the acquisition of H2. (Note
12(f))
|
|
|
|
|
|
|
(iii)
|
On November 29, 2017, the Company issued 127,128 shares
at a fair value of $858 pursuant to the exercise of restricted share units
granted on September 29, 2017. Non-cash compensation charges of $351 were
reclassified from reserves to share capital on the exercise of these
units.
|
|
|
|
|
|
|
(iv)
|
On November 2, 2017, the Company closed a bought deal
financing of 23,000,000 units at a price of $3.00 per unit for gross
proceeds of $69,000. Each unit consisted one common share and one warrant
exercisable at a price of $4.00 per share for a period of three years.
Concurrently, the Company closed a non-brokered private placement of
2,000,000 units for gross proceeds of $6,000 having the same terms as the
bought deal financing.
|
|
|
|
|
|
|
|
Total cash share issue costs amounted to $6,643 which
consisted of underwriters’ commissions of $4,002, underwriters’ expenses
of $10, professional fees of $320 and regulatory fees of $26. In addition,
the Company issued an aggregate of 1,333,980 compensation warrants to the
underwriters at a fair value of $2,285. The compensation warrants are
exercisable into one common share at an exercise price of $3.00 per share
and expires on February 28, 2019. The fair value of the compensation
warrants at the date of grant was estimated at $1.71 per warrant based on
the following weighted average assumptions: Stock price volatility –
85.49%; Risk-free interest rate – 1.40%; Dividend yield - 0.00%; and
Expected life - 3 years.
|
|
|
|
|
|
|
(v)
|
On September 29, 2017, the Company issued 89,107 shares
at a fair value of $248 pursuant to the acquisition of BCNL and UCI. (Note
12(d))
|
|
|
|
|
|
|
(vi)
|
During the nine months ended March 31, 2018, the Company
issued 5,135,191 (June 30, 2017 – 2,926,103) common shares with a fair
value of $12,906 (June 30, 2017 - $7,408) for contingent consideration.
(Note 12(a))
|
33
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
17.
|
Share Capital
(Continued)
|
|
|
(b)
|
Issued and outstanding
(continued)
|
|
|
(vii)
|
During the nine months ended March 31, 2018, an aggregate
of 42,378,292 (June 30, 2017 - 29,020,319) common shares were issued on
the conversion of $192,147 (June 30, 2017 - $37,580) convertible notes.
$27,048 (June 30, 2017 - $4,800) was reclassified from reserves to share
capital on the conversion of these notes. (Note 15(a)(b)(c)(d))
|
|
|
|
|
|
|
(viii)
|
During the nine months ended March 31, 2018, 4,016,424
stock options (June 30, 2017 - 2,001,700) were exercised for gross
proceeds of $5,844 (June 30, 2017 - $821). Non-cash compensation charges
of $3,529 (June 30, 2017 - $578) were reclassified from reserves to share
capital on the exercise of these options.
|
|
|
|
|
|
|
(ix)
|
During the nine months ended March 31, 2018, 41,728,111
(June 30, 2017 - 54,936,306) warrants were exercised for gross proceeds of
$128,000 (June 30, 2017 - $26,602). Non-cash compensation charges of
$3,092 (June 30, 2017 - $2,046) were reclassified from reserves to share
capital on the exercise of these warrants.
|
|
|
|
|
|
|
(x)
|
During the nine months ended March 31, 2018, 1,865,249
(June 30, 2017 – 4,084,434) compensation options were exercised for gross
proceeds of $4,197 (June 30, 2017 - $1,674). Non-cash compensation charges
of $1,854 (June 30, 2017 - $1,292) were reclassified from reserves to
share capital on the exercise of these compensation options.
|
|
|
|
|
|
|
(xi)
|
On May 26, 2017, the Company issued 8,316,782 shares at a
fair value of $20,709 pursuant to the acquisition of Pedanios. (Note
12(c))
|
|
|
|
|
|
|
(xii)
|
In April 2017, the Company issued an aggregate of 899,225
common shares with a fair value of $2,391 pursuant to the acquisition of
Peloton. (Note 12(b))
|
|
|
|
|
|
|
(xiii)
|
On February 28, 2017, the Company closed a brokered
private placement of 33,337,500 units at a price of $2.25 per unit for
gross proceeds of $75,009. Each unit consisted one common share and
one-half of one share purchase warrant of the Company. Each warrant is
exercisable into one common share at a price of $3.00 per share for a
period of two years, subject to a forced exercise provision if the
Company's VWAP equals or exceeds $4.50 for 10 consecutive trading
days.
|
|
|
|
|
|
|
|
Total cash share issue costs amounted to $4,479 which
consisted of underwriters’ commissions of $4,197, underwriters’ expenses
of $95, legal fees of $121 and regulatory fees of $66. In addition, the
Company issued an aggregate of 1,865,249 compensation warrants to the
underwriters at a fair value of $2,782. The compensation warrants have the
same terms as the private placement and expire February 28, 2019. The fair
value of the compensation warrants at the date of grant was estimated at
$0.99 per warrant based on the following weighted average assumptions:
Stock price volatility - 79%; Risk-free interest rate - 0.70%; Dividend
yield - 0.00%; and Expected life - 2 years.
|
|
|
|
|
|
|
(xiv)
|
On August 30, 2016, the Company issued 25,510 common
shares to an officer of the Company at a fair value of $13 pursuant to an
employment agreement.
|
|
|
|
|
|
|
(xv)
|
On August 17, 2016, 17,875,000 common shares were issued
at a fair value of $11,440 pursuant to the acquisition of CanvasRx. (Note
12(a))
|
34
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
17.
|
Share Capital
(Continued)
|
|
|
(b)
|
Issued and outstanding
(continued)
|
|
|
(xvi)
|
In conjunction with the acquisition of CanvasRx, the
Company completed a brokered private placement of 57,500,000 subscription
receipts for aggregate gross proceeds of $23,000 (the “Offering”). Each
subscription receipt was converted into units of the Company at a price of
$0.40 per unit upon the satisfaction of the conditions precedent to the
acquisition. Each unit consisted of one common share and one-half of one
common share purchase warrant of the Company. Each whole warrant was
exercisable into one common share of the Company at an exercise price of
$0.55 per share expiring August 9, 2018. A portion of the net proceeds
from the Offering was used to satisfy the cash component of the
acquisition.
|
|
|
|
|
|
|
|
Total cash share issue costs with respect to the Offering
amounted to $1,804 which consisted of agent’s commission of $1,473,
agent’s legal, advisory fees and expenses of $219, transfer agent fees of
$16 and legal fees of $96. In addition, the Company issued aggregate
compensation warrants of 3,775,000 to the agents at a fair value of
$1,848. The compensation warrants have the same terms as the private
placement and expire August 9, 2018. The fair value of the compensation
warrants at the date of grant was estimated at $0.33 per warrant based on
the following weighted average assumptions: Stock price volatility - 79%;
Risk-free interest rate - 0.70%; Dividend yield - 0.00%; and Expected life
- 2 years.
|
|
|
|
|
|
|
(xvii)
|
On August 17, 2016, 20,000,000 common shares were issued
on achievement of performance milestones pursuant to the reverse take-over
of Prescient Mining Corp. completed on December 9, 2014 (the “RTO”). The
amount of $2,322 was reclassified from reserves to share capital on the
issuance of these shares.
|
|
|
|
|
|
|
(xviii)
|
On July 14, 2016, 50,000 common shares were issued at a
fair value of $24 for financing fees related to a loan which was settled
in the prior year.
|
A summary of the status of the
escrowed securities outstanding follows:
|
|
|
|
Shares
|
|
|
Warrants
|
|
|
|
|
|
#
|
|
|
#
|
|
|
|
Balance, June 30, 2016
|
|
29,812,500
|
|
|
9,000,000
|
|
|
|
Issued (Exercised)
|
|
20,000,000
|
|
|
(8,000,000
|
)
|
|
|
Forfeited
|
|
-
|
|
|
(1,000,000
|
)
|
|
|
Released
|
|
(36,875,000
|
)
|
|
-
|
|
|
|
Balance, June 30, 2017
|
|
12,937,500
|
|
|
-
|
|
|
|
Issued
|
|
2,878,934
|
|
|
-
|
|
|
|
Released
|
|
(12,937,500
|
)
|
|
-
|
|
|
|
Balance, March 31, 2018
|
|
2,878,934
|
|
|
-
|
|
|
|
(a)
|
Pursuant to an escrow agreement dated September 18, 2014,
60,000,000 common shares of the Company were deposited into escrow with
respect to the RTO. In addition, warrants at $0.02 per share expiring
December 9, 2019 and stock options at $0.001 per share expiring December
1, 2019 were also subject to the escrow agreement. Under the escrow
agreement, 10% of the escrowed common shares were released from escrow on
December 9, 2014, the date of closing of the RTO, and 15% were released
every six months thereafter over a period of 36 months. As of December 31,
2017, all of these shares had been released from escrow.
|
|
|
|
|
|
|
(b)
|
Pursuant to an escrow agreement dated November 30, 2017,
2,878,934 common shares of the Company were deposited into escrow with
respect to the acquisition of H2. (Note 12(f)) The escrowed common shares
are to be released upon achievement of certain milestones relating to the
completion of construction of the H2 facility and receipt of relevant
licenses to cultivate and sell medical cannabis.
|
35
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
17.
|
Share Capital
(Continued)
|
|
|
(d)
|
Share purchase warrants
|
Each whole warrant entitles the holder
to purchase one common share of the Company. A summary of the status of the
warrants outstanding follows:
|
|
|
|
|
|
|
Weighted average
|
|
|
|
|
|
Warrants
|
|
|
exercise price
|
|
|
|
|
|
#
|
|
|
$
|
|
|
|
Balance, June 30, 2016
|
|
28,750,590
|
|
|
0.40
|
|
|
|
Issued
|
|
50,173,466
|
|
|
1.36
|
|
|
|
Forfeited
|
|
(1,000,000
|
)
|
|
0.02
|
|
|
|
Exercised
|
|
(54,936,306
|
)
|
|
0.48
|
|
|
|
Balance, June 30, 2017
|
|
22,987,750
|
|
|
2.32
|
|
|
|
Issued
|
|
27,355,709
|
|
|
3.91
|
|
|
|
Exercised
|
|
(41,728,111
|
)
|
|
3.07
|
|
|
|
Balance, March 31, 2018
|
|
8,615,348
|
|
|
3.76
|
|
During the nine months ended March 31,
2018, the Company recorded share-based payments of $2,285 for broker warrants
issued related to the financing. (Note 17(b)(iv))
The following table summarizes the
warrants that remain outstanding as at March 31, 2018:
|
|
Exercise Price
|
Warrants
|
|
Expiry Date
|
|
|
$
|
#
|
|
|
|
|
0.55
|
61,500
|
|
August 9, 2018
|
|
|
0.55
|
501,000
|
|
August 17, 2018
|
|
|
2.81
|
89,107
|
|
September 29, 2020
|
|
|
3.00
|
633
|
|
November 2, 2020
|
|
|
4.00
|
7,963,108
|
|
November 2, 2020
|
|
|
|
8,615,348
|
|
|
|
|
(e)
|
Compensation
options/warrants
|
Each compensation option/warrant
entitles the holder to purchase one common share and one-half of one share
purchase warrant of the Company. Each whole warrant is exercisable into one
additional common share of the Company for a period of two years. A summary of
the status of the compensation options/warrants outstanding follows:
|
|
|
|
Compensation
|
|
|
Weighted average
|
|
|
|
|
|
options/warrants
|
|
|
exercise price
|
|
|
|
|
|
#
|
|
|
$
|
|
|
|
Balance, June 30, 2016
|
|
309,434
|
|
|
0.53
|
|
|
|
Issued
|
|
5,640,249
|
|
|
1.01
|
|
|
|
Exercised
|
|
(4,084,434
|
)
|
|
0.41
|
|
|
|
Balance, June 30, 2017
|
|
1,865,249
|
|
|
2.25
|
|
|
|
Exercised
|
|
(1,865,249
|
)
|
|
2.25
|
|
|
|
Balance, March 31, 2018
|
|
-
|
|
|
-
|
|
36
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
18.
|
Share-based Compensation
|
On September 25, 2017, the Board
adopted a “rolling maximum” or “evergreen” plan which fixed a maximum number of
shares issuable thereunder as 10% of the issued and outstanding securities of
the Company. The number of common shares issuable under the Company’s share
compensation arrangements including Stock Options and Restricted Stock Units,
may not exceed 10% of the total number of issued and outstanding Common
Shares.
The Company has an incentive stock
option plan, which provides that the Board of Directors may from time to time,
in its discretion, and in accordance with the Exchange requirements, grant to
directors, officers, employees and consultants, non-transferable options to
purchase common shares, provided that the number of common shares reserved for
issuance under the plan and all other share compensation arrangements of the
Company, will not exceed 10% of the issued and outstanding common shares of the
Company. A summary of the status of the options outstanding follows:
|
|
|
|
Stock
|
|
|
Weighted Average
|
|
|
|
|
|
Options
|
|
|
Exercise Price
|
|
|
|
|
|
#
|
|
|
$
|
|
|
|
Balance, June 30, 2016
|
|
5,309,834
|
|
|
0.37
|
|
|
|
Granted
|
|
12,170,000
|
|
|
2.21
|
|
|
|
Exercised
|
|
(2,001,700
|
)
|
|
0.41
|
|
|
|
Forfeited
|
|
(244,568
|
)
|
|
0.74
|
|
|
|
Balance, June 30, 2017
|
|
15,233,566
|
|
|
1.84
|
|
|
|
Granted
|
|
14,625,000
|
|
|
6.86
|
|
|
|
Exercised
|
|
(4,016,424
|
)
|
|
1.45
|
|
|
|
Forfeited
|
|
(698,004
|
)
|
|
1.39
|
|
|
|
Balance, March 31, 2018
|
|
25,144,138
|
|
|
4.82
|
|
The following table summarizes the
stock options that remain outstanding as at March 31, 2018:
|
|
Expiry Date
|
Options Outstanding (#
)
|
Exercise Price ($)
|
Options Exercisable (#)
|
|
|
September 2018
|
63,112
|
0.03
|
63,112
|
|
|
May 2020
|
118,000
|
0.34
|
105,500
|
|
|
June 2020
|
50,000
|
0.295
|
50,000
|
|
|
August 2020
|
470,296
|
0.295 – 0.30
|
248,350
|
|
|
March 2021
|
200,000
|
0.58
|
200,000
|
|
|
May 2021
|
500,000
|
0.46
|
-
|
|
|
August 2021
|
2,081,666
|
0.66 – 2.25
|
2,081,666
|
|
|
September 2021
|
819,275
|
1.30
|
819,275
|
|
|
January 2022
|
1,850,000
|
2.56
|
800,000
|
|
|
March 2022
|
2,500,000
|
2.27
|
833,333
|
|
|
May 2022
|
2,182,084
|
2.49
|
164,584
|
|
|
August 2022
|
1,171,667
|
2.39
|
125,834
|
|
|
September 2022
|
3,031,037
|
2.76
|
663,537
|
|
|
November 2022
|
2,790,001
|
4.64
|
211,668
|
|
|
December 2022
|
1,342,000
|
7.00 – 7.10
|
104,500
|
|
|
January 2023
|
2,525,000
|
9.60 – 13.48
|
400,000
|
|
|
February 2023
|
2,525,000
|
10.13 – 11.53
|
-
|
|
|
March 2023
|
925,000
|
9.03
– 11.74
|
-
|
|
|
|
25,144,138
|
|
6,871,359
|
37
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
18.
|
Share-based Compensation
(Continued)
|
|
|
(a)
|
Stock options (continued)
|
During the three and nine months ended
March 31, 2018, the Company recorded aggregate share-based payments of $15,872
and $25,814 respectively (three and nine months ended March 31, 2017 - $2,632
and $5,522
respectively) for all stock options
granted and vested during the period including Hempco stock options vested from
the acquisition date. (Note 12(e))
The fair value of stock options
granted during the period was determined using the following weighted average
assumptions at the time of grant using the Black-Scholes option pricing model:
|
|
|
|
2018
|
|
|
2017
|
|
|
|
Risk-Free Annual Interest
Rate
|
|
1.65%
|
|
|
0.66%
|
|
|
|
Expected Annual Dividend Yield
|
|
0%
|
|
|
0%
|
|
|
|
Expected Stock Price
Volatility
|
|
81.22%
|
|
|
87.0%
|
|
|
|
Expected Life of Options
|
|
2.96 years
|
|
|
2.95 years
|
|
|
|
Forfeiture rate
|
|
4.48%
|
|
|
5%
|
|
Volatility was estimated by using the
average historical volatility of the Company and other companies that the
Company considers comparable that have trading history and volatility history.
The expected life in years represents the period of time that options granted
are expected to be outstanding. The risk-free rate is based on Canada government
bonds with a remaining term equal to the expected life of the options.
The weighted average fair value of
stock options granted during the nine months ended March 31, 2018 was $4.04
(2017 - $1.23) per option. As at March 31, 2018, stock options outstanding have
a weighted average remaining contractual life of 4.24 years.
|
|
(b)
|
Restricted Share Units
|
On September 25, 2017, the Company
adopted a restricted share unit (“RSU”) plan for directors, officers, employees
and consultants of the Company (“Participants”). Under the terms of the plan,
RSU’s are issued to Participants and the shares issued vest over a period of up
to three years from the date of grant. Each RSU gives the Participant the right
to receive one common share of the Company. The Company has reserved 10,000,000
common shares for issuance under this plan. The fair market value of each RSU
granted is calculated on the date of grant based on the closing price of the
Company’s shares on the date prior to the grant, and recognized on a
straight-line basis over the vesting period.
On September 29, 2017, the Company
granted 2,127,128 RSUs to directors, officers, employees and consultants of the
Company, of which 127,128 relate to fiscal 2017 which vested immediately. The
rest of the RSUs vest annually.
On January 15, 2018, the Company
granted 150,000 RSUs to an officer of the Company vesting annually over 3 years.
A summary of the status of the RSUs
outstanding is as follows:
|
|
|
|
|
|
|
Weighted average
|
|
|
|
|
|
RSUs
|
|
|
exercise price
|
|
|
|
|
|
#
|
|
|
$
|
|
|
|
Balance, June 30, 2017
|
|
-
|
|
|
-
|
|
|
|
Issued
|
|
2,277,128
|
|
|
3.26
|
|
|
|
Exercised
|
|
(127,128
|
)
|
|
8.00
|
|
|
|
Balance, December 31, 2017
|
|
2,150,000
|
|
|
3.29
|
|
38
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
18.
|
Share-based Compensation
(Continued)
|
|
|
(b)
|
Restricted Share Units
(continued)
|
During the three and nine months ended
March 31, 2018, the Company recorded share-based payments of $1,168 and $2,171,
respectively for 2,150,000 RSUs granted and vested during the period.
Share-based payments of $351 for 127,128 RSUs were accrued during the year ended
June 30, 2017.
The following table summarizes the
RSUs that remain outstanding as at March 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
RSUs Outstanding
|
|
|
RSUs Vested
|
|
|
Expiry
|
|
|
Price per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
525,000
|
|
|
-
|
|
|
September 29,
2018
|
|
|
2.76
|
|
|
|
|
1,475,000
|
|
|
-
|
|
|
September 29, 2020
|
|
|
2.76
|
|
|
|
|
150,000
|
|
|
-
|
|
|
January 15, 2021
|
|
|
10.32
|
|
|
|
|
2,150,000
|
|
|
-
|
|
|
|
|
|
3.29
|
|
|
|
(c)
|
Employee Share Purchase Plan
(ESPP)
|
On September 25, 2017, the Company
adopted an ESPP whereby eligible employees may contribute to the ESPP at least
1% but no more than 10% of their annual gross salary up to a maximum of $10,500,
to purchase common shares of the Company in the open market at prevailing market
prices. The Company contributes an amount equal to 50% of the employee’s
contributions which are expensed as incurred as there are no vesting
provisions.
The Company contributed $43 to the
ESPP during the three and nine months ended March 31, 2018.
|
19.
|
General and
Administration
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
|
March 31,
|
|
|
March,
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Professional fees
|
|
1,460
|
|
|
1,183
|
|
|
4,548
|
|
|
2,324
|
|
|
|
Office and administration
|
|
4,045
|
|
|
198
|
|
|
6,656
|
|
|
652
|
|
|
|
Wages and benefits
|
|
4,342
|
|
|
656
|
|
|
9,204
|
|
|
1,657
|
|
|
|
|
|
9,847
|
|
|
2,037
|
|
|
20,408
|
|
|
4,633
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Consulting fees
|
|
1,851
|
|
|
1,052
|
|
|
4,989
|
|
|
2,381
|
|
|
|
Branding, public and media relations, and
tradeshows
|
|
911
|
|
|
272
|
|
|
1,930
|
|
|
720
|
|
|
|
Selling and client care
expenses
|
|
1,966
|
|
|
1,008
|
|
|
5,277
|
|
|
2,642
|
|
|
|
Wages and benefits
|
|
1,152
|
|
|
352
|
|
|
2,488
|
|
|
925
|
|
|
|
|
|
5,880
|
|
|
2,684
|
|
|
14,684
|
|
|
6,668
|
|
39
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
21.
|
Finance and Other
Costs
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Accretion expense
|
|
1,898
|
|
|
589
|
|
|
4,884
|
|
|
2,089
|
|
|
|
Bank charges
|
|
61
|
|
|
7
|
|
|
105
|
|
|
19
|
|
|
|
Financing fees
|
|
23
|
|
|
137
|
|
|
553
|
|
|
2,408
|
|
|
|
Interest expense (recovery)
|
|
(93
|
)
|
|
549
|
|
|
23
|
|
|
1,607
|
|
|
|
|
|
1,889
|
|
|
1,282
|
|
|
5,565
|
|
|
6,123
|
|
|
22.
|
Related Party
Transactions
|
The Company incurred the following
transactions with related parties during the three and nine months ended March
31, 2018:
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Consulting fees paid or
accrued to directors of ACE
|
|
60
|
|
|
53
|
|
|
173
|
|
|
159
|
|
|
|
Office, rent and administration paid or
accrued to companies owned by directors and officers and a former director
of the Company
|
|
-
|
|
|
48
|
|
|
62
|
|
|
108
|
|
|
|
Operational, administrative
and service fees paid or accrued pursuant to an agreement between CanvasRx
and a company having a director in common with the Company
|
|
1,815
|
|
|
1,048
|
|
|
4,957
|
|
|
2,369
|
|
|
|
Consulting fees paid to a company owned by an
officer of the Company
|
|
-
|
|
|
499
|
|
|
289
|
|
|
499
|
|
|
|
Consulting fees paid to a
company controlled by a director of the Company for scientific, research
and development services
|
|
15
|
|
|
15
|
|
|
45
|
|
|
29
|
|
|
|
Consulting fees paid to a company controlled by a director of
the Company for financial and other advisory services
|
|
5
|
|
|
13
|
|
|
24
|
|
|
45
|
|
|
|
|
|
1,895
|
|
|
1,676
|
|
|
5,550
|
|
|
3,209
|
|
During the three and nine months ended
March 31, 2018, the Company generated $895 profit margin from design and
construction consulting services to Cann Group.
|
|
(b)
|
Compensation of key management
personnel
|
The Company’s key management personnel
have the authority and responsibility for planning, directing and controlling
the activities of the Company and consists of the Company’s executive management
team and management directors.
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
$
|
|
$
|
$
|
|
|
$
|
|
|
|
Management compensation
|
|
1,695
|
|
|
271
|
|
|
3,172
|
|
|
816
|
|
|
|
Directors’ fees
(1)
|
|
56
|
|
|
70
|
|
|
145
|
|
|
212
|
|
|
|
Share-based payments
(2)
|
|
5,315
|
|
|
2,039
|
|
|
10,026
|
|
|
4,017
|
|
|
|
|
|
7,066
|
|
|
2,380
|
|
|
13,343
|
|
|
5,045
|
|
40
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
22.
|
Related Party Transactions
(Continued)
|
|
|
(b)
|
Compensation of key management personnel
(continued)
|
|
|
(1)
|
Include meeting fees and committee chair fees.
|
|
|
|
|
|
|
(2)
|
Share-based payments are the fair value of options
granted and vested to key management personnel and directors of the
Company under the Company’s stock option plan. (Note
18(a))
|
|
|
(c)
|
Related party balances
|
The following related party amounts
were included in (i) accounts receivable, (ii) accounts payable and accrued
liabilities, and (iii) note receivable:
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
(i) A company having a
director in common
|
|
-
|
|
|
72
|
|
|
|
(ii) Companies controlled by directors and
officers of the Company
(1)
|
|
25
|
|
|
76
|
|
|
|
(ii) Directors and officers
and a former director and officer of the Company
(1)
|
|
657
|
|
|
565
|
|
|
|
(iii) A 50% owned joint venture company (Note 11)
|
|
3,400
|
|
|
2,096
|
|
|
|
(1)
|
The amounts are unsecured, non-interest bearing and have
no specific repayments term.
|
|
23.
|
Commitments and
Contingencies
|
|
|
(a)
|
Office and operating
leases
|
|
|
(i)
|
The Company’s subsidiary, 1769474 Alberta Ltd., has an
operating lease on lands located in Cremona, Alberta (the “Lands”) for
monthly rent payments of $5. The lease expires on November 14, 2019, with
an option to extend for an additional five-year term. The Company has the
option to purchase the Lands during the additional term.
|
|
|
|
|
|
|
(ii)
|
The Company is committed under lease and sublease
agreements with respect to various office premises located in Vancouver,
British Columbia, expiring between June 30, 2018 and December 31, 2027,
office premise lease located in Berlin, Germany expiring December 31,
2022, and sublease agreements with respect to clinics located across
Canada expiring between August 1, 2019 and December 1, 2023, as
follows:
|
|
|
|
|
$
|
|
|
|
2018
|
|
3,949
|
|
|
|
2019
|
|
3,844
|
|
|
|
2020
|
|
3,657
|
|
|
|
2021
|
|
3,513
|
|
|
|
2022
|
|
3,177
|
|
|
|
Thereafter
|
|
16,862
|
|
|
|
|
|
35,002
|
|
|
|
(iii)
|
The Company entered into an agreement to lease
approximately 30 acres of land at the EIA for the development of a
production facility. The lease has a term of fifteen years with monthly
rent payments of $69 for the first five years, increasing to monthly
payments of $76 and $83 in the fifth and tenth year of the lease term,
respectively. The first monthly installment is payable on or before the
earlier of (i) the date that an occupancy permit has been issued for the
facility by Leduc County, and (ii) May 1, 2018. The Company has eight
options to renew the term of the lease, each option for an additional five
years exercisable at the Company’s discretion.
|
41
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
23.
|
Commitments and Contingencies
(Continued)
|
|
|
(b)
|
Claims and litigation
|
|
|
(i)
|
On November 29, 2017, a claim was commenced against the
Company regarding 300,000 stock options with an exercise price of $0.39
per share issued to a consultant pursuant to an agreement dated March 16,
2015. The agreement was terminated on March 8, 2016, and in accordance to
the Company’s stock option plan, the unexercised options expired 90 days
from the date of the termination of the agreement.
|
|
|
|
|
|
|
|
The option holder is attempting to enforce exercise
rights which the Company believes do not exist. The Company intends to
defend this claim vigorously.
|
|
|
|
|
|
|
|
The claim has no effect on the consolidated financial
statements as the Company believes the action to be without merit, and
accordingly, no provision had been recognized for the claim.
|
|
|
|
|
|
|
(ii)
|
On January 12, 2018, CanniMed filed a claim in the
Ontario Superior Court of Justice alleging that Aurora, several large
shareholders of CanniMed and others participated in a civil conspiracy
intended to injure the economic interests of CanniMed. The action claimed
damages of $725,000 for unlawful actions that have negatively affected the
appreciation of the value of CanniMed common shares and prevented CanniMed
from pursuing alternative change of control transactions for the benefit
of CanniMed shareholders.
|
|
|
|
|
|
|
|
On January 26, 2018, the Company had been served with a
formal Notice of Discontinuance of the court action brought by CanniMed
against the Company and other named
defendants.
|
|
24.
|
Segmented Information
|
The Company operates primarily in three
segments, the production and sale of medical cannabis, patient counselling and
outreach service, and design and construction consulting services.
|
|
|
|
|
|
|
|
|
|
Design and
|
|
|
|
|
|
|
|
|
|
|
|
Medical
|
|
|
Patient
|
|
|
Construction
|
|
|
|
|
|
|
|
|
|
|
|
Cannabis
|
|
|
Counselling
|
|
|
Consulting
|
|
|
Others
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Three months ended March 31,
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
10,891
|
|
|
608
|
|
|
2,979
|
|
|
1,622
|
|
|
16,100
|
|
|
|
Gross profit (loss)
|
|
4,754
|
|
|
593
|
|
|
2,717
|
|
|
(449
|
)
|
|
7,615
|
|
|
|
Income (loss) from operations
|
|
(30,507
|
)
|
|
(1,161
|
)
|
|
2,426
|
|
|
(2,514
|
)
|
|
(31,756
|
)
|
|
|
Net income (loss)
|
|
(19,219
|
)
|
|
(858
|
)
|
|
1,787
|
|
|
(2,505
|
)
|
|
(20,795
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
4,336
|
|
|
839
|
|
|
-
|
|
|
-
|
|
|
5,175
|
|
|
|
Gross profit (loss)
|
|
4,964
|
|
|
798
|
|
|
-
|
|
|
-
|
|
|
5,762
|
|
|
|
Loss from operations
|
|
(1,578
|
)
|
|
(254
|
)
|
|
-
|
|
|
-
|
|
|
(1,832
|
)
|
|
|
Net loss
|
|
396
|
|
|
(255
|
)
|
|
-
|
|
|
-
|
|
|
141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended March 31,
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
27,979
|
|
|
2,416
|
|
|
2,979
|
|
|
2,675
|
|
|
36,049
|
|
|
|
Gross profit (loss)
|
|
18,401
|
|
|
2,347
|
|
|
2,717
|
|
|
(553
|
)
|
|
22,912
|
|
|
|
Income (loss) from operations
|
|
(45,293
|
)
|
|
(2,344
|
)
|
|
2,365
|
|
|
(4,015
|
)
|
|
(49,287
|
)
|
|
|
Net income (loss)
|
|
(6,186
|
)
|
|
(1,670
|
)
|
|
1,726
|
|
|
(3,910
|
)
|
|
(10,040
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended March 31,
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
10,295
|
|
|
1,836
|
|
|
-
|
|
|
-
|
|
|
12,131
|
|
|
|
Gross profit
|
|
8,413
|
|
|
1,796
|
|
|
-
|
|
|
-
|
|
|
10,209
|
|
|
|
Loss from operations
|
|
(6,811
|
)
|
|
(674
|
)
|
|
-
|
|
|
-
|
|
|
(7,485
|
)
|
|
|
Net income (loss)
|
|
(7,472
|
)
|
|
(680
|
)
|
|
-
|
|
|
-
|
|
|
(8,152
|
)
|
42
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
24.
|
Segmented Information
(Continued)
|
|
|
|
|
|
|
|
|
|
|
Design and
|
|
|
|
|
|
|
|
|
|
|
|
Medical
|
|
|
Patient
|
|
|
Construction
|
|
|
|
|
|
|
|
|
|
|
|
Cannabis
|
|
|
Counselling
|
|
|
Consulting
|
|
|
Others
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
As at March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
1,654,525
|
|
|
598
|
|
|
2,908
|
|
|
13,369
|
|
|
1,671,400
|
|
|
|
Total liabilities
|
|
(280,768
|
)
|
|
(933
|
)
|
|
(747
|
)
|
|
(2,179
|
)
|
|
(284,627
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
321,644
|
|
|
1,035
|
|
|
-
|
|
|
-
|
|
|
322,679
|
|
|
|
Total liabilities
|
|
102,374
|
|
|
1,372
|
|
|
-
|
|
|
-
|
|
|
103,746
|
|
The Company generates revenues in two
geographical locations, in Canada and in the European Union (“EU”).
|
|
|
|
Canada
|
|
|
EU
|
|
|
Others
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Three months ended March 31,
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
13,179
|
|
|
2,411
|
|
|
510
|
|
|
16,100
|
|
|
|
Gross profit (loss)
|
|
7,391
|
|
|
880
|
|
|
(656
|
)
|
|
7,615
|
|
|
|
Income (loss) from operations
|
|
(31,059
|
)
|
|
(41
|
)
|
|
(656
|
)
|
|
(31,756
|
)
|
|
|
Net income
|
|
(19,567
|
)
|
|
(572
|
)
|
|
(656
|
)
|
|
(20,795
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended March 31,
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
29,197
|
|
|
6,129
|
|
|
723
|
|
|
36,049
|
|
|
|
Gross profit (loss)
|
|
21,348
|
|
|
2,166
|
|
|
(602
|
)
|
|
22,912
|
|
|
|
Income (loss) from operations
|
|
(49,112
|
)
|
|
427
|
|
|
(602
|
)
|
|
(49,287
|
)
|
|
|
Net income
|
|
(9,477
|
)
|
|
39
|
|
|
(602
|
)
|
|
(10,040
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
1,667,266
|
|
|
4,057
|
|
|
77
|
|
|
1,671,400
|
|
|
|
Total liabilities
|
|
(277,022
|
)
|
|
(7,605
|
)
|
|
-
|
|
|
(284,627
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
321,251
|
|
|
1,428
|
|
|
-
|
|
|
322,679
|
|
|
|
Total liabilities
|
|
96,678
|
|
|
7,068
|
|
|
-
|
|
|
103,746
|
|
During the three and nine months ended
March 31, 2017, all of the Company’s assets and liabilities were located in
Canada. All revenues during the three and nine months ended March 31, 2017 were
generated in Canada.
43
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
25.
|
Financial Instruments and Risk
Management
|
|
|
(a)
|
Fair value of financial
instruments
|
The Company’s financial instruments
consist of cash and cash equivalents, short-term investments, accounts
receivable, marketable securities, promissory notes receivable, convertible
debenture receivable, loans receivable, derivatives, accounts payable and
accrued liabilities and convertible notes. The carrying values of these
financial instruments approximate their fair values as at March 31, 2018.
Financial instruments recorded at fair
value are classified using a fair value hierarchy that reflects the significance
of the inputs to fair value measurements. The three levels of hierarchy are:
|
|
Level 1
|
–
|
Unadjusted quoted prices in active markets for
identical assets or liabilities;
|
|
|
Level 2
|
–
|
Inputs other than quoted prices that are
observable for the asset or liability, either directly or indirectly;
|
|
|
|
|
and
|
|
|
Level 3
|
–
|
Inputs for the asset or liability that are not
based on observable market data.
|
There have been no transfers between
fair value levels during the period.
The following table summarizes the
Company’s financial instruments as at March 31, 2018:
|
|
|
|
Available-for-
|
|
|
|
|
|
Financial
|
|
|
Other
|
|
|
Financial
|
|
|
|
|
|
|
|
|
sale financial
|
|
|
Loans and
|
|
|
assets at
|
|
|
financial
|
|
|
liabilities
|
|
|
|
|
|
|
|
|
assets
|
|
|
receivables
|
|
|
FVTPL
|
|
|
liabilities
|
|
|
at FVTPL
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
-
|
|
|
231,023
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
231,023
|
|
|
|
Short-term
investments
|
|
-
|
|
|
690
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
690
|
|
|
|
Accounts receivable
|
|
-
|
|
|
13,094
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
13,094
|
|
|
|
Marketable
securities
|
|
57,409
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
57,409
|
|
|
|
Share subscriptions receivable
|
|
-
|
|
|
55,000
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
55,000
|
|
|
|
Loans receivable
|
|
-
|
|
|
3,400
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3,400
|
|
|
|
Derivatives
|
|
-
|
|
|
-
|
|
|
3,977
|
|
|
-
|
|
|
-
|
|
|
3,977
|
|
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
(1)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
28,905
|
|
|
-
|
|
|
28,905
|
|
|
|
Convertible notes
(2)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
197,092
|
|
|
197,092
|
|
|
|
Deferred revenue
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,324
|
|
|
-
|
|
|
1,324
|
|
|
|
Finance lease
|
|
-
|
|
|
-
|
|
|
-
|
|
|
507
|
|
|
-
|
|
|
507
|
|
|
|
Loans and borrowings
|
|
-
|
|
|
-
|
|
|
-
|
|
|
11,574
|
|
|
-
|
|
|
11,574
|
|
|
|
(1)
|
Balance includes interest rate swaps of $82 and are
included in accounts payable on the Statement of Financial
Position.
|
|
|
(2)
|
The fair value of convertible notes includes both the
debt and equity components.
|
The following is a summary of
financial assets measured at fair value segregated based on the various levels
of inputs (Note 6(b)):
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Marketable securities
|
|
57,409
|
|
|
-
|
|
|
-
|
|
|
57,409
|
|
|
|
Derivative assets
|
|
-
|
|
|
-
|
|
|
3,977
|
|
|
3,977
|
|
44
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
25.
|
Financial Instruments and Risk Management
(Continued)
|
|
|
(a)
|
Fair value of financial instruments
(continued)
|
For the nine months ended March 31,
2018, the Company recognized a total of $29,181 in unrealized gains on level 3
financial assets, comprised of $21,915 unrealized gains on warrant derivatives,
$329 unrealized gain on option derivatives and $6,937 unrealized gains on
convertible debentures on the statement of comprehensive loss. Of the $21,915
unrealized gain on warrant derivatives, $17,078 was attributable to the change
in fair value of warrant derivatives and $4,837 was attributable to the
amortization of deferred unrealized inception gains. Of the $329 unrealized gain
on option derivatives, $5 was attributable to the change in fair value of option
derivatives and $324 was attributable to share-based compensation over the
option vesting period. Of the $6,937 in unrealized gain on convertible
debentures, $830 was attributable to the change in fair value of convertible
debentures and $6,107 was attributable to the amortization of deferred
unrealized inception gains.
Changes in level 3 financial assets
for the period were as follows:
|
|
|
|
Warrant
|
|
|
Option
|
|
|
Convertible
|
|
|
|
|
|
|
|
|
Derivatives
|
|
|
Derivatives
|
|
|
Debenture
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Opening balance
|
|
292
|
|
|
-
|
|
|
11,071
|
|
|
11,363
|
|
|
|
Additions
|
|
2,621
|
|
|
-
|
|
|
-
|
|
|
2,621
|
|
|
|
Share-based compensation
|
|
-
|
|
|
324
|
|
|
-
|
|
|
324
|
|
|
|
Unrealized gain
|
|
20,128
|
|
|
5
|
|
|
830
|
|
|
20,963
|
|
|
|
Conversion of debenture
|
|
4,330
|
|
|
-
|
|
|
(11,901
|
)
|
|
(7,571
|
)
|
|
|
Exercise of warrants
|
|
(23,723
|
)
|
|
-
|
|
|
-
|
|
|
(23,723
|
)
|
|
|
Ending balance
|
|
3,648
|
|
|
329
|
|
|
-
|
|
|
3,977
|
|
Changes in deferred gains on
convertible debenture and derivatives measured at fair value and included in
level 3 of the fair value hierarchy were as follows:
|
|
|
|
Warrant
|
|
|
Convertible
|
|
|
|
|
|
|
|
|
Derivatives
|
|
|
Debenture
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Opening balance
|
|
321
|
|
|
10,206
|
|
|
10,527
|
|
|
|
Additions
|
|
3,051
|
|
|
-
|
|
|
3,051
|
|
|
|
Conversion of debenture
|
|
4,099
|
|
|
(4,099
|
)
|
|
-
|
|
|
|
Unrealized gains amortized
|
|
(4,837
|
)
|
|
(6,107
|
)
|
|
(10,944
|
)
|
|
|
Ending balance
|
|
2,634
|
|
|
-
|
|
|
2,634
|
|
Contingent
consideration
The Company’s liability for the
CanvasRx (Note 12(a)), BCNL and UCI (Note 12(d)), H2 (Note 12(f)), and Larssen
(Note 12(g)) (collectively, the “Subsidiaries”) contingent consideration was
measured at fair value based on unobservable inputs and was considered a level 3
financial instrument. The fair value of these liabilities determined by this
analysis was primarily driven by the Company’s expectations of the Subsidiaries’
achieving their milestones. The expected milestones were assessed probabilities
by management which were discounted to present value in order to derive a fair
value of the contingent consideration. The primary inputs of the calculation
were the probabilities of achieving the milestones and a discount rate.
45
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
25.
|
Financial Instruments and Risk Management
(Continued)
|
|
|
(a)
|
Fair value of financial instruments
(continued)
|
Interest rate swap
derivatives
The Company acquired from CanniMed
derivative contracts to fix the risk associated with interest rates. At March
31, 2018, the fair values of the following derivative contracts were included in
the statement of financial position in accounts payable and accrued liabilities
and have an average fixed rate of 2.88% .
|
|
|
|
March 31, 2018
|
|
|
June 30, 2017
|
|
|
|
|
$
|
$
|
|
$
|
$
|
|
|
|
Notional value
|
|
7,926
|
|
|
-
|
|
|
|
Derivative instrument liabilities
|
|
82
|
|
|
-
|
|
|
|
|
|
8,008
|
|
|
-
|
|
For the three and nine months ended
March 31, 2018, the Company recognized $5 unrealized gain on interest rate swap
derivatives.
|
|
(b)
|
Financial instruments risk
|
The Company is exposed in varying
degrees to a variety of financial instrument related risks. The Board mitigates
these risks by assessing, monitoring and approving the Company’s risk management
processes:
Credit risk is the risk of a potential
loss to the Company if a customer or third party to a financial instrument fails
to meet its contractual obligations. The Company is moderately exposed to credit
risk from its cash and cash equivalents, trade and other receivables, short-term
GIC investments, and loans receivable. The risk exposure is limited to their
carrying amounts at the statement of financial position date. The risk for cash
and cash equivalents is mitigated by holding these instruments with highly rated
Canadian financial institutions. The Company does not invest in asset-backed
deposits or investments and does not expect any credit losses. The Company
periodically assesses the quality of its investments and is satisfied with the
credit rating of the financial institutions and the investment grade of its
guaranteed investment certificates. Trade and other receivables primarily
consist of trade accounts receivable and goods and services taxes recoverable
(“GST”). Credit risk from the loans receivable arises from the possibility that
principal and/or interest due may become uncollectible. The Company mitigates
this risk by managing and monitoring the underlying business relationships.
The Company provides credit to its
customers in the normal course of business and has established credit evaluation
and monitoring processes to mitigate credit risk but has limited risk as the
majority of sales are transacted with credit cards.
As at March 31, 2018, the Company’s
aging of receivables was approximately as follows:
|
|
|
|
March 31,
|
|
|
June 30,
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
0 – 60 days
|
|
8,881
|
|
|
1,534
|
|
|
|
61 –
120 days
|
|
4,213
|
|
|
778
|
|
|
|
|
|
13,094
|
|
|
2,312
|
|
46
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
25.
|
Financial Instruments and Risk Management
(Continued)
|
|
|
(b)
|
Financial instruments risk
(continued)
|
Liquidity risk is the risk that the
Company will not be able to meet its financial obligations associated with
financial liabilities. The Company manages liquidity risk through the management
of its capital structure. The Company has access to CanniMed’s
lines of credit with available borrowings of approximately $1,600 at March 31,
2018. The Company’s approach to managing liquidity is to ensure that it will
have sufficient liquidity to settle obligations and liabilities when due.
In addition to the commitments
outlined in Note 23, the Company has the following contractual obligations:
|
|
|
|
Total
|
|
|
<1 year
|
|
|
1 - 3 years
|
|
|
3 -5 years
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Accounts payable and accrued
liabilities
|
|
28,905
|
|
|
28,905
|
|
|
-
|
|
|
-
|
|
|
|
Income taxes payable
|
|
774
|
|
|
774
|
|
|
-
|
|
|
-
|
|
|
|
Deferred revenue
|
|
1,324
|
|
|
1,324
|
|
|
-
|
|
|
-
|
|
|
|
Finance lease
|
|
579
|
|
|
232
|
|
|
292
|
|
|
55
|
|
|
|
Contingent consideration
|
|
22,583
|
|
|
22,583
|
|
|
-
|
|
|
-
|
|
|
|
|
|
54,165
|
|
|
53,818
|
|
|
292
|
|
|
55
|
|
The operating results and financial
position of the Company are reported in Canadian dollars. As the Company operates in an international
environment, some of the Company’s financial instruments and transactions are
denominated in currencies other than the Canadian dollar. The results of the
Company’s operations are subject to currency transaction and translation
risks.
The Company holds cash in Canadian
dollars, U.S. dollars, and Euros, and investments in Australian and U.S.
dollars. The Company’s main risk is associated with fluctuations in the Euros,
Australian and U.S. dollars. Assets and liabilities are translated based on the
foreign currency translation policy.
The Company has determined that an
effect of a 10% increase or decrease in the Australian dollar, U.S. dollar and
Euro against the Canadian dollar on financial assets and liabilities, as at
March 31, 2018, including cash, investments, accounts payable and accrued
liabilities denominated in Euros, Australian and U.S. dollars, would result in
an increase or decrease of approximately $79 (2017 - $1,430) to the net loss and
comprehensive loss for the nine months ended March 31, 2018.
At March 31, 2018, the Company had no
hedging agreements in place with respect to foreign exchange rates. The Company
has not entered into any agreements or purchased any instruments to hedge
possible currency risks at this time.
Interest rate risk is the risk that
the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. Cash and cash equivalents bear
interest at market rates. The Company’s investments, loans receivables and
convertible debentures have fixed rates of interest. The majority of the
Company’s loans and borrowings have floating interest rates. The Company holds
interest rate swaps to fix its exposure to variable interest rates on
approximately one half of its loans and borrowings.
47
|
AURORA CANNABIS INC.
|
|
Notes to the Condensed Interim Consolidated Financial
Statements
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
25.
|
Financial Instruments and Risk Management
(Continued)
|
|
|
(b)
|
Financial instruments risk
(continued)
|
Price risk is the risk of variability
in fair value due to movements in equity or market prices. The Company’s marketable securities and
investments are susceptible to price risk arising from uncertainties about their
future values. The fair value of marketable securities is based on quoted market
prices which the shares of the investments can be exchanged for.
If the fair value of these financial
assets were to increase or decrease by 10%, the Company would incur an
associated increase or decrease in net loss and comprehensive loss of
approximately $6,169 (2017 - $2,823). See Note 6 for additional details
regarding the fair value of investments and marketable securities.
The Company’s objectives when managing
capital are to ensure that there are adequate capital resources to safeguard the
Company’s ability to continue as a going concern and maintain adequate levels of
funding to support its ongoing operations and development such that it can
continue to provide returns to shareholders and benefits for other stakeholders.
The capital structure of the Company
consists of items included in shareholders’ equity and debt, net of cash and
cash equivalents. The Company manages its capital structure and makes
adjustments to it in light of changes in economic conditions and the risk
characteristics of the Company’s underlying assets. The Company plans to use
existing funds, as well as funds from the future sale of products to fund
operations and expansion activities.
As at March 31, 2018, the Company is
not subject to externally imposed capital requirements.
The following events occurred
subsequent to March 31, 2018:
|
|
(a)
|
103,673 common shares were issued on the exercise of
103,673 stock options for gross proceeds of $215.
|
|
|
|
|
|
|
(b)
|
75,040 common shares were issued on the exercise of
75,040 warrants for gross proceeds of $41.
|
|
|
|
|
|
|
(c)
|
54,842 common shares were issued on the conversion of
$358 principal amount of debentures. (Note
14(c)(d)).
|
48
AURORA CANNABIS INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three and nine
month periods ended March 31, 2018
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
This Management’s Discussion and Analysis (“MD&A”) reports on the consolidated financial condition
and operating results of Aurora Cannabis Inc. (“the Company” or “Aurora”) for the nine month period ended
March 31, 2018, and has been prepared pursuant to the MD&A disclosure requirements under National
Instrument 51-102 - Continuous Disclosure Obligations (“NI 51-102”) of the Canadian Securities
Administrators. The Company’s continuous disclosure documents are available on SEDAR at www.sedar.com.
The MD&A should be read in conjunction with the Company’s unaudited Condensed Interim Consolidated
Financial Statements for the three and nine month periods ended March 31, 2018 and notes thereto (the
“Interim Financial Statements”) and the audited consolidated financial statements for the year ended June
30, 2017 and the related annual MD&A.
The Interim Financial Statements were prepared in accordance with IAS 34 Interim Financial Reporting of
the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting
Standards Board (“IASB”) and interpretations of the IFRS Interpretations Committee (“IFRIC”), and
include the accounts of the Company, and its wholly-owned subsidiaries, joint venture and associates.
The Company has reclassified certain immaterial items on the comparative condensed interim consolidatedstatement of comprehensive loss to conform with current period’s presentation and improve clarity.
This MD&A has been prepared as of May 7, 2018. All dollar amounts referred to in this MD&A are
expressed in thousands of Canadian dollars, except for share and per share amounts, and where indicated
otherwise.
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Agility, Innovation, Execution and Expansion: Building a
Globally Dominant Cannabis Company
Aurora continued to execute its aggressive plan to build a
vertically integrated, and geographically and horizontally diversified cannabis
company.
During the three months ended March 31, 2018, the Company’s
revenues and grams sold continued to increase.
Construction of the world-leading Aurora Sky facility and the
Lachute facility are progressing on schedule. Aurora has planted the first bays
at Aurora Sky and has successfully completed two harvests of cannabis at its
Aurora Vie facility. Construction planning has commenced at Aurora Sun, the
Company’s planned new 1,200,000 square foot, high-technology hybrid greenhouse
cannabis facility in Medicine Hat, Alberta, and retrofitting has begun at the
Aurora Nordic greenhouse facilities in Odense, Denmark, with cultivation
expected to commence in the summer of 2018
During the three months ended March 31, 2018, Aurora raised
over $350 million new funds, expanded its operations through the acquisition of
CanniMed Therapeutics Inc. (“CanniMed”), and has successfully delivered the
first ever batch of privately exported medical cannabis to the Italian
government.
Financial and Operational Highlights
|
In $000’s unless otherwise noted
|
|
Q3 2018
|
|
|
Q2 2018
|
|
|
Change
|
|
|
|
|
#
|
|
|
#
|
|
|
%
|
|
|
Active registered patients
(1)
|
|
45,776
|
|
|
21,718
|
|
|
110.8%
|
|
|
Grams sold
|
|
1,352,982
|
|
|
1,161,809
|
|
|
16.5%
|
|
|
Grams produced
|
|
1,205,965
|
|
|
1,204,259
|
|
|
0.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
%
|
|
|
Revenues
|
|
16,100
|
|
|
11,700
|
|
|
37.6%
|
|
|
Gross margin of
Aurora-produced cannabis
(2)
|
|
66%
|
|
|
74%
|
|
|
|
|
|
Average net selling price per gram
|
|
7.99
|
|
|
8.36
|
|
|
(4.4%
|
)
|
|
Cash cost of sales per gram
(3)
|
|
1.80
|
|
|
1.74
|
|
|
3.4%
|
|
|
Cash cost to produce per gram
(3)
|
|
1.53
|
|
|
1.41
|
|
|
8.5%
|
|
|
Cash and cash equivalents
|
|
231,023
|
|
|
350,841
|
|
|
(34.2%
|
)
|
|
Working capital
|
|
338,476
|
|
|
302,526
|
|
|
11.9%
|
|
|
Cannabis inventory and
biological assets
|
|
29,114
|
|
|
17,325
|
|
|
68.0%
|
|
|
New
investment in capital assets
|
|
75,040
|
|
|
46,397
|
|
|
61.7%
|
|
|
(1)
|
Of the total active registered patients, 21,327 patients
are registered with CanniMed. Excluding the patients of CanniMed, Aurora
increased its active registered patients in Q3 2018 to 24,449, an increase
of 12.6%.
|
|
(2)
|
Gross margin of Aurora-produced cannabis was calculated
based on revenue and cost of sales on cannabis that was produced by
Aurora. Gross margin of Aurora-produced cannabis is a non-IFRS financial
measure that does not have a standardized meaning under IFRS and may not
be comparable to other companies. See definitions later in this document
and reconciliation and discussion under “
Gross
Profit”
.
|
3
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
|
(3)
|
Cash cost of sales and cost to produce per gram was
calculated based on cash cost of goods sold and grams sold in the period
that was produced by Aurora. Cash cost of sales per gram and cash cost to
produce per gram are non-IFRS financial measures that do not have a
standardized meaning under IFRS and may not be comparable to other
companies. See definitions later in this document and reconciliation and
discussion under “
Cash Cost of Sales of Dried Cannabis
Sold.
”
|
COMPANY OVERVIEW
Aurora was incorporated in British Columbia, Canada, and its
common shares are listed on the Toronto Stock Exchange (“TSX”) under the symbol “ACB” and on the OTCQX
under the symbol “ACBFF”.
The Company’s principal business is the production and
distribution of medical cannabis in Canada and internationally. The Company
produces and distributes dried medical cannabis and cannabis oils in Canada
pursuant to the
Access to Cannabis for Medical Purposes Regulations
(“ACMPR”), through its wholly-owned subsidiary, Aurora Cannabis Enterprises Inc.
(“ACE”), and distributes wholesale medical cannabis in the European Union
pursuant to the German Medicinal Products Act and German Narcotic Drugs Act, and
in Italy through the January 2018 tender process.
Aurora is one of the world`s largest and fastest growing
cannabis companies and has created a growing constellation of subsidiaries and
strategic partnerships that provide differentiation in terms of geographic
reach, production, technology, product offering, and execution.
With a growing number of countries adopting medical cannabis
legislation, the Company has embarked on an aggressive international expansion
strategy that currently sees Aurora with operations and investments in Germany,
Denmark, Italy, Australia, Cayman Islands and South Africa.
Aurora’s strategy and vision is to build a leading, integrated
global cannabis company through:
|
|
•
|
the continued acceleration of its penetration
of the Canadian medical cannabis market,
|
|
|
•
|
leveraging its Health Canada sales license for
derivative products (cannabis oils),
|
|
|
•
|
ramping up cultivation at its Aurora Sky and
Aurora Vie facilities,
|
|
|
•
|
completing full construction of Aurora Sky in
Edmonton, Alberta and Lachute Quebec facilities,
|
|
|
•
|
commencing construction of the new 1,000,000
square foot Aurora Nordic facility in Denmark, and
|
|
|
•
|
retrofitting the existing greenhouse capacity
in Denmark to commence cultivation and revenue generation in Denmark while the Aurora Nordic
facility is under construction.
|
Further production capacity will increase through the
construction of Aurora Sun, a 1,200,000 square foot facility that at full
capacity should produce in excess of 150,000 kilograms per year. Upgrades are
also being undertaken to the Company’s first facility in Cremona, Alberta, to
further enhance existing production. Aurora is also in the process of
integrating CanniMed, through which it has access to additional capacity,
registered patients and international markets.
In preparation for the anticipated Canadian federal
legalization of adult consumer use of cannabis, the Company is building
organizational and production capacity to capture a significant share of the
adult use market.
4
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Innovation and integration of technology are key components in
Aurora’s growth strategy. Going forward, Aurora will continue to leverage new technologies, aimed at:
|
|
•
|
improving the customer experience, such as via further
enhancements to Aurora’s unique mobile application;
|
|
|
•
|
make available to its patient base novel drug delivery
technologies;
|
|
|
•
|
delivering industry-leading per square foot production
capacity, while reducing operational expenses at its production
facilities; and
|
|
|
•
|
substantially increasing the production of cannabis
concentrates through the Company’s collaboration with Radient.
|
The Company is also focusing on delivering further product
differentiation, including through Aurora’s intended strategic investment in
Hempco, its partnership with Namaste Technologies, the acquisition of homegrow
and urban garden companies BC Northern Lights and Urban Cultivator, product
development at CanniMed and Aurora, and the acquisition from CTT Pharmaceutical
Holdings, Inc. (“CTT”) of licenses for the exclusive use in Canada of
intellectual property related to proprietary drug delivery technologies.
Finally, the Company is executing a significant international
expansion initiative, as evidenced by the lead participation in the May 2017
Cann Group IPO in Australia, the May 2017 acquisition of Pedanios, Germany’s largest distributor of medical cannabis, and its
partnership with Alfred Pedersen in Denmark for the construction of the new
Aurora Nordic facility. The Company is actively pursuing further international
opportunities.
Aurora expects that this strategy will deliver strong and
sustainable shareholder value as the Company gains and retains significant
market share of the domestic and international medical cannabis markets, as well
as the Canadian adult consumer use market once legalized.
Facilities
Aurora’s fully funded capacity, including Aurora Sun, which was
announced subsequent to the quarter, and its supply agreement with the Green
Organic Dutchman, is expected to exceed 430,000 kilograms annually.
5
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
|
Facility
|
Location
|
Square
|
Full Scale
|
License Status
|
Comments
|
|
|
|
Feet
|
Annual
|
|
|
|
|
|
|
Capacity
|
|
|
|
|
|
|
(kilograms)
|
|
|
|
In
Operation
|
|
Aurora Mountain
|
Mountain
View
County, Alberta,
Canada
|
55,200
|
4,800
|
Licensed by Health Canada for the cultivation and sale of
dried cannabis and oils.
|
Alberta is an ideal production location due to low
energy, labor and tax costs. EU GMP certified.
|
|
|
|
|
|
|
|
|
Aurora Vie
|
Pointe
Claire,
Quebéc,
Canada
|
40,000
|
4,000
|
License to cultivate received from Health Canada on
October 27, 2017.
|
State-of-the-art next generation purpose-built to EU GMP
standards.
|
|
|
|
|
|
|
|
|
CanniMed
|
Saskatoon,
Saskatchewan,
Canada
|
97,000
|
7,000
|
Licensed by Health Canada for the cultivation and sale of
dried cannabis, oils and capsules.
|
Canadian GMP certified. To be upgraded to EU GMP
standards.
|
|
|
|
|
|
|
|
|
Under
Construction
|
|
Aurora Sky
|
Edmonton
International
Airport, Alberta,
Canada
|
800,000
|
>100,000
|
License to cultivate received from Health Canada on
January 26, 2018.
|
Expected to be the world’s most technologically advanced
cannabis facility utilizing state- of-the-art cultivation technologies.
Built to EU GMP standards. First harvest expected June 2018.
|
|
|
|
|
|
|
|
|
Lachute
|
Lachute
Québec,
Canada
|
48,000
|
4,500
|
Pre-license
|
Acquired in November 2017 through the acquisition of H2
Biopharma Inc. To be completed to EU GMP standards. Completion expected
August 2018
|
|
|
|
|
|
|
|
Aurora Nordic
(retrofit)
|
Odense,
Denmark
|
100,000
|
8,000
|
Licensed by Denmark’s Medicines Agency
|
51% ownership. Retrofit of existing greenhouse. First
harvest expected in October 2018.
|
|
|
|
|
|
|
|
|
In
Design
|
|
Aurora Nordic
|
Odense,
Denmark
|
1,000,000
|
>120,000
|
Licensed by Denmark’s Medicines Agency
|
51% ownership “Sky-type” facility (Aurora Larssen build).
Construction to be phased. Cultivation following the completion of first
200,000 square feet expected in calendar Q3 2018.
|
|
|
|
|
|
|
|
|
Aurora
Sun
|
Medicine Hat,
Alberta, Canada
|
1,200,000
|
>150,000
|
Pre-license
|
“Sky-type” facility (Aurora Larssen build) expandable to
1,500,000 square feet. To be completed to EU GMP standards. Full
completion expected second half of calendar 2019.
|
6
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
CANNABIS DIVISION
Recent Domestic Developments Subsequent to March 31,
2018
Construction of Aurora
Sun
In April 2018, the Company announced it is in the process of
acquiring approximately 71 acres of land in Medicine Hat, Alberta, subject to
certain conditions, where the Company will be constructing a new
high-technology, low production cost, hybrid greenhouse cannabis production
facility, “Aurora Sun”. The new facility, to be designed and engineered by
Aurora Larssen Projects Inc. (“ALPS”), will measure 1,200,000 square feet, or
over 21 football fields, and is readily expandable to 1,500,000 square feet.
Aurora Sun will have approximately 850,000 square feet of flowering space and
will be built in compliance with EU GMP standards. The Company anticipates
benefiting from the positive local government and community support,
municipality-owned utilities offering low energy costs and free power
transmission, as well as country-leading annual sunshine hours in Medicine Hat
to accelerate construction timelines and continue reducing production and
operating costs. First planting is anticipated in the first half of calendar
2019, and completion of the full facility in the second half of calendar 2019.
At full capacity, Aurora Sun is expected to bring an additional 150,000
kilograms of annual capacity, and such capacity is intended to serve and will be
serving both the pending Canadian adult consumer market and the rapidly
expanding international medical markets.
Lachute Quebec Facility
The Lachute Quebec facility is structurally complete. The
Company is currently outfitting the grow rooms for production, with the first
growing tables currently being installed. Furthermore, the facility is going
through the final stages of completing the processing areas for EU GMP
certification. Plants, subject to licensing, are expected to move into the
facility within the next four to six weeks.
Letter of Intent with Pharmasave
In April 2018, Aurora, through its recently acquired
subsidiary, CanniMed, entered into a Letter of Intent to become a preferred
supplier of medical cannabis to Pharmasave. A member governed cooperative of
more than 650 independently owned community pharmacies across the country,
Pharmasave is one of Canada's leading independent community pharmacies. Subject
to changes to regulations that would allow such distribution, CanniMed and
Aurora will supply and distribute high-quality medical cannabis, produced at the
companies' GMP compliant and GMP certified facilities, through Pharmasave
pharmacists across Canada.
Supply Agreement with Société des
Alcools du Québec
In April 2018, the Company completed a final agreement with the
Société des Alcools du Québec (“SAQ”) to supply cannabis for the Québec adult
consumer market, once legalized. Under the agreement, Aurora will supply the
Quebec market, on a monthly basis, with a wide variety of premium product from
its facilities. Supply quantities will be determined based on demand on a
month-by month basis, with a minimum of 5,000 kilograms for the first year, with
no set maximum. The initial term of the contract is to August 31, 2021. The
agreement is conditional on the adoption by the federal and provincial
governments of the necessary regulatory framework.
7
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Continued Strong Patient Growth
Aurora registered over 8,000 patients since June 30, 2017, and
as of the date of this report, the Company has surpassed 24,000 active
registered patients after the Company’s first product sale in January 2016.
Management believes this to be the fastest rate of patient registration for a
Licensed Producer (“LP”) after the launch of commercial operations. With the
acquisition of CanniMed in March 2018, the Company added over 21,300 patients,
increasing the total active registered patients to approximately 45,000.
Exclusive License to Novel
Patented Sub-Lingual Wafer Technology
In April 2018, the Company entered into an agreement that
provides Aurora, through its ownership of CanniMed, with joint exclusivity on the distribution in Canada
of CTT’s novel, patented drug delivery technologies. This collaboration includes
the licensing by CTT to CanniMed and Aurora of six patents related to
cannabinoid delivery for pain management that will enable CanniMed and Aurora to
exclusively develop and commercialize this unique, sub-lingual (beneath the
tongue) wafer, drug delivery system in Canada. Orally Dissolvable Thin Film
Wafers are a proprietary drug delivery mechanism in the form of paper-thin
polymer films used as carriers for pharmaceutical agents. The companies are
working together toward obtaining Health Canada approval prior to marketing and
distributing the sub-lingual wafer.
Key Revenue Developments During the Third Fiscal Quarter
2018
Strong Revenue Growth
Aurora generated revenues of approximately $16,100 in Q3 2018,
up 37.6% or approximately $4,400 from Q2 2018, and up 211.1% or approximately
$10,925 from Q3 2017. Revenues generated were as follows:
|
|
|
Mar 31,
|
|
|
Dec 31,
|
|
|
Sep 30,
|
|
|
Jun 30,
|
|
|
Mar 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
Revenue
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Canadian dried cannabis
|
|
6,304
|
|
|
5,750
|
|
|
4,641
|
|
|
4,384
|
|
|
4,336
|
|
|
Canadian cannabis oils
|
|
2,178
|
|
|
1,508
|
|
|
1,439
|
|
|
804
|
|
|
-
|
|
|
Europe dried cannabis
|
|
2,331
|
|
|
2,483
|
|
|
1,235
|
|
|
439
|
|
|
-
|
|
|
Total cannabis revenues
|
|
10,813
|
|
|
9,741
|
|
|
7,315
|
|
|
5,627
|
|
|
4,336
|
|
|
Construction consulting revenue
|
|
2,979
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Other revenues
(1)
|
|
2,308
|
|
|
1,959
|
|
|
934
|
|
|
309
|
|
|
839
|
|
|
Total consolidated revenue
|
|
16,100
|
|
|
11,700
|
|
|
8,249
|
|
|
5,936
|
|
|
5,175
|
|
|
(1)
|
Other revenues included income generated from accessory
sales, patient counselling, and sale of Hempco, BCNL and UCI
products.
|
Aurora sold a total of 1,352,982 grams of cannabis in Q3
compared to 1,161,809 grams of in Q2, up 16.5% or 191,173 grams. Total grams
sold consists of 1,183,280 dried cannabis and 169,702 grams equivalent of
cannabis oils.
8
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Key Domestic Developments During the Third Fiscal Quarter
2018
Aurora Sky
On January 26, 2018, Aurora Sky received its license to
cultivate from Health Canada and plant material was moved into the facility in
preparation for a first harvest expected in June 2018. The Company remains on
schedule for completion of the entire facility this summer, and continues to
work with Health Canada on the licensing of new bays as these come online.
Aurora Sky is now fully under glass, and the Company continues
to meet project milestones, including the recent installation of key operational
systems, such as:
|
|
•
|
The overhead crane systems;
|
|
|
•
|
Key automation components;
|
|
|
•
|
The high-tech irrigation and fertilization
systems, and
|
|
|
•
|
The overpressure, filtration and air treatment
systems.
|
The Company has also introduced several new genetics into
production to expand the range of offerings available for the medical and adult
consumer use market.
Aurora Vie
The Company completed construction at Aurora Vie and received
its cultivation license from Health Canada in October 2017. To date, the Company
has successfully completed three harvests of cannabis at Aurora Vie during the
quarter and is waiting for the issuance of a sales license from Health Canada.
Acquisition of CanniMed
Therapeutics Inc.
On March 15, 2018, the Company acquired 87.2% of the issued and
outstanding shares of CanniMed pursuant to its offer (the “Offer”) to purchase
all of CanniMed’s issued and outstanding shares. Aurora issued 62,833,216 common
shares and paid $130,979 in consideration for the CanniMed shares tendered to
the Offer.
On March 26, 2018, in consideration for the second round of
shares tendered to the Offer, the Company issued 6,495,679 common shares and
paid $12,559, increasing its ownership interest in CanniMed to 95.9% . Aurora
has effected a subsequent acquisition transaction on May 1, 2018 acquiring the
remaining CanniMed shares not tendered to the Offer which it completed through a
compulsory share acquisition procedure as set out in the
Canada Business
Corporations Act
. The common shares of CanniMed were delisted from the TSX
effective as of the closing of the market on May 1, 2018, and CanniMed will
apply to cease to be a reporting issuer under applicable Canadian securities
laws.
Total Company shares issued for the acquisition of 100% of
CanniMed were 72,746,846, significantly below the estimated 103,905,923 shares
originally offered in November 2017.
The combination of the two companies creates one of the world’s
largest and fastest growing cannabis companies with an expanding international
footprint. Among other things, the combined entity currently has over 45,000 active registered patients, 7 state-of-the-art
EU GMP certifiable facilities with a funded capacity of approximately 430,000
kilograms of cannabis per year and over 750 employees.
9
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Strategic Investment in The Green
Organic Dutchman Holdings Ltd.
(“TGOD”)
In January 2018, the Company subscribed for $55,000
subscription receipts through a private placement which will automatically
convert into 33,333,334 units upon TGOD’s listing on the TSX. On April 26, 2018,
TGOD announced the upsizing of its IPO and Aurora elected to exercise its right
to participate in the IPO on a pro-rata basis by subscribing to 6,341,250 units
at $3.65 for a total cost of $23,146. On May 2, 2018, TGOD completed its listing
and the Company acquired a 17.62% interest on a non-diluted basis. TGOD is a
Canadian company licensed under the ACMPR to cultivate medical cannabis.
The parties also entered into an investor rights agreement
whereby Aurora has the option to incrementally increase its ownership interest
in TGOD to over 50% upon TGOD achieving certain operational milestones.
The companies also entered into a supply contract providing
Aurora with the right to purchase up to 20% or approximately 23,000 kilograms
per annum of TGOD’s annual production of organic cannabis. Additionally, Aurora
has the right to purchase up to 33% of TGOD’s production upon increasing its
ownership interest to 31%.
Strategic
Investment in Liquor Stores N.A. Ltd. (“Liquor
Stores”)
On February 14, 2018, Aurora completed its investment in Liquor
Stores and received 6.9 million common shares at a cost of $103,500,
representing a 19.9% ownership interest. Subject to the Competition Bureau and
disinterested shareholder approval of Liquor Stores, Aurora will make additional
investments in Liquor Stores of $34.5 million which would bring Aurora’s
ownership interest up to 25%, and will be issued warrants which, if exercised by
Aurora, could bring the Company’s ownership interest to approximately 40% on a
fully diluted basis.
Liquor Stores intends to use the financing net proceeds to
establish and launch a leading brand of cannabis retail outlets, by converting a
number of Liquor Stores' existing retail outlets into cannabis retail outlets
and establishing new cannabis retail outlets. Aurora's brand leadership, quality
products, customer care, innovation and deep product knowledge will be a strong
complement to Liquor Stores' well-established distribution network, best
practices in the retail of adult-use controlled products, commitment to
regulatory compliance, and deep talent pool with over 2,000 retail
employees.
Supplier Agreement with Shoppers
Drug Mart
On February 21, 2018, the Company entered into an agreement to
become a supplier of branded medical cannabis products to Shoppers Drug Mart
(“Shoppers”) subject to Health Canada's approval of Shoppers’ application to be
a licensed producer. It is expected the products will be sold online, as
Canadian regulations currently restrict the sale of medical cannabis in retail
pharmacies.
10
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Continued Strong Patient Growth
The Company added approximately 24,058 active registered
patients during Q3 2018, representing an increase of 110.8% during the quarter.
The significant increase was largely a result of the acquisition of CanniMed
which brought an additional 21,327 active registered patients during the period.
Key International Developments During the Third Fiscal
Quarter 2018
The Company continues to execute on its international expansion
strategy. The countries Aurora is currently active in include Canada, Germany,
Italy, Denmark, Australia, Cayman Islands, and South Africa through a
combination of strategic investments, domestic production, and supply
agreements, providing a strong early mover advantage in a growing number of key
international markets.
Aurora continues to staff up in Europe to further accelerate
its international expansion, and is actively engaged in a number of discussions,
and is prioritizing 2018 entry into those jurisdictions that provide an optimal
strategic fit.
With the EU GMP certification of Aurora Mountain and Pedanios
GmbH, Aurora is one of few companies globally with this pharma-grade designation
across both production and distribution facilities in Canada and Germany
respectively, allowing it to sell into the most restrictive and promising
markets in the EU, such as Italy.
Germany
The Company continues to ship wholesale product directly to
German pharmacies. Revenue growth at Pedanios is currently constrained by supply
availability due to Aurora Mountain operating at full capacity. However, due to
the rapid adoption of the medical cannabis system by patients and prescribing
physicians in Germany and the anticipated additional supply coming from Aurora
Sky and Aurora Vie, the Company anticipates having an increase in international
shipments in the second half of this calendar year.
Italy
Aurora, through its wholly owned subsidiary Pedanios, won a
highly competitive EU-wide public tender to supply medical cannabis to the
Italian government through the Ministry of Defense, which oversees medical
cannabis production and distribution in Italy. In March 2018, Aurora
successfully delivered the first batch of privately exported medical cannabis
from Canada to the Italian government through Pedanios. Following the successful
delivery, the products have now been distributed to Italian pharmacies.
Further orders by the Italian Ministry of Defense will be
subject to additional tender processes, in which Aurora and Pedanios intend to
continue to participate. While the first tender was set at 100 kilograms, the
Italian Ministry of Defense has the option to increase the amount requested.
This is Aurora's first step into supplying the tightly restricted Italian
market, and provides Aurora with first mover advantage. Prior to the new tender
process, medical cannabis in Italy has been supplied through two sources only:
the Italian Ministry of Defense and the Dutch Office of Medicinal Cannabis. No
import licenses from other sources into the Italian market have been granted to
date. The Company believes that having won this first tender, and becoming the
first private company ever to supply medical cannabis to the Italian government,
provides a distinct early mover advantage in a market with access to
over 60 million people and insurance cost coverage.
11
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Denmark and Scandinavia
Aurora Nordic Cannabis A/S (
“Aurora
Nordic”)
Aurora Nordic, based in Odense Denmark, is owned 51% by Aurora
and 49% by Scandinavian Cannabis A/S, which is an entity owned by Alfred
Pederson & Søn (“APS”). Design for the 1,000,000 square foot Aurora Nordic
facility is currently being completed. Once all required permitting has been
received, construction will commence.
In order to accelerate time to market, Aurora Nordic is
retrofitting an existing, Larssen designed 100,000 square foot greenhouse that
at full capacity should produce approximately 8,000 kg per annum of cannabis.
The facility will be EU GMP compliant to ensure Aurora Nordic can service the
international market. The retrofit is progressing well, and Aurora anticipates
cultivation to commence this summer. The Company anticipates completing the
import of live Aurora genetics before the end of this summer in order to
establish a functional medical cannabis transit corridor, develop its mother
plant and genetic collection, address phytosanitary demands and controls,
develop cultivation and processing methods, and validate laboratory testing
protocols.
Australia
Cann Group Limited (“Cann
Group”)
On January 23, 2018, the Company further increased its
ownership interest in Cann Group from 21.8% to 22.9% by subscribing to an
additional 3,194,033 ordinary shares for a total investment of A$7,985. In
January 2018, Cann Group was granted a license to import and/or export cannabis
genetics and medicinal cannabis products by the Australian government's
Department of Health, through the Office of Drug Control (ODC). The license
enables Cann Group to import genetics from Aurora to help broaden the company’s
portfolio of medical cannabis products, pending Aurora's receipt of an export
permit from Health Canada.
Export to Australia for Novel
Nose-to-Brain Drug Delivery Research by
PreveCeutical Medical
Inc. (“PreveCeutical”)
Aurora exported cannabis to Australia to be used for
PreveCeutical’s soluble gel drug delivery research program which aims to develop
a system that will increase the bioavailability of drugs by using a
nose-to-brain delivery system. PreveCeutical intends to apply Sol-gel technology
of cannabinoids to develop therapies for relief from a range of symptoms,
including pain, inflammation, seizures and neurological disorders. The
advantages of Sol-gels over conventional liquid nasal sprays relate to longer
therapeutic effects, reduced dosage requirements, and reduced irritation and
other negative side effects.
In consideration of the shipment, Aurora has received certain
rights, including the option to either license, on a non-exclusive basis, the
technology for Canada and Australia, or to opt for a royalty arrangement on
product sales, as well as to purchase shares in PreveCeutical.
12
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Other Key Developments during the Third Fiscal Quarter
2018
Continued Strong Patient Growth
CanvasRx, which now operates 28 facilities nationwide, remains
a leading Canadian network of cannabis counseling and outreach centres and to
date, CanvasRx has assisted over 42,200 patients. Over 9,500 medical doctors
across Canada have referred patients to CanvasRx or its affiliated medical
clinics.
Further Investment in Hempco
On March 22, 2018, the Company exercised its 10,558,676
warrants in Hempco at $0.41 per share for a total cost of $4,329, thereby
increasing its ownership interest from 22% to 35% on an undiluted basis.
Management anticipates that Hempco will provide further product
differentiation for the Company, as well as, subject to regulatory changes
anticipated for 2018, provide substantial supply of low-cost raw material for
the extraction of CBD.
Strategic Investment in Micron
Waste Technologies Inc.
(“Micron”)
On January 15, 2018, the Company completed its strategic
investment in Micron, taking a 6.46% ownership interest. The parties have agreed
to collaborate under which both companies will work on the optimization of
Micron’s technology for the treatment of organic waste generated in the
cultivation and production of cannabis products.
Upon successful completion of the project, Aurora intends to
acquire multiple units for its various facilities. Micron will retain the
intellectual property related to the digester and upon the first successful sale
of a digester within the cannabis industry, Micron shall issue to Aurora
2,000,000 common shares.
The world’s first on-site cannabis disposal unit installed at
Aurora’s Mountain View facility will process cannabis waste, removing traceable
active cannabinoid residues such as THC and CBD, and treat the resulting
effluent to meet municipal sewage bylaw standards.
Aurora PRO
In February 2018, the Company launched a new B2B service,
Aurora PRO, for LPs and licensed retailers in the forthcoming adult consumer
market. Aurora PRO is a broad service offering that leverages Aurora's
purchasing power, quality assurance processes, technological infrastructure,
cultivation know-how, distribution channels, as well as its best-in-class
customer service to help simplify the sales process and effectively deliver
products to market. Aurora PRO creates a quick, seamless, and scalable platform
to facilitate wholesale B2B transactions, while at the same time offering a
broad range of operational support services and market intelligence to private
retailers.
The execution of Aurora PRO will be by way of a secure internet
portal, with dedicated staff providing additional resources and in-person
services to producers and retailers subscribed to the service.
13
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Radient
Technologies Inc. (“Radient”)
On February 5, 2018, Radient announced that it had received its
Licensed Dealer status for its research laboratory which will allow it to work
with controlled substances for research and development purposes. Radient will
be able to commence production of cannabis extracts in its manufacturing
facility as contemplated under the Aurora Master Services Agreement dated
November 6, 2017, upon obtaining Licensed Producer and Licensed Dealer status
from Health Canada expected later in calendar 2018.
GENERAL CORPORATE DEVELOPMENTS
Recent Developments
Additional Available Capital
As of May 7, 2018, approximately $163 million in additional
gross cash proceeds remain available from the future exercise of warrants and
stock options.
Key Developments during the Third Fiscal Quarter
2018
S&P / TSX Composite
Index
Effective March 19, 2018, the Company was added to S&P/TSX
Composite Index, the primary gauge for Canadian-based TSX listed companies. The
S&P/TSX Composite Index consists of the largest Canadian companies by market
capitalization and liquidity.
Strengthened Capital Position
Aurora strengthened its balance sheet and liquidity position
during the third quarter of 2018 with $356,266 in new funds as follows:
|
|
•
|
On January 12, 2018, the Company’s 115,000 special
warrants were exercised into $115,000 convertible debentures. The
debentures have a term of five years, bear interest at 6% per annum,
payable semi-annually, and are convertible at $6.50 per common share. The
Company may force conversion of the principal amount of the outstanding
debentures should the VWAP of its common shares exceed $9.00 for any ten
consecutive trading days.
|
|
|
•
|
On March 9, 2018, the Company completed a bought deal
offering of 230,000 convertible debentures for gross proceeds of $230,000
including the exercise in full of the Underwriter’s over- allotment
option. The debentures have a term of two years, bear interest at 5% per
annum, payable semi-annually, and are convertible at $13.05 per common
share. The Company may force conversion of the principal amount of the
outstanding debentures should the VWAP of its common shares exceed $17.00
for any ten consecutive trading days.
|
|
|
•
|
During the three months ended March 31, 2018, the Company
raised $11,266 through the exercise of warrants and options.
|
During the three months ended March 31, 2018, the Company
converted $112,677 debentures into common shares.
14
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Strengthening of Management Team
Aurora continues to attract top industry talent, strengthening
its senior management team to ensure the Company has the leadership to continue
growing and building shareholder value. The Company had the following
appointments during the three months ended March 31, 2018:
|
|
•
|
Promoted Cam Battley to Chief Corporate Officer who
previously served as Aurora’s Executive Vice President;
|
|
|
•
|
Savior Joseph as Senior Vice President, Global Marketing;
|
|
|
•
|
Jillian Swainson as Senior Vice President and General
Counsel;
|
|
|
•
|
André Jérôme as Senior Vice President, Business
Integration, and Director and Interim CEO CanniMed;
|
|
|
•
|
Dr. Shane Morris as Vice President Product Development
and Regulatory Affairs; and
|
|
|
•
|
Dr. Kelly Narine as Vice President of Research.
|
Other Developments
|
|
•
|
Mr. Joseph del Moral resigned as a Director of the
Company to pursue a non-cannabis related opportunity. Mr. del Moral, who
also resigned from his position as CEO of CanvasRx, will continue to
assist both Aurora and CanvasRx during a transitionary period, and will
remain available to the Company as an advisor.
|
SUMMARY OF QUARTERLY RESULTS
The following table presents selected financial information
from continuing operations for the most recent eight quarters:
|
|
|
|
|
|
|
|
|
Basic and
|
|
|
|
|
|
|
|
Net Income
|
|
|
Diluted Earnings
|
|
|
Quarter ended
|
|
Revenue
|
|
|
(Loss)
|
|
|
(Loss) per Share
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
March 31, 2018
|
|
16,100
|
|
|
(20,795
|
)
|
|
(0.04
|
)
|
|
December 31, 2017
|
|
11,700
|
|
|
7,194
|
|
|
0.02
|
|
|
September 30, 2017
|
|
8,249
|
|
|
3,560
|
|
|
0.01
|
|
|
June 30, 2017
|
|
5,936
|
|
|
(4,816
|
)
|
|
(0.01
|
)
|
|
March 31, 2017
|
|
5,175
|
|
|
139
|
|
|
-
|
|
|
December 31, 2016
|
|
3,885
|
|
|
(2,678
|
)
|
|
(0.01
|
)
|
|
September 30, 2016
|
|
3,071
|
|
|
(5,613
|
)
|
|
(0.03
|
)
|
|
June
30, 2016
|
|
1,220
|
|
|
(7,474
|
)
|
|
(0.05
|
)
|
Revenues increased for the quarter ended March 31, 2018, primarily due to
income generated from ALPS for design and construction consulting fees
which represented 19% of revenues in the period. Additionally, 53% of the
Company’s revenues were generated from the sale of medical cannabis in Canada,
14% from sales in Europe through Pedanios, and 14% from patient counselling
services and other revenues. Net loss for the quarter ended March 31, 2018 was
primarily attributable to increases in business acquisition costs related to the
CanniMed acquisition as well as share-based payments offset by net unrealized
gains from marketable securities and derivatives of $11,239.
15
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
RESULTS OF OPERATIONS
During the nine months ended March 31, 2018, the Company
continued to advance its aggressive business and operating strategies that
included major expansion projects and domestic and international strategic
acquisitions and investments.
During the prior period, the Company focused on increasing its
operational and production efficiencies at its first Mountain View facility,
moved forward with the construction of Aurora Sky, continued registration and
servicing of new and existing patients, increased production to meet product
demand, pursued strategic acquisitions and investment opportunities and closed
various equity and debt financings.
Revenues
|
|
|
Mar 31,
|
|
|
Dec 31,
|
|
|
Sep 30,
|
|
|
Jun 30,
|
|
|
Mar 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Canadian dried cannabis
|
|
6,304
|
|
|
5,750
|
|
|
4,641
|
|
|
4,384
|
|
|
4,336
|
|
|
Canadian cannabis oils
|
|
2,178
|
|
|
1,508
|
|
|
1,439
|
|
|
804
|
|
|
-
|
|
|
Europe dried cannabis
|
|
2,331
|
|
|
2,483
|
|
|
1,235
|
|
|
439
|
|
|
-
|
|
|
Total cannabis revenues
|
|
10,813
|
|
|
9,741
|
|
|
7,315
|
|
|
5,627
|
|
|
4,336
|
|
|
Design & construction
consulting
|
|
2,979
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Other revenue
(1)
|
|
2,308
|
|
|
1,959
|
|
|
934
|
|
|
309
|
|
|
839
|
|
|
Total consolidated revenues
|
|
16,100
|
|
|
11,700
|
|
|
8,249
|
|
|
5,936
|
|
|
5,175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quantity sold
|
|
#
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
Dried cannabis (grams)
|
|
1,183,280
|
|
|
1,048,882
|
|
|
802,250
|
|
|
710,155
|
|
|
653,008
|
|
|
Cannabis oils (gram
equivalent)
|
|
169,702
|
|
|
112,927
|
|
|
87,715
|
|
|
44,904
|
|
|
-
|
|
|
Cannabis oils (bottles)
|
|
25,024
|
|
|
18,239
|
|
|
17,853
|
|
|
8,302
|
|
|
-
|
|
|
Total consolidated grams sold
|
|
1,352,982
|
|
|
1,161,809
|
|
|
889,965
|
|
|
755,059
|
|
|
653,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average net selling
price
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Dried cannabis (per gram)
|
|
7.30
|
|
|
7.85
|
|
|
7.32
|
|
|
6.79
|
|
|
6.64
|
|
|
Cannabis oils (per gram
equivalent)
|
|
12.83
|
|
|
13.35
|
|
|
16.41
|
|
|
17.91
|
|
|
-
|
|
|
Cannabis oils (per bottle)
|
|
87.02
|
|
|
82.68
|
|
|
80.63
|
|
|
96.87
|
|
|
-
|
|
|
Total consolidated average selling price per gram sold
|
|
7.99
|
|
|
8.36
|
|
|
8.22
|
|
|
7.45
|
|
|
6.64
|
|
|
(1)
|
Other revenue consists of income generated from sale of
accessories, patient counselling, and sales of Hempco, BCNL and UCI
products.
|
Revenues for the three and nine months ended March 31, 2018
were $16,100 and $36,049 respectively ($5,175 and $12,131 in the three and nine
months ended March 31, 2017). The increase in revenues during the period was
primarily due to the increase in cannabis oil sales as well as new revenue from
ALPS’ design and construction consulting. In addition, the Company generated
additional revenues from its subsidiaries, CanniMed, Hempco, BCNL and UCI.
16
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
The consolidated average selling price per gram sold decreased
from the Dec 31, 2017 period as the Company increased wholesale bulk sales of
dried cannabis. Additionally, the average net selling price per gram equivalent
of cannabis oils sold decreased in the March 31, 2018 and December 31, 2017
periods as more grams of cannabis were used in the production of oils to reach
the specified potency and strength in the oils. The potency and strength in the
oils vary depending on strain of dried cannabis used to produce the oils.
Cannabis oils were sold at $115 per 30 milliliter bottle during the period ended
June 30, 2017 which resulted in a higher average selling price. Effective July
1, 2017, cannabis oils were sold at $95.00 per 30 milliliter bottle.
During the three and nine months ended March 31, 2018, the
Company granted a total of $1,441 and $4,458 (three and nine months ended March
31, 2017 - $1,006 and $2,575) discounts on cannabis sales. The Company’s
discounts consist of a $50 credit offered to each new Aurora patient and a
compassionate pricing offered to low-income households and patients. The
compassionate pricing program helps low-income households and patients on
provincial or federal assistance programs have access to the Company’s medical
cannabis.
Aurora’s dried medical cannabis are currently priced at $9.00
per gram with compassionate pricing set at $6.00 per gram, and cannabis oils at
$95.00 per 30 milliliter bottle with compassionate pricing set at $65.00 per 30
milliliter bottle. During the three and nine months ended March 31, 2018,
approximately 27% and 34% of registered patients purchased medical cannabis
through the compassionate pricing program respectively (three and nine months
ended March 31, 2017 – 28% and 27%).
Cost of Sales
Included in cost of sales for the three and nine months ended
March 31, 2018 were the cash cost of sales of $6,827 and $14,736 (three and nine
months ended March 31, 2017 - $2,241 and $6,853), unrealized gains on changes in
fair value of biological assets of $2,506 and $12,350 (three and nine months
ended March 31, 2017 - $4,516 and $7,594), and unrealized losses on changes in
fair value of inventory of $4,164 and $10,751 (three and nine months ended March
31, 2017 - $1,688 and $2,661), respectively.
The increase in cost of sales during the three and nine months
ended March 31, 2018 was largely attributable to increased sales during the
periods, as well as cost of sales generated by the Company’s new subsidiaries
Pedanios, Hempco, CanniMed, BCNL and UCI in comparison to the prior comparative
periods. The Company sold 1,352,982 grams and 3,404,755 grams of cannabis in the
three and nine months ended March 31, 2018, compared to 653,008 grams and
1,626,773 grams sold in the three and nine months ended March 31, 2017, an
increase of 107% and 109% respectively.
Biological assets consist of cannabis plants at various
pre-harvest stages of growth which are recorded at fair value less costs to sell
at the point of harvest. Cost to sell are primarily related to shipping costs.
At harvest, the biological assets are transferred to inventory at their fair
value which becomes the deemed cost for inventory. Costs incurred after harvest,
such as packaging and allocated overheads, are capitalized to inventory.
Overhead costs are allocated to each stage of the growing process and
capitalized to either biological assets for plants not yet harvested and to
inventory for plants that have been harvested. Inventory is later expensed to
cost of goods sold when sold.
17
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Non-IFRS Measures
The Company has included certain non-IFRS performance measures
throughout this MD&A, including cash cost of sales of Canadian dried
cannabis sold per gram, cash cost to produce dried cannabis per gram, and grams
produced each as defined in this section. The Company employs these measures
internally to measure its operating and financial performance and to assist in
business decision making.
The Company believes that these non-IFRS financial measures, in
addition to conventional measures prepared in accordance with IFRS, enable
investors to evaluate the Company’s operating results, underlying performance
and future prospects in a manner similar to Aurora management.
As there are no standardized methods of calculating these
non-IFRS measures, the Company’s methods may differ from those used by others,
and accordingly, the use of these measures may not be directly comparable to
similarly titled measures used by others. Accordingly, these non-IFRS measures
are intended to provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared in accordance
with IFRS.
Cash Cost of Sales of Dried Cannabis Sold and Cash Cost to
Produce Dried Cannabis
Cash cost of sales of dried cannabis sold is calculated by
taking the cost of sales, which excludes the effect of changes in fair value of
biological assets and inventory, and removing non-cash production costs, oil
conversion costs, cost of accessories, cost of products purchased from other
Licensed Producers that were sold, and cost of sales from non-cannabis
production subsidiaries, all divided by the total grams of dried cannabis sold
in the period that was produced by Aurora.
Cash cost to produce dried cannabis sold per gram is equal to
cash cost of sales of dried cannabis sold less packaging costs (post-production
cost), divided by the total grams of dried cannabis sold in the period that was
produced by Aurora.
Management believes these measures provide useful information
as they measure the efficiency of production and may be a benchmark of the
Company against its competitors. These measures provide more clarity on the cash
cost of sales per gram based on the actual dried grams sold that were produced
by Aurora in the period.
Grams Produced and Grams Equivalent of Oil Produced
Grams produced in the period refers to the grams of dried
cannabis harvested from plants in the period. The Company calculates grams
produced in the period based on the weight of dried harvested buds that have
completed the drying stage, which is adjusted for the weight change from the
drying process.
Grams equivalent of oil produced represents the equivalent
number of dried grams that would be used by the patients from the cannabis oils.
The dried cannabis is first transformed to produce cannabis extracts (high
density solution) which is then diluted into cannabis oil. The “grams
equivalent” measure is used to disclose amount of oil sold and (or) produced in
the period as opposed to milliliters as the actual grams used the production of
cannabis oils can vary depending on the strain of dried cannabis used which
yields a different potency and strength in the oil. The Company estimates and
converts its cannabis oil inventory to equivalent grams based on the tetrahydrocannabinol (“THC”) and
cannabidiol (“CBD”) content in the cannabis oils.
18
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Cash Cost of Sales and Cash Cost to Produce Dried
Cannabis
The Company calculates cash cost of sales of dried cannabis
sold, on a total and per gram basis, as follows:
|
Unaudited Non-IFRS Measure
|
|
Three months ended
|
|
|
Three months ended
|
|
|
(In CDN $000’s, except gram amounts)
|
|
Mar 31 ‘18
|
|
|
Dec 31 ‘17
|
|
|
|
|
$
|
|
|
$
|
|
|
Total cost of sales
|
|
6,827
|
|
|
4,837
|
|
|
Less:
|
|
|
|
|
|
|
|
Cost of sales from
non-cannabis production subsidiaries
|
|
(2,993
|
)
|
|
(1,889
|
)
|
|
Cost of accessories
|
|
(351
|
)
|
|
(267
|
)
|
|
Oil conversion costs
|
|
(862
|
)
|
|
(451
|
)
|
|
Cost of products purchased from other
Licensed Producers
|
|
(568
|
)
|
|
(536
|
)
|
|
Depreciation
|
|
(293
|
)
|
|
(203
|
)
|
|
Cash
cost of sales of dried cannabis sold
|
|
1,760
|
|
|
1,491
|
|
|
|
|
|
|
|
|
|
|
Grams of dried cannabis sold in the period
produced by Aurora
|
|
979,149
|
|
|
855,591
|
|
|
Cash cost of sales per gram of dried cannabis sold
|
$
|
1.80
|
|
$
|
1.74
|
|
Cash cost of sales per gram of dried cannabis sold increased by
3.4% from the preceding quarter due mainly from an increase in utilities in the
winter months and overhead expenses. Cash cost of sales per gram of dried
cannabis is expected to decrease as the impact of automation, scale, and yield
expertise is realized at Aurora Sky, Aurora Nordic, and Aurora Sun.
Cash Cost to Produce Dried Cannabis
The Company calculates cash cost to produce Canadian dried
cannabis sold, on a total and per gram basis, as follows:
|
Unaudited Non-IFRS Measure
|
|
Three months ended
|
|
|
Three months ended
|
|
|
(
In CDN $000’s, except gram
amounts
)
|
|
Mar 31 ‘18
|
|
|
Dec 31 ‘17
|
|
|
|
|
$
|
|
|
$
|
|
|
Cash cost of sales of dried
cannabis sold
|
|
1,760
|
|
|
1,491
|
|
|
Less:
|
|
|
|
|
|
|
|
Packaging costs
|
|
(265
|
)
|
|
(283
|
)
|
|
Cash
cost to produce dried cannabis sold
|
|
1,495
|
|
|
1,208
|
|
|
|
|
|
|
|
|
|
|
Grams of dried cannabis sold in the period
produced by Aurora
|
|
979,149
|
|
|
855,591
|
|
|
Cash cost to produce per gram of dried cannabis sold
|
$
|
1.53
|
|
$
|
1.41
|
|
Cash cost to produce per gram of dried cannabis sold increased
by 8.5% from the preceding quarter primarily due to increased cash cost of sales
of dried cannabis sold that were produced by Aurora as mentioned above.
19
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
During the first quarter of 2018, the Mountain View facility
reached optimal production capacity and production yields are expected to remain
relatively consistent until production begins in the new Aurora facilities.
Total production costs are expected to increase as the Company
completes construction and begins producing cannabis at its new facilities in
Alberta and Québec. However, per gram production costs are expected to decrease
materially as the efficiencies from automation, scale and yield expertise are
realized in the new Aurora facilities.
Gross Profit
Gross profit before the effect of changes in fair value was
$9,273 and $21,313 for the three and nine months ended March 31, 2018 compared
to $2,934 and $5,278 for the three and nine months ended March 31, 2017.
The increase for the three and nine months ended March 31, 2018
compared to the prior comparative period was primarily attributable to new
revenues from ALPS, as well as increased revenues generated from the Company’s new subsidiaries, Hempco, BCNL and UCI.
Gross profit before the effect of changes in fair value
increased by 35.1% or $2,410 for the three months ended March 31, 2018 as
compared to the previous quarter, from $6,863 for the three months ended
December 31, 2017 to $9,273 for the three months ended March 31, 2018. The
increase in gross profit before the effect of changes in fair value primarily
resulted from an increase of $2,979 in revenues from ALPS and $763 in revenues
from the recent acquisition of new subsidiaries.
Gross profit after the effect of changes in fair value was
$7,615 and $22,912 for the three and nine months ended March 31, 2018 compared
to $5,762 and $10,211 for the three and nine months ended March 31, 2017. The
increase was attributable the increase in revenues as described above as well as
the gain on the net effect of changes in fair value of biological assets and
inventory.
Non-IFRS Measure
Gross Profit and Gross Margin for Aurora-Produced
Cannabis
Gross profit for Aurora-produced cannabis is calculated by
taking revenue less cost of sales on Aurora-produced cannabis. Revenue on
Aurora-produced cannabis is calculated by taking consolidated revenue less
revenue from non-cannabis production operations and revenue from products
sourced from other Licensed Producers. Cost of sales on Aurora-produced cannabis
is calculated by taking consolidated cost of sales, excluding the effects of
changes in fair value of biological assets and inventory, less cost of sales
from non-cannabis production operations and cost of sales from products sourced
from other Licensed Producers.
Gross margin for Aurora-produced cannabis is calculated by
taking gross profit for Aurora-produced cannabis divided by revenue for
Aurora-produced cannabis.
Management believes this measure provides useful information as
it measures the Company’s production and distribution efficiency for its
principal business, the production and distribution of cannabis.
20
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
The Company has calculated gross profit and gross margin on
Aurora-produced cannabis as follows:
|
Unaudited Non-IFRS Measure
|
|
Three months ended
|
|
|
Three months ended
|
|
|
(
In CDN $000’s
)
|
|
Mar 31 ‘18
|
|
|
Dec 31 ‘17
|
|
|
|
|
$
|
|
|
$
|
|
|
Total consolidated revenue
|
|
16,100
|
|
|
11,700
|
|
|
Less revenue from non-cannabis production
operations
|
|
(5,235
|
)
|
|
(1,959
|
)
|
|
Less revenue from cannabis sourced from other LPs
|
|
(274
|
)
|
|
(1,165
|
)
|
|
Revenue for Aurora-produced cannabis
|
|
10,591
|
|
|
8,576
|
|
|
|
|
|
|
|
|
|
|
Total consolidated cost of sales
|
|
6,827
|
|
|
4,837
|
|
|
Less cost of sales from
non-cannabis production operations
|
|
(2,347
|
)
|
|
(1,211
|
)
|
|
Less
cost of sales from cannabis sourced from other LPs
|
|
(917
|
)
|
|
(1,382
|
)
|
|
Cost of sales for Aurora-produced cannabis
|
|
3,563
|
|
|
2,244
|
|
|
|
|
|
|
|
|
|
|
Gross profit on
Aurora-produced cannabis
|
|
7,028
|
|
|
6,332
|
|
|
Gross margin on Aurora-produced cannabis
|
|
66%
|
|
|
74%
|
|
The decrease in gross margin on Aurora-produced cannabis is
primarily a result of increased cost of sales in the period primarily
attributable to increased depreciation, materials, and utilities in the winter
months.
General and Administration
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
March 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Professional
fees
|
|
1,460
|
|
|
1,183
|
|
|
4,548
|
|
|
2,324
|
|
|
Office and administration
|
|
4,045
|
|
|
198
|
|
|
6,656
|
|
|
652
|
|
|
Wages and benefits
|
|
4,342
|
|
|
656
|
|
|
9,204
|
|
|
1,657
|
|
|
|
|
9,847
|
|
|
2,037
|
|
|
20,408
|
|
|
4,633
|
|
The over-all increase in general and administration costs by
$7,810 and $15,775 for the three and nine months ended March 31, 2018 was
primarily attributable to increases in corporate and general administrative
activities of the Company as it continued to scale up its business operations in
both Canada and Germany and expanded its operations through the recent Hempco,
Larssen, CanniMed, BCNL and UCI acquisitions. For the three and nine months
ended March 31, 2018, $3,019 and $4,979 general and administration expenses were
attributable to subsidiaries acquired since March 31, 2017. In the prior period,
the Company began to expand operations with the acquisition of CanvasRx and
closed equity and debt financings.
Professional fees increased by $277 and $2,224 during the three
and nine months ended March 31, 2018. The increase resulted from various legal,
regulatory and advisory fees related to various consulting contracts, employment
agreements and other business contracts entered into to support its increasing
business operations. Regulatory fees increased from the prior period as a result
of the transfer of the Company’s listing from the TSX Venture Exchange to the
TSX.
21
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Office and administration increased by $3,847 and $6,004 during
the three and nine months ended March 31, 2018 as a result of increased rent
expenses with the expansion of office space and locations, and travel expenses
related to management and employee travels between the Company’s offices and
facilities located in Vancouver, Mountain View County, Edmonton, Pointe-Claire,
Québec, Toronto and Germany. Travel costs were also incurred as the Company
evaluated potential projects and conducted due diligence activities as part of
the Company’s aggressive expansion strategy. Additional expenses were incurred
for information technology to support the Company’s expansion, insurance
premiums as the Company expanded its coverage consistent with the increase in
operations, and general increases in office and administration expenses as a
result of consolidating operations with recently acquired subsidiaries.
Wages and benefits increased by $3,686 and $7,547 during the
three and nine months ended March 31, 2018. The increase during the period was
primarily due to hiring of an aggregate of 53 employees in ACE since March 31,
2017 in the finance, corporate and human resources (HR) departments, as well as
wages and benefits incurred from recently acquired subsidiaries. During the
three months ended March 31, 2018, ACE hired a total of 26 corporate general and
administrative employees (2017 - 5). Additionally, management compensation
increased as compared to 2017 as the Company strengthened its management team
with the hiring of several senior executives to achieve its growth objectives
and execute its aggressive domestic and international expansions strategy.
Sales and Marketing
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
March 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Consulting fees
|
|
1,851
|
|
|
1,052
|
|
|
4,989
|
|
|
2,381
|
|
|
Branding, public and media relations, and
tradeshows
|
|
911
|
|
|
272
|
|
|
1,930
|
|
|
720
|
|
|
Selling and client care
expenses
|
|
1,966
|
|
|
1,008
|
|
|
5,277
|
|
|
2,642
|
|
|
Wages and benefits
|
|
1,152
|
|
|
352
|
|
|
2,488
|
|
|
925
|
|
|
|
|
5,880
|
|
|
2,684
|
|
|
14,684
|
|
|
6,668
|
|
Consulting fees increased by $799 and $2,608 during the three
and nine months ended March 31, 2018. The increase was primarily attributable to
service fees accrued and paid to Canadian Cannabis Clinics (“CCC”) pursuant to
an agreement to provide operational, administrative and consulting services to
CanvasRx. The Company incurred $1,815 and $4,957 in fees to CCC during the three
and nine months ended March 31, 2018 compared to $1,048 and $2,369 in 2017,
respectively. The increase in fees to CCC was a direct result of increased
CanvasRx locations. CanvasRx revenues have increased from $1,836 for the nine
months ended March 31, 2017 to $2,416 for the nine months ended March 31, 2018.
Since the acquisition of CanvasRx in August 2016, 13,384 CanvasRx patients have
registered with the Company as of March 31, 2018.
Selling and client care expenses increased by $958 and $2,635
during the three and nine months ended March 31, 2018. Selling expenses consist
of shipping costs, sales fees and commissions and payment processing fees.
Client care expenses relate to patient registrations and maintenance, and
consist of rent, utilities, and office expenses for the client care center. The
increase in selling and client care expenses is directly related to the increase
in sales during the periods and the expansion of the client care center.
22
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Wages and benefits increased by $800 and $1,563 during the
three and nine months ended March 31, 2018 as the Company hired a total of 51
sales and marketing employees since March 31, 2017 and incurred additional wages
through recently acquired subsidiaries. During the three months ended March 31,
2018, ACE hired a total of 27 sales and marketing employees (2017 – 1) mainly in
client care, compliance, public affairs and marketing. The increase in personnel
in the client care center is required to support the increase in patient volume
during the periods.
Research and Development
Research and development costs for the three and nine months
ended March 31, 2018 was $477 and $756, respectively, compared to $52 and $191
for the three and nine months ended March 31, 2017. Expenses increased in the
period primarily due to the development of Aurora Envoy
TM
and
designing the related manufacturing process, design of equipment to improve
operational efficiencies at production facilities, as well as the development of
new product offerings including capsules, milled and decarboxylated
cannabis.
Acquisition and Project Evaluation Costs
Acquisition and project evaluation costs increased by $5,532
from $11 during the three months ended March 31, 2017 to $5,543 for the three
months ended March 31, 2018. The Company incurred legal, consulting and advisory
fees relating to business acquisitions and due diligence activities as part of
its aggressive domestic and international expansion strategy, with $5,500
attributable to the CanniMed acquisition.
Depreciation and Amortization
Depreciation and amortization were $873 and $1,967 for the
three and nine months ended March 31, 2018 compared to $178 and $500 for the
three and nine months ended March 31, 2018, respectively. The increase in
depreciation and amortization of $695 and $1,467 for the three and nine months
ended March 31, 2018 was mainly from the amortization of intangible assets of
$159 and $728, respectively, related to customer relationships from the
acquisition of CanvasRx in the prior year. No amortization of intangible assets
was recorded in the prior period. Depreciation for the current year also
increased as a result of increased additions to property, plant, and equipment.
Share-based Payments
The Company recorded share-based payment expense of $15,872 and
$25,814 for stock options and restricted share units granted and vested during
three and nine months ended March 31, 2018, compared to $2,632 and $5,522 for
stock options granted and vested during three and nine months ended March 31,
2017. The increase in share-based payments was mainly due to the hiring of
additional personnel as the Company strengthens its management team in line with
its current and future expansion plans.
Finance and Other Costs
Finance and other costs were $1,889 and $5,565 during the three
and nine months ended March 31, 2018 compared to $1,282 and $6,123 for the three
and nine months ended March 31, 2017.
23
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
During the three months ended March 31, 2018, included in
finance and other costs were $1,771 accretion and interest charges from the
convertible debentures.
During the three months ended March 31, 2017, included in
finance and other costs were $589 accretion expense, $137 finance charges, and
$549 interest expenses relating to convertible debentures.
Other Income (Expenses)
During the three months ended March 31, 2018, the company
recognized an unrealized gain on marketable securities of $12,593 primarily
relating to the acquisition-date fair value of 700,600 CanniMed shares acquired
in the open market.
Additionally, the Company recorded in other comprehensive
income an unrealized loss on marketable securities of $11,951 during the three
months ended March 31, 2018, of which $11,975 is attributable to the investment
in common shares of Radient and Micron, offset by the reversal of $23,535 in
unrealized losses on the investment in CanniMed’s shares. The unrealized loss in
CanniMed shares were reversed upon the Company obtaining control in CanniMed at
which point the fair value of the shares was recorded as part of the investment
in CanniMed, with the corresponding gain recognized in the statement of
operations and comprehensive loss.
Please see Note 6 to the Company’s Interim Financial Statements
for additional details on the investments.
Income Tax Recovery
During the three and nine months ended March 31, 2018, the
Company recorded a deferred tax recovery of $1,909 and expense of $1,950,
respectively, primarily related to the unrealized gain on warrant derivatives,
convertible debentures, marketable securities and intangible assets from
business acquisitions.
During the three and nine months ended March 31, 2017, the
Company recorded a deferred tax recovery of $2,055 in connection with its
issuance of convertible debentures in the aggregate of $40,000, offset by a
deferred tax expense of $139 related to its investments in a convertible
debenture and private placement of units.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended March 31, 2018, the Company
generated revenues of $16,100 from operations, and financed its current
operations, growth initiatives, and met its capital requirements from debt and
equity financings. The Company’s objectives when managing its liquidity and
capital resources are to ensure sufficient cash to fund the Company’s operating
and working capital requirements for at least the next twelve months.
Working capital as of March 31, 2018 was $338,476 as compared
to $170,142 at June 30, 2017. The increase in working capital of $168,334 was
largely attributable to the increase in cash and cash equivalents of $71,227,
share subscriptions of $55,000, $42,564 increase in the fair value of marketable
securities, $10,782 increase in accounts receivables, $20,571 increase in
inventory and biological assets, offset by a $9,362 increase in contingent
consideration payable related to performance milestones of newly acquired subsidiaries, and a $20,152 increase in accounts payable mainly
due to production facility construction.
24
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Marketable securities of $57,409 at March 31, 2018 primarily
consisted of 37,643,431 common shares in Radient at a market price of $1.47 per
share representing 16.77% interest in that entity, and 4,411,765 common shares
in Micron at a market price of $0.47 per share representing 7.19% interest in
that entity as of period end.
Inventory at March 31, 2018 was $26,779 (June 30, 2017 -
$7,703) which consisted of dried cannabis of $19,449 (June 30, 2017 - $5,845),
cannabis oils of $3,394 (June 30, 2017 - $1,676), capsules of $52 (June 30, 2017
- $nil) home cultivation systems of $588 (June 30, 2017 - $nil), Hempco
inventory of $2,612 (June 30, 207 - $nil), and accessories, supplies and
consumables of $684 (June 30, 2017 - $182). The increase in inventory mainly
resulted from increased production of dried cannabis and purchases from other
Licensed Producers to supplement the Company’s inventory to meet patient demand
in Canada and Germany, as well as inventory held by new subsidiaries acquired in
the period. As at March 31, 2018, included in inventory was a provision of
$2,146 (June 30, 2017 - $1,630) to reduce inventory to net realizable value. The
adjustment to net realizable value took into account the compassionate pricing
for qualifying low income patients of $6.00 per gram of dried cannabis.
Biological assets at March 31, 2018 were $5,583 (June 30, 2017
- $4,088). At March 31, 2018, the Company expected that the biological assets
which consisted of plants at various stages of growth would yield approximately
1,173,827 grams (June 30, 2017 – 599,245 grams) of medical cannabis when
harvested. Biological assets increased during the period as a result of an
increase in number of plants in production, higher yields, increase in fair
value, as well as plants acquired from CanniMed.
The Company’s long-term assets mainly consisted of property,
plant and equipment of $191,239, of which $12,022 related to the existing
Mountain View facility in Alberta, $106,533 related to the ongoing construction
of the Aurora Sky facility, $9,233 related to the construction of the Aurora Vie
facility, and $9,872 related to the construction of the H2 facility. Additional
long-term assets include goodwill of $883,071 and intangible assets of $59,958
relating to business and asset acquisitions. $817,187 of goodwill is
attributable to the CanniMed acquisition.
Net cash and cash equivalents on hand increased from $159,796
as at June 30, 2017 to $231,023 as at March 31, 2018. The increase in cash and
cash equivalents resulted mainly from net cash generated from financing
activities of $540,131, offset by net cash used for operations of $36,546,
investments and capital expenditures of $432,211, and adjusted by $147 from the
effect of foreign exchange on cash flows.
During the nine months ended March 31, 2018, the Company
strengthened its balance sheet and liquidity position with approximately
$133,844 from the exercise of stock options and warrants as well as the
conversion of $192,147 convertible debentures into common shares. The Company
anticipates that it has sufficient funds to cover future operating cash flows
and to complete the construction of both the Aurora Sky and Lachute facilities
based on the current capital resources available.
On March 9, 2018, to support the Company’s aggressive growth
strategy, the Company raised aggregate gross proceeds of $230,000 through a
bought deal offering of unsecured convertible debentures bearing interest at 5%
and convertible into common shares at $13.05 per share. The proceeds will be
used towards the Company’s strategic growth initiatives for domestic and
international expansion.
25
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
The Company anticipates that it will have sufficient liquidity
and capital resources to meet all of its planned expenditures for the next
twelve months.
Operating Activities
For the nine months ended March 31, 2018, cash flows used for
operating activities were $36,546 compared to $15,192 for the nine months ended
March 31, 2017. During the nine months ended March 31, 2018, cash flows used for
operations resulted primarily from cash inflows of $21,313 from gross profit
before the effect of changes in fair value, offset by cash flows used for
operating expenses of $36,560, finance and other costs of $3,424 and cash
outflows of $17,875 related to changes in non-cash working capital.
Investing Activities
For the nine months ended March 31, 2018, the Company had net
cash outflows related to investing activities of $432,211 as compared to $21,048
for the nine months ended March 31, 2017. Cash used in investing activities
during the period included the following:
|
|
•
|
construction of Aurora Sky facility of $48,723
|
|
|
•
|
purchase of production equipment, building improvements
and construction of other facilities of $48,949;
|
|
|
•
|
investments of $55,205 in marketable securities and
derivatives;
|
|
|
•
|
share subscriptions of $55,000;
|
|
|
•
|
investment in associates of $105,086;
|
|
|
•
|
investment in long term deposits of $1,978;
|
|
|
•
|
contingent consideration payable of $6,192;
|
|
|
•
|
secured loans and advances of $4,236; and
|
|
|
•
|
acquisition of businesses and assets of $119,047, net of
cash balance assumed.
|
Investing activities during the prior period consisted mainly
of the acquisition of CanvasRx for net consideration and earn out cash payment
of $4,641, construction of the new Aurora Sky facility of $11,507, purchase of
production equipment, computers and furniture, and building improvements of
$1,459, investments in a private placement of $1,250 and a convertible debenture
of $2,000, and a promissory note receivable of $191.
Financing Activities
Net cash flows provided by financing activities for the nine
months ended March 31, 2018 were $540,131 compared to $147,097 for the nine
months ended March 31, 2017. During the period, the Company raised aggregate net
cash proceeds of $541,814 as follows:
|
|
•
|
November 2017 bought deal financing for net proceeds of
$70,647
|
|
|
•
|
November 2017 special warrant financing for net proceeds
of $110,922;
|
|
|
•
|
March 2018 convertible debentures for net proceeds of
$222,205;
|
|
|
•
|
the exercise of warrants, options, and compensation
options for net proceeds of $138,040.
|
26
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Cash provided by financing activities also includes cash flows
arising from changes in the Company’s non controlling interest in Hempco and
CanniMed of $1,584, offset by finance lease payments of $157 during the nine
months ended March 31, 2018.
For the nine months ended March 31, 2017, the Company raised
aggregate net cash of $157,489 from private placements, unsecured convertible
debentures and from the exercise of options and warrants. The proceeds were
offset by repayments of loans totaling $10,215 consisting of related party loans
of $5,757, and third party loans of $4,458.
Capital Resource Measures
The Company’s major capital expenditures during the three
months ended March 31, 2018 mainly consisted of the construction of Aurora Sky.
The Company believes it has sufficient cash and resources to fund the Company’s
operations and complete construction of its announced facilities for at least
the next fiscal year See
“Facilities”
for Aurora’s operating, under
construction and announced production facilities.
Contractual Obligations
In addition to the commitments outlined in Note 23 to the
Company’s Interim Financial Statements, the Company had the following
contractual obligations as of March 31, 2018:
|
|
|
|
|
|
Less than
|
|
|
|
|
|
After
|
|
|
Contractual Obligations
|
|
Total
|
|
|
1 year
|
|
|
1 to 3 years
|
|
|
3 years
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Accounts payable and accrued
liabilities
|
|
28,905
|
|
|
28,905
|
|
|
-
|
|
|
-
|
|
|
Income taxes payable
|
|
774
|
|
|
774
|
|
|
-
|
|
|
-
|
|
|
Deferred revenues
|
|
1,324
|
|
|
1,324
|
|
|
-
|
|
|
-
|
|
|
Finance lease
|
|
579
|
|
|
232
|
|
|
292
|
|
|
55
|
|
|
Operating lease
|
|
98
|
|
|
60
|
|
|
38
|
|
|
-
|
|
|
Office lease
|
|
35,002
|
|
|
3,949
|
|
|
7,501
|
|
|
23,552
|
|
|
Convertible notes
|
|
232,323
|
|
|
-
|
|
|
229,775
|
|
|
2,548
|
|
|
Loans and borrowings
|
|
11,574
|
|
|
2,279
|
|
|
2,490
|
|
|
6,805
|
|
|
Contingent consideration payable
|
|
22,583
|
|
|
22,583
|
|
|
-
|
|
|
-
|
|
|
Total
|
|
333,162
|
|
|
60,106
|
|
|
240,096
|
|
|
32,960
|
|
Contingencies
The Company is subject to a claim outlined in Note 23(b) to the
Company’s Condensed Interim Consolidated Financial Statements.
Investment in Australis Holdings LLP
Each of the Company’s wholly-owned subsidiary, ACI and its
joint venture partner, AJR Builders Group LLC (“AJR”), holds a 50% interest in
Australis Holdings LLP (“AHL”), a Washington Limited Liability Partnership.
27
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
AHL purchased two parcels of land totaling approximately 24.5
acres (the “Property”) in Whatcom county,Washington for USD$2,300,000 in 2015
with the initial intention to construct a new cannabis production and processing
facility. The Company subsequently decided not to move forward with US medical
cannabis production.
Pursuant to a promissory note dated April 10, 2015, the Company
through ACI loaned CAD$1,645 to AHL to fund the purchase of the Property. The
note bears interest at a rate of 5% per annum and had an original maturity date
of October 31, 2017 which was extended to October 31, 2018. In the event of a
default, interest will be charged at 12% per annum. The note is secured by a
first mortgage on one parcel of the Property and a second mortgage on the other
title as well as a general security agreement granting ACI security over present
and after acquired property of AHL.
OFF-BALANCE SHEET ARRANGEMENTS
As at the date of this MD&A, the Company had no material
off-balance sheet arrangements that have, or are reasonably likely to have, a
current or future effect on the financial performance or financial condition of
the Company.
28
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise
|
TRANSACTIONS WITH RELATED PARTIES
Related Party Transactions
The Company entered into certain transactions with related
parties during the three and nine months ended March 31, 2018 and 2017 as
follows:
|
|
|
|
|
|
Three months
|
|
|
Nine months
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ended
|
|
|
|
|
|
ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mar 31,
|
|
|
Mar 31,
|
|
|
Mar 31,
|
|
|
Mar 31,
|
|
|
Mar 31,
|
|
|
Jun
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Name and Relationship to Company
|
|
Transaction
|
|
|
|
|
|
Related Party
Transactions
|
|
|
|
|
|
Balance
Payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Receivable)
(1)
|
|
|
Delcon
Industries Ltd, a company controlled by Dale Lesack, a director of ACE
|
|
Consulting fees
(2)
|
|
|
38
|
|
|
38
|
|
|
113
|
|
|
113
|
|
|
16
|
|
|
|
|
|
Evolve Concrete, a company controlled by Chris Mayerson, a
director of ACE
|
|
Consulting fees
(3)
|
|
|
22
|
|
|
15
|
|
|
60
|
|
|
46
|
|
|
14
|
|
|
|
|
|
Canadian Cannabis Clinics (“CCC”), a company where Joseph del
Moral, is a common director
|
|
Service fees
(4)
|
|
|
1,815
|
|
|
1,048
|
|
|
4,957
|
|
|
2,369
|
|
|
-
|
|
|
|
|
|
Superior Safety Codes (“Superior”), a company controlled
by Terry Booth, CEO and Steve Dobler, President of the Company
|
|
Rent,
accounting and administration
(5)
|
|
|
-
|
|
|
48
|
|
|
62
|
|
|
108
|
|
|
-
|
|
|
|
|
|
Belot
Business Consulting Corp, a company controlled by Neil Belot, Chief Global
Business Development Office
|
|
Consulting fees
(6)
|
|
|
-
|
|
|
499
|
|
|
289
|
|
|
499
|
|
|
-
|
|
|
|
|
|
748086 Alberta Ltd., a company controlled by Jason Dyck, a
director of the Company
|
|
Consulting fees
(7)
|
|
|
15
|
|
|
15
|
|
|
45
|
|
|
29
|
|
|
5
|
|
|
|
|
|
8115966 Canada Inc. (“8115966”), a company
controlled by Michael Singer, a director of the Company
|
|
Consulting fees
(8)
|
|
|
5
|
|
|
13
|
|
|
24
|
|
|
45
|
|
|
-
|
|
|
|
|
Goods and Services
|
(1)
|
The amounts are unsecured, non-interest bearing and have
no specific repayment terms.
|
|
(2)
|
Consulting fees were paid for services as Production
Facilitator.
|
|
(3)
|
Consulting fees paid for services as part-time (full-time
in the prior year) Cultivator of the Company.
|
|
(4)
|
CCC provides operational, administrative and consulting
services to CanvasRx.
|
|
(5)
|
Rent for corporate offices in Edmonton and Calgary as
well as accounting and administrative support at these offices pursuant to
an Administrative Services and Office Space Agreement dated January 1,
2016.
|
|
(6)
|
Consulting fees paid related to the CanvasRx
acquisition.
|
|
(7)
|
Consulting fees related to scientific research and
development services.
|
|
(8)
|
Consulting fees for financial and other advisory services
pursuant to a consulting agreement effective April 18, 2016 with
8115966.
|
29
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
During the three and nine months ended March 31, 2018, the
Company generated $843 design and construction consulting revenue from Cann
Group.
Key Management Compensation
The Company’s key management personnel have the authority and
responsibility for planning, directing and controlling the activities of the
Company and consists of the Company’s Directors, CEO, President, CFO, COO, Chief
Corporate Officer, Chief Global Business Development Officer, Chief Information
Officer, and Vice Presidents.
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
March 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Management compensation
|
|
1,695
|
|
|
271
|
|
|
3,172
|
|
|
816
|
|
|
Directors’ fees
(1)
|
|
56
|
|
|
70
|
|
|
145
|
|
|
212
|
|
|
Share-based payments
(2)
|
|
5,315
|
|
|
2,038
|
|
|
10,026
|
|
|
4,017
|
|
|
|
|
7,066
|
|
|
2,379
|
|
|
13,343
|
|
|
5,045
|
|
|
(1)
|
Include meeting fees and committee chair fees.
|
|
(2)
|
Share-based payments are the fair value of options
granted and vested to key management personnel and directors of the
Company under the Company’s stock option plan.
|
Related Party Balances
In addition to the related party payables for goods and
services noted above, the following related party amounts were included in (i)
accounts payable and accrued liabilities and (ii) note receivable:
|
|
|
March 31,
|
|
|
June 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
$
|
|
|
$
|
|
|
(i) Directors and officers
and a former director and officer of the Company
(1)
|
|
657
|
|
|
565
|
|
|
(ii)
A 50% owned joint venture company
(2)
|
|
3,400
|
|
|
2,096
|
|
|
(1)
|
The amounts are unsecured, non-interest bearing and have
no specific repayments term.
|
|
(2)
|
See note 11(a) to the Interim Financial
Statements.
|
CRITICAL ACCOUNTING ESTIMATES
The preparation of the Company’s Financial Statements in
conformity with IFRS requires management to make judgments, estimates, and
assumptions about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognized in the period in
which the estimate is revised, if the revision affects only that period, or in
the period of the revision and future periods, if the revision affects both
current and future periods.
Significant judgments, estimates and assumptions that have the
most significant effect on the amounts recognized in the Financial Statements
are described in Note 2(e) to the Company’s Interim Financial Statements and Note 2 to the Company’s audited consolidated
financial statements for the year ended June 30, 2017.
30
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
NEW ACCOUNTING PRONOUNCEMENTS
Please see Note 2(f),
Recent Accounting Pronouncements,
to the Company’s Interim Financial Statements for a full disclosure on its
changes in accounting policies including initial adoption.
FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS
Please see Note 25,
Financial Instruments and Risk
Management
, to the Company’s Interim Financial
Statements for a full discussion of its financial instruments
and risk management.
SUMMARY OF OUTSTANDING SHARE DATA
As of the date of this MD&A, the Company had the following
securities issued and outstanding:
|
Securities
(1)
|
|
May 7, 2018
|
|
|
|
|
#
|
|
|
Issued and outstanding
shares
|
|
561,217,812
|
|
|
Options
|
|
25,702,631
|
|
|
Warrants
|
|
8,540,348
|
|
|
Restricted share units
|
|
2,150,000
|
|
|
Convertible debentures
|
|
17,944,437
|
|
|
(1)
|
See the Company’s Interim Financial Statements
for a detailed description of these securities.
|
OUTLOOK
While production capacity at our Mountain View facility in
Cremona is nearly fully optimized, we anticipate further growth throughout the
remainder of calendar 2018 through cultivation and sales from the Company’s Aurora Vie and Aurora Sky facilities, subject to licensing, as
well as from increased shipments to our international markets, the growth of
cannabis oil production and sales, increased product availability through
strategic wholesale supply relationships, and growth from CanniMed. Further
growth throughout the calendar year is anticipated from the Lachute facility,
once completed and licensed, as well as from our initiatives in Denmark.
INTERNAL CONTROLS OVER FINANCIAL REPORTING
In accordance with National Instrument 52-109
Certification
of Disclosure in Issuers’ Annual and Interim
Filings
(“NI
52-109”)
,
the establishment and maintenance of Disclosure Controls and
Procedures (“DCP”) and Internal Control Over Financial Reporting (“ICFR”) is the
responsibility of management. The DCP and ICFR have been designed by management
based on the 2013 Internal Control Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (“COSO”) to provide
reasonable assurance that the Company’s financial reporting is reliable and that
its financial statements have been prepared in accordance with IFRS.
31
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Pursuant to NI 52-109, the Company has limited the scope of the
design of DCP and ICFR to exclude controls, policies and procedures over
entities acquired by the Company not more than 365 days before the end of the
financial period. These recently acquired entities include Pedanios GmbH
(acquired May 29, 2017), BCNL and UCI (acquired September 29, 2017), Hempco Food
and Fiber Inc. (acquired November 14, 2017 with 35% interest held at March 31,
2018), H2 Biopharma Inc. (acquired November 30, 2017), Larssen Ltd. (acquired
December 4, 2017), Aurora Nordic Cannabis A/S (51% interest acquired February
12, 2018) and CanniMed Therapeutics Inc. (acquired March 15, 2018 with 95.9%
interest held at March 31, 2018). Additionally, the Company does not have a
reasonable basis for making the representations on the adequacy of internal
controls for Hempco, which is proportionately consolidated based on the
Company’s percentage ownership interest as of March 31, 2018, as it does not
have sufficient access to design and evaluate those controls, policies and
procedures carried out by that subsidiary. Excluding goodwill and intangible
assets generated from these acquisitions, on a combined basis, Pedanios, BCNL,
UCI, Hempco, H2, Larssen, Aurora Nordic and CanniMed represent approximately 13%
of the Company’s current assets, 6% of total assets, 19% current liabilities, 8%
total liabilities, 35% revenues, and 15% net loss for the nine months ended
March 31, 2018.
Regardless of how well the DCP and ICFR are designed, internal
controls have inherent limitations and can only provide reasonable assurance
that the controls are meeting the Company’s objectives in providing reliable
financial reporting information in accordance with IFRS. These inherent
limitations include, but are not limited to, human error and circumvention of
controls and as such, there can be no assurance that the controls will prevent
or detect all misstatements due to errors or fraud, if any.
Based on the COSO control framework, the CEO and CFO concluded
that the design of DCP and ICFR as at March 31, 2018 provides reasonable
assurance that material information relating to the Company is made known to
them, information required to be disclosed by the Company is reported within the
required time periods as specified in such legislation, and that the Company’s
financial reporting is reliable and its financial statements have been prepared
in accordance with IFRS. The CEO and CFO are also responsible for disclosing any
changes to the Company’s internal controls during the most recent period that
have materially affected, or are reasonably likely to materially affect, its
internal control over financial reporting. There have been no changes to the
Company’s internal control over financial reporting during the three months
ended March 31, 2018 that have materially affected, or are likely to materially
affect, the Company’s internal control over financial reporting.
FORWARD-LOOKING STATEMENTS
This MD&A may contain “forward-looking information” within
the meaning of Canadian securities legislation (“forward-looking statements”).
These forward-looking statements are made as of the date of this MD&A and
Company does not intend, and does not assume any obligation, to update these
forward-looking statements, except as required under applicable securities
legislation. Forward-looking statements relate to future events or future
performance and reflect Company management’s expectations or beliefs regarding
future events. In certain cases, forward-looking statements can be identified by
the use of words such as “plans”, “expects” or “does not expect”, “is expected”,
“budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or
“does not anticipate”, or “believes”, or variations of such words and phrases or
statements that certain actions, events or results “may”, “could”, “would”,
“might” or “will be taken”, “occur” or “be achieved” or the negative of these
terms or comparable terminology. In this document, certain forward-looking statements are identified by
words including “may”, “future”, “expected”, “intends” and “estimates”. By their
very nature forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
achievements of the Company to be materially different from any future results,
performance achievements expressed or implied by the forward-looking statements.
The Company provides no assurance that forward-looking statements will prove to
be accurate, as actual results and future events could differ materially from
those anticipated in such statements. Accordingly, readers should not place
undue reliance on forward-looking statements.
32
|
AURORA CANNABIS INC.
|
|
Management’s Discussion & Analysis
|
|
For the Three and Nine Month Periods Ended March 31, 2018
|
|
(In thousands
of Canadian dollars, except share and per share amounts, and where
otherwise noted)
|
Certain forward-looking statements in this MD&A include,
but are not limited to the following:
|
|
•
|
the completion of construction of Aurora Sky, its
associated costs, and receipt of licenses from Health Canada to produce
and sell medical cannabis from this facility;
|
|
|
•
|
the acquisition of the land for Aurora Sun and the
completion of Aurora Sun, the associated costs and receipts of licenses
from Health Canada to produce and sell medical cannabis from this
facility;
|
|
|
•
|
the successful integration of CanniMed into Aurora’s
operations;
|
|
|
•
|
the completion of construction of its facility in
Lachute, Québec and receipt of Health Canada licenses to allow it to
produce and sell cannabis;
|
|
|
•
|
obtaining a license to sell cannabis from Health Canada
from the Aurora Vie facility;
|
|
|
•
|
the completion of the retrofit and construction of the
new facility for Aurora Nordic;
|
|
|
•
|
investments and capital expenditures;
|
|
|
•
|
its expectations regarding production capacity and
production yields; and
|
|
|
•
|
product sales expectation and corresponding forecasted
increase in revenues.
|
The above and other aspects of the Company’s anticipated future
operations are forward-looking in nature and, as a result, are subject to
certain risks and uncertainties. Although the Company believes that the
expectations reflected in these forward-looking statements are reasonable, undue
reliance should not be placed on them as actual results may differ materially
from the forward-looking statements. Such forward-looking statements are
estimates reflecting the Company's best judgment based upon current information
and involve a number of risks and uncertainties, and there can be no assurance
that other factors will not affect the accuracy of such forward-looking
statements. Such factors include but are not limited to the Company’s ability to
obtain the necessary financing and the general impact of financial market
conditions, the yield from marijuana growing operations, product demand, changes
in prices of required commodities, competition, government regulations and other
risks as set out under “Risk Factors” in the Company’s Annual Information Form
dated September 25, 2017 filed on SEDAR.
33
Form 52-109F2
Certification of Interim Filings
Full Certificate
I, Terry Booth, Chief Executive Officer of Aurora Cannabis
Inc., certify the following:
|
1.
|
Review:
I have reviewed the interim
financial report and interim MD&A (together, the “interim filings”) of
Aurora Cannabis Inc. (the “issuer”) for the interim period ended March 31,
2018.
|
|
|
|
|
2.
|
No misrepresentations:
Based on my
knowledge, having exercised reasonable diligence, the interim filings do
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated or that is necessary to make a
statement not misleading in light of the circumstances under which it was
made, with respect to the period covered by the interim filings.
|
|
|
|
|
3.
|
Fair presentation:
Based on my knowledge,
having exercised reasonable diligence, the interim financial report
together with the other financial information included in the interim
filings fairly present in all material respects the financial condition,
financial performance and cash flows of the issuer, as of the date of and
for the periods presented in the interim filings.
|
|
|
|
|
4.
|
Responsibility:
The issuer’s other
certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (DC&P) and internal
control over financial reporting (ICFR), as those terms are defined in
National Instrument 52-109
Certification of Disclosure in Issuers’
Annual and Interim Filings,
for the issuer.
|
|
|
|
|
5.
|
Design:
Subject to the limitations, if any,
described in paragraphs 5.2 and 5.3, the issuer’s other certifying
officer(s) and I have, as at the end of the period covered by the interim
filings
|
|
|
(a)
|
designed DC&P, or caused it to be designed under our
supervision, to provide reasonable assurance that
|
|
|
|
|
|
|
|
|
(i)
|
material information relating to the issuer is made known
to us by others, particularly during the period in which the interim
filings are being prepared; and
|
|
|
|
|
|
|
|
|
(ii)
|
information required to be disclosed by the issuer in its
annual filings, interim filings or other reports filed or submitted by it
under securities legislation is recorded, processed, summarized and
reported within the time periods specified in securities legislation;
and
|
|
|
|
|
|
|
|
(b)
|
designed ICFR, or caused it to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with the issuer’s
GAAP.
|
|
5.1
|
Control framework:
The control framework
the issuer’s other certifying officer(s) and I used to design the issuer’s
ICFR is the Internal Control – Integrated Framework (COSO Framework 2013)
published by The Committee of Sponsoring Organization of the Treadway
Commission (COSO).
|
|
|
|
|
5.2
|
ICFR – material weakness relating to
design
:
N/A
|
|
|
|
|
5.3
|
Limitation on scope of design:
The issuer
has disclosed in its interim MD&A
|
1
|
|
(a)
|
the fact that the issuer’s other certifying officer(s)
and I have limited the scope of our design of DC&P and ICFR to exclude
controls, policies and procedures of
|
|
|
|
|
|
|
|
|
(i)
|
N/A
|
|
|
|
|
|
|
|
|
(ii)
|
N/A
|
|
|
|
|
|
|
|
|
(iii)
|
a business that the issuer acquired not more than 365
days before the last day of the period covered by the interim filings;
and
|
|
|
|
|
|
|
|
(b)
|
summary financial information about the proportionately
consolidated entity, special purpose entity or business that the issuer
acquired that has been proportionately consolidated or consolidated in the
issuer’s financial statements.
|
|
6.
|
Reporting changes in ICFR:
The issuer has
disclosed in its interim MD&A any change in the issuer’s ICFR that
occurred during the period beginning on January 1, 2018 and ended on March
31, 2018 that has materially affected, or is reasonably likely to
materially affect, the issuer’s ICFR.
|
Date:
May 8, 2018
(signed) Terry
Booth
Terry
Booth
Chief Executive Officer
2
Form 52-109F2
Certification of Interim Filings
Full Certificate
I, Glen Ibbott, Chief Financial Officer of Aurora Cannabis
Inc., certify the following:
|
1.
|
Review:
I have reviewed the interim
financial report and interim MD&A (together, the “interim filings”) of
Aurora Cannabis Inc. (the “issuer”) for the interim period ended March 31,
2018.
|
|
|
|
|
2.
|
No misrepresentations:
Based on my
knowledge, having exercised reasonable diligence, the interim filings do
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated or that is necessary to make a
statement not misleading in light of the circumstances under which it was
made, with respect to the period covered by the interim filings.
|
|
|
|
|
3.
|
Fair presentation:
Based on my knowledge,
having exercised reasonable diligence, the interim financial report
together with the other financial information included in the interim
filings fairly present in all material respects the financial condition,
financial performance and cash flows of the issuer, as of the date of and
for the periods presented in the interim filings.
|
|
|
|
|
4.
|
Responsibility:
The issuer’s other
certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (DC&P) and internal
control over financial reporting (ICFR), as those terms are defined in
National Instrument 52-109
Certification of Disclosure in Issuers’
Annual and Interim Filings,
for the issuer.
|
|
|
|
|
5.
|
Design:
Subject to the limitations, if any,
described in paragraphs 5.2 and 5.3, the issuer’s other certifying
officer(s) and I have, as at the end of the period covered by the interim
filings
|
|
|
(a)
|
designed DC&P, or caused it to be designed under our
supervision, to provide reasonable assurance that
|
|
|
|
|
|
|
|
|
(i)
|
material information relating to the issuer is made known
to us by others, particularly during the period in which the interim
filings are being prepared; and
|
|
|
|
|
|
|
|
|
(ii)
|
information required to be disclosed by the issuer in its
annual filings, interim filings or other reports filed or submitted by it
under securities legislation is recorded, processed, summarized and
reported within the time periods specified in securities legislation;
and
|
|
|
|
|
|
|
|
(b)
|
designed ICFR, or caused it to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with the issuer’s
GAAP.
|
|
5.1
|
Control framework:
The control framework
the issuer’s other certifying officer(s) and I used to design the issuer’s
ICFR is the Internal Control – Integrated Framework (COSO Framework 2013)
published by The Committee of Sponsoring Organization of the Treadway
Commission (COSO).
|
|
|
|
|
5.2
|
ICFR – material weakness relating to
design
:
N/A
|
|
|
|
|
5.3
|
Limitation on scope of design:
The issuer
has disclosed in its interim MD&A
|
1
|
|
(a)
|
the fact that the issuer’s other certifying officer(s)
and I have limited the scope of our design of DC&P and ICFR to exclude
controls, policies and procedures of
|
|
|
|
|
|
|
|
|
(i)
|
N/A
|
|
|
|
|
|
|
|
|
(ii)
|
N/A
|
|
|
|
|
|
|
|
|
(iii)
|
a business that the issuer acquired not more than 365
days before the last day of the period covered by the interim filings;
and
|
|
|
|
|
|
|
|
(b)
|
summary financial information about the proportionately
consolidated entity, special purpose entity or business that the issuer
acquired that has been proportionately consolidated or consolidated in the
issuer’s financial statements.
|
|
6.
|
Reporting changes in ICFR:
The issuer has
disclosed in its interim MD&A any change in the issuer’s ICFR that
occurred during the period beginning on January 1, 2018 and ended on March
31, 2018 that has materially affected, or is reasonably likely to
materially affect, the issuer’s ICFR.
|
Date:
May 8, 2018
(signed) Glen Ibbott
Glen Ibbott
Chief Financial
Officer
2
Aurora Cannabis Announces Q3 Fiscal 2018 Results
211% YoY Revenue Growth, Continued Expansion, Diversification
and Differentiation
Edmonton, AB,
May 8, 2018
–
Aurora
Cannabis Inc. (the “Company” or “Aurora”) (TSX: ACB) (OTCQX: ACBFF) (Frankfurt:
21P; WKN: A1C4WM) today announced its financial and operational results for the
third quarter of fiscal 2018, ended March 31, 2018.
Q3 2018 Financial Highlights
|
|
|
Q3 2018
|
|
|
Q2 2018
|
|
|
Change %
|
|
|
Q3 2017
|
|
|
Change %
|
|
|
|
|
#
|
|
|
#
|
|
|
|
|
|
|
|
|
|
|
|
Active registered patients
|
|
45,776
|
|
|
21,718
|
|
|
110.8%
|
|
|
13,110
|
|
|
249.2%
|
|
|
Grams
sold
|
|
1,352,982
|
|
|
1,161,809
|
|
|
16.5%
|
|
|
653,008
|
|
|
107.2%
|
|
|
Grams produced
|
|
1,205,965
|
|
|
1,204,259
|
|
|
0.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In CDN $000’s unless otherwise
noted)
|
|
$
|
|
|
$
|
|
|
|
|
|
$
|
|
|
|
|
|
Revenues
|
|
16,100
|
(2)
|
|
11,700
|
|
|
37.6%
|
|
|
5,175
|
|
|
211.1%
|
|
|
Average selling price per gram
|
|
7.99
|
|
|
8.36
|
|
|
-4.4%
|
|
|
6.64
|
|
|
20.3%
|
|
|
Gross
margins on Aurora-produced cannabis
(1)
|
|
66.0%
|
|
|
73.8%
|
|
|
|
|
|
|
|
|
|
|
|
Cash cost of sales per gram
(1)
|
|
1.80
|
|
|
1.74
|
|
|
3.4%
|
|
|
|
|
|
|
|
|
Cash
cost to produce per gram
(1)
|
|
1.53
|
|
|
1.41
|
|
|
8.5%
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
231,023
|
|
|
350,841
|
|
|
-34.2%
|
|
|
111,116
|
|
|
107.9%
|
|
|
(1)
|
Gross margins on Aurora-produced cannabis, cash cost of
sales per gram, and cash cost to produce per gram are non-IFRS financial
measures that do not have a standardized meaning under IFRS and may not be
comparable to other companies. See definitions later in this document
under “Non-IFRS Measures.”
|
|
|
|
|
(2)
|
Revenues include 16 days of CanniMed results, which was
consolidated as of March 15, 2018
|
Highlights
|
•
|
A 249.2% increase over last year in active registered
patients to 45,776 was driven in particular by the acquisition of
CanniMed, contributing 21,327 patients. Excluding the CanniMed patients,
Aurora increased its active registered patients in Q3 2018 by 86.5% to
24,449, as compared to 13,110 for March 31, 2017.
|
|
•
|
The Company recorded $16.1 million in revenues,
up 211.1% from Q3 2017 and up 37.6% sequentially from Q2 2018.
|
|
•
|
Total cannabis sales of $10.8 million, up
149.4% from Q3 2017 and up 11.0% sequentially
|
|
|
o
|
Dried cannabis sold in Canada: $6.3 million, up
45.4% from Q3 2017 and up 9.6% sequentially;
|
|
|
o
|
Dried cannabis sold internationally: $2.3
million, down 6.1% sequentially. No international revenues were recorded
in Q3 2017;
|
|
|
o
|
Cannabis oils sold in Canada: $2.2 million, up
44.4% sequentially. No cannabis oil sales were recorded in Q3 2017.
|
|
•
|
Service and other revenues: $2.3 million, up
175.1% from Q3 2017 and up 17.8% sequentially.
|
|
•
|
Design and construction consulting: $3.0
million. No such revenues were recorded for the previous quarter and same
period in the prior year, respectively.
|
|
•
|
Completed key strategic acquisition and
investments, including CanniMed Therapeutics, Liquor Stores NA, and The
Green Organic Dutchman.
|
|
•
|
Project milestones continue to be met at Aurora Sky,
including installation of key operational systems. The facility remains on
schedule for first harvest, subject to licensing, in June, and significant
production ramp up is expected in the second half of calendar 2018.
|
|
•
|
Successfully completed first three harvests at
Aurora Vie.
|
|
•
|
Announced major funded capacity expansion with
Aurora Nordic and Aurora Sun, raising total funded capacity to 430,000 kg
per year.
|
|
•
|
Continued focus on international opportunities
in key developing markets across multiple continents driving sustainable
long-term value.
|
Management commentary
“More than tripling our revenues year-over-year demonstrates
that Aurora continues to execute consistently on its growth strategy, with
exceptional performance across all functions, both in Canada and
internationally,” said Terry Booth, CEO. “It’s worth noting that Aurora’s
industry-leading revenue growth since starting commercial operations has thus
far been driven predominantly by the output of a single production facility,
Aurora Mountain, supported by differentiation into additional revenue streams.
With production underway at Aurora Vie and Aurora Sky, yield enhancements being
implemented at CanniMed, and significant new capacity coming online through
2018, we are targeting further, accelerated growth in subsequent quarters.
We also continue to prepare for legalization of the adult
consumer use market, as our unique investment in Liquor Stores, growing
inventory, and our supply deal with Quebec are testament to. We have
consistently executed at an exceptionally high pace, investing in facilities, as
well as in vertical and horizontal diversification. This has created a strong
platform for continued growth, and we look forward to reporting on our progress
in the coming quarters.”
Q3 2018 and Subsequent Operational Highlights
Aurora continues to build a vertically integrated, and
geographically and horizontally diversified cannabis company. During and
subsequent to the quarter, the Company entered into a number of strategic
transactions and partnerships to drive growth.
CanniMed Acquisition
|
•
|
On May 1, 2018, Aurora completed the acquisition of
CanniMed Therapeutics Inc. (“CanniMed”), which subsequently was delisted
and now operates as a wholly-owned subsidiary of the Company. CanniMed
will form the heart of Aurora’s Medical Cannabis Centre of Excellence, and
focus, in addition to servicing its patient base, on expanding capacity,
product development, scientific research and education. The combination
with CanniMed adds in excess of 20,000 patients and 20,000 kg per annum in
funded capacity, as well as new drug delivery technologies, high-margin
cannabis products, and additional domestic and international distribution
channels.
|
|
|
o
|
An agreement was signed with Pharmasave for the
supply of cannabis to one of Canada’s largest member-owned chain of
pharmacies.
|
|
|
o
|
A topical cream was launched. Early sales have
been strong with positive feedback from physicians and patients on the
efficacy of the new product.
|
|
|
o
|
An agreement with CTT Pharmaceuticals (“CTT”) provides
Aurora and CanniMed with exclusive access to CTT’s sub-lingual wafer drug
delivery technology. The companies are currently working towards obtaining
regulatory approval prior to market launch.
|
The Green Organic Dutchman
The Company completed a strategic investment in The Green
Organic Dutchman (“TGOD”), who are completing a 14,000 kg per annum facility in
Ancaster, Ontario, and in addition are constructing a 102,000 kg per year,
Aurora Larssen Projects (ALPS) designed facility in Valleyfield, Quebec.
Furthermore, the companies signed an agreement giving Aurora the right to
purchase approximately 23,000 kg per year of premium organic cannabis.
Subsequent to the quarter, TGOD completed its initial public
offering (IPO), in which Aurora participated to maintain its ownership interest
at 17.6% . The Company anticipates benefiting both strategically and financially
from its ownership interest in TGOD, as reflected by the significant
appreciation in value of its investment.
Liquor Stores NA
The Company completed a strategic investment in Liquor Stores
NA (“LIQ”) in preparation for the adult consumer use market. LIQ is one of the
leading liquor retail chains in Western Canada, and is in the process of
converting a number of existing locations, while establishing a number of new
stores for the sale of cannabis once adult consumer use is legalized. LIQ
operates out of a large number of premium retail locations, and has the
experience, systems, facilities and capabilities to drive a large retail
network.
Facilities
–
Capacity
Expansion
The Company is executing on a focused strategy to achieve
massive production capacity through the construction of state of the art
technology, highly automated, hybrid greenhouse facilities to deliver consistently high quality of cannabis at ultra-low production
costs. The Company currently has over 430,000 kg per year of funded production
capacity.
Aurora Sky
Aurora Sky, the benchmark facility for the
high-technology, low cost production of cannabis, received its production
license in January 2018 and subsequently plant material was moved into the
facility in preparation for a first harvest expected in June 2018. The Company
remains on schedule for completion of the entire facility this summer, and
continues to work with Health Canada on the licensing of new bays as these come
online.
Aurora Sky is now fully under glass, and the Company continues
to meet project milestones, including the recent installation of key operational
systems, such as:
|
•
|
The overhead crane systems;
|
|
•
|
Key automation components;
|
|
•
|
The high-tech irrigation and fertilization
systems, and
|
|
•
|
The overpressure, filtration and air treatment
systems.
|
The Company has also introduced several new genetics into
production to expand the range of offerings available for the medical and adult
consumer use market.
Aurora Sun
The latest addition to the Aurora family
of facilities, Aurora Sun, at 1,200,000 square foot, will be the Company’s
largest facility, and is to be located in Medicine Hat, Alberta. Aurora Sun is
expected to produce in excess of 150,000 kg of high-quality cannabis per year at
full capacity. The Company anticipates benefiting from positive local government
and community support, municipality-owned utilities offering low energy costs
and free power transmission, as well as country-leading annual sunshine hours in
Medicine Hat to accelerate construction timelines and continue reducing
production and operating costs.
Aurora Vie
The Company has completed its first three
harvests at Aurora Vie in Pointe-Claire Quebec and is ramping up production at
the facility while working towards obtaining its sales license from Health
Canada.
Lachute Quebec Facility
The Lachute Quebec facility
is structurally complete. The Company is currently outfitting the grow rooms for
production, with the first growing tables currently being installed.
Furthermore, the facility is going through the final stages of completing the
processing areas for EU GMP certification. Plants, subject to licensing, are
expected to move into the facility within the next 4-6 weeks
Aurora Nordic
The Company announced that 51% owned
Aurora Nordic will be constructing a 1,000,000 square foot high-technology, low
cost hybrid greenhouse cannabis facility in Denmark. Design for the 1,000,000
square foot Aurora Nordic facility is currently being completed. Once all
required permitting has been received, construction will commence.
Odense
In order to accelerate time to market, Aurora
Nordic is retrofitting an existing, Larssen designed 100,000 square foot
greenhouse that at full capacity should produce approximately 8,000 kg per annum
of cannabis. The facility will be EU GMP compliant to ensure Aurora Nordic can
service the international market. The retrofit is progressing well, and Aurora
anticipates cultivation to commence this summer.
International
The Company continues to execute on its international expansion
strategy. The countries Aurora is currently active in include Canada, Germany,
Italy, Denmark, Australia, Cayman Islands, and South Africa through a
combination of strategic investments, domestic production, and supply
agreements, providing a strong early mover advantage in a growing number of key
international markets.
Aurora continues to staff up in Europe to further accelerate
its international expansion, and is actively engaged in a number of discussions,
and is prioritizing 2018 entry into those jurisdictions that provide an optimal
strategic fit.
With the EU GMP certification of Aurora Mountain and Pedanios
GmbH, Aurora is one of few companies globally with this pharma-grade designation
across both production and distribution facilities in Canada and Germany,
respectively, allowing it to sell into the most restrictive and promising
markets in the EU, such as Italy.
|
|
o
|
The Company continues to ship wholesale product directly
to German pharmacies. Revenue growth at Pedanios is currently constrained
by supply availability due to Aurora Mountain operating at full capacity.
However, due to the rapid adoption of the medical cannabis system by
patients and prescribing physicians in Germany and the anticipated
additional supply coming from Aurora Sky and Aurora Vie, the Company
anticipates having an increase in international shipments in the second
half of this calendar year.
|
|
|
o
|
Pedanios won the first ever public tender to
supply medical cannabis to the Italian Ministry of Defense, who control
supply of the Italian market.
|
|
|
o
|
The first lots were successfully supplied to
the Italian market and are being sold in pharmacies.
|
|
|
o
|
The Company believes that having won this first tender,
and becoming the first private company ever to supply medical cannabis to
the Italian government, provides a distinct early mover advantage in a
market with access to over 60 million people and insurance cost coverage.
|
|
|
o
|
Aurora Nordic, in which Aurora holds a 51% stake, with
the balance owned by its partner Alfred Pederson & Son, has made
excellent progress on the Odense facility retrofit and anticipates
completing the import of live Aurora genetics before the end of this
summer in order to establish a functional medical cannabis transit
corridor, develop its mother plant and genetics collection, address
phytosanitary demands and controls, develop cultivation and processing
methods, and validate laboratory testing protocols.
|
|
|
o
|
In January 2018, Aurora increased its ownership
interest in Cann Group to 22.9%, Australia’s first and largest cannabis
company.
|
|
|
o
|
Cann Group recently signed an agreement with Aurora
Larssen Projects (ALPS) for the design and construction consulting
services for Cann’s phase III cannabis facility, measuring approximately
250,000 square feet. Site selection for the facility is imminent, with
applications for the required planning permits and regulatory approvals
progressing. Cann Group anticipates the facility to be operational in the
first half of calendar 2019.
|
|
|
o
|
The Company continues to export quantities of
product to Australia for research purposes, both through Aurora and
CanniMed.
|
Vertical Integration
Aurora increasingly is becoming the trusted partner of choice
for a growing constellation of companies, through a vertically integrated
offering of B2B and B2C products and services.
|
•
|
Aurora Larssen Projects (“ALPS”) continues to work on a
growing number of cannabis projects globally, with Cann Group the latest
addition to its customer portfolio. ALPS is also assisting The Green
Organic Dutchman in the development of a high-technology hybrid
greenhouse.
|
|
•
|
The Company’s counselling and outreach service CanvasRx
continues to grow rapidly and now has established 28 locations. To date,
CanvasRx has assisted 42,200 patients, with an accumulative prescription
length of 15,786,305 days since inception.
|
Distribution Channels
|
•
|
The Company continues to develop new distribution
channels for its products, such as the completed agreements with
Pharmasave and Shoppers Drug Mart. Additionally, the investment in LIQ and
the completed agreement with the Société des Alcools du Québec are some of
the Company’s initial preparations for the legalization of adult consumer
use.
|
Strengthened Balance Sheet
|
•
|
The Company strengthened its balance sheet and
liquidity position during the third quarter of 2018 with $356 million in
new funds and the conversion of $112.7 million in convertible debentures
into common shares.
|
Management Team Expansion and Director Change
Aurora continues to attract top industry talent, strengthening
its senior management team to ensure the Company has the leadership to continue
growing and building shareholder value.
|
•
|
Mr. Cam Battley was promoted to Chief Corporate
Officer
|
|
•
|
Mr. Savior Joseph was appointed as SVP Global
Marketing
|
|
•
|
Ms. Jillian Swainson was appointed as SVP and
General Counsel
|
|
•
|
Mr. André Jérôme was appointed as SVP, Business
Integration, and Director and Interim CEO of CanniMed
|
|
•
|
Dr. Shane Morris was appointed as VP Product
Development and Regulatory Affairs
|
|
•
|
Dr. Kelly Narine was appointed as Vice
President of Research
|
|
•
|
Mr. Joseph del Moral resigned from the
Company’s Board and as CEO of CanvasRx.
|
Financial review Q3 2018
A comprehensive discussion of Aurora’s financials and
operations are provided in the Company’s Management Discussion & Analysis
and Financial Statements to be filed with SEDAR today and will be published on
www.sedar.com
.
Revenues
|
(in $ ‘000s unless indicated otherwise)
|
|
Mar 31,
|
|
|
Dec 31,
|
|
|
Sep 30,
|
|
|
Jun 30,
|
|
|
Mar 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Canadian dried cannabis
|
|
6,304
|
|
|
5,750
|
|
|
4,641
|
|
|
4,384
|
|
|
4,336
|
|
|
Canadian cannabis oils
|
|
2,178
|
|
|
1,508
|
|
|
1,439
|
|
|
804
|
|
|
-
|
|
|
Europe dried cannabis
|
|
2,331
|
|
|
2,483
|
|
|
1,235
|
|
|
439
|
|
|
-
|
|
|
Total cannabis revenues
|
|
10,813
|
|
|
9,741
|
|
|
7,315
|
|
|
5,627
|
|
|
4,336
|
|
|
Design & construction consulting
|
|
2,979
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Other revenue
(1)
|
|
2,308
|
|
|
1,959
|
|
|
934
|
|
|
309
|
|
|
839
|
|
|
Total consolidated revenues
|
|
16,100
|
|
|
11,700
|
|
|
8,249
|
|
|
5,936
|
|
|
5,175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quantity sold
|
|
#
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
Dried cannabis (grams)
|
|
1,183,280
|
|
|
1,048,882
|
|
|
802,250
|
|
|
710,155
|
|
|
653,008
|
|
|
Cannabis oils (gram equivalent)
|
|
169,702
|
|
|
112,927
|
|
|
87,715
|
|
|
44,904
|
|
|
-
|
|
|
Cannabis oils (bottles)
|
|
25,024
|
|
|
18,239
|
|
|
17,853
|
|
|
8,302
|
|
|
-
|
|
|
Total consolidated grams sold
|
|
1,352,982
|
|
|
1,161,809
|
|
|
889,965
|
|
|
755,059
|
|
|
653,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average net selling price
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Dried cannabis (per gram)
|
|
7.30
|
|
|
7.85
|
|
|
7.32
|
|
|
6.79
|
|
|
6.64
|
|
|
Cannabis oils (per gram equivalent)
|
|
12.83
|
|
|
13.35
|
|
|
16.41
|
|
|
17.91
|
|
|
-
|
|
|
|
|
87.02
|
|
|
82.68
|
|
|
80.63
|
|
|
96.87
|
|
|
-
|
|
|
Total consolidated average selling price per
|
|
7.99
|
|
|
8.36
|
|
|
8.22
|
|
|
7.45
|
|
|
6.64
|
|
Revenues for the third quarter of fiscal 2018 were $16.1
million, up 211.1% from the same quarter in the prior year and up 37.6%
sequentially from the previous quarter. Revenue growth compared to the same
quarter in the prior year was attributable mainly to higher patient numbers,
higher average selling price per gram due to higher selling prices for oils, the
development of new markets (Europe), and new revenues streams (product
diversification through the acquisitions of Urban Cultivator, BC Northern
Lights, ALPS). As CanniMed was only consolidated as of March 15, 2018, its
contribution to growth was limited.
The average price of product sold increased by 20.3% over Q3
2017 from $6.64 to $7.99 per gram, attributable mainly to increases in cannabis
oils sold.
Total product sold for the period was 1,352,982 grams of dried
cannabis and cannabis oils, up 107.2% as compared to the third quarter of 2017,
and up 16.5% from Q2 2018.
Revenues from cannabis oil sales increased by 44.4% compared to
the Q2 2018. The Company recorded no revenues from oil sales in the same quarter
for the prior year. Compared to Q2 2018, the average selling price fell from
$8.36 to $7.99 as the Company increased wholesale bulk sales of dried cannabis,
and due to higher cannabis consumption for oil extraction.
No International cannabis sales were recorded in the second
quarter of 2017. Entry in this new market enabled the Company to develop a new
revenue stream, generating $2.3 million for the quarter. Product availability
from the Company’s fully optimized Mountain facility restricted growth in
Germany. While European revenues for the period declined slightly (6.1%), in
March Pedanios recorded its first month with sales exceeding 100kg. The Company
anticipates that with Aurora Vie and Aurora Sky coming online, the availability
of product for the international market will increase.
Cost of sales
Included in cost of sales for the three months ended March 31,
2018 were cost of goods sold of $6.8 million, unrealized gain on changes in fair
value of biological assets of $2.5 million, and unrealized loss on changes in
fair value on sale of inventory of $4.2 million.
The increase in cost of goods sold during the period under
review was largely attributable to increases in production and production
yields, as well as contribution from the Company’s new subsidiaries BCNL, UCI
and Hempco.
Cash costs of sales per gram of dried cannabis produced during
the quarter increased slightly, coming in at $1.80 for Q2 2018, as compared to
$1.74 for Q2 2018. The difference is explained predominantly through higher
seasonal utility costs and overhead expenses.
Gross Profit
Gross profit, before the effect of changes in fair value, was
$9.3 million, a 216% increase from Q3 2017, attributable mainly to higher
business volume related to a strong increase in registered patient numbers and
an increase in the average price per gram of product sold, revenues generated in
Germany through the Company`s subsidiary Pedanios, as well as the contribution
from the Company`s subsidiaries BCNL, UCL and Hempco.
Gross profit after the effect of changes in fair value was $7.6
million for the three months ended March 31, 2018, as compared to $5.8 million
for the three months ended March 31, 2017. The increase was primarily
attributable to the increase in revenues as described above, as well as the gain
on the net effect of changes in fair value of biological assets and inventory.
General & Administrative Costs
General and administration costs increased by $7.8 million to
$9.8 million for the quarter, as compared to Q3 2017, attributable primarily to
increases in corporate and general administrative activities in support of
Aurora’s continues growth initiatives in Canada and Germany, and expanding
operations through its newly acquired subsidiaries.
Sales & Marketing
Sales and marketing costs were $5.9 million in Q3 2018, up $3.2
million compared to Q3 2017, attributable mainly to increased service fees paid
in relation to significant growth in patient volumes serviced by CanvasRx, as
well as higher selling and client care expenses related to a substantial
increase in registered patients and resulting business volume.
Acquisition and Project Evaluation Costs
Acquisition and project evaluation costs for the quarter
increased by $5.5 million as comparted to the same quarter in the prior year.
The Company incurred legal, consulting and advisory fees relating to business
acquisitions and due diligence activities as part of its aggressive domestic and
international expansion strategy, with primarily $5.5 million attributable to
the CanniMed Offer.
Other Income
The company recognized an unrealized gain on marketable
securities of $12.6 million, primarily relating to the acquisition-date fair
value of 700,600 CanniMed shares acquired in the open market.
Additionally, the Company recorded in other comprehensive
income an unrealized loss on marketable securities of $12.0 million for the
quarter, attributable to the investment in common shares of Radient and Micron,
offset by the reversal of $23.5 in unrealized losses on the investment in
CanniMed’s shares. The unrealized loss in CanniMed shares were reversed upon the
Company obtaining control of CanniMed at which point the fair value of the
shares was recorded as part of the investment in CanniMed, with the
corresponding gain recognized in the statement of operations and comprehensive
loss.
Net Loss
Net loss of $20.8 million for the period under review was
primarily attributable to increases in business acquisition costs related to the
CanniMed acquisition, as well as share-based payments, offset partially by net
unrealized gains from marketable securities and derivatives of $10.9
million.
Liquidity and Capital Resources
The Company
strengthened its balance sheet and liquidity
position during the third quarter of 2018 with $356 million in new funds, as
follows:
|
•
|
On January 12, 2018, the Company’s 115,000
special warrants were exercised into $115 million in convertible
debentures, bearing interest at 6% per annum, convertible at $6.50 per
common share.
|
|
•
|
On March 9, 2018, the Company completed a bought deal
offering of 230,000 convertible debentures for gross proceeds of $230
million. The debentures have a term of two years, bear interest at 5% per
annum, and are convertible at $13.05 per common share.
|
|
•
|
During the three months ended March 31, 2018,
the Company raised $11.3 million through the exercise of options and
warrants.
|
For the nine-month period, net cash and cash equivalents on
hand increased from $159.8 million as at June 30, 2017 to $231.0 million as at
March 31, 2018, due to net cash flows provided by financing activities for the
nine months ended March 31, 2018 of $540.1 million, offset partially by cash
flows used in operations of $36.5 million and investments and capital
expenditures of $432.2 million.
Working capital as of March 31, 2018 was $338.5 million, as
compared to $170.1 million as at June 30, 2017. The increase in working capital
of $168.3 million was largely attributable to the increase in cash and cash
equivalents of $71.2 million, share subscriptions of $55.0 million, a $42.6
million increase in the fair value of marketable securities, a $10.8 million
increase in accounts receivables, a $20.6 million increase in inventory and
biological assets, offset by a $9.4 million increase in contingent consideration
payable related to performance milestones of newly acquired subsidiaries, and a
$20.2 million increase in accounts payable, mainly due to production facility
construction.
Outstanding Share Data
As of the date of the MD&A, the Company had the following
securities issued and outstanding:
|
Securities
|
|
May 7, 2018
|
|
|
|
|
#
|
|
|
Issued and outstanding shares
|
|
564,783,420
|
|
|
Options
|
|
26,190,465
|
|
|
Warrants
|
|
8,415,308
|
|
|
Restricted share units
|
|
2,150,000
|
|
|
Convertible debentures
|
|
17,944,434
|
|
Financial and Strategic Outlook
While production capacity at our Mountain View facility in
Cremona is nearly fully optimized, we anticipate further growth through the
remainder of calendar 2018 through cultivation and sales from the Company’s
Aurora Vie and Aurora Sky facilities, subject to licensing, as well as from
increased shipments to our international markets, the growth of cannabis oil
production and sales, increased product availability through strategic wholesale
supply relationships, and growth from CanniMed. Further growth throughout the
calendar year is anticipated from the Lachute facility, once completed and
licensed, as well as from our initiatives in Denmark.
Aurora’s business strategy is to continue accelerating its
penetration of the Canadian medical cannabis market, leverage its Health Canada
sales license for derivative products (cannabis oils), ramp up cultivation at
its Aurora Sky and Aurora Vie facilities, and fully complete Aurora Sky in
Edmonton Alberta and Lachute Quebec (H2) facilities. Internationally, we expect
to commence the construction of the new 1,000,000 square foot Aurora Nordic
facility in Denmark, and retrofit existing greenhouse capacity in Denmark to
commence cultivation and revenue generation in Denmark while the Aurora Nordic
facility is under construction. Further production capacity will increase
through the construction of Aurora Sun, a 1,200,000 square foot facility that at
full capacity should produce in excess of 150,000 kg per year. Upgrades are also
being undertaken to the Company’s first facility in Cremona, Alberta, to further
enhance existing production. Aurora is also in the process of integrating
CanniMed therapeutics, through which it has access to additional capacity,
registered patients and international markets.
In preparation for the anticipated Canadian federal
legalization of adult consumer use of cannabis, the Company is building
organizational and production capacity to capture a significant share of the
adult use market.
Innovation and integration of technology are key components in
Aurora’s growth strategy. Going forward, Aurora will continue to leverage new
technologies, aimed at:
|
|
•
|
Improving the customer experience, e.g. via
further enhancements to Aurora’s unique mobile application - the world’s
only mobile app for ordering legal medical cannabis;
|
|
|
•
|
Make available to its patient base novel drug
delivery technologies;
|
|
|
•
|
Delivering industry-leading per square foot
production capacity, while reducing operational expenses at its production
facilities, and
|
|
|
•
|
Substantially increasing the production of
cannabis concentrates through the Company’s collaboration with Radient.
|
The Company is also focusing on delivering further product
differentiation, including through Aurora’s intended strategic investment in
Hempco, its partnership with Namaste Technologies, the acquisition of homegrow
and urban garden companies BC Northern Lights and Urban Cultivator, product
development at CanniMed and Aurora, and the acquisition from CTT of licenses for
the exclusive use in Canada of IP related to proprietary drug delivery
technologies.
Finally, the Company is executing a significant international
expansion initiative, as evidenced by the lead participation in the May 2017
Cann Group IPO in Australia, the May 2017 acquisition of Pedanios, Germany’s
largest distributor of medical cannabis, and its partnership with Alfred
Pedersen in Denmark for the construction of the new Aurora Nordic facility. The
Company is actively pursuing further international opportunities.
Non-IFRS Financial Measures
The Company has included the following non-IFRS performance
measures in this press release:
|
•
|
Cash cost of sales of dried cannabis sold is calculated
by taking the cost of sales, which excludes the effect of changes in fair
value of biological assets and inventory, and removing non-cash production
costs, oil conversion costs, cost of accessories, cost of products
purchased from other Licensed Producers that were sold, and cost of sales
from non-cannabis production subsidiaries, all divided by the total grams
of dried cannabis sold in the period that was produced by Aurora. Cash
cost to produce dried cannabis sold per gram is equal to cash cost of
sales of dried cannabis sold less packaging costs (post-production cost)
divided by the total grams of dried cannabis sold in the period that was
produced by Aurora.
|
|
•
|
Grams produced in the period refers to the grams of dried
cannabis harvested from plants in the period. The Company calculates grams
produced in the period based on the weight of dried harvested buds that
have completed the drying stage, which is adjusted for the weight change
from the drying process.
|
|
•
|
Gross margin for Aurora-produced cannabis is
calculated by taking gross profit for Aurora-produced cannabis divided by
net revenue for Aurora-produced cannabis. Gross profit for Aurora-produced
cannabis is calculated by taking net revenue less cost of sales on
Aurora-produced cannabis. Net revenue on Aurora-produced cannabis is
calculated by taking consolidated net revenue less net revenue from
non-cannabis production operations and net revenue from products sourced
from other Licensed Producers. Cost of sales on Aurora-produced cannabis
is calculated by taking consolidated cost of sales, excluding the effects
of changes in fair value of biological assets and inventory, less cost of
sales from non-cannabis production operations and cost of sales from
products sourced from other Licensed Producers.
|
Milestone Payment
The Company will be paying a consideration equal to
$1,249,619.39 to the vendors of CanvasRx Inc. based on the achievement of
certain performance milestones for the period ended March 31, 2018, pursuant to
a share purchase agreement announced on August 10, 2016.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Enterprises Inc., is a
licensed producer of medical cannabis pursuant to Health Canada's Access to
Cannabis for Medical Purposes Regulations ("ACMPR"). The Company operates a
55,200 square foot, state-of-the-art production facility in Mountain View
County, Alberta, known as "Aurora Mountain", and a second 40,000 square foot
high-technology production facility known as “Aurora Vie” in Pointe-Claire,
Quebec on Montreal’s West Island. In January 2018, Aurora’s 800,000 square foot flagship cultivation facility, Aurora Sky,
located at the Edmonton International Airport, was licensed. Once at full
capacity, Aurora Sky is expected to produce over 100,000 kg per annum of
cannabis. Aurora is completing a facility in Lachute, Quebec utilizing its
wholly owned subsidiary Aurora Larssen Projects Inc.
The Company’s wholly-owned subsidiary CanniMed Therapeutics
Inc. (“CanniMed”) is Canada’s most experienced licensed producer of medical
cannabis, with over 20,000 kg per annum in funded capacity. CanniMed forms the
heart of Aurora’s Medical Cannabis Centre of Excellence, aimed at product and
market development.
Aurora also owns Berlin-based Pedanios GmbH, the leading
wholesale importer, exporter, and distributor of medical cannabis in the
European Union. The Company owns 51% of Aurora Nordic, which will be
constructing a 1,000,000 square foot hybrid greenhouse in Odense, Denmark. The
Company offers further differentiation through its acquisition of BC Northern
Lights Ltd. and Urban Cultivator Inc., industry leaders, respectively, in the
production and sale of proprietary systems for the safe, efficient and
high-yield indoor cultivation of cannabis, and in state-of-the-art indoor
gardening appliances for the cultivation of organic microgreens, vegetables and
herbs in home and professional kitchens.
Aurora holds a 19.88% ownership interest in Liquor Stores N.A.,
(“LIQ”) who are developing a cannabis retail network in Western Canada. In
addition, the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc, and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian producer The Green Organic Dutchman Ltd., with options
to increase to majority ownership.
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index
On behalf of the Board of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
###
Further information
|
Marc Lakmaaker
|
Craig MacPhail
|
|
Director, Investor Relations and
|
NATIONAL Equicom
|
|
Corporate Development
|
+1 416-586-1938
|
|
+1.647.269.5523
|
cmacphail@national.ca
|
|
marc.lakmaaker@auroramj.com
|
|
|
www.auroramj.com
|
|
Forward-Looking Information Cautionary Statement
This news release contains certain
“forward
-
looking statements” within the meaning of such statements
under applicable securities law. Forward-looking statements are
frequently characterized by words such
as “plan”, “continue”, “expect”,
“project”, “intend”, “believe”, “anticipate”, “estimate”, “may”, “will”,
“potential”, “proposed” and other similar words, or statements that certain
events or conditions “may” or “will” occur. These statements are only
predictions. Forward looking statements in release
include statements
regarding the proposed completion of a subsequent acquisition transaction.
Various assumptions were used in drawing the conclusions or making the
projections contained in the forward-looking statements throughout this news
release. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
expressly required by applicable law. A more complete
discussion of the
risks and uncertainties facing the Company appears in the Company’s Annual
Information
Form and continuous disclosure filings, which are available
at www.sedar.com.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
|
AURORA CANNABIS INC.
|
|
Condensed Interim Consolidated Statements of Financial
Position
|
|
March 31, 2018 and June 30, 2017
|
|
(Unaudited – In thousands of Canadian dollars)
|
|
|
|
March 31, 2018
|
|
|
June 30, 2017
|
|
|
|
|
$
|
|
|
$
|
|
|
Assets
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
231,023
|
|
|
159,796
|
|
|
Short-term investments
|
|
690
|
|
|
-
|
|
|
Accounts
receivable
|
|
13,094
|
|
|
2,312
|
|
|
Marketable securities
|
|
57,409
|
|
|
14,845
|
|
|
Share
subscriptions
|
|
55,000
|
|
|
-
|
|
|
Inventory
|
|
26,779
|
|
|
7,703
|
|
|
Biological
assets
|
|
5,583
|
|
|
4,088
|
|
|
Promissory notes receivable
|
|
-
|
|
|
1,222
|
|
|
Loans receivable
|
|
3,400
|
|
|
2,096
|
|
|
Prepaid and other current assets
|
|
1,644
|
|
|
1,544
|
|
|
|
|
394,622
|
|
|
193,606
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
191,239
|
|
|
45,523
|
|
|
Convertible debenture
|
|
-
|
|
|
11,071
|
|
|
Derivatives
|
|
3,977
|
|
|
292
|
|
|
Investment in associates and joint venture
|
|
136,555
|
|
|
-
|
|
|
Intangible assets
|
|
59,958
|
|
|
31,087
|
|
|
Goodwill
|
|
883,071
|
|
|
41,100
|
|
|
Deposits
|
|
1,978
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
1,671,400
|
|
|
322,679
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
Accounts payable
and accrued liabilities
|
|
28,905
|
|
|
8,753
|
|
|
Income taxes payable
|
|
774
|
|
|
-
|
|
|
Deferred revenue
|
|
1,324
|
|
|
1,421
|
|
|
Finance lease
|
|
281
|
|
|
69
|
|
|
Loans and
borrowings
|
|
2,279
|
|
|
-
|
|
|
Contingent consideration payable
|
|
22,583
|
|
|
13,221
|
|
|
|
|
56,146
|
|
|
23,464
|
|
|
|
|
|
|
|
|
|
|
Finance lease
|
|
226
|
|
|
282
|
|
|
Convertible notes
|
|
197,092
|
|
|
63,536
|
|
|
Loans and borrowings
|
|
9,295
|
|
|
-
|
|
|
Deferred gain on convertible debenture
|
|
-
|
|
|
10,206
|
|
|
Deferred gain on derivatives
|
|
2,634
|
|
|
321
|
|
|
Deferred tax liability
|
|
19,234
|
|
|
5,937
|
|
|
Total liabilities
|
|
284,627
|
|
|
103,746
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
Share capital
|
|
1,416,124
|
|
|
221,447
|
|
|
Reserves
|
|
(4,134
|
)
|
|
25,912
|
|
|
Deficit
|
|
(35,921
|
)
|
|
(28,426
|
)
|
|
Total equity attributable to
shareholders of Aurora
|
|
1,376,069
|
|
|
218,933
|
|
|
Non-controlling interest
|
|
10,704
|
|
|
-
|
|
|
Total equity
|
|
1,386,773
|
|
|
218,933
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
1,671,400
|
|
|
322,679
|
|
|
AURORA CANNABIS INC.
|
|
Condensed Interim Consolidated Statements of
Comprehensive Income (Loss)
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Revenues
|
|
16,100
|
|
|
5,175
|
|
|
36,049
|
|
|
12,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
6,827
|
|
|
2,241
|
|
|
14,736
|
|
|
6,853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit before fair
value adjustments
|
|
9,273
|
|
|
2,934
|
|
|
21,313
|
|
|
5,278
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on changes in
fair value on sale of inventory
|
|
4,164
|
|
|
1,688
|
|
|
10,751
|
|
|
2,661
|
|
|
Unrealized gain on changes in fair value of biological
assets
|
|
(2,506
|
)
|
|
(4,516
|
)
|
|
(12,350
|
)
|
|
(7,592
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
7,615
|
|
|
5,762
|
|
|
22,912
|
|
|
10,209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administration
|
|
9,847
|
|
|
2,037
|
|
|
20,408
|
|
|
4,633
|
|
|
Sales and marketing
|
|
5,880
|
|
|
2,684
|
|
|
14,684
|
|
|
6,668
|
|
|
Research and
development
|
|
477
|
|
|
52
|
|
|
756
|
|
|
191
|
|
|
Acquisition and project
evaluation costs
|
|
5,543
|
|
|
11
|
|
|
7,639
|
|
|
180
|
|
|
Share of loss from
investment in associate
|
|
879
|
|
|
-
|
|
|
931
|
|
|
-
|
|
|
Depreciation and
amortization
|
|
873
|
|
|
178
|
|
|
1,967
|
|
|
500
|
|
|
Share-based payments
|
|
15,872
|
|
|
2,632
|
|
|
25,814
|
|
|
5,522
|
|
|
|
|
39,371
|
|
|
7,594
|
|
|
72,199
|
|
|
17,694
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
(31,756
|
)
|
|
(1,832
|
)
|
|
(49,287
|
)
|
|
(7,485
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other
income
|
|
833
|
|
|
239
|
|
|
2,188
|
|
|
366
|
|
|
Finance and other costs
|
|
(1,889
|
)
|
|
(1,282
|
)
|
|
(5,565
|
)
|
|
(6,123
|
)
|
|
Foreign exchange
|
|
(430
|
)
|
|
-
|
|
|
(166
|
)
|
|
-
|
|
|
Gain on disposition of
subsidiary
|
|
35
|
|
|
-
|
|
|
35
|
|
|
-
|
|
|
Unrealized gain on
debenture
|
|
-
|
|
|
2,004
|
|
|
6,937
|
|
|
2,004
|
|
|
Unrealized gain on
marketable securities
|
|
12,593
|
|
|
1,333
|
|
|
16,293
|
|
|
1,333
|
|
|
Unrealized gain (loss)
on derivatives
|
|
(1,678
|
)
|
|
(182
|
)
|
|
21,925
|
|
|
(182
|
)
|
|
Share-based compensation income
|
|
324
|
|
|
-
|
|
|
324
|
|
|
-
|
|
|
|
|
9,788
|
|
|
2,112
|
|
|
41,971
|
|
|
(2,602
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes
|
|
(21,968
|
)
|
|
280
|
|
|
(7,316
|
)
|
|
(10,087
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax recovery (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
(736
|
)
|
|
-
|
|
|
(774
|
)
|
|
19
|
|
|
Deferred, net
|
|
1,909
|
|
|
(139
|
)
|
|
(1,950
|
)
|
|
1,916
|
|
|
|
|
1,173
|
|
|
(139
|
)
|
|
(2,724
|
)
|
|
1,935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
(20,795
|
)
|
|
141
|
|
|
(10,040
|
)
|
|
(8,152
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of Aurora
|
|
(19,215
|
)
|
|
141
|
|
|
(7,933
|
)
|
|
(8,152
|
)
|
|
Non-controlling interests
|
|
(1,580
|
)
|
|
-
|
|
|
(2,107
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.04
|
)
|
$
|
0.00
|
|
$
|
(0.02
|
)
|
$
|
(0.03
|
)
|
|
Diluted
|
$
|
(0.04
|
)
|
$
|
0.00
|
|
$
|
(0.02
|
)
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
478,918,568
|
|
|
313,129,033
|
|
|
427,180,423
|
|
|
253,099,730
|
|
|
Diluted
|
|
478,918,568
|
|
|
313,129,033
|
|
|
427,180,423
|
|
|
253,099,730
|
|
|
AURORA CANNABIS INC.
|
|
Condensed Interim Consolidated Statements of
Comprehensive Income (Loss)
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars, except share
and per share amounts)
|
|
|
|
(Continued)
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Net income (loss)
|
|
(20,795
|
)
|
|
141
|
|
|
(10,040
|
)
|
|
(8,152
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax
|
|
1,613
|
|
|
-
|
|
|
(118
|
)
|
|
-
|
|
|
Unrealized gain (loss) on marketable securities
|
|
(11,951
|
)
|
|
(472
|
)
|
|
874
|
|
|
(472
|
)
|
|
Foreign currency translation
|
|
40
|
|
|
-
|
|
|
65
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
(31,093
|
)
|
|
(331
|
)
|
|
(9,219
|
)
|
|
(8,624
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of Aurora
|
|
(29,513
|
)
|
|
(331
|
)
|
|
(7,112
|
)
|
|
(8,624
|
)
|
|
Non-controlling interests
|
|
(1,580
|
)
|
|
-
|
|
|
(2,107
|
)
|
|
-
|
|
|
AURORA CANNABIS INC.
|
|
Condensed Interim Consolidated Statements of Cash
Flows
|
|
Three and nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars)
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
Cash provided by (used in)
Operating activities
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Net income (loss) for
the period
|
|
(19,215
|
)
|
|
141
|
|
|
(7,933
|
)
|
|
(8,152
|
)
|
|
Adjustments for
non-cash items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on changes in fair value of biological assets
|
|
(2,506
|
)
|
|
(4,516
|
)
|
|
(12,350
|
)
|
|
(7,592
|
)
|
|
Changes in fair value included in inventory sold
|
|
4,164
|
|
|
1,688
|
|
|
10,751
|
|
|
2,661
|
|
|
Depreciation of fixed assets
|
|
1,055
|
|
|
281
|
|
|
1,941
|
|
|
752
|
|
|
Amortization of intangible assets
|
|
159
|
|
|
-
|
|
|
728
|
|
|
-
|
|
|
Share-based payments
|
|
15,872
|
|
|
2,632
|
|
|
25,814
|
|
|
5,522
|
|
|
Share of loss from investment in associate
|
|
879
|
|
|
-
|
|
|
931
|
|
|
-
|
|
|
Unrealized gain on debentures
|
|
-
|
|
|
(2,004
|
)
|
|
(6,937
|
)
|
|
(2,004
|
)
|
|
Unrealized (gain) loss on derivatives
|
|
1,678
|
|
|
182
|
|
|
(21,925
|
)
|
|
182
|
|
|
Share-based compensation income
|
|
(324
|
)
|
|
-
|
|
|
(324
|
)
|
|
-
|
|
|
Unrealized gain on marketable securities
|
|
(12,593
|
)
|
|
(1,333
|
)
|
|
(16,293
|
)
|
|
(1,333
|
)
|
|
Accrued interest and accretion expense
|
|
2,466
|
|
|
398
|
|
|
5,035
|
|
|
1,901
|
|
|
Financing fees
|
|
-
|
|
|
252
|
|
|
-
|
|
|
2,373
|
|
|
Interest and other income
|
|
-
|
|
|
-
|
|
|
(59
|
)
|
|
-
|
|
|
Deferred tax expense (recovery)
|
|
(1,909
|
)
|
|
139
|
|
|
1,950
|
|
|
(1,916
|
)
|
|
Changes in
non-cash working capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GST
recoverable
|
|
(778
|
)
|
|
(181
|
)
|
|
(3,351
|
)
|
|
(266
|
)
|
|
Accounts
receivable
|
|
(2,093
|
)
|
|
787
|
|
|
(2,047
|
)
|
|
(713
|
)
|
|
Inventory
|
|
(2,571
|
)
|
|
(307
|
)
|
|
(5,224
|
)
|
|
400
|
|
|
Biological assets
|
|
1,447
|
|
|
-
|
|
|
1,447
|
|
|
-
|
|
|
Prepaid
and other current assets
|
|
(94
|
)
|
|
(6,992
|
)
|
|
356
|
|
|
(7,533
|
)
|
|
Accounts
payable and accrued liabilities
|
|
(13,056
|
)
|
|
739
|
|
|
(9,616
|
)
|
|
916
|
|
|
Income
taxes payable
|
|
742
|
|
|
-
|
|
|
742
|
|
|
-
|
|
|
Deferred revenue
|
|
(238
|
)
|
|
(1,089
|
)
|
|
(182
|
)
|
|
(390
|
)
|
|
|
|
(26,915
|
)
|
|
(9,183
|
)
|
|
(36,546
|
)
|
|
(15,192
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investments
|
|
218
|
|
|
-
|
|
|
(179
|
)
|
|
-
|
|
|
Marketable securities
and derivatives
|
|
(15,457
|
)
|
|
(1,250
|
)
|
|
(55,205
|
)
|
|
(1,250
|
)
|
|
Share subscriptions
|
|
(55,000
|
)
|
|
-
|
|
|
(55,000
|
)
|
|
-
|
|
|
Convertible debenture
|
|
-
|
|
|
(2,000
|
)
|
|
-
|
|
|
(2,000
|
)
|
|
Notes receivable
|
|
-
|
|
|
(191
|
)
|
|
(4,236
|
)
|
|
(191
|
)
|
|
Purchase of property,
plant and equipment
|
|
(43,736
|
)
|
|
(8,124
|
)
|
|
(97,672
|
)
|
|
(12,966
|
)
|
|
Acquisition of
businesses, net of cash acquired
|
|
32,691
|
|
|
(1,223
|
)
|
|
24,169
|
|
|
(4,641
|
)
|
|
Acquisition of assets
|
|
(142,261
|
)
|
|
-
|
|
|
(143,216
|
)
|
|
-
|
|
|
Investment in
associates
|
|
(105,086
|
)
|
|
-
|
|
|
(105,086
|
)
|
|
-
|
|
|
Contingent
consideration payable
|
|
6,192
|
|
|
-
|
|
|
6,192
|
|
|
-
|
|
|
Deposits
|
|
(1,382
|
)
|
|
-
|
|
|
(1,978
|
)
|
|
-
|
|
|
|
|
(323,821
|
)
|
|
(12,788
|
)
|
|
(432,211
|
)
|
|
(21,048
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance lease
|
|
191
|
|
|
(241
|
)
|
|
157
|
|
|
(177
|
)
|
|
Proceeds of convertible
notes
|
|
345,000
|
|
|
-
|
|
|
345,000
|
|
|
40,000
|
|
|
Proceeds (repayment) of
short term loans
|
|
(252
|
)
|
|
(666
|
)
|
|
(252
|
)
|
|
(6,215
|
)
|
|
Proceeds (repayment) of
long term loans
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(4,000
|
)
|
|
Financing fees
|
|
(11,873
|
)
|
|
(50
|
)
|
|
(11,873
|
)
|
|
(1,660
|
)
|
|
Special warrant
subscriptions
|
|
(111,009
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Shares issued for cash,
net of share issue costs
|
|
11,262
|
|
|
78,198
|
|
|
208,683
|
|
|
119,149
|
|
|
Acquisition of non-controlling interest
|
|
(2,446
|
)
|
|
-
|
|
|
(1,584
|
)
|
|
-
|
|
|
|
|
230,873
|
|
|
77,241
|
|
|
540,131
|
|
|
147,097
|
|
|
Effect of foreign exchange on cash and cash equivalents
|
|
45
|
|
|
-
|
|
|
(147
|
)
|
|
-
|
|
|
Increase (decrease) in cash and cash
equivalents
|
|
(119,818
|
)
|
|
55,270
|
|
|
71,227
|
|
|
110,857
|
|
|
Cash and cash equivalents, beginning of period
|
|
350,841
|
|
|
55,846
|
|
|
159,796
|
|
|
259
|
|
|
Cash
and cash equivalents, end of period
|
|
231,023
|
|
|
111,116
|
|
|
231,023
|
|
|
111,116
|
|
|
AURORA CANNABIS INC.
|
|
Condensed Interim Consolidated Statements of Cash
Flows
|
|
Nine months ended March 31, 2018 and 2017
|
|
(Unaudited – In thousands of Canadian dollars)
|
(Continued)
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Supplementary information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment in
accounts payable
|
|
6,301
|
|
|
2,021
|
|
|
6,301
|
|
|
2,021
|
|
|
Depreciation in production costs
|
|
249
|
|
|
103
|
|
|
610
|
|
|
252
|
|
Aurora Cannabis Increases Stake in Alcanna (formerly Liquor
Stores NA)
Meeting of Escrow Conditions Triggers Release of Funds to
Alcanna
TSX: ACB
EDMONTON, May 10, 2018 /CNW/ - Further to its press release of
February 5, 2018, Aurora Cannabis Inc. ("
Aurora
" or the "
Company
")
(TSX:ACB) (OTCQB:ACBFF) (Frankfurt: 21P; WKN:A1C4WM), today announced that,
following the satisfaction of the escrow release conditions related to Alcanna
Inc.'s ("Alcanna" – TSX: CLIQ) (Formerly: Liquor Stores NA) previous
private placement with Aurora, 2,300,000 subscription receipts were converted,
on a one-for-one basis, into 2,300,000 common shares of Alcanna. Following the
satisfaction of the escrow release conditions, $34.6 million were
released from escrow to Alcanna. Following the conversion of the Subscription
Receipts, Aurora holds an aggregate of 9,200,000 common shares, representing
approximately a 25% ownership interest in Alcanna (on a non-diluted basis).
Alcanna intends to use the proceeds of the conversion and the
private placement to establish and launch a leading brand of cannabis retail
outlets, whereby it intends to create, initially, some 50 retail cannabis stores
in prime retail locations in western Canada, both through conversion of existing
stores and by establishing stores in new locations.
The Investment Agreement between Aurora and Alcanna included
provisions for Alcanna to develop a retail cannabis network. Since Aurora's
initial investment on February 14
th
, Alcanna has made considerable
progress with the execution of its cannabis strategy, highlights of which
are:
|
|
•
|
Appointed Paul Wilson as President and COO of
the cannabis division. Mr. Wilson has deep retail experience, including as
CEO and
|
|
|
•
|
President roles at Mark's Work Wearhouse,
Canadian Tire, Princess Auto, Spence Diamonds and most recently Hold it
All and Kit and Ace.
|
|
|
•
|
Is in the process towards achieving its goal of
opening up to 50 cannabis outlets before year end, with a number of stores
opening for training and education prior to the legalisation of
recreational cannabis,
|
|
|
•
|
Will be implementing a comprehensive
educational programme provided by Aurora for its cannabis retail employees
to ensure Alcanna cannabis customers will enjoy a superior customer
experience.
|
Further placement details
Under the previous private placement, Alcanna also issued to
Aurora, for no additional consideration, two classes of common share purchase
warrants, that provide Aurora with the right, up until August 14, 2019, to
increase the Company's ownership interest to up to 40%. Further details can be
found in Alcanna's filings on www.sedar.com
About Aurora
Aurora's wholly-owned subsidiary, Aurora Enterprises Inc., is a
licensed producer of medical cannabis pursuant to Health Canada's Access to
Cannabis for Medical Purposes Regulations ("ACMPR"). The Company operates a
55,200 square foot, state-of-the-art production facility in Mountain View
County, Alberta, known as "Aurora Mountain", and a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Inc.
The Company's wholly-owned subsidiary CanniMed Therapeutics
Inc. is Canada's most experienced licensed producer of medical cannabis, with
over 20,000 kg per annum in funded capacity. CanniMed forms the heart of
Aurora's Medical Cannabis Centre of Excellence, aimed at product and market
development.
Aurora also owns Berlin-based Pedanios, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company owns 51% of Aurora Nordic, which will be constructing a 1,000,000
square foot hybrid greenhouse in Odense, Denmark. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and in state-of-the-art indoor gardening appliances for the
cultivation of organic microgreens, vegetables and herbs in home and
professional kitchens.
Aurora holds a 25% ownership interest in Alcanna Inc, ("TSX:
SLIQ") who are developing a cannabis retail network in Western Canada. In
addition, the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc, and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian producer The Green Organic Dutchman Ltd., with options
to increase to majority ownership.
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index
About Alcanna
Alcanna operates 229 retail liquor stores. Following receipt of
final approval from the TSX in connection with Alcanna's name change from
Liquor Stores N.A. Ltd. to Alcanna Inc., Alcanna's common shares and
convertible subordinated debentures will trade on the Toronto Stock Exchange
under the symbols "CLIQ" and "CLIQ.DB.B", respectively.
On behalf of the Boards of Directors,
AURORA CANNABIS INC.
Terry Booth
CEO
Forward-Looking Information Cautionary Statement
This news release contains certain "forward-looking
statements" within the meaning of such statements under applicable securities
law. Forward-looking statements are frequently characterized by words such as
"plan", "continue", "expect", "project", "intend", "believe", "anticipate",
"estimate", "may", "will", "potential", "proposed" and other similar words, or
statements that certain events or conditions "may" or "will" occur. These
statements are only predictions. Forward looking statements in release include
statements regarding the proposed completion of a subsequent acquisition
transaction. Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking statements throughout this news
release. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
expressly required by applicable law. A more complete discussion of the risks
and uncertainties facing the Company appears in the Company's Annual Information
Form and continuous disclosure filings, which are available at
www.
sedar.
com
.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/May2018/10/c8875.html
%SEDAR: 00025675E
For further information:
Marc Lakmaaker, Director,
Investor Relations and Corporate Development, +1.647.269.5523,
marc.lakmaaker@auroramj.com, www.auroramj.com; Craig MacPhail, NATIONAL Equicom,
+1 416-586-1938, cmacphail@national.ca
CO: Aurora Cannabis Inc.
CNW 07:00e 10-MAY-18
EXECUTED COPY
|
|
|
INDENTURE
|
|
|
|
Made as of March 9, 2018
|
|
|
|
Between
|
|
|
|
AURORA CANNABIS INC.
|
|
(the “
Corporation
”)
|
|
|
|
and
|
|
|
|
COMPUTERSHARE TRUST COMPANY OF CANADA
|
|
(the “
Trustee
”)
|
|
|
TABLE OF CONTENTS
|
RECITALS
|
1
|
|
|
|
|
ARTICLE 1 – INTERPRETATION
|
1
|
|
|
Section 1.1 Definitions
|
1
|
|
|
Section 1.2 Meaning of
“Outstanding”
|
7
|
|
|
Section 1.3 Interpretation
|
8
|
|
|
Section 1.4 Headings, etc.
|
9
|
|
|
Section 1.5 Time of Essence
|
9
|
|
|
Section 1.6 Monetary References
|
9
|
|
|
Section 1.7 Invalidity, etc.
|
9
|
|
|
Section 1.8 Language
|
9
|
|
|
Section 1.9 Successors and Assigns
|
9
|
|
|
Section 1.10 Severability
|
10
|
|
|
Section 1.11 Entire Agreement
|
10
|
|
|
Section 1.12 Benefits of
Indenture
|
10
|
|
|
Section 1.13 Applicable Law and Attornment
|
10
|
|
|
Section 1.14 Currency of
Payment
|
10
|
|
|
Section 1.15 Non-Business Days
|
10
|
|
|
Section 1.16 Accounting Terms
|
11
|
|
|
Section 1.17 Calculations
|
11
|
|
|
Section 1.18 Schedules
|
11
|
|
|
|
|
|
ARTICLE 2 – THE DEBENTURES
|
11
|
|
|
Section 2.1 Issue of Global Debentures
|
11
|
|
|
Section 2.2 Limit of Debentures
|
13
|
|
|
Section 2.3 Terms of Debentures of any Series
|
13
|
|
|
Section 2.4 Form of Debentures
|
14
|
|
|
Section 2.5 Form and Terms of Initial
Debentures
|
15
|
|
|
Section 2.6 Certification and
Delivery of Additional Debentures
|
20
|
|
|
Section 2.7 Non-Certificated Deposit
|
21
|
|
|
Section 2.8 Execution of
Debentures
|
23
|
|
|
Section 2.9 Certification
|
23
|
|
|
Section 2.10 Interim Debentures
or Certificates
|
24
|
|
|
Section 2.11 Mutilation, Loss, Theft or
Destruction
|
24
|
|
|
Section 2.12 Concerning
Interest
|
25
|
|
|
Section 2.13 Debentures to Rank Pari Passu
|
25
|
|
|
Section 2.14 Payments of
Amounts Due on Maturity
|
25
|
|
|
Section 2.15 U.S. Legend
|
26
|
|
|
Section 2.16 Payment of
Interest
|
28
|
|
|
|
|
|
ARTICLE 3 – REGISTRATION,
TRANSFER, EXCHANGE AND OWNERSHIP
|
29
|
|
|
Section 3.1 Global Debentures or Book Based
Only Debentures
|
29
|
|
|
Section 3.2 Fully Registered
Debentures
|
32
|
|
|
Section 3.3 Transferee Entitled to Registration
|
34
|
|
|
Section 3.4 No Notice of Trusts
|
34
|
|
|
Section 3.5 Registers Open for Inspection
|
34
|
|
|
Section 3.6 Exchanges of
Debentures
|
34
|
(i)
|
|
Section 3.7 Closing of Registers
|
35
|
|
|
Section 3.8 Charges for
Registration, Transfer and Exchange
|
35
|
|
|
Section 3.9 Ownership of Debentures
|
36
|
|
|
|
|
|
ARTICLE 4 – PURCHASE OF DEBENTURES
|
37
|
|
|
Section 4.1 Purchase of
Debentures by the Corporation
|
37
|
|
|
Section 4.2 Deposit of Maturity Monies
|
37
|
|
|
|
|
|
ARTICLE 5 – SUBORDINATION OF DEBENTURES
|
37
|
|
|
Section 5.1 Applicability of
Article
|
37
|
|
|
Section 5.2 Order of Payment
|
38
|
|
|
Section 5.3 Subrogation to
Rights of Holders of Secured Indebtedness
|
39
|
|
|
Section 5.4 Obligation to Pay Not Impaired
|
40
|
|
|
Section 5.5 No Payment if
Secured Indebtedness in Default
|
40
|
|
|
Section 5.6 Payment on Debentures Permitted
|
41
|
|
|
Section 5.7 Confirmation of
Subordination
|
41
|
|
|
Section 5.8 Knowledge of Trustee
|
41
|
|
|
Section 5.9 Trustee May Hold
Secured Indebtedness
|
41
|
|
|
Section 5.10 Rights of Holders of Secured
Indebtedness Not Impaired
|
42
|
|
|
Section 5.11 Altering the
Secured Indebtedness
|
42
|
|
|
Section 5.12 Additional Indebtedness
|
42
|
|
|
Section 5.13 Right of
Debentureholder to Convert Not Impaired
|
42
|
|
|
Section 5.14 Invalidated Payments
|
42
|
|
|
Section 5.15 Contesting
Security
|
43
|
|
|
|
|
|
ARTICLE 6 – CONVERSION OF
DEBENTURES
|
43
|
|
|
Section 6.1 Applicability of Article
|
43
|
|
|
Section 6.2 Notice of Expiry of
Conversion Privilege
|
43
|
|
|
Section 6.3 Revival of Right to Convert
|
43
|
|
|
Section 6.4 Manner of Exercise
of Right to Convert
|
43
|
|
|
Section 6.5 Adjustment of Conversion Price
|
45
|
|
|
Section 6.6 No Requirement to
Issue Fractional Common Shares
|
52
|
|
|
Section 6.7 Forced Conversion
|
52
|
|
|
Section 6.8 Corporation to
Reserve Common Shares
|
53
|
|
|
Section 6.9 Cancellation of Converted
Debentures
|
53
|
|
|
Section 6.10 Certificate as to
Adjustment
|
53
|
|
|
Section 6.11 Notice of Special Matters
|
53
|
|
|
Section 6.12 Protection of
Trustee
|
54
|
|
|
Section 6.13 Restricted CUSIP or U.S. Legend on
Certain Common Shares
|
54
|
|
|
|
|
|
ARTICLE 7 – COVENANTS OF THE CORPORATION
|
55
|
|
|
Section 7.1 To Pay Principal,
Premium (if any) and Interest
|
55
|
|
|
Section 7.2 To Pay Trustee’s Remuneration
|
55
|
|
|
Section 7.3 To Give Notice of
Default
|
55
|
|
|
Section 7.4 Preservation of Existence, etc.
|
55
|
|
|
Section 7.5 Keeping of Books
|
56
|
|
|
Section 7.6 Annual Certificate of Compliance
|
56
|
|
|
Section 7.7 Performance of
Covenants by Trustee
|
56
|
|
|
Section 7.8 Maintain Listing
|
56
|
|
|
Section 7.9 No Dividends on
Common Shares if Event of Default
|
56
|
|
|
Section 7.10 Withholding Matters
|
57
|
|
|
Section 7.11 SEC Reporting
Status
|
57
|
|
|
|
|
|
ARTICLE 8 – DEFAULT
|
59
|
|
|
Section 8.1 Events of Default
|
59
|
|
|
Section 8.2 Notice of Events of
Default
|
62
|
|
|
Section 8.3 Waiver of Default
|
62
|
|
|
Section 8.4 Enforcement by the
Trustee
|
63
|
|
|
Section 8.5 No Suits by Debentureholders
|
64
|
|
|
Section 8.6 Application of
Monies by Trustee
|
64
|
|
|
Section 8.7 Notice of Payment by Trustee
|
65
|
|
|
Section 8.8 Trustee May Demand
Production of Debentures
|
65
|
|
|
Section 8.9 Remedies Cumulative
|
66
|
|
|
Section 8.10 Judgment Against
the Corporation
|
66
|
|
|
Section 8.11 Immunity of Directors, Officers
and Others
|
66
|
|
|
|
|
|
ARTICLE 9 – SATISFACTION AND DISCHARGE
|
66
|
|
|
Section 9.1 Cancellation and
Destruction
|
66
|
|
|
Section 9.2 Non-Presentation of Debentures
|
66
|
|
|
Section 9.3 Repayment of
Unclaimed Monies
|
67
|
|
|
Section 9.4 Discharge
|
67
|
|
|
Section 9.5 Satisfaction
|
67
|
|
|
Section 9.6 Continuance of Rights, Duties and
Obligations
|
69
|
|
|
|
|
|
ARTICLE 10 – SUCCESSORS
|
70
|
|
|
Section 10.1 Corporation may
Consolidate, etc., Only on Certain Terms
|
70
|
|
|
Section 10.2 Successor Substituted
|
71
|
|
|
|
|
|
ARTICLE 11 – COMPULSORY ACQUISITION
|
71
|
|
|
Section 11.1 Definitions In
this Article:
|
71
|
|
|
Section 11.2 Offer for Debentures
|
72
|
|
|
Section 11.3 Offeror’s Notice
to Dissenting Shareholders
|
72
|
|
|
Section 11.4 Delivery of Debenture Certificates
|
73
|
|
|
Section 11.5 Payment of
Consideration to Trustee
|
73
|
|
|
Section 11.6 Consideration to be held in Trust
|
73
|
|
|
Section 11.7 Completion of
Transfer of Debentures to Offeror
|
73
|
|
|
Section 11.8 Communication of Offer to the
Corporation
|
74
|
|
|
|
|
|
ARTICLE 12 – MEETINGS OF DEBENTUREHOLDERS
|
74
|
|
|
Section 12.1 Right to Convene
Meeting
|
74
|
|
|
Section 12.2 Notice of Meetings
|
75
|
|
|
Section 12.3 Chairman
|
76
|
|
|
Section 12.4 Quorum
|
76
|
|
|
Section 12.5 Power to Adjourn
|
77
|
|
|
Section 12.6 Show of Hands
|
77
|
|
|
Section 12.7 Poll
|
77
|
|
|
Section 12.8 Voting
|
77
|
|
|
Section 12.9 Proxies
|
78
|
|
|
Section 12.10 Persons Entitled to Attend
Meetings
|
78
|
|
|
Section 12.11 Powers
Exercisable by Extraordinary Resolution
|
78
|
|
|
Section 12.12 Meaning of “Extraordinary
Resolution”
|
80
|
|
|
Section 12.13 Powers Cumulative
|
81
|
|
|
Section 12.14 Minutes
|
81
|
|
|
Section 12.15 Instruments in
Writing
|
82
|
|
|
Section 12.16 Binding Effect of Resolutions
|
82
|
|
|
Section 12.17 Evidence of
Rights Of Debentureholders
|
82
|
|
|
Section 12.18 Concerning Serial Meetings
|
82
|
|
|
|
|
|
ARTICLE 13 – NOTICES
|
82
|
|
|
Section 13.1 Notice to
Corporation
|
82
|
|
|
Section 13.2 Notice to Debentureholders
|
83
|
|
|
Section 13.3 Notice to Trustee
|
83
|
|
|
Section 13.4 Mail Service Interruption
|
83
|
|
|
|
|
|
ARTICLE 14 – CONCERNING THE TRUSTEE
|
84
|
|
|
Section 14.1 Replacement of
Trustee
|
84
|
|
|
Section 14.2 Duties of Trustee
|
85
|
|
|
Section 14.3 Reliance Upon
Declarations, Opinions, etc.
|
85
|
|
|
Section 14.4 Evidence and Authority to Trustee,
Opinions, etc.
|
85
|
|
|
Section 14.5 Officer’s
Certificates Evidence
|
86
|
|
|
Section 14.6 Experts, Advisers and Agents
|
86
|
|
|
Section 14.7 Trustee May Deal
in Debentures
|
87
|
|
|
Section 14.8 Investment of Monies Held by
Trustee
|
87
|
|
|
Section 14.9 Trustee Not
Ordinarily Bound
|
88
|
|
|
Section 14.10 Trustee Not Required to Give
Security
|
88
|
|
|
Section 14.11 Trustee Not Bound
to Act on Trust’s Request
|
88
|
|
|
Section 14.12 Conditions Precedent to Trustee’s
Obligations to Act Hereunder
|
88
|
|
|
Section 14.13 Authority to
Carry on Business
|
89
|
|
|
Section 14.14 Compensation and Indemnity
|
89
|
|
|
Section 14.15 Acceptance of
Trust
|
90
|
|
|
Section 14.16 Third Party Interests
|
90
|
|
|
Section 14.17 Anti-Money
Laundering
|
90
|
|
|
Section 14.18 Privacy Laws
|
90
|
|
|
Section 14.19 Force Majeure
|
91
|
|
|
|
|
|
ARTICLE 15 – SUPPLEMENTAL
INDENTURES
|
91
|
|
|
Section 15.1 Supplemental Indentures
|
91
|
|
|
|
|
|
ARTICLE 16 – EXECUTION AND FORMAL DATE
|
92
|
|
|
Section 16.1 Execution
|
92
|
|
|
Section 16.2 Formal Date
|
92
|
|
|
|
|
|
Schedule A – Form of Debenture
|
1
|
|
|
|
|
Schedule B – Form of Notice of Conversion
|
1
|
|
|
|
|
Schedule C – Common Share Legend
|
1
|
|
|
|
|
Schedule D –Form of Certificate of Transfer
|
1
|
|
|
|
|
Schedule E –Form of Certificate Of Exchange
|
1
|
|
|
|
|
Schedule F – Form of U.S. Purchaser Letter
|
1
|
INDENTURE
This Agreement is made as of March 9, 2018, between
|
|
AURORA CANNABIS INC
.
|
|
|
a corporation existing under the laws of the
Province of British Columbia and having its head office in the City of
Vancouver, in the Province of British Columbia
(the
“
Corporation
”)
|
|
|
|
|
|
AND
|
|
|
|
|
|
COMPUTERSHARE TRUST COMPANY OF CANADA
|
|
|
a trust company existing under the laws of
Canada and registered to carry on business in the Province of British
Columbia
(the “
Trustee
”)
|
RECITALS
The Corporation wishes to create
and issue the Debentures (as herein defined) in the manner and subject to the
terms and conditions of this Indenture;
FOR VALUE RECEIVED, the parties agree as follows:
ARTICLE 1– INTERPRETATION
Section 1.1
Definitions
In this Indenture and in the
Debentures, unless there is something in the subject matter or context
inconsistent therewith, the expressions following shall have the following
meanings, namely:
(1)
“1933 Act”
means the
United States
Securities Act of 1933
, as amended, and the rules and
regulations promulgated thereunder;
(2)
“90% Redemption Right”
has the meaning ascribed thereto in clause 2.5(7)(b);
(3)
“this Indenture”
,
“this Convertible Debenture Indenture”
,
“hereto”
,
“herein”
,
“hereby”
,
“hereunder”
,
“hereof”
and similar expressions
refer to this Indenture and not to any particular Article, Section, subsection,
clause, subdivision or other portion hereof and include any and every instrument
supplemental or ancillary hereto;
(4)
“Additional
Debentures”
means Debentures of any one or more series, other than the first
series of Debentures, being the Initial Debentures, issued under this Indenture;
- 2 -
(5)
“Applicable Securities
Legislation”
means applicable securities laws (including rules, regulations,
policies and instruments) in each of the applicable provinces and territories of
Canada;
(6)
“Auditors of the
Corporation”
means an independent firm of chartered accountants duly
appointed as auditors of the Corporation;
(7)
“Beneficial Holder”
means any Person who holds a beneficial interest in a Debenture that is
represented by a Debenture Certificate or an Uncertificated Debenture registered
in the name of such person’s nominee;
(8)
“Board of Directors”
means the board of directors of the Corporation;
(9) “
Book Based Only
Debentures
” means Debentures issued under this Indenture in non-certificated
form which are held only by way of book based (electronic) register maintained
by the Trustee;
(10)
“Business Day”
means
any day other than a Saturday, Sunday or any other day that the Trustee in
Vancouver, British Columbia is not generally open for business;
(11)
“Change of Control”
means: (i) any event as a result of or following which a Person or group of
Persons acting jointly or in concert within the meaning of Applicable Securities
Legislation, beneficially owns or exercises control or direction over an
aggregate of more than 50% of the then outstanding Common Shares; or (ii) the
sale or other transfer of all or substantially all of the consolidated assets of
the Corporation, unless the holders of voting securities of the Corporation
immediately prior to such sale, merger, reorganization or other similar
transaction hold securities representing 50% or more of the voting control or
direction in the Corporation or the successor entity upon completion of such
merged, reorganized or other continuing entity;
(12)
“Change of Control
Notice”
has the meaning ascribed thereto in subsection 2.5(7);
(13)
“Change of Control
Offer”
has the meaning ascribed thereto in subsection 2.5(7);
(14)
“Change of Control
Purchase Date”
has the meaning ascribed thereto in subsection 2.5(7);
(15)
“Common Shares”
means
the common shares in the capital of the Corporation, as such common shares are
constituted on the date of execution and delivery of this Indenture; provided
that in the event of a change or a subdivision, revision, reduction, combination
or consolidation thereof, any reclassification, capital reorganization,
consolidation, amalgamation, arrangement, merger, sale or conveyance or
liquidation, dissolution or winding- up, or such successive changes,
subdivisions, redivisions, reductions, combinations or consolidations,
reclassifications, capital reorganizations, consolidations, amalgamations,
arrangements, mergers, sales or conveyances or liquidations, dissolutions or
windings-up, then, subject to adjustments, if any, having been made in
accordance with the provisions of Section 6.5,
“Common Shares”
shall, as
the context may require, mean the shares or other securities or property
resulting from such change, subdivision, redivision, reduction, combination or
consolidation, reclassification, capital reorganization, consolidation,
amalgamation, arrangement, merger, sale or conveyance or liquidation,
dissolution or winding-up;
- 3 -
(16)
“Conversion Price”
means
the dollar amount for which each Common Share may be issued from time to time
upon the conversion of Debentures or any series of Debentures which are by their
terms convertible in accordance with the provisions of Article 6;
(17)
“Corporation”
means Aurora
Cannabis Inc. and includes any successor to or of the Corporation which shall
have complied with the provisions of Article 10;
(18)
“Counsel”
means a barrister
or solicitor or firm of barristers or solicitors retained or employed by the
Trustee or retained or employed by the Corporation and reasonably acceptable to
the Trustee;
(19)
“Current Market Price”
means, generally, the VWAP of the Common Shares on the TSX, if the Common Shares
are listed on the TSX, for the 20 consecutive trading days ending on the date
immediately preceding the applicable date. If the Common Shares are not listed
on the TSX, reference shall be made for the purpose of the above calculation to
the principal securities exchange or market on which the Common Shares are
listed or quoted or if no such prices are available “
Current Market
Price
” shall be the fair value of a Common Share as reasonably determined by
the Board of Directors;
(20)
“Date of Conversion”
has
the meaning ascribed thereto in subsection 6.4(2);
(21)
“Debenture Certificate”
means a certificate evidencing Debentures substantially in the form attached
as Schedule A hereto;
(22)
“Debenture Liabilities”
has
the meaning ascribed thereto in Section 5.1;
(23)
“Debentureholders”
or
“holders”
means the Persons for the time being entered in the register
for Debentures as registered holders of Debentures or any transferees of such
Persons by endorsement or delivery;
(24)
“Debentures”
means the
debentures, notes or other evidence of indebtedness of the Corporation issued
and certified hereunder, or deemed to be issued and certified hereunder,
including, without limitation, the Initial Debentures, and for the time being
outstanding, whether in definitive, uncertificated or interim form;
(25)
“Defeased Debentures”
has
the meaning ascribed thereto in subsection 9.6(2);
(26)
“Depository” or “CDS”
means
CDS Clearing and Depository Services Inc. and its successors in interest;
(27)
“Event of Default”
has the
meaning ascribed thereto in Section 8.1;
(28)
“Extraordinary Resolution”
has the meaning ascribed thereto in Section 12.12;
- 4 -
(29) “
Forced Conversion Date
”
has the meaning ascribed thereto in Section 6.7;
(30) “
Forced Conversion Notice
”
has the meaning ascribed thereto in Section 6.7;
(31) “
Fully Registered
Debentures
” means Debentures registered as to both principal and
interest;
(32)
“Global Debenture
” means a
Debenture that is issued to and registered in the name of the Depository, or its
nominee, pursuant to Section 2.7 for the purpose of being held by or on behalf
of the Depository as custodian for participants in the Depository’s book-entry
only registration system or non-certificated inventory system;
(33)
“Government Obligations”
means securities issued or guaranteed by the Government of Canada or any
province thereof;
(34)
“Guarantees”
means any
guarantee, undertaking to assume, endorse, contingently agree to purchase, or to
provide funds for the payment of, or otherwise become liable in respect of, any
indebtedness, liability or obligation of any Person;
(35)
“Ineligible Consideration”
shall have the meaning ascribed to it in Section 6.5(n);
(36)
“IFRS”
means International
Financial Reporting Standards issued by the International Accounting Standards
Board (including as further described in Section 1.16);
(37)
“Initial Debentures”
means
the Debentures designated as “5.0% Unsecured Convertible Debentures” and
described in Section 2.5;
(38)
“Interest Payment Date”
means a date specified in a Debenture as the date on which interest on such
Debenture shall become due and payable;
(39) “
Internal Procedures
” means
in respect of the making of any one or more entries to, changes in or deletions
of any one or more entries in the register of Debentureholders at any time
(including without limitation, original issuance or registration of transfer of
ownership) the minimum number of the Trustee’s internal procedures customary at
such time for the entry, change or deletion made to be complete under the
operating procedures followed by the time by the Trustee, it being understood
that neither preparation and issuance shall constitute part of such procedures
for any purpose of this definition;
(40)
“Material Subsidiary”
means
any Subsidiary of the Corporation which has consolidated assets equal to or
greater than 10% of the consolidated assets of the Corporation and its
Subsidiaries;
(41)
“Maturity Account”
means an
account or accounts required to be established by the Corporation (and which
shall be maintained by and subject to the control of the Trustee) for each
series of Debentures issued pursuant to and in accordance with this Indenture;
(42)
“Maturity Date”
means the
date specified for maturity of any Debentures;
- 5 -
(43)
“Merger Event”
has the
meaning ascribed thereto in Section 6.5(d);
(44)
“NI 62-104”
means National
Instrument 62-104 —
Take-Over Bids and Issuer Bids
;
(45)
“Non-Recourse Debt”
means
any indebtedness, liabilities or other obligations (including purchase money
obligations), and Guarantees, indemnities, endorsements (other than endorsements
for collection in the ordinary course of business) or other contingent
obligations in respect of obligations of another Person and, in each case,
incurred to finance the creation, development, construction or acquisition of
real and tangible personal property (including fixtures) and any increases in or
extensions, renewals or refunding of any such indebtedness, liabilities and
obligations, provided that the recourse of the lender thereof or any agent,
trustee, receiver or other Person acting on behalf of the lender in respect of
such indebtedness, liabilities and obligations or any judgment in respect
thereof is limited in all circumstances to the real and tangible personal
property (including fixtures) created, developed, constructed or acquired in
respect of which such indebtedness, liabilities and obligations have been
incurred and to any receivables, inventory, equipment, chattel paper,
intangibles and other rights or collateral arising from or connected with such
property (and, for certainty, shall include the shares or other ownership
interests of a Subsidiary of the Corporation which holds only such property and
other rights and collateral arising from or connected therewith) and to which
the lender has recourse;
(46)
“Offer Price”
has the
meaning ascribed thereto in subsection 2.5(7);
(47)
“Offering”
means the
offering of up to $230,000,000 aggregate principal amount of Initial Debentures
pursuant to the (final) short form prospectus dated March 2, 2018;
(48)
“Offeror’s Notice”
has the
meaning ascribed thereto in Section 11.3;
(49)
“Officer’s Certificate”
means a certificate of the Corporation signed by any authorized officer or
director of the Corporation, in their capacity as an officer or director of the
Corporation, and not in their personal capacity;
(50) “
Participant
” means a
Person recognized by CDS as a participant in the non-certificated inventory
system administered by CDS;
(51)
“Periodic Offering”
means
an offering of Debentures of a series from time to time, the specific terms of
which Debentures, including, without limitation, the rate or rates of interest,
if any, thereon, the stated maturity or maturities thereof and the redemption
provisions, if any, with respect thereto, are to be determined by the
Corporation upon the issuance of such Debentures from time to time;
(52)
“Person”
includes an
individual, corporation, company, partnership, joint venture, association,
trust, trustee, unincorporated organization or government or any agency or
political subdivision thereof (and for the purposes of the definition of
“Change of Control”
, in addition to the foregoing,
“Person”
shall
include any syndicate or group that would be deemed to be a
“Person”
under NI 62-104);
(53)
“Privacy Laws”
has the
meaning ascribed thereto in Section 14.18;
- 6 -
(54)
“Qualified Institutional Buyer”
means a “qualified institutional buyer” as such term is defined in Rule 144A
under the 1933 Act;
(55)
“Regulation S”
means
Regulation S adopted by the SEC under the 1933 Act;
(56)
“Restricted Debentures”
means collectively the Restricted Uncertificated Debentures and Restricted
Physical Debentures;
(57)
“Restricted Physical Debenture”
means a definitive Debenture that bears the U.S. Legend;
(58)
“Restricted Uncertificated
Debenture”
means an Uncertificated Debenture that is marked to bear the U.S.
Legend;
(59) “
SEC
” has the meaning
ascribed thereto in Section 7.11;
(60)
“Securities”
has the
meaning ascribed thereto in Section 2.15;
(61)
“Secured Creditor”
means a
holder or holders of Secured Indebtedness and includes any representative or
representatives, agent or agents or trustee or trustees of any such holder or
holders;
(62)
“Secured Indebtedness”
means the principal of, the premium (if any) and interest and other
obligations on secured indebtedness, statutory liens (other than statutory liens
where the party is defending same in good faith), secured bank or other
institutional indebtedness, and secured project indebtedness, in each case owing
by the Corporation, or renewals, extensions and refunding of such indebtedness,
including, without limitation: (a) obligations of the Corporation or its
Subsidiaries under any swap, hedging or other similar contracts or arrangements;
(b) all costs and expenses incurred by or on behalf of the holder of any Secured
Indebtedness in enforcing payment or collection of any such Secured
Indebtedness, including enforcing any security interest securing the same.
“Secured Indebtedness” shall not include any indebtedness that would otherwise
be Secured Indebtedness if it is expressly stated to be subordinate to or rank
pari passu
with the Debentures;
(63)
“Senior Security”
has the
meaning ascribed thereto in clause 5.2(2)(a);
(64)
“Serial Meeting”
has the
meaning ascribed thereto in clause 12.2(2)(a);
(65)
“Subsidiary”
has the
meaning ascribed thereto in the
Securities Act
(British Columbia);
(66)
“Tax Act”
means the
Income Tax Act
(Canada), as amended;
(67))
“Time of Expiry”
means
the time of expiry of certain rights with respect to the conversion of
Debentures under Article 6 which is to be set forth separately in the form and
terms for each series of Debentures which by their terms are to be convertible,
and has the meaning ascribed thereto in subsection 2.5(5) with respect to the
Initial Debentures;
- 7 -
(68)
“trading day”
means, with
respect to the TSX or other market for securities, any day on which such
exchange or market is open for trading or quotation;
(69)
“Trustee”
means
Computershare Trust Company of Canada, or its successor or successors for the
time being as trustee hereunder;
(70) “
TSX
” means the Toronto
Stock Exchange;
(71) “
Uncertificated Debenture
”
means any Debenture which is not issued as part of a Debenture Certificate;
(72)
“United States”
or
“U.S.”
means the United States of America, its territories and
possessions, any state of the United States, or any political subdivision
thereof, and the District of Columbia;
(73)
“Unrestricted Debentures”
means collectively Unrestricted Physical Debentures and Unrestricted
Uncertificated Debentures;
(74)
“Unrestricted Physical
Debenture”
means a definitive Debenture that does not bear the U.S.
Legend;
(75)
“Unrestricted Uncertificated
Debenture”
means a Debenture that is not marked to bear the U.S. Legend;
(76)
“U.S. Legend”
has the
meaning ascribed thereto in Section 2.15;
(77) “
U.S. Securities Exchange
Act
” means the United States Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder;
(78)
“VWAP”
means the per share
volume weighted average trading price of the Common Shares for the applicable
period (which must be calculated utilizing days in which the Common Shares
actually trade) on the TSX (or if the Common Shares are no longer traded on the
TSX, on such other exchange as the Common Shares are then traded);
(79)
“Withholding Taxes”
has the
meaning ascribed to it in Section 7.10; and
(80)
“Written Direction of the Corporation”
means an
instrument in writing signed by any one officer or director of the Corporation.
Section 1.2
Meaning of “Outstanding”
Every Debenture certified and
delivered by the Trustee or every Uncertificated Debenture authenticated by the
Trustee by completing its internal procedures hereunder shall be deemed to be
outstanding until it is cancelled, converted or redeemed or delivered to the
Trustee for cancellation, conversion or redemption for monies and/or Common
Shares, as the case may be, or the payment thereof shall have been set aside
under Section 9.2, provided that:
- 8 -
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(a)
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Debentures which have been partially redeemed, purchased
or converted shall be deemed to be outstanding only to the extent of the
unredeemed, unpurchased or unconverted part of the principal amount
thereof;
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(b)
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when a new Debenture has been issued in substitution for
a Debenture which has been lost, stolen or destroyed, only one of such
Debentures shall be counted for the purpose of determining the aggregate
principal amount of Debentures outstanding; and
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(c)
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for the purposes of any provision of this Indenture
entitling holders of outstanding Debentures to vote, sign consents,
requisitions or other instruments or take any other action under this
Indenture, or to constitute a quorum of any meeting of Debentureholders,
Debentures owned directly or indirectly, legally or equitably, by the
Corporation shall be disregarded except that:
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(i)
|
for the purpose of determining whether the Trustee shall
be protected in relying on any such vote, consent, requisition or other
instrument or action, or on the holders of Debentures present or
represented at any meeting of Debentureholders, only the Debentures which
the Trustee knows are so owned shall be so disregarded; and
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(ii)
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Debentures so owned which have been pledged in good faith
other than to the Corporation shall not be so disregarded if the pledgee
shall establish to the satisfaction of the Trustee the pledgee’s right to
vote such Debentures, sign consents, requisitions or other instruments or
take such other actions in his discretion free from the control of the
Corporation or a Subsidiary of the Corporation.
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Section 1.3
Interpretation
In this Indenture:
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(a)
|
words importing the singular number or masculine gender
shall include the plural number or the feminine or neuter genders, and
vice versa;
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(b)
|
all references to Articles and Schedules refer, unless
otherwise specified, to articles of and schedules to this
Indenture;
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(c)
|
all references to Sections, subsections or clauses refer,
unless otherwise specified, to Sections, subsections or clauses of this
Indenture;
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(d)
|
words and terms denoting inclusiveness (such as “include”
or “includes” or “including”), whether or not so stated, are not limited
by and do not imply limitation of their context or the words or phrases
which precede or succeed them;
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- 9 -
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(e)
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reference to any agreement or other instrument in writing
means such agreement or other instrument in writing as amended, modified,
replaced or supplemented from time to time;
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(f)
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unless otherwise indicated, reference to a statute shall
be deemed to be a reference to such statute as amended, re-enacted or
replaced from time to time; and
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(g)
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unless otherwise indicated, time periods within which a
payment is to be made or any other action is to be taken hereunder shall
be calculated by including the day on which the period commences and
excluding the day on which the period ends.
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Section 1.4
Headings, etc.
The division of this Indenture
into Articles and Sections, the provision of a Table of Contents and the
insertion of headings are for convenience of reference only and shall not affect
the construction or interpretation of this Indenture or of the Debentures.
Section 1.5
Time of Essence
Time shall be of the essence of this Indenture.
Section 1.6
Monetary References
Whenever any amounts of money are
referred to herein, such amounts shall be deemed to be in lawful money of Canada
unless otherwise expressed.
Section 1.7
Invalidity, etc.
Any provision hereof which is
prohibited or unenforceable shall be ineffective only to the extent of such
prohibition or unenforceability, without invalidating the remaining provisions
hereof.
Section 1.8
Language
Each of the parties hereto hereby
acknowledges that it has consented to and requested that this Indenture and all
documents relating hereto, including, without limiting the generality of the
foregoing, the form of Debenture attached hereto as Schedule A and the form of
U.S. Purchaser Letter attached hereto as Schedule F, be drawn up in the English
language only.
Section 1.9
Successors and Assigns
All covenants and agreements of
the Corporation in this Indenture and the Debentures shall bind its successors
and assigns, whether so expressed or not. All covenants and agreements of the
Trustee in this Indenture shall bind its successors.
- 10 -
Section 1.10
Severability
In case any provision in this
Indenture or in the Debentures shall be invalid, illegal or unenforceable, such
provision shall be deemed to be severed herefrom or therefrom and the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected, prejudiced or impaired thereby.
Section 1.11
Entire Agreement
This Indenture and all
supplemental indentures and Schedules hereto and thereto, and the Debentures
issued hereunder and thereunder, together constitute the entire agreement
between the parties hereto with respect to the indebtedness created hereunder
and thereunder and under the Debentures and supersedes as of the date hereof all
prior memoranda, agreements, negotiations, discussions and term sheets, whether
oral or written, with respect to the indebtedness created hereunder or
thereunder and under the Debentures.
Section 1.12
Benefits of Indenture
Nothing in this Indenture or in
the Debentures, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, any paying agent, the holders of
Debentures, the Secured Creditors (to the extent provided in Article 5 only),
and (to the extent provided in Section 8.11) the holders of Common Shares, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
Section 1.13
Applicable Law and Attornment
This Indenture, any supplemental
indenture and the Debentures shall be governed by and interpreted in accordance
with the laws of the Province of British Columbia and the federal laws of Canada
applicable therein and shall be treated in all respects as British Columbia
contracts, with respect to any suit, action or proceedings relating to this
Indenture, any supplemental indenture or any Debenture, the Corporation, the
Trustee and each holder irrevocably submit and attorn to the non-exclusive
jurisdiction of the courts of the Province of British Columbia.
Section 1.14
Currency of Payment
Unless otherwise indicated in a
supplemental indenture with respect to any particular series of Debentures, all
payments to be made under this Indenture or a supplemental indenture shall be
made in Canadian dollars.
Section 1.15
Non-Business Days
Whenever any payment to be made
hereunder shall be due, any period of time would begin or end, any calculation
is to be made or any other action is to be taken on, or as of, or from a period
ending on, a day other than a Business Day, such payment shall be made, such
period of time shall begin or end, such calculation shall be made and such other
action shall be taken, as the case may be, unless otherwise specifically
provided herein, on or as of the next succeeding Business Day without any
additional interest, cost or charge to the Corporation.
- 11 -
Section 1.16
Accounting Terms
Except as hereinafter provided or
as otherwise indicated in this Indenture, all calculations required or permitted
to be made hereunder pursuant to the terms of this Indenture shall be made in
accordance with IFRS. For greater certainty, IFRS shall include any accounting
standards that may from time to time be approved for general application by the
Canadian Institute of Chartered Accountants.
Section 1.17
Calculations
The Corporation shall be
responsible for making all calculations called for hereunder including, without
limitation, calculations of Current Market Price. The Corporation shall make
such calculations in good faith and, absent manifest error, the Corporation’s
calculations shall be final and binding on holders and the Trustee. The
Corporation will provide a schedule of its calculations to the Trustee and the
Trustee shall be entitled to rely conclusively on the accuracy of such
calculations without independent verification.
Section 1.18
Schedules
(1) The following Schedules are
incorporated into and form part of this Indenture:
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Schedule A – Form of Debenture
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Schedule B – Form of Notice of Conversion
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Schedule C – Common Share Legend
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Schedule D –Form of Certificate of Transfer
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Schedule E –Form of Certificate Of Exchange
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Schedule F – Form of U.S. Purchaser Letter
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(2) In the event of any
inconsistency between the provisions of any Section of this Indenture and the
provisions of the Schedules which form a part hereof, the provisions of this
Indenture shall prevail to the extent of the inconsistency.
ARTICLE 2– THE DEBENTURES
Section 2.1
Issue of Global Debentures
(1) The Corporation may specify
that the Debentures of a series are to be issued in whole or in part as one or
more Global Debentures, that may or may not be Book Based Only Debentures,
registered in the name of a Depository, or its nominee, designated by the
Corporation in the Written Direction of the Corporation delivered to the Trustee
at the time of issue of such Debentures, and in such event the Corporation shall
execute and the Trustee shall certify and deliver one or more Global Debentures
that are not Book Based Only Debentures that shall:
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(a)
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represent an aggregate amount equal to the principal
amount of the outstanding Debentures of such series to be represented by
one or more Global Debentures;
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(b)
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be released by the Trustee as instructed by the
Corporation for further delivery to such Depository or pursuant to such
Depository’s instructions; and
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(c)
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bear a legend substantially to the following effect, or
as may otherwise be required by the
Depositary:
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“THIS DEBENTURE IS A GLOBAL DEBENTURE WITHIN THE MEANING
OF THE INDENTURE HEREIN REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITORY OR A NOMINEE THEREOF. THIS DEBENTURE MAY NOT BE TRANSFERRED TO
OR EXCHANGED FOR DEBENTURES REGISTERED IN THE NAME OF ANY PERSON OTHER
THAN THE DEPOSITORY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE
REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE TRUST
INDENTURE DATED AS OF THE 9TH DAY OF MARCH, 2018 BETWEEN AURORA CANNABIS
INC. AND COMPUTERSHARE TRUST COMPANY OF CANADA (THE “
INDENTURE
”).
EVERY DEBENTURE AUTHENTICATED AND DELIVERED UPON REGISTRATION OF, TRANSFER
OF, OR IN EXCHANGE FOR, OR IN LIEU OF, THIS DEBENTURE SHALL BE A GLOBAL
DEBENTURE SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE.
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UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF CDS CLEARING AND DEPOSITORY SERVICES INC. (“
CDS
”)
TO AURORA CANNABIS INC. OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN RESPECT THEREOF IS
REGISTERED IN THE NAME OF CDS & CO., OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS (AND ANY PAYMENT IS MADE
TO CDS & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF CDS), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED HOLDER
HEREOF, CDS & CO., HAS A PROPERTY INTEREST IN THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HEREIN AND IT IS A VIOLATION OF ITS RIGHTS
FOR ANOTHER PERSON TO HOLD, TRANSFER OR DEAL WITH THIS CERTIFICATE.”
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- 13 -
(2) Each Depository designated
for a Global Debenture must, at the time of its designation and at all times
while it serves as such Depository, be a clearing agency registered or
designated under the Applicable Securities Legislation of the jurisdiction where
the Depository has its principal offices.
Section 2.2
Limit of Debentures
The aggregate principal amount of
Debentures authorized to be issued under this Indenture is unlimited, but
Debentures may be issued only upon and subject to the conditions and limitations
herein set forth.
Section 2.3
Terms of Debentures of any Series
(1) The Debentures may be issued
in one or more series. There shall be established herein or in or pursuant to
one or more indentures supplemental hereto, prior to the initial issuance of
Debentures of any particular series:
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(a)
|
the designation of the Debentures of the series (which
need not include the term “
Debentures
”), which shall distinguish
the Debentures of the series from the Debentures of all other
series;
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(b)
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any limit upon the aggregate principal amount of the
Debentures of the series that may be certified and delivered under this
Indenture (except for Debentures certified and delivered upon registration
of, transfer of, amendment of, or in exchange for, or in lieu of, other
Debentures of the series pursuant to Sections 2.10, 2.11, Section 3.1 and
Section 3.6 and Article 4 and Article 6);
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(c)
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the date or dates on which the principal of the
Debentures of the series is payable;
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(d)
|
the rate or rates at which the Debentures of the series
shall bear interest, if any, the date or dates from which such interest
shall accrue, on which such interest shall be payable and on which record
date, if any, shall be taken for the determination of holders to whom such
interest shall be payable and/or the method or methods by which such rate
or rates or date or dates shall be determined;
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(e)
|
the place or places where the principal of and any
interest on Debentures of the series shall be payable or where any
Debentures of the series may be surrendered for registration of transfer
or exchange;
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(f)
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the right, if any, of the Corporation to redeem
Debentures of the series, in whole or in part, at its option and the
period or periods within which, the price or prices at which and any terms
and conditions upon which, Debentures of the series may be so
redeemed;
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(g)
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the obligation, if any, of the Corporation to redeem,
purchase or repay Debentures of the series pursuant to any mandatory
redemption, sinking fund or analogous provisions or at the option of a
holder thereof and the price or prices at which, the period or periods
within which, the date or dates on which, and any terms and conditions
upon which, Debentures of the series shall be redeemed, purchased or
repaid, in whole or in part, pursuant to such obligations;
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(h)
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if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which Debentures of the series
shall be issuable;
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(i)
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subject to the provisions of this Indenture, any trustee,
Depositories, authenticating or paying agents, transfer agents or
registrars or any other agents with respect to the Debentures of the
series;
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(j)
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any other events of default or covenants with respect to
the Debentures of the series;
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(k)
|
whether and under what circumstances the Debentures of
the series will be convertible into or exchangeable for securities of any
Person;
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(l)
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the form and terms of the Debentures of the
series;
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(m)
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if applicable, that the Debentures of the series shall be
issuable in certificated or uncertificated form;
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(n)
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if other than Canadian currency, the currency in which
the Debentures of the series are issuable; and
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(o)
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any other terms of the Debentures of the series (which
terms shall not be inconsistent with the provisions of this
Indenture).
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(2) All Debentures of any one
series shall be substantially identical, except as may otherwise be established
herein or by or pursuant to a resolution of the Board of Directors, Officer’s
Certificate or in an indenture supplemental hereto. All Debentures of any one
series need not be issued at the same time and may be issued from time to time,
including pursuant to a Periodic Offering, consistent with the terms of this
Indenture, if so provided herein, by or pursuant to such resolution of the Board
of Directors, Officer’s Certificate or in an indenture supplemental hereto.
Section 2.4
Form of Debentures
Except in respect of the Initial
Debentures, the form of which is provided for herein, the Debentures of each
series shall be substantially in such form or forms (not inconsistent with this
Indenture) as shall be established herein or by or pursuant to one or more
resolutions of the Board of Directors (or to the extent established pursuant to,
rather than set forth in, a resolution of the Board of Directors, in an
Officer’s Certificate detailing such establishment) or in one or more indentures
supplemental hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have imprinted or otherwise reproduced thereon such legend or
legends or endorsements, not inconsistent with the provisions of this Indenture,
as may be required to comply with any law or with any rules or regulations
pursuant thereto or with any rules or regulations of any securities exchange or
securities regulatory authority or to conform to general usage, all as may be
determined by the directors or officers of the Corporation executing such
Debentures on behalf of the Corporation, as conclusively evidenced by their
execution of such Debentures.
- 15 -
Section 2.5
Form and Terms of Initial
Debentures
(1) The first series of
Debentures (the “
Initial Debentures
”) authorized for issue immediately is
limited to an aggregate principal amount of up to $230,000,000 and shall be
designated as “5.0% Unsecured Convertible Debentures”.
(2) The Initial Debentures shall
be dated the date of closing of the Offering and shall mature on March 9, 2020
(the “
Maturity Date
” for the Initial Debentures).
(3) The Initial Debentures shall
bear interest from the date of closing of the Offering at the rate of 5.0% per
annum (based on a year of 360 days comprised of twelve 30-day months), payable
in equal, semi-annual payments in arrears on June 30 and December 31 in each
year, the first such payment to fall due on June 30, 2018 and the last such
payment (representing interest payable from the last Interest Payment Date to,
but excluding, the Maturity Date of the Initial Debentures) to fall due on March
9, 2020, payable after as well as before maturity and after as well as before
default, with interest on amounts in default or after maturity at the same rate,
compounded semi-annually. For certainty, the first interest payment will include
interest accrued from and including the date of closing of the Offering to June
30, 2018, which will be equal to $15.69 for each $1,000 principal amount of
Initial Debentures. Any payment required to be made on any day that is not a
Business Day will be made on the next succeeding Business Day. The record date
for the payment of interest on the Initial Debentures will be that date which is
five Business Days prior to each Interest Payment Date.
(4) The Initial Debentures will
be subordinated to all existing and future Secured Indebtedness of the
Corporation in accordance with the provisions of Article 5. The Initial
Debentures will rank
pari passu
with each other series of Debentures
issued under this Indenture or under indentures supplemental to this Indenture
(regardless of their actual date or terms of issue) and, except as prescribed by
law, with all other existing and future unsecured indebtedness of the
Corporation, other than Secured Indebtedness.
(5) Upon and subject to the
provisions and conditions of Article 6 and Section 3.7, the holder of each
Initial Debenture shall have the right at such holder’s option, at any time
prior to the close of business on the earliest of (i) the Business Day
immediately preceding the Maturity Date of the Initial Debentures; or (ii) if
subject to repurchase pursuant to a Change of Control, on the Business Day
immediately preceding the payment date, subject to the satisfaction of certain
conditions, by notice to the holders of Initial Debentures in accordance with
subsection 2.5(7) (the earlier of which will be the “
Time of Expiry
” for
the purposes of Article 6 in respect of the Initial Debentures), to convert any
part, being $1,000 or an integral multiple thereof, of the principal amount of a
Debenture into Common Shares at the Conversion Price in effect on the Date of Conversion. Notwithstanding the foregoing, no Initial
Debentures may be converted on an Interest Payment Date or during the five
Business Days preceding each Interest Payment Date.
- 16 -
The Conversion Price in effect on the date hereof for each
Common Share to be issued upon the conversion of Initial Debentures shall be
equal to $13.05 such that approximately 76.6284 Common Shares shall be issued
for each $1,000 principal amount of Initial Debentures so converted. Except as
provided below, no adjustment in the number of Common Shares to be issued upon
conversion will be made for dividends or distributions on Common Shares issuable
upon conversion, the record date for the payment of which precedes the date upon
which the holder becomes a holder of Common Shares in accordance with Article 6,
or for interest accrued on Initial Debentures surrendered. No fractional Common
Shares will be issued, and holders will receive a cash payment in satisfaction
of any fractional interest based on the Current Market Price as of the Date of
Conversion, provided, however, the Corporation shall not be required to make any
payment of less than $1.00. The Conversion Price applicable to, and the Common
Shares, securities or other property receivable on the conversion of, the
Initial Debentures is subject to adjustment pursuant to the provisions of
Section 6.5. Holders converting their Initial Debentures will receive, in
addition to the applicable number of Common Shares, accrued and unpaid interest
(less any taxes required to be deducted) in respect of the Initial Debentures
surrendered for conversion up to but excluding the Date of Conversion from, and
including, the most recent Interest Payment Date. For clarity, payment of such
interest may, at the option of the Corporation, be paid on the next regularly
scheduled Interest Payment Date following the Date of Conversion.
Subject to Section 6.7, if prior to the Maturity Date, the
volume weighted average price of the Common Shares on the Toronto Stock Exchange
(or such other Canadian stock exchange on which the Common Shares are listed for
trading) for 10 consecutive trading days exceeds $17.00, as adjusted in
accordance with the Indenture, the Corporation may deliver a written notice to
the Trustee in accordance with the Indenture and to the Registered Holder by way
of news release to cause the Registered Holder to convert all but not less than
the principal amount of the Debentures (less any tax required by law to be
deducted or withheld) into that number of Common Shares of the Corporation equal
to the principal amount of the Debentures (less any tax required by law to be
deducted or withheld) to the date of such forced conversion.
The Conversion Price will not be adjusted for accrued interest.
Notwithstanding any other provisions of this Indenture, if a
Debenture is surrendered for conversion on an Interest Payment Date or during
the five preceding Business Days, the Person or Persons entitled to receive
Common Shares in respect of the Debenture so surrendered for conversion shall
not become the holder or holders of record of such Common Shares until the
Business Day following such Interest Payment Date and, for clarity, any interest
payable on such Debentures will be for the account of the holder of record of
such Debentures at the close of business on the relevant record date.
- 17 -
A Debenture in respect of which a holder has accepted a notice
in respect of a Change of Control Offer pursuant to the provisions of subsection
2.5(7) may be surrendered for conversion only if such notice is withdrawn in
accordance with this Indenture.
(6) The Initial Debentures shall
be issued in denominations of $1,000 and integral multiples of $1,000. Each
Initial Debenture and the certificate of the Trustee endorsed thereon shall be
issued in substantially the form set out in Schedule A, with such insertions,
omissions, substitutions or other variations as shall be required or permitted
by this Indenture, and may have imprinted or otherwise reproduced thereon such
legend or legends or endorsements, not inconsistent with the provisions of this
Indenture, as may be required to comply with any law or with any rules or
regulations pursuant thereto or with any rules or regulations of any securities
exchange or securities regulatory authority or to conform with general usage,
all as may be determined by the Board of Directors executing such Initial
Debenture in accordance with Section 2.8 hereof, as conclusively evidenced by
their execution of an Initial Debenture. Each Initial Debenture shall
additionally bear such distinguishing letters and numbers as the Trustee shall
approve. Notwithstanding the foregoing, an Initial Debenture may be in such
other form or forms as may, from time to time, be, approved by a resolution of
the Board of Directors, or as specified in an Officer’s Certificate. The Initial
Debentures may be engraved, lithographed, printed, mimeographed or typewritten
or partly in one form and partly in another.
The Initial Debentures shall be issued in the form of one or
more Debenture Certificates, shall bear the U.S. Legend, if applicable, and as
Uncertificated Debentures.
(7) Within 30 days following a
Change of Control, and subject to the provisions and conditions of this
subsection 2.5(7), the Corporation shall, at the discretion of the
Debentureholders, be obligated to offer to purchase or convert all of the
Initial Debentures then outstanding. The terms and conditions of such obligation
are set forth below:
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(a)
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Not less than 30 days following the occurrence of a
Change of Control, the Corporation shall deliver to the Trustee, and the
Trustee shall promptly deliver to the holders of the Initial Debentures, a
notice stating that there has been a Change of Control and specifying the
date on which such Change of Control occurred and the circumstances or
events giving rise to such Change of Control (a
“Change of Control
Notice
”). Prior to the Change of Control Purchase Date (as defined
below), the Debentureholders shall, in their sole discretion, have the
right to require the Corporation to, either: (i) purchase the Debentures
at 104% of the principal amount thereof plus unpaid interest to the
Maturity Date (the “
Offer Price
”); or (ii) convert the Debentures
at the Conversion Price (the “
Change of Control Offer
”). The
“
Change of Control Purchase Date”
shall be the date that is 30
Business Days after the date of the Change of Control Notice is delivered
to holders of Initial Debentures.
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(b)
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If 90% or more in aggregate principal amount of Initial
Debentures outstanding on the date the Corporation provides the Change of
Control Notice to holders of the Initial Debentures have been surrendered
for purchase pursuant to the Change of Control Offer on the expiration
thereof, the Corporation has the right upon written notice provided to the Trustee within 10 days
following the expiration of the Change of Control Offer, to redeem all the
Initial Debentures remaining outstanding on the expiration of the Change of
Control Offer at the Offer Price as at the Change of Control Purchase Date (the
“90% Redemption Right
”).
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- 18 -
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(c)
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Upon receipt of notice that the Corporation has exercised
or is exercising the 90% Redemption Right and is acquiring the remaining
Initial Debentures, the Trustee shall promptly provide written notice to
each Debentureholder that did not previously accept the Change of Control
Offer that:
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(i)
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the Corporation has exercised the 90% Redemption Right
and is purchasing all outstanding Initial Debentures effective on the
expiry of the Change of Control Offer at the Offer Price, and shall
include a calculation of the amount payable to such holder as payment of
the Offer Price as at the Change of Control Purchase Date;
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(ii)
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each such holder must transfer their Initial Debentures
to the Trustee on the same terms as those holders that accepted the Change
of Control Offer and must send their respective Initial Debentures, duly
endorsed for transfer, to the Trustee within 10 days after the sending of
such notice; and
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(iii)
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the rights of such holder under the terms of the Initial
Debentures and this Indenture cease effective as of the date of expiry of
the Change of Control Offer provided the Corporation has, on or before the
time of notifying the Trustee of the exercise of the 90% Redemption Right,
paid the Offer Price to, or to the order of, the Trustee and thereafter
the Initial Debentures shall not be considered to be outstanding and the
holder shall not have any right except to receive such holder’s Offer
Price upon surrender and delivery of such holder’s Initial Debentures in
accordance with the Indenture.
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(d)
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The Corporation shall, on or before 11:00 a.m. (Vancouver
time) on the Business Day immediately prior to the Change of Control
Purchase Date, deposit with the Trustee or any paying agent to the order
of the Trustee, such sums of money as may be sufficient to pay the Offer
Price of the Initial Debentures to be purchased or redeemed by the
Corporation on the Change of Control Purchase Date (less any tax required
by law to be deducted in respect of accrued and unpaid interest), provided
the Corporation may elect to satisfy this requirement by providing the
Trustee with a certified cheque or wire transfer for such amounts required
under this clause 2.5(7)(d) post-dated to the date of expiry of the Change
of Control Offer. The Corporation shall also deposit with the Trustee a
sum of money sufficient to pay any charges or expenses which may be
incurred by the Trustee in connection with such purchase. Every such
deposit shall be irrevocable. From the sums so deposited, the Trustee
shall pay or cause to be paid to the holders of such Initial Debentures,
the Offer Price to which they are entitled (less any tax required by law to be
deducted in respect of accrued and unpaid interest) on the Corporation’s
purchase.
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- 19 -
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(e)
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In the event that one or more of such Initial Debentures
being purchased in accordance with this subsection 2.5(7) becomes subject
to purchase in part only, upon surrender of such Initial Debentures for
payment of the Offer Price, the Corporation shall execute and the Trustee
shall certify and deliver without charge to the holder thereof or upon the
holder’s order, one or more new Initial Debentures for the portion of the
principal amount of the Initial Debentures not purchased.
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(f)
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Initial Debentures for which holders have accepted the
Change of Control Offer and Initial Debentures which the Corporation has
elected to redeem in accordance with this subsection 2.5(7) shall become
due and payable at the Offer Price on the Change of Control Purchase Date,
in the same manner and with the same effect as if it were the date of
maturity specified in such Initial Debentures, anything therein or herein
to the contrary notwithstanding, and from and after the Change of Control
Purchase Date, if the money necessary to purchase or redeem, or the Common
Shares necessary to purchase or redeem, the Initial Debentures shall have
been deposited as provided in this subsection 2.5(7) and affidavits or
other proofs satisfactory to the Trustee as to the publication and/or
mailing of such notices shall have been lodged with it, interest on the
Initial Debentures shall cease. If any question shall arise as to whether
any notice has been given as above provided and such deposit made, such
question shall be decided by the Trustee whose decision shall be final and
binding upon all parties in interest.
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(g)
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In case the holder of any Initial Debenture to be
purchased or redeemed in accordance with this subsection 2.5(7) shall fail
on or before the Change of Control Purchase Date to so surrender such
holder’s Initial Debenture or shall not within such time accept payment of
the monies payable, to take delivery of certificates representing such
Common Shares issuable in respect thereof, or give such receipt therefor,
if any, as the Trustee may require, such monies may be set aside in trust,
or such certificates may be held in trust, without interest, either in the
deposit department of the Trustee or in a chartered bank, and such setting
aside shall for all purposes be deemed a payment to the Debentureholder of
the sum or the Common Shares so set aside and the Debentureholder shall
have no other right except to receive payment of the monies so paid and
deposited, or take delivery of the certificates so deposited, or both,
upon surrender and delivery of such holder’s Initial Debenture. In the
event that any money or certificates representing Common Shares required
to be deposited hereunder with the Trustee or any depository or paying
agent on account of principal, premium, if any, or interest, if any, on
Initial Debentures issued hereunder shall remain so deposited for a period
of six years from the Change of Control Purchase Date, then such monies,
or certificates representing Common Shares, together with any accumulated
interest thereon, or any distributions paid thereon, shall at the end of such period be paid over or
delivered over by the Trustee or such depository or paying agent to the
Corporation and the Trustee shall not be responsible to Debentureholders for any
amounts owing to them.
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- 20 -
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(h)
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Subject to the provisions above related to Initial
Debentures purchased in part, all Initial Debentures redeemed and paid
under this subsection 2.5(7) shall forthwith be delivered to the Trustee
and cancelled and no Initial Debentures shall be issued in substitution
therefor.
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Section 2.6
Certification and Delivery of
Additional Debentures
The Corporation may from time to
time request the Trustee to certify and deliver Additional Debentures of any
series by delivering to the Trustee the documents referred to below in this
Section 2.6 whereupon the Trustee shall certify such Debentures and cause the
same to be delivered in accordance with the Written Direction of the Corporation
referred to below or pursuant to such procedures acceptable to the Trustee as
may be specified from time to time by a Written Direction of the Corporation.
The maturity date, issue date, interest rate (if any) and any other terms of the
Debentures of such series shall be set forth in or determined by or pursuant to
such Written Direction of the Corporation and procedures. In certifying such
Debentures, the Trustee shall be entitled to receive and shall be fully
protected in relying upon, unless and until such documents have been superseded
or revoked:
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(a)
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an Officer’s Certificate and/or executed supplemental
indenture by or pursuant to which the form and terms of such Additional
Debentures were established;
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(b)
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a Written Direction of the Corporation requesting
certification and delivery of such Additional Debentures and setting forth
delivery instructions, provided that, with respect to Debentures of a
series subject to a Periodic Offering:
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(i)
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such Written Direction of the Corporation may be
delivered by the Corporation to the Trustee prior to the delivery to the
Trustee of such Additional Debentures of such series for certification and
delivery;
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(ii)
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the Trustee shall certify and deliver Additional
Debentures of such series for original issue from time to time, in an
aggregate principal amount not exceeding the aggregate principal amount,
if any, established for such series, pursuant to a Written Direction of
the Corporation or pursuant to procedures acceptable to the Trustee as may
be specified from time to time by a Written Direction of the
Corporation;
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(iii)
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the maturity date or dates, issue date or dates, interest
rate or rates (if any) and any other terms of Additional Debentures of
such series shall be determined by an executed supplemental indenture or
by Written Direction of the Corporation or pursuant to such procedures;
and
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(iv)
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if provided for in such procedures, such Written
Direction of the Corporation may authorize certification and delivery
pursuant to oral or electronic instructions from the Corporation which oral or
electronic instructions shall be promptly confirmed in writing;
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- 21 -
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(c)
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an opinion of Counsel, in form and substance satisfactory
to the Trustee, acting reasonably, to the effect that all requirements
imposed by this Indenture and by law in connection with the proposed issue
of Additional Debentures have been complied with, subject to the delivery
of certain documents or instruments specified in such opinion;
and
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(d)
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an Officer’s Certificate (which Officer’s Certificate
shall be in such form that satisfies all applicable laws) certifying that
the Corporation is not in default under this Indenture, that the terms and
conditions for the certification and delivery of Additional Debentures
(including those set forth in Section 14.4), have been complied with
subject to the delivery of any documents or instruments specified in such
Officer’s Certificate and that no Event of Default exists or will exist
upon such certification and delivery.
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Section 2.7
Non-Certificated Deposit
(1) Subject to the provisions
hereof, at the Corporation’s option, Debentures may be issued and registered in
the name of CDS or its nominee and:
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(a)
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the deposit of which may be confirmed electronically by
the Trustee to a particular Participant through CDS; and
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(b)
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shall be identified by a specific CUSIP/ISIN as requested
by the Corporation from CDS to identify each specific series of Debentures
and the Initial Debentures shall be identified by CUSIP – 05156XAE8/ISIN –
CA05156XAE81
.
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(2) If the Corporation issues
Debentures in a non-certificated format, Beneficial Holders of such Debentures
registered and deposited with CDS shall not receive Debenture Certificates in
definitive form and shall not be considered owners or holders thereof under this
Indenture or any supplemental indenture. Beneficial interests in Debentures
registered and deposited with CDS will be represented only through the
non-certificated inventory system administered by CDS. Transfers of Debentures
registered and deposited with CDS between Participants shall occur in accordance
with the rules and procedures of CDS. Neither the Corporation nor the Trustee
shall have any responsibility or liability for any aspects of the records
relating to or payments made by CDS or its nominee, on account of the beneficial
interests in Debentures registered and deposited with CDS. Nothing herein shall
prevent the Beneficial Holders of Debentures registered and deposited with CDS
from voting such Debentures using duly executed proxies or voting instruction
forms.
(3) All references herein to
actions by, notices given or payments made to Debentures shall, where Debentures
are held through CDS, refer to actions taken by, or notices given or payments
made to, CDS upon instruction from the Participants in accordance with its rules
and procedures.
- 22 -
For the purposes of any provision hereof requiring or
permitting actions with the consent of or the direction of Debentureholders
evidencing a specified percentage of the aggregate Debentures outstanding, such
direction or consent may be given by Beneficial Holders acting through CDS and
the Participants owning Debentures evidencing the requisite percentage of the
Debentures. The rights of a Beneficial Holder whose Debentures are held
established by law and agreements between such holders and CDS and the
Participants upon instructions from the Participants. Each Trustee and the
Corporation may deal with CDS for all purposes (including the making of
payments) as the authorized representative of the respective Debentures and such
dealing with CDS shall constitute satisfaction or performance, as applicable, of
their respective obligations hereunder.
(4) For so long as Debentures are
held through CDS, if any notice or other communication is required to be given
to Debentureholders, the Trustee will give such notices and communications to
CDS.
(5) If CDS resigns or is removed
from its responsibility as Depository and the Trustee is unable or does not wish
to locate a qualified successor, CDS shall provide the Trustee with instructions
for registration of Debentures in the names and in the amounts specified by CDS
and the Corporation shall issue and the Trustee shall certify and deliver the
aggregate number of Debentures then outstanding in the form of definitive
Debentures Certificates representing such Debentures.
(6) The rights of Beneficial
Holders who hold securities entitlements in respect of the Debentures through
non-certificated inventory system administered by CDS shall be limited to those
established by applicable law and agreements between the Depository and the
Participants and between such Participants and the Beneficial Holders who hold
securities entitlements in respect of the Debentures through the
non-certificated inventory system administered by CDS, and such rights must be
exercised through a Participant in accordance with the rules and procedures of
the Depository.
(7) Notwithstanding anything
herein to the contrary, none of the Corporation nor the Trustee nor any agent
thereof shall have any responsibility or liability for:
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(a)
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the electronic records maintained by the Depository
relating to any ownership interests or other interests in the Debentures
or the depository system maintained by the Depository, or payments made on
account of any ownership interest or any other interest of any Person in
any Debenture represented by an electronic position in the
non-certificated inventory system administered by CDS (other than
Depository or its nominee);
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(b)
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for maintaining, supervising or reviewing any records of
the Depository or any Participant relating to any such interest;
or
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(c)
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any advice or representation made or given by the
Depository or those contained herein that relate to the rules and
regulations of the Depository or any action to be taken by the Depository on its own direction or at
the direction of any Participant.
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(8) The Corporation may terminate
the application of this Section 2.7 in its sole discretion in which case all
Debentures shall be evidenced by Debenture Certificates registered in the name
of a Person other than the Depository.
Section 2.8
Execution of Debentures
All Debentures shall be signed
(either manually or by facsimile or other electronic signature) by any one
authorized director or officer of the Corporation holding office at the time of
signing. A facsimile or electronic signature upon a Debenture shall for all
purposes of this Indenture be deemed to be the signature of the Person whose
signature it purports to be. Notwithstanding that any Person whose signature,
either manual or in facsimile or electronic form, appears on a Debenture as a
director or officer may no longer hold such office at the date of the Debenture
or at the date of the certification and delivery thereof, such Debenture shall
be valid and binding upon the Corporation and entitled to the benefits of this
Indenture.
Section 2.9
Certification
(1) No Debenture shall be issued
or, if issued, shall be obligatory or shall entitle the holder to the benefits
of this Indenture, until it has been certified by or on behalf of the Trustee
substantially in the form set out in this Indenture, in the relevant
supplemental indenture, or in some other form approved by the Trustee. Such
certification or authentication of any Debenture shall be conclusive evidence
that such Debenture is duly issued, is a valid obligation of the Corporation and
the holder is entitled to the benefits hereof. Debentures will be authenticated
on a Written Direction of the Corporation.
(2) The certificate of the
Trustee signed on the Debentures, or interim Debentures hereinafter mentioned,
and the authentication of Uncertificated Debentures, shall not be construed as a
representation or warranty by the Trustee as to the validity of this Indenture
or of the Debentures or interim Debentures or as to the issuance of the
Debentures or interim Debentures and the Trustee shall in no respect be liable
or answerable for the use made of the Debentures or interim Debentures or any of
them or the proceeds thereof. The certificate of the Trustee on the Debentures
or interim Debentures, and the authentication of Uncertificated Debentures,
shall, however, be a representation and warranty by the Trustee that the
Debentures or interim Debentures have been duly certified by or on behalf of the
Trustee pursuant to the provisions of this Indenture.
(3) The Trustee shall certify
Uncertificated Debentures (whether upon original issuance, exchange,
registration of transfer or otherwise) by completing its Internal Procedures and
the Corporation shall, and hereby acknowledges that it shall, thereupon be
deemed to have duly and validly issued such Uncertificated Debentures have been
duly issued hereunder and that the holder or holders are entitled to the
benefits of this Indenture. The register shall be final and conclusive evidence
as to all matters relating to Uncertificated Debentures with respect to which
this Indenture requires the Trustee to maintain records or accounts. In case of
differences between the register at any time and any other time the
register at the later time shall be controlling, absent manifest error and such
Uncertificated Debentures are binding on the Corporation.
- 24 -
Section 2.10
Interim Debentures or
Certificates
Pending the delivery of
definitive Debentures of any series to the Trustee, the Corporation may issue
and the Trustee certify in lieu thereof interim Debentures in such forms and in
such denominations and signed in such manner as provided herein, entitling the
holders thereof to definitive Debentures of the series when the same are ready
for delivery; or the Corporation may execute and the Trustee certify a temporary
Debenture for the whole principal amount of Debentures of the series then
authorized to be issued hereunder and deliver the same to the Trustee and
thereupon the Trustee may issue its own interim certificates in such form and in
such amounts, not exceeding in the aggregate the principal amount of the
temporary Debenture so delivered to it, as the Corporation and the Trustee may
approve entitling the holders thereof to definitive Debentures of the series
when the same are ready for delivery; and, when so issued and certified, such
interim or temporary Debentures or interim certificates shall, for all purposes
but without duplication, rank in respect of this Indenture equally with
Debentures duly issued hereunder and, pending the exchange thereof for
definitive Debentures, the holders of the interim or temporary Debentures or
interim certificates shall be deemed without duplication to be Debentureholders
and entitled to the benefit of this Indenture to the same extent and in the same
manner as though the said exchange had actually been made. Forthwith after the
Corporation shall have delivered the definitive Debentures to the Trustee, the
Trustee shall cancel such temporary Debentures, if any, and shall call in for
exchange all interim Debentures or certificates that shall have been issued and
forthwith after such exchange shall cancel the same. No charge shall be made by
the Corporation or the Trustee to the holders of such interim or temporary
Debentures or interim certificates for the exchange thereof. All interest paid
upon interim or temporary Debentures or interim certificates shall be noted
thereon as a condition precedent to such payment unless paid by cheque to the
registered holders thereof.
Section 2.11
Mutilation, Loss, Theft or
Destruction
In case any of the Debentures
issued hereunder shall become mutilated or be lost, stolen or destroyed, the
Corporation, in its discretion, may issue, and thereupon the Trustee shall
certify and deliver, a new Debenture upon surrender and cancellation of the
mutilated Debenture, or in the case of a lost, stolen or destroyed Debenture, in
lieu of and in substitution for the same, and the substituted Debenture shall be
in a form approved by the Trustee and shall be entitled to the benefits of this
Indenture and rank equally in accordance with its terms with all other
Debentures issued or to be issued hereunder. In case of loss, theft or
destruction the applicant for a substituted Debenture shall furnish to the
Corporation and to the Trustee such evidence of the loss, theft or destruction
of the Debenture as shall be satisfactory to them in their discretion and shall
also furnish an indemnity and surety bond satisfactory to them in their
discretion. The applicant shall pay all reasonable expenses incidental to the
issuance of any substituted Debenture.
- 25 -
Section 2.12
Concerning Interest
(1) All Debentures issued
hereunder, whether originally or upon exchange or in substitution for previously
issued Debentures which are interest bearing, shall bear interest (i) from and
including their issue date, or (ii) from and including the last Interest Payment
Date to which interest shall have been paid or made available for payment on the
outstanding Debentures of that series, whichever shall be the later, or, in
respect of Debentures subject to a Periodic Offering, from and including their
issue date or from and including the last Interest Payment Date to which
interest shall have been paid or made available for payment on such Debentures,
in all cases, to and excluding the next Interest Payment Date.
(2) Unless otherwise specifically
provided in the terms of the Debentures of any series, interest shall be
computed on the basis of a year of 360 days comprised of twelve 30-day months.
With respect to any series of Debentures, whenever interest is computed on the
basis of a year (the “
deemed year
”) which contains fewer days than the
actual number of days in the calendar year of calculation, such rate of interest
shall be expressed as a yearly rate for purposes of the
Interest Act
(Canada) by multiplying such rate of interest by the actual number of days in
the calendar year of calculation and dividing it by the number of days in the
deemed year.
Section 2.13
Debentures to Rank Pari Passu
The Debentures will be direct
unsecured obligations of the Corporation. Each Debenture of the same series of
Debentures will rank
pari passu
with each other Debenture of the same
series (regardless of their actual date or terms of issue) and, subject to
statutory preferred exceptions, with all other present and future unsecured
indebtedness of the Corporation.
Section 2.14
Payments of Amounts Due on
Maturity
Except as may otherwise be
provided herein or in any supplemental indenture in respect of any series of
Debentures, payments of amounts due upon maturity of the Debentures will be made
in the following manner. The Corporation will establish and maintain with the
Trustee a Maturity Account for each series of Debentures. Each such Maturity
Account shall be maintained by and be subject to the control of the Trustee for
the purposes of this Indenture. On or before 11:00 a.m. (Vancouver time) on the
Business Day immediately prior to each Maturity Date for Debentures outstanding
from time to time under this Indenture, the Corporation will deliver to the
Trustee a certified cheque or wire transfer for deposit in the applicable
Maturity Account in an amount sufficient to pay the cash amount payable in
respect of such Debentures (including the principal amount together with any
accrued and unpaid interest thereon less any tax required by law to be
deducted), provided the Corporation may elect to satisfy this requirement by
providing the Trustee with a cheque for such amounts required under this Section
2.14 post-dated to the applicable Maturity Date. The Trustee, on behalf of the
Corporation, will pay to each holder entitled to receive payment the principal
amount of and premium (if any) and accrued and unpaid interest on the Debenture,
upon surrender of the Debenture at any branch of the Trustee designated for such
purpose from time to time by the Corporation and the Trustee. The delivery of
such funds to the Trustee for deposit to the applicable Maturity Account will
satisfy and discharge the liability of the Corporation for the Debentures to
which the delivery of funds relates to the extent of the amount delivered (plus the
amount of any tax deducted as aforesaid) and such Debentures will thereafter to
that extent not be considered as outstanding under this Indenture and such
holder will have no other right in regard thereto other than to receive out of
the money so delivered or made available the amount to which it is entitled.
- 26 -
Section 2.15
U.S. Legend
(1) The Debentures and Common
Shares issuable upon conversion thereof have not been and will not be registered
under the 1933 Act or any state securities laws. To the extent that Initial
Debentures are offered and sold in the United States to Qualified Institutional
Buyers in reliance on an exemption from registration under Rule 144A under the
1933 Act, such Initial Debentures and all Common Shares issuable on conversion
thereof (collectively, the
“Securities
”), shall be “restricted
securities” within the meaning assigned to that term in Rule 144(a)(3) under the
1933 Act. Subject to subsection 2.15(3), such Securities, as well as all
securities issued in exchange for or in substitution of the Securities, shall be
issued in certificated form bearing the legend below or under a separate,
restricted CUSIP number and, until such time as the same is no longer required
under applicable requirements of the 1933 Act or state securities laws, shall
bear the following legend (the
“US Legend
”):
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(a)
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“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND
WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “U.S. SECURITIES ACT”) OR THE LAWS OF ANY STATE OF THE UNITED
STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE
BENEFIT OF AURORA CANNABIS INC. (THE “CORPORATION”), THAT SUCH SECURITIES
MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR
INDIRECTLY, ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN
COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND
(C) IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, IN
COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES
ACT PROVIDED BY (i) RULE 144 THEREUNDER, IF AVAILABLE, OR (ii) RULE 144A
THEREUNDER, IF AVAILABLE, AND, IN BOTH CASES, IN ACCORDANCE WITH
APPLICABLE U.S. STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES
NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE
U.S. STATE SECURITIES LAWS, AND, IN THE CASE OF (C)(i) OR (D) ABOVE, AFTER
THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF
RECOGNIZED STANDING IN
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE
CORPORATION AND THE TRUSTEE OR TRANSFER AGENT TO SUCH EFFECT. DELIVERY OF THIS
CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON
STOCK EXCHANGES IN CANADA.”
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- 27 -
provided that if the Debentures or
Common Shares are being sold in compliance with the requirements of Rule 904 of
Regulation S and in compliance with Canadian local laws and regulations, and
provided that the Corporation is a “foreign issuer” within the meaning of
Regulation S at the time of issuance of the Debentures or Common Shares, as
applicable, such Securities may be transferred to an unrestricted CUSIP or the
U.S. Legend may be removed by providing a declaration to the Trustee
substantially as set forth in Schedule D (or as the Corporation or the Trustee
may prescribe from time to time), together with any other evidence reasonably
requested by the Corporation or Trustee, which evidence may include an opinion
of counsel of recognized standing, in form and substance reasonably satisfactory
to the Corporation and the Trustee, to the effect that the transfer is being
made in compliance with Rule 904 of Regulation S; and provided further that, if
any Debentures or Common Shares are being sold in accordance with Rule 144 under
the 1933 Act, if available, the Debentures or Common Shares, as applicable, may
be transferred into an unrestricted CUSIP or the U.S. Legend may be removed by
delivery to the Trustee of an opinion of counsel of recognized standing, in form
and substance reasonably satisfactory to the Trustee and the Corporation, that
the Debentures or Common Shares no longer required a restricted CUSIP or the
U.S. Legend is no longer required under applicable requirements of the 1933 Act
or applicable state securities laws. Provided that the Trustee obtains
confirmation from the Corporation that such counsel is satisfactory to it, it
shall be entitled to rely on such opinion of counsel without further inquiry.
(2) The parties hereto hereby
acknowledge and agree that the Securities may not be reoffered, or resold,
pledged or otherwise transferred except: (i) to the Corporation; (ii) outside
the United States in accordance with Regulation S and in compliance with
applicable local laws and regulations; (iii) in compliance with the exemption
from registration under the 1933 Act provided by (A) Rule 144 under the 1933
Act, or (B) Rule 144A under the 1933 Act, if applicable, and, in each case, in
accordance with applicable state securities laws; or (iv) in a transaction that
does not require registration under the 1933 Act or any applicable state
securities laws.
(3) Notwithstanding subsection
2.15(1), to the extent that a Qualified Institutional Buyer acquiring the
Initial Debentures pursuant to the Offering has duly executed and delivered a
U.S. Purchaser Letter substantially as set forth in Schedule F, such Initial
Debentures shall be included in the Unrestricted Debentures, and any Common
Shares issued to such Qualified Institutional Buyer upon conversion of such
Initial Debentures shall neither be required to be issued under a restricted
CUSIP nor bear a U.S. Legend.
- 28 -
(4) Prior to the issuance of the
Debentures, the Corporation shall notify the Trustee, in writing, concerning
which Debentures are to be included in the Restricted Debentures which shall
bear the U.S. Legend. All Securities issued pursuant to Rule 144A under the 1933
Act shall bear the U.S. Legend. The Trustee will thereafter maintain a list of
all registered holders from time to time of such legended Debentures.
Section 2.16
Payment of Interest
The following provisions shall
apply to Debentures, except as otherwise provided in subsection 2.5(3) or
specified in a resolution of the Board of Directors, an Officer’s Certificate or
a supplemental indenture relating to a particular series of Additional
Debentures:
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(a)
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As interest becomes due on each Debenture (except,
subject to certain exceptions set forth herein including in subsection
2.5(3), on conversion or on redemption, when interest may at the option of
the Corporation be paid upon surrender of such Debenture), the
Corporation, either directly or through the Trustee or any agent of the
Trustee, shall send or forward by prepaid ordinary mail, wire transfer of
funds or such other means as may be agreed to by the Trustee, payment of
such interest (less any tax required to be withheld therefrom) to the
order of the registered holder of such Debenture appearing on the
registers maintained by the Trustee at the close of business on the record
date prior to the applicable Interest Payment Date and addressed to the
holder at the holder’s last address appearing on the register, unless such
holder otherwise directs. If payment is made by cheque, such cheque shall
be forwarded at least three days prior to each date on which interest
becomes due and if payment is made by other means (such as electronic
transfer of funds, provided the Trustee must receive confirmation of
receipt of funds prior to being able to wire funds to holders), such
payment shall be made in a manner whereby the holder receives credit for
such payment on the date such interest on such Debenture becomes due. The
mailing of such cheque or the making of such payment by other means shall,
to the extent of the sum represented thereby, plus the amount of any tax
withheld as aforesaid, satisfy and discharge all liability for interest on
such Debenture, unless in the case of payment by cheque, such cheque is
not paid at par on presentation. In the event of non-receipt of any cheque
for or other payment of interest by the Person to whom it is so sent as
aforesaid, the Corporation will issue to such Person a replacement cheque
or other payment for a like amount upon being furnished with such evidence
of non-receipt as it shall reasonably require and upon being indemnified
to its satisfaction. Notwithstanding the foregoing, if the Corporation is
prevented by circumstances beyond its control (including, without
limitation, any interruption in mail service) from making payment of any
interest due on each Debenture in the manner provided above, the
Corporation may make payment of such interest or make such interest
available for payment in any other manner acceptable to the Trustee with
the same effect as though payment had been made in the manner provided
above.
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(b)
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All payments of interest on the Uncertificated Debenture
shall be made by wire funds transfer or certified cheque made payable (i)
to the Depository or its nominee on the day interest is payable for
subsequent payment to Beneficial Holders of the applicable Uncertificated
Debenture, unless the Corporation and the Depository otherwise agree or
(ii) if the Corporation wishes to have the Trustee act as interest paying
agent, to the Trustee by no later than the Business Day prior to the day
interest is payable for subsequent payment to Beneficial Holders of the
applicable Uncertificated Debenture. None of the Corporation, the Trustee
or any agent of the Trustee for any Debenture issued as an Uncertificated
Debenture will be liable or responsible to any Person for any aspect of
the records related to or payments made on account of beneficial interests
in any Uncertificated Debenture or for maintaining, reviewing, or
supervising any records relating to such beneficial interests.
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ARTICLE 3– REGISTRATION, TRANSFER, EXCHANGE AND OWNERSHIP
Section 3.1
Global Debentures or Book Based Only
Debentures
(1) With respect to each series
of Debentures issuable in whole or in part as one or more Global Debentures
and/or as Book Based Only Debentures, the Corporation shall cause to be kept by
and at the principal offices of the Trustee in Vancouver, British Columbia and
by the Trustee or such other registrar as the Corporation, with the approval of
the Trustee, may appoint at such other place or places, if any, as the
Corporation may designate with the approval of the Trustee, a register in which
shall be entered the name and address of the holder of each such Global
Debenture and/or Book Based Only Debenture as holder thereof and particulars of
the Global Debenture and/or Book Based Only Debenture held by it, and of all
transfers thereof. If any Debentures of such series are at any time not Global
Debentures or Book Based Only Debentures, the provisions of Section 3.2 shall
govern with respect to registrations and transfers of such Debentures.
(2) Notwithstanding any other
provision of this Indenture, a Global Debenture or Book Based Only Debenture may
not be transferred by the registered holder thereof and accordingly, no
definitive certificates shall be issued to Beneficial Holders except in the
following circumstances or as otherwise specified in a resolution of the
Directors, an Officer’s Certificate or a supplemental indenture relating to a
particular series of Additional Debentures:
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(a)
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Global Debentures or Book Based Only Debentures may be
transferred by a Depository to a nominee of such Depository or by a
nominee of a Depository to such Depository or to another nominee of such
Depository or by a Depository or its nominee to a successor Depository or
its nominee;
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(b)
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Global Debentures or Book Based Only Debentures may be
transferred at any time after (i) the Depository for such Global
Debentures or Book Based Only Debentures, as the case may be, or the
Corporation has notified the Trustee that the Depository is unwilling or
unable to continue as Depository for such Global Debentures or Book Based
Only Debentures, or (ii) the Depository ceases to
be a clearing agency or otherwise ceases to be eligible to be a
Depository under Section 2.1(2), provided in each case that at the time of such
transfer the Trustee and the Corporation are unable to locate a qualified
successor Depository for such Global Debentures or Book Based Only Debentures;
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- 30 -
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(c)
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Global Debentures or Book Based Only Debentures may be
transferred at any time after the Corporation has determined, in its sole
discretion, with the consent of the Trustee to terminate the book-entry
only registration system or book based entry, as the case may be, in
respect of such Global Debentures or Book Based Only Debentures and has
communicated such determination to the Trustee in writing;
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(d)
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Global Debentures or Book Based Only Debentures may be
transferred at any time after the Trustee has determined that an Event of
Default has occurred and is continuing with respect to the Debentures of
the series issued as a Global Debenture or Book Based Only Debentures, as
the case may be, provided that Beneficial Holders of the Debentures
representing, in the aggregate, more than 25% of the aggregate principal
amount of the Debentures of such series advise the Depository in writing,
through the Depository Participants, that the continuation of the
book-entry only registration system or book based entry, as applicable,
for such series of Debentures is no longer in their best interest and also
provided that at the time of such transfer the Debentureholders have not
waived the Event of Default pursuant to Section 8.3;
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(e)
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Global Debentures or Book Based Only Debentures may be
transferred if required by applicable law; or
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(f)
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Global Debentures or Book Based Only Debentures may be
transferred if the book-entry only registration system or book based
entry, as applicable, ceases to exist.
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(3) With respect to the Global
Debentures, unless and until definitive certificates have been issued to
Beneficial Holders of the Debentures pursuant to subsection Section 3.1(2):
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(a)
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the Corporation and the Trustee may deal with the
Depository for all purposes (including paying interest on the Debentures)
as the sole holder of such series of Debentures and the authorized
representative of the Beneficial Holders;
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(b)
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the rights of the Beneficial Holders of the Debentures
shall be exercised only through the Depository and shall be limited to
those established by law and agreements between such Beneficial Holders
and the Depository or the Depository Participants;
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(c)
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the Depository will make book-entry or book based, as
applicable, transfers among the Depository Participants;
and
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- 31 -
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(d)
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whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Debentureholders evidencing
a specified percentage of the outstanding Debentures, the Depository shall
be deemed to be counted in that percentage only to the extent that it has
received instructions to such effect from the Beneficial Holders of the
Debentures or the Depository Participants, and has delivered such
instructions to the Trustee.
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(4) Whenever a notice or other
communication is required to be provided to Debentureholders, unless and until
definitive certificate(s) have been issued to Beneficial Holders of the
Debentures pursuant to this Section 3.1, the Trustee shall provide all such
notices and communications to the Depository for forwarding by the Depository to
such Beneficial Holders in accordance with Applicable Securities Legislation.
Upon the termination of the book-entry only registration system or book based
entry, as applicable, on the occurrence of one of the conditions specified in
Section 3.1(2) with respect to a series of Debentures issued hereunder, the
Trustee shall notify all applicable Depository Participants and Beneficial
Holders, through the Depository, of the availability of definitive Debenture
certificates. Upon surrender by the Depository of the certificate(s)
representing the Global Debentures and receipt of new registration instructions
from the Depository, the Trustee shall deliver the definitive Debenture
certificates for such Debentures to the holders thereof in accordance with the
new registration instructions and thereafter, the registration and transfer of
such Debentures will be governed by Section 3.2 and the remaining Sections of
this Article 3, as applicable.
(5) Notwithstanding any other
provisions of this Indenture or the Debentures, transfers and exchanges of
Debentures and beneficial interests in Global Debentures shall be made in
accordance the applicable rules and guidelines of the Securities Transfer
Association of Canada.
(6) Notwithstanding any
provisions made in this Indenture for the issuance, certification and
authentication of Debentures in physical form as Additional Debentures,
Debentures or Global Debentures, the Debentures issued under the terms of this
Indenture may also be issued to the Depository in book based only form,
non-certificated and appearing on the register of the Trustee as a book based
entry. In the absence of any physical securities being created for certification
by the Corporation and authentication by the Trustee both at the initial
issuance of the Debentures and at the time of any subsequent additional issuance
of Debentures pursuant to the terms of a supplemental indenture, confirmation of
the due issuance and validity of any Debentures shall be based upon the
comparison of the Debentures in quantity and description appearing under the
relevant broker’s instant deposit request identification number to the quantity
and description of Debentures as detailed in the Written Direction of the
Corporation addressed to the Trustee and to the broker upon whose posting of the
Book Based Only Debentures to the book entry records of the Depository on a
non-certificated basis on which both the Corporation and the Trustee shall
depend. It is the responsibility of the Corporation to make the necessary
arrangements with its broker or brokers to obtain, in a timely manner, the
necessary instant deposit request identification number to facilitate the
issuance of non-certificated Book Based Only Debentures.
(7) In the establishment and
maintenance of a non-certificated Book Based Only Debenture issue, the Trustee
shall maintain such a record on its register for Debentures in book based form
only. Transfers of Debentures appearing on the register of the Depository shall
otherwise occur as provided for in this Indenture. The parties hereto further
recognize that, notwithstanding the issuance of Book Based Only Debentures,
conversions of Debentures shall occur as contemplated by the terms of this
Indenture but the Trustee is permitted to employ whatever reasonable means it
may from time to time require in order to guarantee the unhindered (but subject
to the terms and conditions hereof) conversion of such Debentures appearing on
the register for Debentures in book based only form by making whatever
arrangements are deemed necessary by it with the Depository.
- 32 -
(8) At the time of the execution
of this Indenture, the parties hereto understand that no declarations or other
paper certificates or documentation will be required in order to effect
conversions of Debentures held by Persons in the United States. If at any time
subsequent to the initial issuance of Debentures it is determined by the
Depository, the Trustee, the Corporation or legal counsel that physical
declarations or other paper documentation are required for conversions or
otherwise, the parties hereto and the Debentureholders acknowledge that the
Trustee may be obliged to require the Debentures held by such Persons converting
their Debentures to be certificated rather than held in book based form.
Section 3.2
Fully Registered Debentures
(1) With respect to each series
of Debentures issuable as Fully Registered Debentures, the Corporation shall
cause to be kept by and at the principal office of the Trustee in Vancouver,
British Columbia and by the Trustee or such other registrar as the Corporation,
with the approval of the Trustee, may appoint at such other place or places, if
any, as may be specified in the Debentures of such series or as the Corporation
may designate with the approval of the Trustee, a register in which shall be
entered the names and addresses of the holders of Fully Registered Debentures
and particulars of the Debentures held by them respectively and of all transfers
of Fully Registered Debentures. Such registration shall be noted on the
Debentures by the Trustee or other registrar unless a new Debenture shall be
issued upon such transfer.
(2) No transfer of a Fully
Registered Debenture shall be valid unless made on such register referred to in
subsection 3.2(1) by the registered holder or such holder’s executors,
administrators or other legal representatives or an attorney duly appointed by
an instrument in writing in form and executed in a manner satisfactory to the
Trustee or other registrar upon surrender of the Debentures together with a duly
executed form of transfer acceptable to the Trustee upon compliance with such
other reasonable requirements as the Trustee or other registrar may prescribe,
or unless the name of the transferee shall have been noted on the Debenture by
the Trustee or other registrar.
(3) Notwithstanding any other
provisions in this Indenture or the Debentures, transfers and exchanges of
Restricted Debentures shall be made in accordance with this Section 3.2(3):
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(a)
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Transfer and Exchange of Interests in a Restricted
Uncertificated Debenture for Interests in an Unrestricted Uncertificated
Debenture.
An interest in a Restricted Uncertificated Debenture may be
exchanged by any holder thereof for an interest in an Unrestricted
Uncertificated Debenture or transferred to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Uncertificated Debenture if the
Trustee receives the following:
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(i)
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if the holder of such interest in a Restricted
Uncertificated Debenture proposes to exchange such beneficial interest for
a beneficial interest in an Unrestricted Uncertificated Debenture, a
certificate from such holder in the form of Schedule E, including the
certifications in item (1)(a) thereof; or
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(ii)
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if the holder of such beneficial interest in a Restricted
Uncertificated Debenture proposes to transfer such beneficial interest to
a Person who shall take delivery thereof in the form of a beneficial
interest in an Unrestricted Uncertificated Debenture, a certificate from
such holder in the form of Schedule D, including the certifications in
items (2) or (3) thereof;
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and, in each such case set forth in
this clause 3.2(3)(a), an opinion of counsel in form reasonably acceptable to
the Corporation and the Trustee to the effect that such transfer or exchange is
in compliance with the 1933 Act and all applicable state securities laws.
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(b)
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Transfer of Restricted Physical Debenture for
Restricted Physical Debenture.
A Restricted Physical Debenture may be
transferred to a Person who takes delivery thereof in the form of a
Restricted Physical Debenture if the Trustee receives a certificate to the
effect set forth in Schedule D, including the certifications in item (1)
thereof.
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(c)
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Transfer and Exchange of Restricted Physical
Debentures for Unrestricted Physical Debentures.
A Restricted Physical
Debenture may be exchanged by the holder thereof for an Unrestricted
Physical Debenture or transferred to a Person who takes delivery thereof
in the form of an Unrestricted Physical Debenture if the Trustee receives
the following:
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(i)
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if the holder of such Restricted Physical Debenture
proposes to exchange such Debenture for an Unrestricted Physical
Debenture, a certificate from such holder in the form of Schedule E,
including the certifications in item (1)(b) thereof; or
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(ii)
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if the holder of such Restricted Physical Debenture
proposes to transfer such Debenture to a Person who shall take delivery
thereof in the form of an Unrestricted Physical Debenture, a certificate
from such holder in the form of Schedule D, including the certifications
in item (2) or (3) thereof;
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and, in each such case set forth in
this clause 3.2(3)(c), an opinion of counsel in form reasonably acceptable to
the Corporation and the Trustee to the effect that such transfer or exchange is in compliance with the 1933 Act
and all applicable state securities laws.
- 34 -
Section 3.3
Transferee Entitled to
Registration
The transferee of a Debenture
shall be entitled, after the appropriate form of transfer is lodged with the
Trustee or other registrar and upon compliance with all other conditions in that
behalf required by this Indenture or by law, to be entered on the register as
the owner of such Debenture free from all equities or rights of set-off or
counterclaim between the Corporation and the transferor or any previous holder
of such Debenture, save in respect of equities of which the Corporation is
required to take notice by statute or by order of a court of competent
jurisdiction. Upon surrender for registration of transfer of Debentures, the
Corporation shall issue and thereupon the Trustee shall certify and deliver a
new Debenture Certificate or confirm the electronic deposit of Uncertificated
Debentures of like tenor in the name of the designated transferee and register
such transfer in accordance with Section 3.2. If less than all the Debentures
evidenced by the Debenture Certificate(s) or Uncertificated Debentures so
surrendered are transferred, the transferor shall be entitled to receive, in the
same manner, a new Debenture Certificate or electronically deposited
Uncertificated Debentures registered in his name evidencing the Debentures not
transferred.
Section 3.4
No Notice of Trusts
Neither the Corporation nor the
Trustee nor any registrar shall be bound to take notice of or see to the
execution of any trust (other than that created by this Indenture) whether
express, implied or constructive, in respect of any Debenture, and may transfer
the same on the direction of the Person registered as the holder thereof,
whether named as trustee or otherwise, as though that Person were the beneficial
owner thereof.
Section 3.5
Registers Open for Inspection
The registers referred to in
Sections 3.1 and 3.2 shall at all reasonable times be open for inspection by the
Corporation, the Trustee or any Debentureholder. Every registrar, including the
Trustee, shall from time to time when requested so to do by the Corporation, in
writing, furnish the Corporation with a list of names and addresses of holders
of registered Debentures entered on the register kept by them and showing the
principal amount and serial numbers of the Debentures held by each such holder,
provided the Trustee shall be entitled to charge a reasonable fee to the
Corporation to provide such a list.
Section 3.6
Exchanges of Debentures
(1) Subject to Section 3.1, 3.2
and 3.7, Debentures in any authorized form or denomination, other than
Uncertificated Debentures, may be exchanged for Debentures in any other
authorized form or denomination, of the same series and date of maturity,
bearing the same interest rate and of the same aggregate principal amount as the
Debentures so exchanged.
(2) In respect of exchanges of
Debentures permitted by subsection 3.6(1), Debentures of any series may be
exchanged only at the principal offices of the Trustee in the city of Vancouver,
British Columbia or at such other place or places, if any, as
may be specified in the Debentures of such series and at such other place or
places as may from time to time be designated by the Corporation with the
approval of the Trustee. Any Debentures tendered for exchange shall be
surrendered to the Trustee. The Corporation shall execute and the Trustee shall
certify all Debentures necessary to carry out exchanges as aforesaid. All
Debentures surrendered for exchange shall be cancelled.
- 35 -
(3) Debentures issued in exchange
for Debentures which at the time of such issue have been selected or called for
redemption at a later date shall be deemed to have been selected or called for
redemption in the same manner and shall have noted thereon a statement to that
effect.
Section 3.7
Closing of Registers
(1) Neither the Corporation nor
the Trustee nor any registrar shall be required to:
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(a)
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make transfers or exchanges or convert any Debentures on
any Interest Payment Date for such Debentures or during the five preceding
Business Days;
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(b)
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make transfers or exchanges of, or convert any Debentures
on the day of any selection by the Trustee of Debentures to be redeemed or
during the ten preceding Business Days;
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(c)
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make conversions of Debentures on any Interest Payment
Date or during the five preceding Business Days;
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(d)
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make exchanges of any Debentures which will have been
selected or called for redemption unless upon due presentation thereof for
redemption such Debentures shall not be redeemed, as the register for the
applicable series of Debentures shall be closed in respect of such actions
on such dates; or
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(e)
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make conversions of any Debentures the Business Day
immediately preceding the Maturity Date for such Debentures or during such
greater period prior to an applicable maturity date as directed in writing
by the Corporation (which period shall not exceed the five Business Days
preceding the applicable date of maturity).
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(2) Subject to any restriction
herein provided, the Corporation with the approval of the Trustee may at any
time close any register for any series of Debentures, other than those kept at
the principal offices of the Trustee in Vancouver, British Columbia, and
transfer the registration of any Debentures registered thereon to another
register (which may be an existing register) and thereafter such Debentures
shall be deemed to be registered on such other register. Notice of such transfer
shall be given to the holders of such Debentures.
Section 3.8
Charges for Registration, Transfer
and Exchange
For each Debenture exchanged,
registered, transferred or discharged from registration, the Trustee or other
registrar, except as otherwise herein provided, may make a reasonable charge for its services and in addition may charge a reasonable
sum for each new Debenture issued (such amounts to be agreed upon from time to
time by the Trustee and the Corporation), and payment of such charges and
reimbursement of the Trustee or other registrar for any stamp taxes or
governmental or other charges required to be paid shall be made by the party
requesting such exchange, registration, transfer or discharge from registration
as a condition precedent thereto. Notwithstanding the foregoing provisions, no
charge shall be made to a Debentureholder hereunder:
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(a)
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for any exchange, registration, transfer or discharge
from registration of any Debenture applied for within a period of two
months from the date of the first delivery of Debentures of that series
or, with respect to Debentures subject to a Periodic Offering, within a
period of two months from the date of delivery of any such
Debenture;
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(b)
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for any exchange of any interim or temporary Debenture or
interim certificate that has been issued under Section 2.10 for a
definitive Debenture; or
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(c)
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for any exchange of an Uncertificated Debenture as
contemplated in Section 3.1.
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Section 3.9
Ownership of Debentures
(1) Unless otherwise required by
law, the Person in whose name any registered Debenture is registered shall for
all purposes of this Indenture be and be deemed to be the owner thereof and
payment of or on account of the principal of and premium, if any, on such
Debenture and interest thereon shall be made to such registered holder.
(2) The registered holder for the
time being of any registered Debenture shall be entitled to the principal,
premium, if any, and/or interest evidenced by such instruments, respectively,
free from all equities or rights of set-off or counterclaim between the
Corporation and the original or any intermediate holder thereof and all persons
may act accordingly and the receipt of any such registered holder for any such
principal, premium or interest shall be a good discharge to the Trustee, any
registrar and to the Corporation for the same and none shall be bound to inquire
into the title of any such registered holder.
(3) Where Debentures are
registered in more than one name, the principal, premium, if any, and interest
from time to time payable in respect thereof may be paid to the order of all
such holders, failing written instructions from them to the contrary, and the
receipt of any one of such holders therefor shall be a valid discharge, to the
Trustee, any registrar and to the Corporation.
(4) In the case of the death of
one or more joint holders of any Debenture the principal, premium, if any, and
interest from time to time payable thereon may be paid to the order of the
survivor or survivors of such registered holders and the receipt of any such
survivor or survivors therefor shall be a valid discharge to the Trustee and any
registrar and to the Corporation.
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ARTICLE 4– PURCHASE OF DEBENTURES
Section 4.1
Purchase of Debentures by the
Corporation
(1) Unless otherwise specifically
provided with respect to a particular series of Debentures, the Corporation may,
if it is not at the time in default hereunder, at any time and from time to
time, purchase Debentures in the market (which shall include purchases from or
through an investment dealer or a firm holding membership on a recognized stock
exchange) or by tender or by contract, at any price. All Debentures so purchased
will be delivered to the Trustee and shall be cancelled and no Debentures shall
be issued in substitution therefor.
(2) If, upon an invitation for
tenders, more Debentures are tendered at the same lowest price than the
Corporation is prepared to accept, the Debentures to be purchased by the
Corporation shall be selected by the Trustee on a pro rata basis from the
Debentures tendered by each tendering Debentureholder who tendered at such
lowest price. For this purpose the Trustee may make, and from time to time
amend, regulations with respect to the manner in which Debentures may be so
selected, and regulations so made shall be valid and binding upon all
Debentureholders, notwithstanding the fact that as a result thereof one or more
of such Debentures become subject to purchase in part only. The holder of a
Debenture of which a part only is purchased, upon surrender of such Debenture
for payment, shall be entitled to receive, without expense to such holder, one
or more new Debentures for the unpurchased part so surrendered, and the Trustee
shall certify and deliver such new Debenture or Debentures upon receipt of the
Debenture so surrendered or, with respect to an Uncertificated Debenture, the
Depository shall electronically deposit the unpurchased part so surrendered.
Section 4.2
Deposit of Maturity Monies
Payment on maturity of Debentures
shall be provided for by the Corporation depositing with the Trustee or any
paying agent to the order of the Trustee, on or before 11:00 a.m. (Vancouver
time) on the Business Day immediately prior to the Maturity Date such sums of
money as may be sufficient to pay all accrued and unpaid interest thereon up to
but excluding the Maturity Date, provided the Corporation may elect to satisfy
this requirement by providing the Trustee with a certified cheque or wire
transfer for such amounts required under this Section 4.2 post-dated to the
Maturity Date. The Corporation shall also deposit with the Trustee a sum of
money sufficient to pay any charges or expenses which may be incurred by the
Trustee in connection therewith. Every such deposit shall be irrevocable. From
the sums so deposited, the Trustee shall pay or cause to be paid to the holders
of such Debentures, upon surrender of such Debentures, the principal and
interest to which they are respectively entitled on the Maturity Date.
ARTICLE 5– SUBORDINATION OF DEBENTURES
Section 5.1
Applicability of Article
The indebtedness, liabilities and
obligations of the Corporation hereunder (except as provided in Section 14.14)
or under the Debentures, whether on account of principal, premium, if any, interest or otherwise, but excluding the issuance of
Common Shares upon any conversion pursuant to Article 6, upon any purchase
pursuant to Article 4, or at maturity pursuant to Section 2.14 (collectively,
the “
Debenture Liabilities
”), shall be subordinated and postponed and
subject in right of payment, to the extent and in the manner hereinafter set
forth in the following Sections of this Article 5, to the full and final payment
of all Secured Indebtedness, and each holder of any such Debenture by his
acceptance thereof agrees to and shall be bound by the provisions of this
Article 5.
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Section 5.2
Order of Payment
(1) In the event of any
insolvency or bankruptcy proceedings, or any receivership, liquidation,
reorganization or other similar proceedings relative to the Corporation, or to
its property or assets, or in the event of any proceedings for voluntary
liquidation, dissolution or voluntary winding-up of the Corporation, whether or
not involving insolvency or bankruptcy, or any marshalling of the assets and
liabilities of the Corporation:
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(a)
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all Secured Indebtedness shall first be paid in full, or
provision made for such payment, before any payment is made on account of
Debenture Liabilities;
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(b)
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any payment or distribution of assets of the Corporation,
whether in cash, property or securities, to which the holders of the
Debentures or the Trustee on behalf of such holders would be entitled
except for the provisions of this Article 5, shall be paid or delivered by
the trustee in bankruptcy, receiver, assignee for the benefit of
creditors, or other liquidating agent making such payment or distribution,
directly to the holders of Secured Indebtedness or their representative or
representatives, or to the trustee or trustees under any indenture
pursuant to which any instruments evidencing any of such Secured
Indebtedness may have been issued, to the extent necessary to pay all
Secured Indebtedness in full after giving effect to any concurrent payment
or distribution, or provision therefor, to the holders of such Secured
Indebtedness; and
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(c)
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the Secured Creditors or a receiver or a receiver-manager
of the Corporation or of all or part of its assets or any other
enforcement agent may sell, mortgage, or otherwise dispose of the
Corporation’s assets in whole or in part, free and clear of all Debenture
Liabilities and without the approval of the Debentureholders or the
Trustee.
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(2) The rights and priority of
the Secured Indebtedness and the subordination pursuant hereto shall not be
affected by:
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(a)
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the time, sequence or order of creating, granting,
executing, delivering of, or registering, perfecting or failing to
register or perfect any security notice, caveat, financing statement or
other notice in respect of any security securing the Secured Indebtedness
(the “
Senior Security
”);
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(b)
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the time or order of the attachment, perfection or
crystallization of any security constituted by the Senior
Security;
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(c)
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the taking of any collection, enforcement or realization
proceedings pursuant to the Senior Security;
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(d)
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the date of obtaining of any judgment or order of any
bankruptcy court or any court administering bankruptcy, insolvency or
similar proceedings as to the entitlement of the Secured Creditors, or any
of them or the Debentureholders or any of them to any money or property of
the Corporation;
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(e)
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the failure to exercise any power or remedy reserved to
the Secured Creditors under the Senior Security or to insist upon a strict
compliance with any terms thereof;
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(f)
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whether any Senior Security is now perfected, hereafter
ceases to be perfected, is avoidable by any trustee in bankruptcy or like
official or is otherwise set aside, invalidated or lapses;
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(g)
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the date of giving or failing to give notice to or making
demand upon the Corporation; or
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(h)
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any other matter whatsoever.
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Section 5.3
Subrogation to Rights of Holders
of Secured Indebtedness
(1) Subject to the prior payment
in full of all Secured Indebtedness, the holders of the Debentures shall be
subrogated to the rights of the holders of Secured Indebtedness to receive
payments or distributions of assets of the Corporation to the extent of the
application thereto of such payments or other assets which would have been
received by the holders of the Debentures but for the provisions hereof until
the principal of, premium, if any, and interest on the Debentures shall be paid
in full, and no such payments or distributions to the holders of the Debentures
of cash, property or securities, which otherwise would be payable or
distributable to the holders of the Secured Indebtedness, shall, as between the
Corporation, its creditors other than the holders of Secured Indebtedness, and
the holders of Debentures, be deemed to be a payment by the Corporation to the
holders of the Secured Indebtedness or on account of the Secured Indebtedness,
it being understood that the provisions of this Article 5 are and are intended
solely for the purpose of defining the relative rights of the holders of the
Debentures, on the one hand, and the holders of Secured Indebtedness, on the
other hand.
(2) The Trustee, for itself and
on behalf of each of the Debentureholders, hereby waives any and all rights to
require a Secured Creditor to pursue or exhaust any rights or remedies with
respect to the Corporation or any property and assets subject to any Senior
Security or in any other manner to require the marshalling of property, assets
or security in connection with the exercise by the Secured Creditors of any
rights, remedies or recourses available to them.
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Section 5.4
Obligation to Pay Not Impaired
Nothing contained in this Article
5 or elsewhere in this Indenture or in the Debentures is intended to or shall
impair, as between the Corporation, its creditors other than the holders of
Secured Indebtedness, and the holders of the Debentures, the obligation of the
Corporation, which is absolute and unconditional, to pay to the holders of the
Debentures the principal of, premium, if any, and interest on the Debentures, as
and when the same shall become due and payable in accordance with their terms,
or affect the relative rights of the holders of the Debentures and creditors of
the Corporation other than the holders of the Secured Indebtedness, nor shall
anything herein or therein prevent the Trustee or the holder of any Debenture
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article 5 of the
holders of Secured Indebtedness in respect of cash, property or securities.
Section 5.5
No Payment if Secured Indebtedness
in Default
(1) Upon the maturity of any
Secured Indebtedness by lapse of time, acceleration or otherwise, or any other
enforcement of any Secured Indebtedness, then, except as provided in Section
5.8, all such Secured Indebtedness shall first be paid in full, or shall first
have been duly provided for, before any payment is made on account of the
Debenture Liabilities.
(2) In case of a circumstance
constituting a default or event of default with respect to any Secured
Indebtedness permitting (whether at that time or upon notice, lapse of time, or
satisfaction of any other condition precedent) a Secured Creditor to demand
payment or accelerate the maturity thereof where the notice of such default or
event of default has been given by or on behalf of the holders of Secured
Indebtedness to the Corporation or the Corporation otherwise has knowledge
thereof, unless and until such default or event of default shall have been cured
or waived or shall have ceased to exist, no payment (by purchase of Debentures
or otherwise) shall be made by the Corporation (except as provided in Section
5.8) with respect to the Debenture Liabilities and neither the Trustee nor the
holders of Debentures shall be entitled to demand, institute proceedings for the
collection of (which shall, for certainty include proceedings related to an
adjudication or declaration as to the insolvency or bankruptcy of the
Corporation and other similar creditor proceedings), or receive any payment or
benefit (including without limitation by set-off, combination of accounts or
otherwise in any manner whatsoever) on account of the Debentures after the
happening of such a default or event of default (except as provided in Section
5.8), and unless and until such default or event of default shall have been
cured or waived or shall have ceased to exist, such payments shall be held in
trust for the benefit of, and, if and when such Secured Indebtedness shall have
become due and payable, shall be paid over to, the holders of the Secured
Indebtedness or their representative or representatives or to the trustee or
trustees under any indenture under which any instruments evidencing an amount of
the Secured Indebtedness remaining unpaid until all such Secured Indebtedness
shall have been paid in full, after giving effect to any concurrent payment or
distribution to the holders of such Secured Indebtedness.
(3) The fact that any payment
hereunder is prohibited by this Section 5.5 shall not prevent the failure to
make such payment from being an Event of Default hereunder.
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Section 5.6
Payment on Debentures Permitted
Nothing contained in this Article
5 or elsewhere in this Indenture, or in any of the Debentures, shall affect the
obligation of the Corporation to make, or prevent the Corporation from making,
at any time except as prohibited by Sections 5.2 or 5.5, any payment of
principal of or, premium, if any, or interest on the Debentures. The fact that
any such payment is prohibited by Sections 5.2 or 5.5 shall not prevent the
failure to make such payment from being an Event of Default hereunder. Nothing
contained in this Article 5 or elsewhere in this Indenture, or in any of the
Debentures, shall prevent the conversion of the Debentures or, except as
prohibited by Sections 5.2 or 5.5, the application by the Trustee of any monies
deposited with the Trustee hereunder for the purpose, to the payment of or on
account of the Debenture Liabilities.
Section 5.7
Confirmation of Subordination
Each holder of Debentures by his
acceptance thereof authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effect the subordination as
provided in this Article 5 and appoints the Trustee his attorney-in-fact for any
and all such purposes. Upon request of the Corporation, and upon being furnished
an Officer’s Certificate stating that one or more named Persons are Secured
Creditors and specifying the amount and nature of the Secured Indebtedness of
such Secured Creditor, the Trustee shall enter into a written agreement or
agreements with the Corporation and the Person or Persons named in such
Officer’s Certificate providing that such Person or Persons are entitled to all
the rights and benefits of this Article 5 as a Secured Creditor and for such
other matters, such as an agreement not to amend the provisions of this Article
5 and the definitions herein without the consent of such Secured Creditor, as
the Secured Creditor may reasonably request. Such agreement shall be conclusive
evidence that the indebtedness specified therein is Secured Indebtedness,
however, nothing herein shall impair the rights of any Secured Creditor who has
not entered into such an agreement.
Section 5.8
Knowledge of Trustee
Notwithstanding the provisions of
this Article 5 or any provision in this Indenture or in the Debentures
contained, the Trustee will not be charged with knowledge of any Secured
Indebtedness or of any default in the payment thereof, or of the existence of
any Event of Default or any other fact that would prohibit the making of any
payment of monies to or by the Trustee, or the taking of any other action by the
Trustee, unless and until the Trustee has received written notice thereof from
the Corporation, any Debentureholder or any Secured Creditor.
Section 5.9
Trustee May Hold Secured
Indebtedness
The Trustee is entitled to all
the rights set forth in this Article 5 with respect to any Secured Indebtedness
at the time held by it, to the same extent as any other holder of Secured
Indebtedness, and nothing in this Indenture deprives the Trustee of any of its
rights as such holder.
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Section 5.10
Rights of Holders of Secured
Indebtedness Not Impaired
No right of any present or future
holder of any Secured Indebtedness to enforce the subordination herein will at
any time or in any way be prejudiced or impaired by any act or failure to act on
the part of the Corporation or by any non-compliance by the Corporation with the
terms, provisions and covenants of this Indenture, regardless of any knowledge
thereof which any such holder may have or be otherwise charged with.
Section 5.11
Altering the Secured Indebtedness
The holders of the Secured
Indebtedness have the right to extend, renew, modify or amend the terms of the
Secured Indebtedness or any security therefor and to release, sell or exchange
such security and otherwise to deal freely with the Corporation, all without
notice to or consent of the Debentureholders or the Trustee and without
affecting the liabilities and obligations of the parties to this Indenture or
the Debentureholders.
Section 5.12
Additional Indebtedness
This Indenture does not restrict
the Corporation from incurring additional indebtedness for borrowed money or
other obligations or liabilities (including Secured Indebtedness) or mortgaging,
pledging or charging its properties to secure any indebtedness or liabilities.
Except for Secured Indebtedness, any additional indebtedness for borrowed money
or other obligations or liabilities or other debts will be subordinated to the
Debentures.
Section 5.13
Right of Debentureholder to
Convert Not Impaired
The subordination of the
Debentures to the Secured Indebtedness and the provisions of this Article 5 do
not impair in any way the right of a Debentureholder to convert its Debentures
pursuant to Article 6 provided that there is no continuing default or event
under Secured Indebtedness or acceleration of Secured Indebtedness that has not
been rescinded and provided that such conversion does not result in a payment
that could reasonably be expected to cause a default or event of default under
any Secured Indebtedness.
Section 5.14
Invalidated Payments
In the event that any of the
Secured Indebtedness shall be paid in full and subsequently, for whatever
reason, such formerly paid or satisfied Secured Indebtedness becomes unpaid or
unsatisfied, the terms and conditions of this Article 5 shall be reinstated and
the provisions of this Article shall again be operative until all Secured
Indebtedness is repaid in full, provided that such reinstatement shall not give
the Secured Creditors any rights or recourses against the Trustee or the
Debentureholders for amounts paid to the Debentureholders subsequent to such
payment or satisfaction in full and prior to such reinstatement.
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Section 5.15
Contesting Security
The Trustee, for itself and on
behalf of the Debentureholders, agrees that it shall not contest or bring into
question the validity, perfection or enforceability of any of the Secured
Indebtedness, the Senior Security or the relative priority of the Senior
Security.
ARTICLE 6– CONVERSION OF DEBENTURES
Section 6.1
Applicability of Article
(1) Any Debentures issued
hereunder of any series which by their terms are convertible (subject, however,
to any applicable restriction of the conversion of Debentures of such series)
will be convertible into Common Shares or other securities of the Corporation,
at such conversion rate or rates, and on such date or dates and in accordance
with such other provisions as shall have been determined at the time of issue of
such Debentures and shall have been expressed in this Indenture (including
subsection 2.5(5) and Section 3.7 hereof), in such Debentures, in an Officer’s
Certificate, or in a supplemental indenture authorizing or providing for the
issue thereof.
(2) Such right of conversion
shall extend only to the maximum number of whole Common Shares into which the
aggregate principal amount of the Debenture or Debentures surrendered for
conversion at any one time by the holder thereof may be converted. Fractional
interests in Common Shares shall be adjusted for in the manner provided in
Section 6.6.
Section 6.2
Notice of Expiry of Conversion
Privilege
Notice of the expiry of the
conversion privileges of the Debentures shall be given by or on behalf of the
Corporation, not more than 60 days and not less than 30 days prior to the date
fixed for the Time of Expiry, in the manner provided in Section 13.2.
Section 6.3
Revival of Right to Convert
If the redemption of any
Debenture called for redemption by the Corporation is not made or the payment of
the purchase price of any Debenture which has been tendered in acceptance of an
offer by the Corporation to purchase Debentures for cancellation is not made, in
the case of a redemption upon due surrender of such Debenture or in the case of
a purchase on the date on which such purchase is required to be made, as the
case may be, then, provided the Time of Expiry has not passed, the right to
convert such Debentures shall revive and continue as if such Debenture had not
been called for redemption or tendered in acceptance of the Corporation’s offer,
respectively.
Section 6.4
Manner of Exercise of Right to
Convert
(1) The holder of a Debenture
desiring to convert such Debenture in whole or in part into Common Shares shall
surrender such Debenture to the Trustee at its principal office in the City of
Vancouver, British Columbia together with the conversion notice in the form of
Schedule B or any other written notice in a form satisfactory to the Trustee,
duly executed by the holder or his executors or administrators or other legal representatives or his or their attorney duly appointed by an instrument in writing in form and executed in a manner satisfactory to the Trustee, exercising his right to convert such Debenture in accordance with the provisions of this Article; provided that with respect to an Uncertificated Debenture, registration and surrender of interests in the Debentures will be made only through the Depositary's non-certificated system. Thereupon such Debentureholder or, subject to payment of all applicable stamp or security transfer taxes or other governmental charges and compliance with all reasonable requirements of the Trustee, his nominee(s) or assignee(s) shall be entitled to be entered in the books of the Corporation as at the Date of Conversion (or such later date as is specified in subsection 6.4(2)) as the holder of the number of Common Shares, as applicable, into which such Debenture is convertible in accordance with the provisions of this Article and, as soon as practicable thereafter, the Corporation shall deliver to such Debentureholder or, subject as aforesaid, his nominee(s) or assignee(s), a certificate or certificates for such Common Shares or deposit such Common Shares through the Depository's non-certificated system and make or cause to be made any payment of interest to which such holder is entitled in accordance with subsection 6.4(5) . With respect to a Global Debenture, the obligation to surrender a Debenture to the Trustee shall be satisfied if the Trustee makes a notation on the Global Debenture of the principal amount thereof so converted and the Trustee is provided with all other documentation which it may request.
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(2) For the purposes of this
Article, a Debenture shall be deemed to be surrendered for conversion on the
date (herein called the “
Date of Conversion
”) on which it is so
surrendered when the register of the Trustee is open and in accordance with the
provisions of this Article or, in the case of an Uncertificated Debenture which
the Trustee received notice of and all necessary documentation in respect of the
exercise of the conversion rights and, in the case of a Debenture so surrendered
by mail or other means of transmission, on the date on which it is received by
the Trustee at one of its offices specified in subsection 6.4(1); provided that
if a Debenture is surrendered for conversion on a day on which the register of
Common Shares is closed, the Person or Persons entitled to receive Common Shares
shall become the holder or holders of record of such Common Shares as at the
date on which such registers are next reopened.
(3) Any part, being $1,000 or an
integral multiple thereof, of a Debenture in a denomination in excess of $1,000
may be converted as provided in this Article and all references in this
Indenture to conversion of Debentures shall be deemed to include conversion of
such parts.
(4) The holder of any Debenture
of which only a part is converted shall, upon the exercise of his right of
conversion surrender such Debenture to the Trustee in accordance with subsection
6.4(1), and the Trustee shall cancel the same and shall without charge forthwith
certify and deliver to the holder a new Debenture or Debentures in an aggregate
principal amount equal to the unconverted part of the principal amount of the
Debenture so surrendered or, with respect to an Uncertificated Debenture,
registration and surrender of interests in the Debentures will be made only
through the Depositary’s non-certificated system.
(5) The holder of a Debenture
surrendered for conversion in accordance with this Section 6.4 shall be entitled
(subject to any applicable restriction on the right to receive interest on
conversion of Debentures of any series) to receive accrued and unpaid interest
in respect thereof, in cash, up to but excluding the Date of Conversion and the
Common Shares issued upon such conversion shall rank only in respect of
distributions or dividends declared in favour of shareholders of record on and
after the Date of Conversion or such later date as such holder shall become the
holder of record of such Common Shares pursuant to subsection 6.4(2), from which
applicable date they will for all purposes be and be deemed to be issued and
outstanding as fully paid and non-assessable Common Shares.
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Section 6.5
Adjustment of Conversion Price
The Conversion Price in effect at
any date shall be subject to adjustment from time to time as set forth below.
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(a)
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If and whenever at any time prior to the Time of Expiry
the Corporation shall
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(i)
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subdivide or redivide the outstanding Common Shares into
a greater number of shares,
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(ii)
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reduce, combine or consolidate the outstanding Common
Shares into a smaller number of shares, or
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(iii)
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issue Common Shares to the holders of all or
substantially all of the outstanding Common Shares by way of a dividend or
distribution (other than the issue of Common Shares to holders of Common
Shares who have elected to receive dividends or distributions in the form
of Common Shares in lieu of cash dividends or cash distributions paid in
the ordinary course on the Common Shares),
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the Conversion Price in effect on the
effective date of such subdivision, redivision, reduction, combination or
consolidation or on the record date for such issue of Common Shares by way of a
dividend or distribution, as the case may be, shall in the case of any of the
events referred to in (i) and (iii) above be decreased in proportion to the
number of outstanding Common Shares resulting from such subdivision, redivision
or dividend, or shall, in the case of any of the events referred to in (ii)
above, be increased in proportion to the number of outstanding Common Shares
resulting from such reduction, combination or consolidation. Such adjustment
shall be made successively whenever any event referred to in this subsection
6.5(a) shall occur. Any such issue of Common Shares by way of a dividend or
distribution shall be deemed to have been made on the record date for the
dividend or distribution for the purpose of calculating the number of
outstanding Common Shares under subsections (c) and (d) of this Section 6.5.
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(b)
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If and whenever at any time prior to the Time of Expiry
the Corporation shall fix a record date for the payment of a cash dividend
or distribution to the holders of all or substantially all of the
outstanding Common Shares, the Conversion Price shall be adjusted
immediately after such record date so that it shall be equal to the price
determined by multiplying the Conversion Price
in effect on such record date by a fraction, of which the
denominator shall be the Current Market Price on such record date and of which
the numerator shall be the Current Market Price on such record date minus the
amount in cash per Common Share distributed to holders of Common Shares. Such
adjustment shall be made successively whenever such a record date is fixed. To
the extent that any such cash dividend or distribution is not paid, the
Conversion Price shall be re-adjusted to the Conversion Price which would then
be in effect if such record date had not been fixed.
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(c)
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If and whenever at any time prior to the Time of Expiry
the Corporation shall fix a record date for the issuance of options,
rights or warrants to all or substantially all the holders of its
outstanding Common Shares entitling them, for a period expiring not more
than 45 days after such record date, to subscribe for or purchase Common
Shares (or securities convertible into Common Shares) at a price per share
(or having a conversion or exchange price per share) less than 95% of the
Current Market Price on such record date, the Conversion Price shall be
adjusted immediately after such record date so that it shall equal the
price determined by multiplying the Conversion Price in effect on such
record date by a fraction, of which the numerator shall be the total
number of Common Shares outstanding on such record date plus a number of
Common Shares equal to the number arrived at by dividing the aggregate
price of the total number of additional Common Shares offered for
subscription or purchase (or the aggregate conversion or exchange price of
the convertible securities so offered) by such Current Market Price, and
of which the denominator shall be the total number of Common Shares
outstanding on such record date plus the total number of additional Common
Shares offered for subscription or purchase (or into which the convertible
securities so offered are convertible). Such adjustment shall be made
successively whenever such a record date is fixed. To the extent that any
such options, rights or warrants are not so issued or any such options,
rights or warrants are not exercised prior to the expiration thereof, the
Conversion Price shall be re-adjusted to the Conversion Price which would
then be in effect if such record date had not been fixed or to the
Conversion Price which would then be in effect based upon the number of
Common Shares (or securities convertible into Common Shares) actually
issued upon the exercise of such options, rights or warrants were included
in such fraction, as the case may be.
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(d)
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If and whenever at any time prior to the Time of Expiry,
there is a reclassification of the Common Shares or a capital
reorganization of the Corporation other than as described in subsection
6.5(a) or a consolidation, amalgamation, arrangement, binding share
exchange, merger of the Corporation with or into any other Person or other
entity or acquisition of the Corporation or other combination pursuant to
which the Common Shares are converted into or acquired for cash,
securities or other property; or a sale or conveyance of the property and
assets of the Corporation as an entirety or substantially as an entirety
to any other Person (other than a direct or indirect
wholly-owned subsidiary of the Corporation) or other entity or a
liquidation, dissolution or winding-up of the Corporation (any such event, a
“
Merger Event
”), any holder of a Debenture who has not exercised its
right of conversion prior to the effective date of such reclassification,
capital reorganization, consolidation, amalgamation, arrangement, merger, share
exchange, acquisition, combination, sale or conveyance or liquidation,
dissolution or winding-up, upon the exercise of such right thereafter, shall be
entitled to receive and shall accept, in lieu of the number of Common Shares
then sought to be acquired by it, such amount of cash or the number of shares or
other securities or property of the Corporation or of the Person or other entity
resulting from such merger, amalgamation, arrangement, acquisition, combination
or consolidation, or to which such sale or conveyance may be made or which
holders of Common Shares receive pursuant to such liquidation, dissolution or
winding-up, as the case may be, that such holder of a Debenture would have been
entitled to receive on such reclassification, capital reorganization,
consolidation, amalgamation, arrangement, merger, share exchange, acquisition,
combination, sale or conveyance or liquidation, dissolution or winding-up, if,
on the record date or the effective date thereof, as the case may be, the holder
had been the registered holder of the number of Common Shares sought to be
acquired by it and to which it was entitled to acquire upon the exercise of the
conversion right, subject to subsection 6.5(m) . If determined appropriate by
the Board of Directors, to give effect to or to evidence the provisions of this
subsection 6.5(d), the Corporation, its successor, or such purchasing Person or
other entity, as the case may be, shall, prior to or contemporaneously with any
such reclassification, capital reorganization, consolidation, amalgamation,
arrangement, merger, share exchange, acquisition, combination, sale or
conveyance or liquidation, dissolution or winding-up, enter into an indenture
which shall provide, to the extent possible, for the application of the
provisions set forth in this Indenture with respect to the rights and interests
thereafter of the holder of Debentures to the end that the provisions set forth
in this Indenture shall thereafter correspondingly be made applicable, as nearly
as may reasonably be, with respect to any cash, shares or other securities or
property to which a holder of Debentures is entitled on the exercise of its
acquisition rights thereafter. Any indenture entered into between the
Corporation and the Trustee pursuant to the provisions of this subsection 6.5(d)
shall be a supplemental indenture entered into pursuant to the provisions of
Article 16. Any indenture entered into between the Corporation, any successor to
the Corporation or such purchasing Person or other entity and the Trustee shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided in this subsection 6.5(d) and which
shall apply to successive reclassifications, capital reorganizations,
amalgamations, consolidations, mergers, share exchanges, acquisitions,
combinations, sales or conveyances. For greater certainty, nothing in this
subsection 6.5(d) shall affect or reduce the requirement for any Person to make
a Change of Control Offer, and notice of any transaction to which this subsection 6.5(d) applies shall
be given in accordance with Section 6.10.
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- 48 -
The Corporation shall not become a
party to any Merger Event unless its terms are consistent with this subsection
6.5(d) .
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(e)
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If the Corporation shall make a distribution to all or
substantially all of the holders of Common Shares of shares in the capital
of the Corporation, other than Common Shares, or evidences of indebtedness
or other assets of the Corporation, including securities (but excluding
(i) any issuance of rights or warrants for which an adjustment was made
pursuant to subsection 6.5(c), and (ii) any dividend or distribution paid
exclusively in cash for which an adjustment was made pursuant to
subsection 6.5(b)) (the “
Distributed
Securities
”), then in
each such case (unless the Corporation at its option chooses to distribute
such Distributed Securities to the holders of Debentures on such dividend
or distribution date (as if each holder had converted such Debenture into
Common Shares immediately preceding the record date with respect to such
distribution)) the Conversion Price in effect immediately preceding the
ex-distribution date fixed for the dividend or distribution shall be
adjusted so that the same shall equal the price determined by multiplying
the Conversion Price in effect immediately preceding such ex-distribution
date by a fraction of which the denominator shall be the five-day VWAP
immediately prior to the ex-distribution date and of which the numerator
shall be the five-day VWAP for the first five trading days that occur
immediately post the ex- distribution date. Such adjustment shall be made
successively whenever any such distribution is made and shall become
effective five Business Days immediately after the ex-distribution date.
In the event that such dividend or distribution is not so paid or made,
the Conversion Price shall again be adjusted to be the Conversion Price
that would then be in effect if such dividend or distribution had not been
declared.
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Notwithstanding the foregoing, if the securities
distributed by the Corporation to all holders of its Common Shares consist
of capital stock of, or similar equity interests in, a Subsidiary or other
business of the Corporation (the “
Spinoff Securities
”), the
Conversion Price shall be adjusted, unless the Corporation makes an
equivalent distribution to the holders of Debentures, so that the same
shall be equal to the rate determined by multiplying the Conversion Price
in effect on the record date fixed for the determination of shareholders
entitled to receive such distribution by a fraction, the denominator of
which shall be the sum of (A) the weighted average trading price of one
Common Share over the 20 consecutive trading day period (the “
Spinoff
Valuation Period
”) commencing on and including the fifth trading day
after the date on which ex- dividend trading commences for such
distribution on the TSX (or such other exchange on which the Common Shares
are then listed) and (B) the product of (i) the weighted average trading
price (calculated in substantially the same way as the Current Market
Price is calculated for the Common Shares) over
the Spinoff Valuation Period of the Spinoff Securities or, if no
such prices are available, the fair market value of the Spinoff Securities as
reasonably determined by the Board of Directors (which determination shall be
conclusive and shall be evidenced by an Officer’s Certificate delivered to the
Trustee) multiplied by (ii) the number of Spinoff Securities distributed in
respect of one Common Share and the numerator of which shall be the weighted
average trading price of one Common Share over the Spinoff Valuation Period,
such adjustment to become effective immediately preceding the opening of
business on the 25th trading day after the date on which ex-dividend trading
commences; provided, however, that the Corporation may in lieu of the foregoing
adjustment elect to make adequate provision so that each holder of Debentures
shall have the right to receive upon conversion thereof the amount of such
Spinoff Securities that such holder of Debentures would have received if such
Debentures had been converted on the record date with respect to such
distribution.
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(f)
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If any issuer bid made by the Corporation or any of its
Subsidiaries for all or any portion of Common Shares shall expire, then,
if the issuer bid shall require the payment to shareholders of
consideration per Common Share having a fair market value (determined as
provided below) that exceeds the Current Market Price on the last date
(the “
Expiration Date
”) tenders could have been made pursuant to
such issuer bid (as it may be amended) (the last time at which such
tenders could have been made on the Expiration Date is hereinafter
sometimes called the “
Expiration Time
”), the Conversion Price shall
be adjusted so that the same shall equal the rate determined by
multiplying the Conversion Price in effect immediately preceding the close
of business on the Expiration Date by a fraction of which (i) the
denominator shall be the sum of (A) the fair market value of the aggregate
consideration (the fair market value as determined by the Board of
Directors, whose determination shall be conclusive evidence of such fair
market value and which shall be evidenced by an Officer’s Certificate
delivered to the Trustee) payable to shareholders based on the acceptance
(up to any maximum specified in the terms of the issuer bid) of all Common
Shares validly tendered and not withdrawn as of the Expiration Time (the
Common Shares deemed so accepted, up to any such maximum, being referred
to as the “
Purchased Common Shares
”) and (B) the product of the
number of Common Shares outstanding (less any Purchased Common Shares and
excluding any Common Shares held in the treasury of the Corporation) at
the Expiration Time and the Current Market Price on the Expiration Date
and (ii) the numerator of which shall be the product of the number of
Common Shares outstanding (including Purchased Common Shares but excluding
any Common Shares held in the treasury of the Corporation) at the
Expiration Time multiplied by the Current Market Price on the Expiration
Date, such increase to become effective immediately preceding the opening
of business on the day following the Expiration Date. In the event that
the Corporation is obligated to purchase Common Shares pursuant to any
such issuer bid, but the Corporation is permanently prevented by applicable law from
effecting any or all such purchases or any or all such purchases are rescinded,
the Conversion Price shall again be adjusted to be the Conversion Price which
would have been in effect based upon the number of Common Shares actually
purchased, if any. If the application of this subsection 6 . 5 ( f ) to any
issuer bid would result in a decrease in the Conversion Price, no adjustment
shall be made for such issuer bid under this subsection 6.5(f) .
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For purposes of this subsection
6.5(f), the term “
issuer bid
” shall mean an issuer bid under Applicable
Securities Legislation or a take-over bid under Applicable Securities
Legislation by a Subsidiary of the Corporation for the Common Shares and all
references to “purchases” of Common Shares in issuer bids (and all similar
references) shall mean and include the purchase of Common Shares in issuer bids
and all references to “tendered Common Shares” (and all similar references)
shall mean and include Common Shares tendered in issuer bids.
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(g)
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In any case in which this Section 6.5 shall require that
an adjustment shall become effective immediately after a record date for
an event referred to herein, the Corporation may defer, until the
occurrence of such event, issuing to the holder of any Debenture converted
after such record date and before the occurrence of such event the
additional Common Shares issuable upon such conversion by reason of the
adjustment required by such event before giving effect to such adjustment;
provided, however, that the Corporation shall deliver to such holder an
appropriate instrument evidencing such holder’s right to receive such
additional Common Shares upon the occurrence of the event requiring such
adjustment and the right to receive any distributions made on such
additional Common Shares declared in favour of holders of record of Common
Shares on and after the Date of Conversion or such later date as such
holder would, but for the provisions of this subsection 6.5(g), have
become the holder of record of such additional Common Shares pursuant to
subsection 6.4(2).
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(h)
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The adjustments provided for in this Section 6.5 are
cumulative and shall apply to successive subdivisions, redivisions,
reductions, combinations, consolidations, distributions, issues or other
events resulting in any adjustment under the provisions of this Section,
provided that, notwithstanding any other provision of this Section, no
adjustment of the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
Conversion Price then in effect; provided however, that any adjustments
which by reason of this subsection 6.5(h) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment.
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(i)
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For the purpose of calculating the number of Common
Shares outstanding, Common Shares owned by or for the benefit of the
Corporation shall not be counted.
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(j)
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In the event of any question arising with respect to the
adjustments provided in this Section 6.5, such question shall be
conclusively determined by a firm of nationally recognized chartered
accountants appointed by the Corporation and acceptable to the Trustee
(who may be the Auditors of the Corporation); such accountants shall have
access to all necessary records of the Corporation and such determination
shall be binding upon the Corporation, the Trustee, and the
Debentureholders.
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(k)
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In case the Corporation shall take any action affecting
the Common Shares other than action described in this Section 6.5, which
in the opinion of the Board of Directors, would materially affect the
rights of Debentureholders, the Conversion Price shall be adjusted in such
manner and at such time, by action of the Board of Directors, as the Board
of Directors, in their sole discretion may determine to be equitable in
the circumstances. Failure of the directors to make such an adjustment
shall be conclusive evidence that they have determined that it is
equitable to make no adjustment in the circumstances.
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(l)
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No adjustment in the Conversion Price shall be made in
respect of any event described in subsections 6.5(a), 6.5(b), 6.5(c),
6.5(e) or 6.5(f) other than the events described in clauses 6.5(a)(i) or
6.5(a)(ii) if the holders of the Debentures are entitled to participate in
such event on the same terms mutatis mutandis as if they had converted
their Debentures prior to the effective date or record date, as the case
may be, of such event.
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(m)
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Except as stated above in this Section 6.5, no adjustment
will be made in the Conversion Price for any Debentures as a result of the
issuance of Common Shares at less than the Current Market Price on the
date of issuance or the then applicable Conversion Price.
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(n)
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Notwithstanding any of the foregoing in this Section 6.5,
if a holder of a Debenture would otherwise be entitled to receive, upon
conversion of the Debenture, any property (including cash) or securities
that would not constitute “prescribed securities” for the purposes of
clause 212(1)(b)(vii)(E) of the Tax Act as it applied on December 31, 2007
(“
Ineligible Consideration
”), such holder of a Debenture shall not
be entitled to receive such Ineligible Consideration and the Corporation
or the successor or acquirer, as the case may be, shall have the right (at
the sole option of the Corporation or the successor or acquirer, as the
case may be) to deliver to such holder “prescribed securities” for the
purposes of clause 212(1)(b)(vii)(E) of the Tax Act as it applied on
December 31, 2007 with a market value (as conclusively determined by the
Board of Directors) equal to the market value of such Ineligible
Consideration.
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- 52 -
Section 6.6
No Requirement to Issue Fractional
Common Shares
The Corporation shall not be
required to issue fractional Common Shares upon the conversion of Debentures
pursuant to this Article. If more than one Debenture shall be surrendered for
conversion at one time by the same holder, the number of whole Common Shares
issuable upon conversion thereof shall be computed on the basis of the aggregate
principal amount of such Debentures to be converted. If any fractional interest
in a Common Share would, except for the provisions of this Section, be
deliverable upon the conversion of any principal amount of Debentures, the
Corporation shall, in lieu of delivering any certificate representing such
fractional interest, make a cash payment to the holder of such Debenture of an
amount equal to the fractional interest which would have been issuable
multiplied by the Current Market Price, provided, however, the Corporation shall
not be required to make any payment of less than $1.00.
Section 6.7
Forced Conversion
If following the closing of the
Offering and prior to the Maturity Date, the VWAP of the Common Shares on the
TSX (or such other Canadian stock exchange on which the Common Shares are listed
for trading) for 10 consecutive trading days exceeds $17.00, as adjusted in
accordance with Section 6.5, the Corporation may force conversion of all but not
less than all of the principal amount (less any tax required by law to be
deducted or withheld) of the Debenture at the Conversion Price, upon giving the
Debentureholders 30 days advance written notice by way to the Trustee in
accordance with Section 13.3 (the “
Forced Conversion Notice
”) and
concurrently issuing a news release. The Corporation shall pay all accrued and
unpaid interest (less any tax required by law to be deducted or withheld) in
cash. The holder of a Debenture may convert such Debenture in whole or in part
into Common Share until 4:30 p.m. (Vancouver time) on the Business Day prior to
the date the Debenture is forced to convert in the manner provided in Section
6.4.
In the event that the Corporation
exercises its right to force conversion of all of the principal amount of the
Debentures pursuant to this Section 6.7, the effective date for the forced
conversion (the “
Forced Conversion Date
”) shall be: (a) the date
stipulated in the Forced Conversion Notice; or (b) if no date is so stipulated
in the Forced Conversion Notice, the date that is 30 days following the date of
such Forced Conversion Notice, and upon such Forced Conversion Date: (i) all of
the principal amount (less any tax required by law to be deducted or withheld)
of the Debentures shall be deemed to be converted into Common Shares at the then
applicable Conversion Price; and (ii) the Debentureholders shall be entered in
the books of the Corporation as at the Forced Conversion Date as the holder of
the number of Common Shares, as applicable, into which the Debentures held by
them are convertible. Upon the surrender of Debenture Certificates to the
Trustee at its principal office in the City of Vancouver, at 510 Burrard Street,
3
rd
Floor, Vancouver, British Columbia V6C 3B9, by the
Debentureholders, or in the case of Uncertificated Debentures, the surrender of
interests in the Debentures through the Depository’s non-certificated system,
the Corporation shall deliver to the Debentureholders certificates for the
Common Shares or deposit Common Shares through the Depository’s non-certificated
system, as applicable, for the Common Shares into which the Debentures held by
them have been converted.
- 53 -
Section 6.8
Corporation to Reserve Common
Shares
The Corporation covenants with
the Trustee that it will at all times reserve and keep available out of its
authorized Common Shares (if the number thereof is or becomes limited), solely
for the purpose of issue upon conversion of Debentures as in this Article
provided, and conditionally allot to Debentureholders who may exercise their
conversion rights hereunder, such number of Common Shares as shall then be
issuable upon the conversion of all outstanding Debentures. The Corporation
covenants with the Trustee that all Common Shares which shall be so issuable
shall be duly and validly issued as fully-paid and non-assessable.
Section 6.9
Cancellation of Converted
Debentures
Subject to the provisions of
Section 6.4 as to Debentures converted in part, all Debentures converted in
whole or in part under the provisions of this Article shall be forthwith
delivered to and cancelled by the Trustee and no Debenture shall be issued in
substitution for those converted.
Section 6.10
Certificate as to Adjustment
The Corporation shall from time
to time immediately after the occurrence of any event which requires an
adjustment or readjustment as provided in Section 6.5, deliver an Officer’s
Certificate to the Trustee specifying the nature of the event requiring the same
and the amount of the adjustment necessitated thereby and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based, which certificate and the amount of the adjustment
specified therein shall be conclusively determined by a firm of nationally
recognized chartered accountants appointed by the Corporation and acceptable to
the Trustee (who may be the Auditors of the Corporation) and such advice or
determination shall be conclusive and binding on all parties in interest. When
so approved, the Corporation shall, except in respect of any subdivision,
redivision, reduction, combination or consolidation of the Common Shares,
forthwith give notice to the Debentureholders in the manner provided in Section
13.2 specifying the event requiring such adjustment or readjustment and the
results thereof, including the resulting Conversion Price; provided that, if the
Corporation has given notice under this Section 6.10 covering all the relevant
facts in respect of such event and if the Trustee approves, no such notice need
be given under this Section 6.10.
Section 6.11
Notice of Special Matters
(1) The Corporation covenants
with the Trustee that so long as any Debenture remains outstanding, it will give
notice to the Trustee, and to the Debentureholders in the manner provided in
Section 13.2, of its intention to fix a record date for any event referred to in
subsections 6.5(a), 6.5(b), 6.5(c), 6.5(d) or 6.5(e) (other than the
subdivision, redivision, reduction, combination or consolidation of its Common
Shares) which may give rise to an adjustment in the Conversion Price, and, in
each case, such notice shall specify the particulars of such event and the
record date and the effective date for such event; provided that the Corporation
shall only be required to specify in such notice such particulars of such event
as shall have been fixed and determined on the date on which such
notice is given. Such notice shall be given not less than 14 days in each case
prior to such applicable record date.
- 54 -
(2) In addition, the Corporation
covenants with the Trustee that so long as any Debenture remains outstanding, it
will give notice to the Trustee, and to the Debentureholders in the manner
provided in Section 13.2, at least 30 days prior to the (i) effective date of
any transaction referred to in Section 6.5(d) stating the consideration into
which the Debentures will be convertible after the effective date of such
transaction, and (ii) Expiration Date of any transaction referred to in
subsection 6.5(f) stating the consideration paid per Common Share in such
transaction.
Section 6.12
Protection of Trustee
The Trustee:
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(a)
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shall not at any time be under any duty or responsibility
to any Debentureholder to determine whether any facts exist which may
require any adjustment in the Conversion Price, or with respect to the
nature or extent of any such adjustment when made, or with respect to the
method employed in making the same;
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(b)
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shall not be accountable with respect to the validity or
value (or the kind or amount) of any Common Shares or of any shares or
other securities or property which may at any time be issued or delivered
upon the conversion of any Debenture; and
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(c)
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shall not be responsible for any failure of the
Corporation to make any cash payment or to issue, transfer or deliver
Common Shares or share certificates upon the surrender of any Debenture
for the purpose of conversion, or to comply with any of the covenants
contained in this Article.
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Section 6.13
Restricted CUSIP or U.S. Legend
on Certain Common Shares
Each Common Share issued upon
conversion of Debentures represented by the Restricted Debentures shall be
represented by a certificate with a restricted CUSIP for Common Shares and each
certificate representing Common Shares issued upon conversion of Debentures
bearing the U.S. Legend shall have imprinted or otherwise reproduced thereon
such legend or legends in substantially the form of Schedule C attached hereto;
provided that if such Common Shares are being sold in compliance with the
requirements of Rule 904 of Regulation S and in compliance with local laws and
regulations, and provided that the Corporation is a “foreign issuer” within the
meaning of Regulation S at the time of issuance of such Common Shares, the U.S.
Legend may be removed or the Common Shares may be transferred from the
restricted CUSIP by providing a declaration to the Trustee, as registrar and
transfer agent for the Common Shares, substantially as set forth in Schedule D
(or as the Corporation or the Trustee may prescribe from time to time), together
with any other evidence reasonably requested by the Corporation or Trustee,
which evidence may include an opinion of counsel of recognized standing, in form
and substance reasonably satisfactory to the Corporation and the Trustee, to the
effect that the transfer is being made in compliance with Rule 904 of Regulation
S; and provided further that, if any such Common Shares are being sold in accordance with Rule 144 under
the 1933 Act, Common Shares may be transferred from the restricted CUSIP or the
U.S. Legend may be removed by delivery to the Trustee, as registrar and transfer
agent for the Common Shares, of an opinion of counsel of recognized standing, in
form and substance reasonably satisfactory to the Trustee and the Corporation,
that the transfer out of the restricted CUSIP is permissible or that the U.S.
Legend is no longer required under applicable requirements of the 1933 Act or
applicable state securities laws. Provided that the Trustee obtains confirmation
from the Corporation that such counsel is satisfactory to it, it shall be
entitled to rely on such opinion of counsel without further inquiry.
- 55 -
ARTICLE 7 – COVENANTS OF THE CORPORATION
The Corporation hereby covenants
and agrees with the Trustee for the benefit of the Trustee and the
Debentureholders, that so long as any Debentures remain outstanding:
Section 7.1
To Pay Principal, Premium (if any)
and Interest
The Corporation will duly and
punctually pay or cause to be paid to every Debentureholder the principal of,
premium (if any) and interest accrued on the Debentures of which it is the
holder on the dates, at the places and in the manner mentioned herein and in the
Debentures.
Section 7.2
To Pay Trustee’s Remuneration
The Corporation will pay the
Trustee reasonable remuneration for its services as Trustee hereunder and will
repay to the Trustee on demand all monies which shall have been paid by the
Trustee in connection with the execution of the trusts hereby created and such
monies including the Trustee’s remuneration, shall be payable out of any funds
coming into the possession of the Trustee in priority to payment of any
principal of the Debentures or interest or premium thereon. Such remuneration
shall continue to be payable until the trusts hereof be finally wound up and
whether or not the trusts of this Indenture shall be in the course of
administration by or under the direction of a court of competent jurisdiction.
Section 7.3
To Give Notice of Default
The Corporation shall notify the
Trustee and the Debentureholders immediately upon obtaining knowledge of any
Event of Default hereunder.
Section 7.4
Preservation of Existence, etc.
Subject to the express provisions
hereof, the Corporation will carry on and conduct its activities, and cause its
Subsidiaries to carry on and conduct their businesses, in a business-like manner
and in accordance with good business practices; and, subject to the express
provisions hereof, it will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and rights.
- 56 -
Section 7.5
Keeping of Books
The Corporation will keep or
cause to be kept proper books of record and account, in which full and correct
entries shall be made of all financial transactions and the assets and business
of the Corporation in accordance with generally accepted accounting principles.
Section 7.6
Annual Certificate of Compliance
The Corporation shall deliver to
the Trustee, within 120 days after the end of each calendar year, (and at any
reasonable time upon demand by the Trustee) an Officer’s Certificate as to the
knowledge of such officers of the Corporation who execute the Officer’s
Certificate of the Corporation’s compliance with all conditions and covenants in
this Indenture certifying that after reasonable investigation and inquiry, the
Corporation has complied with all covenants, conditions or other requirements
contained in this Indenture, the non-compliance with which could, with the
giving of notice, lapse of time or otherwise, constitute an Event of Default
hereunder, or if such is not the case, setting forth with reasonable particulars
the circumstances of any failure to comply and steps taken or proposed to be
taken to eliminate such circumstances and remedy such Event of Default, as the
case may be.
Section 7.7
Performance of Covenants by
Trustee
If the Corporation shall fail to
perform any of its covenants contained in this Indenture, the Trustee may notify
the Debentureholders of such failure on the part of the Corporation or may
itself perform any of the covenants capable of being performed by it, but shall
be under no obligation to do so or to notify the Debentureholders All sums so
expended or advanced by the Trustee shall be repayable as provided in Section
7.2. No such performance, expenditure or advance by the Trustee shall be deemed
to relieve the Corporation of any default hereunder.
Section 7.8
Maintain Listing
The Corporation will use
reasonable commercial efforts to maintain the listing of the Common Shares on
the TSX, and to maintain the Corporation’s status as a “reporting issuer” not in
default of the requirements of the Applicable Securities Legislation; provided
that the foregoing covenant shall not prevent or restrict the Corporation from
carrying out a transaction to which Article 10 would apply if carried out in
compliance with Article 10 even if as a result of such transaction the
Corporation ceases to be a “reporting issuer” in all or any of the provinces of
Canada or the Common Shares cease to be listed on the TSX or any other stock
exchange.
Section 7.9
No Dividends on Common Shares if
Event of Default
The Corporation shall not declare
or pay any dividend to the holders of its issued and outstanding Common Shares
after the occurrence of an Event of Default unless and until such default shall
have been cured or waived or shall have ceased to exist.
- 57 -
Section 7.10
Withholding Matters
All payments made by or on behalf
of the Corporation under or with respect to the Debentures (including, without
limitation, any penalties, interest and other liabilities related thereto) will
be made free and clear of and without withholding, or deduction for, or on
account of, any present or future tax, duty, levy, impost, assessment or other
governmental charge (including, without limitation, penalties, interest and
other liabilities related hereto) imposed or levied by or on behalf of the
Government of Canada or the United States or elsewhere, or of any province or
territory thereof or by any authority or agency therein or thereof having power
to tax (“
Withholding Taxes
”), unless the Corporation is required by law
or the interpretation or administration thereof, to withhold or deduct any
amounts for, or on account of Withholding Taxes. If the Corporation is so
required to withhold or deduct any amount for, or on account of, Withholding
Taxes from any payment made under or with respect to the Debentures, the
Corporation shall deduct and withhold such Withholding Taxes from any payment to
be made or with respect to the Debentures and, provided that the Corporation
forthwith remits such amount to the relevant governmental authority or agency,
the amount of any such deduction or withholding will be considered an amount
paid in satisfaction of the Corporation’s obligations under the Debentures.
There is no obligation on the Corporation to gross-up or pay additional amounts
to a holder of Debentures in respect of such deductions or withholdings. For
greater certainty, if any amount is required to be deducted or withheld in
respect of Withholding Taxes upon a conversion of a Debenture, the Corporation
shall be entitled to liquidate such number of Common Shares (or other
securities) issuable as a result of such conversion as shall be necessary in
order to satisfy such requirement. The Corporation shall provide the Trustee
with copies of receipts or other communications relating to the remittance of
such withheld amount or the filing of any forms received from such government
authority or agency promptly after receipt thereof.
Section 7.11
SEC Reporting Status
The Corporation confirms that as at the date of execution of
this Indenture it does not have
a class of securities registered
pursuant to Section 12 of the U.S. Securities Exchange Act or have a reporting
obligation pursuant to Section 15(d) of the U.S. Securities Exchange Act.
The Corporation covenants that in the event that (i) any class
of its securities shall become registered pursuant to Section 12 of the U.S.
Securities Exchange Act or such Corporation shall incur a reporting obligation
pursuant to Section 15(d) of the U.S. Securities Exchange Act, or (ii) any such
registration or reporting obligation shall be terminated by such Corporation in
accordance with the U.S. Securities Exchange Act, such Corporation shall
promptly deliver to the Trustee an Officers' Certificate (in a form provided by
the Trustee) notifying the Trustee of such registration or termination and such
other information as the Trustee may require at the time. The Corporation
acknowledges that the Trustee is relying upon the foregoing representation and
covenants in order to meet certain U.S. Securities and Exchange Commission (the
“
SEC
”) obligations with respect to those clients who are filing with the
SEC.
Section 7.12 Cannabis Related Covenant
(1) In this Indenture, the
following terms have the following meanings:
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“
Cannabis Permits
” means all
permits or licenses of any nature held by the Corporation or any subsidiary of
the Corporation, as of the date of this Indenture or thereafter, under Canadian
federal, provincial and territorial law, and regulations made thereunder, that
are necessary or desirable to lawfully conduct or maintain, directly or
indirectly, its cannabis-related activities and interests.
“
Governmental Authority
” or
“
Governmental Authorities
” means any of the governments of Canada, the
United States of America, any other nation or any political subdivision thereof,
whether provincial, state, territorial or local, and any agency, authority,
instrumentality, regulatory body, court, central bank, fiscal or monetary
authority or other authority regulating financial institutions, and any other
entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.
(2) To the extent that the
Corporation has cannabis-related activities and interests now or in the future,
the Corporation covenants and agrees that, in addition to any other covenant or
obligation in this Indenture and for so long as Debentures remain outstanding,
it shall:
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(a)
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at all times obtain, keep and maintain in good standing
its Cannabis Permits, and shall notify the Trustee of any breach of this
requirement immediately upon obtaining knowledge thereof;
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(b)
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ensure at all times that it continues to have all permits
and licenses required by any Canadian or other applicable Governmental
Authority that are necessary or desirable to lawfully conduct or maintain,
directly or indirectly, its cannabis- related activities and
interests;
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(c)
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notify the Trustee immediately of, and provide it with a
copy of, any and all correspondence and notices that result in a loss of,
or a penalty or other sanction under, any Cannabis Permit or applicable
law;
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(d)
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deliver to the Trustee, within 120 days after the end of
each calendar year, and at any other reasonable time upon demand by the
Trustee, and in any event, immediately upon the breach of any covenant
contained in this 7.12(2), an Officer’s Certificate (or a supplement to an
Officer’s Certificate otherwise being provided) as to the knowledge of
such officer(s) of the Corporation’s compliance or non- compliance with
this Section 7.12, and attaching current evidence of the valid current
status of all Cannabis Permits;
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(e)
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carry on and conduct its activities in accordance with
all applicable laws and regulations of all Governmental
Authorities;
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(f)
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meet all listing requirements for each stock exchange
upon which it is listed relating to compliance with applicable law in all
jurisdictions in which the Corporation has interests, on which its
securities are listed;
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(g)
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in no event, acquire or hold cannabis or cannabis-related
operations or interests in the United States of America (including,
without limiting the generality of the foregoing, royalty entitlements or
investments in a cannabis business), or sell or distribute cannabis into
the United States of America, so long as the production or distribution of
cannabis remains prohibited as a matter of any federal, territorial or
state laws of the United States of America or is prohibited as a matter of
any applicable United States of America Governmental Authority;
and
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(h)
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in no event, acquire or hold cannabis or cannabis-related
operations or interests in any country other than Canada and the United
States of America (including, without limiting the generality of the
foregoing, royalty entitlements or investments in a cannabis business) if
the production, distribution or possession of cannabis is prohibited as a
matter of the law of the applicable country.
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(3) The Corporation acknowledges
and agrees that notwithstanding any other provision of this Indenture, any
default of any provision of Section 7.12 will result in the right of the
Trustee, at its sole discretion, to resign as trustee effective immediately, and
the Corporation hereby acknowledges such right of the Trustee to immediately
resign. For greater certainty, no cure period or advance notice is required to
be given by the Trustee before the Trustee may exercise such discretion.
(4) The Corporation acknowledges
and agrees, in addition to any other provision herein relating to the
resignation or replacement of the Trustee, that the Trustee may resign its trust
and be discharged from all further duties and liabilities hereunder, without
notice, if the Trustee reasonably determines that (i) the Corporation has become
unable to continue to lawfully operate any part of its cannabis or
cannabis-related business or to own or maintain, directly or indirectly, its
cannabis or cannabis-related investments or operations; or (ii) the Trustee
would be prejudiced by continuing to act as trustee hereunder.
(5) The Corporation shall cause
all of its subsidiaries to comply with the provisions of this Article 7 as if
such subsidiaries were expressly referred to in such provisions in replacement
of references to the Corporation, mutatis mutandis.
ARTICLE 8– DEFAULT
Section 8.1
Events of Default
(1) Each of the following events
constitutes, and is herein sometimes referred to as, an “
Event of
Default
”:
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(a)
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failure for 10 days to pay interest on the Debentures
when due;
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(b)
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failure to pay principal or premium (whether by way of
payment of cash or delivery of Common Shares), if any, when due on the
Debentures whether at maturity, upon redemption or a Change of Control, by
declaration or otherwise;
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(c)
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default in the delivery, when due, of any Common Shares
or other consideration, payable on conversion with respect to the
Debentures, which default continues for 15 days;
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(d)
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default in the observance or performance of any covenant
or condition of the Indenture by the Corporation and the failure to cure
(or obtain a waiver for) such default for a period of 30 days after notice
in writing has been given by the Trustee or from holders of not less than
25% in aggregate principal amount of the Debentures to the Corporation
specifying such default and requiring the Corporation to rectify such
default or obtain a waiver for same;
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(e)
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if a decree or order of a Court having jurisdiction is
entered adjudging the Corporation or any Material Subsidiary a bankrupt or
insolvent under the
Bankruptcy and Insolvency Act
(Canada) or any
other bankruptcy, insolvency or analogous laws, or issuing sequestration
or process of execution against, or against any substantial part of, the
property of the Corporation or any Material Subsidiary, or appointing a
receiver of, or of any substantial part of, the property of the
Corporation or any Material Subsidiary or ordering the winding- up or
liquidation of its affairs, and any such decree or order continues
unstayed and in effect for a period of 60 days;
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(f)
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if the Corporation or any Material Subsidiary institutes
proceedings to be adjudicated a bankrupt or insolvent, or consents to the
institution of bankruptcy or insolvency proceedings against it under the
Bankruptcy and Insolvency Act
(Canada) or any other bankruptcy,
insolvency or analogous laws, or consents to the filing of any such
petition or to the appointment of a receiver of, or of any substantial
part of, the property of the Corporation or any Material Subsidiary or
makes a general assignment for the benefit of creditors, or admits in
writing its inability to pay its debts generally as they become
due;
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(g)
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if a resolution is passed for the winding-up or
liquidation of the Corporation or any Material Subsidiary except in the
course of carrying out or pursuant to a transaction in respect of which
the conditions of Section 10.1 are duly observed and performed;
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(h)
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if, after the date of this Indenture, any proceedings
with respect to the Corporation or any Material Subsidiary are taken with
respect to a compromise or arrangement, with respect to creditors of the
Corporation or any Material Subsidiary generally, under the applicable
legislation of any jurisdiction; or
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(i)
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if an event of default occurs or exists under any
indenture, agreement or other instrument evidencing or governing
indebtedness for borrowed money (other than Non-Recourse Debt) of the
Corporation or any Material Subsidiary and as a result of such event of
default (i) indebtedness for borrowed money thereunder in excess of
$500,000 (or the equivalent amount in any other currency) has become due
and payable before the date it would otherwise have been due
and payable or (ii) the holders of such indebtedness are entitled
to commence, and have commenced, the enforcement of security they hold for such
indebtedness (if any) or the exercise of any other creditors’ remedies to
collect such indebtedness; and
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(j)
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if the Corporation fails to comply with Article 10
hereof;
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then: (i) in each and every such event listed above, the
Trustee may, in its discretion, but subject to the provisions of this Section,
and shall, upon receipt of a request in writing signed by the holders of not
less than 25% in principal amount of the Debentures then outstanding (or if the
Event of Default shall exist only in respect of one or more series of the
Debentures then outstanding, then upon receipt of a request in writing signed by
the holders of not less than 25% in principal amount of the Debentures of such
series then outstanding), subject to the provisions of Section 8.3, by notice in
writing to the Corporation declare the principal of and interest and premium, if
any, on all Debentures then outstanding and all other monies outstanding
hereunder to be due and payable and the same shall thereupon forthwith become
immediately due and payable (or, if the Event of Default shall exist only in
respect of one or more series of the Debentures then outstanding, then the
Trustee may declare due and payable the principal and interest and premium, if
any, only with respect to such Debentures in respect of which there is an Event
of Default) to the Trustee, and (ii) on the occurrence of an Event of Default
under clauses 8.1(1)(e), 8.1(1)(f), 8.1(1)(g) or 8.1(1)(i), the principal of and
interest and premium, if any, on all Debentures then outstanding hereunder and
all other monies outstanding hereunder, shall automatically without any
declaration or other act on the part of the Trustee or any Debentureholder
become immediately due and payable to the Trustee and, in either case, upon such
amounts becoming due and payable in either (i) or (ii) above, the Corporation
shall forthwith pay to the Trustee for the benefit of the Debentureholders such
principal, accrued and unpaid interest and premium, if any, and interest on
amounts in default on such Debenture and all other monies outstanding hereunder,
together with subsequent interest at the rate borne by the Debentures on such
principal, interest, premium and such other monies from the date of such
declaration or event until payment is received by the Trustee, such subsequent
interest to be payable at the times and places and in the manner mentioned in
and according to the tenor of the Debentures. Such payment when made shall be
deemed to have been made in discharge of the Corporation’s obligations hereunder
and any monies so received by the Trustee shall be applied in the manner
provided in Section 8.6.
(2) For greater certainty, for
the purposes of this Section 8.1, a series of Debentures shall be in default in
respect of an Event of Default if such Event of Default relates to a default in
the payment of principal, premium, if any, or interest on the Debentures of such
series in which case references to Debentures in this Section 8.1 refer to
Debentures of that particular series.
(3) For purposes of this Article
8, where the Event of Default refers to an Event of Default with respect to a
particular series of Debentures as described in this Section 8.1, then this
Article 8 shall apply
mutatis mutandis
to the Debentures of such series
and references in this Article 8 to the Debentures shall mean Debentures of the
particular series and references to the Debentureholders shall refer to the
Debentureholders of the particular series, as applicable.
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Section 8.2
Notice of Events of Default
If an Event of Default shall
occur and be continuing the Trustee shall, within 30 days following an Event of
Default or after it receives written notice of the occurrence of such Event of
Default, give notice of such Event of Default to the Debentureholders in the
manner provided in Section 12.2, provided that notwithstanding the foregoing,
unless the Trustee shall have been requested to do so by the holders of at least
25% of the principal amount of the Debentures then outstanding, the Trustee
shall not be required to give such notice if the Trustee in good faith shall
have determined that the withholding of such notice is in the best interests of
the Debentureholders and shall have so advised the Corporation in writing.
When notice of the occurrence of
an Event of Default has been given and the Event of Default is thereafter cured,
notice that the Event of Default is no longer continuing shall be given by the
Trustee to the Debentureholders within 15 days after the Trustee becomes aware
the Event of Default has been cured.
Section 8.3
Waiver of Default
(1) Upon the happening of any
Event of Default hereunder:
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(a)
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the holders of the Debentures shall have the power (in
addition to the powers exercisable by Extraordinary Resolution as
hereinafter provided) by requisition in writing by the holders of more
than 50% of the principal amount of Debentures then outstanding, to
instruct the Trustee to waive any Event of Default and to cancel any
declaration made by the Trustee pursuant to Section 8.1 and the Trustee
shall thereupon waive the Event of Default and cancel such declaration, or
either, upon such terms and conditions as shall be prescribed in such
requisition; provided that notwithstanding the foregoing if the Event of
Default has occurred by reason of the non-observance or non-performance by
the Corporation of any covenant applicable only to one or more series of
Debentures, then the holders of more than 50% of the principal amount of
the outstanding Debentures of that series shall be entitled to exercise
the foregoing power and the Trustee shall so act and it shall not be
necessary to obtain a waiver from the holders of any other series of
Debentures; and
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(b)
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the Trustee, so long as it has not become bound to
declare the principal and interest on the Debentures then outstanding to
be due and payable, or to obtain or enforce payment of the same, shall
have power to waive any Event of Default if, in the Trustee’s opinion, the
same shall have been cured or adequate satisfaction made therefor, and in
such event to cancel any such declaration theretofore made by the Trustee
in the exercise of its discretion, upon such terms and conditions as the
Trustee may deem advisable.
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(2) No such act or omission
either of the Trustee or of the Debentureholders shall extend to or be taken in
any manner whatsoever to affect any subsequent Event of Default or the rights
resulting therefrom.
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Section 8.4
Enforcement by the Trustee
(1) Subject to the provisions of
Section 8.3 and to the provisions of any Extraordinary Resolution that may be
passed by the Debentureholders, if the Corporation shall fail to pay to the
Trustee, forthwith after the same shall have been declared to be due and payable
under Section 8.1, the principal of and premium (if any) and interest on all
Debentures then outstanding, together with any other amounts due hereunder, the
Trustee may in its discretion and shall upon receipt of a request in writing
signed by the holders of not less than 25% in principal amount of the Debentures
then outstanding and upon being funded and indemnified to its reasonable
satisfaction against all costs, expenses and liabilities to be incurred, proceed
in its name as trustee hereunder to obtain or enforce payment of such principal
of and premium (if any) and interest on all the Debentures then outstanding
together with any other amounts due hereunder by such proceedings authorized by
this Indenture or by law or equity as the Trustee in such request shall have
been directed to take, or if such request contains no such direction, or if the
Trustee shall act without such request, then by such proceedings authorized by
this Indenture or by suit at law or in equity as the Trustee shall deem
expedient.
(2) The Trustee shall be entitled
and empowered, either in its own name or as Trustee of an express trust, or as
attorney-in-fact for the holders of the Debentures, or in any one or more of
such capacities, to file such proof of debt, amendment of proof of debt, claim,
petition or other document as may be necessary or advisable in order to have the
claims of the Trustee and of the holders of the Debentures allowed in any
insolvency, bankruptcy, liquidation or other judicial proceedings relative to
the Corporation or its creditors or relative to or affecting its property. The
Trustee is hereby irrevocably appointed (and the successive respective holders
of the Debentures by taking and holding the same shall be conclusively deemed to
have so appointed the Trustee) the true and lawful attorney-in-fact of the
respective holders of the Debentures with authority to make and file in the
respective names of the holders of the Debentures or on behalf of the holders of
the Debentures as a class, subject to deduction from any such claims of the
amounts of any claims filed by any of the holders of the Debentures themselves,
any proof of debt, amendment of proof of debt, claim, petition or other document
in any such proceedings and to receive payment of any sums becoming
distributable on account thereof, and to execute any such other papers and
documents and to do and perform any and all such acts and things for and on
behalf of such holders of the Debentures, as may be necessary or advisable in
the opinion of the Trustee, in order to have the respective claims of the
Trustee and of the holders of the Debentures against the Corporation or its
property allowed in any such proceeding, and to receive payment of or on account
of such claims; provided, however, that subject to Section 8.3, nothing
contained in this Indenture shall be deemed to give to the Trustee, unless so
authorized by Extraordinary Resolution, any right to accept or consent to any
plan of reorganization or otherwise by action of any character in such
proceeding to waive or change in any way any right of any Debentureholder.
(3) The Trustee shall also have
the power at any time and from time to time to institute and to maintain such
suits and proceedings as it may be advised shall be necessary or advisable to
preserve and protect its interests and the interests of the Debentureholders.
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(4) All rights of action
hereunder may be enforced by the Trustee without the possession of any of the
Debentures or the production thereof on the trial or other proceedings relating
thereto.
(5) Any such suit or proceeding
instituted by the Trustee shall be brought in the name of the Trustee as trustee
of an express trust, and any recovery of judgment shall be for the rateable
benefit of the holders of the Debentures subject to the provisions of this
Indenture. In any proceeding brought by the Trustee (and also any proceeding in
which a declaratory judgment of a court may be sought as to the interpretation
or construction of any provision of this Indenture, to which the Trustee shall
be a party) the Trustee shall be held to represent all the holders of the
Debentures, and it shall not be necessary to make any holders of the Debentures
parties to any such proceeding.
Section 8.5
No Suits by Debentureholders
No holder of any Debenture shall
have any right to institute any action, suit or proceeding at law or in equity
for the purpose of enforcing payment of the principal of or interest on the
Debentures or for the execution of any trust or power hereunder or for the
appointment of a liquidator or receiver or for a receiving order under the
Bankruptcy and Insolvency Act
(Canada) or to have the Corporation wound
up or to file or prove a claim in any liquidation or bankruptcy proceeding or
for any other remedy hereunder, unless: (a) such holder shall previously have
given to the Trustee written notice of the happening of an Event of Default
hereunder; and (b) the Debentureholders by Extraordinary Resolution or by
written instrument signed by the holders of at least 25% in principal amount of
the Debentures then outstanding shall have made a request to the Trustee and the
Trustee shall have been afforded reasonable opportunity either itself to proceed
to exercise the powers hereinbefore granted or to institute an action, suit or
proceeding in its name for such purpose; and (c) the Debentureholders or any of
them shall have furnished to the Trustee, when so requested by the Trustee,
sufficient funds and security and indemnity satisfactory to it against the
costs, expenses and liabilities to be incurred therein or thereby; and (d) the
Trustee shall have failed to act within a reasonable time after such
notification, request and offer of indemnity and such notification, request and
offer of indemnity are hereby declared in every such case, at the option of the
Trustee, to be conditions precedent to any such proceeding or for any other
remedy hereunder by or on behalf of the holder of any Debentures.
Section 8.6
Application of Monies by Trustee
(1) Except as herein otherwise
expressly provided, any monies received by the Trustee from the Corporation
pursuant to the foregoing provisions of this Article 8, or as a result of legal
or other proceedings or from any trustee in bankruptcy or liquidator of the
Corporation, shall be applied, together with any other monies in the hands of
the Trustee available for such purpose, as follows:
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(a)
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first, in payment or in reimbursement to the Trustee of
its compensation, costs, charges, expenses, borrowings, advances or other
monies furnished or provided by or at the instance of the Trustee in or
about the execution of its trusts under, or otherwise in relation to, this
Indenture, with interest thereon as herein
provided;
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(b)
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second, but subject as hereinafter in this Section 8.6
provided, in payment, rateably and proportionately to the holders of
Debentures, of the principal of and premium (if any) and accrued and
unpaid interest and interest on amounts in default on the Debentures which
shall then be outstanding in the priority of principal first and then
premium and then accrued and unpaid interest and interest on amounts in
default unless otherwise directed by Extraordinary Resolution and in that
case in such order or priority as between principal, premium (if any) and
interest as may be directed by such resolution; and
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(c)
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third, in payment of the surplus, if any, of such monies
to the Corporation or its assigns;
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provided, however, that no payment shall be made pursuant to
clause (b) above in respect of the principal, premium or interest on any
Debenture held, directly or indirectly, by or for the benefit of the Corporation
or any Subsidiary (other than any Debenture pledged for value and in good faith
to a Person other than the Corporation or any Subsidiary but only to the extent
of such person’s interest therein) except subject to the prior payment in full
of the principal, premium (if any) and interest (if any) on all Debentures which
are not so held.
(2) The Trustee shall not be
bound to apply or make any partial or interim payment of any monies coming into
its hands if the amount so received by it, after reserving thereout such amount
as the Trustee may think necessary to provide for the payments mentioned in
subsection 8.6(1), is insufficient to make a distribution of at least 2% of the
aggregate principal amount of the outstanding Debentures, but it may retain the
money so received by it and invest or deposit the same as provided in Section
14.8 until the money or the investments representing the same, with the income
derived therefrom, together with any other monies for the time being under its
control shall be sufficient for the said purpose or until it shall consider it
advisable to apply the same in the manner hereinbefore set forth. The foregoing
shall, however, not apply to a final payment in distribution hereunder.
Section 8.7
Notice of Payment by Trustee
Not less than 15 days’ notice
shall be given in the manner provided in Section 13.2 by the Trustee to the
Debentureholders of any payment to be made under this Article 8. Such notice
shall state the time when and place where such payment is to be made and also
the liability under this Indenture to which it is to be applied. After the day
so fixed, unless payment shall have been duly demanded and have been refused,
the Debentureholders will be entitled to interest only on the balance (if any)
of the principal monies, premium (if any) and interest due (if any) to them,
respectively, on the Debentures, after deduction of the respective amounts
payable in respect thereof on the day so fixed.
Section 8.8
Trustee May Demand Production of
Debentures
The Trustee shall have the right
to demand production of the Debentures in respect of which any payment of
principal, interest or premium required by this Article 8 is made and may cause
to be endorsed on the same a memorandum of the amount so paid and the date of
payment, but the Trustee may, in its discretion, dispense with such
production and endorsement, upon such indemnity being given to it and to the
Corporation as the Trustee shall deem sufficient.
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Section 8.9
Remedies Cumulative
No remedy herein conferred upon
or reserved to the Trustee, or upon or to the holders of Debentures is intended
to be exclusive of any other remedy, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
existing or hereafter to exist by law or by statute.
Section 8.10
Judgment Against the Corporation
The Corporation covenants and
agrees with the Trustee that, in case of any judicial or other proceedings to
enforce the rights of the Debentureholders, judgment may be rendered against it
in favour of the Debentureholders or in favour of the Trustee, as trustee for
the Debentureholders, for any amount which may remain due in respect of the
Debentures and premium (if any) and the interest thereon and any other monies
owing hereunder.
Section 8.11
Immunity of Directors, Officers
and Others
The Debentureholders and the
Trustee hereby waive and release any right, cause of action or remedy now or
hereafter existing in any jurisdiction against any past, present or future
officer, director or employee of the Corporation or holder of Common Shares of
the Corporation or of any successor for the payment of the principal of or
premium or interest on any of the Debentures or on any covenant, agreement,
representation or warranty by the Corporation contained herein or in the
Debentures.
ARTICLE 9– SATISFACTION AND DISCHARGE
Section 9.1
Cancellation and
Destruction
All Debentures shall forthwith
after payment thereof be delivered to the Trustee and cancelled by it. All
Debentures cancelled or required to be cancelled under this or any other
provision of this Indenture shall be destroyed by the Trustee and, if required
by the Corporation, the Trustee shall furnish to it a destruction certificate
setting out the designating numbers of the Debentures so destroyed.
Section 9.2
Non-Presentation of Debentures
In case the holder of any
Debenture shall fail to present the same for payment on the date on which the
principal of, premium (if any) or the interest thereon or represented thereby
becomes payable either at maturity or otherwise or shall not accept payment on
account thereof and give such receipt therefor, if any, as the Trustee may
require:
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(a)
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the Corporation shall be entitled to pay or deliver to
the Trustee and direct it to set aside; or
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(b)
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in respect of monies in the hands of the Trustee which
may or should be applied to the payment of the Debentures, the Corporation
shall be entitled to direct the Trustee to set aside; or
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(c)
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if the redemption was pursuant to notice given by the
Trustee, the Trustee may itself set aside;
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the monies in trust to be paid to the holder of such Debenture
upon due presentation or surrender thereof in accordance with the provisions of
this Indenture; and thereupon the principal of, premium (if any) or the interest
payable on or represented by each Debenture in respect whereof such monies have
been set aside shall be deemed to have been paid and the holder thereof shall
thereafter have no right in respect thereof except that of receiving delivery
and payment of the monies so set aside by the Trustee upon due presentation and
surrender thereof, subject always to the provisions of Section 9.3.
Section 9.3
Repayment of Unclaimed
Monies
Subject to applicable law, any
monies set aside under Section 9.2 and not claimed by and paid to holders of
Debentures as provided in Section 9.2 within six years after the date of such
setting aside shall be repaid and delivered to the Corporation by the Trustee
and thereupon the Trustee shall be released from all further liability with
respect to such monies and thereafter the holders of the Debentures in respect
of which such monies were so repaid to the Corporation shall have no rights in
respect thereof except to obtain payment and delivery of the monies from the
Corporation subject to any limitation provided by the laws of the Province of
Ontario.
Section 9.4
Discharge
The Trustee shall at the written
request of the Corporation release and discharge this Indenture and execute and
deliver such instruments as it shall be advised by Counsel are requisite for
that purpose and to release the Corporation from its covenants herein contained
(other than the provisions relating to the indemnification of the Trustee), upon
proof being given to the reasonable satisfaction of the Trustee that the
principal of, premium (if any) and interest (including interest on amounts in
default, if any), on all the Debentures and all other monies payable hereunder
have been paid or satisfied or that all the Debentures having matured or having
been duly called for redemption, payment of the principal of and interest
(including interest on amounts in default, if any) on such Debentures and of all
other monies payable hereunder has been duly and effectually provided for in
accordance with the provisions hereof.
Section 9.5
Satisfaction
(1) The Corporation shall be
deemed to have fully paid, satisfied and discharged all of the outstanding
Debentures of any series and the Trustee, at the expense of the Corporation,
shall execute and deliver proper instruments acknowledging the full payment,
satisfaction and discharge of such Debentures, when, with respect to all of the
outstanding Debentures or all of the outstanding Debentures of any series, as
applicable:
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(a)
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the Corporation has deposited or caused to be deposited
with the Trustee as trust funds or property in trust for the purpose of
making payment on such Debentures, an amount in money sufficient to pay,
satisfy and discharge the entire amount of principal of, premium, if any,
and interest, if any, to maturity, or any repayment date, or any Change of
Control Purchase Date, or upon conversion or otherwise as the case may be,
of such Debentures;
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(b)
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the Corporation has deposited or caused to be deposited
with the Trustee as trust property in trust for the purpose of making
payment on such Debentures:
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(i)
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if the Debentures are issued in Canadian dollars, such
amount in Canadian dollars of direct obligations of, or obligations the
principal and interest of which are guaranteed by, the Government of
Canada; or
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(ii)
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if the Debentures are issued in a currency or currency
unit other than Canadian dollars, cash in the currency or currency unit in
which the Debentures are payable and/or such amount in such currency or
currency unit of direct obligations of, or obligations the principal and
interest of which are guaranteed by, the Government of Canada or the
government that issued the currency or currency unit in which the
Debentures are payable;
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as will be sufficient to pay and discharge the entire amount of
principal of, premium, if any on, and accrued and unpaid interest to maturity or
any repayment date, as the case may be, of all such Debentures; or
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(c)
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all Debentures authenticated and delivered (other than
(A) Debentures which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 2.11 and (B) Debentures for
whose payment has been deposited in trust and thereafter repaid to the
Corporation as provided in Section 9.3) have been delivered to the Trustee
for cancellation;
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so long as in any such event:
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(d)
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the Corporation has paid, caused to be paid or made
provisions to the satisfaction of the Trustee for the payment of all other
sums payable or which may be payable with respect to all of such
Debentures (together with all applicable expenses of the Trustee in
connection with the payment of such Debentures); and
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(e)
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the Corporation has delivered to the Trustee an Officer’s
Certificate stating that all conditions precedent herein provided relating
to the payment, satisfaction and discharge of all such Debentures have
been complied with.
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Any deposits with the Trustee referred to in this Section 9.5
shall be irrevocable, subject to Section 9.6, and shall be made under the terms
of an escrow and/or trust agreement in form and substance satisfactory to the Trustee and which provides for
the due and punctual payment of the principal of, premium, if any, and interest
on the Debentures being satisfied.
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(2) Upon the satisfaction of the
conditions set forth in this Section 9.5 with respect to all the outstanding
Debentures, or all the outstanding Debentures of any series, as applicable, the
terms and conditions of the Debentures, including the terms and conditions with
respect thereto set forth in this Indenture (other than those contained in
Article 2 and Article 4 and the provisions of Article 1 pertaining to Article 2
and Article 4) shall no longer be binding upon or applicable to the Corporation.
(3) Any funds or obligations
deposited with the Trustee pursuant to this Section 9.5 shall be denominated in
the currency or denomination of the Debentures in respect of which such deposit
is made.
(4) If the Trustee is unable to
apply any money or securities in accordance with this Section 9.5 by reason of
any legal proceeding or any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Corporation’s obligations under this Indenture and the affected Debentures shall
be revived and reinstated as though no money or securities had been deposited
pursuant to this Section 9.5 until such time as the Trustee is permitted to
apply all such money or securities in accordance with this Section 9.5, provided
that if the Corporation has made any payment in respect of principal of,
premium, if any, or interest on Debentures or, as applicable, other amounts
because of the reinstatement of its obligations, the Corporation shall be
subrogated to the rights of the holders of such Debentures to receive such
payment from the money or securities held by the Trustee.
Section 9.6
Continuance of Rights, Duties and
Obligations
(1) Where trust funds or trust
property have been deposited pursuant to Section 9.5, the holders of Debentures
and the Corporation shall continue to have and be subject to their respective
rights, duties and obligations under Article 2 and Article 4.
(2) In the event that, after the
deposit of trust funds or trust property pursuant to Section 9.5 in respect of a
series of Debentures (the “
Defeased Debentures
”), any holder of any of
the Defeased Debentures from time to time converts its Debentures to Common
Shares or other securities of the Corporation in accordance with Section 2.5 (in
respect of Initial Debentures or the comparable provision of any other series of
Debentures), Article 6 or any other provision of this Indenture, the Trustee
shall upon receipt of a Written Direction of the Corporation return to the
Corporation from time to time the proportionate amount of the trust funds or
other trust property deposited with the Trustee pursuant to Section 9.5 in
respect of the Defeased Debentures which is applicable to the Defeased
Debentures so converted (which amount shall be based on the applicable principal
amount of the Defeased Debentures being converted in relation to the aggregate
outstanding principal amount of all the Defeased Debentures).
(3) In the event that, after the
deposit of trust funds or trust property pursuant to Section 9.5, the
Corporation is required to make a Change of Control Offer to purchase any
outstanding Debentures pursuant to subsection 2.5(7) (in respect of Initial
Debentures or the comparable provision of any other series of Debentures), in
relation to Initial Debentures or to make an offer to purchase Debentures pursuant to any other similar provisions
relating to any other series of Debentures, the Corporation shall be entitled to
use any trust money or trust property deposited with the Trustee pursuant to
Section 9.5 for the purpose of paying to any holders of Defeased Debentures who
have accepted any such offer of the Corporation the Offer Price payable to such
holders in respect of such Change of Control Offer in respect of Initial
Debentures (or the total offer price payable in respect of an offer relating to
any other series of Debentures). Upon receipt of a Written Direction from the
Corporation, the Trustee shall be entitled to pay to such holder from such trust
money or trust property deposited with the Trustee pursuant to Section 9.5 in
respect of the Defeased Debentures which is applicable to the Defeased
Debentures held by such holders who have accepted any such offer to the
Corporation (which amount shall be based on the applicable principal amount of
the Defeased Debentures held by accepting offerees in relation to the aggregate
outstanding principal amount of all the Defeased Debentures).
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ARTICLE 10– SUCCESSORS
Section 10.1
Corporation may Consolidate,
etc., Only on Certain Terms
(1) The Corporation may not,
without the consent of the holders of the Debentures by Extraordinary Resolution
hereunder, consolidate with or amalgamate or merge with or into any Person
(other than a directly or indirectly wholly-owned Subsidiary of the Corporation)
or sell, convey, transfer or lease all or substantially all of the properties
and assets of the Corporation to another Person (other than a directly or
indirectly wholly-owned Subsidiary of the Corporation) unless:
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(a)
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the Person formed by such consolidation or into which the
Corporation is amalgamated or merged, or the Person which acquires by
sale, conveyance, transfer or lease all or substantially all of the
properties and assets of the Corporation is a corporation, organized and
existing under the laws of Canada or any province or territory thereof or
the laws of the United States or any state thereof and such corporation
(if other than the Corporation or the continuing corporation resulting
from the amalgamation of the Corporation with another corporation under
the laws of Canada or any province or territory thereof) expressly
assumes, by an indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the obligations of the
Corporation under the Debentures and this Indenture and the performance or
observance of every covenant and provision of this Indenture and the
Debentures required on the part of the Corporation to be performed or
observed and the conversion rights shall be provided for in accordance
with Article 6, by supplemental indenture satisfactory in form to the
Trustee, executed and delivered to the Trustee, by the Person (if other
than the Corporation or the continuing corporation resulting from the
amalgamation of the Corporation with another corporation under the laws of
Canada or any province or territory thereof) formed by such consolidation
or into which the Corporation shall have been merged or by the Person
which shall have acquired the Corporation’s
assets;
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(b)
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after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have occurred and be continuing;
and
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(c)
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if the Corporation or the continuing corporation
resulting from the amalgamation or merger of the Corporation with another
Person under the laws of Canada or any province or territory thereof or
the laws of the United States or any state thereof will not be the
resulting, continuing or surviving corporation, the Corporation shall
have, at or prior to the effective date of such consolidation,
amalgamation, merger or sale, conveyance, transfer or lease, delivered to
the Trustee an Officer’s Certificate and an opinion of Counsel, each
stating that such consolidation, merger or transfer complies with this
Article and, if a supplemental indenture is required in connection with
such transaction, such supplemental indenture complies with this Article,
and that all conditions precedent herein provided for relating to such
transaction have been complied with.
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(2) For purposes of the
foregoing, the sale, conveyance, transfer or lease (in a single transaction or a
series of related transactions) of the properties or assets of one or more
Subsidiaries of the Corporation (other than to the Corporation or another
wholly-owned Subsidiary of the Corporation), which, if such properties or assets
were directly owned by the Corporation, would constitute all or substantially
all of the properties and assets of the Corporation and its Subsidiaries, taken
as a whole, shall be deemed to be the sale, conveyance, transfer or lease of all
or substantially all of the properties and assets of the Corporation.
Section 10.2
Successor Substituted
Upon any consolidation of the
Corporation with, or amalgamation or merger of the Corporation into, any other
Person or any sale, conveyance, transfer or lease of all or substantially all of
the properties and assets of the Corporation and its Subsidiaries, taken as a
whole, in accordance with Section 10.1, the successor Person formed by such
consolidation or into which the Corporation is amalgamated or merged or to which
such sale, conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Corporation
under this Indenture with the same effect as if such successor Person had been
named as the Corporation herein, and thereafter, except in the case of a lease,
and except for obligations the predecessor Person may have under a supplemental
indenture entered into pursuant to clause 10.1(1)(c), the predecessor Person
shall be relieved of all obligations and covenants under this Indenture and the
Debentures.
ARTICLE 11– COMPULSORY ACQUISITION
Section 11.1
Definitions In this Article:
(1)
“Affiliate”
and
“Associate”
shall have their respective meanings set forth in the
Securities Act
(Ontario);
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(2)
“Dissenting
Debentureholders”
means a Debentureholder who does not accept an Offer
referred to in Section 11.2 and includes any assignee of the Debenture of a
Debentureholder to whom such an Offer is made, whether or not such assignee is
recognized under this Indenture;
(3)
“Offer”
means an offer
to acquire outstanding Debentures, which is a takeover bid for Debentures within
the meaning ascribed thereto in NI 62-104, whereas of the date of the offer to
acquire, the Debentures that are subject to the offer to acquire, together with
the Offeror’s Debentures, constitute in the aggregate 20% or more of the
outstanding principal amount of the Debentures;
(4)
“offer to acquire”
includes an acceptance of an offer to sell;
(5)
“Offeror”
means a
person, or two or more persons acting jointly or in concert, who make an Offer
to acquire Debentures;
(6)
“Offeror’s Debentures”
means Debentures beneficially owned, or over which control or direction is
exercised, on the date of an Offer by the Offeror, any Affiliate or Associate of
the Offeror or any Person or company acting jointly or in concert with the
Offeror; and
(7)
“Offeror’s Notice”
means the notice described in Section 11.3.
Section 11.2
Offer for Debentures
If an Offer for all of the
outstanding Debentures (other than Debentures held by or on behalf of the
Offeror or an Affiliate or Associate of the Offeror) is made and:
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(a)
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within the time provided in the Offer for its acceptance
or within 120 days after the date the Offer is made, whichever period is
the shorter, the Offer is accepted by Debentureholders representing at
least 90% of the outstanding principal amount of the Debentures, other
than the Offeror’s Debentures;
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(b)
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the Offeror is bound to take up and pay for, or has taken
up and paid for the Debentures of the Debentureholders who accepted the
Offer;
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(c)
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the Offeror complies with Sections 11.3 and 11.5;
and
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(d)
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the Offer complies with applicable securities laws
(including any applicable requirements of the U.S. Securities Exchange
Act).
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the Offeror is entitled to acquire, and the Dissenting
Debentureholders are required to sell to the Offeror, the Debentures held by the
Dissenting Debentureholder for the same consideration per Debenture payable or
paid, as the case may be, under the Offer.
Section 11.3
Offeror’s Notice to Dissenting
Shareholders
Where an Offeror is entitled to
acquire Debentures held by Dissenting Debentureholders pursuant to Section 11.2
and the Offeror wishes to exercise such right, the Offeror shall send by registered mail within 30 days after the date of termination of
the Offer a notice (the “
Offeror’s Notice
”) to each Dissenting
Debentureholder stating that:
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(a)
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Debentureholders holding at least 90% of the principal
amount of all outstanding Debentures, other than Offeror’s Debentures,
have accepted the Offer;
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(b)
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the Offeror is bound to take up and pay for, or has taken
up and paid for, the Debentures of the Debentureholders who accepted the
Offer;
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(c)
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Dissenting Debentureholders must transfer their
respective Debentures to the Offeror on the terms on which the Offeror
acquired the Debentures of the Debentureholders who accepted the Offer
within 21 days after the date of the sending of the Offeror’s Notice;
and
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(d)
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Dissenting Debentureholders must send their respective
Debenture certificate(s) to the Trustee within 21 days after the date of
the sending of the Offeror’s Notice.
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Section 11.4
Delivery of Debenture
Certificates
A Dissenting Debentureholder to
whom an Offeror’s Notice is sent pursuant to Section 11.3 shall, within 21 days
after the sending of the Offeror’s Notice, send his or her Debenture
certificate(s) to the Trustee duly endorsed for transfer.
Section 11.5
Payment of Consideration to
Trustee
Within 21 days after the Offeror
sends an Offeror’s Notice pursuant to Section 11.3, the Offeror shall pay or
transfer to the Trustee, or to such other Person as the Trustee may direct, the
cash or other consideration that is payable to Dissenting Debentureholders
pursuant to Section 11.2. The acquisition by the Offeror of all Debentures held
by all Dissenting Debentureholders shall be effective as of the time of such
payment or transfer.
Section 11.6
Consideration to be held in Trust
The Trustee, or the Person
directed by the Trustee, shall hold in trust for the Dissenting Debentureholders
the cash or other consideration they or it receives under Section 11.5. The
Trustee, or such persons, shall deposit cash in a separate account in a Canadian
chartered bank, or other body corporate, any of whose deposits are insured by
the Canada Deposit Insurance Corporation, and shall place other consideration in
the custody of a Canadian chartered bank or such other body corporate.
Section 11.7
Completion of Transfer of
Debentures to Offeror
Within 30 days after the date of
the sending of an Offeror’s Notice pursuant to Section 11.3, the Trustee, if the
Offeror has complied with Section 11.5, shall:
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(a)
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do all acts and things and execute and cause to be
executed all instruments as in the Trustee’s opinion may be necessary or
desirable to cause the transfer of the Debentures of the Dissenting
Debentureholders to the Offeror;
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(b)
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send to each Dissenting Debentureholder who has complied
with Section 11.4 the consideration to which such Dissenting
Debentureholder is entitled under this Article 11; and
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(c)
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send to each Dissenting Debentureholder who has not
complied with Section 11.4 a notice stating
that:
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(i)
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his or her Debentures have been transferred to the
Offeror;
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(ii)
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the Trustee or some other Person designated in such
notice are holding in trust the consideration for such Debentures;
and
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(iii)
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the Trustee, or such other Person, will send the
consideration to such Dissenting Debentureholder as soon as possible after
receiving such Dissenting Debentureholder’s Debenture certificate(s) or
such other documents as the Trustee or such other Person may require in
lieu thereof;
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and the Trustee is hereby appointed the agent and attorney of
the Dissenting Debentureholders for the purposes of giving effect to the
foregoing provisions.
Section 11.8
Communication of Offer to the
Corporation
An Offeror cannot make an Offer
for Debentures unless, concurrent with the communication of the Offer to any
Debentureholder, a copy of the Offer is provided to the Corporation.
ARTICLE 12– MEETINGS OF DEBENTUREHOLDERS
Section 12.1
Right to Convene Meeting
The Trustee or the Corporation
may at any time and from time to time, and the Trustee shall, on receipt of a
Written Direction of the Corporation or a written request signed by the holders
of not less than 25% of the principal amount of the Debentures then outstanding
and upon receiving funding and being indemnified to its reasonable satisfaction
by the Corporation or by the Debentureholders signing such request against the
costs which may be incurred in connection with the calling and holding of such
meeting, convene a meeting of the Debentureholders. In the event of the Trustee
failing, within 30 days after receipt of any such request and such funding of
indemnity, to give notice convening a meeting, the Corporation or such
Debentureholders, as the case may be, may convene such meeting. Every such
meeting shall be held in the City of Vancouver or at such other place as may be
approved or determined by the Trustee.
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Section 12.2
Notice of Meetings
(1) At least 21 days’ notice of
any meeting shall be given to the Debentureholders in the manner provided in
Section 13.2 and a copy of such notice shall be sent by post to the Trustee,
unless the meeting has been called by it. Such notice shall state the time when
and the place where the meeting is to be held and shall state briefly the
general nature of the business to be transacted thereat and it shall not be
necessary for any such notice to set out the terms of any resolution to be
proposed or any of the provisions of this Article. The accidental omission to
give notice of a meeting to any holder of Debentures shall not invalidate any
resolution passed at any such meeting. A holder may waive notice of a meeting
either before or after the meeting.
(2) If the business to be
transacted at any meeting by Extraordinary Resolution or otherwise, or any
action to be taken or power exercised by instrument in writing under Section
12.15, especially affects the rights of holders of Debentures of one or more
series in a manner or to an extent differing in any material way from that in or
to which the rights of holders of Debentures of any other series are affected
(determined as provided in subsections 12.2(3) and (4)), then:
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(a)
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a reference to such fact, indicating each series of
Debentures in the opinion of the Trustee so especially affected
(hereinafter referred to as the “especially affected series”) shall be
made in the notice of such meeting, and in any such case the meeting shall
be and be deemed to be and is herein referred to as a “
Serial
Meeting
”; and
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(b)
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the holders of Debentures of an especially affected
series shall not be bound by
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(c)
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any action taken at a Serial Meeting or by instrument in
writing under Section 12.15 unless in addition to compliance with the
other provisions of this Article 12:
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(i)
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at such Serial Meeting: (I) there are Debentureholders
present in person or by proxy and representing at least 25% in principal
amount of the Debentures then outstanding of such series, subject to the
provisions of this Article 12 as to quorum at adjourned meetings; and (II)
the resolution is passed by the affirmative vote of the holders of more
than 50% (or in the case of an Extraordinary Resolution not less than
66⅔%) of the principal amount of the Debentures of such series then
outstanding voted on the resolution; or
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(ii)
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in the case of action taken or power exercised by
instrument in writing under Section 12.15, such instrument is signed in
one or more counterparts by the holders of not less than 66⅔% in
principal amount of the Debentures of such series then
outstanding.
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(3) Subject to Section 12.2(4),
the determination as to whether any business to be transacted at a meeting of
Debentureholders, or any action to be taken or power to be exercised by
instrument in writing under Section 12.15, especially affects the rights of the
Debentureholders of one or more series in a manner or to an extent differing in
any material way from that in or to which it affects the rights of
Debentureholders of any other series (and is therefore an especially affected
series) shall be determined by an opinion of Counsel, which shall be binding on
all Debentureholders, the Trustee and the Corporation for all purposes hereof.
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(4) A proposal:
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(a)
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to extend the maturity of Debentures of any particular
series or to reduce the principal amount thereof, the rate of interest or
redemption premium thereon or to impair any conversion right
thereof;
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(b)
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to modify or terminate any covenant or agreement which by
its terms is effective only so long as Debentures of a particular series
are outstanding; or
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(c)
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to reduce with respect to Debentureholders of any
particular series any percentage stated in this Section 12.2 or Sections
12.4, 12.12 and 12.15;
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shall be deemed to especially affect the rights of the
Debentureholders of such series in a manner differing in a material way from
that in which it affects the rights of holders of Debentures of any other
series, whether or not a similar extension, reduction, modification or
termination is proposed with respect to Debentures of any or all other series.
Section 12.3
Chairman
Some person, who need not be a
Debentureholder, nominated in writing by the Trustee shall be chairman of the
meeting and if no Person is so nominated, or if the Person so nominated is not
present within 15 minutes from the time fixed for the holding of the meeting, a
majority of the Debentureholders present in person or by proxy shall choose some
Person present to be chairman.
Section 12.4
Quorum
Subject to the provisions of
Section 12.12, at any meeting of the Debentureholders a quorum shall consist of
Debentureholders present in person or by proxy and representing at least 25% in
principal amount of the outstanding Debentures and, if the meeting is a Serial
Meeting, at least 25% of the Debentures then outstanding of each especially
affected series. If a quorum of the Debentureholders shall not be present within
30 minutes from the time fixed for holding any meeting, the meeting, if summoned
by the Debentureholders or pursuant to a request of the Debentureholders, shall
be dissolved, but in any other case the meeting shall be adjourned to the same
day in the next week (unless such day is not a Business Day in which case it
shall be adjourned to the next following Business Day thereafter) at the same
time and place to the extent possible and no notice shall be required to be
given in respect of such adjourned meeting. At the adjourned meeting, the
Debentureholders present in person or by proxy shall, subject to the provisions
of Section 12.12, constitute a quorum and may transact the business for which
the meeting was originally convened notwithstanding that they may not represent
25% of the principal amount of the outstanding Debentures or of the Debentures
then outstanding of each especially affected series. Any business may be brought
before or dealt with at an adjourned meeting which might have been brought before or dealt with at
the original meeting in accordance with the notice calling the same. No business
shall be transacted at any meeting unless the required quorum is present at the
commencement of business.
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Section 12.5
Power to Adjourn
The chairman of any meeting at
which a quorum of the Debentureholders is present may, with the consent of the
holders of a majority in principal amount of the Debentures represented thereat,
adjourn any such meeting and no notice of such adjournment need be given except
such notice, if any, as the meeting may prescribe.
Section 12.6
Show of Hands
Every question submitted to a
meeting shall, subject to Section 12.7, be decided in the first place by a
majority of the votes given on a show of hands except that votes on
Extraordinary Resolutions shall be given in the manner hereinafter provided. At
any such meeting, unless a poll is duly demanded as herein provided, a
declaration by the chairman that a resolution has been carried or carried
unanimously or by a particular majority or lost or not carried by a particular
majority shall be conclusive evidence of the fact. The chairman of any meeting
shall be entitled, both on a show of hands and on a poll, to vote in respect of
the Debentures, if any, held by him.
Section 12.7
Poll
On every Extraordinary
Resolution, and on any other question submitted to a meeting when demanded by
the chairman or by one or more Debentureholders or proxies for Debentureholders,
a poll shall be taken in such manner and either at once or after an adjournment
as the chairman shall direct. Questions other than Extraordinary Resolutions
shall, if a poll be taken, be decided by the votes of the holders of a majority
in principal amount of the Debentures and of each especially affected series, if
applicable, represented at the meeting and voted on the poll.
Section 12.8
Voting
On a show of hands every Person
who is present and entitled to vote, whether as a Debentureholder or as proxy
for one or more Debentureholders or both, shall have one vote. On a poll each
Debentureholder present in person or represented by a proxy duly appointed by an
instrument in writing shall be entitled to one vote in respect of each $1.00
principal amount of Debentures of which he shall then be the holder. In the case
of any Debenture denominated in a currency or currency unit other than Canadian
dollars, the principal amount thereof for these purposes shall be computed in
Canadian dollars on the basis of the conversion of the principal amount thereof
at the applicable spot buying rate of exchange for such other currency or
currency unit as reported by the Bank of Canada at the close of business on the
Business Day next preceding the meeting. Any fractional amounts resulting from
such conversion shall be rounded to the nearest $100. A proxy need not be a
Debentureholder. In the case of joint holders of a Debenture, any one of them
present in person or by proxy at the meeting may vote in the absence of the other or others but in case more than one of
them be present in person or by proxy, they shall vote together in respect of
the Debentures of which they are joint holders.
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Section 12.9
Proxies
A Debentureholder may be present
and vote at any meeting of Debentureholders by an authorized representative. The
Corporation (in case it convenes the meeting) or the Trustee (in any other case)
for the purpose of enabling the Debentureholders to be present and vote at any
meeting without producing their Debentures, and of enabling them to be present
and vote at any such meeting by proxy and of lodging instruments appointing such
proxies at some place other than the place where the meeting is to be held, may
from time to time make and vary such regulations as it shall think fit providing
for and governing the form of the instrument appointing a proxy, which shall be
in writing, and the manner in which the same shall be executed and the
production of the authority of any Person signing on behalf of a
Debentureholder.
Any regulations so made shall be binding and effective and the
votes given in accordance therewith shall be valid and shall be counted. Save as
such regulations may provide, the only persons who shall be recognized at any
meeting as the holders of any Debentures, or as entitled to vote or be present
at the meeting in respect thereof, shall be Debentureholders and persons whom
Debentureholders have by instrument in writing duly appointed as their proxies.
Section 12.10
Persons Entitled to Attend
Meetings
The Corporation and the Trustee,
by their respective officers and directors, the Auditors of the Corporation and
the legal advisors of the Corporation, the Trustee or any Debentureholder may
attend any meeting of the Debentureholders, but shall have no vote as such.
Section 12.11
Powers Exercisable by
Extraordinary Resolution
(1) In addition to the powers
conferred upon them by any other provisions of this Indenture or by law, a
meeting of the Debentureholders shall have the following powers exercisable from
time to time by Extraordinary Resolution (subject in the case of the matters in
paragraphs (a)– (d) and (l) to the prior approval of the TSX (or such other
recognized stock exchange on which the Common Shares are listed for trading)):
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(a)
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power to authorize the Trustee to grant extensions of
time for payment of any principal, premium or interest on the Debentures,
whether or not the principal, premium, or interest, the payment of which
is extended, is at the time due or overdue;
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(b)
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power to sanction any modification, abrogation,
alteration, compromise or arrangement of the rights of the
Debentureholders or the Trustee (with its consent) against the
Corporation, or against its property, whether such rights arise under this
Indenture or the Debentures or otherwise;
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(c)
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power to assent to any modification of or change in or
addition to or omission from the provisions contained in this Indenture or
any Debenture which shall be agreed to by the Corporation and to authorize the Trustee to
concur in and execute any indenture supplemental hereto embodying any
modification, change, addition or omission;
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(d)
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power to sanction any scheme for the reconstruction,
reorganization or recapitalization of the Corporation or for the
consolidation, amalgamation, arrangement, combination or merger of the
Corporation with any other Person or for the sale, leasing, transfer or
other disposition of all or substantially all of the undertaking, property
and assets of the Corporation or any part thereof, provided that no such
sanction shall be necessary in respect of any such transaction if the
provisions of Section 10.1 shall have been complied with;
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(e)
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power to direct or authorize the Trustee to exercise any
power, right, remedy or authority given to it by this Indenture in any
manner specified in any such Extraordinary Resolution or to refrain from
exercising any such power, right, remedy or authority;
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(f)
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power to waive, and direct the Trustee to waive, any
default hereunder and/or cancel any declaration made by the Trustee
pursuant to Section 8.1 either unconditionally or upon any condition
specified in such Extraordinary Resolution;
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(g)
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power to restrain any Debentureholder from taking or
instituting any suit, action or proceeding for the purpose of enforcing
payment of the principal, premium or interest on the Debentures, or for
the execution of any trust or power hereunder;
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(h)
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power to direct any Debentureholder who, as such, has
brought any action, suit or proceeding to stay or discontinue or otherwise
deal with the same upon payment, if the taking of such suit, action or
proceeding shall have been permitted by Section 8.5, of the costs, charges
and expenses reasonably and properly incurred by such Debentureholder in
connection therewith;
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(i)
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power to assent to any compromise or arrangement with any
creditor or creditors or any class or classes of creditors, whether
secured or otherwise, and with holders of any shares or other securities
of the Corporation;
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(j)
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power to appoint a committee with power and authority
(subject to such limitations, if any, as may be prescribed in the
resolution) to exercise, and to direct the Trustee to exercise, on behalf
of the Debentureholders, such of the powers of the Debentureholders as are
exercisable by Extraordinary Resolution or other resolution as shall be
included in the resolution appointing the committee. The resolution making
such appointment may provide for payment of the expenses and disbursements
of and compensation to such committee. Such committee shall consist of
such number of persons as shall be prescribed in the resolution appointing
it and the members need not be themselves Debentureholders. Every such
committee may elect its chairman and may make regulations respecting its quorum, the calling of its meetings
and the filling of vacancies occurring in its number and its procedure
generally. Such regulations may provide that the committee may act at a meeting
at which a quorum is present or may act by minutes signed by the number of
members thereof necessary to constitute a quorum. All acts of any such committee
within the authority delegated to it shall be binding upon all Debentureholders.
Neither the committee nor any member thereof shall be liable for any loss
arising from or in connection with any action taken or omitted to be taken by
them in good faith;
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(k)
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power to remove the Trustee from office and to appoint a
new Trustee or Trustees provided that no such removal shall be effective
unless and until a new Trustee or Trustees shall have become bound by this
Indenture;
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(l)
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power to sanction the exchange of the Debentures for or
the conversion thereof into shares, bonds, debentures or other securities
or obligations of the Corporation or of any other Person formed or to be
formed;
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(m)
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power to authorize the distribution in specie of any
shares or securities received pursuant to a transaction authorized under
the provisions of subsection 12.11(1); and
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(n)
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power to amend, alter or repeal any Extraordinary
Resolution previously passed or sanctioned by the Debentureholders or by
any committee appointed pursuant to clause
12.11(1)(j).
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(2) Notwithstanding the foregoing
provisions of this Section 12.11 none of such provisions shall in any manner
allow or permit any amendment, modification, abrogation or addition to the
provisions of Article 5 which could reasonably be expected to detrimentally
affect the rights, remedies or recourse of the priority of the Secured
Creditors.
Section 12.12
Meaning of “Extraordinary
Resolution”
(1) The expression
“
Extraordinary Resolution
” when used in this Indenture means, subject as
hereinafter in this Article provided, a resolution proposed to be passed as an
Extraordinary Resolution at a meeting of Debentureholders (including an
adjourned meeting) duly convened for the purpose and held in accordance with the
provisions of this Article at which the holders of not less than 25% of the
principal amount of the Debentures then outstanding, and if the meeting is a
Serial Meeting, at which holders of not less than 25% of the principal amount of
the Debentures then outstanding of each especially affected series, are present
in person or by proxy and passed by the favourable votes of the holders of not
less than 66⅔% of the principal amount of the Debentures, and if the
meeting is a Serial Meeting by the affirmative vote of the holders of not less
than 66⅔% of each especially affected series, in each case present or
represented by proxy at the meeting and voted upon on a poll on such resolution.
(2) If, at any such meeting, the
holders of not less than 25% of the principal amount of the Debentures then
outstanding and, if the meeting is a Serial Meeting, 25% of the principal amount
of the Debentures then outstanding of each especially affected
series, in each case are not present in person or by proxy within 30 minutes
after the time appointed for the meeting, then the meeting, if convened by or on
the requisition of Debentureholders, shall be dissolved but in any other case it
shall stand adjourned to such date, being not less than 14 nor more than 60 days
later, and to such place and time as may be appointed by the chairman. Not less
than 10 days’ notice shall be given of the time and place of such adjourned
meeting in the manner provided in Section 13.2. Such notice shall state that at
the adjourned meeting the Debentureholders present in person or by proxy shall
form a quorum. At the adjourned meeting the Debentureholders present in person
or by proxy shall form a quorum and may transact the business for which the
meeting was originally convened and a resolution proposed at such adjourned
meeting and passed thereat by the affirmative vote of holders of not less than
66⅔% of the principal amount of the Debentures and, if the meeting is a
Serial Meeting, by the affirmative vote of the holders of not less than
66⅔% of the principal amount of the Debentures of each especially affected
series, in each case present or represented by proxy at the meeting and voted
upon on a poll shall be an Extraordinary Resolution within the meaning of this
Indenture, notwithstanding that the holders of not less than 25% in principal
amount of the Debentures then outstanding, and if the meeting is a Serial
Meeting, holders of not less than 25% of the principal amount of the Debentures
then outstanding of each especially affected series, are not present in person
or by proxy at such adjourned meeting.
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(3) Votes on an Extraordinary
Resolution shall always be given on a poll and no demand for a poll on an
Extraordinary Resolution shall be necessary.
Section 12.13
Powers Cumulative
Any one or more of the powers in
this Indenture stated to be exercisable by the Debentureholders by Extraordinary
Resolution or otherwise may be exercised from time to time and the exercise of
any one or more of such powers from time to time shall not be deemed to exhaust
the rights of the Debentureholders to exercise the same or any other such power
or powers thereafter from time to time.
Section 12.14
Minutes
Minutes of all resolutions and
proceedings at every meeting as aforesaid shall be made and duly entered in
books to be from time to time provided for that purpose by the Trustee at the
expense of the Corporation, and any such minutes as aforesaid, if signed by the
chairman of the meeting at which such resolutions were passed or proceedings
had, or by the chairman of the next succeeding meeting of the Debentureholders,
shall be prima facie evidence of the matters therein stated and, until the
contrary is proved, every such meeting, in respect of the proceedings of which
minutes shall have been made, shall be deemed to have been duly held and
convened, and all resolutions passed thereat or proceedings taken thereat to
have been duly passed and taken.
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Section 12.15
Instruments in Writing
All actions which may be taken
and all powers that may be exercised by the Debentureholders at a meeting held
as hereinbefore in this Article provided may also be taken and exercised by the
holders of 66⅔% of the principal amount of all the outstanding Debentures
and, if the meeting at which such actions might be taken would be a Serial
Meeting, by the holders of 66⅔% of the principal amount of the Debentures
then outstanding of each especially affected series, by an instrument in writing
signed in one or more counterparts and the expression “Extraordinary Resolution”
when used in this Indenture shall include an instrument so signed.
Section 12.16
Binding Effect of Resolutions
Every resolution and every
Extraordinary Resolution passed in accordance with the provisions of this
Article at a meeting of Debentureholders shall be binding upon all the
Debentureholders, whether present at or absent from such meeting, and every
instrument in writing signed by Debentureholders in accordance with Section
12.15 shall be binding upon all the Debentureholders, whether signatories
thereto or not, and each and every Debentureholder and the Trustee (subject to
the provisions for its indemnity herein contained) shall be bound to give effect
accordingly to every such resolution, Extraordinary Resolution and instrument in
writing.
Section 12.17
Evidence of Rights Of
Debentureholders
(1) Any request, direction,
notice, consent or other instrument which this Indenture may require or permit
to be signed or executed by the Debentureholders may be in any number of
concurrent instruments of similar tenor signed or executed by such
Debentureholders.
(2) The Trustee may, in its
discretion, require proof of execution in cases where it deems proof desirable
and may accept such proof as it shall consider proper.
Section 12.18
Concerning Serial Meetings
If in the opinion of Counsel any
business to be transacted at any meeting, or any action to be taken or power to
be exercised by instrument in writing under Section 12.15, does not adversely
affect the rights of the holders of Debentures of one or more series, the
provisions of this Article 12 shall apply as if the Debentures of such series
were not outstanding and no notice of any such meeting need be given to the
holders of Debentures of such series. Without limiting the generality of the
foregoing, a proposal to modify or terminate any covenant or agreement which is
effective only so long as Debentures of a particular series are outstanding
shall be deemed not to adversely affect the rights of the holders of Debentures
of any other series.
ARTICLE 13– NOTICES
Section 13.1
Notice to Corporation
Any notice to the Corporation
under the provisions of this Indenture shall be valid and effective if delivered
to the Corporation at: Suite 1500, 1199 West Hastings Street, Vancouver, British Columbia V6E 3T5, Attention: Chief Executive Officer,
or if given by registered letter, postage prepaid, to such offices and so
addressed and if mailed, shall be deemed to have been effectively given three
days following the mailing thereof. The Corporation may from time to time notify
the Trustee in writing of a change of address which thereafter, until changed by
like notice, shall be the address of the Corporation for all purposes of this
Indenture.
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Section 13.2
Notice to Debentureholders
(1) All notices to be given
hereunder with respect to the Debentures shall be deemed to be validly given to
the holders thereof if sent by first class mail, postage prepaid, by letter or
circular addressed to such holders at their post office addresses appearing in
any of the registers hereinbefore mentioned and shall be deemed to have been
effectively given three days following the day of mailing. Accidental error or
omission in giving notice or accidental failure to mail notice to any
Debentureholder or the inability of the Corporation to give or mail any notice
due to anything beyond the reasonable control of the Corporation shall not
invalidate any action or proceeding founded thereon.
(2) If any notice given in
accordance with the foregoing paragraph would be unlikely to reach the
Debentureholders to whom it is addressed in the ordinary course of post by
reason of an interruption in mail service, whether at the place of dispatch or
receipt or both, the Corporation shall give such notice by publication at least
once in the city of Vancouver (or in such of those cities as, in the opinion of
the Trustee, is sufficient in the particular circumstances), each such
publication to be made in a daily newspaper of general circulation in the
designated city.
(3) Any notice given to
Debentureholders by publication shall be deemed to have been given on the day on
which publication shall have been effected at least once in each of the
newspapers in which publication was required.
(4) All notices with respect to
any Debenture may be given to whichever one of the holders thereof (if more than
one) is named first in the registers hereinbefore mentioned, and any notice so
given shall be sufficient notice to all holders of any persons interested in
such Debenture.
Section 13.3
Notice to Trustee
Any notice to the Trustee under
the provisions of this Indenture shall be valid and effective if delivered,
receipt confirmed, to the Trustee at its principal office in the City of
Vancouver, at 510 Burrard Street, 3
rd
Floor, Vancouver, British
Columbia V6C 3B9, Attn: General Manager, Corporate Trust, or by Email:
corporatetrust.vancouver@computershare.com, and shall be deemed to have been
effectively given as of the date of such receipt confirmation or if given by
registered letter, postage prepaid, to such office and so addressed and, if
mailed, shall be deemed to have been effectively given three days following the
mailing thereof.
Section 13.4
Mail Service Interruption
If by reason of any interruption
of mail service, actual or threatened, any notice to be given to the Trustee
would reasonably be unlikely to reach its destination by the time notice by mail is deemed to have been given pursuant to Section 13.3,
such notice shall be valid and effective only if delivered at the appropriate
address in accordance with Section 13.3.
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ARTICLE 14– CONCERNING THE TRUSTEE
Section 14.1
Replacement of Trustee
(1) The Trustee may resign its
trust and be discharged from all further duties and liabilities hereunder by
giving to the Corporation 90 days’ notice in writing or such shorter notice as
the Corporation may accept as sufficient. If at any time a material conflict of
interest exists in the Trustee’s role as a fiduciary hereunder the Trustee
shall, within 30 days after ascertaining that such a material conflict of
interest exists, either eliminate such material conflict of interest or resign
in the manner and with the effect specified in this Section 14.1. The validity
and enforceability of this Indenture and of the Debentures issued hereunder
shall not be affected in any manner whatsoever by reason only that such a
material conflict of interest exists. In the event of the Trustee resigning or
being removed or being dissolved, becoming bankrupt, going into liquidation or
otherwise becoming incapable of acting hereunder, the Corporation shall
forthwith appoint a new Trustee unless a new Trustee has already been appointed
by the Debentureholders. Failing such appointment by the Corporation, the
retiring Trustee or any Debentureholder may apply to a Judge of the Ontario
Superior Court of Justice, on such notice as such Judge may direct at the
Corporation’s expense, for the appointment of a new Trustee but any new Trustee
so appointed by the Corporation or by the Court shall be subject to removal as
aforesaid by the Debentureholders and the appointment of such new Trustee shall
be effective only upon such new Trustee becoming bound by this Indenture. Any
new Trustee appointed under any provision of this Section 14.1 shall be a
corporation authorized to carry on the business of a trust company in all of the
Provinces of Canada. On any new appointment the new Trustee shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named herein as Trustee.
(2) Any company into which the
Trustee may be merged or, with or to which it may be consolidated, amalgamated
or sold, or any company resulting from any merger, consolidation, sale or
amalgamation to which the Trustee shall be a party, or any company which shall
purchase all or substantially all of the corporate trust book of business of the
Trustee, shall be the successor trustee under this Indenture without the
execution of any instrument or any further act. Nevertheless, upon the written
request of the successor Trustee or of the Corporation, the Trustee ceasing to
act shall execute and deliver an instrument assigning and transferring to such
successor Trustee, upon the trusts herein expressed, all the rights, powers and
trusts of the Trustee so ceasing to act, and, upon receipt by the Trustee of
payment in full for any outstanding charges due to it, shall duly assign,
transfer and deliver all property and money held by such Trustee to the
successor Trustee so appointed in its place. Should any deed, conveyance or
instrument in writing from the Corporation be required by any new Trustee for
more fully and certainly vesting in and confirming to it such estates,
properties, rights, powers and trusts, then any and all such deeds, conveyances
and instruments in writing shall on request of said new Trustee, be made,
executed, acknowledged and delivered by the Corporation.
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Section 14.2
Duties of Trustee
In the exercise of the rights,
duties and obligations prescribed or conferred by the terms of this Indenture,
the Trustee shall act honestly and in good faith and exercise that degree of
care, diligence and skill that a reasonably prudent trustee would exercise in
comparable circumstances.
Section 14.3
Reliance Upon Declarations,
Opinions, etc.
In the exercise of its rights,
duties and obligations hereunder the Trustee may, if acting in good faith, rely,
as to the truth of the statements and accuracy of the opinions expressed
therein, upon statutory declarations, opinions, reports or certificates
furnished pursuant to any covenant, condition or requirement of this Indenture
or required by the Trustee to be furnished to it in the exercise of its rights
and duties hereunder, if the Trustee examines such statutory declarations,
opinions, reports or certificates and determines that they comply with Section
14.4, if applicable, and with any other applicable requirements of this
Indenture. The Trustee may nevertheless, in its discretion, require further
proof in cases where it deems further proof desirable. Without restricting the
foregoing, the Trustee may rely on an opinion of Counsel satisfactory to the
Trustee notwithstanding that it is delivered by a solicitor or firm which acts
as solicitors for the Corporation.
Section 14.4
Evidence and Authority to
Trustee, Opinions, etc.
(1) The Corporation shall furnish
to the Trustee evidence of compliance with the conditions precedent provided for
in this Indenture relating to any action or step required or permitted to be
taken by the Corporation or the Trustee under this Indenture or as a result of
any obligation imposed under this Indenture, including without limitation, the
certification and delivery of Debentures hereunder, the satisfaction and
discharge of this Indenture and the taking of any other action to be taken by
the Trustee at the request of or on the application of the Corporation,
forthwith if and when (a) such evidence is required by any other Section of this
Indenture to be furnished to the Trustee in accordance with the terms of this
Section 14.4, or (b) the Trustee, in the exercise of its rights and duties under
this Indenture, gives the Corporation written notice requiring it to furnish
such evidence in relation to any particular action or obligation specified in
such notice.
(2) Such evidence shall consist
of
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(a)
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a certificate made by any two officers or directors of
the Corporation, stating that any such condition precedent has been
complied with in accordance with the terms of this Indenture;
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(b)
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in the case of a condition precedent compliance with
which is, by the terms of this Indenture, made subject to review or
examination by a solicitor, an opinion of Counsel that such condition
precedent has been complied with in accordance with the terms of this
Indenture; and
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(c)
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in the case of any such condition precedent compliance
with which is subject to review or examination by auditors or accountants,
an opinion or report of the Auditors of the Corporation whom the Trustee for such purposes
hereby approves, that such condition precedent has been complied with in
accordance with the terms of this Indenture.
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(3) Whenever such evidence
relates to a matter other than the certificates and delivery of Debentures and
the satisfaction and discharge of this Indenture, and except as otherwise
specifically provided herein, such evidence may consist of a report or opinion
of any solicitor, auditor, accountant, engineer or appraiser or any other Person
whose qualifications give authority to a statement made by him, provided that if
such report or opinion is furnished by a trustee, officer or employer of the
Corporation it shall be in the form of a statutory declaration. Such evidence
shall be, so far as appropriate, in accordance with the immediately preceding
paragraph of this Section.
(4) Each statutory declaration,
certificate, opinion or report with respect to compliance with a condition
precedent provided for in the Indenture shall include (a) a statement by the
Person giving the evidence that he has read and is familiar with those
provisions of this Indenture relating to the condition precedent in question,
(b) a brief statement of the nature and scope of the examination or
investigation upon which the statements or opinions contained in such evidence
are based, (c) a statement that, in the belief of the Person giving such
evidence, he has made such examination or investigation as is necessary to
enable him to make the statements or give the opinions contained or expressed
therein, and (d) a statement whether in the opinion of such Person the
conditions precedent in question have been complied with or satisfied.
(5) The Corporation shall furnish
or cause to be furnished to the Trustee at any time if the Trustee reasonably so
requires, its certificate that the Corporation has complied with all covenants,
conditions or other requirements contained in this Indenture, the non-compliance
with which would, with the giving of notice or the lapse of time, or both, or
otherwise, constitute an Event of Default, or if such is not the case,
specifying the covenant, condition or other requirement which has not been
complied with and giving particulars of such non-compliance. The Corporation
shall, whenever the Trustee so requires, furnish the Trustee with evidence by
way of statutory declaration, opinion, report or certificate as specified by the
Trustee as to any action or step required or permitted to be taken by the
Corporation or as a result of any obligation imposed by this Indenture.
Section 14.5
Officer’s Certificates Evidence
Except as otherwise specifically
provided or prescribed by this Indenture, whenever in the administration of the
provisions of this Indenture the Trustee shall deem it necessary or desirable
that a matter be proved or established prior to taking or omitting any action
hereunder, the Trustee, if acting in good faith, may rely upon an Officer’s
Certificate.
Section 14.6
Experts, Advisers and Agents
The Trustee may:
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(a)
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employ or retain and act and rely on the opinion or
advice of or information obtained from any solicitor, auditor, valuer,
engineer, surveyor, appraiser or other expert, whether obtained by the
Trustee or by the Corporation, or otherwise, and shall not be liable for
acting, or refusing to act, in good faith on any such opinion or advice
and shall not be responsible for any misconduct on the part of any of them
and may pay proper and reasonable compensation for all such legal and
other advice or assistance as aforesaid. The reasonable costs of such
services shall be added to and become part of the Trustee’s remuneration
hereunder; and
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(b)
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employ such agents and other assistants as it may
reasonably require for the proper discharge of its duties hereunder, and
may pay reasonable remuneration for all services performed for it (and
shall be entitled to receive reasonable remuneration for all services
performed by it) in the discharge of the trusts hereof and compensation
for all disbursements, costs and expenses made or incurred by it in the
discharge of its duties hereunder and in the management of the trusts
hereof and any solicitors employed or consulted by the Trustee may, but
need not be, solicitors for the Corporation.
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Section 14.7
Trustee May Deal in Debentures
Subject to Section 14.2, the
Trustee may, in its personal or other capacity, buy, sell, lend upon and deal in
the Debentures and generally contract and enter into financial transactions with
the Corporation or otherwise, without being liable to account for any profits
made thereby.
Section 14.8
Investment of Monies Held by
Trustee
(1) Unless otherwise
provided in this Indenture, any monies held by the Trustee, which, under this
Indenture, may or ought to be invested or which may be on deposit with the
Trustee or which may be in the hands of the Trustee, may be invested and
reinvested in the name or under the control of the Trustee in securities in
which, under the laws of the Province of Ontario, trustees are authorized to
invest trust monies, provided that such securities are expressed to mature
within two years or such shorter period selected to facilitate any payments
expected to be made under this Indenture, after their purchase by the Trustee,
and unless and until the Trustee shall have declared the principal of and
interest on the Debentures to be due and payable, the Trustee shall so invest
such monies at the Written Direction of the Corporation given in a reasonably
timely manner. Pending the investment of any monies as hereinbefore provided,
such monies may be deposited in the name of the Trustee in any chartered bank of
Canada or, with the consent of the Corporation, in the deposit department of the
Trustee or any other loan or trust company authorized to accept deposits under
the laws of Canada or any Province thereof at the rate of interest, if any, then
current on similar deposits.
(2) Unless and until the
Trustee shall have declared the principal of and interest on the Debentures to
be due and payable, the Trustee shall pay over to the Corporation all interest
received by the Trustee in respect of any investments or deposits made pursuant
to the provisions of this Section.
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Section 14.9
Trustee Not Ordinarily Bound
Except as provided in Section 8.2
and as otherwise specifically provided herein, the Trustee shall not, subject to
Section 14.2, be bound to give notice to any Person of the execution hereof, nor
to do, observe or perform or see to the observance or performance by the
Corporation of any of the obligations herein imposed upon the Corporation or of
the covenants on the part of the Corporation herein contained, nor in any way to
supervise or interfere with the conduct of the Corporation’s business, unless
the Trustee shall have been required to do so in writing by the holders of not
less than 25% of the aggregate principal amount of the Debentures then
outstanding or by any Extraordinary Resolution of the Debentureholders passed in
accordance with the provisions contained in Article 12, and then only after it
shall have been funded and indemnified to its satisfaction against all actions,
proceedings, claims and demands to which it may render itself liable and all
costs, charges, damages and expenses which it may incur by so doing.
Section 14.10
Trustee Not Required to Give
Security
The Trustee shall not be required
to give any bond or security in respect of the execution of the trusts and
powers of this Indenture or otherwise in respect of the premises.
Section 14.11
Trustee Not Bound to Act on
Trust’s Request
Except as otherwise specifically
provided in this Indenture, the Trustee shall not be bound to act in accordance
with any direction or request of the Corporation until a duly authenticated copy
of the instrument or resolution containing such direction or request shall have
been delivered to the Trustee, and the Trustee shall be empowered to act upon
any such copy purporting to be authenticated and believed by the Trustee to be
genuine.
Section 14.12
Conditions Precedent to
Trustee’s Obligations to Act Hereunder
(1) The obligation of the
Trustee to commence or continue any act, action or proceeding for the purpose of
enforcing the rights of the Trustee and of the Debentureholders hereunder shall
be conditional upon the Debentureholders furnishing when required by notice in
writing by the Trustee, sufficient funds to commence or continue such act,
action or proceeding and indemnity reasonably satisfactory to the Trustee to
protect and hold harmless the Trustee against the costs, charges and expenses
and liabilities to be incurred thereby and any loss and damage it may suffer by
reason thereof.
(2) None of the provisions
contained in this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers.
(3) The Trustee may, before
commencing or at any time during the continuance of any such act, action or
proceeding require the Debentureholders at whose instance it is acting to
deposit with the Trustee the Debentures held by them for which Debentures the
Trustee shall issue receipts.
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Section 14.13
Authority to Carry on Business
The Trustee represents to the
Corporation that at the date of execution and delivery by it of this Indenture
it is authorized to carry on the business of a trust company in each of the
provinces and territories of Canada but if, notwithstanding the provisions of
this Section 14.13, it ceases to be so authorized to carry on business, the
validity and enforceability of this Indenture and the securities issued
hereunder shall not be affected in any manner whatsoever by reason only of such
event but the Trustee shall, within 90 days after ceasing to be authorized to
carry on the business of a trust company in any of the provinces of Canada,
either become so authorized or resign in the manner and with the effect
specified in Section 14.1.
Section 14.14
Compensation and Indemnity
(1) The Corporation shall
pay to the Trustee from time to time compensation for its services hereunder as
agreed separately by the Corporation and the Trustee, and shall pay or reimburse
the Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in the administration or execution of
its duties under this Indenture (including the reasonable and documented
compensation and disbursements of its Counsel and all other advisers and
assistants not regularly in its employ), both before any default hereunder and
thereafter until all duties of the Trustee under this Indenture shall be finally
and fully performed. Any fees and expenses of the trustee in connection herewith
shall be paid by the Corporation within 30 days of issuance of an invoice
therefor and, if not so paid, shall bear interest at a rate per annum to the
then-current rate of interest charged by the Trustee to its corporate clients.
The Trustee’s compensation shall not be limited by any law on compensation of a
trustee of an express trust.
(2) The Corporation hereby
indemnifies and holds the Trustee and its affiliates, their successors and
assigns, as well as its and their respective directors, officers, employees and
agents, harmless from and against any and all claims, demands, assessments,
interest, penalties, actions, suits, proceedings, liabilities, losses, damages,
costs and expenses, including, without limiting the foregoing, expert,
consultant and counsel fees and disbursements on a solicitor and client basis,
arising from or in connection with any actions or omissions that the Trustee or
they take pursuant to this Indenture, provided that any such action or omission
is without gross negligence, bad faith or wilful misconduct or is taken on
advice and instructions given to the Trustee or them by the Corporation, or the
Corporation’s representatives, including the Corporation’s legal counsel, or
counsel consulted by the Trustee or them. This indemnity shall survive the
resignation or removal of the Trustee and the termination or discharge of this
Indenture.
(3) Notwithstanding any
other provision of this Indenture, the Trustee shall not be liable for any (i)
breach by any other party of the Applicable Securities Legislation, (ii) lost
profits or (iii) punitive, consequential or special damages of any Person.
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Section 14.15
Acceptance of Trust
The Trustee hereby accepts the
trusts in this Indenture declared and provided for and agrees to perform the
same upon the terms and conditions herein set forth and to hold all rights,
privileges and benefits conferred hereby and by law in trust for the various
persons who shall from time to time be Debentureholders, subject to all the
terms and conditions herein set forth.
Section 14.16
Third Party Interests
Each party to this Indenture (in
this paragraph referred to as a “representing party”) hereby represents to the
Trustee that any account to be opened by, or interest to be held by, the Trustee
in connection with this Indenture, for or to the credit of such representing
party, either (i) is not intended to be used by or on behalf of any third party;
or (ii) is intended to be used by or on behalf of a third party, in which case
such representing party hereby agrees to complete, execute and deliver forthwith
to the Trustee a declaration, in the Trustee’s prescribed form or in such other
form as may be satisfactory to it, as to the particulars of such third party.
Section 14.17
Anti-Money Laundering
The Trustee shall retain the
right not to act and shall not be liable for refusing to act if, due to a lack
of information or for any other reason whatsoever, the Trustee, in its sole
judgment, acting reasonably, determines that such act might cause it to be in
noncompliance with any applicable anti-money laundering or anti-terrorist or
economic sanctions legislation, regulation or guideline. Further, should the
Trustee, in its sole judgment, acting reasonably, determine at any time that its
acting under this Indenture has resulted in its being in non-compliance with any
applicable anti-money laundering or anti-terrorist or economic sanctions
legislation, regulation or guideline, then it shall have the right to resign on
10 days’ prior written notice sent to the Corporation provided that (i) the
Trustee’s written notice shall describe the circumstances of such
non-compliance; and (ii) if such circumstances are rectified to the Trustee’s
satisfaction within such 10-day period, then such resignation shall not be
effective.
Section 14.18
Privacy Laws
The Corporation acknowledges that
the Trustee may, in the course of providing services hereunder, collect or
receive financial and other personal information about such parties and/or their
representatives, as individuals, or about other individuals related to the
subject matter hereof, and use such information for the following purposes:
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(a)
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to provide the services required under this Indenture and
other services that may be requested from time to time;
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(b)
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to help the Trustee manage its servicing relationships
with such individuals;
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(c)
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to meet the Trustee’s legal and regulatory requirements;
and
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(d)
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if Social Insurance Numbers are collected by the Trustee,
to perform tax reporting and to assist in verification of an individual’s
identity for security purposes.
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Each party acknowledges and
agrees that the Trustee may receive, collect, use and disclose personal
information provided to it or acquired by it in the course of this Indenture for
the purposes described above and, generally, in the manner and on the terms
described in its Privacy Code, which the Trustee shall make available on its
website,
www.computershare.com
, or upon request, including revisions
thereto. The Trustee may transfer personal information to other companies in or
outside of Canada that provide data processing and storage or other support in
order to facilitate the services it provides.
Further, each party agrees that
it shall not provide or cause to be provided to the Trustee any personal
information relating to an individual who is not a party to this Indenture
unless that party has assured itself that such individual understands and has
consented to the aforementioned uses and disclosures.
Section 14.19
Force Majeure
Neither party shall be liable to
the other, or held in breach of this Indenture, if prevented, hindered, or
delayed in the performance or observance of any provision contained herein by
reason of act of God, riots, terrorism, acts of war, epidemics, governmental
action or judicial order, earthquakes, or any other similar causes (including,
but not limited to, mechanical, electronic or communication interruptions,
disruptions or failures). Performance times under this Indenture shall be
extended for a period of time equivalent to the time lost because of any delay
that is excusable under this Section.
ARTICLE 15– SUPPLEMENTAL INDENTURES
Section 15.1
Supplemental Indentures
From time to time the Trustee
and, when authorized by a resolution of the directors of Corporation, the
Corporation, may, subject to the provisions hereof and subject to the prior
approval of the TSX, as need be, and they shall when required by this Indenture,
execute, acknowledge and deliver by their proper officers deeds or indentures
supplemental hereto which thereafter shall form part hereof, for any one or more
of the following purposes:
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(a)
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providing for the issuance of Additional Debentures under
this Indenture;
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(b)
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adding to the covenants of the Corporation herein
contained for the protection of the Debentureholders, or of the Debentures
of any series, or providing for events of default, in addition to those
herein specified;
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(c)
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making such provisions not inconsistent with this
Indenture as may be necessary or desirable with respect to matters or
questions arising hereunder, including the making of any modifications in
the form of the Debentures which do not affect the substance thereof and
which in the opinion of the Trustee relying on an opinion of Counsel will
not be prejudicial to the interests of the
Debentureholders;
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(d)
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evidencing the succession, or successive successions, of
others to the Corporation and the covenants of and obligations assumed by
any such successor in accordance with the provisions of this
Indenture;
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(e)
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giving effect to any Extraordinary Resolution passed as
provided in Article 12; and
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(f)
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for any other purpose not inconsistent with the terms of
this Indenture.
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Unless the supplemental indenture requires the consent or
concurrence of Debentureholders or the holders of a particular series of
Debentures, as the case may be, by Extraordinary Resolution, the consent or
concurrence of Debentureholders or the holders of a particular series of
Debentures, as the case may be, shall not be required in connection with the
execution, acknowledgement or delivery of a supplemental indenture. The
Corporation and the Trustee may amend any of the provisions of this Indenture
related to matters of United States law or the issuance of Debentures into the
United States in order to ensure that such issuances can be made in accordance
with applicable law in the United States without the consent or approval of the
Debentureholders. Further, the Corporation and the Trustee may without the
consent or concurrence of the Debentureholders or the holders of a particular
series of Debentures, as the case may be, by supplemental indenture or
otherwise, make any changes or corrections in this Indenture which it shall have
been advised by Counsel are required for the purpose of curing or correcting any
ambiguity or defective or inconsistent provisions or clerical omissions or
mistakes or manifest errors contained herein or in any indenture supplemental
hereto or any Written Direction of the Corporation provided for the issue of
Debentures, providing that in the opinion of the Trustee (relying upon an
opinion of Counsel) the rights of the Debentureholders are in no way prejudiced
thereby.
ARTICLE 16– EXECUTION AND FORMAL DATE
Section 16.1
Execution
This Indenture may be
simultaneously executed in several counterparts, each of which when so executed
shall be deemed to be an original and such counterparts together shall
constitute one and the same instrument.
Section 16.2
Formal Date
For the purpose of convenience
this Indenture may be referred to as bearing the formal date of March 9, 2018
irrespective of the actual date of execution hereof.
The parties have executed this Agreement.
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AURORA CANNABIS INC.
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By:
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“Terry Booth”
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Name:
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Terry Booth
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Title:
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Chief Executive Officer
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COMPUTERSHARE TRUST COMPANY
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OF CANADA
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By:
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“Jennifer Wong”
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Name:
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Jennifer Wong
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Title:
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Corporate Trust Officer
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By:
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“Jennifer Lesley Wong”
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Name:
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Jennifer Lesley Wong
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Title:
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Associate Trust Officer
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Schedule A – Form of Debenture
[INITIAL DEBENTURES LEGEND]
[U.S. LEGEND (RULE 506) – TO BE INCLUDED ON ALL INITIAL
DEBENTURES ISSUED TO U.S. PERSONS OR IN THE UNITED STATES PURSUANT TO RULE 506]
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT
BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
“U.S. SECURITIES ACT”), OR THE LAWS OF ANY STATE OF THE UNITED STATES. THE
HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF AURORA
CANNABIS INC. (THE “CORPORATION”) THAT SUCH SECURITIES MAY BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (A) TO THE
CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF
REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE
LOCAL LAWS AND REGULATIONS, IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION
UNDER THE U.S. SECURITIES ACT PROVIDED BY (i) RULE 144 THEREUNDER, IF AVAILABLE,
OR RULE 144A THEREUNDER, IF AVAILABLE, AND, IN BOTH CASES, IN ACCORDANCE WITH
APPLICABLE U.S. STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT
REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE U.S. STATE
SECURITIES LAWS, AND, IN THE CASE OF (C)(i) OR (D) ABOVE, AFTER THE SELLER
FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE CORPORATION AND THE TRUSTEE OR
TRANSFER AGENT TO SUCH EFFECT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE
“GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN
CANADA.
A - 1
CUSIP 05156XAE8
ISIN CA05156XAE81
AURORA CANNABIS INC.
(A corporation incorporated under the laws of British
Columbia)
5.0% UNSECURED CONVERTIBLE SUBORDINATED DEBENTURE
DUE MARCH 9, 2020
Aurora Cannabis Inc.
(the “
Corporation
”) for
value received hereby acknowledges itself indebted and, subject to the
provisions of the Debenture Indenture (the “
Indenture
”) dated as of March
9, 2018 between the Corporation and Computershare Trust Company of Canada (the
“
Trustee
”), promises to pay to the registered holder hereof on March 9,
2020 or on such earlier date as the principal amount hereof may become due in
accordance with the provisions of the Indenture (any such date, the “
Maturity
Date
”) the principal amount hereof in lawful money of Canada on presentation
and surrender of this Initial Debenture at the main branch of the Trustee in
Vancouver, British Columbia in accordance with the terms of the Indenture and,
subject as hereinafter provided, to pay interest on the principal amount hereof
from, and including, the date hereof, or from the last Interest Payment Date to
which interest shall have been paid or made available for payment hereon,
whichever is later, at the rate of 5.0% per annum (based on a year of 360 days
comprised of twelve 30-day months), in like money, in arrears in equal (with the
exception of the first interest payment which will include interest from March
9, 2018, as set forth below, and semi-annual instalments (less any tax required
by law to be deducted) on June 30 and December 31 in each year commencing on
June 30, 2018 and the last payment (representing interest payable from the last
Interest Payment Date to, but excluding, the Maturity Date)
to fall due
on the Maturity Date and, should the Corporation at any time make default in the
payment of any principal, premium, if any, or interest, to pay interest on the
amount in default at the same rate, in like money and on the same dates. For
certainty, the first interest payment will include interest accrued from March
9, 2018 to June 30, 2018, which will be equal to $15.69 for each $1,000
principal amount of the Initial Debentures.
This Initial Debenture is one of
the 5.0% Unsecured Convertible Debentures (referred to herein as the “
Initial
Debentures
”) of the Corporation issued or issuable in one or more series
under the provisions of the Indenture. The Initial Debentures authorized for
issue immediately are limited to an aggregate principal amount of $230,000,000
in lawful money of Canada. Reference is hereby expressly made to the Indenture
for a description of the terms and conditions upon which the Initial Debentures
are or are to be issued and held and the rights and remedies of the holders of
the Initial Debentures and of the Corporation and of the Trustee, all to the
same effect as if the provisions of the Indenture were herein set forth to all
of which provisions the holder of this Initial Debenture by acceptance hereof
assents.
A - 2
The Initial Debentures are
issuable only in denominations of $1,000 and integral multiples thereof. Upon
compliance with the provisions of the Indenture, Debentures of any denomination
may be exchanged for an equal aggregate principal amount of Debentures in any
other authorized denomination or denominations.
Any part, being $1,000 or an
integral multiple thereof, of the principal of this Initial Debenture, provided
that the principal amount of this Initial Debenture is in a denomination in
excess of $1,000, is convertible, at the option of the holder hereof, upon
surrender of this Initial Debenture at the principal office of the Trustee in
Vancouver, British Columbia, at any time prior to the close of business on the
Maturity Date or, if called for repurchase pursuant to a Change of Control (as
defined in the Indenture) on the Business Day immediately prior to the payment
date, into common shares of the Corporation (the “
Common Shares
”)
(without adjustment for interest accrued hereon or for dividends or
distributions on Common Shares issuable upon conversion) at a conversion price
of $13.05 (the “
Conversion Price
”) per Common Share, being a rate of
approximately 76.6284 Common Shares for each $1,000 principal amount of Initial
Debentures, all subject to the terms and conditions and in the manner set forth
in the Indenture. No Initial Debentures may be converted during the five
Business Days preceding each of June 30 and December 31 in each year, commencing
June 30, 2018, as the registers of the Trustee will be closed during such
periods. The Indenture makes provision for the adjustment of the Conversion
Price in the events therein specified. No fractional Common Shares will be
issued on any conversion but in lieu thereof, the Corporation will satisfy such
fractional interest by a cash payment equal to the market price of such
fractional interest determined in accordance with the Indenture. Holders
converting their Debentures will receive accrued and unpaid interest thereon. If
a Debenture is surrendered for conversion on an Interest Payment Date or during
the five preceding Business Days, the person or persons entitled to receive
Common Shares in respect of the Debentures so surrendered for conversion shall
not become the holder or holders of record of such Common Shares until the
Business Day following such Interest Payment Date and, for clarity, any interest
payable on such Debentures will be for the account of the holder of record of
such Debentures at the close of business on the relevant record date.
Subject to the provisions in the
Indenture and without further action on the part of the Registered Holder, if
prior to the Maturity Date, the volume weighted average price of the Common
Shares on the Toronto Stock Exchange (or such other Canadian stock exchange on
which the Common Shares are listed for trading) for 10 consecutive trading days
exceeds $17.00, as adjusted in accordance with the Indenture, the Corporation
may deliver a written notice (the “
Forced Conversion Notice
”) to the
Trustee in accordance with the Indenture and to the Registered Holder by way of
news release to cause the Registered Holder to convert all but not less than the
principal amount of the Debentures (less any tax required by law to be deducted
or withheld) into that number of Common Shares of the Corporation equal to the
principal amount of the Debentures (less any tax required by law to be deducted
or withheld) to the date of such forced conversion. The Corporation shall pay
all accrued and unpaid interest in cash. The effective date for the forced
conversion (the “
Forced Conversion Date
”) shall be: (a) the date
stipulated in the Forced Conversion Notice; or (b) if no date is so stipulated
in the Forced Conversion Notice, the date that is 30 days following the date of
such Forced Conversion Notice, and upon such Forced Conversion Date: (i) all of
the principal amount of the Debentures (less any tax required by law to be
deducted or withheld) shall be deemed to be converted into Common Shares at the then applicable Conversion Price; and (ii)
the registered holder shall be entered in the books of the Corporation as at the
Forced Conversion Date as the holder of the number of Common Shares, as
applicable, into which the Debentures are convertible. In the event that the
Corporation delivers a Forced Conversion Notice, upon surrender of this Initial
Debenture to the Trustee, the Corporation shall deliver certificates for the
Common Shares into which the Debentures have been converted.
A - 3
Not less than 30 days prior to
the consummation of: (i) any event as a result of or following which any person,
or persons acting jointly or in concert directly or indirectly within the
meaning of applicable securities legislation, beneficially owns or exercises
control or direction over an aggregate of more than 50% of the outstanding
Common Shares; or (ii) the sale or other transfer of all or substantially all of
the consolidated assets of the Corporation, unless the holders of voting
securities of the Corporation immediately prior to such sale, merger,
reorganization or other similar transaction hold securities representing 50% or
more of the voting control or direction in the Corporation or the successor
entity upon completion of such merged, reorganized or other continuing entity
(collectively, a “
Change of Control
”), the Corporation shall notify the
holders of the Initial Debentures of the Change of Control, and the holders of
the Initial Debentures shall, in their sole discretion, have the right to
require the Corporation to, either: (i) purchase the Debentures at 104% of the
principal amount thereof plus unpaid interest to the Maturity Date; or (ii)
convert the Debentures at the Conversion Price (the “
Change of Control
Offer
”). If 90% or more of the principal amount of all Debentures
outstanding on the date the Corporation provides notice of a Change of Control
to the Trustee have been tendered for purchase pursuant to the Change of Control
Offer, the Corporation has the right to redeem all the remaining outstanding
Initial Debentures on the same date and at the same price.
If an offer is made for the Initial Debentures which is a
take-over bid for the Initial Debentures within the meaning of applicable
Canadian securities laws and 90% or more of the principal amount of all the
Initial Debentures (other than Initial Debentures held at the date of the offer
by or on behalf of the Offeror, associates or affiliates of the Offeror or
anyone acting jointly or in concert with the Offeror) are taken up and paid for
by the Offeror, the Offeror will be entitled to acquire the Initial Debentures
of those holders who did not accept the offer on the same terms as the Offeror
acquired the first 90% of the principal amount of the Initial Debentures.
The indebtedness evidenced by this Initial Debenture, and by
all other Initial Debentures now or hereafter certified and delivered under the
Indenture, is a direct unsecured obligation of the Corporation, and is
subordinated in right of payment, to the extent and in the manner provided in
the Indenture, to the prior payment in full of all Secured Indebtedness, whether
outstanding at the date of the Indenture or thereafter created, incurred,
assumed or guaranteed.
The Indenture contains provisions binding upon all holders of
Initial Debentures outstanding thereunder (or in certain circumstances specific
series of Initial Debentures) resolutions passed at meetings of such holders
held in accordance with such provisions and instruments signed by the holders of
a specified majority of Initial Debentures outstanding (or specific series),
which resolutions or instruments may have the effect of amending the terms of
this Initial Debenture or the Indenture.
A - 4
The Indenture contains provisions disclaiming any personal
liability on the part of holders of Common Shares and officers, directors and
employees of the Corporation in respect of any obligation or claim arising out
of the Indenture or this Initial Debenture.
This Initial Debenture may only be transferred, upon compliance
with the conditions prescribed in the Indenture, in one of the registers to be
kept at the principal office of the Trustee in the City of Vancouver and in such
other place or places and/or by such other registrars (if any) as the
Corporation with the approval of the Trustee may designate. No transfer of this
Initial Debenture shall be valid unless made on the register by the registered
holder hereof or his executors or administrators or other legal representatives,
or his or their attorney duly appointed by an instrument in form and substance
satisfactory to the Trustee or other registrar, and upon compliance with such
reasonable requirements as the Trustee and/or other registrar may prescribe and
upon surrender of this Initial Debenture for cancellation. Thereupon a new
Initial Debenture or Initial Debentures in the same aggregate principal amount
shall be issued to the transferee in exchange hereof.
This Initial Debenture shall not become obligatory for any
purpose until it shall have been certified by the Trustee under the Indenture.
Capitalized words or expressions used in this Initial Debenture
shall, unless otherwise defined herein, have the meaning ascribed thereto in the
Indenture. In the event of any inconsistency between the terms of this Initial
Debenture and the Indenture, the terms of the Indenture shall govern.
IN WITNESS WHEREOF AURORA
CANNABIS INC.
has caused this Debenture to be signed by its authorized
representatives as of March 9, 2018.
TRUSTEE’S CERTIFICATE
This Initial Debenture is one of
the 5.0% Unsecured Convertible Debentures due March 9, 2020 referred to in the
Indenture within mentioned.
Dated:
A - 5
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COMPUTERSHARE
TRUST
COMPANY
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OF CANADA
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By:
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Name:
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Title:
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REGISTRATION PANEL
(No writing hereon except by Trustee or other registrar)
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Date of Registration
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In Whose Name Registered
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Signature of Trustee or Registrar
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A - 6
FORM OF ASSIGNMENT
FOR VALUE RECEIVED
, the undersigned hereby sells,
assigns and transfers unto
_____________________
, whose address and
social insurance number, if applicable, are set forth below, this Initial
Debenture (or $_______________________ principal amount hereof
*
) of
AURORA CANNABIS INC.
standing in the name(s) of the undersigned in the
register maintained by the Corporation with respect to such Initial Debenture
and does hereby irrevocably authorize and direct the Trustee to transfer such
Initial Debenture in such register, with full power of substitution in the
premises.
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Dated:
____________________________________________________________________________________________________________________________________________
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Address of Transferee:
________________________________________________________________________________________________________________________________
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(Street Address, City, Province and Postal Code)
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Social Insurance Number of Transferee, if applicable:
__________________________________________________________________________________________________________
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*If less than the full principal amount of the within Initial
Debenture is to be transferred, indicate in the space provided the principal
amount (which must be $1,000 or an integral multiple thereof, unless you hold an
Initial Debenture in a non-integral multiple of $1,000 by reason of your having
exercised your right to exchange upon the making of a Change of Control Offer,
in which case such Initial Debenture is transferable only in its entirety) to be
transferred.
[ ]
Check if the
undersigned Transferor is a Qualified Institutional Buyer that acquired Initial
Debentures under the Offering as “restricted securities” which, pursuant to
Section 2.15(3)
of the Indenture, have been included in the Unrestricted
Debenture against execution and delivery by the Transferor of a U.S. Purchaser
Letter substantially as set forth in Schedule F to the Indenture. IF THIS BOX IS
CHECKED, THE TRANSFEROR MUST COMPLETE AND DELIVER A CERTIFICATE OF TRANSFER
SUBSTANTIALLY AS SET FORTH IN SCHEDULE D TO THE INDENTURE.
REASON FOR TRANSFER – For US Residents only (where the
individual(s) or
corporation receiving the securities is a
US resident). Please select only one (see
instructions
below).
|
[ ] Gift
|
[ ] Estate
|
[ ] Private Sale
|
[ ] Other (or no change in
ownership)
|
|
Date of Event
(Date of gift, death or sale):
|
Value per Debenture
on the date of
event:
|
|
|
A - 7
|
1.
|
The signature(s) of the transferor(s) must correspond
with the name(s) as written upon the face of this certificate(s), in every
particular, without alteration or enlargement, or any change whatsoever.
The signature(s) on this form must be guaranteed by an authorized officer
of Royal Bank of Canada, Scotia Bank or TD Canada Trust whose sample
signature(s) are on file with the transfer agent, or by a member of an
acceptable Medallion Signature Guarantee Program (STAMP, SEMP, NYSE, MSP).
Notarized or witnessed signatures are not acceptable as guaranteed
signatures. The Guarantor must affix a stamp bearing the actual words:
“SIGNATURE GUARANTEED”, “MEDALLION GUARANTEED” OR “SIGNATURE &
AUTHORITY TO SIGN GUARANTEE”, all in accordance with the transfer agent’s
then current guidelines and requirements at the time of transfer. For
corporate holders, corporate signing resolutions, including certificate of
incumbency, will also be required to accompany the transfer unless there
is a “SIGNATURE & AUTHORITY TO SIGN GUARANTEE” Stamp affixed to the
Form of Transfer obtained from an authorized officer of the Royal Bank of
Canada, Scotia Bank or TD Canada Trust or a “MEDALLION GUARANTEED” Stamp
affixed to the Form of Transfer, with the correct prefix covering the face
value of the certificate.
|
|
|
|
|
2.
|
The registered holder of this Initial Debenture is
responsible for the payment of any documentary, stamp or other transfer
taxes that may be payable in respect of the transfer of this
Debenture.
|
|
Signature of Guarantor:
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|
|
|
|
|
|
|
|
|
|
|
Authorized Officer
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Signature of transferring registered holder
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Name of Institution
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A - 8
Schedule B – Form of Notice of Conversion
CONVERSION NOTICE
|
To:
|
AURORA CANNABIS INC.
|
|
|
|
|
Note:
|
All capitalized terms used herein have the
meaning ascribed thereto in the Indenture mentioned below, unless
otherwise indicated.
|
The undersigned registered holder
of 5.0% Unsecured Convertible Debentures irrevocably elects to convert such
Debentures (or $• principal amount thereof
*
) in accordance with the
terms of the Indenture referred to in such Debentures and tenders herewith the
Debentures and directs that the Common Shares of Aurora Cannabis Inc. issuable
upon a conversion be issued and delivered to the person indicated below. (If
Common Shares are to be issued in the name of a person other than the holder,
all requisite transfer taxes must be tendered by the undersigned and the Form of
Assignment must be completed and delivered in respect of such other person).
[ ]
Check if
the undersigned registered holder is a Qualified Institutional Buyer that
acquired Initial Debentures under the Offering as “restricted securities” which,
pursuant to Section 2.15(3) of the Indenture, have been included in the
Unrestricted Debenture against execution and delivery by the Transferor of a
U.S. Purchaser Letter substantially as set forth in Schedule F to the Indenture.
IF THIS BOX IS CHECKED, THE UNDERSIGNED REGISTERED HOLDER ACKNOWLEDGES AND
AGREES THAT IT CONTINUES TO BE BOUND BY THE TERMS AND CONDITIONS SET FORTH IN
THE U.S. PURCHASER LETTER.
|
Dated:
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|
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|
|
|
|
|
Signature of Registered Holder)
|
|
*
|
If less than the full principal amount of the Debentures,
indicate in the space provided the principal amount (which must be $1,000
or integral multiples thereof).
|
|
|
|
|
NOTE:
|
If Common Shares are to be issued in the name of a person
other than the holder, the signature must be guaranteed by a chartered
bank, a trust company or by a member of an acceptable Medallion Guarantee
Program. The Guarantor must affix a stamp bearing the actual words:
“SIGNATURE GUARANTEED”.
|
B - 1
(Print name in which Common Shares are to be issued, delivered
and registered)
|
Name:
__________________________________________________________________________________________________________________________________________________
|
|
|
|
_________________________________________________________________________________________________________________________________________________________
|
|
Address
|
|
_________________________________________________________________________________________________________________________________________________________
|
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(City, Province and Postal Code)
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Name of guarantor:
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Authorized signature:
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|
B - 2
Schedule C – Common Share Legend
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
“
U.S. SECURITIES ACT
”), OR THE LAWS OF ANY STATE OF THE UNITED STATES.
THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF
AURORA CANNABIS INC. (THE “
CORPORATION
”) THAT SUCH SECURITIES MAY BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY
(A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE
904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH
APPLICABLE LOCAL LAWS AND REGULATIONS, IN COMPLIANCE WITH THE EXEMPTION FROM
REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY (i) RULE 144 THEREUNDER,
IF AVAILABLE, OR (ii) RULE 144A THEREUNDER, IF AVAILABLE, AND, IN BOTH CASES, IN
ACCORDANCE WITH APPLICABLE U.S. STATE SECURITIES LAWS, OR (D) IN A TRANSACTION
THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY
APPLICABLE U.S. STATE SECURITIES LAWS, AND, IN THE CASE OF (C)(i) OR (D) ABOVE,
AFTER THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF
RECOGNIZED STANDING IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE
CORPORATION AND THE TRUSTEE OR TRANSFER AGENT TO SUCH EFFECT. DELIVERY OF THIS
CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON
STOCK EXCHANGES IN CANADA.
C - 1
Schedule D –Form of Certificate of Transfer
|
Aurora Cannabis Inc.
|
|
Suite 1500, 1199 West Hastings Street
|
|
Vancouver, British Columbia
|
|
V6E 3T5
|
|
Attention: Terry Booth
|
|
|
|
|
|
Computershare Trust Company of Canada
|
|
510 Burrard Street, 2
nd
Floor
|
|
Vancouver, British Columbia V6C 3B9
|
Re: Transfer of Debentures
Reference is hereby made to the
Indenture, dated as of March 9, 2018 (the “
Indenture
”), between Aurora
Cannabis Inc., as issuer (the “
Corporation
”), and Computershare Trust
Company of Canada, as trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.
____________ (the
“
Transferor
”) owns and proposes to transfer the Debentures or interests
in such Debentures specified in Annex A hereto, in the principal amount of
$____________ (the “
Transfer
”), to____________ (the “
Transferee
”),
as further specified in Annex A hereto. In connection with the Transfer, the
Transferor hereby certifies that
[CHECK ALL THAT APPLY]
1.
[ ]
Check if Transferee will take delivery of an interest in a
Restricted Uncertificated Debenture or a Restricted Physical Debenture pursuant
to Rule 144A.
The Transfer is being effected pursuant to and in accordance
with Rule 144A (“
Rule 144A
”) under the Securities Act of 1933, as amended
(the “
Securities Act
”), and, accordingly, the Transferor hereby further
certifies that the interest or physical Debenture is being transferred to a
Person that the Transferor reasonably believes is purchasing the interest or
physical Debenture for its own account, or for one or more accounts with respect
to which such Person exercises sole investment discretion, and such Person and
each such account is a “qualified institutional buyer” within the meaning of
Rule 144A in a transaction meeting the requirements of Rule 144A, and such
Transfer is in compliance with any applicable blue sky securities laws of any
state of the United States. Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture, the transferred beneficial interest
or physical Debenture will be subject to the restrictions on transfer enumerated
in the U.S. Legend.
2.
[ ]
Check if Transferee will take delivery of an interest in an
Unrestricted Uncertificated Debenture or an Unrestricted Physical Debenture
pursuant to Regulation S.
The Transfer is being effected pursuant to and in
accordance with Rule 904 of Regulation S under the Securities Act and,
accordingly, the Transferor hereby further certifies that (i) the Transferor is
not an “affiliate” of the Corporation as that term is defined in Rule 405 under
the Securities Act, (ii) the offer was not made, and the
Transfer is not being made, to a Person in the United States and (x) at the time
the buy order was originated, the Transferee was outside the United States or
such Transferor and any Person acting on its behalf reasonably believed and
believes that the Transferee was outside the United States or (y) the
transaction was executed in, on or through the facilities of a designated
offshore securities market and neither such Transferor nor any Person acting on
its behalf knows that the transaction was prearranged with a buyer in the United
States, (iii) neither the Transferor nor any affiliate of the Transferor nor any
Person acting on any of their behalf has engaged or will engage in any directed
selling efforts in the United States in connection with the Transfer, (iv) the
Transfer is
bona fide
and not for the purpose of “washing off’ the resale
restrictions imposed because the securities are “restricted securities” (as that
term is defined in Rule 144(a)(3) under the Securities Act), (v) the Transferor
does not intend to replace such securities with fungible unrestricted securities
and (vi) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act. Terms used in this section have
the meaning given to them by Regulation S under the Securities Act.
D - 1
3.
[ ]
Check and complete if Transferee will take delivery of an
interest in an Unrestricted Uncertificated Debenture or an Unrestricted Physical
Debenture pursuant to any provision of the Securities Act other than Regulation
S.
(a) [
]
Check if Transfer is pursuant to Rule 144
. (i) The Transfer is being
effected pursuant to and in accordance with Rule 144 under the Securities Act
(“
Rule 144
”) and in compliance with the transfer restrictions contained
in the Indenture and any applicable blue sky securities laws of any state of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the U.S. Legend are not required to be imposed on the beneficial interest of
the Transferor in order to maintain compliance with the Securities Act.
(b)
[ ]
Check if Transfer is Pursuant to Other Exemption
.
(i) The Transfer is being effected pursuant to and in compliance with an
exemption from the registration requirements of the Securities Act other than
Rule 144A, Regulation S and Rule 144, and in compliance with the transfer
restrictions contained in the Indenture and any applicable blue sky securities
laws of any State of the United States and (ii) the restrictions on transfer
contained in the Indenture and the U.S. Legend are not required to be imposed on
the beneficial interest of the Transferor in order to maintain compliance with
the Securities Act.
In connection with requests for
transfers pursuant to item 3(a) or Rule 144, the Transferor must deliver to the
Corporation and the Trustee an opinion of counsel of recognized standing in form
and substance satisfactory to the Trustee and reasonably satisfactory to the
Corporation, to the effect that the legend is no longer required under
applicable requirements of the Securities Act or state securities laws.
D - 2
This certificate and the
statements contained herein are made for your benefit and the benefit of the
Corporation.
|
|
|
|
|
[Insert Name of Transferor]
|
|
|
|
|
By:
|
|
|
|
Name: •
|
|
|
Title: •
|
D - 3
ANNEX A TO CERTIFICATE OF TRANSFER
|
1.
|
The Transferor owns and proposes to transfer the
following:
|
[CHECK ONE OF (a) OR (b) OR (c) OR (d)]
|
|
(a)
|
[ ] a Restricted Uncertificated
Debenture CUSIP
|
|
|
|
|
|
|
(b)
|
[ ] an Unrestricted Uncertificated
Debenture CUSIP
|
|
|
|
|
|
|
(c)
|
[ ] a Restricted Physical Debenture
|
|
|
|
|
|
|
(d)
|
[ ] an Unrestricted Physical
Debenture
|
after the Transfer the Transferee will hold:
[CHECK ONE OF (e) OR (f) OR (g) OR (h)]
|
|
(e)
|
[ ]
a Restricted
Uncertificated Debenture CUSIP
|
|
|
|
|
|
|
(f)
|
[ ] an Unrestricted Uncertificated
Debenture CUSIP
|
|
|
|
|
|
|
(g)
|
[ ] a Restricted Physical Debenture
|
|
|
|
|
|
|
(h)
|
[ ] an Unrestricted Physical
Debenture
|
in accordance with the terms of the Indenture.
D - 4
Schedule E –Form of Certificate Of Exchange
|
Aurora Cannabis Inc.
|
|
Suite 1500, 1199 West Hastings Street
|
|
Vancouver, British Columbia
|
|
V6E 3T5
|
|
Attention: Terry Booth
|
|
|
|
|
|
Computershare Trust Company of Canada
|
|
510 Burrard Street, 2
nd
Floor
|
|
Vancouver, British Columbia V6C 3B9
|
Re: Exchange of Debentures
(
CUSIP
♦
)
Reference is hereby made to the
Indenture, dated as of March 9, 2018 (the “
Indenture
”), between Aurora
Cannabis Inc., as issuer (the “
Corporation
”), and Computershare Trust
Company of Canada, as trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.
____________ (the
“
Owner
”) owns and proposes to exchange the Debentures or interests in
such Debentures specified herein, in the principal amount of $____________ (the
“
Exchange
”). In connection with the Exchange, the Owner hereby certifies
that:
1.
Exchange of Restricted Physical Debentures or Restricted Uncertificated
Debenture for Unrestricted Physical Debentures or Unrestricted Uncertificated
Debenture
(a) [
]
Check if Exchange is a Restricted Uncertificated Debenture to an
Unrestricted Uncertificated Debenture.
In connection with the Exchange of
the Restricted Uncertificated Debenture for an Unrestricted Uncertificated
Debenture in an equal principal amount, the Owner hereby certifies (i) the
interest is being acquired for the Owner’s own account without transfer, (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to the Uncertificated Debentures and pursuant to and in accordance
with the Securities Act of 1933, as amended (the “
Securities Act
”), (iii)
the restrictions on transfer contained in the Indenture and the U.S. Legend are
not required to be imposed on the beneficial interest of the Owner in order to
maintain compliance with the Securities Act and (iv) the interest in an
Unrestricted Uncertificated Debenture is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
(b)
[ ]
Check if Exchange is from Restricted Physical Debenture to
Unrestricted Physical Debenture
. In connection with the Owner’s Exchange of
a Restricted Physical Debenture for an Unrestricted Physical Debenture, the
Owner hereby certifies (i) the Unrestricted Physical Debenture is being acquired
for the Owner’s own account without transfer, such Exchange has been effected in
compliance with the transfer restrictions applicable to Restricted Physical Debentures and pursuant to and in
accordance with the Securities Act, the restrictions on transfer contained in
the Indenture and the U.S. Legend are not required to be imposed on the Physical
Debenture of the Owner in order to maintain compliance with the Securities Act
and (iv) the Unrestricted Physical Debenture is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.
E - 1
In connection with requests for
Exchanges pursuant to item 1(a) or 1(b), the Owner must deliver to the
Corporation and the Trustee an opinion of counsel of recognized standing in form
and substance satisfactory to the Trustee and reasonably satisfactory to the
Corporation, to the effect that the legend is no longer required under
applicable requirements of the Securities Act or state securities laws.
This certificate and the
statements contained herein are made for your benefit and the benefit of the
Corporation.
|
|
|
|
|
[Insert Name of Transferor]
|
|
|
|
|
By:
|
|
|
|
Name: •
|
|
|
Title: •
|
E - 2
Schedule F – Form of U.S. Purchaser Letter
|
Aurora Cannabis Inc.
|
|
Suite 1500, 1199 West Hastings Street
|
|
Vancouver, British Columbia V6E 3T5
|
|
Canada
|
Ladies and Gentlemen:
In connection with its agreement to purchase debentures (the
“
Debentures
”) of Aurora Cannabis Inc. (the “
Corporation
”), the
undersigned purchaser acknowledges, represents to, warrants, covenants and
agrees with the Corporation, as follows:
|
|
1.
|
It is authorized to consummate the purchase of the
Debentures.
|
|
|
|
|
|
|
2.
|
It is a Qualified Institutional Buyer, purchasing the
Debentures for its own account or for the account or benefit of one or
more Qualified Institutional Buyers with respect to which it exercises
sole investment discretion for investment purposes only and not with a
view to any resale, distribution or other disposition of the Debentures or
the Common Shares in violation of United States federal or U.S. state
securities laws.
|
|
|
|
|
|
|
3.
|
It understands and acknowledges that none of the
Debentures or the Common Shares have been nor will be registered under the
U.S. Securities Act or the securities laws of any state of the United
States, and will, therefore, be “restricted securities” within the meaning
of Rule 144 under the U.S. Securities Act that will not be represented by
certificates that bear a U.S. restricted legend or identified by a
restricted CUSIP number, and that the offer and sale of the Debentures to
it will be made in reliance upon an exemption from registration available
for offers and sales to Qualified Institutional Buyers.
|
|
|
|
|
|
|
4.
|
It, alone or with the assistance of its professional
advisors, has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of its
investment in the Debentures or the Common Shares and is able, without
impairing its financial condition, to hold the Debentures or the Common
Shares for an indefinite period of time and to bear the economic risks,
and withstand a complete loss, of such investment.
|
|
|
|
|
|
|
5.
|
It acknowledges that it has not purchased the Debentures
as a result of any “general solicitation” or “general advertising” (as
those terms are used in Regulation D under the U.S. Securities Act),
including, but not limited to, any advertisements, articles, notices or
other communications published in any newspaper, magazine or similar media
or on the Internet or broadcast over radio, television or the Internet, or
any seminar or meeting whose attendees have been invited by general
solicitation or general advertising.
|
|
|
|
|
|
|
6.
|
In consideration for the receipt of unlegended
“restricted securities”, it agrees that if it decides to offer, sell,
pledge or otherwise transfer any of the Debentures or Common Shares, it
will not offer, sell, pledge or otherwise transfer such securities,
directly or indirectly, unless the transfer is: (i) to the Corporation,
(ii) outside the United States in accordance with the requirements of Rule
904 of Regulation S and in compliance with applicable local laws and
regulations, (iii) in compliance with an exemption from registration under
the U.S. Securities Act provided by (A) Rule 144 thereunder, if available,
or (B) Rule 144A, if available, and, in both cases, in accordance with
applicable U.S. state securities laws, or (iv) in another transaction that
does not require registration under the U.S. Securities Act or any
applicable U.S. state securities laws, and, in the case of (iii)(A) and
(iv) above, after it has furnished to the Corporation an opinion of
counsel of recognized standing in form and substance reasonably
satisfactory to the Corporation to such effect.
|
F - 1
|
|
7.
|
It acknowledges it has implemented, or shall immediately
implement, adequate internal procedures to be able to ensure compliance
with the transfer restrictions and, in particular, to ensure that the
Debentures and Common Shares shall be properly identified in its records
as “restricted securities” that are subject to such transfer restrictions
notwithstanding the absence of a U.S. restrictive legend.
|
|
|
|
|
|
|
8.
|
It understands and acknowledges that the Corporation is
not obligated to file and has no present intention of filing with the SEC
or with any U.S. state securities commission any registration statement in
respect of resales of any of the Debentures or Common Shares in the United
States.
|
|
|
|
|
|
|
9.
|
It understands and acknowledges that the Corporation (i)
is not obligated to remain a “foreign issuer” within the meaning of
Regulation S, (ii) may not, at the time of conversion of the Debentures
into Common Shares, or at any other time, be a foreign issuer, and (iii)
may engage in one or more transactions which could cause the Corporation
not to be a foreign issuer.
|
|
|
|
|
|
|
10.
|
It is aware that (i) purchasing, holding and disposing of
the Debentures or the Common Shares may have tax consequences under the
laws of Canada and the United States, and (ii) it is solely responsible
for determining the tax consequences applicable to its particular
circumstances and should consult its own tax advisors concerning
investment in the Debentures or the Common Shares.
|
|
|
|
|
|
|
11.
|
No agency, governmental authority, regulatory body, stock
exchange or other entity (including, without limitation, the SEC or any
U.S. state securities commission) has made any finding or determination as
to the merit of investment in, nor have any such agencies or governmental
authorities made any recommendation or endorsement with respect to, the
Debentures or the Common Shares.
|
|
|
|
|
|
|
12.
|
If required by applicable securities legislation,
regulatory policy or order or by any securities commission, stock exchange
or other regulatory authority, it will execute, deliver and file and
otherwise assist the Corporation in filing reports, questionnaires,
undertakings and other documents with respect to the issuance of the
Debentures or the Common Shares.
|
|
|
|
|
|
|
13.
|
It understands and acknowledges that it is making the
representations, warranties and agreements contained herein with the
intent that they may be relied upon by the Corporation in determining its
eligibility to purchase the Debentures and the Common Shares.
|
|
|
|
|
|
|
14.
|
(i) If it is acquiring any Debentures as a fiduciary or
agent for one or more investor accounts, it represents that it has full
power to make the representations, warranties and agreements contained
herein on behalf of each such account and that the representations,
warranties and agreements contained herein are true and correct and will
be binding upon each such account; or (ii) the undersigned is an officer
of the purchaser duly authorized to execute and deliver this letter on
behalf of the purchaser.
|
|
|
|
|
|
|
15.
|
It acknowledges and consents to the fact that the
Corporation may be required by applicable securities laws to provide the
securities regulators or other authorities pursuant to the
Proceeds of
Crime (Money Laundering) and Terrorist Financing Act
(Canada) with its
personal information; and, notwithstanding that it may be purchasing
securities as agent on behalf of an undisclosed principal, it agrees to
provide, on request, particulars as to the identity of such undisclosed
principal as may be required by the Corporation in order to comply with
the foregoing.
|
|
|
|
|
|
|
16.
|
It represents and warrants that (i) the funds
representing the purchase price which will be advanced by it will not
represent proceeds of crime for the purposes of the
United States
Uniting and Strengthening America by Providing Appropriate Tools Required
to Intercept and Obstruct Terrorism Act
(the “
PATRIOT Act
”),
and it acknowledges that the Corporation may in the future be required by
law to disclose its name and other information, on a confidential basis,
pursuant to the PATRIOT Act, and (b) no portion of the purchase price to be provided by it (i)
has been or will be derived from or related to any activity that is deemed
criminal under the laws of the United States of America or any other
jurisdiction, or (ii) is being tendered on behalf of a person or entity that has
not been identified to or by it; and it shall promptly notify the Corporation if
it discovers that any of such representations ceases to be true and provide the
Corporation with appropriate information in connection therewith.
|
F - 2
|
|
17.
|
It agrees that by accepting the Debentures it shall be
representing and warranting that the foregoing representations and
warranties are true and correct as at the closing date of the offering of
the Debentures and that they shall survive the purchase by it of the
Debentures and shall continue in full force and effect notwithstanding any
subsequent disposition by it of the Debentures. It irrevocably authorizes
the Corporation to produce this U.S. Purchaser Letter or a copy hereof to
any interested party in any administrative or legal proceedings or
official enquiry with respect to the matters set forth
herein.
|
The Corporation shall be entitled to rely on delivery of an
electronic mail or facsimile copy of this U.S. Purchaser Letter, and acceptance
by the Corporation of an electronic mail or facsimile copy of this U.S.
Purchaser Letter shall create a legal, valid and binding agreement between the
Corporation and the undersigned.
|
By:
|
|
|
|
|
|
|
Print Name of U.S. Purchaser
|
|
|
|
|
By:
|
|
|
|
|
|
|
Name:
|
|
|
Title:
|
F - 3
Aurora takes Control of Hempco, Increasing Ownership to
52.7%
TSX: ACB
TSXV: HEMP
EDMONTON and BURNABY, BC, May 15, 2018 /CNW/ - Aurora Cannabis
Inc. (the "Company" or "Aurora") (TSX: ACB) (OTCQX: ACBFF) (Frankfurt: 21P; WKN:
A1C4WM) and Hempco Food and Fiber Inc. ("Hempco") (TSX-V: HEMP) are pleased to
announce that, further to the Companies' press release of September 18, 2017,
Aurora has exercised its right under a private option agreement with Charles and
Angela Holmes. Pursuant to this agreement Aurora has purchased an aggregate of
10,754,942 additional Hempco Shares (50% from Charles Holmes, 50% from Angela
Holmes). Following the transaction, Aurora's ownership interest in Hempco now
stands at 52.7% (50.12% on a fully-diluted basis).
Management commentary
"Hempco plays an important role in our strategy to secure
access to low-cost raw material for the potential production of CBD extracts
once new legislation is in place allowing whole (hemp) plant utilization," said
Terry Booth, CEO. "Furthermore, this is a strategic partnership that also helps
us develops a broader portfolio of value added products for the health
supplements market. By taking control, we will be able to more closely integrate
Hempco's operations with our own and drive growth."
Diane Jang, CEO of Hempco, added, "Aurora provides us with a
large, financially strong and long-term stable shareholder, whose capabilities
and networks will enable Hempco to accelerate development. With our new Nisku
plant coming online, multiple distribution channel initiatives being
implemented, and new products coming to market, we are rapidly developing a
strong foundation for growth and expansion."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Enterprises Inc., is a
licensed producer of medical cannabis pursuant to Health Canada's Access to
Cannabis for Medical Purposes Regulations ("ACMPR"). The Company operates a
55,200 square foot, state-of-the-art production facility in Mountain View
County, Alberta, known as "Aurora Mountain", and a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Inc.
The Company's wholly-owned subsidiary CanniMed Therapeutics
Inc. ("CanniMed") is Canada's most experienced licensed producer of medical
cannabis, with over 20,000 kg per annum in funded capacity. CanniMed forms the
heart of Aurora's Medical Cannabis Centre of Excellence, aimed at product and
market development.
Aurora also owns Berlin-based Pedanios GmbH, the leading
wholesale importer, exporter, and distributor of medical cannabis in the
European Union. The Company owns 51% of Aurora Nordic, which will be
constructing a 1,000,000 square foot hybrid greenhouse in Odense, Denmark. The
Company offers further differentiation through its acquisition of BC Northern
Lights Ltd. and Urban Cultivator Inc., industry leaders, respectively, in the
production and sale of proprietary systems for the safe, efficient and
high-yield indoor cultivation of cannabis, and in state-of-the-art indoor
gardening appliances for the cultivation of organic microgreens, vegetables and
herbs in home and professional kitchens.
Aurora holds a 19.88% ownership interest in Liquor Stores N.A.,
("LIQ") who are developing a cannabis retail network in Western Canada. In
addition, the Company holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc, and has a strategic
investment in Hempco Food and Fiber Inc., with options to increase ownership
stake to over 50%. Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian producer The Green Organic Dutchman Ltd., with options
to increase to majority ownership.
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
About Hempco
For more than 12 years Hempco has been a trusted and respected
pioneer, innovator and provider of premier hemp-based foods. Hempco is committed
to developing hemp foods, hemp fiber and hemp nutraceuticals. Hempco is
expanding its processing ability to meet global demands in a 56,000 sq. ft.
facility located at Nisku, Alberta. Hempco's common shares trade on the TSX
Venture Exchange under the symbol "HEMP".
On behalf of the Boards of Directors,
|
AURORA CANNABIS INC.
|
HEMPCO FOOD AND FIBER INC.
|
|
Terry Booth
|
Diane Jang
|
|
CEO
|
CEO
|
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or
statements that certain events or conditions "may" or "will"
occur. These statements are only predictions. Various assumptions were used in
drawing the conclusions or making the projections contained in the
forward-looking statements throughout this news release, including the
assumptions that the Hempco shareholders will approve the creation of a new
control person and allow the private placement to proceed. Forward-looking
statements are based on the opinions and estimates of management at the date the
statements are made, and are subject to a variety of risks and uncertainties and
other factors that could cause actual events or results to differ materially
from those projected in the forward-looking statements. The Companies are under
no obligation, and expressly disclaim, any intention or obligation, to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as expressly required by applicable
law.
None of the TSX, the TSX Venture and their Regulation
Services Provider (as that term is defined in the policies of the Toronto Stock
Exchange and the TSX Venture Exchange) accepts responsibility for the adequacy
or accuracy of this release.
SOURCE Hempco Food and Fiber Inc.
View original content:http://www.newswire.ca/en/releases/archive/May2018/15/c4151.html
%SEDAR: 00025252E
For further information:
For Aurora: Marc Lakmaaker,
Director, Investor Relations and Corporate Development, +1.647.269.5523,
marc.lakmaaker@auroramj.com, www.auroramj.com; Craig MacPhail, NATIONAL Equicom,
+1 416-586-1938, cmacphail@national.ca; For Hempco: John Ross, Chief Financial
Officer, +1.647.291.4234, john@hempcocanada.com
CO: Hempco Food and Fiber Inc.
CNW 07:00e 15-MAY-18
Aurora Cannabis Makes Strategic Investment in CTT
Pharmaceutical
Aurora Expands Exclusive Access to CTT's Product and
Development Pipeline
TSX: ACB OTC: CTTH
EDMONTON, May 22, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) and
CTT Pharmaceutical Holdings Inc. ("
CTT
") (US-OTC: CTTH) today announced
that Aurora is acquiring an initial 9.14% ownership interest in CTT via way of a
non-brokered private placement in the form of a US$1 million 5% convertible
debenture. The agreement includes an issuance of warrants enabling to Aurora to
increase ownership to 42.5% .
Commercial agreement
Additionally, the companies announced that, within 60 days,
they intend completing a final commercial agreement, expanding the exclusivity
agreement, announced first on April 16, 2018, which related to distribution in
Canada only of CTT's novel, patent-protected drug delivery technologies. CTT
will now provide Aurora with global exclusivity to develop, manufacture and
market CTT's novel oral thin films wafers. The companies will work jointly
towards obtaining Health Canada approval for introduction of the new products on
the Canadian market, as well as obtaining commercial access to other
international jurisdictions in which Aurora is active.
Clinically-Proven Rapid Onset Drug Delivery
Technology
CTT is an Ontario based global leader in the development of
dose specific fast dissolving oral thin film wafers that provide a dose
specific, smoke-free delivery of medical cannabis or other active ingredients.
CTT's oral thin film wafer is made from FDA approved non-medical ingredients
used in several pharmaceutical formulations and provides the effective oral
delivery of a specific dose with rapid onset of action within 5-10 minutes after
dosing. Clinical research undertaken by CTT indicates the oral wafer delivery of
THC into the blood steam was approximately 40% quicker compared to edible form
factors, as well as resulted in approximately 28% more THC in the blood stream
at peak bioavailability levels.
Management Commentary
"The investment in CTT reflects our commitment to science-based
diversification into higher-margin drug delivery technologies for both the
medical and adult consumer use markets" said Terry Booth, CEO. "The
clinically-proven rapid onset of action of CTT's wafers is a key differentiator
that, we believe, will resonate strongly with physicians, patients and adult use
consumers. This provides us with an important competitive advantage in the
rapidly growing market segment for smoke-free form factors."
Dr. Pankaj Modi, CEO of CTT, added, "We believe Aurora more
than any other LP, provides the global distribution channels, regulatory affairs
expertise, scale and manufacturing ability to successfully commercialize this
unique technology on a global basis. We are very pleased to have Aurora as a key
strategic investor, delivering additional recognition to our product development
capabilities, and increasing both our commercial and capital markets
visibility."
Terms of the Investment
Aurora will make an initial US$1 million investment in CTT by
way of a non-brokered private placement of convertible debentures (the
"Debentures"). The Debentures will have a maturity date of three years from the
closing date of the offering (the "Maturity Date") and will bear interest from
the date of closing at 5.0% per annum, payable semi-annually. The Debentures
will be convertible, at the option of the holder, into common shares of CTT at
any time prior to the close of business on the last business day immediately
preceding the Maturity Date at a conversion price of $0.268 per Common Share
(the "Conversion Price").
Consequently the initial investment, Aurora owns approximately
9.14% of the issued and outstanding common shares of CTT Pharma (on a
non-diluted basis) In addition, Aurora shall also receive from CTT warrants,
such that Aurora will be able to increase its ownership interest in CTT to 42.5%
on a fully diluted basis. Each warrant provides the Company with the right to
purchase one common share of CTT at a price of $0.35. The warrants are
exercisable upon certain conditions being met. The initial investment provides
Aurora with the right to appoint one member of CTT's board of directors. Upon
achieving 42.5% ownership, the Company shall have the right to appoint a second
board member of CTT.
Investor Rights Agreement
Aurora and CTT have also entered into an investor rights
agreement that provides Aurora with anti-dilution protections, enabling the
Company to maintain its ownership level.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Enterprises Inc., is a
licensed producer of medical cannabis pursuant to Health Canada's Access to
Cannabis for Medical Purposes Regulations ("ACMPR"). The Company operates a
55,200 square foot, state-of-the-art production facility in Mountain View
County, Alberta, known as "Aurora Mountain", and a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Inc.
The Company's wholly-owned subsidiary CanniMed Therapeutics
Inc. ("CanniMed") is Canada's most experienced licensed producer of medical
cannabis, with over 20,000 kg per annum in funded capacity. CanniMed forms the
heart of Aurora's Medical Cannabis Centre of Excellence, aimed at product and
market development.
Aurora also owns Berlin-based Pedanios GmbH, the leading
wholesale importer, exporter, and distributor of medical cannabis in the
European Union. The Company owns 51% of Aurora Nordic, which will be
constructing a 1,000,000 square foot hybrid greenhouse in Odense, Denmark. The
Company offers further differentiation through its acquisition of BC Northern
Lights Ltd. and Urban Cultivator Inc., industry leaders, respectively, in the
production and sale of proprietary systems for the safe, efficient and
high-yield indoor cultivation of cannabis, and in state-of-the-art indoor
gardening appliances for the cultivation of organic microgreens, vegetables and
herbs in home and professional kitchens.
Aurora holds a 25% ownership interest in Alcanna Inc. ("CLIQ"),
one of Western Canada's largest retail chains of liquor stores, who are
developing a cannabis retail network in Western Canada. In addition, the Company
holds approximately 17.23% of the issued shares in leading extraction technology
company Radient Technologies Inc, and holds 52.7% of Hempco Food and Fiber Inc.
Aurora is also the cornerstone investor in two other licensed producers, with a
22.9% stake in Cann Group Limited, the first Australian company licensed to
conduct research on and cultivate medical cannabis, and a 17.62% stake in
Canadian producer The Green Organic Dutchman Ltd., with options to increase to
majority ownership.
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index
About CTT Pharmaceutical
CTT's principal asset is a unique and novel patented drug
delivery technology, an orally administered, fast dissolving thin film (the
"Wafer"). This technology platform will target both the human and veterinarian
(pet) markets for treatment of many diseases. The Company believes that its
Wafer technology will be one of the first to gain use in major markets such as
pain management. Several Canadian and U.S. patents protect the Oral Thin Film
(Wafer) formulation.
CTT's oral fast dissolving drug delivery systems consist of
edible Wafers that dissolve without water and within a few seconds after
placement in the mouth. The majority of drugs administered using our drug
delivery system mirror injections in that they have the ability to enter the
bloodstream quickly, are convenient and discrete, and can be administered
anywhere. A faster absorption rate is achieved because the mouth contains a very
thin mucosa and is extremely vascular. There is no bitter taste, no smoke
inhalation, less degradation of medication (by bypassing the stomach) and most
importantly lower dosage units are required given the efficacy of absorption.
Patient compliance is also improved especially with those who have a fear of
choking or difficulty swallowing, and/or are pediatric, geriatric or
incapacitated.
For more information, please visit our website:
www.cttpharmaceuticals.com
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
companies are under no obligation, and expressly disclaim any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
|
AURORA CANNABIS INC.
|
CTT Pharmaceutical Holding Inc.
|
|
Terry Booth
|
Dr. Pankaj Modi
|
|
CEO
|
CEO
|
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/May2018/22/c2507.html
%SEDAR: 00025675E
For further information:
Marc Lakmaaker, Director,
Investor Relations and Corporate Development, +1.647.269.5523,
marc.lakmaaker@auroramj.com, www.auroramj.com; Craig MacPhail, NATIONAL Equicom,
+1.416.586.1938, cmacphail@national.ca; For CTT: Dr. Pankaj Modi,
info@cttpharmaceuticals.com, +1.866.803.8386
CO: Aurora Cannabis Inc.
CNW 07:00e 22-MAY-18
Aurora Cannabis Appoints Jonathan Zaid Director of Advocacy
and Corporate Social Responsibility
Key Influencer in Canadian Medical Cannabis Sector by Being
First to Secure Individual Insurance Coverage
TSX: ACB
EDMONTON, May 23, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today
announced it has appointed Jonathan Zaid as Director of Advocacy and Corporate
Social Responsibility (CSR).
Mr. Zaid has deep roots within the Canadian and international
cannabis communities. He is a leading expert, thought-leader and sought-after
speaker on cannabis policy, medical cannabis taxation, insurance coverage, and
advocacy. Prior to joining Aurora, Mr. Zaid founded Canada's most active and
high-profile medical cannabis non-profit advocacy organization, Canadians for
Fair Access to Medical Marijuana ("CFAMM"). Mr. Zaid, on behalf of CFAMM, has
played a critical leadership role in engaging with a wide variety of policy
makers in opposition to inappropriate taxation of prescription medical cannabis,
among many other issues of key concern to patients and the broader cannabis
sector. Mr. Zaid has received broad recognition for his efforts and
successes:
|
|
•
|
Was the first individual in Canada to
successfully advocate for a major insurance company to cover the costs of
medically prescribed cannabis, creating momentum for other insurance
companies to follow suit
|
|
|
•
|
Was honored in Financial Post's Top-five
Innovators "Mavericks and Movers" edition (April 2018) and received the
Lift Cannabis 'Top Effort Affecting Policy Change' award (2017)
|
|
|
•
|
Has demonstrated the ability to drive change on
a national level, create and execute strategic communication initiatives,
mobilize grassroots movements, and propel organizational growth
|
|
|
•
|
Has strong relationships with Canadian and
international stakeholders, governments, patients, and the healthcare
community
|
|
|
•
|
Was called to testify as an expert witness
before House of Commons committees on cannabis policy
|
Reporting to the Chief Corporate Officer, Mr. Zaid's
responsibilities will include:
|
|
•
|
Overseeing the development and implementation
of a global proactive advocacy and CSR strategy.
|
|
|
•
|
Executing on Aurora's advocacy priorities,
including the Company's patient-first policy
|
|
|
º
|
Advocacy to start in Canada and expand to
global jurisdictions in which the Company is or will be active
|
|
|
•
|
Establishing a comprehensive global advocacy
program that will include
|
|
|
º
|
Reversing the harms of prohibition, including
advocating for amnesty
|
|
|
º
|
Driving patient access, including enhanced
insurance coverage and reduced taxation
|
Management Commentary
"Jonathan personally moved the needle for our industry in a
pivotal way, by being the first individual Canadian to secure coverage from a
major insurance company for his medically prescribed cannabis," said Cam
Battley, Chief Corporate Officer. "Consequently, multiple major insurance
companies are now considering extending their policies to provide much broader
coverage of medical cannabis. We believe that, as in Europe, this will have a
major impact on the development of the medical cannabis industry going forward.
We are delighted to have someone with such vision and impact join the
Company.
Furthermore, we take the corporate responsibilities that come
with being one of the world's most prominent cannabis companies extremely
seriously. His appointment is a clear signal to all stakeholders that our
company culture strongly supports patients, and embraces responsible advocacy
and engaged corporate citizenship, and we intend to show continued leadership in
these fields. Jonathan's work, both within the cannabis community and with
governmental, insurance and other stakeholders is exceptionally strong, and we
believe that Aurora will benefit significantly from having him on board."
Mr. Zaid, added, "Aurora is a pioneer and a world-class
innovator that has always stood up for smart, rational and fair public policy.
With a rapidly growing domestic and international footprint, deep relationships
with the cannabis culture and patient communities, and a distinctly high
profile, Aurora is in a unique position to do good while doing well. I am
excited to further develop the company's CSR and advocacy initiatives in this
new role."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Enterprises Inc., is a
licensed producer of medical cannabis pursuant to Health Canada's Access to
Cannabis for Medical Purposes Regulations ("ACMPR"). The Company operates a
55,200 square foot, state-of-the-art production facility in Mountain View
County, Alberta, known as "Aurora Mountain", and a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Inc.
The Company's wholly-owned subsidiary CanniMed Therapeutics
Inc. ("CanniMed") is Canada's most experienced licensed producer of medical
cannabis, with over 20,000 kg per annum in funded capacity. CanniMed forms the
heart of Aurora's Medical Cannabis Centre of Excellence, aimed at product and
market development.
Aurora also owns Berlin-based Pedanios GmbH, the leading
wholesale importer, exporter, and distributor of medical cannabis in the
European Union. The Company owns 51% of Aurora Nordic, which will be
constructing a 1,000,000 square foot hybrid greenhouse in Odense, Denmark. The
Company offers further differentiation through its acquisition of BC Northern
Lights Ltd. and Urban Cultivator Inc., industry leaders, respectively, in the
production and sale of proprietary systems for the safe, efficient and
high-yield indoor cultivation of cannabis, and in state-of-the-art indoor
gardening appliances for the cultivation of organic microgreens, vegetables and
herbs in home and professional kitchens.
Aurora holds a 25% ownership interest in Alcanna Inc. ("CLIQ"),
one of Western Canada's largest retail chains of liquor stores, who are
developing a cannabis retail network in Western Canada. In addition, the Company
holds approximately 17.23% of the issued shares in leading extraction technology
company Radient Technologies Inc, and holds 52.7% of Hempco Food and Fiber Inc.
Aurora is also the cornerstone investor in two other licensed producers, with a
22.9% stake in Cann Group Limited, the first Australian company licensed to
conduct research on and cultivate medical cannabis, and a 17.62% stake in
Canadian producer The Green Organic Dutchman Ltd., with options to increase to
majority ownership. Finally, the Company owns a 9.14% stake in CTT
Pharmaceutical, an innovative product development company within the cannabis
space.
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
AURORA CANNABIS INC.
Terry Booth
CEO
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/May2018/23/c6296.html
%SEDAR: 00025675E
For further information:
Marc Lakmaaker, Director,
Investor Relations and Corporate Development, +1.647.269.5523,
marc.lakmaaker@auroramj.com, www.auroramj.com; Craig MacPhail, NATIONAL Equicom,
+1 416 586-1938, cmacphail@national.ca
CO: Aurora Cannabis Inc.
CNW 07:00e 23-MAY-18
FORM 51-102F3
Material Change Report
|
Item 1:
|
Name and Address of Company
|
Aurora Cannabis Inc. (“
Aurora
”
or the “
Company
”)
1500 - 1199 West Hastings St.
Vancouver,
BC
Canada V6E 3T5
|
Item 2:
|
Date of Material Change
|
May 14, 2018
A news release (attached as Schedule
A) announcing the material change referred to in this report was issued on May
14, 2018 through the facilities of Global Newswire and a copy of the same was
filed on SEDAR under Aurora’s profile on May 14, 2018.
|
Item 4:
|
Summary of Material Change
|
On May 14, 2018, Aurora and MedReleaf
Corp. (“
MedReleaf
”) entered into an arrangement agreement (the
“
Original Agreement
”) as amended by an amending agreement dated May 24,
2018 (the “
Amending Agreement
”, and together with the Original Agreement,
hereinafter defined as the “
Agreement
”) pursuant to which Aurora agreed
to acquire all of the issued and outstanding common shares of MedReleaf (each a
“
MedReleaf Share
”) by way of a statutory Plan of Arrangement (the
“
Arrangement
”) under the
Business Corporations Act
(Ontario) for a
consideration of 3.575 Aurora common shares (each an “
Aurora Share
”) and
$0.000001 for each MedReleaf Share. Upon completion of the Arrangement, existing
Aurora and MedReleaf shareholders will own approximately 61% and 39% of the
combined company, respectively, on a fully diluted basis.
|
Item 5:
|
Full Description of Material Change
|
|
5.1
|
Full Description of Material
Change
|
On May 14, 2018, Aurora and MedReleaf
entered into the Original Agreement and on May 24, 2018 entered into the
Amending Agreement. Pursuant to the Agreement, Aurora agreed to acquire all of
the issued and outstanding MedReleaf Shares by way of a statutory Plan of
Arrangement under the
Business Corporations Act
(Ontario).
Under the terms of the Agreement,
holders of MedReleaf Shares will receive 3.575 Aurora Shares (the “
Share
Consideration
”) and $0.000001 in cash (the “
Cash Consideration
”) for
each MedReleaf Share. The Share Consideration will be adjusted for any stock
splits, consolidations, stock dividends, reclassifications, redenominations, or
the like between the date of the Agreement and the Effective Time (as defined in
the Agreement). The Arrangement implies a price of $29.44 per MedReleaf Share
and a premium of approximately 34%, based on the 20-day volume weighted average
prices of Aurora Shares and MedReleaf Shares on the Toronto Stock Exchange (the
“
TSX
”) as of May 11, 2018.
Taxable Canadian resident MedReleaf
shareholders will be entitled to elect to receive tax-deferred roll-over
treatment in connection with the acquisition by Aurora of their MedReleaf Shares
under the transaction. Taxable Canadian resident MedReleaf shareholders will
also be entitled to elect to solely receive the Share Consideration (and, not
receive the Cash Consideration).
Transaction Summary
The implementation of the Arrangement
will be subject to the approval of a majority of the votes cast by the holders
of Aurora Shares at a special meeting of Aurora shareholders (the “
Aurora
Share Issuance Resolution
”), which is expected to take place in the middle
of July, 2018 (the “
Aurora Meeting
”). The Arrangement is also subject to
the approval of at least 66-
2
/
3
% of the votes cast by
holders of MedReleaf Shares at a special meeting of MedReleaf shareholders.
In addition to the shareholder
approvals, the Arrangement is also subject to a number of mutual conditions,
including (i) the receipt of the Competition Bureau, court (Ontario Superior
Court of Justice (commercial list)) and stock exchange (TSX) approvals; (ii)
there shall be no law, ruling or regulatory action preventing the Arrangement;
and (iii) rights of dissent shall not have been exercised by holders of more
than 5% of the outstanding MedReleaf Shares. In addition, completion of the
Arrangement is subject to reciprocal conditions in favor of each of Aurora and
MedReleaf that: (i) the representations and warranties of each of Aurora and
MedReleaf shall be true and correct (subject to materiality or material adverse
effect qualifiers); (ii) there shall have been no material adverse effect in
respect of either Aurora or MedReleaf; and (iii) each of Aurora and MedReleaf
shall have complied in all material respects with their covenants made in the
Agreement.
The Agreement has been unanimously
approved by the boards of directors of each of Aurora and MedReleaf. The
financial advisor to Aurora, BMO Capital Markets, provided a fairness opinion to
the board of directors of Aurora which concluded that, subject to the
assumptions, limitations and qualifications set out in such fairness opinion,
the consideration provided for in the Arrangement is fair, from a financial
point of view to Aurora. Canaccord Genuity Corp. and GMP Securities L.P. have
each provided fairness opinions to the special committee of independent
directors of MedReleaf and to the board of directors of MedReleaf that, subject
to the assumptions, limitations and qualifications set out in such fairness
opinions, the consideration to be received by MedReleaf’s shareholders pursuant
to the Arrangement is fair, from a financial point of view, to the MedReleaf
shareholders.
Certain directors and executive
officers of each of Aurora and MedReleaf have entered into customary voting
support agreements in favour of the Arrangement. In addition, Aurora has secured
support from holders of approximately 56% of MedReleaf Shares, who have entered
into “hard” support agreements to vote their shares in favour of the
Arrangement.
The Agreement includes customary
provisions including reciprocal non-solicitation provisions, subject to the
right of each of Aurora and MedReleaf to accept a superior proposal in certain
circumstances, with both Aurora and MedReleaf having a five (5) business day
right to match any such superior proposal for the other party. The Agreement
also provides for reciprocal termination fees of $80 million if the Arrangement
is terminated in certain specified circumstances, as well as the payment of a
$15 million expense reimbursement fee if the Arrangement is terminated in
certain other specified circumstances, including where Aurora shareholders do
not approve the Aurora Share Issuance Resolution.
Upon completion of the Arrangement,
the board of directors of Aurora will be increased to eight (8) members, with
Norma Beauchamp and Ronald Funk, currently independent Directors of MedReleaf,
to be appointed to the board of directors of Aurora.
Further information regarding the
Arrangement will be contained in the information circular that Aurora will
prepare, file and mail in due course to its shareholders in connection with the
Aurora Meeting to be held to consider the issuance of Aurora Shares payable as
consideration under the Arrangement. All shareholders are urged to read the
information circular once available as it will contain additional important
information concerning the Arrangement.
SEDAR Filings
The Agreement and the voting support
agreements will be filed on the SEDAR profiles of Aurora and MedReleaf. The
summary of the material terms provided herein is qualified by reference to the
entirety of such agreements.
|
5.2
|
Disclosure for Restructuring
Transactions
|
Not applicable.
|
Item 6:
|
Reliance on subsection 7.1(2) of National
Instrument 51-102
|
Not applicable.
|
Item 7:
|
Omitted Information
|
Not applicable.
|
Item 8:
|
Executive Officer
|
Terry Booth
Chief Executive
Officer
(604) 362-5207
May 24, 2018
Cautionary Note Regarding
Forward-Looking Statements
Certain information in this material
change report constitutes forward-looking statements under applicable securities
laws. Any statements that are contained in this material change report that are
not statements of historical fact may be deemed to be forward-looking
statements. Forward looking statements are often identified by terms such as
“may”, “should”, “anticipate”, “expect”, “potential”, “believe”, “intend” or the
negative of these terms and similar expressions. Forward-looking statements in
this material change report include, but are not limited to, statements with
respect to anticipated benefits associated with the acquisition of MedReleaf,
statements with respect to the effect of the Arrangement on the combined company
and its strategy going forward, the completion of any capital project or
expansions, the timing for the completion of the Arrangement; the consideration
to be received by shareholders of MedReleaf, which may fluctuate in value due to
Aurora common shares forming the consideration; the satisfaction of closing
conditions including, without limitation (i) required Aurora and MedReleaf
shareholder approvals; (ii) necessary court approval in connection with the plan
of arrangement, (iii) receipt of any required approvals under the Competition
Act; (iv) certain termination rights available to the parties under the
Agreement; (v) Aurora obtaining the necessary approvals from the TSX for the
listing of its common shares in connection with the Arrangement; and (vi) other
closing conditions, including, without limitation, compliance by Aurora and
MedReleaf with various covenants contained in the Agreement. In particular,
there can be no assurance that the Arrangement will be completed. Forward
looking statements are based on certain assumptions regarding Aurora and
MedReleaf, including expected growth, results of operations, performance,
industry trends and growth opportunities. While Aurora and MedReleaf consider
these assumptions to be reasonable, based on information currently available,
they may prove to be incorrect. Readers are cautioned not to place undue
reliance on forward-looking statements. Forward-looking statements also
necessarily involve known and unknown risks, including, without limitation,
risks associated with general economic conditions; adverse industry events;
future legislative and regulatory developments; inability to access sufficient
capital from internal and external sources, and/or inability to access
sufficient capital on favourable terms; the cannabis industry in Canada
generally, income tax and regulatory matters; the ability of Aurora to implement
its business strategies; competition; currency and interest rate fluctuations
and other risks. Readers are cautioned that the foregoing list is not
exhaustive. Readers are further cautioned not to place undue reliance on forward
looking statements as there can be no assurance that the plans, intentions or
expectations upon which they are placed will occur. Such information, although
considered reasonable by management at the time of preparation, may prove to
bein correct and actual results may differ materially from those anticipated.
Forward-looking statements contained in this material change report are
expressly qualified by this cautionary statement and reflect our expectations as
of the date hereof, and thus are subject to change thereafter. Aurora and
MedReleaf disclaim any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by law. Factors that could cause
anticipated opportunities and actual results to dif er materially include, but
are not limited to, matters referred to above and else wherein Aurora's
MedReleaf's public filings and the material change reports that will be filed in
respect of this Arrangement, which are, or will be, available on SEDAR.
Notice to U.S. Holders.
Both Aurora and MedReleaf have been
formed outside of the United States. Arrangement will be subject to disclosure
requirements of Canada that are different from those of the United States.
Financial statements included in the documents, if any, will be prepared in
accordance with Canadian accounting standards and may not be comparable to the
financial statements of United States companies. It may be difficult for a
security holder in the United States to enforce his/her/its rights and any claim
a security holder may have arising under the U.S. federal securities laws, since
the companies are located in Canada, and some or all of their officers or
directors may be residents of Canada or another country outside of the United
States. A security holder may not be able to sue a Canadian company or its
officers or directors in a court in Canada or elsewhere outside of the United
States for violations of U.S. securities laws. It may be difficult to compel a
Canadian company and its affiliates to subject themselves to a U.S. court's
judgment.
SCHEDULE A
[
Please see attached.
]
Aurora Cannabis to Acquire MedReleaf
TSX:ACB
TSX:LEAF
Transaction to Create Preeminent Global Cannabis
Company
EDMONTON and MARKHAM, ON, May 14, 2018 /CNW/ - Aurora Cannabis
Inc. ("Aurora") (TSX: ACB) and MedReleaf Corp. ("MedReleaf") (TSX: LEAF) are
pleased to announce that they have entered into a definitive arrangement
agreement (the "Arrangement Agreement") whereby Aurora intends to acquire all of
the issued and outstanding common shares of MedReleaf in an all-share
transaction valued at approximately C$3.2 billion on a fully diluted basis (the
"Transaction").
Proposed Transaction
Under the terms of the Arrangement Agreement, holders of
MedReleaf common shares will receive 3.575 common shares of Aurora for each
MedReleaf common share held (the "Exchange Ratio"). Upon completion of the
Transaction, existing Aurora and MedReleaf shareholders would own approximately
61% and 39% of the pro forma company, respectively, on a fully diluted
basis.
The Exchange Ratio implies a price of C$29.44 per MedReleaf
common share and a premiumof approximately 34%, based on the 20-day volume
weighted average prices of Aurora and MedReleaf common shares on the Toronto
Stock Exchange as of May 11, 2018.
Highlights of the Transaction
The proposed Transaction brings together two of Canada's
premier cannabis companies with fully-aligned strategic visions and production
philosophies, as well as complementary assets, distribution networks, products,
and capabilities. The combined company will meet what Aurora and MedReleaf
management teams consider to be the critical success factors in the industry,
creating a powerful platformfor accelerated growth on a global scale:
|
|
•
|
Industry leading scale:
the Transaction brings
together two leading operators with a total funded capacity of over
570,000 kg per year of high-quality cannabis, through nine facilities in
Canada and two in Denmark.
|
|
|
•
|
Lowproduction costs and industry leading yields:
Aurora's automated greenhouses are expected to deliver
industry-leading efficiency and low production costs, delivering
sustainably robust margins. MedReleaf's high-yield cultivation is expected
to further enhance productivity and reduce costs across the combined
entity's facilities.
|
|
|
•
|
Extensive distribution channels in Canada and
internationally:
the two companies have established distribution
agreements with Alberta's Alcanna (formerly Liquor Stores), Quebec's SAQ,
Pharmasave and Shoppers Drug Mart in Canada, among others. Additionally,
the companies have a rapidly growing international footprint through a
network of in-country sales and distribution capabilities and supply and
licensing agreements on five continents, including countries such as
Germany, Italy, Brazil and Australia. Both companies are actively engaged
in initiatives to further expand their international activities.
|
|
|
•
|
Proven execution and agility across the value chain:
creating a combined company, fully integrated across the entire value
chain. The combined entity will be enabled to move with more agility and
speed to capitalize on diversified opportunities in both the domestic and
international markets, and create new, higher-margin opportunities across
the value chain.
|
|
|
•
|
Enhanced diversification:
a more broadly
diversified portfolio of award-winning high-quality flower and derivative
products will enable the companies to establish strong brands across the
various market segments.
Brand leadership
: three established
medical brands, Aurora, CanniMed and MedReleaf, coupled with a portfolio
of consumer and wellness brands - San Rafael '71, Woodstock, and AltaVie -
all backed by detailed consumer and marketplace insights and advanced
analytical frameworks.
|
|
|
•
|
Innovation and R&D excellence:
the expanded
scientific teamwill focus on developing a robust pipeline of marketable
IP, accessing higher-margin segments and new revenue streams. Aurora's
Medical Centre of Excellence, formed through the combination of the Aurora
and CanniMed science and product development teams, together with
MedReleaf's ongoing studies with recognized research institutes, are
expected to continue to evolve product innovation and create additional
momentumfor brand equity development on a global scale.
|
|
|
•
|
Enhanced capital markets profile:
the combined
entity's expanded capital markets profile is expected to appeal to a
broader shareholder audience, enhance trading liquidity and increase
weighting in index tracking portfolios.
|
"This is a transformational transaction that brings together
two pioneering cannabis companies, both committed to high technology, high
quality and low cost production, to create a powerful platformfor accelerated
growth and success on a global scale," said Terry Booth, CEO of Aurora. "Our
complementary assets, strategic synergies, and strong market positioning will
provide us with critical mass and an excellent product portfolio in preparation
for the adult consumer use market in Canada. Equally, the combination
strengthens our capacity to service the rapidly expanding global medical
cannabis markets, and amplifies our early-mover advantage. We are very excited
about the combination of our respective science and R&D teams, which will
position us exceptionally well for the development of high value-added products,
addressing as yet unmet needs in the medical markets, and driving continued
innovation for the adult consumer use market."
Neil Closner, CEO of MedReleaf, added, "MedReleaf was founded
on the belief that by striving to be the Medical Grade Standard and bringing the
highest level of quality and rigor to the cannabis industry, we would produce
safe, consistent, and effective products that help improve the quality of life
of our patients and, in time, provide an unrivaled experience for the adult use
consumer. This, in turn, would drive growth and opportunity for our business. By
combining with Aurora, an integrated producer with an exceptionally strong track
record for execution, and deep domestic and international distribution
capabilities, we will be ideally positioned to set the global standard for our
industry at a pace that will be difficult to match."
Board of Directors' Recommendations
The Arrangement Agreement has been unanimously approved by the
boards of directors of Aurora and MedReleaf, and each board recommends that
their respective shareholders vote in favour of the Transaction.
The board of directors of MedReleaf and the special committee
of the MedReleaf board of directors have obtained a fairness opinion from each
of Canaccord Genuity Corp. and GMP Securities L.P. that, as of the date of the
opinions, and subject to the assumptions, limitations, and qualifications on
which such opinions are based, the consideration to be received by MedReleaf's
shareholders pursuant to the Arrangement Agreement is fair, from a financial
point of view, to the MedReleaf shareholders. The board of directors of Aurora
has obtained an opinion from BMO Capital Markets that, as of the date of the
opinion, and subject to the assumptions, limitations, and qualifications on
which such opinion is based, the Exchange Ratio provided for in the Arrangement
Agreement is fair from a financial point of view to Aurora.
Transaction Summary
The Transaction will be effected by way of a plan of
arrangement completed under the
Business Corporations Act
(Ontario). The
Transaction will require approval by at least 66 2/3% of the votes cast by the
shareholders of MedReleaf present at a special meeting of MedReleaf
shareholders. The issuance of Aurora common shares in connection with the
Transaction will require the approval of a simple majority of the shareholders
of Aurora present at a special meeting. Directors and officers of Aurora and
MedReleaf have entered into support agreements pursuant to which they have
agreed to vote their shares in favour of the Transaction. In addition, holders
of approximately 56% of MedReleaf's issued and outstanding common shares have
entered into irrevocable hard lock-ups to vote their shares in favour of the
Transaction.
Upon completion of the Transaction, the board of directors of
Aurora will be increased to 8 members, with Norma Beauchamp and Ronald Funk,
currently independent Directors of MedReleaf, to be appointed to the board of
directors of Aurora.
The Arrangement Agreement includes customary provisions
including reciprocal non-solicitation provisions, subject to the right of each
of MedReleaf and Aurora to accept a superior proposal in certain circumstances,
with both Aurora and MedReleaf having a five business day right to match any
such superior proposal for the other party. The Arrangement Agreement also
provides for reciprocal termination fees of C$80 million if the Transaction is
terminated in certain specified circumstances, as well as the payment of a C$15
million expense reimbursement fee if the Transaction is terminated in certain
other specified circumstances.
In addition to shareholder approvals, the Transaction is
subject to the receipt of certain regulatory court and stock exchange approvals
and the satisfaction of other conditions customary in transactions of this
nature.
Further information regarding the Transaction will be included
in the information circulars that Aurora and MedReleaf will prepare, file, and
mail in due course to their respective shareholders in connection with their
special meetings to be held to consider the Transaction. The Arrangement
Agreement will be filed on the SEDAR profiles of MedReleaf and Aurora on the
SEDAR website at www.sedar.com.
None of the securities to be issued pursuant to the Arrangement
Agreement have been or will be registered under the United States Securities Act
of 1933, as amended (the "U.S. Securities Act"), or any state securities laws,
and any securities issued in the Arrangement are anticipated to be issued in
reliance upon the exemption from such registration requirements provided by
Section 3(a)(10) of the U.S. Securities Act and applicable exemptions under
state securities laws. This news release does not constitute an offer to sell or
the solicitation of an offer to buy any securities.
Advisors and Counsel
BMO Capital Markets is acting as the exclusive financial
advisor to Aurora. McMillan LLP is acting as legal counsel to Aurora.
Canaccord Genuity is acting as the exclusive financial advisor
to the special committee of the board of directors of MedReleaf, who also
received an independent fairness opinion from GMP Securities, and an independent
financial diligence report from Deloitte LLP. Stikeman Elliott LLP is acting as
legal counsel to MedReleaf. Davies Ward Phillips & Vineberg LLP is acting as
legal counsel to shareholders of MedReleaf.
Press Conference and Analyst Call
Aurora and MedReleaf will hold a press conference at 10:00 a.m.
Eastern time, details of which have been disseminated via media advisory. The
presentation and multi-media assets will be available at:
https://investor.auroramj.com/#/investor-info#aurora-medreleaf
Conference Call and Webcast Access Information
Aurora and MedReleaf will host a webcast conference call,
including a slide presentation, to discuss the transaction on Monday, May 14,
2018, at 11:30 a.m. Eastern time.
Participants may join the conference call by dialing (888)
231-8191 or (647) 427-7450.
A live webcast of the conference call, including the slide
presentation, will be available at https://bit.ly/2wB9U4z. Please connect at
least 15 minutes prior to the conference call to ensure adequate time for any
software downloads that may be required to join the webcast. To view the webcast
presentation with slides, please choose either the Real Streaming Audio or
Windows Streaming Audio option.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Enterprises Inc., is a
licensed producer of medical cannabis pursuant to Health Canada's Access to
Cannabis for Medical Purposes Regulations ("ACMPR"). The Company operates a
55,200 square foot, state-of-the-art production facility in Mountain View
County, Alberta, known as "Aurora Mountain", and a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Inc.
The Company's wholly-owned subsidiary CanniMed Therapeutics
Inc. ("CanniMed") is Canada's most experienced licensed producer of medical
cannabis, with over 20,000 kg per annum in funded capacity. CanniMed forms the
heart of Aurora's Medical Cannabis Centre of Excellence, aimed at product and
market development.
Aurora also owns Berlin-based Pedanios GmbH, the leading
wholesale importer, exporter, and distributor of medical cannabis in the
European Union. The Company owns 51% of Aurora Nordic, which will be
constructing a 1,000,000 square foot hybrid greenhouse in Odense, Denmark. The
Company offers further differentiation through its acquisition of BC Northern
Lights Ltd. and Urban Cultivator Inc., industry leaders, respectively, in the
production and sale of proprietary systems for the safe, efficient and
high-yield indoor cultivation of cannabis, and in state-of-the-art indoor
gardening appliances for the cultivation of organic microgreens, vegetables and
herbs in home and professional kitchens.
Aurora holds a 25% ownership interest in Alcanna Inc. (formerly
Liquor Stores N.A.), (TSX:CLIQ) who are developing a cannabis retail network in
Western Canada. In addition, the Company holds approximately 17.23% of the
issued shares in extraction technology company Radient Technologies Inc, and has
a strategic investment in Hempco Food and Fiber Inc., with options to increase
ownership stake to over 50%. Aurora is also the cornerstone investor in two
other licensed producers, with a 22.9% stake in Cann Group Limited, the first
Australian company licensed to conduct research on and cultivate medical
cannabis, and a 17.62% stake in Canadian producer The Green Organic Dutchman
Ltd., with options to increase to majority ownership.
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index
About MedReleaf
Voted Top Licensed Producer at the 2017 Lift Canadian Cannabis
Awards, MedReleaf is an R&D-driven company dedicated to innovation,
operational excellence and the production of top-quality cannabis. Sourced from
around the world and carefully cultivated in one of two state of the art ICH-GMP
and ISO 9001 certified facilities in Ontario, the Company delivers a variety of
premium products for the global medical market and is committed to serving the
therapeutic needs of its medical patients and providing a compelling product
assortment for the adult-use recreational consumer. For more information on
MedReleaf, its products, research and how the company is helping patients
#livefree, please visit MedReleaf.com or follow @medreleaf.
Forward looking statements
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS:
Certain information in this news release constitutes forward-looking statements
under applicable securities laws. Any statements that are contained in this news
release that are not statements of historical fact may be deemed to be
forward-looking statements. Forward looking statements are often identified by
terms such as "may", "should", "anticipate", "expect", "potential", "believe",
"intend" or the negative of these terms and similar expressions. Forward-looking
statements in this news release include, but are not limited to, statements with
respect to accretive earnings, anticipated benefits associated with the
acquisition of MedReleaf, statements with respect to the effect of the
Transaction on the combined company and its strategy going forward, the
completion of any capital project or expansions, the timing for the completion
of the Transaction; the consideration to be received by shareholders of
MedReleaf, which may fluctuate in value due to Aurora common shares forming the
consideration; the satisfaction of closing conditions including, without
limitation (i) required Aurora and MedReleaf shareholder approvals; (ii)
necessary court approval in connection with the plan of arrangement, (iii)
receipt of any required approvals under the Competition Act; (iv) certain
termination rights available to the parties under the Arrangement Agreement; (v)
Aurora obtaining the necessary approvals from the TSX for the listing of its
common shares in connection with the Transaction; and (vi) other closing
conditions, including, without limitation, compliance by Aurora and MedReleaf
with various covenants contained in the Arrangement Agreement. In particular,
there can be no assurance that the Transaction will be completed. Forward
looking statements are based on certain assumptions regarding Aurora and
MedReleaf, including expected growth, results of operations, performance,
industry trends and growth opportunities. While Aurora and MedReleaf consider
these assumptions to be reasonable, based on information currently available,
they may prove to be incorrect. Readers are cautioned not to place undue
reliance on forward-looking statements. Forward-looking statements also
necessarily involve known and unknown risks, including, without limitation,
risks associated with general economic conditions; adverse industry events;
future legislative and regulatory developments; inability to access sufficient
capital from internal and external sources, and/or inability to access
sufficient capital on favourable terms; the cannabis industry in Canada
generally, income tax and regulatory matters; the ability of Aurora to implement
its business strategies; competition; currency and interest rate fluctuations
and other risks.
Readers are cautioned that the foregoing list is not
exhaustive. Readers are further cautioned not to place undue reliance on
forward-looking statements as there can be no assurance that the plans,
intentions or expectations upon which they are placed will occur. Such
information, although considered reasonable by management at the time of
preparation, may prove to be incorrect and actual results may differ materially
from those anticipated.
Forward-looking statements contained in this news release
are expressly qualified by this cautionary statement and reflect our
expectations as of the date hereof, and thus are subject to change thereafter.
Aurora and MedReleaf disclaim any intention or obligation to update or revise
any forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by law. Factors that could cause
anticipated opportunities and actual results to differ materially include, but
are not limited to, matters referred to above and elsewhere in Aurora's
MedReleaf's public filings and the material change reports that will be filed in
respect of this Transaction, which are, or will be, available on SEDAR.
Notice to U.S. Holders.
Both Aurora and
MedReleaf have been formed outside of the United States. Transaction will be
subject to disclosure requirements of Canada that are different from those of
the United States. Financial statements included in the documents, if any, will
be prepared in accordance with Canadian accounting standards and may not be
comparable to the financial statements of United States companies. It may be
difficult for a securityholder in the United States to enforce his/her/its
rights and any claim a securityholder may have arising under the U.S. federal
securities laws, since the companies are located in Canada, and some or all of
their officers or directors may be residents of Canada or another country
outside of the United States. A securityholder may not be able to sue a Canadian
company or its officers or directors in a court in Canada or elsewhere outside
of the United States for violations of U.S. securities laws. It may be difficult
to compel a Canadian company and its affiliates to subject themselves to a U.S.
court's judgment.
|
AURORA CANNABIS INC.
|
MEDRELEAF CORP.
|
|
Terry Booth
|
Neil Closner
|
|
CEO
|
CEO
|
SOURCE MedReleaf Corp.
View original content:
http://www.newswire.ca/en/releases/archive/May2018/14/c5551.html
%SEDAR: 00042628E
For further information:
For Aurora: Marc Lakmaaker,
Director, Investor Relations and Corporate Development, +1.855.279.4652,
marc.lakmaaker@auroramj.com, www.auroramj.com; Craig MacPhail, NATIONAL Equicom,
+1.800.385.5451, cmacphail@national.ca; Media enquiries: Jane Taber, NATIONAL
Public Relations, +1.416.848.1450, jtaber@national.ca; For MedReleaf: Darren
Karasiuk, SVP & GM, Recreational, dkarasiuk@medreleaf.com, +1.855.473.5323;
Dennis Fong, LodeRock Advisors, Investor Relations,
investorrelations@medreleaf.com; +1.416.283.9930
CO: MedReleaf Corp.
CNW 06:00e 14-MAY-18
Aurora Cannabis and MedReleaf File Arrangement Agreement and
Material Change Reports
TSX:ACB TSX:LEAF
EDMONTON and MARKHAM, ON, May 25, 2018 /CNW/ - Aurora Cannabis
Inc. ("Aurora") (TSX: ACB) and MedReleaf Corp. ("MedReleaf") (TSX: LEAF) today
announced the filing on SEDAR of the arrangement agreement dated May 14, 2018
between Aurora and MedReleaf (the "Original Agreement"), as amended by an
amending agreement (the "Amending Agreement"), and the material change reports
in respect of the previously announced transaction whereby Aurora intends to
acquire all of the issued and outstanding common shares of MedReleaf (the
"Material Change Reports").
Aurora and MedReleaf have agreed to amend the Original
Agreement to include, in the consideration payable to holders of MedReleaf's
common shares, (each a "MedReleaf Share"), $0.000001 in cash for each
MedReleaf Share. As a result, the consideration under the arrangement has been
increased from 3.575 Aurora common shares for each MedReleaf Share to 3.575
Aurora common shares and $0.000001 in cash for each MedReleaf Share.
Taxable Canadian resident MedReleaf shareholders will be entitled to elect to
receive tax-deferred roll-over treatment in connection with the acquisition by
Aurora of their MedReleaf Shares. If a MedReleaf shareholder does not, or is
unable to, make an election, then Aurora's acquisition cost for such
shareholder's MedReleaf Shares will generally be equal to the fair market value
of such shares.
For further information, please visit www.sedar.com to view the
Original Agreement, the Amending Agreement and the Material Change Reports.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Enterprises Inc., is a
licensed producer of medical cannabis pursuant to Health Canada's Access to
Cannabis for Medical Purposes Regulations ("ACMPR"). The Company operates a
55,200 square foot, state-of-the-art production facility in Mountain View
County, Alberta, known as "Aurora Mountain", and a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Inc.
The Company's wholly-owned subsidiary CanniMed Therapeutics
Inc. ("CanniMed") is Canada's most experienced licensed producer of medical
cannabis, with over 20,000 kg per annum in funded capacity. CanniMed forms the
heart of Aurora's Medical Cannabis Centre of Excellence, aimed at product and
market development.
Aurora also owns Berlin-based Pedanios GmbH, the leading
wholesale importer, exporter, and distributor of medical cannabis in the
European Union. The Company owns 51% of Aurora Nordic, which will be
constructing a 1,000,000 square foot hybrid greenhouse in Odense, Denmark. The
Company offers further differentiation through its acquisition of BC Northern
Lights Ltd. and Urban Cultivator Inc., industry leaders, respectively, in the
production and sale of proprietary systems for the safe, efficient and
high-yield indoor cultivation of cannabis, and in state-of-the-art indoor
gardening appliances for the cultivation of organic microgreens, vegetables and
herbs in home and professional kitchens.
Aurora holds a 25% ownership interest in Alcanna Inc. ("CLIQ"),
one of Western Canada's largest retail chains of liquor stores, who are
developing a cannabis retail network in Western Canada. In addition, the Company
holds approximately 17.23% of the issued shares in leading extraction technology
company Radient Technologies Inc, and holds 52.7% of Hempco Food and Fiber Inc.
Aurora is also the cornerstone investor in two other licensed producers, with a
22.9% stake in Cann Group Limited, the first Australian company licensed to
conduct research on and cultivate medical cannabis, and a 17.62% stake in
Canadian producer The Green Organic Dutchman Ltd., with options to increase to
majority ownership. Finally, the Company owns a 9.14% stake in CTT
Pharmaceutical, an innovative product development company within the cannabis
space.
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index
About MedReleaf
Canada's most awarded licensed producer, MedReleaf is an
R&D-driven company dedicated to innovation, operational excellence and the
production of top-quality cannabis. Sourced from around the world and carefully
cultivated in one of two state-of-the-art ICH-GMP and ISO 9001 certified
facilities in Ontario Canada, with a third facility currently in development,
premium MedReleaf products are delivered to the global medical market. MedReleaf
serves the therapeutic needs of patients seeking safe, consistent and effective
medical cannabis and provides a compelling product offering for the adult-use
recreational consumer.
For more information on MedReleaf, its products, research and
how the company is helping patients #livefree, please visit MedReleaf.com or
follow @medreleaf.
Forward looking statements
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS:
Certain information in this news release constitutes forward-looking statements
under applicable securities laws. Any statements that are contained in this news
release that are not statements of historical fact may be deemed to be
forward-looking statements. Forward looking statements are often identified by
terms such as "may", "should", "anticipate", "expect", "potential", "believe",
"intend" or the negative of these terms and similar
expressions. Forward-looking statements in this news release
includes, but is not limited to, the consideration to be received by
shareholders of MedReleaf, which may fluctuate in value due to Aurora common
shares forming the consideration. In particular, there can be no assurance that
the transaction will be completed. Forward looking statements are based on
certain assumptions regarding Aurora and MedReleaf, including expected growth,
results of operations, performance, industry trends and growth opportunities.
While Aurora and MedReleaf consider these assumptions to be reasonable, based on
information currently available, they may prove to be incorrect. Readers are
cautioned not to place undue reliance on forward-looking statements.
Forward-looking statements also necessarily involve known and unknown risks,
including, without limitation, risks associated with general economic
conditions; adverse industry events; future legislative and regulatory
developments; inability to access sufficient capital from internal and external
sources, and/or inability to access sufficient capital on favourable terms; the
cannabis industry in Canada generally, income tax and regulatory matters; the
ability of Aurora to implement its business strategies; competition; currency
and interest rate fluctuations and other risks.
Readers are cautioned that the foregoing list is not
exhaustive. Readers are further cautioned not to place undue reliance on
forward-looking statements as there can be no assurance that the plans,
intentions or expectations upon which they are placed will occur. Such
information, although considered reasonable by management at the time of
preparation, may prove to be incorrect and actual results may differ materially
from those anticipated.
Forward-looking statements contained in this news release
are expressly qualified by this cautionary statement and reflect our
expectations as of the date hereof, and thus are subject to change thereafter.
Aurora and MedReleaf disclaim any intention or obligation to update or revise
any forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by law. Factors that could cause
anticipated opportunities and actual results to differ materially include, but
are not limited to, matters referred to above and elsewhere in Aurora's and
MedReleaf's public filings and the material change reports that will be filed in
respect of this transaction, which are, or will be, available on SEDAR.
SOURCE MedReleaf Corp.
View original content: http://www.newswire.ca/en/releases/archive/May2018/25/c6195.html
%SEDAR: 00042628E
For further information:
For Aurora: Marc Lakmaaker,
Director, Investor Relations and Corporate Development, +1.855.279.4652,
marc.lakmaaker@auroramj.com, www.auroramj.com; Craig MacPhail, NATIONAL Equicom,
+1.800.385.5451, cmacphail@national.ca; For MedReleaf: Darren Karasiuk, SVP
& GM, Recreational, dkarasiuk@medreleaf.com, +1.855.473.5323; Dennis Fong,
LodeRock Advisors, Investor Relations, investorrelations@medreleaf.com,
+1.416.283.9930
CO: MedReleaf Corp.
CNW 06:00e 25-MAY-18
Aurora Cannabis Retains KCSA Strategic Communications to
Enhance U.S. investor and Media Outreach
TSX: ACB
EDMONTON, May 25, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today
announced it has appointed retained KCSA Strategic Communications ("KCSA"), a
leading New York-based communications firm, to support the Company's strategic
communications and investor relations efforts in the United States.
"With American investor interest in Aurora growing rapidly, and
a number of significant corporate developments on the way, this is the right
moment for us to amplify our outreach to multiple U.S. audiences," said Cam
Battley, Chief Corporate Officer. "Given Aurora's status as a global leader in
the cannabis sector, we are adding skilled resources, both internally and
externally, to help us share the Company's story of agility, innovation and
execution with institutional and retail investors in the U.S. and around the
world."
KCSA will implement a comprehensive communications program
aimed at further increasing awareness of Aurora across the U.S. institutional
and retail investment communities. Since its inception nearly fifty years ago,
KCSA has developed a strong reputation for its work representing public
companies, including a growing roster of cannabis companies.
Phil Carlson, Managing Director of KCSA Strategic
Communications, commented, "Aurora has a clear and well-executed strategy, aimed
at building a fully integrated and well-diversified cannabis company that meets
all the critical success factors to capitalize on the global cannabis
opportunity, estimated at approximately US$140 billion at maturity
1
for the medical market alone. With our extensive history of providing expert
strategic communications counsel based on best practices and large networks, we
believe we are the right partner for Aurora to introduce this compelling story
to a broader audience of institutional and retail investors, as well as to media
and other influencers."
____
1
Eight Capital, 2017
Milestone payment
The Company issued a total of 182,853 common shares of the
Company to the vendors of CanvasRx for the achievement of certain performance
milestones, pursuant to a share purchase agreement announced on August 10,
2016.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Enterprises Inc., is a
licensed producer of medical cannabis pursuant to Health Canada's Access to
Cannabis for Medical Purposes Regulations ("ACMPR"). The Company operates a
55,200 square foot, state-of-the-art production facility in Mountain View
County, Alberta, known as "Aurora Mountain", and a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Inc.
The Company's wholly-owned subsidiary CanniMed Therapeutics
Inc. ("CanniMed") is Canada's most experienced licensed producer of medical
cannabis, with over 20,000 kg per annum in funded capacity. CanniMed forms the
heart of Aurora's Medical Cannabis Centre of Excellence, aimed at product and
market development.
Aurora also owns Berlin-based Pedanios GmbH, the leading
wholesale importer, exporter, and distributor of medical cannabis in the
European Union. The Company owns 51% of Aurora Nordic, which will be
constructing a 1,000,000 square foot hybrid greenhouse in Odense, Denmark. The
Company offers further differentiation through its acquisition of BC Northern
Lights Ltd. and Urban Cultivator Inc., industry leaders, respectively, in the
production and sale of proprietary systems for the safe, efficient and
high-yield indoor cultivation of cannabis, and in state-of-the-art indoor
gardening appliances for the cultivation of organic microgreens, vegetables and
herbs in home and professional kitchens.
Aurora holds a 25% ownership interest in Alcanna Inc. ("CLIQ"),
one of Western Canada's largest retail chains of liquor stores, who are
developing a cannabis retail network in Western Canada. In addition, the Company
holds approximately 17.23% of the issued shares in leading extraction technology
company Radient Technologies Inc, and holds 52.7% of Hempco Food and Fiber Inc.
Aurora is also the cornerstone investor in two other licensed producers, with a
22.9% stake in Cann Group Limited, the first Australian company licensed to
conduct research on and cultivate medical cannabis, and a 17.62% stake in
Canadian producer The Green Organic Dutchman Ltd., with options to increase to
majority ownership. Finally, the Company owns a 9.14% stake in CTT
Pharmaceutical, an innovative product development company within the cannabis
space.
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were
used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news
release
.
Forward-looking statements are based on the opinions and
estimates of management at the date the statements are made, and are subject to
a variety of risks and uncertainties and other factors that could cause actual
events or results to differ materially from those projected in the
forward-looking statements. The Company is under no obligation, and expressly
disclaims any intention or obligation, to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release
.
AURORA CANNABIS INC.
Terry Booth
CEO
c
View original
content:
http://www.prnewswire.com/news-releases/aurora-cannabis-retains-kcsa-strategic-communications-to-enhance-us-investor-and-media-outreach-300654909.html
SOURCE Aurora Cannabis Inc.
View original content:http://www.newswire.ca/en/releases/archive/May2018/25/c8526.html
%SEDAR: 00025675E
For further information:
Marc Lakmaaker, Director,
Investor Relations and Corporate Development, +1.647.269.5523,
marc.lakmaaker@auroramj.com, www.auroramj.com; Craig MacPhail, NATIONAL Equicom,
+1 416 586-1938, cmacphail@national.ca
CO: Aurora Cannabis Inc.
CNW 07:00e 25-MAY-18
Aurora Cannabis Signs Agreement with Heinrich Klenk GmbH
& Co. KG
Accelerating Growth and Market Penetration in Germany
TSX: ACB
EDMONTON, May 28, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today
announced that the Company, through its wholly owned subsidiary Pedanios GmbH
("Pedanios"), has signed a collaboration agreement with Heinrich Klenk GmbH
& Co. KG ("Klenk"), one of Europe's largest medicinal plant companies.
Klenk, whose products are carried in over 25,000 pharmacies throughout Germany
and Europe, has been importing, exporting, and processing medicinal plants and
herbal raw materials for the pharmaceutical industry for over 90 years.
Under the terms of the agreement, Aurora has launched a new
cannabis brand in Germany called "Cannabis Klenk" which is produced in Canada,
imported by Pedanios, and sold to German pharmacies through Klenk's existing and
wide-reaching pharmaceutical wholesale distribution network. Klenk has an
unmatched reputation in Germany, both for the quality of its products, and for
the reliability of its distribution network.
"Klenk is a fantastic partner for Aurora, enabling us to add to
our already leading presence in the German market with one of the country's most
widely recognized medicinal plant brands and most comprehensive distribution
networks," said Neil Belot, Chief Global Business Development Officer.
"Operating for over 90 years, Klenk is one of the most trusted partners to the
pharmaceutical wholesale and pharmacy sectors. This, we believe, will help
further destigmatize the use of medical cannabis in Germany and accelerate
growth. Klenk's decentralized distribution capabilities ensure short supply
lines throughout the entire country, greatly increasing our market reach, while
reducing the need to invest heavily in our own sales and fulfillment
capabilities."
Klenk and its medicinal plant products are synonymous with
quality and are made available across Germany and Europe through decades long
relationships with the leading European pharmaceutical wholesale distributors.
Cannabis Klenk branded products are currently held in over 20 distribution hubs
located across Germany to facilitate fast and uncomplicated access, as well as
same-day delivery service to pharmacies where available.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Enterprises Inc., is a
licensed producer of medical cannabis pursuant to Health Canada's Access to
Cannabis for Medical Purposes Regulations ("ACMPR"). The Company operates a
55,200 square foot, state-of-the-art production facility in Mountain View
County, Alberta, known as "Aurora Mountain", and a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Inc.
The Company's wholly-owned subsidiary CanniMed Therapeutics
Inc. ("CanniMed") is Canada's most experienced licensed producer of medical
cannabis, with over 20,000 kg per annum in funded capacity. CanniMed forms the
heart of Aurora's Medical Cannabis Centre of Excellence, aimed at product and
market development.
Aurora also owns Berlin-based Pedanios GmbH, the leading
wholesale importer, exporter, and distributor of medical cannabis in the
European Union. The Company owns 51% of Aurora Nordic, which will be
constructing a 1,000,000 square foot hybrid greenhouse in Odense, Denmark. The
Company offers further differentiation through its acquisition of BC Northern
Lights Ltd. and Urban Cultivator Inc., industry leaders, respectively, in the
production and sale of proprietary systems for the safe, efficient and
high-yield indoor cultivation of cannabis, and in state-of-the-art indoor
gardening appliances for the cultivation of organic microgreens, vegetables and
herbs in home and professional kitchens.
Aurora holds a 25% ownership interest in Alcanna Inc. ("CLIQ"),
one of Western Canada's largest retail chains of liquor stores, who are
developing a cannabis retail network in Western Canada. In addition, the Company
holds approximately 17.23% of the issued shares in leading extraction technology
company Radient Technologies Inc, and holds 52.7% of Hempco Food and Fiber Inc.
Aurora is also the cornerstone investor in two other licensed producers, with a
22.9% stake in Cann Group Limited, the first Australian company licensed to
conduct research on and cultivate medical cannabis, and a 17.62% stake in
Canadian producer The Green Organic Dutchman Ltd., with options to increase to
majority ownership. Finally, the Company owns a 9.14% stake in CTT
Pharmaceutical, an innovative product development company within the cannabis
space.
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index
About Klenk
Klenk is a family-run company with about 100 employees that has
been trading plant-based raw materials for more than 90 years. Klenk procures,
analyzes and processes these for our customers in the pharmaceutical, food and
animal feed industries. For decades, Klenk has been the natural partner for
pharmacies in the field of medicinal herbs, raw plant materials and medicinal
teas.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
AURORA CANNABIS INC.
Terry Booth
CEO
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/May2018/28/c3917.html
%SEDAR: 00025675E
For further information:
Marc Lakmaaker, Director,
Investor Relations and Corporate Development, +1.647.269.5523,
marc.lakmaaker@auroramj.com, www.auroramj.com; Craig MacPhail, NATIONAL Equicom,
+1 416 586-1938, cmacphail@national.ca; For U.S. investors: Phil Carlson /
Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233 / (212)
896-1203, Email: pcarlson@kcsa.com / ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 07:00e 28-MAY-18
Aurora Cannabis Launches New Cannabis Product Line -Aurora
Frost
Patent Pending Technology Enables Efficient High-Volume
Production
TSX: ACB
EDMONTON, May 30, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today
announces the launch of new product line called Aurora Frost. This new dried
cannabis product line represents the highest potency offering of any Aurora
product launched to date at over 35% THC.
Aurora Frost products are produced from premium whole flower.
The products, generally known throughout the industry as kief, consist primarily
of trichomes, the resinous glands rich in active pharmaceutical ingredients,
including terpenes, flavonoids, and cannabinoids, such as THC and CBD.
Aurora's in-house technology team successfully developed a new
and proprietary technology used to efficiently produce high volume, GMP
compliant, Aurora Frost products, based on a process that finely trims the
trichomes from the cannabis flower.
Beginning today, Aurora Frost is shipping in convenient,
child-safe, certified glass bottles. Products are sold in one gram increments,
priced at $35 per gram ($25 per gram for compassionate pricing patients). Like
all Aurora products, Aurora Frost comes with publicly available third party
independent laboratory results on potency, terpene profile, and contaminant
analysis.
"Successfully developing a proprietary, fine trimming and GMP
compliant technology needed to produce these high-quality products at commercial
scale, provides us with a remarkable advantage in addressing this niche of the
cannabis market," said Terry Booth, CEO. "Aurora now makes this high potency
medical cannabis available to its patients, reflecting the Aurora Standard of
innovation and patient care."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Enterprises Inc., is a
licensed producer of medical cannabis pursuant to Health Canada's Access to
Cannabis for Medical Purposes Regulations ("ACMPR"). The Company operates a
55,200 square foot, state-of-the-art production facility in Mountain View
County, Alberta, known as "Aurora Mountain", and a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Inc.
The Company's wholly-owned subsidiary CanniMed Therapeutics
Inc. ("CanniMed") is Canada's most experienced licensed producer of medical
cannabis, with over 20,000 kg per annum in funded capacity. CanniMed forms the
heart of Aurora's Medical Cannabis Centre of Excellence, aimed at product and
market development.
Aurora also owns Berlin-based Pedanios GmbH, the leading
wholesale importer, exporter, and distributor of medical cannabis in the
European Union. The Company owns 51% of Aurora Nordic, which will be
constructing a 1,000,000 square foot hybrid greenhouse in Odense, Denmark. The
Company offers further differentiation through its acquisition of BC Northern
Lights Ltd. and Urban Cultivator Inc., industry leaders, respectively, in the
production and sale of proprietary systems for the safe, efficient and
high-yield indoor cultivation of cannabis, and in state-of-the-art indoor
gardening appliances for the cultivation of organic microgreens, vegetables and
herbs in home and professional kitchens.
Aurora holds a 25% ownership interest in Alcanna Inc. ("CLIQ"),
one of Western Canada's largest retail chains of liquor stores, who are
developing a cannabis retail network in Western Canada. In addition, the Company
holds approximately 17.23% of the issued shares in leading extraction technology
company Radient Technologies Inc, and holds 52.7% of Hempco Food and Fiber Inc.
Aurora is also the cornerstone investor in two other licensed producers, with a
22.9% stake in Cann Group Limited, the first Australian company licensed to
conduct research on and cultivate medical cannabis, and a 17.62% stake in
Canadian producer The Green Organic Dutchman Ltd., with options to increase to
majority ownership. Finally, the Company owns a 9.14% stake in CTT
Pharmaceutical, an innovative product development company within the cannabis
space.
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
AURORA CANNABIS INC.
Terry Booth
CEO
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/May2018/30/c6360.html
%SEDAR: 00025675E
For further information:
Marc Lakmaaker, Director,
Investor Relations and Corporate Development, +1.647.269.5523,
marc.lakmaaker@auroramj.com, www.auroramj.com; Craig MacPhail, NATIONAL Equicom,
+1 416 586-1938, cmacphail@national.ca; For U.S. investors: Phil Carlson /
Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233 / (212)
896-1203, Email: pcarlson@kcsa.com / ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 07:00e 30-MAY-18
Aurora Cannabis Enters into Global Softgel Business with
Capcium Inc.
Strategic Investment Secures 19.99% Ownership of a Softgel
Production Leader
TSX: ACB
EDMONTON, June 7, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) and
Capcium Inc. ("
Capcium
") announced today that the companies have signed a
strategic agreement to produce high quality cannabis-based softgels for
patients. Additionally, Aurora has acquired a 19.99% ownership interest in
Capcium by way of a non-brokered private placement for consideration of $10
million.
Capcium, a privately-owned Montreal-based global leader in
softgel manufacturing, has emerged as one of the leading manufacturers in the
cannabis industry. Production of high-precision dosage controlled softgels is an
extensive and complex process. Capcium, through its pharmaceutical and
encapsulation experience, has developed expertise that is ready to be applied to
the cannabis industry and deliver high-volume production capacity.
Capcium intends to use the proceeds from the Aurora investment
to expand its cutting-edge cannabis softgel manufacturing business, which
includes the construction and operation of a large, state-of-the-art facility,
to be completed in Q4, 2019.
In advance of this new Capcium facility, and to accelerate time
to market, Capcium and Aurora have agreed to immediately establish a
high-volume, state-of-the-art softgel manufacturing operation at Aurora Vie, the
Company's cannabis production facility in Pointe-Claire, Québec. Softgel sales
from this facility are anticipated to commence (subject to Health Canada
approval) by the end of Summer 2018. Capcium will be the exclusive manufacturer
of Aurora's North American cannabis softgel products. The agreement also
contemplates Capcium being the company's preferred global manufacturer of
softgel cannabis products.
Management Commentary
"This investment in Capcium reflects our strategic objective to
further expand our differentiated, higher-margin product offerings," said Terry
Booth, CEO of Aurora. "Capcium's extensive know-how has enabled it to develop an
advanced technology for the high-volume production of cannabis-based softgels.
This provides us with a strong competitive advantage, positioning us well to
build a leading position in the production and sale of value-added cannabis
products globally. We are proud that Aurora quickly is becoming the partner of
choice in the cannabis industry, and we look forward to capitalizing with
Capcium on the significant opportunity that softgels represent."
Sylvain Duvernay, CEO of Capcium, added, "Teaming up with what
we believe to be the most innovative Licensed Producer with excellent
international distribution channels, greatly enhances our growth prospects. We
are delighted that Aurora and Capcium will become long-term partners, and look
forward to bringing Québec made softgel cannabis products to Canada and to the
global markets."
Aurora and Capcium believe the benefits of the transaction are
significant for all shareholders. Aurora's brand leadership, quality products,
customer care, innovation and deep product knowledge will be a strong complement
to Capcium's well-established softgel manufacturing expertise. This deal will
establish Québec as a world leader for cannabis value added products by
leveraging the experience and expertise of two innovative companies with Québec
operations, while creating highly-skilled Québec-based employment in the rapidly
expanding cannabis sector.
Terms of the Investment
Aurora has made an initial $10 million investment in Capcium by
way of a non-brokered private placement. The consideration paid by Aurora
consists of $500,000 in cash and $9.5 in million common shares of Aurora at a
five-day volume weighted average trading price of Aurora's Common Shares on the
Toronto Stock Exchange (the "TSX") for the period ended June 6, 2018. Upon
completion of the investment, Aurora will own approximately 19.99% of the issued
and outstanding common shares of Capcium.
The private placement is subject to the final approval of the
TSX, and is not subject to any financing or due diligence conditions.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Enterprises Inc., is a
licensed producer of medical cannabis pursuant to Health Canada's Access to
Cannabis for Medical Purposes Regulations ("ACMPR"). The Company operates a
55,200 square foot, state-of-the-art production facility in Mountain View
County, Alberta, known as "Aurora Mountain", and a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed. Once at full capacity, Aurora Sky is expected to produce
over 100,000 kg per annum of cannabis. Aurora is completing a facility in
Lachute, Quebec utilizing its wholly owned subsidiary Aurora Larssen Projects
Inc.
The Company's wholly-owned subsidiary CanniMed Therapeutics
Inc. ("CanniMed") is Canada's most experienced licensed producer of medical
cannabis, with over 20,000 kg per annum in funded capacity. CanniMed forms the
heart of Aurora's Medical Cannabis Centre of Excellence, aimed at product and
market development.
Aurora owns Berlin-based Pedanios GmbH, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company owns 51% of Aurora Nordic, which will be constructing a 1,000,000
square foot hybrid greenhouse in Odense, Denmark. The Company offers further
differentiation through its acquisition of BC Northern Lights Ltd. and Urban
Cultivator Inc., industry leaders, respectively, in the production and sale of
proprietary systems for the safe, efficient and high-yield indoor cultivation of
cannabis, and state-of-the-art indoor gardening appliances for the cultivation
of organic microgreens.
Aurora holds a 25% ownership interest in Alcanna Inc. ("CLIQ"),
one of Western Canada's largest retail chains of liquor stores. The Company
holds approximately 17.02% of the issued shares in leading extraction technology
company Radient Technologies Inc, and holds 52.7% of Hempco Food and Fiber Inc.
Aurora is also the cornerstone investor in two other licensed producers, with a
22.9% stake in Cann Group Limited, the first Australian company licensed to
conduct research on and cultivate medical cannabis, and a 17.62% stake in
Canadian producer The Green Organic Dutchman Ltd., with options to increase to
majority ownership. Finally, the Company owns a 9.14% stake in CTT
Pharmaceutical, an innovative product development company within the cannabis
space.
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index
About Capcium
Capcium Inc. is a Montreal based contract manufacturing
platform specializing in softgel encapsulation. Capcium is transforming the
cannabis industry by providing high-value, high quality cannabis products.
Capcium presently holds a nutraceutical license from Health Canada and will soon
apply to be fully licensed for cannabis in its new state-of-the-art
manufacturing facility in Pointe Claire, Quebec.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Terry Booth, CEO
Aurora Cannabis Inc.
SOURCE Aurora Cannabis Inc.
View original content:http://www.newswire.ca/en/releases/archive/June2018/07/c6598.html
%SEDAR: 00025675E
For further information:
Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com, www.auroramj.com; Rob Kelly,
+1.705.606.0744, rob.kelly@auroramj.com, www.auroramj.com; U.S. investors, Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com / ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 07:15e 07-JUN-18
Aurora Cannabis Welcomes Historic Senate Vote to Legalize
the Adult Usage of Cannabis in Canada
TSX: ACB
EDMONTON, June 7, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
comments on today's Canadian Senate's vote in favour of Bill C-45, which governs
the legalization of the adult consumer use of cannabis.
"This truly is a monumental day for Canada and the cannabis
movement, with the ground-breaking Senate vote to pass Bill C-45 representing a
major milestone, strengthening our global leadership in the cannabis sector, and
making this country the first in the Group of Seven Nations (G7) to take this
historic step," said Terry Booth, CEO. "We applaud the government's intelligent
and rational public policy, initiating wholesale legislative changes - focused
on clearly defined objectives - to reduce the negative impact of prohibition,
while establishing a well-regulated system designed to protect public health and
public safety. We must also salute and congratulate the advocates, the activists
and the passionate who for decades, and often at great personal risk, spoke up,
sat in, appealed laws, wrote new ones, ran studies, educated, and changed
perceptions towards ending criminal prohibition."
"We are very pleased with today's vote, but more important work
remains, particularly with respect to how our industry is allowed to operate and
profile itself in order to meet Canadian adult consumer expectations," added Mr.
Booth. "In addition, with legalization alone, the burden of prior non-violent
cannabis-related convictions and charges will continue to carry a significant
and unacceptable negative impact on many Canadians, disproportionately affecting
individuals from marginalized populations. Aurora believes the government must
now urgently consider amnesty for non-violent cannabis-related offenses, and
will continue advocating on this important topic. Furthermore, we will continue
our advocacy to obtain tax-exempt status for medical cannabis in support of
Canada's patients whose quality of life has greatly improved through
cannabis-based therapies. Medical cannabis currently is the sole prescribed
medicine in Canada upon which any tax is charged, and we will continue our
pursuit to correct this oversight."
Mr. Booth concluded, "With the implementation of Bill C-45
around the corner, we will continue our high-paced execution and deliver
innovations, industry-leading customer care, and rapidly growing production
capacity to this significant and exciting market. We will bring the Aurora
Standard to the adult consumer market, delivering a uniquely satisfying customer
experience."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Enterprises Inc., is a
licensed producer of medical cannabis pursuant to Health Canada's Access to
Cannabis for Medical Purposes Regulations ("ACMPR"). The Company operates a
55,200 square foot, state-of-the-art production facility in Mountain View
County, Alberta, known as "Aurora Mountain", and a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed by Health Canada. Once at full capacity, Aurora Sky is
expected to produce over 100,000 kg per annum of cannabis. Aurora is completing
a facility in Lachute, Quebec utilizing its wholly owned subsidiary Aurora
Larssen Projects Inc. ("ALPS"). ALPS provides comprehensive project services
related to the design, engineering, construction support, compliance
requirement, genetics, commissioning and maintenance of Aurora Standard
production facilities across the globe.
The Company's wholly-owned subsidiary CanniMed Therapeutics
Inc. ("CanniMed") is Canada's first licensed producer of medical cannabis, with
over 20,000 kg per annum in funded capacity. Aurora also owns Berlin-based
Pedanios GmbH, the leading wholesale importer, exporter, and distributor of
medical cannabis in the European Union. The Company owns 51% of Aurora Nordic,
which will be constructing a 1,000,000 square foot hybrid greenhouse in Odense,
Denmark.
The Company offers further differentiation through its
acquisition of BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens.
Aurora holds a 25% ownership interest in Alcanna Inc. ("CLIQ"),
Western Canada's largest private retail chain of liquor stores, who are
developing a cannabis retail network in Western Canada. In addition, the Company
holds approximately 17.23% of the issued shares in leading extraction technology
company Radient Technologies Inc, and holds 52.7% of Hempco Food and Fiber Inc.
Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian licensed producer The Green Organic Dutchman Ltd., with
options to increase to majority ownership. Finally, the Company owns a 9.14%
stake in CTT Pharmaceutical, an innovative product development company within
the cannabis space.
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Terry Booth, CEO
Aurora Cannabis Inc.
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/June2018/08/c1265.html
%SEDAR: 00025675E
For further information:
Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com, www.auroramj.com; Rob Kelly,
+1.705.606.0744, rob.kelly@auroramj.com, www.auroramj.com; U.S. investors: Phil
Carlson, Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233,
(212) 896-1203, Email: pcarlson@kcsa.com, ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 00:30e 08-JUN-18
Aurora Cannabis Signs Supply Agreement with Ascent
Industries
Ascent to supply up to 20,000 kg of dried cannabis flower and
up to 6,000 kg of cannabis trim per year
TSX: ACB
EDMONTON, June 11, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today
announced that it has signed a cannabis flower and trim supply agreement (the
"Agreement") with Ascent Industries Corp's ("Ascent") wholly-owned subsidiary,
Agrima Botanicals Corp. ("Agrima"), a licensed producer of medical cannabis
pursuant to Health Canada's Access to Cannabis for Medical Purposes Regulations
("ACMPR").
Under the terms of the Agreement, Agrima will supply Aurora
with up to 20,000 kg of dried cannabis flower and up to 6,000 kg of cannabis
trim per year from its Canadian cultivation facilities. The Agreement is
effective for a term of five years, subject to a 12,000 kg per year minimum.
"The agreement with Ascent brings further differentiation to
Aurora's growing portfolio of products," said Terry Booth, CEO. "Expanding
product choice to our various audiences through quality operators such as Agrima
positions us well to accelerate growth. Furthermore, the relationship provides
an opportunity to potentially source additional, higher-margin derivative
products down the line."
Philip Campbell, CEO and Director of Ascent added, "We are
delighted to be selected as a supplier to Aurora, a leader in the global
cannabis sector. Agrima is committed to providing high-quality cannabis to both
consumers and strategic partners, which this new agreement is testament to. We
believe this represents the beginning of a strong strategic relationship with
Aurora, one which will benefit both companies for years to come."
Ascent's wholly-owned subsidiary, Agrima will supply Aurora
with dried cannabis flower and trim grown at its facilities in Pitt Meadows,
British Columbia. Once operational, the 600,000 square foot, automated
cultivation facility will have a total cultivation capacity of approximately
60,000 kg of cut flower per year. Agrima anticipates receiving Health Canada
approval towards the end of calendar 2018, and anticipates shipping its first
products in Q1 2019.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Enterprises Inc., is a
licensed producer of medical cannabis pursuant to Health Canada's Access to
Cannabis for Medical Purposes Regulations ("ACMPR"). The Company operates a
55,200 square foot, state-of-the-art production facility in Mountain View
County, Alberta, known as "Aurora Mountain", and a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed by Health Canada. Once at full capacity, Aurora Sky is
expected to produce over 100,000 kg per annum of cannabis. Aurora is completing
a facility in Lachute, Quebec utilizing its wholly owned subsidiary Aurora
Larssen Projects Inc. ("ALPS"). ALPS provides comprehensive project services
related to the design, engineering, construction support, compliance
requirement, genetics, commissioning and maintenance of Aurora Standard
production facilities across the globe.
The Company's wholly-owned subsidiary CanniMed Therapeutics
Inc. ("CanniMed") is Canada's first licensed producer of medical cannabis, with over 20,000 kg per
annum in funded capacity. Aurora also owns Berlin-based Pedanios GmbH, the
leading wholesale importer, exporter, and distributor of medical cannabis in the
European Union. The Company owns 51% of Aurora Nordic, which will be
constructing a 1,000,000 square foot hybrid greenhouse in Odense, Denmark.
The Company offers further differentiation through its
acquisition of BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens.
Aurora holds a 25% ownership interest in Alcanna Inc. ("CLIQ"),
Western Canada's largest private retail chain of liquor stores, who are
developing a cannabis retail network in Western Canada. In addition, the Company
holds approximately 17% of the issued shares in leading extraction technology
company Radient Technologies Inc, and holds 52.7% of Hempco Food and Fiber Inc.
Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian licensed producer The Green Organic Dutchman Ltd., with
options to increase to majority ownership. Finally, the Company owns a 9.14%
stake in CTT Pharmaceutical, an innovative product development company within
the cannabis space.
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
About Ascent
In Canada, Ascent is a Licensed Producer under the ACMPR of
Health Canada, with licenses to cultivate cannabis and produce cannabis
extracts. In addition, the Company plans to apply for a license to distribute
cannabis products in Canada under the ACMPR in the near future. The Company has
also applied for a controlled drugs license in Canada under the
Controlled
Drugs and Substances Act
(Canada). In the United States, the Company holds
licenses for the production, processing and wholesale distribution of cannabis
in Oregon and in Nevada.
The Company's operations currently include licensed facilities
in British Columbia, Canada, and in Oregon and Nevada in the United States. The
Company's activities at each facility are governed by the applicable licenses
held by the Company, and currently include cultivation and extraction in Canada,
and production, processing and wholesale distribution of a catalogue of premium
cannabis products in Oregon and Nevada. In addition, Ascent conducts
cannabis-based research with Simon Fraser University and the University of
Kentucky.
The Company is increasing its production capacity from 50,000
square feet to 650,000 square feet in 2018, from which it expects to produce
significantly larger quantities of cannabis and cannabis oil to support its
expanding operations. The Company offers a product suite of more than 40 unique
products under eight consumer focused brands, including gel capsules, oils,
vaporizer pens, pre-rolled joints, various edibles and raw flower. Through
careful development of its sophisticated cannabis brands, Ascent is positioned
to be a leader in branded, commercialized products in both medical and adult-use
markets across North America and internationally. The Company's intellectual
property portfolio includes existing trademarks for its sophisticated brands,
applications for trademarks internationally for these brands, as well as
applications for patents the Company has and is in the process of filing for
certain unique scientific formulations and processes the Company has
created.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the
meaning of applicable securities law ("forward-looking
statements"). Forward-looking statements are frequently characterized by words
such as "plan", "continue", "expect", "project", "intend", "believe",
"anticipate", "estimate", "may", "will", "potential", "proposed" and other
similar words, or statements that certain events or conditions "may" or "will"
occur. These statements are only predictions. Various assumptions were used in
drawing the conclusions or making the projections contained in the
forward-looking statements throughout this news release. Forward-looking
statements are based on the opinions and estimates of management at the date the
statements are made, and are subject to a variety of risks and uncertainties and
other factors that could cause actual events or results to differ materially
from those projected in the forward-looking statements. The Company is under no
obligation, and expressly disclaims any intention or obligation, to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as expressly required by applicable
law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Terry Booth, CEO
Aurora Cannabis Inc.
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/June2018/11/c5238.html
%SEDAR: 00025675E
For further information:
Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com, www.auroramj.com; Rob Kelly,
+1.705.606.0744, rob.kelly@auroramj.com, www.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com / ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 07:00e 11-JUN-18
Aurora Cannabis to Acquire Cannabis Science Leader Anandia
Laboratories Inc.
Boosting IP Portfolio, Cultivar Diversification, Cultivation
Efficiencies and Product Development
TSX: ACB
EDMONTON, June 12, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) and
Anandia Laboratories Inc. ("
Anandia
") announced today that they have
signed a binding term sheet whereby Aurora intends to acquire all of the issued
and outstanding common shares of privately-held Anandia in an all share
transaction valued at approximately $115 million on a fully diluted basis (the
"Transaction").
Led by CEO and co-founder Jonathan Page, PhD, one of the
industry's most widely recognized cannabis experts, Anandia is considered the
industry leader in science, genetics, and independent cannabis product testing.
Dr. Page was the first scientist to sequence the cannabis genome and provide
deep insights into the biosynthesis of cannabinoids and the interplay between
cannabinoids and terpenes.
Anandia's COO and co-founder, John Coleman, PhD, brings over 20
years of experience in drug research and commercialization as a natural product
chemist. He previously worked in the biotech industry, most recently leading the
team identifying new drug targets for the federally funded Centre for Drug
Research and Development.
Anandia's intellectual property ("IP") includes the exclusive
rights to a number of key genes in the cannabinoid pathway, as well as patents
pending for genetic markers. The strength of Anandia's expert staff, proprietary
assets and know-how will provide Aurora with a very significant advantage in
developing new cannabis cultivars. For instance, genome-based variety
development and technological fortification can tailor metabolite (cannabinoid
and terpene) profiles, improve disease resistance, enhance crop yield and
optimize flowering time, and can be employed to develop specialized cultivars
for oil production.
In advance of the forthcoming legalization of the adult use
market and the significant associated growth, Anandia intends to expand its
R&D, product testing, and product development facilities to meet both
domestic and international demand, including the development of:
|
|
•
|
A 12,700 sq. ft. corporate head office, testing lab,
R&D and tissue culture facility in Vancouver, British Columbia. This
existing laboratory is undergoing security upgrades, with operations
planned to coincide with legalization.
|
|
|
•
|
A unique, 22,500 sq. ft., Aurora Larssen Projects Inc.
("ALP's") designed and constructed, Cannabis Innovation Centre, focused on
cannabis breeding and genetics. This purpose-built greenhouse with an
associated 10,000 sq. ft. laboratory building in Comox, BC is currently
under construction and is located five minutes from a major airport, and
has the option to expand to 100,000+ sq. ft. The project is on track with
development permitting in-place, and construction planned for summer/fall
2018.
|
Anandia follows a three-pronged approach to creating value for
its clients licensed under Canada's
Access to Cannabis for Medical Purposes
Regulations
("ACMPR") and intends to continue to do so following completion
of the Transaction:
|
|
•
|
Independent Third-Party Analytical Testing:
which includes cannabinoids, terpenes and contaminants (microorganisms,
pesticides, heavy metals and others).
|
|
|
•
|
Genetics: plant breeding, tissue culture and
strain archiving, as well as genomics-based technologies.
|
|
|
•
|
Product Development: development of cannabinoid
preparations and formulations.
|
Combining with Aurora gives Anandia access to significant new
market opportunities in Canada and internationally through Aurora's global
footprint. Furthermore, leveraging Aurora's capabilities and capacity in
facility development, the combination will accelerate the construction of
Anandia's testing and product development laboratory in Vancouver, and a unique,
purpose-built cannabis breeding facility ahead of Canadian adult-use
legalization,
Anandia's Product Testing
Anandia's cannabis testing services will remain operationally
independent of Aurora. These services will remain intact and Anandia is
committed to continuing to serve all clients, including Licensed Producers and
patient-growers, and Anandia is committed to maintaining complete data
confidentiality. Anandia will continue to build capacity to take on the
increased sample volume arising from legalization, including expansion to its
new testing facility in Vancouver.
Management Commentary
"This is a transformative acquisition that expands our science
capabilities in the upstream segment of the seed-to-sale cannabis value chain,
significantly boosting plant-based innovations in cultivation, enabling
accelerated product development, and, ultimately, enhancing our margin profile
going forward," said Terry Booth, CEO of Aurora. "Anandia has a fantastic,
complementary corporate culture and some of the best and brightest minds in the
cannabis industry, including Dr. Jonathan Page, the first scientist to sequence
the cannabis genome. By adding Dr. Page and the Anandia team to the existing
Aurora and CanniMed research infrastructure, we are assembling a unique,
world-class research group to capitalize on the many exciting opportunities the
cannabis plant offers society."
Dr. Jonathan Page, Anandia's co-founder and CEO, added,
"Anandia is already on its way to developing a world-leading library of cannabis
genetics coupled with in-depth genomic analysis. We expect our breeding efforts
to be accelerated through access to Aurora's financial resources and scientific
expertise, as well as through the addition of Aurora's multiple cultivation
sites. Anandia and Aurora are strong believers in research and science-based
solutions. Joining forces with Aurora allows us to continue to provide
best-in-class testing services to our customers, while rapidly advancing
cannabis science for the benefit of patients, consumers and growers."
Neil Belot, Chief Global Business Development Officer for
Aurora, added, "The expansion of Anandia's physical infrastructure combined with
Aurora's rapidly growing global footprint, creates a unique platform to pursue a
wide variety of market opportunities. The Transaction will greatly boost our
competitive advantage in developing marketable intellectual property and
high-margin products, and help address diversified needs on a global basis."
Terms of the Transaction
Aurora will purchase 100% of the issued and outstanding shares
from Anandia's shareholders in exchange for common shares of Aurora, based on
the 20-day VWAP (to the Effective Date) equivalent to $115 million. In addition,
each ACB share will be accompanied with a warrant exercisable for 1/2 of an ACB
share at an exercise price equal to the issue price plus 10% with a term of 5
years.
The parties intend to complete the Transaction by way of a plan
of arrangement under the Business Corporations Act (British Columbia) subject to
finalization of an Arrangement Agreement on acceptable terms to both parties.
The closing of the Transaction is subject to customary closing conditions,
including execution of definitive documentation, completion of satisfactory due
diligence, receipt of approval of the shareholders of Anandia, and receipt
of applicable third party and regulatory approvals, including that of the
Supreme Court of British Columbia and the satisfaction of other conditions
customary in transactions of this nature. The parties anticipate closing the
Transaction in the coming weeks.
About Aurora
Aurora's wholly-owned subsidiary, Aurora Enterprises Inc., is a
licensed producer of medical cannabis pursuant to Health Canada's Access to
Cannabis for Medical Purposes Regulations ("ACMPR"). The Company operates a
55,200 square foot, state-of-the-art production facility in Mountain View
County, Alberta, known as "Aurora Mountain", and a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed by Health Canada. Once at full capacity, Aurora Sky is
expected to produce over 100,000 kg per annum of cannabis. Aurora is completing
a facility in Lachute, Quebec utilizing its wholly owned subsidiary Aurora
Larssen Projects Inc. ("ALPS"). ALPS provides comprehensive project services
related to the design, engineering, construction support, compliance
requirement, genetics, commissioning and maintenance of Aurora Standard
production facilities across the globe.
The Company's wholly-owned subsidiary CanniMed Therapeutics
Inc. ("CanniMed") is Canada's first licensed producer of medical cannabis, with
over 20,000 kg per annum in funded capacity. Aurora also owns Berlin-based
Pedanios GmbH, the leading wholesale importer, exporter, and distributor of
medical cannabis in the European Union. The Company owns 51% of Aurora Nordic,
which will be constructing a 1,000,000 square foot hybrid greenhouse in Odense,
Denmark.
The Company offers further differentiation through its
acquisition of BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens.
Aurora holds a 25% ownership interest in Alcanna Inc. ("CLIQ"),
Western Canada's largest private retail chain of liquor stores, who are
developing a cannabis retail network in Western Canada. In addition, the Company
holds approximately 17% of the issued shares in leading extraction technology
company Radient Technologies Inc, and holds 52.7% of Hempco Food and Fiber Inc.
Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian licensed producer The Green Organic Dutchman Ltd., with
options to increase to majority ownership. Finally, the Company owns a 9.14%
stake in CTT Pharmaceutical, an innovative product development company within
the cannabis space.
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
About Anandia
Anandia has been established to provide the science, technical
innovations and services that underpin the global cannabis industry. Anandia
provides industry-leading analytical testing services including potency,
pesticides, microbes and terpenes to Licensed Producers and patients. In
addition, Anandia uses modern plant breeding approaches to develop next
generation cannabis varieties.
Anandia holds a Dealer's License by Health Canada pursuant to
the provisions of the
Controlled Drugs and Substances Act
and the
Narcotic Control Regulations. The Dealer's License permits Anandia to analyze and extract cannabis, as well as cultivate
cannabis for breeding purposes.
Anandia has achieved important recognition in various national
and international publications, as well as received the accolade for Top Testing
Lab at the 2017 Lift Canadian Cannabis Awards.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur and include, but are not limited to: a) closing
of the Transaction, b) the competitive advantages realized by Aurora upon
completing the Transaction, and c) Anandia's expansion and development plans.
These statements are only predictions. Various assumptions were used in drawing
the conclusions or making the projections contained in the forward-looking
statements throughout this news release. Forward-looking statements are based on
the opinions and estimates of management at the date the statements are made,
and are subject to a variety of risks and uncertainties and other factors that
could cause actual events or results to differ materially from those projected
in the forward-looking statements. The Company is under no obligation, and
expressly disclaims any intention or obligation, to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Terry Booth, CEO
Aurora Cannabis Inc.
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/June2018/12/c5897.html
%SEDAR: 00025675E
For further information:
For Aurora: Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com, www.auroramj.com; Rob Kelly,
+1-647-331-7228, rob.kelly@auroramj.com, www.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com / ebarker@kcsa.com; For Anandia:
Jonathan Page, President and CEO, ir@anandia.ca, 1.778.945.8590; For Anandia
media inquiries: Lana Culley, Director of Business Development, lana@anandia.ca,
+1.289.968.4585
CO: Aurora Cannabis Inc.
CNW 07:00e 12-JUN-18
Aurora Cannabis to Be Lead Investor in Choom Holdings
Private Placement
Delivering Product Diversification and Access to Craft
Grower's Western Canada Retail Strategy
EDMONTON, June 13, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
announced today that it intends to complete a $7 million investment in Choom
Holdings Inc. ("Choom") (CSE:CHOO) (OTCQB: CHOOF), whereby Aurora will receive
9,859,155 common shares from Choom's treasury, priced at $0.71 per share (the
"Transaction"), representing an 8% ownership interest.
Choom currently operates two late stage applicants under the
Access to Cannabis for Medical Purposes Regulations
("ACMPR"). Choom has
agreements in place to acquire two additional late-stage applicant craft growers
in BC and Saskatchewan, including a facility in Sooke, British Columbia,
anticipated to receive its cultivation license from Health Canada in the third
quarter of 2018.
The relationship between Aurora and Choom germinated through
Aurora Pro, the platform through which the Company delivers a variety of
services to industry participants, including cultivation, genetics, regulatory
consultancy and market development services. The Aurora Pro platform was
developed by Aurora to interact with craft growers who are faced with
potentially unreasonable entry barriers to the adult usage market in Canada.
Choom's strategy is to develop a carefully curated portfolio of
high-grade cannabis strains with ideal characteristics for craft growing,
targeting the premium segment of the adult consumer use market. Choom continues
to develop a sophisticated brand, high-grade products, and an elevated in-store
customer experience. Images of the company's concept cannabis retail outlets can
be found on https://bit.ly/2JzwdOr.
To date, Choom has secured rights to 17 retail leases in highly
defensible locations throughout Alberta. Applications to obtain a cannabis
retail license for these outlets have been submitted. Choom also has 7 leases
secured in BC, and licenses will be applied for upon commencement of the
licensing program in BC. Choom furthermore intends to play an important role in
the Saskatchewan retail market, and has a robust strategy in place to develop
its presence in this market.
Management Commentary
"Our investment in a consumer-focused brand with a strong
retail strategy offers Aurora additional growth opportunities through supply,
retail and distribution to the adult consumer use market, and provides a good
example of the functioning of Aurora Pro," said Terry Booth, CEO of Aurora.
"Choom has established a well-developed brand, supported by deep roots within
the British Columbia cannabis community and a passion for high-grade,
handcrafted product. We're excited to strengthen our relationship with the team
at Choom and help amplify their market reach as they continue to execute on
their differentiated craft growing philosophy and their unique retail strategy."
Chris Bogart, President & CEO for Choom, added, "Teaming up
with what we consider to be the most dynamic licensed producer with exceptional
strength throughout the entire cannabis value chain, we believe, will prove to
be a key growth accelerator for Choom. Both companies have a very strong focus
on the entire customer experience, key in establishing exceptional brands. This
investment by Aurora is a strong signal to our markets and our shareholders that
Choom's strategy meets with the highest standards in the industry."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Enterprises Inc., is a
licensed producer of medical cannabis pursuant to Health Canada's Access to
Cannabis for Medical Purposes Regulations ("ACMPR"). The Company operates a
55,200 square foot, state-of-the-art production facility in Mountain View
County, Alberta, known as "Aurora Mountain", and a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed by Health Canada. Once at full capacity, Aurora Sky is
expected to produce over 100,000 kg per annum of cannabis. Aurora is completing
a facility in Lachute, Quebec utilizing its wholly owned subsidiary Aurora
Larssen Projects Inc. ("ALPS"). ALPS provides comprehensive project services
related to the design, engineering, construction support, compliance
requirement, genetics, commissioning and maintenance of Aurora Standard
production facilities across the globe.
The Company's wholly-owned subsidiary CanniMed Therapeutics
Inc. ("CanniMed") is Canada's first licensed producer of medical cannabis, with
over 20,000 kg per annum in funded capacity. Aurora also owns Berlin-based
Pedanios GmbH, the leading wholesale importer, exporter, and distributor of
medical cannabis in the European Union. The Company owns 51% of Aurora Nordic,
which will be constructing a 1,000,000 square foot hybrid greenhouse in Odense,
Denmark.
The Company offers further differentiation through its
acquisition of BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens.
Aurora holds a 25% ownership interest in Alcanna Inc. ("CLIQ"),
Western Canada's largest private retail chain of liquor stores, who are
developing a cannabis retail network in Western Canada. In addition, the Company
holds approximately 17% of the issued shares in leading extraction technology
company Radient Technologies Inc, and holds 52.7% of Hempco Food and Fiber Inc.
Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.62% stake in Canadian licensed producer The Green Organic Dutchman Ltd., with
options to increase to majority ownership. Finally, the Company owns a 9.14%
stake in CTT Pharmaceutical, an innovative product development company within
the cannabis space.
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
About Choom
Choom™ was created for and inspired by the Choom Gang; a group
of buddies in Honolulu during the 1970's who loved to smoke weed—or as the
locals called it, "Choom". Now, after four decades, Choom™ is bringing the
spirit of Hawaii to Canada. Choom™ is focused on delivering an elevated customer
experience through our curated retail environments, high-grade handcrafted
Cannabis supply, and a diversity of brands for the Canadian recreational
consumer.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or
statements that certain events or conditions "may" or "will"
occur and include, but are not limited to: a) closing of the Transaction, b) the
benefits realized by Aurora and Choom upon completing the Transaction, c)
Choom's expansion and development plans, and d) the receipt by Choom of retail
licenses. These statements are only predictions. Various assumptions were used
in drawing the conclusions or making the projections contained in the
forward-looking statements throughout this news release. Forward-looking
statements are based on the opinions and estimates of management at the date the
statements are made, and are subject to a variety of risks and uncertainties and
other factors that could cause actual events or results to differ materially
from those projected in the forward-looking statements. The Company is under no
obligation, and expressly disclaims any intention or obligation, to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as expressly required by applicable
law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Terry Booth, CEO
Aurora Cannabis Inc.
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/June2018/13/c7951.html
%SEDAR: 00025675E
For further information:
For Aurora: Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com, www.auroramj.com; Rob Kelly,
+1.705.606.0744, rob.kelly@auroramj.com, www.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com / ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 07:00e 13-JUN-18
Aurora Cannabis Closes Strategic Investment in Choom
Holdings
Exposure to Unique Canadian Craft Cultivator and Retail
Operator
TSX: ACB
EDMONTON, June 18, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
announced today that it has closed its previously announced $7 million
investment in Choom Holdings Inc. ("Choom"), whereby Aurora received 9,859,155
common shares from Choom's treasury, priced at $0.71 per share, representing a
6% ownership interest. In total, Choom issued 14,225,352 shares for total gross
proceeds of $10.1 million. All securities issued are subject to a four month
hold period.
Since the announcement of the private placement, Choom closed
its previously announced acquisition of Specialty Medijuana Products Inc.
("SMP"). SMP recently completed construction of its 10,000 square foot Sooke,
British Columbia facility and expects to receive its cultivation license from
Health Canada in the third quarter of 2018. In addition, SMP intends to expand
production capacity by and additional 19,600 square feet at the Sooke facility,
bringing the total capacity to 29,600 square feet. SMP has also submitted plans
to construct two separate hybrid greenhouse facilities on the grounds of the
Sooke Facility, which when completed would bring total production capacity to
over 700,000 square feet.
Management Commentary
"This strategic investment positions Aurora to participate in
the emerging craft cultivation market, as well as in an exciting Western Canada
retail strategy with a seasoned team of executives," said Terry Booth, CEO of
Aurora. "Choom's product cultivation strategy puts the cultivar first,
developing a high-grade offering with unique flavour profiles, which are
anticipated to resonate strongly with the adult-use consumer market, once
legalized. We're pleased to close our investment in Choom, and look forward to
building a strong, long-term relationship with the team."
Chris Bogart, President & CEO for Choom, added, "The
financing provides us with the funds to accelerate the execution of our unique
retail strategy moving forward. We are now well positioned to expand our
production and retail footprint, and pursue further opportunities across
Canada."
About Aurora
Aurora's wholly-owned subsidiary, Aurora Enterprises Inc., is a
licensed producer of medical cannabis pursuant to Health Canada's Access to
Cannabis for Medical Purposes Regulations ("ACMPR"). The Company operates a
55,200 square foot, state-of-the-art production facility in Mountain View
County, Alberta, known as "Aurora Mountain", and a second 40,000 square foot
high-technology production facility known as "Aurora Vie" in Pointe-Claire,
Quebec on Montreal's West Island. In January 2018, Aurora's 800,000 square foot
flagship cultivation facility, Aurora Sky, located at the Edmonton International
Airport, was licensed by Health Canada. Once at full capacity, Aurora Sky is
expected to produce over 100,000 kg per annum of cannabis. Aurora is completing
a facility in Lachute, Quebec utilizing its wholly owned subsidiary Aurora
Larssen Projects Inc. ("ALPS"). ALPS provides comprehensive project services
related to the design, engineering, construction support, compliance
requirement, genetics, commissioning and maintenance of Aurora Standard
production facilities across the globe.
The Company's wholly-owned subsidiary CanniMed Therapeutics
Inc. ("CanniMed") is Canada's first licensed producer of medical cannabis, with
over 20,000 kg per annum in funded capacity. Aurora also owns Berlin-based Pedanios GmbH, the leading wholesale
importer, exporter, and distributor of medical cannabis in the European Union.
The Company owns 51% of Aurora Nordic, which will be constructing a 1,000,000
square foot hybrid greenhouse in Odense, Denmark.
The Company offers further differentiation through its
acquisition of BC Northern Lights Ltd. and Urban Cultivator Inc., industry
leaders, respectively, in the production and sale of proprietary systems for the
safe, efficient and high-yield indoor cultivation of cannabis, and in
state-of-the-art indoor gardening appliances for the cultivation of organic
microgreens, vegetables and herbs in home and professional kitchens.
Aurora holds a 25% ownership interest in Alcanna Inc. ("CLIQ"),
Western Canada's largest private retail chain of liquor stores, who are
developing a cannabis retail network in Western Canada. In addition, the Company
holds approximately 17% of the issued shares in leading extraction technology
company Radient Technologies Inc, and holds 52.7% of Hempco Food and Fiber Inc.
Aurora is also the cornerstone investor in two other licensed
producers, with a 22.9% stake in Cann Group Limited, the first Australian
company licensed to conduct research on and cultivate medical cannabis, and a
17.6% stake in Canadian licensed producer The Green Organic Dutchman Ltd., with
options to increase to majority ownership. Finally, the Company has convertible
securities reflecting a 9.1% stake in CTT Pharmaceutical, an innovative product
development company within the cannabis space, as well as a 6% interest in craft
grower and retail brand developer Choom Holdings.
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
About Choom
Choom™ was created for and inspired by the Choom Gang; a group
of buddies in Honolulu during the 1970's who loved to smoke weed—or as the
locals called it, "Choom". Now, after four decades, Choom™ is bringing the
spirit of Hawaii to Canada. Choom™ is focused on delivering an elevated customer
experience through our curated retail environments, high-grade handcrafted
Cannabis supply, and a diversity of brands for the Canadian recreational
consumer.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur and include, but are not limited to: a) the
competitive advantages realized by Aurora upon completing the Transaction, and
b) Choom's expansion and development plans. These statements are only
predictions. Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking statements throughout this news
release. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Terry Booth, CEO
Aurora Cannabis Inc.
SOURCE Aurora Cannabis Inc.
View original content:http://www.newswire.ca/en/releases/archive/June2018/18/c1131.html
%SEDAR: 00025675E
For further information:
For Aurora: Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com, www.auroramj.com; Rob Kelly,
+1.647.331.7228, rob.kelly@auroramj.com, www.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com /ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 07:00e 18-JUN-18
Aurora Cannabis to Issue Return of Capital to Shareholders
via Spin-Out of U.S. Assets
/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR
FOR RELEASE, PUBLICATION, DISTRIBUTION OR DISSEMINATION DIRECTLY, OR INDIRECTLY,
IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES/
New Spin-Off Company Australis Capital Applying for CSE
Listing
TSX: ACB
EDMONTON, June 20, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
announced today that it intends to distribute units consisting of shares and
warrants of its subsidiary, Australis Capital Inc. ("Australis"), to
shareholders of the Company by way of a return of capital.
Capital distribution of Australis shares to Aurora
shareholders
The spin-out of Australis will happen in the form of a
distribution of units (the "Units") in Australis Capital to resident holders of
Aurora shares (the "Distribution"). Non-resident holders will receive cash
instead of units pursuant to the spin-out, as explained below.
The Distribution will be paid on the basis of one Unit for
every 20 Aurora shares outstanding on the record date, to be fixed by the board
of directors of Aurora. Each Unit will consist of one common share ("Share") and
one Share purchase warrant ("Warrant") of Australis. Each Warrant will entitle
the holder thereof to acquire one Share at an exercise price of $0.25 per
Australis share, on or prior to 4:00 p.m. (Eastern Time) on the date that is one
year from the date of the Distribution.
Aurora shareholders are not required to pay for the Units they
receive by way of the Distribution, to tender or surrender their Aurora shares,
or to take any other action in connection with the Distribution, other than
providing a declaration of residency.
Australis has filed a preliminary prospectus in all provinces
and territories of Canada, except for Quebec in respect of the Distribution,
which is available on SEDAR under Australis' profile ( www.sedar.com). Australis
intends to file a preliminary prospectus in Quebec shortly, upon completion of
translation of the preliminary prospectus into French.
Spin-out to Non-resident Holders
As described in further detail in the preliminary prospectus,
no Shares will be issued to shareholders who are (or are deemed to be)
non-residents of Canada. Rather, such Shares will be delivered to a custodian
for sale in the open market following the Distribution, and the net cash
proceeds will be delivered to non-resident shareholders, net of any withholding
taxes. Shareholders who fail to provide a declaration of Canadian residency in
the form that will be provided will be deemed to be a non-resident for these
purposes. Canadian shareholders who hold their shares in Aurora through a
brokerage or other account are therefore urged to contact their brokers to avoid
being deemed a non-resident.
CSE Listing
Australis is applying to list its Shares and Warrants on the
Canadian Securities Exchange (the "CSE"). Listing will be subject to Australis
fulfilling all of the listing requirements of the CSE.
Australis Capital
Australis is an investment company that intends to acquire
ownership interests in a variety of opportunities and asset classes, primarily
in the cannabis and real estate sectors in the United States. The Australis
Board, Management and Investment Advisory Committee have material experience
with, and knowledge of, the cannabis space in the U.S., and are anticipated to
execute on high-quality investments.
The U.S. Cannabis Market
While 29 states have legalized medical cannabis and 9 states
plus the District of Columbia have proceeded with consumer legalization,
cannabis remains a Schedule I controlled substance at the federal level in the
United States. Consequently, the U.S. cannabis market is very fragmented in
nature and includes many high-quality operations and technology innovators with
limited access to capital. This has created a compelling opportunity for
well-connected and capitalized companies to invest in U.S. assets, especially
considering anticipated market growth, with over 50% of the U.S. population
currently living in states with legal access.
Recent changes in U.S. federal positioning with respect to
cannabis have positively impacted the perception of risk to invest in U.S.
cannabis assets. This has further incentivized capital market participants to
seek opportunities to fund U.S. based operations. Entering the U.S. market now,
in compliance with regulatory requirements, represents a risk/reward balance
that is attractive to a well-connected and funded operators.
Assets
Aurora has completed a series of intercorporate transactions in
connection with the proposed Distribution, resulting in the Company holding a
direct interest in 100% of the issued and outstanding common Shares and Warrants
of Australis, and Australis holding the following investments:
|
|
•
|
A 50% joint venture interest in Australis Holdings LLP, a
limited liability partnership organized under the laws of Washington
State, which holds two parcels of land totaling 24.5 acres in Whatcom
County, Washington, along with approximately $3,156,402 of loans
(including interest as of June 13, 2018) owing from Australis Holdings;
|
|
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•
|
Aurora's interests in SubTerra LLC ("SubTerra"),
consisting of (a) a royalty of five percent (5%) of the gross revenues of
SubTerra earned annually from the sale of cannabis and cannabis based
products grown and/or processed at its facility during the period
commencing June 1, 2018 and ending May 31, 2028; (b) a payment of $150,000
annually during the period commencing June 1, 2018 and ending May 31,
2028; and (c) a two-year option to purchase the White Pine land parcel for
$3,000. SubTerra does not currently conduct any cannabis related
activities, but has applied to the State of Michigan for a license for the
production, research and processing of medical cannabis.
|
Furthermore, Australis intends to raise $15 million through a
non-brokered private placement (see below for details), so that the company will
be well-capitalized to act on opportunities.
Funding Agreement and Restricted Back-in Right
Aurora and Australis entered into the Funding Agreement on June
14, 2018 pursuant to which Aurora will advance $500,000 to Australis, in
consideration for which Australis will issue to Aurora: (a) a warrant to
purchase a number of Shares equal to 20% of the issued and outstanding Shares as
of the date on which the Shares commence trading on the CSE, which will be
exercisable for a period of ten years from the date of issue at an exercise
price of $0.20 per Share, and (b) a warrant to purchase a number of Shares equal
to 20% of the number of Shares issued and outstanding as of the date of
exercise, which will be exercisable for a period of ten years from the date of
issue at an exercise price equal to the five day volume weighted average trading
price of the Shares on the CSE or such other stock exchange on which the Shares
may then be listed at the time of exercise, or if the Shares are not then listed on a stock exchange at the fair
market value of the Shares at the time of exercise (collectively, the
"Restricted Back-in Right").
Aurora will be prohibited from exercising the Restricted
Back-in Right unless all of Australis' business operations in the United States
are allowed under applicable federal and state laws and Aurora has received the
consent of the Toronto Stock Exchange and any other stock exchange on which
Aurora may be listed, as required.
Management Commentary
"The proposed distribution of Australis shares and warrants
delivers an immediate return to Aurora shareholders, and creates the opportunity
for holders to benefit financially as Australis executes on its investment
strategy in the U.S.," said Terry Booth, CEO of Aurora. "The fragmented U.S.
cannabis market has many innovative and successful operators that struggle to
access growth capital. This creates exciting and attractively priced
opportunities for the well-connected and knowledgeable team at Australis to
capitalize on. Although fragmented, many U.S. cannabis companies have done an
excellent job in creating brand value and have developed high-quality,
differentiated products with potential for geographic expansion. While
regulatory requirements vary greatly from state to state, Australis are well
prepared to navigate this landscape, secure opportunities, and pursue
growth."
Board and Management
Australis' Board, Management team and Investment Advisory
Committee have considerable financial, M&A and cannabis industry experience,
and consist of the following people:
Executive Officers
Scott Dowty, CEO and Director
Mr. Dowty has 25
years of experience evaluating companies and markets to identify key business
drivers, spur rapid revenue and profit growth in competitive and highly
regulated global markets. Mr. Dowty has held executive and corporate officer
positions with numerous publicly traded US based companies, and is currently the
Chief Revenue Officer of Apriva LLC, a leading provider of payment technology
solutions and secure mobile communications
Campbell Birge, CFO
Mr. Birge has over 20
years of experience advising and working with public and private companies in
Canada, the United States and Mexico. He is currently President and Director of
U.S. listed CTT Pharmaceutical Holdings Inc. and previously served with other
U.S. based public companies as CEO, CFO and as a Director. Mr. Birge is well
connected in the capital markets, as well as has advised public companies in the
cannabis sector.
Directors
Arlene Dickinson, Director
Arlene Dickinson is
the owner and CEO of Venture Communications, a company she grew from a small,
local firm to one of the largest independent agencies in Canada, and is also the
CEO of District Ventures and Youinc.com, companies all aimed at helping market,
fund and grow entrepreneurs and entrepreneurial companies. She is a two-time
best-selling author, accomplished speaker, and may be best known for her role as
a Dragon for eight seasons on the award-winning CBC series Dragons Den. Ms.
Dickinson's leadership has been recognized many times, including Canada's Most
Powerful Women Top 100, the Pinnacle Award for Entrepreneurial Excellence, as
well as PROFIT and Chatelaine's Top 100 Women Business Owners. She is also a
Marketing Hall of Legends inductee.
Roger Swainson, Director\
Mr. Swainson is a partner in Brownlee LLP's business law group.
His practice focuses primarily on commercial lending and finance transactions,
assisting lenders, mortgage brokers and mortgage servicers in structuring
complex commercial loans and financings, as well as commercial real estate
transactions. Mr. Swainson also led the team that revised the Alberta
Condominium Property Act and Regulations in 2002.
John Dover, Director
John Dover is CEO of
NelCorp Inc., a Canada-based operations management consultancy which specializes
in enhancing organizational performance and/or establishing effective Supply
Chain Management (SCM) Programs for small to medium sized firms across North
America. In addition, Mr. Dover has broad experience in asset based and
structured financing transactions specific to more complex supply chain
strategies.
Investment Advisory Committee
Desmond Balakrishnan
Mr. Balakrishnan has
practiced law as a partner at McMillan LLP since February 2002. Mr. Balakrishnan
has served as Director and Corporate Secretary of a number of listed issuers. He
received his Law Degree from the University of Alberta in 1997 and was called to
the British Columbia Bar in 1998. Mr. Balakrishnan a true leader in the cannabis
space has served as legal counsel for numerous public and private companies
within the cannabis industry. Mr. Balakrishnan has developed a deep and
well-respected understanding of the sector, and has developed a large network of
cannabis executives, enabling him to vet promising investment opportunities.
Graham Saunders
Mr. Saunders has served as
Vice Chairman, Head of Capital Markets Origination at Canaccord Genuity Corp.
since January 2016. Mr. Saunders has been instrumental in Canaccord Genuity's
entry and expansion into the cannabis sector. Prior to his current role, Mr.
Saunders acted as Co-Head of Institutional Equity Sales and Managing Director at
Canaccord Genuity Corp. Mr. Saunders' exposure to both the U.S. and Canadian
markets, and Canaccord Genuity's track record as the number one investment bank
in the Cannabis sector results in heavy exposure to Cannabis opportunities,
which Australis anticipates will contribute to the quality of the opportunities
under review.
Neil Belot
Mr. Belot has been the Chief Global
Business Development Officer at Aurora since March 2017, where he focuses on
developing business opportunities that drive Aurora's international growth.
Prior to this, he had held the position of Chief Brand Officer at Aurora since
September 2015 with operational oversight of brand, sales, marketing, client
care, and digital technology. Mr. Belot has been deeply involved with Canada's
medical cannabis industry and community for more than seven years. He also
serves on the Board of Directors for Australia's first licensed cannabis company
Cann Group Limited, as well as for North America's largest public chain of
liquor stores, Alcanna Inc.. Prior to joining Aurora, he was the Executive
Director of the trade association for commercial licensed producers known as the
Canadian Medical Cannabis Industry Association since February 2015. Before
joining the industry association, he managed one of Canada's largest programs
for the legislated bulk trading, pricing, hedging, transporting, and supply of
energy to a portfolio of over 40 municipal corporate clients with over 15,000
points of distribution since January 2013. Mr. Belot earned an international
finance-focused MBA while studying at Dalhousie University and Copenhagen
Business School.
Private Placement
Prior to the completion of the Distribution, Australis intends
to complete a non-brokered private placement (the "
Private Placement
")
with arm's length purchasers. Australis intends issue up to 75,000,000 Shares at
an offering price of $0.20 per Share for gross proceeds of $15 million. The Shares issued pursuant to the Private Placement will be subject
to a statutory four-month hold period, as applicable. Funds will be used to
execute on Australis' investment strategy.
Certain Aurora insiders, including Directors and Officers
intend to participate in the private placement, and consequently will become
shareholders of Australis. No insiders of Aurora will become insiders of
Australis.
This news release does not constitute an offer to sell or the
solicitation of an offer to buy securities in any jurisdiction. The Australis
Shares to be distributed have not been approved or disapproved by any Canadian
or U.S. regulatory authority nor has any such authority passed upon the accuracy
or adequacy of the preliminary prospectus.
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 430,000 kg per year and operations across Canada and in Europe, Aurora
is one of the world's largest cannabis companies. The Company is vertically
integrated and horizontally diversified across every key segment of the value
chain, from facility design and engineering, to cannabis breeding and genetics
research, cannabis and hemp production, extraction and high value-add product
development, home cultivation and wholesale and retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes. Intended to be replicable and scalable globally, these production
facilities are designed to produce cannabis on a massive scale, with high flower
quality, industry-leading yields, and ultra-low per gram production costs. Each
of the Company's facilities is built to meet European Union (EU) GMP standards,
and both its first production facility and its wholly owned European medical
cannabis distributor Pedanios have achieved that level of certification.
In addition to its rapid organic growth and strategic M&A,
which to date includes nine companies acquired, Aurora is distinguished by its
reputation as a partner of choice in the cannabis sector, having invested in and
established strategic partnerships with a range of leading innovators,
including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient
Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann
Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings
Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), and Alcanna Inc. (TSX:
CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website investor.auroramj.com.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur and include, but are not limited to: statements
in respect of the timing and details of the Distribution, the financial
prospects of Australis, the listing of Australis Shares and Warrants on the CSE,
the terms of the Restricted Back-in Right and the proposed Private Placement.
These statements are only predictions. Various assumptions were used in drawing
the conclusions or making the projections contained in the forward-looking
statements throughout this news release. Forward-looking statements are based on
the opinions and estimates of management at the date the statements are made,
and are
subject to a variety of risks and uncertainties and other
factors that could cause actual events or results to differ materially from
those projected in the forward-looking statements. Investors should refer to the
preliminary prospectus filed by Australis in connection with the Distribution
for more information, in particular the risk factors described therein under the
heading "Risk Factors". The Company is under no obligation, and expressly
disclaims any intention or obligation, to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Terry Booth, CEO
Aurora Cannabis Inc.
SOURCE Aurora Cannabis Inc.
View original content:http://www.newswire.ca/en/releases/archive/June2018/20/c5089.html
%SEDAR: 00025675E
For further information:
Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com, www.auroramj.com; Rob Kelly,
+1.647.331.7228, rob.kelly@auroramj.com, www.auroramj.com; U.S. investors, Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com /ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 07:00e 20-JUN-18
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AURORA CANNABIS INC.
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Suite 900, 510 Seymour Street
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Vancouver, British Columbia Canada V6B 1V5
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auroramj.com | +1-844-601-2448
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
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and
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MANAGEMENT INFORMATION CIRCULAR
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with respect to the proposed
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ACQUISITION OF
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MEDRELEAF CORP.
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BY WAY OF
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PLAN OF ARRANGEMENT
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June 18, 2018
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AURORA BOARD UNANIMOUSLY RECOMMENDS THAT
AURORA SHAREHOLDERS VOTE FOR
THE SHARE ISSUANCE RESOLUTION AND
THE REDUCTION OF CAPITAL RESOLUTION.
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These materials are important and require your
immediate action. They require Aurora Cannabis Inc.
shareholders to
make important decisions.
To ensure that your Aurora shares
will be represented at the meeting, please return the enclosed form
of proxy, properly completed and signed, prior to 9:00 a.m.
(Vancouver time) on July 16, 2018.
If you have questions, you
may contact the proxy solicitation agent:
Laurel Hill Advisory
Group
North American Toll Free Number: 1-877-452-7184
Collect
Calls Outside North America: 416-304-0211
E-mail:
assistance@laurelhill.com
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PROPOSED AURORA-MEDRELEAF COMBINATION WILL CREATE A POWERFUL
PLATFORM FOR GLOBAL EXPANSION
VOTE
FOR
THE SHARE ISSUANCE RESOLUTION TO COMBINE TWO OF
CANADA’S PREMIER CANNABIS COMPANIES
June 18, 2018
Fellow shareholders,
We are excited to present you with the details of the
definitive arrangement agreement between Aurora Cannabis Inc. (“
Aurora
”)
and MedReleaf Corp. (“
MedReleaf
”) announced on May 14, 2018. Under the
terms of the agreement (as amended by an amending agreement dated May 24, 2018,
referred collectively to in this circular as the “
Arrangement
Agreement
”), Aurora will acquire each outstanding MedReleaf share in
exchange for 3.575 Aurora Common shares and, in general, $0.000001 in cash.
Simply put, our joint management teams believe that the
combination establishes a pre-eminent global cannabis company, positioned
exceptionally well to rapidly accelerate growth in multiple large domestic and
international markets, while achieving an unmatched margin profile.
Aurora and MedReleaf are complementary in many ways; sharing
philosophies and strategies with respect to corporate values, cultivation and
production, international expansion, focus on aggressive development of global
medical cannabis markets, as well as the establishment of leading consumer
brands in Canada and additional international markets as laws and regulations
permit.
This strategic and cultural alignment creates the foundation to
further strengthen our vertical integration –capturing more margin and
developing strong, defensible competitive advantages, while servicing a rapidly
growing customer base through well-developed distribution channels. The combined
entity will have some of the strongest medical brands, as well as a portfolio of
brands for the adult consumer use market, once legalized. With a rapidly growing
footprint and an established team in multiple international jurisdictions, the
combined entity will continue to strengthen its position in restricted markets
with large populations, such as the EU.
The Arrangement is expected to provide Aurora shareholders (the
“
Aurora Shareholders
”) with the following benefits:
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Industry leading scale:
Unifying two leading
operators with a total funded capacity of over 570,000 kg per year of
high-quality cannabis, through nine facilities in Canada and two in
Europe.
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Low production costs and industry leading yields:
Aurora’s automated ‘Sky Class’ greenhouses are expected to deliver
industry-leading efficiencies and ultra-low production costs, delivering
sustainably robust margins. MedReleaf’s high-yield cultivation techniques
are expected to further enhance productivity and reduce costs across the
combined entity’s facilities.
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International distribution:
Aurora has established
a strong and rapidly growing footprint in the international medical
market. The combined entity can rapidly gain market share and establish an
unmatched position in very substantial markets (the EU, after Brexit, will
have well over 400 million people), while being subject to very limited
competition.
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Brand leadership
: Aurora, CanniMed and MedReleaf,
three established cannabis brands, coupled with a portfolio of consumer
and wellness brands, San Rafael ‘71, Woodstock, and AltaVie, backed by
detailed consumer and marketplace insights and advanced analytical
frameworks.
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Scientific leadership
: Each company is actively
engaged in clinical trials and medical studies, which has resonated
exceptionally well with the medical community, driving above average
prescription rates and referrals. Furthermore, both companies have
developed considerable expertise at the genetics end of the cannabis
industry science value chain, enabling the development of new cultivars
with specific traits for a variety of domestic and international markets.
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R&D
: The combined company will have an
industry leading science and R&D team, approaching 40 PhDs and MScs.
Both companies have a proven track record in developing new products,
adopting innovations throughout the value chain, and integrating exciting
innovations from third parties. Combining these capabilities will
accelerate product development and technology adoption, creating strong,
defensible competitive advantages.
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Aurora has called a special meeting of Aurora Shareholders (the
“
Meeting
”) to vote on a resolution to approve the issuance of the Aurora
common shares forming the consideration to be issued to MedReleaf
securityholders for the outstanding MedReleaf securities (the “
Share Issuance
Resolution
”).
The Meeting is being held on July 18, 2018, the same day as the
special meeting of MedReleaf Shareholders, which has been called to consider and
approve the Arrangement.
After careful consideration of the Arrangement, the board of
directors has
unanimously recommended
that
Aurora Shareholders vote
FOR
of
the Share Issuance Resolution.
In order to become effective, the Share Issuance Resolution
must be approved by at least a majority of the votes cast by Aurora
Shareholders, either present in person or by proxy at the meeting. In addition,
the Arrangement requires the approval of the shareholders of MedReleaf. Certain
directors and senior officers of each of Aurora and MedReleaf have entered into
agreements to vote in favour of the Arrangement.
At the Meeting, Aurora Shareholders will also be asked to
consider a special resolution authorizing Aurora to reduce the capital of its
common shares (the “
Reduction of Capital Resolution
”) in connection with
a proposed reorganization and spin out of certain U.S. assets of Aurora.
The accompanying Notice of Meeting and Circular contain a
detailed description of the Arrangement and set forth the actions to be taken by
you at the Meeting. You should carefully consider all of the information in the
Notice of Meeting and Circular and consult your financial, legal or other
professional advisors if you require assistance.
The Arrangement is also subject to court approval. Assuming
that all of the conditions to the Arrangement are satisfied, Aurora expects the
Arrangement to become effective as soon as possible after receipt of all
necessary shareholder approvals, and in any event in the second half of
2018.
Your vote is important regardless of how many Aurora common
shares you own. To ensure that your Aurora common shares will be represented at
the Meeting, whether or not you are personally able to attend, registered
holders of Aurora common shares are asked to return the enclosed form of proxy,
properly completed and signed, prior to 9:00 a.m. (Vancouver time) on July 16,
2018
(or a day, other than a Saturday, Sunday or holiday which is at least
two business days prior to any adjournment or postponement of the Meeting). The
proxy deadline may be waived or extended by the Chair of the Meeting, in his
sole discretion without notice.
If you are a beneficial Aurora Shareholder, meaning your Aurora
common shares are not registered in your own name but are registered in the name
of a broker, bank or other intermediary, follow the instructions provided on
your voting instruction form.
ii
If you share our vision to combine Aurora and MedReleaf’s
resources, and together, build the world’s largest,
fastest-growing and most
admired cannabis company vote FOR the Share Issuance
Resolution and the
Reduction of Capital Resolution.
If you have questions, you may contact the proxy solicitation
agent, Laurel Hill Advisory Group, by telephone at: 1-877-452-7184 (North
American Toll Free) or 416-304-0211 (Collect Outside North America); or by email
at: assistance@laurelhill.com.
Thank you for being an Aurora Shareholder and for your support
as we continue to work diligently to build the world’s preeminent
fully-integrated cannabis company.
Sincerely,
“Terry Booth”
Terry Booth
Chief Executive
Officer
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AURORA CANNABIS INC.
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900 – 510 Seymour Street
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Vancouver, British Columbia Canada V6B 1V5
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auroramj.com | +1-844-601-2448
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
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TAKE NOTICE
that a special
meeting (the “
Meeting
”) of shareholders of Aurora Cannabis Inc. (the
“
Company
” or “
Aurora
”) will be held at the offices of McMillan
LLP, 1500 – 1055 West Georgia Street, Vancouver, British Columbia, Canada on
Wednesday, July 18, 2018, at 9:00 a.m. (Vancouver time):
(a) to consider, and if deemed
advisable, to approve, with or without variation, an ordinary resolution (the
“
Share Issuance Resolution
”), the full text of which is attached as
Appendix “A” to the accompanying management information circular (the
“
Circular
”) of Aurora, approving the issuance of Aurora common shares
(the “
Aurora Shares
”), including but not limited to (i) the Aurora Shares
to be issued to MedReleaf Shareholders under the Arrangement; (ii) the Aurora
Shares issuable upon the exercise of Replacement Options to be issued to
MedReleaf Plan Optionholders in exchange for their MedReleaf Plan Options under
the Arrangement; (iii) the Aurora Shares issuable upon the exercise of the
MedReleaf Warrants following the Arrangement; and (iv) Aurora Shares issuable in
connection with the vesting of the MedReleaf DSUs following the Arrangement, in
each case, in connection with a court-approved plan of arrangement to be
completed under section 182 of the
Business Corporations Act
(Ontario),
pursuant to which Aurora will acquire all of MedReleaf’s common shares and
MedReleaf will become a wholly-owned subsidiary of Aurora, in accordance with
the arrangement agreement dated May 14, 2018, as amended by the amending
agreement dated May 24, 2018, entered into between Aurora and MedReleaf, all as
more particularly set forth in the Circular.
(b) to consider, and if deemed
advisable, to approve, with or without variation, a special resolution (the
“
Reduction of Capital Resolution
”), the full text of which is attached as
Appendix “B” to the Circular, authorizing Aurora to reduce the capital of the
common shares of Aurora in the context of a reorganization, all as more
particularly set forth in the Circular.
Specific details of the matters
proposed to be put before the Meeting are set forth in the Circular which
accompanies and is deemed to form part of this Notice of Meeting of Aurora
Shareholders.
Regardless of whether a
shareholder (an “
Aurora Shareholder
”) plans to attend the Meeting in
person, we request that each Aurora Shareholder complete and deliver the
enclosed form of proxy, or follow the other voting procedures, all as set out in
the form of proxy and Circular. Beneficial Aurora Shareholders who plan to
attend the Meeting must follow the instructions set out in the form of proxy or
voting instruction form and in the Circular to ensure that their Aurora Shares
will be voted at the Meeting.
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The board of directors of Aurora
have fixed the close of business (Vancouver time) on June 13, 2018 as the record
date for the determination of the Aurora Shareholders that will be entitled to
receive notice of the Meeting, and any adjournment or postponement of the
Meeting, and that will be entitled to vote at the Meeting. Proxies to be used or
acted upon at the Meeting must be deposited with Aurora’s transfer agent
Computershare Trust Company of Canada by 9:00 a.m. (Vancouver time) on July 16,
2018 (or a day other than a Saturday, Sunday or holiday which is at least two
business days before the Meeting or any adjournment or postponement of the
Meeting). The proxy deadline may be waived or extended by the Chair of the
Meeting in their sole discretion without notice.
DATED
at Vancouver, British Columbia, June 18, 2018.
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BY ORDER OF THE BOARD OF DIRECTORS
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“Terry Booth”
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Terry Booth
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Chief Executive Officer
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FREQUENTLY ASKED QUESTIONS ABOUT THE ARRANGEMENT AND THE
MEETING
Following are some questions that you, as a shareholder, may
have relating to the Meeting and answers to those questions. These questions and
answers do not provide all of the information relating to the Meeting or the
matters to be considered at the Meeting and are qualified in their entirety by
the more detailed information contained elsewhere in this Circular. You are
urged to read this Circular in its entirety before making a decision related to
your Aurora Shares. All capitalized terms used herein have the meanings ascribed
to them in the “Glossary of Terms” of the Circular.
FAQs related to the Meeting
Q: What am I voting on?
A: You are being asked to consider and, if deemed advisable, to
vote
FOR
the Share Issuance Resolution, which will approve the issuance
of Aurora Shares in connection with a court-approved plan of arrangement to be
completed under section 182 of the
Business Corporations Act
(Ontario)
pursuant to which Aurora will, among other things, acquire all of MedReleaf’s
issued and outstanding common shares, and MedReleaf will become a wholly-owned
subsidiary of Aurora.
Aurora Shareholders are also being asked to consider, and if
deemed advisable, to vote
FOR
the Reduction of Capital Resolution,
authorizing Aurora to reduce the capital of the common shares of Aurora.
Q: When and where is the Meeting?
A: The Meeting will take place at the offices of McMillan LLP,
1500 – 1055 West Georgia Street, Vancouver, British Columbia, Canada on
Wednesday, July 18, 2018 at 9:00 a.m. (Vancouver time).
Q: How many shares will be issued pursuant to the Share
Issuance Resolution?
A: Aurora Shareholders will be asked to approve the issuance of
up to 414,300,000 Aurora Shares pursuant to the Share Issuance Resolution, which
is equal to approximately 73.22% of the non-diluted Aurora Shares outstanding as
of the Record Date. However, Aurora expects to issue only up to 394,574,356
Aurora Shares, which is equal to approximately 69.74% of the non-diluted Aurora
Shares outstanding as of the Record Date.
Q: Why Should I Vote FOR the Share Issuance
Resolution?
A: The Arrangement is expected to provide a number of benefits
to Aurora Shareholders, including:
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The Arrangement brings together two leading operators
with a total funded capacity of over 570,000 kg per year of high-quality
cannabis.
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MedReleaf’s high-yield cultivation is expected to further
enhance productivity and reduce costs across the combined entity’s
facilities.
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The combined entity will have distribution agreements
with Quebec’s SAQ, Pharmasave and Shoppers Drug Mart in Canada, among
others.
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The combined entity will have strong, complementary
distribution channels internationally, enabling both companies to more
strongly leverage their early mover advantage in these potentially large
and lucrative markets.
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A more broadly diversified portfolio of award-winning
high-quality flower and derivative products will enable the combined
entity to establish strong brands across the various market segments, as
well as establish a strong margin profile.
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Three established cannabis brands, Aurora, CanniMed and
MedReleaf, coupled with a portfolio of consumer and wellness brands – San
Rafael ‘71, Woodstock, and AltaVie – all backed by detailed consumer and
marketplace insights and advanced analytical frameworks.
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Aurora’s Medical Centre of Excellence together with
MedReleaf’s ongoing studies with recognized research institutes are
expected to create scientific momentum on a global scale.
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Q: What is the Recommendation of the Board on the Share
Issuance Resolution?
A: The Board has unanimously approved the Arrangement Agreement
and the terms of the Arrangement and unanimously recommends that Aurora
Shareholders vote FOR the Share Issuance Resolution at the Meeting. In
recommending that the Aurora Shareholders vote FOR the Share Issuance
Resolution, the Board considered, among other things, the expected benefits of
the Arrangement, the Aurora Fairness Opinion and current industry, economic and
market conditions.
Q: Have any significant Aurora Shareholders agreed to vote
their shares in favour of the Share Issuance Resolution?
A: Aurora Supporting Shareholders (who include directors and
senior executives of Aurora and the largest individual shareholders of Aurora),
holding approximately 5% of the Aurora Shares have entered into the Voting and
Support Agreements with MedReleaf and have agreed to vote their Aurora Shares in
favour of the Share Issuance Resolution.
Q: Who is soliciting my proxy?
A: The solicitation of proxies will be primarily by mail, but
proxies may be solicited personally or by telephone by directors, officers and
regular employees of Aurora. Aurora will also be using the services of Laurel
Hill Advisory Group to solicit proxies. If you have questions, you may contact
the proxy solicitation agent, Laurel Hill, by telephone at: 1-877-452-7184
(North American Toll Free) or 416-304-0211 (Collect Outside North America); or
by email at: assistance@laurelhill.com.
Q: Who can attend and vote at the Meeting?
A: The Board of Directors fixed June 13, 2018 as the Record
Date for the determination of persons entitled to receive notice of the Meeting.
Only Aurora Shareholders of record at the close of business on the Record Date
who either: (i) attend the Meeting personally; (ii) complete, sign and deliver a
form of proxy in the manner and subject to the provisions described above; or
(iii) vote in one of the manners provided for in the VIF, will be entitled to
vote or to have their Aurora Shares voted at the Meeting.
Q: How many Aurora Shares are entitled to vote?
A: As of June 13, 2018, there were 565,767,220 Aurora Shares
issued and outstanding. Aurora Shareholders are entitled to one vote per Aurora
Share at meetings of Aurora Shareholders.
Q: What vote is required at the Meeting to approve the Share
Issuance Resolution?
A: The Share Issuance Resolution must be approved by a simple
majority (50% plus one vote) of votes cast at the Meeting by Aurora
Shareholders, present in person or by proxy.
Q: What is the Purpose of the Reduction of Capital
Resolution?
A: Aurora and its wholly-owned subsidiary, Australis Capital
Inc., intend to file a prospectus for the purpose of distributing to Aurora
Shareholders all of the issued and outstanding common shares and common share
purchase warrants in the capital of Australis Capital Inc. as a return of
capital in connection with a proposed reorganization and spin out of certain U.S. assets of Aurora. A
return of capital to the holders of Aurora Shares requires a reduction in the
capital of the Aurora Shares and is subject to approval of Aurora
Shareholders.
vii
Q: What is the Recommendation of the Board on the Reduction
of Capital Resolution?
A: The Board unanimously recommends that Aurora Shareholders
vote FOR the Return of Capital Resolution at the Meeting.
Q: What vote is required at the Meeting to approve the
Reduction of Capital Resolution?
A: The Reduction of Capital Resolution must be approved by a
special majority (at least two-thirds) of votes cast at the Meeting by Aurora
Shareholders, present in person or by proxy.
Q: How do I vote?
A: Aurora Shareholders can vote by mail, internet, telephone
or, in each case, in accordance with the enclosed instructions on the form of
Proxy or VIF. Aurora Shareholders should carefully follow the instructions set
out on the form of Proxy or VIF to ensure that your vote is counted at the
Meeting.
See “General Proxy Information – Voting by Proxyholder“ in this
Circular.
Q: What if I return my proxy but do not mark it to show how
I wish to vote?
A: If your proxy is signed and dated and returned without
specifying your choice or is returned specifying both choices, your Aurora
Shares will be voted FOR the Share Issuance Resolution and FOR the Reduction of
Capital Resolution in accordance with the recommendations of the Board.
Q: When is the cut-off time for delivery of proxies?
A: Proxies must be received prior to 9:00 a.m. (Vancouver time)
on July 16, 2018 (or a day other than a Saturday, Sunday or holiday which is at
least two business days before any adjournment or postponement of the
Meeting).
Q: Do I need to send in my Aurora Share
certificates?
A: No. You are not required to send the certificates
representing your Aurora Shares to validly cast your vote in respect of the
Share Issuance Resolution.
FAQs related to the Arrangement
Q: What is the recommendation of the Board regarding the
Arrangement?
A: After consulting with its financial and legal advisors and
careful consideration of the Arrangement, the Board of Directors has unanimously
recommended that Aurora Shareholders vote
FOR
the Share Issuance
Resolution. See “The Arrangement – Recommendation of the Board“ in this
Circular.
Q: Why is the Board making this recommendation?
A: In the course of their evaluation of the Arrangement, the
Board of Directors consulted with Aurora’s senior management, legal counsel and
BMO Capital Markets, and considered a number of factors which are described in
this Circular under the heading “The Arrangement – Recommendation of the
Board“.
viii
Q: In addition to the approval of Aurora Shareholders, are
there any other approvals required for the Arrangement?
A: Yes, the Arrangement requires the approval of the Court and
is also subject to the receipt of certain regulatory approvals.
The MedReleaf Arrangement Resolution must be approved by not
less than 66
2⁄ 3
% of the votes cast by the
MedReleaf
Shareholders who vote in respect of the Arrangement Resolution in person or by
proxy at the MedReleaf Meeting. Certain directors and officers of MedReleaf have
entered into support agreements pursuant to which they have agreed to vote their
shares in favour of the Arrangement. Holders of approximately 56% of the
MedReleaf Shares have entered into hard lock-ups to vote their shares in favour
of the Arrangement.
The Arrangement is also a Notifiable Transaction and it is a
condition precedent to closing that the Competition Act Approval shall have been
received. Accordingly, Aurora submitted a request to the Commissioner of
Competition for an ARC or, in the alternative, a No-Action Letter on May 30,
2018 and, as agreed by the parties, the parties both submitted Notifications on
June 8, 2018.
See “The Arrangement – Regulatory Matters – Competition Act
Approval“ in this Circular.
Q: Do any directors or executive officers of Aurora have any
interests in the Arrangement that are different from, or in addition to, those
of the Aurora Shareholders?
A: To the best of our knowledge, except as otherwise disclosed
herein, no person who has been a director or executive officer of Aurora at any
time since the beginning of Aurora’s last completed financial year, nor any
associate or affiliate of the foregoing persons, has any substantial or material
interest, direct or indirect, by way of beneficial ownership of securities or
otherwise, in any matter to be acted on at the Meeting.
Q: How will I know when the Arrangement will be
implemented?
A: The Effective Time will occur upon satisfaction or waiver of
all of the conditions to the completion of the Arrangement. Assuming that all of
the conditions to the Arrangement are satisfied, Aurora expects the Arrangement
to become effective in the second half of 2018. At the Effective Time, Aurora
will publicly announce that the conditions are satisfied or waived and that the
Arrangement has been implemented.
Q: Are there risks I should consider in deciding whether to
vote for the Share Issuance Resolution?
A: Aurora Shareholders should consider a number of risk factors
relating to the Arrangement and Aurora in evaluating whether to approve the
Share Issuance Resolution. These risk factors are discussed herein and/or in
certain sections of documents publicly filed, which sections are incorporated
herein by reference. See “Risk Factors“ in this Circular.
Q: Am I entitled to Dissent Rights?
A: Under applicable Canadian law, Aurora Shareholders are not
entitled to dissent rights with respect to the Share Issuance Resolution.
ix
FURTHER QUESTIONS AND REQUESTS FOR ASSISTANCE MAY BE DIRECTED
TO
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Laurel Hill Advisory Group
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70 University Avenue, Suite 1440
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Toronto, ON M5J 2M4
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North American Toll Free Phone: 1-877-452-7184
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Outside of North America: 1-416-304-0211
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Facsimile: 1-416-646-2415
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E-mail: assistance@laurelhill.com
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x
TABLE OF CONTENTS
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NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS
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iv
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THE ARRANGEMENT
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27
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FREQUENTLY ASKED QUESTIONS ABOUT
THE
ARRANGEMENT AND THE MEETING
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vi
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Background to the Arrangement
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27
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Recommendation of the Board
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31
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Information in this Circular
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1
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Reasons for the Arrangement
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31
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Information Pertaining to
MedReleaf
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1
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Aurora
Fairness Opinion
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34
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Notice to
United States Shareholders
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2
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Effect of the Arrangement
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35
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Forward-Looking
Information
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3
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Depositary
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36
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Non-IFRS
Financial Measures
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6
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Arrangement Mechanics
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36
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Currency and Currency
Exchange Rate Information
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7
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Exchange
Procedure
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38
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Unsurrendered Certificates
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39
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SUMMARY
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8
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Fractional
Shares and Rounding of Cash Consideration
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39
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General
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8
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Withholding Rights
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39
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The Meeting
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8
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Warrants
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39
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Background to the Arrangement
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9
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Legacy
Options
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40
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Reasons for the
Arrangement
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9
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Effective
Date
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40
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Fairness
Opinion
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12
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Required
Shareholder Approvals
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40
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Particulars of the
Arrangement
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13
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Voting
and Support Agreements
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40
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Non-Solicitation Provisions
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14
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Expenses
of the Arrangement
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43
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Right
to Match
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15
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Court
Sanction of the Arrangement and Completion of the Arrangement
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44
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Expenses
and Termination Fees
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15
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Stock
Exchange Listing and Reporting Issuer Status
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44
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Governance
of Aurora following the Arrangement
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15
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Effects
on Aurora if Arrangement is not Completed
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44
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Agreements
related to the Arrangement
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15
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Regulatory
Matters
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45
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Parties
to the Arrangement
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16
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Dissenting
Shareholder Rights
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47
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Selected
Aurora Unaudited Pro Forma Consolidated Financial Information
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17
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Proxy
Solicitation Agent
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19
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THE ARRANGEMENT AGREEMENT
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47
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Risk
Factors
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19
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Covenants
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47
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Representations
and Warranties
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52
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GENERAL PROXY INFORMATION
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20
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Conditions
Precedent to the Consummation of the Arrangement
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53
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Solicitation
of Proxies
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20
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Termination
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55
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Appointment
of Proxyholders
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20
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Termination
Fees and Expenses
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57
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Voting by
Proxyholder
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20
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Amendment
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59
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Exercise
of Discretion by Proxyholders
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21
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Governing
Law
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60
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Registered
Aurora Shareholders
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21
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Aurora
Beneficial Shareholders
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21
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RISK FACTORS
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60
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Risks
Relating to the Arrangement
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60
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INFORMATION CONCERNING THE
MEETING
AND ENTITLEMENT TO VOTING
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23
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Risk
Factors Relating to MedReleaf
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63
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Record
Date
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23
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Risk
Factors Relating to Aurora
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63
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Voting
Shares and Principal Holders
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23
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INFORMATION CONCERNING
MEDRELEAF
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63
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MATTERS TO BE CONSIDERED AT
THE
MEETING
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24
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Share
Issuance Resolution
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24
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INFORMATION CONCERNING AURORA
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63
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Shareholder
Approval
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24
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Aurora
Shares to be Issued Pursuant to the Share Issuance Resolution
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25
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INFORMATION CONCERNING THE
COMBINED
COMPANY UPON COMPLETION OF THE
ARRANGEMENT
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63
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Reduction
of Capital Resolution
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25
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xi
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SECURITIES AUTHORIZED FOR ISSUANCE
UNDER EQUITY COMPENSATION PLANS
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64
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CONSENT OF BMO CAPITAL
MARKETS
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68
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APPENDIX “A” SHARE ISSUANCE
RESOLUTION
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A-1
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MANAGEMENT CONTRACTS
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64
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APPENDIX “B” REDUCTION OF CAPITAL
RESOLUTION
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B-1
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INTEREST OF CERTAIN PERSONS
OR
COMPANIES IN MATTERS TO BE ACTED
UPON
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64
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APPENDIX “C” UNAUDITED PRO FORMA
FINANCIAL STATEMENTS
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C-1
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INTEREST OF INFORMED PERSONS IN
MATERIAL TRANSACTIONS
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65
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APPENDIX “D” FAIRNESS OPINION
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D-1
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INDEBTEDNESS OF DIRECTORS AND
EXECUTIVE OFFICERS
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65
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APPENDIX “E” INFORMATION CONCERNING
MEDRELEAF
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E-1
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INTERESTS OF EXPERTS
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65
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APPENDIX “F” INFORMATION CONCERNING
AURORA
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F-1
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AUDITORS
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65
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APPENDIX “G” INFORMATION
CONCERNING
THE COMBINED COMPANY
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G-1
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LEGAL MATTERS
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66
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APPENDIX “H” TAX
CONSIDERATIONS
RELATING TO THE DISTRIBUTION
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H-1
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OTHER INFORMATION AND MATTERS
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66
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APPENDIX “I” GLOSSARY OF
TERMS
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I-1
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ADDITIONAL INFORMATION
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66
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DIRECTORS’ APPROVAL
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67
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xii
MANAGEMENT INFORMATION CIRCULAR
Information in this Circular
This management information
circular (the “
Circular
”) is furnished in connection with the
solicitation of proxies by the management of Aurora Cannabis Inc. (the
“
Company
” or “
Aurora
”) for use at the special meeting (the
“
Meeting
”) of its shareholders to be held at the offices of McMillan LLP,
1500 – 1055 West Georgia Street, Vancouver, British Columbia, Canada on
Wednesday, July 18, 2018, at 9:00 a.m. (Vancouver time), for the purposes set
forth in the accompanying Notice of Meeting.
In this Circular, references to
“we” and “our” refer to Aurora. The “board of directors” or the “Board” refers
to the board of directors of Aurora. “Aurora Shares” means common shares without
par value in the capital of Aurora. “
Aurora Shareholders
” refers to
shareholders of Aurora. “
Beneficial Shareholders
” means Aurora
Shareholders who do not hold Aurora Shares in their own name and
“intermediaries” refers to brokers, investment firms, clearing houses and
similar entities that own securities on behalf of Beneficial Shareholders.
The information contained in this
Circular is given as at June 18, 2018, except where otherwise noted and except
that information in documents incorporated by reference is given as of the dates
noted therein. No person has been authorized to give any information or to make
any representation in connection with the Arrangement and other matters
described herein other than those contained in this Circular and, if given or
made, any such information or representation should be considered not to have
been authorized by Aurora or MedReleaf.
This Circular does not constitute
the solicitation of an offer to purchase, or the making of an offer to sell, any
securities or the solicitation of a proxy by any person in any jurisdiction in
which such solicitation or offer is not authorized or in which the person making
such solicitation or offer is not qualified to do so or to any person to whom it
is unlawful to make such solicitation or offer.
Information contained in this
Circular should not be construed as legal, tax or financial advice and Aurora
Shareholders are urged to consult their own professional advisors in connection
therewith.
Descriptions in this Circular of
the terms of the Arrangement Agreement and the Plan of Arrangement are summaries
of the terms of those documents. Aurora Shareholders should refer to the full
text of each of the Arrangement Agreement and the Plan of Arrangement for
complete details of those documents. The full text of the Arrangement Agreement
and the Plan of Arrangement can be obtained through Aurora’s profile on the
SEDAR website at www.sedar.com.
Information Pertaining to MedReleaf
Except as otherwise indicated,
the information concerning MedReleaf contained in the Circular, including, but
not limited to, information pertaining to MedReleaf in Appendix “E”, has been
taken from or is based upon information provided by MedReleaf and other publicly
available documents and records on file with Canadian securities regulatory
authorities and other public sources. Although Aurora has no knowledge that
would indicate that any statements contained herein concerning MedReleaf taken
from or based upon such documents and records are untrue or incomplete, neither
Aurora nor any of its directors or officers has independently verified such
information or assumes any responsibility for the accuracy or completeness of
such information, including any of MedReleaf’s financial statements, or for any
failure by MedReleaf to disclose events or facts which may have occurred or which may affect the
significance or accuracy of any such information but which are unknown to
Aurora. Aurora has limited means of verifying the accuracy or completeness of
any of the information contained herein that is derived from MedReleaf’s
publicly available documents or records or whether there has been any failure by
MedReleaf to disclose events that may have occurred or may affect the
significance or accuracy of any information.
1
For further information regarding
MedReleaf, please refer to MedReleaf’s filings with the Canadian Securities
Administrators, which may be obtained through the SEDAR website at
www.sedar.com.
Notice to United States Shareholders
NEITHER THE ARRANGEMENT NOR THE
SECURITIES ISSUABLE IN CONNECTION WITH THE ARRANGEMENT HAVE BEEN APPROVED OR
DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION
(“
SEC
”) OR THE SECURITIES REGULATORY AUTHORITIES IN ANY STATE OF THE
UNITED STATES; NOR HAS THE SEC OR THE SECURITIES REGULATORY AUTHORITIES IN ANY
STATE OF THE UNITED STATES PASSED UPON THE FAIRNESS OR MERITS OF THE ARRANGEMENT
OR UPON THE ADEQUACY OR ACCURACY OF THE INFORMATION CONTAINED IN THIS CIRCULAR.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.
The Aurora Shares and Replacement
Options to be issued under the Arrangement have not been and will not be
registered under the United States
Securities Act of 1933
, as amended
(the “1933 Act”), or under the securities laws of any state of the United
States, and will be issued in reliance on the exemption from the registration
requirements of the 1933 Act provided by Section 3(a)(10) of the 1933 Act and
available exemptions under applicable state securities laws. The registration
exemption provided by Section 3(a)(10) of the 1933 Act is conditioned on, among
other things, the approval of the Court which will consider, among other things,
the fairness of the terms and conditions of the Arrangement to holders of
MedReleaf Shares, MedReleaf Options, and MedReleaf Deferred Share Units, as
described under “The Arrangement – Effects on Aurora if Arrangement is not
Completed – United States Securities Law Matters“ in this Circular.
The solicitation of proxies by
Aurora’s management is not subject to the requirements of Section 14(a) of the
United States
Securities Exchange Act of 1934
, as amended (the “
1934
Act
”). Accordingly, this Circular has been prepared in accordance with
applicable Canadian disclosure requirements. Residents of the United States
should be aware that such requirements differ from those of the United States
applicable to proxy statements under the 1934 Act.
Aurora is a company existing
under the laws of the Province of British Columbia and MedReleaf is a
corporation existing under the laws of the Province of Ontario. Information
concerning Aurora and MedReleaf has been prepared in accordance with the
requirements of Canadian securities laws, which differ from the requirements of
United States securities laws. Accordingly, information contained in this
Circular and the documents incorporated by reference herein may not be
comparable to similar information made public by U.S. companies subject to the
reporting and disclosure requirements under the U.S. federal securities laws and
the rules and regulations thereunder.
Financial statements included or
incorporated by reference herein have been prepared in accordance with
International Financial Reporting Standards, as issued by the International
Accounting Standards Board, and are subject to auditing and auditor independence
standards in Canada.
The enforcement by Aurora
Shareholders of civil liabilities under U.S. securities laws may be affected
adversely by the fact that: (i) Aurora is a company existing and governed under
the laws of the Province of British Columbia; (ii) certain of the directors,
officers and the experts named in this Circular are not residents of the United
States; and (iii) a substantial portion of Aurora’s and such officer’s and
director’s respective assets may be located outside the United States. As a
result, it may be difficult or impossible for U.S. securityholders to effect
service of process within the United States upon Aurora, its officers and
directors or the experts named herein, or to realize against them upon judgments
of courts of the United States predicated upon civil liabilities under U.S.
securities laws or “blue sky” law of any state within the United States.
2
In addition, U.S. securityholders
should not assume that the courts of Canada: (a) would enforce judgments of
United States courts obtained in actions against such persons predicated upon
civil liabilities under the federal securities laws of the United States or
“blue sky” laws of any state within the Unites States; or (b) would enforce, in
original actions, liabilities against such persons predicated upon civil
liabilities under the federal securities laws of the United States or “blue sky”
laws of any state within the United States.
Forward-Looking Information
This Circular, the pro forma
consolidated financial statements of Aurora and some of the material
incorporated by reference into this Circular, contain “forward-looking
information”, as such term is defined in applicable Securities Laws and
“forward-looking statements” within the meaning of the United States Private
Securities Litigation Reform Act of 1995, concerning Aurora’s future financial
or operating performance and other statements that express management’s
expectations or estimates of future developments, circumstances or results.
Generally, forward-looking information can be identified by the use of
forward-looking terminology such as “plans”, “expects”, “expected”, “scheduled”,
“estimates”, “forecasts”, “targets”, “anticipates”, “believes”, “intends”, “to
create”, “to diversify”, “to invest”, “enabling”, “upon”, “further”, “proposed”,
“opportunities”, “potentially”, “increases”, “adds”, “improves”, “continuing”
and variations of such words and phrases, or by statements that certain actions,
events or results “may”, “will”, “could” or “might”, “occur” and similar
expressions.
Forward-looking statements in
this Circular and the documents incorporated by reference herein include,
without limitation, those that relate to:
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the completion and expected benefits of the proposed
acquisition of MedReleaf;
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attributes of Aurora and MedReleaf assuming completion of
the Arrangement, which may be stated in the present tense;
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•
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payment of amounts that become due following a change of
control of MedReleaf;
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•
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Aurora’s liquidity position and expected sufficiency of
cash from operations to fund repayment of outstanding debt;
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the expected working capital requirements and the ability
to generate cash flows that exceed capital requirements;
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capital expenditures and costs, including forecasted cash
costs;
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the sufficiency of capital resources and the possibility
of considering alternative financing arrangements to meet strategic needs;
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Aurora’s ability to complete future financings to raise
additional capital for exploration, development and operational activities
and for acquisitions;
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•
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the ability of Aurora to identify appropriate acquisition
opportunities or, if an opportunity is identified, to conclude a
transaction on satisfactory terms;
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•
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the timing and results of court proceedings;
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•
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the construction of Aurora Sky, its associated costs, and
receipt of licenses from Health Canada to produce and sell medical
cannabis from this facility;
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the completion of Aurora’s Quebec facilities, and receipt
of Health Canada license;
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performance of Aurora’s business and operations;
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Aurora’s expectations regarding revenues, expenses and
anticipated costs;
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Aurora’s expectations regarding CanniMed’s prospects for
growth, market share, operational scope, operations, profitability, share
price, the ability to realize expected value, market opportunities;
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3
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future production costs and capacity;
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the ability to renew Aurora’s licenses from Health
Canada;
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whether Aurora will have sufficient working capital and
its ability to raise additional financing required in order to develop its
business and continue operations;
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industry growth trends, including with respect to
projected sales and number of patients;
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•
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the ability of Aurora to successfully integrate CanniMed
(as hereinafter defined);
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Aurora’s expectations with respect to the expected growth
of CanniMed’s revenue and Aurora’s revenue generally;
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Aurora’s expectations with respect to its investment in
TGOD and TGOD’s ability to execute on its business plan;
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Aurora’s expectations with respect to its investment in
LIQ;
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the legalization of cannabis for recreational use in
Canada, including federal and provincial regulations pertaining thereto
and the timing related thereof and Aurora’s intentions to participate in
such market, if and when such market is legalized;
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the medical benefits, viability, safety, efficacy, dosing
and social acceptance of cannabis;
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Aurora’s plans with respect to the payment of dividends;
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the impact of general business and economic conditions;
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whether Aurora will continue to be in compliance with
regulatory requirements;
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whether the key personnel will continue their employment
with Aurora; and
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•
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statements with respect to the Distribution of the
Australis Units to Aurora Shareholders, including the timing of the
Distribution and listing of the Australis Shares and Australis Warrants on
the CSE, and the proposed operations and funding of Australis.
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Forward-looking information is
based on a number of factors, assumptions and estimates that, while considered
reasonable by management based on the business and markets in which Aurora
operates, are inherently subject to significant operational, economic and
competitive uncertainties and contingencies. The estimates and assumptions of
Aurora contained or incorporated by reference in the Circular, which may prove
to be incorrect, include, but are not limited to, the various assumptions set
forth herein and incorporated by reference, as well as:
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•
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that Aurora will complete the Arrangement in accordance
with the terms and conditions of the Arrangement Agreement;
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that the required approvals will be obtained from the
shareholders of MedReleaf and Aurora;
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•
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that all required third party, regulatory, and government
approvals and Court orders will be obtained;
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•
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that MedReleaf will be able to achieve announced guidance
targets in line with publicly disclosed information of both Aurora and
MedReleaf;
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that the Arrangement will proceed in accordance with the
anticipated timeline and close in second half of 2018;
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the accuracy of management’s assessment of the effects of
the successful completion of the Arrangement;
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•
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the trading price of the Aurora Shares and MedReleaf
Shares;
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4
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•
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there being no significant political
developments, whether generally or in respect of the cannabis industry
specifically, in any jurisdiction in which Aurora or MedReleaf now or in
the future carries on business, which are not consistent with Aurora’s
current expectations;
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•
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there being no material variations in the
current tax and regulatory environment;
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•
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prices for natural gas, fuel oil, electricity
and other key supplies remaining consistent with current levels;
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production forecasts meeting expectations;
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•
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Aurora’s ability to operate in a safe,
efficient and effective manner;
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prices for key supplies, including labour costs
and consumables, remaining consistent with Aurora’s current expectations;
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Aurora’s ability to obtain financing as and
when required and on reasonable terms; and
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•
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that the information available to Aurora in
respect of MedReleaf is accurate and complete.
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Readers are cautioned that the
foregoing list is not exhaustive of all factors and assumptions which may have
been used. No assurance can be given that these assumptions will prove to be
correct. These assumptions should be considered carefully by readers. Readers
are cautioned not to place undue reliance on the forward-looking information and
statements or the assumptions on which Aurora’s forward-looking information and
statements are based.
Aurora cautions that
forward-looking information involves known and unknown risks, uncertainties and
other factors that may cause Aurora’s actual results, performance or
achievements to be materially different from those expressed or implied by such
information, including, but not limited to:
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Aurora will continue to hold its license from Health
Canada and be able to renew such license on a timely basis;
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Aurora successfully complying with the regulatory
requirements for Licensed Producers as set out by the ACMPR and Health
Canada;
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the laws, regulations and guidelines generally applicable
to the medical cannabis industry not changing in ways currently unforeseen
by Aurora;
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the proposed laws, regulations and guidelines generally
applicable to the adult-use recreational cannabis industry not changing in
ways currently unforeseen by Aurora;
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•
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potential changes in provincial distribution model for
cannabis sales that could prevent Aurora from fully capitalizing on its
investment in LIQ;
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•
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future clinical research studies on the effects of
medical cannabis do not lead to conclusions that dispute or conflict with
Aurora’s understanding and belief regarding the medical benefits,
viability, safety, efficacy, dosing and social acceptance of cannabis;
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•
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the medical cannabis industry and market in Canada will
continue to grow, and Aurora will be successful in this new industry and
market;
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•
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Aurora has the ability to compete for market share with
other companies, including Licensed Producers, which may have longer
operating histories and more financial resources, manufacturing and
marketing experience than Aurora;
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Aurora is able to attract or retain key personnel with
sufficient experience in the medical cannabis industry, and has the
ability to attract, develop, and retain additional employees required for
Aurora’s development and future success;
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Aurora will not encounter significant interruption in its
access to certain key inputs such as raw materials, electricity, water and
other utilities;
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that CanniMed will be able to meet expected revenue
growth projections;
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the ability of CanniMed or Aurora to realize expected
value, market opportunities, accretion or synergies related to Aurora’s
acquisition of CanniMed;
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fluctuations and changes in Aurora’s or CanniMed’s
operations, financial results and public disclosure;
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CanniMed’s ability to market products successfully to its
anticipated patients;
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Aurora will be able to meet expected revenue growth
projections;
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the ramp up in the harvest and production of cannabis at
Aurora’s new facilities will meet Aurora’s expectations and not be
significantly delayed or interrupted;
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demand for Aurora’s cannabis products will not abate and
the legalization of recreational, adult-use cannabis in Canada will not be
unreasonably delayed;
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Aurora will successfully negotiate a final agreement with
respect to the Danish joint venture on terms and in such time frame
favourable to Aurora;
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Aurora will have sufficient working capital and be able
to secure additional funding necessary for the continued development of
its products and business interests;
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Aurora will successfully integrate acquired businesses
and assets;
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Aurora will continue to be successful in acquiring assets
and investments that strategically fit and at competitive prices;
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potentially unknown risks and liabilities associated with
Aurora’s ability to successfully integrate acquisitions including, but not
limited to, MedReleaf, and its business, assets and operations; and
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the integration of finances and operations of MedReleaf.
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Although Aurora has attempted to
identify important factors that could cause actual results, performance or
achievements to differ materially from those contained in forward-looking
information, there can be other factors that cause results, performance or
achievements not to be as anticipated, estimated or intended. There can be no
assurance that such information will prove to be accurate or that management’s
expectations or estimates of future developments, circumstances or results will
materialize. All of the forward-looking information in this Circular is
qualified by these cautionary statements and those made in each of Aurora’s and
MedReleaf’s filings with Canadian and U.S. securities regulatory authorities
expressly incorporated by reference into this Circular. These factors are not
intended to represent a complete list of the factors that could affect Aurora
and/or MedReleaf. Accordingly, readers should not place undue reliance on
forward-looking information. The forward-looking information in this Circular is
made as of the date of this Circular, and Aurora disclaims any intention or
obligation to update or revise such information, except as required by
applicable law.
6
Non-IFRS Financial Measures
This Circular, and the documents
incorporated by reference, includes references to certain non-IFRS measures.
These measures do not have a standardized meaning prescribed by IFRS and are
therefore unlikely to be comparable to similar measures presented by other
companies. Rather, these measures are provided as additional information to
complement IFRS measures by providing further understanding of our results of
operations from management’s perspective. Accordingly, these measures should not
be considered in isolation or as a substitute for analysis of our financial
information reported under IFRS and may be calculated differently by other
companies. These non-IFRS measures are used to provide investors with
supplemental measures of our operating performance and thus highlight trends in
our core business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that
securities analysts, investors and other interested parties frequently use
non-IFRS measures in the evaluation of issuers. For additional information
regarding these non- IFRS measures (including reconciliations to IFRS measures,
as applicable), see Aurora’s management’s discussion and analysis for the year
ended June 30, 2017 and for the three and nine months ended March 31, 2018,
copies of which are available under Aurora’s profile on SEDAR.
Currency and Currency Exchange Rate Information
Unless otherwise indicated, all
references to “$” or “dollars” in the Circular refer to Canadian dollars and all
references to “US$” in the Circular refer to United States (U.S.) dollars.
Aurora’s financial statements included herein and incorporated by reference are
reported in Canadian dollars and are prepared in accordance with IFRS. Certain
of the MedReleaf financial statements and other financial information included
or incorporated by reference herein are presented in Canadian dollars and have
been prepared in accordance with IFRS.
7
SUMMARY
The following is a summary of
certain information contained in this Circular, including its appendices. This
summary is not intended to be complete and is qualified in its entirety by the
more detailed information contained elsewhere in this Circular, including its
appendices. Certain capitalized terms used in this summary are defined in the
Glossary of Terms attached as Appendix “I” to this Circular. Shareholders are
urged to read this Circular and its appendices carefully and in their
entirety.
General
On May 14, 2018, Aurora and
MedReleaf entered into the Arrangement Agreement, as amended by an amending
agreement dated May 24, 2018, pursuant to which Aurora will acquire all of the
outstanding MedReleaf Shares and each Shareholder will be entitled to receive
3.575 Aurora Shares (the “
Share Consideration
”) and $0.000001 in cash
(the “
Cash Consideration
”) in exchange for each MedReleaf Share. Certain
MedReleaf Shareholders will also be entitled to elect to receive only the Share
Consideration (and not to receive the Cash Consideration). Under the Arrangement
Agreement, Aurora has agreed to, among other things, call the Meeting to seek
approval of Aurora Shareholders for the Share Issuance Resolution.
The Meeting
Meeting and Record Date
The Meeting will be held on
Wednesday, July 18, 2018, at 9:00 a.m. (Vancouver time) at the offices of
McMillan LLP, 1500 – 1055 West Georgia Street, Vancouver, British Columbia,
Canada. The Board of Directors have fixed June 13, 2018 as the record date for
determining the Aurora Shareholders who are entitled to receive notice of and
vote at the Meeting.
The Share Issuance Resolution
At the Meeting, Aurora
Shareholders will be asked to consider and, if deemed advisable, to pass the
Share Issuance Resolution, a copy of which is attached as Appendix “A” to this
Circular. See “The Arrangement –Required Shareholder Approvals – Aurora
Shareholder Approval“ for a discussion of the shareholder approval requirements
to effect the Arrangement.
Aurora Shareholders will be asked
to approve the issuance of up to 414,300,000 Aurora Shares pursuant to the Share
Issuance Resolution, which is equal to approximately 73.22% of the non-diluted
Aurora Shares outstanding as of the Record Date. However, Aurora expects to
issue only up to 394,574,356 Aurora Shares, which is equal to approximately
69.74% of the non-diluted Aurora Shares outstanding as of the Record Date.
The Reduction of Capital Resolution
At the Meeting, Aurora
Shareholders will also be asked to consider and, if deemed advisable, to pass
the Reduction of Capital Resolution, a copy of which is attached as Appendix “B”
to this Circular. The purpose of the Reduction of Capital Resolution is to
facilitate the Reorganization and spin out of Aurora’s interests in certain U.S.
assets by way of a distribution to Aurora Shareholders of all of the outstanding
Australis Units as a return of capital. Each Australis Unit consists of one
Australis Share and one Australis Warrant. Each Australis Warrant entitles the
holder thereof to acquire, subject to adjustment in certain circumstances, one
Australis Share at an exercise price of $0.25 per share on or prior to 4:00 p.m.
(Eastern Time) on the date that is one year from the date of the Distribution.
See “Matters to be Considered at the Meeting – Reduction of Capital
Resolution”.
8
Requisite Shareholder Approvals
In order for the Arrangement to
be completed, the Share Issuance Resolution must be approved by a simple
majority (50% plus one vote) of votes cast at the Meeting by Aurora
Shareholders, present in person or by proxy. The Reduction of Capital Resolution
must be approved by a special majority (at least two-thirds) of votes cast at
the Meeting by Aurora Shareholders, present in person or by proxy.
Aurora Supporting Shareholders
Aurora Supporting Shareholders
(who include directors and senior executives of Aurora), holding approximately
5% of the Aurora Shares have entered into the Voting and Support Agreements with
MedReleaf and have agreed to vote their Aurora Shares in favour of the Share
Issuance Resolution.
Recommendation of the Board
The Board has unanimously
approved the Arrangement Agreement and the terms of the Arrangement and
unanimously recommends that Aurora Shareholders vote FOR the Share Issuance
Resolution at the Meeting. In recommending that the Aurora Shareholders vote FOR
the Share Issuance Resolution, the Board considered, among other things, the
expected benefits of the Arrangement, the Aurora Fairness Opinion and current
industry, economic and market conditions.
The Board also unanimously
recommends that Aurora Shareholders vote FOR the Return of Capital Resolution at
the Meeting. In recommending that the Aurora Shareholders vote FOR the Return of
Capital Resolution, the Board considered, among other things, the potential tax
benefits to the Aurora Shareholders of proceeding with the Distribution as a
return of capital.
Voting at the Meeting
This Circular is being sent to
both registered Aurora Shareholders and Beneficial Shareholders. Only registered
Aurora Shareholders or the persons they appoint as their proxyholders are
permitted to vote at the Meeting. Beneficial Shareholders should follow the
instructions on the forms they receive from their intermediaries. No other
securityholders of Aurora are entitled to vote at the Meeting. See “General
Proxy Information“.
Background to the Arrangement
The provisions of the Arrangement
Agreement are the result of arm’s length negotiations conducted among
representatives of Aurora and MedReleaf, and their respective legal and
financial advisors. See “The Arrangement – Background to the Arrangement“ for a
description of the background to the Arrangement.
Reasons for the Arrangement
In the course of their evaluation
of the Arrangement, the Board of Directors consulted with Aurora’s senior
management, legal counsel and BMO Capital Markets, and considered a number of
factors including, among others, the following:
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a)
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Creation of a Preeminent Global Cannabis Company
.
The Arrangement is anticipated to result in bringing together two of
Canada’s premier cannabis companies with aligned strategic visions and
operating philosophies, as well as complementary assets, distribution
networks, products and capabilities. The Combined Company will have
industry leading scale, brands and a total funded capacity of over 570,000 kg per year of high-quality cannabis,
through nine facilities in Canada and two in Denmark. In addition, MedReleaf’s
experience combined with its industry leading yields will provide Aurora with
immediate expertise to leverage in its newly developed cultivation facilities.
MedReleaf’s cultivation footprint is based in Ontario, which is highly
complementary to Aurora’s Western presence, strengthening the Combined Company’s
coast to coast Canadian presence.
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b)
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Established Brands and Further Product
Diversification
. The completion of the Arrangement will create a more
broadly diversified portfolio with three established cannabis brands –
Aurora, CanniMed and MedReleaf, and consumer and wellness brands – San
Rafael ‘71, Woodstock and AltaVie. These brands are backed by
award-winning products, detailed consumer and marketplace insights and
advanced analytical frameworks.
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c)
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Expanding Distribution Channels Across Canada and
Internationally
. The two companies have established distribution
agreements with Quebec’s SAQ, Pharmasave and Shoppers Drug Mart in Canada,
among others. Additionally, the companies have a rapidly growing
international footprint through a network of sales and distribution
capabilities and supply and licensing agreements in five continents. Both
companies are actively engaged in initiatives to further expand their
international activities. Aurora’s investment in Pedanios can be leveraged
to distribute MedReleaf product into the EU and capture a larger share of
the value chain.
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d)
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Focus on Clinical R&D, Patient Data and Innovative
Product Development
. The expanded team of scientists will focus on
developing a robust pipeline of IP to deliver innovative products for both
medical and adult consumer use markets. Aurora’s Medical Centre of
Excellence, formed through the combination of the Aurora’s and CanniMed’s
science and product development teams, together with MedReleaf’s ongoing
studies with recognized research institutes and its relationship with
Tikum Olam, will provide the Combined Company with access to thousands of
data records and is expected to continue to drive innovation on a global
scale.
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e)
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Enhanced Financial Position
. The Combined Company
will have an enhanced financial position and greater cash resources than
Aurora alone. As at March 31, 2018, the pro forma cash position of the
Combined Company was approximately $445 million.
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f)
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Support of Directors and Officers
. Directors and
certain senior officers of Aurora and MedReleaf have entered into the
Director and Officer Voting and Support Agreements pursuant to which, and
subject to the terms of which, they have agreed, among other things, to
vote their Aurora Shares in favour of the Share Issuance Resolution or
their MedReleaf Shares in favour of the Arrangement Resolution, as the
case may be.
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g)
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Support for the Arrangement from a Majority of
MedReleaf Shareholders.
Certain MedReleaf Shareholders, who
collectively hold approximately 56% of MedReleaf’s issued and outstanding
Shares have entered into the Shareholder Voting and Support Agreements,
pursuant to which, and subject to the terms of which, they have agreed,
among other things, to vote their MedReleaf Shares in favour of the
MedReleaf Arrangement Resolution.
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h)
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Completion of Due Diligence.
Aurora’s management
and operations team completed a detailed due diligence review on
MedReleaf, which included, among other things, site visits and operational
reviews at MedReleaf’s facilities in Markham, Bradford and
Exeter.
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i)
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Aurora Fairness Opinion
. The Aurora Fairness
Opinion provided by BMO Capital Markets to the board of directors of
Aurora states that, as of the date of the Aurora Fairness Opinion and
subject to the assumptions, limitations and qualifications stated in the
Aurora Fairness Opinion, the Exchange Ratio is fair from a financial point
of view to Aurora. The full text of the Fairness Opinion can be found at
Appendix “D”. See “The Arrangement – Aurora Fairness
Opinion“.
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j)
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Other Factors
. The Aurora Board also considered
the Arrangement with reference to the current economic, industry and
market trends affecting each of Aurora and MedReleaf in their respective
markets, information concerning the business, operations, property,
assets, financial condition, operating results and prospects of each of
Aurora and MedReleaf and the then historical trading prices of the Aurora
Shares and the MedReleaf Shares.
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The Aurora Board also considered
a variety of risks and other potentially negative factors relating to the
Arrangement including those matters described under the heading “Risk Factors“.
The Aurora Board believed that, overall, the anticipated benefits of the
Arrangement to Aurora outweighed these risks and negative factors.
In the course of its evaluation
of the Arrangement, the Board consulted with Aurora’s senior management, legal
counsel and BMO Capital Markets, considered current industry, economic and
market conditions and trends, reviewed a significant amount of information and
also considered a number of factors, including but not limited to the
following:
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a)
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MedReleaf Information
. The Board considered the
information provided by MedReleaf with respect to its assets, properties
and financial condition.
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b)
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Size and Market Liquidity
. The Board considered
the anticipated size, market liquidity and cash position of the Combined
Company following the Arrangement.
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c)
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Strategic Opportunity
. The Board evaluated with
management and its financial advisors the business and strategic
opportunities available to increase Shareholder value. The Board
determined that the Arrangement was consistent with the company’s strategy
of acquiring quality assets in an increasingly consolidating industry at
fair valuations and was in the best interests of Aurora.
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d)
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Required Shareholder Approval
. The Board
considered that the Share Issuance Resolution must be approved by at least
a majority of the votes cast at the Meeting, providing protection for
Shareholders.
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e)
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Approvals
. The Board considered that the
Arrangement requires Court approval and approval under the Competition
Act.
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In the course of its
deliberations, the Board also identified and considered a variety of risks and
potentially negative factors in connection with the Arrangement, including, but
not limited to the following:
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a)
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Termination of the Arrangement Agreement
. Each of
Aurora and MedReleaf has the right to terminate the Arrangement Agreement
in certain circumstances, including in the event of a change having a
Material Adverse Effect.
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b)
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Satisfaction or Waiver of Conditions Precedent
.
The completion of the Arrangement is subject to several conditions,
including shareholder, Court and regulatory approvals, and there is no
certainty that all conditions will be satisfied or waived.
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c)
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Failure to Complete the Arrangement
. If the
Arrangement is not completed, a considerable amount of costs, time and
effort of Aurora and its management team will have been diverted away from
other aspects of Aurora’s business activities and other potentially
accretive transactions.
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d)
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Integration and Realization of Anticipated
Benefits
. The Combined Company may fail to realize the growth
opportunities and synergies currently anticipated due to challenges
associated with integrating the operations and personnel of Aurora and
MedReleaf.
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e)
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Fixed Share Consideration
. The Share Consideration
is fixed and, as a result, the Aurora Shares issued on closing of the
Arrangement may have a market value different than at the time of approval
of the Arrangement.
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f)
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Issuance of the Share Consideration
. The
Arrangement will result in a significant number of Aurora Shares to be
issued which may adversely affect the market price of the Aurora
Shares.
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g)
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Termination Payments and Fees
. The Arrangement
Agreement may be terminated by Aurora or MedReleaf in certain
circumstances, in which case a Termination Fee and/or Expense
Reimbursement may be payable. In particular, Aurora will be required to
pay an Expense Reimbursement of $15 million in circumstances where Aurora
Shareholders do not approve the Share Issuance Resolution, even though
there has been no Aurora Acquisition Proposal.
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h)
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Undisclosed Liabilities
. There may be undisclosed
liabilities that Aurora failed to discover or was unable to quantify in
its due diligence.
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The Aurora Board also considered
a variety of risks and other potentially negative factors relating to the
Arrangement including those matters described under the heading “Risk Factors“.
The Aurora Board believed that, overall, the anticipated benefits of the
Arrangement to Aurora outweighed these risks and negative factors.
The foregoing summary of the
information and factors considered by the Aurora Board is not intended to be
exhaustive but includes the material information and factors considered by the
Aurora Board in its consideration of the Arrangement. In view of the variety of
factors and the amount of information considered in connection with the Aurora
Board’s evaluation of the Arrangement, they did not find it practicable to, and
did not, quantify or otherwise attempt to assign any relative weight to each of
the specific factors considered in reaching their respective conclusions and
recommendations. The recommendations of the Aurora Board were made after
consideration of all of the above-noted and other factors and in light of their
respective knowledge of the business, financial condition and prospects of
Aurora and MedReleaf and were based upon the advice of the Aurora Board’s
financial advisors and legal counsel to Aurora. In addition, individual members
of the Aurora Board may have assigned different weights to different
factors.
Fairness Opinion
Pursuant to an engagement letter
dated May 4, 2018, and effective as of April 6, 2018, BMO Capital Markets agreed
to provide Aurora and the Board of Directors with various advisory services in
connection with the Arrangement including, among other things, the provision of
the Aurora Fairness Opinion.
On May 13, 2018, BMO Capital
Markets delivered its oral opinion to the board of directors of Aurora, that as
of the date thereof and subject to the assumptions, limitations and
qualifications stated therein, the Exchange Ratio is fair from a financial point
of view to Aurora. This opinion was subsequently confirmed in writing as at May
13, 2018 by the Aurora Fairness Opinion. On May 24, 2018 the parties entered
into the Amending Agreement, which provided that, unless a MedReleaf Shareholder
otherwise elects, such MedReleaf Shareholder will receive 3.575 Aurora Shares
and $0.000001 in cash for each MedReleaf Share. BMO Capital Markets has
considered the additional $0.000001 cash consideration for each MedReleaf Share
provided for pursuant to the Amending Agreement (the “
Cash
Consideration
”) and has confirmed that the conclusions set out in the Aurora
Fairness Opinion, subject to the assumptions, limitations and qualifications
stated therein, would not have been different when the Aurora Fairness Opinion
was delivered on May 13, 2018 if the Cash Consideration had been provided for
pursuant to the Arrangement Agreement when executed on May 13, 2018 and known to
BMO Capital Markets in advance of the delivery of the Aurora Fairness Opinion on
that date.
BMO Capital Markets has not been
asked to prepare and has not prepared a formal valuation or appraisal of the
securities or assets of Aurora, MedReleaf or any of their affiliates, and the
Aurora Fairness Opinion should not be construed as such. The Aurora Fairness
Opinion is not, and should not be construed as, advice as to the price at which
the securities of Aurora may trade at any time.
12
The terms of the engagement
letter between Aurora and BMO Capital Markets provide that BMO Capital Markets
will receive a fee for rendering the Aurora Fairness Opinion and certain fees
for its advisory services in connection with the Arrangement, a substantial
portion of which is contingent upon the successful completion of the
Arrangement. BMO Capital Markets is also to be reimbursed for its reasonable
out-of-pocket expenses. Furthermore, Aurora has agreed to indemnify BMO Capital
Markets, in certain circumstances, against certain liabilities that might arise
out of its engagement.
The Aurora Fairness Opinion is
rendered on the basis of securities markets, economic, financial and general
business conditions prevailing as at the date thereof and the conditions and
prospects, financial and otherwise, of Aurora and MedReleaf as they are
reflected in certain information obtained by BMO Capital Markets from public
sources or otherwise in connection with BMO Capital Markets’ engagement by
Aurora, and as they have been represented to BMO Capital Markets. In BMO Capital
Markets’ analyses and in connection with preparing the Aurora Fairness Opinion,
BMO Capital Markets made numerous judgments and assumptions with respect to
industry performance, general business, market and economic conditions and other
matters, many of which are beyond the control of BMO Capital Markets or any
party involved in the Arrangement.
The full text of the Aurora
Fairness Opinion which sets forth, among other things, the assumptions made,
information reviewed, matters considered and limitations on the scope of review
undertaken, is attached as Appendix “D” to this Circular. Aurora Shareholders
are encouraged to read the Aurora Fairness Opinion carefully and in its
entirety. The Aurora Fairness Opinion was provided to the board of directors of
Aurora for its exclusive use only in considering the Arrangement and may not be
used or relied upon by any other person or for any other purpose without BMO
Capital Markets’ prior written consent. The Aurora Fairness Opinion addresses
only the fairness from a financial point of view of the Exchange Ratio and does
not address any other aspect of the Arrangement. The Aurora Fairness Opinion
does not address the relative merits of the Arrangement as compared to any other
strategic alternatives that may be available to Aurora. The Aurora Fairness
Opinion does not constitute a recommendation as to how Aurora Shareholders
should vote or act on any matters relating to the Arrangement. The summary of
the Aurora Fairness Opinion set forth in this Circular is qualified in its
entirety by reference to the full text of the Aurora Fairness Opinion. Aurora
Shareholders are urged to read the Aurora Fairness Opinion carefully and in its
entirety.
Particulars of the Arrangement
MedReleaf Shareholders (other
than MedReleaf Shareholders who validly exercise their Dissent Rights) will
ultimately be entitled to receive in exchange for each MedReleaf Share the Share
Consideration and, if applicable, the Cash Consideration pursuant to a series of
transactions as set out in the Plan of Arrangement, which includes the following
steps:
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(a)
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each outstanding MedReleaf Share (other than MedReleaf
Shares held by Dissenting Shareholders) will be assigned and transferred
by the holder thereof to Aurora (free and clear of all Liens) in exchange
for the Share Consideration and the Cash Consideration for each MedReleaf
Share, subject to the right of such MedReleaf Shareholder to elect to
receive only 3.575 Aurora Shares;
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(b)
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each outstanding MedReleaf Plan Option will be exchanged
for a Replacement Option to purchase Aurora Shares in accordance with the
formulation provided in the Arrangement;
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(c)
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each outstanding MedReleaf DSU (whether vested or
unvested) will be deemed to have fully vested and be settled in exchange
for the Share Consideration and the Cash Consideration and each such
MedReleaf DSU shall be immediately cancelled; and
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(d)
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each issued and outstanding MedReleaf Warrant will be
entitled to receive the same aggregate consideration payable thereupon, as
reduced by an amount equal to the aggregate Cash Consideration such holder
of a MedReleaf Warrant would have received in respect of the
MedReleaf Shares issuable upon exercise of such MedReleaf Warrant if such
holder exercised such MedReleaf Warrant immediately prior to the Relevant Time,
the Share Consideration which the holder would have been entitled to receive as
a result of the transactions contemplated by the Plan of Arrangement if,
immediately prior to the Relevant Time, such holder had been the registered
holder of the number of MedReleaf Shares to which such holder would have been
entitled if such holder had exercised such MedReleaf Warrant immediately prior
to the Relevant Time.
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13
The MedReleaf Shares held by
Dissenting Shareholders in respect of which Dissent Rights have been validly
exercised will be deemed to be transferred to Aurora (free and clear of all
Liens), without any further act or formality, and such Dissenting Shareholders
will cease to have any rights as holders of such MedReleaf Shares other than the
right to be paid fair value for such MedReleaf Shares by Aurora as set out in
the Plan of Arrangement, attached as Schedule A to the Arrangement Agreement,
and the MedReleaf Shares so transferred will be cancelled.
The Share Issuance Resolution
must be approved by a majority of the Aurora Shareholders who vote in respect of
the Share Issuance Resolution in person or by proxy at the Meeting. The
Arrangement Resolution must be approved by not less than 66
2⁄ 3
% of
the votes cast by the MedReleaf Shareholders who vote in respect
of
the Arrangement Resolution in person or by proxy at the MedReleaf Meeting. See
“The Arrangement –Required Shareholder Approvals – MedReleaf Shareholder
Approval“.
The Arrangement also requires the
approval of the Court. If, among other things, Aurora Shareholder Approval is
obtained at the Meeting and MedReleaf Shareholder Approval is obtained at the
MedReleaf Meeting, the Court will hold a hearing regarding the Final Order. The
Court will consider, among other things, the fairness and reasonableness of the
Arrangement. The Court may approve the Arrangement in any manner the Court may
direct, subject to compliance with such terms and conditions, if any, as the
Court deems fit.
Completion of the Arrangement is
subject to the other terms and conditions specified in the Arrangement
Agreement. See “The Arrangement Agreement“.
Non-Solicitation Provisions
Each of Aurora and MedReleaf are
subject to reciprocal non-solicitation restrictions that, among other things,
restrict their ability to initiate, solicit, knowingly facilitate, encourage or
promote any inquiries, proposals, expressions of interest or offers regarding,
constituting or that may reasonably be expected to constitute or lead to an
acquisition proposal from any third party. However, each party and its
representatives may, at any time prior to the receipt of required approvals of
the Arrangement by Aurora Shareholders or MedReleaf Shareholders, as applicable,
engage in or participate in any discussions or negotiations with third parties
that submit an unsolicited
bona fide
acquisition proposal, and, subject
to entering into a confidentiality and standstill agreement with such third
party, may provide due diligence access and information, but only if (a) its
board of directors has first determined, in its good faith judgment, after
consultation with its financial advisors and outside legal counsel, that such
acquisition proposal constitutes or could reasonably be expected to constitute
or lead to a superior proposal; (b) not engaging in such discussion would be
inconsistent with the fiduciary duty of the board; (c) such third party was not
restricted from making such an acquisition proposal pursuant to an existing
confidentiality, standstill, non-disclosure, use, business purpose or similar
restriction with it or any of its subsidiaries; and (d) it has been, and
continues to be, in compliance with its non-solicitation obligations.
If prior to receiving its
shareholders’ approval for the transaction, either party’s board receives an
unsolicited acquisition proposal that it determines is a “superior proposal”,
then it may, subject to among other things, payment of an $80 million
termination payment and the five business-day matching right of the other party, change its recommendation of the Arrangement, terminate
the Arrangement Agreement and enter into an agreement in respect of such
superior proposal.
14
See “The Arrangement Agreement –
Covenants – Non-Solicitation“.
Right to Match
Each of Aurora and MedReleaf has
the reciprocal right, but not the obligation, to propose in writing to amend the
terms of the Arrangement Agreement and the Arrangement in response to a Superior
Proposal received by the other party. During the Match Periods, as applicable,
each party shall (i) review any proposal by the other party to amend the terms
of the Arrangement Agreement and the Arrangement in order to determine, in good
faith and in a manner consistent with the fiduciary duties of its board of
directors, whether the proposed amendment by a party upon acceptance by the
other party would result in a particular acquisition proposal not being a
superior proposal; and (ii) negotiate with the other party in good faith, and in
a manner consistent with the fiduciary duties of its board of directors to make
such amendments to the terms of the Arrangement Agreement and the Arrangement as
would enable the applicable party to proceed with the Arrangement on such
amended terms. If a party’s board of directors determines that the proposed
amendment by the other party upon acceptance by it would result in a particular
acquisition proposal not being a superior proposal, as applicable, it shall
promptly so advise the other party and enter into an amendment to the
Arrangement Agreement with the other party reflecting the amended proposal of
the other party and will promptly reaffirm its recommendation of the Arrangement
as amended. See “The Arrangement Agreement –Covenants – Right to Match“.
Expenses and Termination Fees
The Arrangement Agreement
requires that MedReleaf pay the MedReleaf Termination Fee or reimburse Aurora
for the costs and expenses incurred by Aurora in certain circumstances and that
Aurora pay the Aurora Termination Fee or reimburse MedReleaf for the costs and
expenses incurred by MedReleaf in certain circumstances. See “The Arrangement
Agreement – Termination Fees and Expenses“.
Governance of Aurora following the Arrangement
Following completion of the
Arrangement, the board of directors of Aurora will initially be comprised of
eight directors, two of whom will be former independent directors of MedReleaf.
See “Appendix “G” –Information Concerning the Combined Company”.
Agreements related to the Arrangement
Arrangement Agreement
On May 14, 2018, Aurora and
MedReleaf entered into the Arrangement Agreement and on May 24, 2018, entered
into the Amending Agreement, under which the parties agreed, subject to certain
terms and conditions, to complete the Arrangement. This Circular contains a
summary of certain provisions of the Arrangement Agreement and is qualified in
its entirety by the full text of the Arrangement Agreement, a copy of which is
available under Aurora’s profile on the SEDAR website at www.sedar.com.
Director and Officer Voting and Support
Agreements
Certain directors and officers of
Aurora and MedReleaf, who beneficially own securities of Aurora and MedReleaf,
respectively, have entered into Director and Officer Voting and Support
Agreements with MedReleaf and Aurora, respectively, pursuant to which they have
agreed to, among other things, support the Arrangement and vote their shares in
favour of the Share Issuance Resolution and the Arrangement Resolution,
respectively. See “The Arrangement – Voting and Support Agreements – Director
and Officer Voting and Support Agreements”.
15
Shareholder Voting and Support Agreements
Certain shareholders of MedReleaf
who beneficially own securities of MedReleaf, have entered into Voting and
Support Agreements with Aurora pursuant to which they have agreed, among other
things, to support the Arrangement and vote their MedReleaf Shares in favour of
the MedReleaf Arrangement Resolution. See “The Arrangement – Voting and Support
Agreements – Shareholder Voting and Support Agreements“.
In total, the Aurora Supporting
Shareholders and the MedReleaf Supporting Shareholders, who hold approximately
5% and 58% of the Aurora Shares and MedReleaf Shares, respectively, have entered
into the Voting and Support Agreements.
Parties to the Arrangement
Aurora
Aurora’s wholly-owned subsidiary,
Aurora Cannabis Enterprises Inc., is a licensed producer of medical cannabis
pursuant to Health Canada’s Access to Cannabis for Medical Purposes Regulations
(“
ACMPR
”). Aurora operates a 55,200 square foot, state-of-the-art
production facility in Mountain View County, Alberta, known as “Aurora
Mountain”, and a second 40,000 square foot high-technology production facility
known as “Aurora Vie” in Pointe-Claire, Quebec on Montreal’s West Island. In
January 2018, Aurora’s 800,000 square foot flagship cultivation facility, Aurora
Sky, located at the Edmonton International Airport, was licensed. Once at full
capacity, Aurora Sky is expected to produce over 100,000 kg per annum of
cannabis. Aurora is completing a facility in Lachute, Quebec through its wholly
owned subsidiary Aurora Larssen Projects Inc.
Aurora’s wholly-owned subsidiary
CanniMed Therapeutics Inc. (“
CanniMed
”) is Canada’s most experienced
licensed producer of medical cannabis, with over 20,000 kg per annum in funded
capacity. CanniMed forms the heart of Aurora’s Medical Cannabis Centre of
Excellence, aimed at product and market development.
Aurora also owns Berlin-based
Pedanios GmbH, the leading wholesale importer, exporter, and distributor of
medical cannabis in the European Union. Aurora owns 51% of Aurora Nordic, which
will be constructing a 1,000,000 square foot hybrid greenhouse in Odense,
Denmark. Aurora offers further differentiation through its acquisition of BC
Northern Lights Ltd. and Urban Cultivator Inc., industry leaders, respectively,
in the production and sale of proprietary systems for the safe, efficient and
high-yield indoor cultivation of cannabis, and in state-of- the-art indoor
gardening appliances for the cultivation of organic microgreens, vegetables and
herbs in home and professional kitchens.
Aurora holds a 25% ownership
interest in Alcanna, one of Western Canada’s largest retail chains of liquor
stores, who are developing a cannabis retail network in Western Canada. In
addition, Aurora holds approximately 17.23% of the issued shares in leading
extraction technology company Radient Technologies Inc, and holds 52.7% of
Hempco Food and Fiber Inc. Aurora is also the cornerstone investor in two other
licensed producers, with a 22.9% stake in Cann Group Limited, the first
Australian company licensed to conduct research on and cultivate medical
cannabis, and a 17.62% stake in Canadian producer The Green Organic Dutchman
Ltd., with options to increase to majority ownership. Finally, Aurora has an
option to convert its investment into a 9.14% stake in CTT Pharmaceutical
Holdings Inc., an innovative product development company within the cannabis
space.
16
Aurora Cannabis Inc. was
incorporated under the
Business Corporations Act
(British Columbia) on
December 21, 2006 as Milk Capital Corp. On September 3, 2010, Aurora changed its
name to Prescient Mining Corp. Effective October 2, 2014, Aurora changed its
name to its present name, Aurora Cannabis Inc. Its head office is located at 900
– 510 Seymour Street, Vancouver, British Columbia, Canada V6B 1V5. The
registered office of Aurora is located at Suite 1500, 1055 West Georgia Street,
Vancouver, British Columbia, V6E 4N7. Aurora Shares trade on the TSX under the
symbol “ACB”, and are a constituent of the S&P/TSX Composite Index.
MedReleaf
MedReleaf is a licensed producer
of cannabis-based pharmaceutical products based in Markham, Ontario. MedReleaf
is licensed by Health Canada pursuant to the ACMPR to, among other things,
produce at its Markham facility an aggregate of up to 6,000 kilograms of dried
cannabis and up to 1,760 kilograms of cannabis oil, and to sell and distribute
within Canada an aggregate of up to 5,000 kilograms of dried cannabis, up to
1,319 kilograms of bottled cannabis oil, and up to 440 kilograms of encapsulated
cannabis oil produced at its Markham facility.
MedReleaf is an R&D-driven
company dedicated to innovation, operational excellence and the production of
top-quality cannabis. Sourced from around the world and carefully cultivated in
one of two state of the art ICH-GMP and ISO 9001 certified facilities in
Ontario, MedReleaf delivers a variety of premium products for the global medical
market and is committed to serving the therapeutic needs of its medical patients
and providing a compelling product assortment for the adult-use recreational
consumer.
MedReleaf cultivates and produces
its cannabis-based pharmaceutical products for direct sales to its patients
across Canada. MedReleaf interacts with its patients via its e-commerce platform
as well as by phone and email correspondence directed to its patient-care team.
Currently, MedReleaf sells dried cannabis, cannabis oils and cannabis oil
capsules to its patients from its Markham facility. MedReleaf’s sales are
supported by a variety of initiatives, including health conference sponsorships,
as well as through its cannabis education and outreach team of employees.
MedReleaf expects both its portfolio of products and the jurisdictions outside
of Canada in which it operates to expand as local laws allow, resources permit,
and where market research indicates opportunity.
MedReleaf was incorporated under
the laws of Ontario in 2013. MedReleaf completed an initial public offering,
together with a secondary offering of MedReleaf Shares by certain selling
shareholders, on June 7, 2017. The MedReleaf Shares are listed on the TSX under
the trading symbol “LEAF”. MedReleaf’s head office is located at Markham
Industrial Park, Markham, Ontario L3R 6G3.
Selected Aurora Unaudited Pro Forma Consolidated Financial
Information
The selected unaudited pro forma consolidated financial
information set forth below should be read in conjunction with Aurora’s
unaudited pro forma consolidated financial statements and the accompanying notes
thereto attached as Appendix “C” to the Circular. The unaudited pro forma
consolidated statement of financial position and the unaudited pro forma
consolidated statements of comprehensive income (loss) of Aurora are comprised
of information derived from:
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•
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the audited consolidated financial statements
of Aurora for the year ended June 30, 2017;
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•
|
the audited consolidated financial statements
of CanniMed for the year ended October 31, 2016;
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|
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•
|
the audited consolidated financial statements
of CanniMed for the year ended October 31, 2017;
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17
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•
|
the audited consolidated financial statements of
MedReleaf for the year ended March 31, 2018;
|
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|
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•
|
the audited consolidated financial statements of
MedReleaf for the year ended March 31, 2017;
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•
|
the unaudited condensed interim consolidated financial
statements of Aurora for the three and nine months ended March 31, 2018,
which has been adjusted to remove the non-controlling interest portion of
CanniMed to give effect, as if Aurora’s 100% ownership of CanniMed had
taken place as at the date of the unaudited pro forma consolidated
statement of financial position as at March 31, 2018. It should be noted
that the unaudited condensed interim consolidated statements of Aurora for
the three and nine months ended March 31, 2018 reflects a 95.9% ownership
in the issued and outstanding shares of CanniMed and that on May 2, 2018,
Aurora acquired the remaining issued and outstanding shares of CanniMed.
The 16 days of profit and loss attributable to CanniMed included in the
unaudited condensed interim consolidated statement of comprehensive loss
for the three and nine months ended March 31, 2018 was also removed;
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•
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the unaudited condensed interim consolidated financial
statements of CanniMed for the three months ended January 31, 2018;
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•
|
the unaudited condensed interim consolidated financial
statements of CanniMed for the three and six months ended April 30, 2017;
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•
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the unaudited condensed interim consolidated financial
statements of CanniMed for the three and nine months ended July 31, 2017;
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•
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the unaudited condensed interim consolidated financial
statements of CanniMed for the three and nine months ended July 31, 2016;
and
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•
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the unaudited condensed interim consolidated financial
statements of MedReleaf for the three months ended June 30, 2017 and 2016.
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The unaudited pro forma
consolidated statement of financial position of Aurora gives effect to the
acquisition of 100% of the issued and outstanding shares of MedReleaf and
CanniMed as if both acquisitions had occurred on March 31, 2018. The unaudited
pro forma consolidated statement of comprehensive loss for the nine months ended
March 31, 2018 and the twelve months ended June 30, 2017 of Aurora gives effect
to the acquisition of 100% of the issued and outstanding shares of MedReleaf and
CanniMed as if both acquisitions had occurred at July 1, 2016.
18
The summary unaudited pro forma
consolidated financial information is not intended to be indicative of the
results that would actually have occurred, or the results expected in future
periods, had the events reflected herein occurred on the dates indicated. Actual
amounts recorded upon consummation of the Arrangement will differ from the pro
forma information presented below. No attempt has been made to calculate or
estimate potential synergies between Aurora and MedReleaf. The unaudited pro
forma consolidated financial statement information set forth below is extracted
from and should be read in conjunction with the unaudited pro forma consolidated
financial statements of Aurora and the accompanying notes included in Appendix
“C” to the Circular.
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Nine months ended
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Year ended
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Unaudited (in thousands of
Canadian dollars)
|
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March 31, 2018
|
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June 30, 2017
|
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Pro Forma Statement of Operations Data:
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Revenue
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$
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82,878
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$
|
75,094
|
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Net Loss
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$
|
39,918
|
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$
|
94,012
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(in Canadian dollars)
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Pro Forma Per Aurora Share
Data:
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Basic earnings per share
|
$
|
(0.05
|
)
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$
|
(0.13
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)
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Diluted earnings per share
|
$
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(0.05
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)
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$
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(0.13
|
)
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Unaudited (in thousands of
Canadian dollars)
|
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As at March 31, 2018
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Pro Forma Statement of Financial Position
Data:
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Total current assets
|
$
|
667,448
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|
Total assets
|
$
|
5,242,486
|
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Total current liabilities
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$
|
89,985
|
|
|
Total liabilities
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$
|
329,578
|
|
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Total equity
|
$
|
4,912,908
|
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Proxy Solicitation Agent
Aurora has retained Laurel Hill
to solicit proxies. If you have questions, you may contact the proxy
solicitation agent, Laurel Hill Advisory Group, by telephone at: 1-877-452-7184
(North American Toll Free) or 416-304-0211 (Collect Outside North America); or
by email at: assistance@laurelhill.com.
Risk Factors
Aurora Shareholders should
consider a number of risk factors relating to the Arrangement and Aurora in
evaluating whether to approve the Share Issuance Resolution. These risk factors
are discussed herein and/or in certain sections of documents publicly filed,
which sections are incorporated herein by reference. See “Risk Factors“.
19
GENERAL PROXY INFORMATION
Solicitation of Proxies
The solicitation of proxies will
be primarily by mail, but proxies may be solicited personally or by telephone by
directors, officers and regular employees of Aurora. We have arranged for
intermediaries to forward the meeting materials to Beneficial Shareholders of
the Aurora Shares held of record by those intermediaries and we may reimburse
the intermediaries for their reasonable fees and disbursements in that
regard.
Aurora has retained the services
of Laurel Hill to solicit proxies. If you have questions, you may contact the
proxy solicitation agent, Laurel Hill, by telephone at: 1-877-452-7184 (North
American Toll Free) or 416-304-0211 Collect Outside North America); or by email
at: assistance@laurelhill.com. The cost of solicitation will be borne by Aurora.
Aurora expects to pay fees of approximately $110,000 to Laurel Hill for its
proxy solicitation service in addition to certain out-of-pockets expenses.
Appointment of Proxyholders
Terry Booth is the Chief
Executive Officer and a director of Aurora, Glen Ibbott, the Chief Financial
Officer of Aurora and Nilda Rivera, Vice President, Finance and Corporate
Secretary of Aurora.
A Shareholder has the right to appoint a person as
proxyholder (who need not be a Shareholder), other than Terry Booth, Glen Ibbott
or Nilda Rivera, to represent the Shareholder at the Meeting.
To exercise
that right, the Shareholder should strike out the names of Terry Booth, Glen
Ibbott or Nilda Rivera on the accompanying instrument of proxy (the
“
Instrument of Proxy
”) and insert the name of the other person in the
blank space provided on that Instrument of Proxy. Alternatively, a Shareholder
may complete another appropriate form of proxy. The Shareholder should notify
the proxyholder of his or her appointment and instruct the proxyholder on how
the Aurora Shares are to be voted. A proxy will not be valid unless it is
received by the transfer agent of the Aurora Shares, Computershare Trust Company
of Canada (Attention: Proxy Department, 100 University Avenue, 8th Floor,
Toronto, Ontario, M5J 2Y1). To be valid, a proxy must be received by
Computershare Trust Company of Canada not later than 9:00 a.m. (Vancouver Time)
on July 16, 2018 or 48 hours (excluding Saturdays, Sundays and holidays)
preceding any adjournment of the Meeting. The Chairman of the Meeting has the
discretion to accept proxies deposited less than 48 hours before the time of the
Meeting or any adjournment or postponement thereof.
A Shareholder who has signed and
returned a proxy may revoke that proxy: (a) by signing a proxy bearing a later
date and depositing such proxy with Computershare Trust Company of Canada, at
its address set out above, at least 48 hours (excluding Saturdays, Sundays and
holidays) prior to the commencement of the Meeting or any adjournment thereof;
(b) as to any matter on which a vote shall not already have been cast pursuant
to the authority conferred by such proxy, by depositing a written notice of
revocation with Computershare Trust Company of Canada, at its address set out
above, at any time up to and including the last business day preceding the day
of the Meeting or any adjournment thereof or by delivering the notice of
revocation to the Chairman of the Meeting; (c) by attending the Meeting and
voting the Aurora Shares subject to the applicable proxy; or (d) in any other
manner permitted by law.
Voting by Proxyholder
The persons named in the Proxy
will vote or withhold from voting the Aurora Shares represented thereby in
accordance with your instructions on any ballot that may be called for at the
Meeting. If you specify a choice with respect to any matter to be acted upon,
your Aurora Shares will be voted accordingly. The Proxy confers discretionary
authority on the persons named therein with respect to:
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(a)
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each matter or group of matters identified therein for
which a choice is not specified;
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(b)
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any amendment to or variation of any matter identified
therein; and
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(c)
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any other matter that properly comes before the
Meeting.
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20
In respect of a matter for
which a choice is not specified in the Proxy, the management appointee acting as
a proxyholder will vote in favour of the Share Issuance Resolution.
Exercise of Discretion by Proxyholders
The accompanying Instrument of
Proxy confers discretionary authority upon the persons named therein with
respect to amendments or variations of the matters identified in the Notice of
Meeting and any other matters that may properly be brought before the Meeting.
As at the date of this Circular, Management knows of no such amendment,
variation or other matter to be brought before the Meeting. If other matters are
properly brought before the Meeting, it is the intention of the management
designees named in the accompanying Instrument of Proxy to exercise the voting
rights attached to the applicable Aurora Shares in their best judgment pursuant
to the discretionary authority conferred by such proxy with respect to such
matters.
Registered Aurora Shareholders
Registered Aurora Shareholders
(i.e. Aurora Shareholders whose name appears on the records of Aurora as the
registered holders of Aurora Shares) may wish to vote by proxy whether or not
they are able to attend the Meeting in person. Registered Aurora Shareholders
may choose one of the following options to submit their proxy:
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(a)
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Internet
: Use the internet through Computershare’s
website at www.investorvote.com. Registered Shareholders must follow the
instructions that appear on the screen and refer to the enclosed proxy
form for the holder’s account number and the control number; or
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(b)
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Telephone
: Call 1-866-732-8683 to vote over the
phone. Shareholders must follow the instructions of the voice response
system and refer to the enclosed proxy form for the toll-free number, the
holder’s account number and the control number; or
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(c)
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Mail or Fax
: Complete, date and sign the Proxy and
return it to Aurora’s transfer agent, Computershare Trust Company of
Canada (“
Computershare
”), by fax within North America at
1-866-249-7775, outside North America at (416) 263-9524, or by mail to the
8th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1 or by hand
delivery at 3
rd
Floor, 510 Burrard Street, Vancouver, British
Columbia Canada V6C 3B9.
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In all cases the Aurora
Registered Shareholder must ensure the proxy is received at least 48 hours
(excluding Saturdays, Sundays and statutory holidays) before the Meeting or the
adjournment thereof at which the proxy is to be used.
The Proxy deadline may be waived
or extended by the Chairman of the Meeting, in his sole discretion without
notice. Registered Aurora Shareholders may also vote in person at the Meeting by
presenting themselves to a representative of Computershare.
Aurora Beneficial Shareholders
The following information is
of significant importance to Aurora Shareholders who do not hold Aurora Shares
in their own name.
Aurora Beneficial Shareholders should note that the only
proxies that can be recognized and acted upon at the Meeting are those deposited
by Aurora registered shareholders (those whose names appear on the records of
Aurora as the registered holders of Aurora Shares) or as set out in the
following disclosure.
If Aurora Shares are listed in an
account statement provided to an Aurora Shareholder by a broker, then in almost
all cases those Aurora Shares will not be registered in the Aurora Shareholder’s
name on the records of Aurora. Such Aurora Shares will more likely be registered under
the names of intermediaries. In the United States, the vast majority of such
Aurora Shares are registered under the name of Cede & Co. as nominee for The
Depository Trust Company (which acts as depositary for many U.S. brokerage firms
and custodian banks), and in Canada, under the name of CDS & Co. (the
registration name for The Canadian Depository for Securities Limited, which acts
as nominee for many Canadian brokerage firms).
21
Intermediaries are required to
seek voting instructions from Aurora Beneficial Shareholders in advance of
meetings of shareholders. Every intermediary has its own mailing procedures and
provides its own return instructions to clients.
Typically, intermediaries will
use a service company to forward such materials to Non-Registered Shareholders.
The majority of intermediaries now delegate responsibility for obtaining
instructions from clients to Broadridge Financial Solutions, Inc. in Canada and
its counterpart in the United States (“
Broadridge
”).
There are two kinds of Beneficial
Shareholders – those who object to their name being made known to the issuers of
securities which they own (called “
OBOs
” for Objecting Beneficial Owners)
and those who do not object to the issuers of the securities they own knowing
who they are (called “
NOBOs
” for Non- Objecting Beneficial Owners).
Aurora may utilize Broadridge’s
QuickVote™ service to assist Beneficial Shareholders that are NOBOs with voting
their Aurora Shares. NOBOs may be contacted by Laurel Hill to conveniently
obtain a vote directly over the telephone.
These securityholder materials
are being sent to both Aurora registered and Aurora Beneficial owners of the
securities of Aurora. If you are an Aurora Beneficial owner, and Aurora or its
agent has sent these materials directly to you, your name, address and
information about your holdings of securities, were obtained in accordance with
applicable securities regulatory requirements from the intermediary holding
securities on your behalf.
Aurora Beneficial Shareholders
who are OBOs should follow the instructions of their intermediary carefully to
ensure that their Aurora Shares are voted at the Meeting.
22
The voting instruction form
supplied to Beneficial Shareholders by brokers may be similar to the proxy
provided to Aurora registered shareholders by Aurora. However, its purpose is
limited to instructing the intermediary on how to vote your Aurora Shares on
your behalf. As noted above, most brokers delegate responsibility for obtaining
instructions from clients to Broadridge in the United States and in Canada.
Broadridge mails a VIF in lieu of a proxy provided by Aurora. The VIF will name
the same persons as Aurora’s Proxy to represent your Aurora Shares at the
Meeting. You have the right to appoint a person (who need not be an Aurora
Beneficial Shareholder of Aurora), other than any of the persons designated in
the VIF, to represent your Aurora Shares at the Meeting and that person may be
you. To exercise this right, insert the name of the desired representative
(which may be you) in the blank space provided in the VIF. The completed VIF
must then be returned to Broadridge by mail or facsimile or given to Broadridge
by phone or over the internet, in accordance with Broadridge’s instructions.
Broadridge then tabulates the results of all instructions received and provides
appropriate instructions respecting the voting of Aurora Shares to be
represented at the Meeting and the appointment of any shareholder’s
representative.
If you receive a VIF from Broadridge, the VIF must be
completed and returned to Broadridge, in accordance with its instructions, well
in advance of the Meeting in order to have your Aurora Shares voted or to have
an alternate representative duly appointed to attend the Meeting and vote your
Aurora Shares at the Meeting. Aurora Beneficial Shareholders can vote their
shares in the following ways:
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Internet
|
Telephone or Fax
|
Mail
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Call or fax to the number(s)
|
Return the voting instruction
|
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www.proxyvote.com
|
listed on your voting
|
form in the postage paid
|
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instruction form
|
enclosed envelope
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INFORMATION CONCERNING THE MEETING AND ENTITLEMENT TO
VOTING
Record Date
The Board of Directors has fixed
June 13, 2018 as the Record Date for the determination of persons entitled to
receive notice of the Meeting. Only Aurora Shareholders of record at the close
of business on the Record Date who either: (i) attend the Meeting personally;
(ii) complete, sign and deliver a Proxy in the manner and subject to the
provisions described above; or (iii) vote in one of the manners provided for in
the VIF, will be entitled to vote or to have their Aurora Shares voted at the
Meeting.
Voting Shares and Principal Holders
Aurora is authorized to issue an
unlimited number of Aurora Shares without par value. As at June 13, 2018 Record
Date there were 565,767,220 Aurora Shares issued and outstanding. The Aurora
Shares are listed for trading on the TSX under the symbol “ACB”. Aurora
Shareholders are entitled to one vote per Aurora Share at meetings of Aurora
Shareholders.
Aurora is also authorized to
issue an unlimited number of Class A Shares with a par value of $1.00 each and
an unlimited number of Class B Shares with a par value of $5.00 each. There were
no Class A or Class B Shares issued and outstanding at the June 13, 2018 Record
Date.
Class A Shares
Class A shares may be issued from
time to time in one or more series, and the directors may fix from time to time
before such issue the number of Class A shares of each series and the
designation, rights and restrictions attached thereto including any voting rights,
dividend rights, redemption, purchase or conversion rights, sinking fund or
other provisions. The Class A shares rank in priority over Aurora Shares and any
other shares ranking by their terms junior to the Class A shares as to dividends
and return of capital upon liquidation, dissolution or winding up of Aurora or
any other return of capital or distribution of the assets of Aurora. No Class A
shares of Aurora are outstanding as of the Record Date.
23
Class B Shares
Class B shares may be issued from
time to time in one or more series, and the directors may fix from time to time
before such issue the number of Class B shares of each series and the
designation, rights and privileges attached thereto including any voting rights,
dividend rights, redemption, purchase or conversion rights, sinking fund or
other provisions. The Class B shares rank in priority over Aurora Shares and any
other shares ranking by their terms junior to the Class B shares as to dividends
and return of capital upon liquidation, dissolution or winding up of Aurora or
any other return of capital or distribution of the assets of Aurora. No Class B
shares of Aurora are outstanding as of the Record Date.
Principal Holders
To the knowledge of the directors
and executive officers of Aurora as of the date of this Circular, there was no
Person that beneficially owned, directly or indirectly, or exercised control or
direction over, Aurora Shares carrying more than 10% of the voting rights
attached to all outstanding Aurora Shares.
MATTERS TO BE CONSIDERED AT THE
MEETING
Share Issuance Resolution
In connection with the
Arrangement and for the reasons set out below, at the Meeting, Aurora
Shareholders will be asked to consider and, if thought advisable, pass the Share
Issuance Resolution, the full text of which is set out in Appendix “A” to this
Circular.
In order for the Arrangement to
be completed, the Share Issuance Resolution must be approved by a simple
majority (50% plus one vote) of votes cast at the Meeting by Aurora
Shareholders, present in person or by proxy.
Aurora Supporting Shareholders
(who include directors and senior executives of Aurora), holding approximately
5% of the Aurora Shares have entered into the Voting and Support Agreements with
MedReleaf and have agreed to vote their Aurora Shares in favour of the Share
Issuance Resolution.
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The Board of Directors unanimously recommends that
Aurora Shareholders vote FOR the Share Issuance
Resolution. Unless
otherwise directed, the management nominees named in the accompanying form
of
proxy intend to vote FOR the approval of the Share Issuance
Resolution
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Shareholder Approval
Pursuant to Section 611(c) of the
TSX Company Manual, the TSX requires shareholder approval in circumstances where
an issuance of securities will result in the issuance of 25% or more of an
issuer’s outstanding securities on a non-diluted basis in connection with an
acquisition.
The Share Issuance Resolution
will authorize the issuance of a number of Aurora Shares equal to approximately
69.74% of the issued and outstanding Aurora Shares as of June 13, 2018 on a
non-diluted basis.
24
Aurora has made an application to
the TSX to list the Aurora Shares issuable under the Share Issuance Resolution.
Such listing is subject to Aurora fulfilling all of the listing requirements of
the TSX, including obtaining approval of the Share Issuance Resolution.
For information in respect of the
number of Aurora Shares to be Issued under the Share Issuance Resolution please
see below “Aurora Shares to be Issued Pursuant to the Share Issuance
Resolution”.
Aurora Shares to be Issued Pursuant to the Share Issuance
Resolution
Pursuant to the listing rules of
the TSX, an issuer is generally required to obtain shareholder approval in
connection with an acquisition transaction where the number of securities issued
or issuable in payment of the purchase price for the acquisition exceeds 25% of
the number of securities of the listed issuer which are outstanding, on a
non-diluted basis, prior to the date of closing of the transaction. In order for
the Arrangement to be completed, Aurora Shareholders must approve the Share
Issuance Resolution.
Aurora Shareholders will be asked
to approve the issuance of up to 414,300,000 Aurora Shares pursuant to the Share
Issuance Resolution, which is equal to approximately 73.22% of the non-diluted
Aurora Shares outstanding as of the Record Date. However, Aurora expects to
issue only up to 394,574,356 Aurora Shares, which is equal to approximately
69.74% of the non-diluted Aurora Shares outstanding as of the Record Date In
connection with the Arrangement, Aurora expects to issue: (a) approximately
362,134,137 Aurora Shares to MedReleaf Shareholders under the Arrangement (based
on the number of MedReleaf Shares outstanding or approved as of the date of the
Arrangement Agreement); (b) approximately 16,022,940 Aurora Shares upon the
exercise of Replacement Options to be issued to MedReleaf Plan Optionholders in
exchange for their MedReleaf Plan Options under the Arrangement (based on the
number of MedReleaf Plan Options outstanding as of the date of the Arrangement
Agreement), if all of the Replacement Options to be granted pursuant to the Plan
of Arrangement are exercised prior to the expiry date of such Replacement
Options; (c) approximately 5,879,492 Aurora Shares to holders of MedReleaf
Legacy Options, which will be conditionally exercised in connection with the
completion of the Arrangement and settled with Aurora Shares; (d) approximately
10,278,125 Aurora Shares upon the exercise of the MedReleaf Warrants following
the Arrangement (based on the number of MedReleaf Warrants outstanding as of the
date of the Arrangement Agreement), if all of the MedReleaf Warrants are
exercised prior to the expiry date of such MedReleaf Warrants; and (e)
approximately 259,662 Aurora Shares in connection with the vesting of the
MedReleaf DSUs following the Arrangement.
The Share Issuance Resolution
authorizes the approval of a number of Aurora Shares in an amount that exceeds
the estimated Aurora Shares expected to be issued to MedReleaf securityholders.
The balance amount of 19,725,644 Aurora Shares is being authorised in order to
ensure that the Share Issuance Resolution authorizes the issuance of an adequate
number of Aurora Shares under all circumstances in connection with the
Arrangement, including satisfaction of any residual MedReleaf Share issuance
obligations existing as of the effective date of the Arrangement.
Following the successful
completion of the Arrangement, Aurora Shareholders, and MedReleaf Shareholders
will own approximately 61% and 39%, respectively, of the outstanding Aurora
Shares.
Reduction of Capital Resolution
Background to the Reduction of Capital
Aurora and its wholly-owned
subsidiary, Australis, intend to file a prospectus in each of the provinces and
territories of Canada for the purpose of distributing to holders of Aurora
Shares all of the outstanding Australis Units in connection with a proposed
Reorganization and spin out of certain U.S. assets of Aurora. Each Australis
Unit consists of one Australis Share and one Australis Warrant. Each Australis
Warrant entitles the holder thereof to acquire, subject to adjustment in certain
circumstances, one Australis Share at an exercise price of $0.25 per share on or
prior to 4:00 p.m. (Eastern Time) on the date that is one year from the date of
the Distribution. The prospectus will be available on SEDAR at www.sedar.com
under Australis’ profile.
25
In connection with the
Distribution and in the context of the Reorganization, on June 13, 2018, Aurora
completed a series of intercorporate transactions involving Aurora and its
subsidiaries. The intercorporate steps resulted in Aurora holding a direct
interest in 100% of the outstanding Australis Units and Australis holding the
following assets:
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a 50% joint venture interest in Australis Holdings LLP, a
limited liability partnership organized under the laws of Washington
State, which holds two parcels of land totaling 24.5 acres in Whatcom
county, Washington, along with approximately $3,156,402 of loans
(including interest as of June 13, 2018) owing from Australis Holdings
LLP; and
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Aurora’s interests, previously held through PPS, in
SubTerra LLC, a limited liability company organized under the laws of
Michigan State, consisting of (a) a royalty of five percent (5%) of the
gross revenues of SubTerra LLC earned annually from the sale of cannabis
and cannabis based products grown and/or processed at its facility during
the period commencing June 1, 2018 and ending May 31, 2028; (b) a payment
of $150,000.00 annually during the period commencing June 1, 2018 and
ending May 31, 2028; and (c) a two-year option to purchase the White Pine
Parcel for US$3,000.
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Australis will operate as an
investment company focused primarily in the cannabis and real estate sectors in
the United States. Its investments may include the acquisition of equity, debt
or other securities of publicly traded or private companies or other entities,
financing in exchange for pre-determined royalties or distributions and the
acquisition of all or part of one or more businesses, portfolios or other
assets, in each case that Australis Shares and Australis Warrants on the CSE.
Listing will be subject to Australis fulfilling all of the listing requirements
of the CSE.
Aurora and Australis entered into
a funding agreement on June 14, 2018 pursuant to which Aurora will advance
$500,000 to Australis, in consideration for which Australis will provide Aurora
with a restricted back-in right. Subject to applicable regulatory and stock
exchange approvals, the restricted back-in right is expected to consist of (a) a
warrant to purchase a number of Australis Shares equal to 20% of the issued and
outstanding Australis Shares as of the date on which the Australis Shares
commence trading on the CSE, which will be exercisable for a period of ten years
from the date of issue at an exercise price of $0.20 per Australis Share, and
(b) a warrant to purchase a number of Australis Shares equal to 20% of the
number of Australis Shares issued and outstanding as of the date of exercise,
which will be exercisable for a period of ten years from the date of issue at an
exercise price equal to the five day volume weighted average trading price of
the Australis Shares on the CSE or such other stock exchange on which the
Australis Shares may then be listed at the time of exercise, or if the Australis
Shares are not then listed on a stock exchange at the fair market value of the
Australis Shares at the time of exercise. Aurora will be prohibited from
exercising the restricted back-in right unless all of Australis’ business
operations in the United States are legal under applicable federal and state
laws and Aurora has received the consent of the TSX and any other stock exchange
on which Aurora may be listed, as required. Cannabis continues to be categorized
as a controlled substance in the United States under the federal Controlled
Substances Act and as such, cannabis-related practices or activities (including
without limitation, the manufacture, importation, possession, use or
distribution of cannabis) are illegal under United States federal law. Pursuant
to the funding agreement, Aurora will also fund Australis’ transaction costs in
connection with the Reorganization in the amount of $200,000 and may contribute
additional funding to Australis.
Pursuant to the Distribution,
Aurora intends to distribute to holders of Aurora Shares all of the outstanding
Australis Units as a return of capital with the result that Aurora will no
longer hold any Australis Units. Shareholders of Aurora are expected to receive
one Australis Unit for each twenty Aurora Shares held as of the record date of
the Distribution.
26
No Australis Units will be
delivered to any registered or beneficial holder of Aurora Shares who is, or who
appears to Aurora or Computershare Trust Company of Canada, as custodian (the
“
Custodian
”) to be, a non-resident of Canada within the meaning of the
Tax Act (“
Non-Resident
”). Such Units will be delivered by Aurora to the
Custodian for sale by the Custodian on behalf of all Non-Residents through a
registered securities broker or dealer. Such Non-Residents will receive from the
Custodian their pro rata share of the cash proceeds from the sales of such
Units, less any commissions, expenses and any applicable withholding taxes.
Holders of Aurora Shares, or their brokers, will have to provide a declaration
of Canadian residency to Computershare Trust Company of Canada, as registrar and
transfer agent of the Aurora Shares or CDS Clearing and Depository Services
Inc., failing which, such holders will be deemed to be Non-Residents. There may
be adverse tax consequences to Non-Residents from this sale process. See
“Appendix “H” - Tax Considerations Relating to the Distribution - Certain United
States Federal Income Tax Considerations for U.S. Holders”. See also “Appendix
“H” - Tax Considerations Relating to the Distribution - Certain Canadian Federal
Income Tax Considerations”.
Certain Tax Considerations Relating to the
Distribution
Appendix “H” to the Circular sets
out a summary of certain Canadian federal income tax considerations and certain
United States federal income tax consideration relating to the Distribution.
Approval of Reduction of Capital Resolution
While the Distribution itself
does not require approval by Aurora’s Shareholders, a return of capital to the
holders of Aurora Shares requires a reduction in the capital of the Aurora
Shares.
Accordingly, at the Meeting,
shareholders of Aurora will be asked to consider and, if thought advisable,
approve, with or without variation, the Reduction of Capital Resolution
authorizing Aurora to reduce the capital of the Aurora Shares by an amount equal
to the aggregate amount of the Distribution, for the purpose of effecting a
one-time special distribution of the Australis Units by way of a return of
capital.
The text of the Reduction of
Capital Resolution shall be substantially as attached hereto as Appendix “B”. In
order for the Reduction of Capital Resolution to be approved, a special majority
of not less than two thirds of the votes cast at the Meeting in person or by
proxy must be in favour of the Reduction of Capital Resolution.
If the Reduction of Capital
Resolution is approved by the Aurora Shareholders, the Aurora Board intends to
cause Aurora to effect the Distribution as soon as practicable following the
filing of the final prospectus for the Distribution. The record date for the
Distribution is expected to occur prior to the Effective Date of the
Arrangement.
Notwithstanding approval of the
Reduction of Capital Resolution by Aurora Shareholders, the Aurora Board, in its
sole discretion, may determine not to proceed with the Distribution without
further approval or action by or prior notice to shareholders. If the Reduction
of Capital Resolution is not approved by the Aurora Shareholders at the Meeting,
the Aurora Board may nonetheless determine to proceed with the Distribution as a
taxable dividend.
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The Board of Directors unanimously recommends that
Aurora Shareholders vote FOR the Reduction of
Capital Resolution.
Unless otherwise directed, the management nominees named in the
accompanying
form of proxy intend to vote FOR the approval of the
Reduction of Capital Resolution
.
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THE ARRANGEMENT
Background to the Arrangement
The Arrangement and the terms
of the Arrangement Agreement are the result of arm’s length negotiations
conducted between Aurora and MedReleaf and their respective representatives and
advisors.
27
The following is a summary of the material events,
negotiations, discussions and actions leading up to the execution of the
arrangement agreement and its public announcement, on May 14, 2018 and the
execution of the Amending Agreement on May 24, 2018, and its public
announcement.
Over the past few years, Aurora,
along with the cannabis industry in general, has experienced a period of growth,
with Aurora having been particularly active in making acquisitions to accelerate
its growth, to become a preeminent fully integrated global cannabis company.
In early April, 2018, Tarik
Ouass, the controlling shareholder of Zola Finance Inc., which holds
approximately 14% of the outstanding MedReleaf Shares, contacted Terry Booth,
the Chief Executive Officer of Aurora, about a possible meeting. On April 7,
2018, Mr. Booth and Mr. Ouass exchanged correspondence and held telephone
meetings. In that correspondence and in those meetings, Mr. Ouass expressed his
desire for MedReleaf to be combined with an industry leader. Mr. Ouass also
advised Mr. Booth that several other large shareholders were similarly
interested in MedReleaf combining with a larger cannabis company. Mr. Booth and
Mr. Ouass discussed on the phone the potential merits of a combination between
Aurora and MedReleaf, and Mr. Ouass advised that he particularly appreciated
Aurora’s growth strategy. Mr. Ouass advised Mr. Booth that on the right terms he
would be prepared to support a friendly transaction between Aurora and
MedReleaf. Mr. Ouass indicated that he believed shareholders holding
approximately 50% the MedReleaf Shares may also be interested in a friendly
transaction between Aurora and MedReleaf.
On April 7, 2018 Mr. Booth
updated his management team and the Chairman of the Board, Michael Singer, on
his discussions with Mr. Ouass. On April 8, 2018 members of Aurora’s management
team, together with the Chairman of the Board and Aurora’s financial advisors,
BMO Capital Markets, discussed and considered the merits of a potential
transaction, including expected synergies with MedReleaf, and discussed
potential pricing of a potential transaction. Given the potential synergies,
Aurora determined that its preference was for a friendly transaction with
significant and strong shareholder support from MedReleaf Shareholders.
Separately, Lloyd Segal, Chair of
the MedReleaf Board, approached Mr. Singer, the chair of the Aurora Board and a
former business colleague of Mr. Segal’s, and discussed potential mutual
opportunities in the cannabis industry. Mr. Singer did not advise Mr. Segal of
discussions with Mr. Ouass due to their confidential nature.
On April 10, 2018, Zola provided
to Aurora’s financial advisors a form of confidentiality agreement with respect
to discussions regarding a potential transaction with MedReleaf. Aurora provided
an indicative term sheet to Mr. Ouass later that day. On April 13, 2018, Mr.
Booth and Mr. Ouass met by telephone to discuss terms of a potential
transaction. Aurora stipulated that if Mr. Ouass and shareholders holding no
less than 50% of the outstanding MedReleaf Shares would be prepared to enter
into “hard” lock-up agreements with Aurora, Aurora would be prepared to offer
MedReleaf shareholders 3.45 Aurora Shares for each MedReleaf Share, on a
friendly transaction basis. Mr. Booth and Mr. Ouass agreed to meet, together
with their respective advisors, to further discuss the basis on which Aurora
would be prepared to approach MedReleaf with a potential transaction, and the
support that Mr. Ouass would be prepared to provide for that approach.
On April 15, 2018, members of
Aurora’s executive management team, together with Mr. Singer, Aurora’s outside
legal counsel, McMillan LLP, and representatives of BMO Capital Markets, met
with Mr. Ouass and his legal counsel, Davies Ward Phillips & Vineberg LLP.
Also present at the meeting were representatives of Canaccord, who attended at
the invitation of Mr. Ouass. A representative from Canaccord informed the
participants at the meeting that he was not acting as an advisor to either
Aurora or Mr. Ouass and that given Canaccord’s prior engagements for MedReleaf,
it was possible that MedReleaf would approach Canaccord to act on its behalf in
connection with any potential transaction. At the meeting, Mr. Ouass advised
that he expected that, if Aurora were prepared to approach MedReleaf with a
friendly offer to acquire all of the outstanding shares of MedReleaf on the
basis of 3.45 Aurora Shares for one MedReleaf Share, and if a board approved
agreement was reached between Aurora and MedReleaf, he and holders of
approximately 50% of the outstanding MedReleaf Shares would be prepared to enter into
hard lock-up agreements for the transaction. Mr. Ouass expressed his desire to
discuss any potential transaction that both he and the other MedReleaf
Shareholders holding 50% of the outstanding MedReleaf Shares were supporting
with MedReleaf in person before any approach was made by Aurora. Mr. Ouass
advised that he would provide Aurora with non-binding letters of support, which
Aurora could provide to MedReleaf, supporting an approach by Aurora. The parties
also agreed that the supporting shareholders would enter into exclusivity
agreements with Aurora, whereby the supporting shareholders would deal
exclusively with Aurora, to allow Aurora time to enter into discussions with
MedReleaf and complete any necessary due diligence on MedReleaf.
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On April 16, 2018, Mr. Singer
apprised the Board of discussions with Mr. Ouass. Members of the Board expressed
support for management’s proposal to move ahead with a potential transaction
with MedReleaf.
On April 16 and 17, 2018,
Aurora’s advisors negotiated the terms of the support letters and exclusivity
agreements with Mr. Ouass’ legal counsel, and provided to Mr. Ouass and his
legal counsel drafts of the indicative proposal Aurora intended to deliver to
MedReleaf. On April 18, 2018 Aurora was advised that the supporting shareholders
had received the form of support letters and exclusivity agreements, and were
reviewing the agreements with their individual advisors. On April 19, 2018, Mr.
Ouass’ legal counsel provided confirmation that the support letters and
exclusivity agreements had been executed. Later that day, Mr. Booth and Aurora’s
legal counsel discussed with Mr. Ouass and his legal counsel the approach to be
made to MedReleaf. Mr. Ouass agreed that he would first meet with the Chair of
the MedReleaf Board, and advise that he was supportive of a proposal to be made
by Aurora to acquire MedReleaf.
On April 20, 2018, at the request
of Mr. Ouass, Mr. Segal met with Mr. Ouass. At the meeting, Mr. Ouass informed
Mr. Segal that MedReleaf Shareholders, including Zola Finance Inc., who held in
aggregate approximately 49% of the outstanding MedReleaf Shares, had each
delivered a letter to Aurora indicating that they would be prepared to support a
MedReleaf Board-supported acquisition by Aurora of all of the MedReleaf Shares
for 3.45 Aurora Shares per MedReleaf Share. Later that day, Mr. Ouass provided
Mr. Segal with copies of these letters. Later that day Mr. Ouass also briefly
apprised Mr. Booth of the details of his meeting with Mr. Segal.
On the evening of April 20, 2018,
Mr. Segal contacted Mr. Singer and advised him of his meeting with Mr. Ouass.
Mr. Singer confirmed that Aurora had received support letters from Mr. Ouass and
that Aurora was expecting to make a proposal. Mr. Segal advised Mr. Singer that
the MedReleaf Board would meet to consider any proposal delivered by Aurora and
that he expected that the MedReleaf Board would form a special committee to
consider the Aurora proposal and would also consider other proposals.
Later in the evening of April 20,
2018, Mr. Booth, Mr. Singer, other members of Aurora’s management team, and
Aurora’s financial advisors and legal counsel met to consider the information
received by Mr. Singer. The management team determined to wait for a more
fulsome update from Mr. Ouass before delivering the proposal letter to
MedReleaf. Due to conflicting schedules, no update could be provided until late
in the day on April 21, 2018. After several telephone conversations among Mr.
Booth, Mr. Singer, and Mr. Ouass, together with their respective legal counsel,
Aurora determined to provide its expression of interest to MedReleaf. Aurora
delivered a non-binding expression of interest to MedReleaf on April 21
,
2018, which provided for the acquisition of all of the MedReleaf Shares
for 3.45 Aurora Shares for each MedReleaf Share, which would result in existing
MedReleaf Shareholders and Aurora Shareholders owning approximately 38% and 62%
of the pro forma company, respectively, on a fully diluted basis. Aurora
expressed that its desire was to engage in a friendly transaction that was
supported by the MedReleaf Board. Aurora’s expression of interest also indicated
that MedReleaf Shareholders holding 49% of the MedReleaf Shares had signaled a
willingness to support Aurora’s proposed transaction, and that any proposed
transaction was conditional on, among other things, these shareholders entering
into “hard” lock-up agreements with Aurora. The expression of interest requested
that MedReleaf agree to a period of exclusivity through to May 31, 2018 so as to
allow mutual due diligence and the negotiation of definitive agreements.
29
On April 24, 2018 Mr. Singer
provided the Aurora Board with an update on the approach to MedReleaf and
responded to queries regarding the proposal and its merits. On April 23, 2018
MedReleaf Board invited Aurora to make a presentation to the MedReleaf Board on
the merits of its proposed transaction. Aurora’s management team and advisors
prepared for a face to face meeting with the MedReleaf Board scheduled for May
2, 2018.
On April 30, 2018, Aurora entered
into a mutual confidentiality agreement (the “
Confidentiality Agreement
”)
with MedReleaf to allow Aurora to present confidential information concerning
Aurora in the meeting to be held later that week.
On May 2, 2018, representatives
of Aurora management and Mr. Singer made a presentation to the MedReleaf Board
regarding Aurora’s standalone business performance and outlook and Aurora’s
strategic rationale for the business combination with MedReleaf. Representatives
of Canaccord and BMO Capital Markets were also in attendance. During the
meeting, members of the MedReleaf Board asked numerous questions of the Aurora
representatives.
On May 3, 2018, Mr. Segal and
representatives of Canaccord provided representatives of Aurora and BMO Capital
Markets with the Special Committee’s response to Aurora’s initial proposal.
After several periods of negotiation, Aurora ultimately provided a revised
proposal for the acquisition of all of the MedReleaf Shares for 3.575 Aurora
Shares for each MedReleaf Share, an increase of 0.125 Aurora Shares (or 4%) from
Aurora’s initial proposal of 3.45 Aurora Shares for each MedReleaf Share that
has been supported by Mr. Ouass and the other MedReleaf Shareholders. The
revised proposal would result in existing MedReleaf Shareholders and Aurora
Shareholders owning approximately 39% and 61% of the pro forma company,
respectively, on a fully diluted basis. Aurora also proposed a reciprocal $80
million break fee and a reciprocal $15 million expense reimbursement fee in the
event of the failure of a party’s shareholders to approve the transaction.
Aurora’s proposal remained conditional on the receipt of “hard” lock-ups from
various shareholders of MedReleaf, customary due diligence and negotiation of
definitive agreements. Aurora also informed MedReleaf that Aurora was prepared
to agree to mutual standstill and non-solicitation provisions, subject to
reaching agreement on a mutual period of exclusivity through to May 13, 2018,
subject to Aurora’s ability to extend that exclusivity to May 21 and then May
27, 2018, in each case if, at the relevant time, Aurora was continuing to pursue
the proposed transaction in good faith and had confirmed in writing that the
proposed consideration remained unchanged.
Later in the day, representatives
of McMillan and Stikeman Elliott negotiated the terms of a mutual exclusivity
agreement, including customary mutual standstill and non-solicitation
provisions, and that evening MedReleaf and Aurora entered into the exclusivity
agreement.
On May 4, 2018, the engagement
letter with BMO Capital Markets as exclusive financial advisor to Aurora was
finalized, effective as of April 6, 2018.
On May 4, 2018 and May 7, 2018,
respectively, representatives of McMillan provided representatives of Stikeman
Elliott with initial drafts of the Arrangement Agreement and form of shareholder
“hard” lock-up. Through early in the morning on May 14, 2018, the parties and
their advisors continued to negotiate the terms of the Arrangement Agreement and
the “hard” lock-up agreements.
On May 7, 2018, each of MedReleaf
and Aurora provided representatives of the other party and its advisors with
access to an electronic data room, which contained certain public and non-public
information concerning itself, and during the week of May 7, 2018,
representatives of each of MedReleaf and Aurora and their advisors visited
certain properties of the other to conduct on-site due diligence. Each of
MedReleaf’s and Aurora’s due diligence investigations of the other party
continued through May 13, 2018.
On May 10, 2018, an additional
MedReleaf Shareholder delivered a letter to Aurora indicating its support for an
acquisition of all of the MedReleaf Shares for 3.45 Aurora Shares per MedReleaf
Share. As a result, holders of approximately 56% of the MedReleaf Shares had now
delivered letters to Aurora in support of its initial proposal.
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On May 13, 2018, the Aurora
Board, together with management and representatives of BMO Capital Markets, met
to consider and review the terms of the proposed final draft Arrangement
Agreement and related matters. At such meeting, representatives of BMO Capital
Markets provided a presentation to the Aurora Board regarding the proposed
transaction with MedReleaf. BMO Capital Markets then delivered to the Aurora
Board its oral opinion, which was subsequently confirmed in writing, that as of
the date thereof, and subject to the assumptions, qualifications and limitations
stated therein, the Exchange Ratio is fair from a financial point of view to
Aurora. Following discussion of the key benefits and risks of the proposed
transaction, including those noted under the heading “The Arrangement – Reasons
for the Arrangement” and after consulting with its financial advisor, the Aurora
Board unanimously determined that the Arrangement is in the best interests of
Aurora and is fair to the Aurora Shareholders and unanimously approved entering
into the Arrangement Agreement and unanimously recommended that the Aurora
Shareholders vote in favour of the Share Issuance Resolution.
Throughout the evening of May 13,
2018 and the early morning of May 14, 2018, representatives of the parties
finalized the Original Agreement and the related documents and press release.
The Original Agreement, the Director and Officer Voting and Support Agreements
and the Shareholder Voting and Support Agreements were executed in the early
morning on May 14, 2018 and later that morning, prior to the opening of trading
on the TSX, MedReleaf and Aurora issued a joint press release announcing entry
into the transaction.
Following the announcement of the
transaction, the parties discussed amending the Original Agreement to include in
the consideration payable to MedReleaf Shareholders, $0.000001 in cash for each
MedReleaf Share, which would allow Aurora to increase its tax cost in the
MedReleaf Shares acquired by it from MedReleaf Shareholders who did not, or were
not eligible to, make an election for a roll-over for Canadian income tax
purposes. On May 24, 2018, following confirmation from BMO Capital Markets that
the conclusions set out in the Aurora Fairness Opinion, subject to the
assumptions, limitations, and qualifications stated therein, would not have been
different when the Aurora Fairness Opinion was delivered on May 13, 2018 if the
additional Cash Consideration had been provided for pursuant to the Arrangement
Agreement when executed on May 13, 2018 and known to BMO Capital Markets in
advance of the delivery of the Aurora Fairness Opinion on that date, the Aurora
Board approved entry into an Amending Agreement to reflect the addition of the
Cash Consideration and certain related amendments. On May 25, 2018, prior to the
opening of trading on the TSX, MedReleaf and Aurora issued a joint press release
announcing the Amending Agreement.
Recommendation of the Board
AFTER CAREFUL CONSIDERATION OF
THE ARRANGEMENT, THE BOARD UNANIMOUSLY RECOMMENDS THAT AURORA SHAREHOLDERS VOTE
IN FAVOUR OF THE SHARE ISSUANCE RESOLUTION.
Reasons for the Arrangement
In reaching its conclusion to
approve the Arrangement Agreement and to recommend that Aurora Shareholders vote
in favour of the Share Issuance Resolution, the Board considered, among other
things, the following factors:
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a)
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Creation of a Pre-eminent Global Cannabis
Company
.
The Arrangement is anticipated to result in bringing
together two of Canada’s premier cannabis companies with aligned strategic
visions and operating philosophies, as well as complementary assets,
distribution networks, products and capabilities. The Combined Company
will have industry leading scale, brands and a total funded capacity of
over 570,000 kg per year of high-quality cannabis, through nine facilities
in Canada and two in Denmark. In addition, MedReleaf’s experience combined
with its industry leading yields will provide Aurora with immediate expertise to leverage in its
newly developed cultivation facilities. MedReleaf’s cultivation footprint is
based in Ontario, which is highly complementary to Aurora’s Western presence,
strengthening the Combined Company’s coast to coast Canadian presence.
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31
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b)
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Established Brands and Further Product
Diversification
.
The completion of the Arrangement will create
a more broadly diversified portfolio with three established cannabis
brands – Aurora, CanniMed and MedReleaf, and consumer and wellness brands
– San Rafael ‘71, Woodstock and AltaVie. These brands are backed by
award-winning products, detailed consumer and marketplace insights and
advanced analytical frameworks.
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c)
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Expanding Distribution Channels Across Canada and
Internationally
.
The two companies have established
distribution agreements with Quebec’s SAQ, Pharmasave and Shoppers Drug
Mart in Canada, among others. Additionally, the companies have a rapidly
growing international footprint through a network of sales and
distribution capabilities and supply and licensing agreements in five
continents. Both companies are actively engaged in initiatives to further
expand their international activities. Aurora’s investment in Pedanios can
be leveraged to distribute MedReleaf product into the EU and capture a
larger share of the value chain.
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d)
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Focus on Clinical R&D, Patient Data and Innovative
Product Development
.
The expanded team of scientists will focus
on developing a robust pipeline of IP to deliver innovative products for
both medical and adult consumer use markets. Aurora’s Medical Centre of
Excellence, formed through the combination of the Aurora’s and CanniMed’s
science and product development teams, together with MedReleaf’s ongoing
studies with recognized research institutes and its relationship with
Tikum Olam, will provide the Combined Company with access to thousands of
data records and is expected to continue to drive innovation on a global
scale.
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e)
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Enhanced Financial Position
. The Combined Company
will have an enhanced financial position and greater cash resources than
Aurora alone. As at March 31, 2018, the pro forma cash position of the
Combined Company was approximately $445 million.
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f)
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Support of Directors and Officers
. Directors and
certain senior officers of Aurora and MedReleaf have entered into the
Director and Officer Voting and Support Agreements pursuant to which, and
subject to the terms of which, they have agreed, among other things, to
vote their Aurora Shares in favour of the Share Issuance Resolution or
their MedReleaf Shares in favour of the Share Issuance Resolution, as the
case may be.
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g)
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Support for the Arrangement from a Majority of
MedReleaf Shareholders.
Certain MedReleaf Shareholders, who
collectively hold approximately 56% of MedReleaf’s issued and outstanding
Shares have entered into the Shareholder Voting and Support Agreements,
pursuant to which, and subject to the terms of which, they have agreed,
among other things, to vote their MedReleaf Shares in favour of the
MedReleaf Arrangement Resolution.
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h)
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Completion of Due Diligence
.
Aurora’s
management and operations team completed a detailed due diligence review
of MedReleaf, which included, among other things, site visits and
operational reviews at MedReleaf’s facilities in Markham, Bradford and
Exeter.
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i)
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Aurora Fairness Opinion
.
The Aurora
Fairness Opinion provided by BMO Capital Markets to the Aurora Board
states that, as of the date of the Aurora Fairness Opinion and subject to
the assumptions, limitations and qualifications stated in the Aurora
Fairness Opinion, the Exchange Ratio is fair from a financial point of
view to Aurora. The full text of the Aurora Fairness Opinion can be found
at Appendix “D”. See “The Arrangement – Aurora Fairness
Opinion“.
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j)
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Other Factors
.
The Aurora Board also
considered the Arrangement with reference to the current economic,
industry and market trends affecting each of Aurora and MedReleaf in their
respective markets, information concerning the business, operations,
property, assets, financial condition, operating results and prospects of
each of Aurora and MedReleaf and the then historical trading prices of the
Aurora Shares and the MedReleaf Shares.
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32
In the course of its evaluation
of the Arrangement, the Board consulted with Aurora’s senior management, legal
counsel and BMO Capital Markets, considered current industry, economic and
market conditions and trends, reviewed a significant amount of information and
considered a number of factors, including but not limited to the following:
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a)
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MedReleaf Information
. The Board considered the
information provided by MedReleaf with respect to its assets, properties
and financial condition.
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b)
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Size and Market Liquidity
. The Board considered
the anticipated size, market liquidity and cash position of the Combined
Company following the Arrangement.
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c)
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Strategic Opportunity
. The Board evaluated with
management and its financial advisors the business and strategic
opportunities available to increase shareholder value. The Board
determined that the Arrangement was consistent with the company’s strategy
of acquiring quality assets in an increasingly consolidating industry at
fair valuations and was in the best interests of Aurora.
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d)
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Required Shareholder Approval
. The Board
considered that the Share Issuance Resolution must be approved by at least
a majority of the votes cast at the Meeting, providing protection for
Aurora Shareholders.
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e)
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Approvals
. The Board considered that the
Arrangement requires Court approval and approval under the Competition
Act.
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In the course of its deliberations, the Board also identified
and considered a variety of risks and potentially negative factors in connection
with the Arrangement, including, but not limited to the following:
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a)
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Termination of the Arrangement Agreement
. Each of
Aurora and MedReleaf has the right to terminate the Arrangement Agreement
in certain circumstances, including in the event of a change having a
Material Adverse Effect.
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b)
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Satisfaction or Waiver of Conditions Precedent
.
The completion of the Arrangement is subject to several conditions,
including shareholder, court and regulatory approvals, and there is no
certainty that all conditions will be satisfied or waived.
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c)
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Failure to Complete the Arrangement
. If the
Arrangement is not completed, a considerable amount of costs, time and
effort of Aurora and its management team will have been diverted away from
other aspects of Aurora’s business activities and other potentially
accretive transactions.
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d)
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Integration and Realization of Anticipated
Benefits
. The Combined Company may fail to realize the growth
opportunities and synergies currently anticipated due to challenges
associated with integrating the operations and personnel of Aurora and
MedReleaf.
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e)
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Share Consideration is Fixed
. The Exchange Ratio
is fixed and, as a result, the Aurora Shares issued on closing of the
Arrangement may have a market value different than at the time of approval
of the Arrangement.
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f)
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Issuance of the Share Consideration
. The
Arrangement will result in a significant number of Aurora Shares being
issued which may adversely affect the market price of the Aurora
Shares.
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g)
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Termination Payments and Fees
. The Arrangement
Agreement may be terminated by Aurora or MedReleaf in certain
circumstances, in which case a Termination Fee and/or Expense
Reimbursement may be payable. In particular, Aurora will be required to
pay an Expense Reimbursement of $15 million in circumstances where Aurora
Shareholders do not approve the Share Issuance Resolution, even though
there has been no Aurora Acquisition Proposal.
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h)
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Undisclosed Liabilities
. There may be undisclosed
liabilities that Aurora failed to discover or was unable to quantify in
its due diligence.
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The Aurora Board also considered
a variety of risks and other potentially negative factors relating to the
Arrangement including those matters described under the heading “Risk Factors“.
The Aurora Board believed that, overall, the anticipated benefits of the Arrangement to
Aurora outweighed these risks and negative factors.
33
The foregoing summary of the
information and factors considered by the Aurora Board is not intended to be
exhaustive but includes the material information and factors considered by the
Aurora Board in its consideration of the Arrangement. In view of the variety of
factors and the amount of information considered in connection with the Aurora
Board’s evaluation of the Arrangement, they did not find it practicable to, and
did not, quantify or otherwise attempt to assign any relative weight to each of
the specific factors considered in reaching their respective conclusions and
recommendations. The recommendations of the Aurora Board were made after
consideration of all of the above-noted and other factors and in light of their
respective knowledge of the business, financial condition and prospects of
Aurora and MedReleaf and were based upon the advice of the Aurora Board’s
financial advisors and legal counsel to Aurora. In addition, individual members
of the Aurora Board may have assigned different weights to different
factors.
Aurora Fairness Opinion
Pursuant to an engagement letter
dated May 4, 2018 and effective as of April 6, 2018, BMO Capital Markets agreed
to provide Aurora and the Board of Directors with various advisory services in
connection with the Arrangement including, among other things, the provision of
the Aurora Fairness Opinion.
On May 13, 2018, BMO Capital
Markets delivered its oral opinion to the Aurora Board, that as of the date
thereof and subject to the assumptions, limitations and qualifications stated
therein, the Exchange Ratio is fair from a financial point of view to Aurora.
This opinion was subsequently confirmed in writing as at May 13, 2018 by the
Aurora Fairness Opinion. On May 24, 2018 the parties entered into the Amending
Agreement, which provided that, unless a MedReleaf Shareholder otherwise elects,
such MedReleaf Shareholder will receive 3.575 Aurora Shares and $0.000001 in
cash for each MedReleaf Share. BMO Capital Markets has considered the additional
$0.000001 cash consideration for each MedReleaf Share provided for pursuant to
the Amending Agreement (the “Additional Cash Consideration”) and has confirmed
that the conclusions set out in the Aurora Fairness Opinion, subject to the
assumptions, limitations and qualifications stated therein, would not have been
different when the Aurora Fairness Opinion was delivered on May 13, 2018 if the
Additional Cash Consideration had been provided for pursuant to the Arrangement
Agreement when executed on May 13, 2018 and known to BMO Capital Markets in
advance of the delivery of the Aurora Fairness Opinion on that date
BMO Capital Markets has not been
asked to prepare and has not prepared a formal valuation or appraisal of the
securities or assets of Aurora, MedReleaf or any of their affiliates, and the
Aurora Fairness Opinion should not be construed as such. The Aurora Fairness
Opinion is not, and should not be construed as advice as to the price at which
the securities of Aurora may trade at any time.
The terms of the engagement
letter between Aurora and BMO Capital Markets provide that BMO Capital Markets
will receive a fee for rendering the Aurora Fairness Opinion and certain fees
for its advisory services in connection with the Arrangement, a substantial
portion of which is contingent upon the successful completion of the
Arrangement. BMO Capital Markets is also to be reimbursed for its reasonable
out-of-pocket expenses. Furthermore, Aurora has agreed to indemnify BMO Capital
Markets, in certain circumstances, against certain liabilities that might arise
out of its engagement.
The Aurora Fairness Opinion is
rendered on the basis of securities markets, economic, financial and general
business conditions prevailing as at the date thereof and the conditions and
prospects, financial and otherwise, of Aurora and MedReleaf as they are
reflected in certain information obtained by BMO Capital Markets from public
sources or otherwise in connection with BMO Capital Markets’ engagement by
Aurora, and as they have been represented to BMO Capital Markets. In BMO Capital
Markets’ analyses and in connection with preparing the Aurora Fairness Opinion,
BMO Capital Markets made numerous judgments and assumptions with respect to
industry performance, general business, market and economic conditions and other
matters, many of which are beyond the control of BMO Capital Markets or any
party involved in the Arrangement.
34
The full text of the Aurora
Fairness Opinion which sets forth, among other things, the assumptions made,
information reviewed, matters considered and limitations on the scope of review
undertaken, is attached as Appendix “D” to this Circular. Aurora Shareholders
are encouraged to read the Aurora Fairness Opinion carefully and in its
entirety. The Aurora Fairness Opinion was provided to the board of directors of
Aurora for its exclusive use only in considering the Arrangement and may not be
used or relied upon by any other person or for any other purpose without BMO
Capital Markets’ prior written consent. The Aurora Fairness Opinion addresses
only the fairness from a financial point of view of the Exchange Ratio and does
not address any other aspect of the Arrangement. The Aurora Fairness Opinion
does not address the relative merits of the Arrangement as compared to any other
strategic alternatives that may be available to Aurora. The Aurora Fairness
Opinion does not constitute a recommendation as to how Aurora Shareholders
should vote or act on any matters relating to the Arrangement. The summary of
the Aurora Fairness Opinion set forth in this Circular is qualified in its
entirety by reference to the full text of the Aurora Fairness Opinion. Aurora
Shareholders are urged to read the Aurora Fairness Opinion carefully and in its
entirety.
Effect of the Arrangement
The Arrangement Agreement
provides for the acquisition of all of the issued and outstanding MedReleaf
Shares by Aurora by way of a Court approved plan of arrangement under section
182 of the OBCA.
Under the terms of the
Arrangement Agreement, holders of the MedReleaf Shares will receive 3.575 Aurora
Shares (the “
Share Consideration
”) and $0.000001 in cash (the “
Cash
Consideration
”) for each MedReleaf Share held. Certain MedReleaf
Shareholders will also be entitled to elect to receive only Share Consideration
(and not to receive the Cash Consideration). The Share Consideration will be
appropriately adjusted for any stock splits, consolidations, stock dividends,
reclassifications, re-denominations or the like between the date of the
Arrangement Agreement and the Effective Time. The transaction implies a price of
$29.44 per MedReleaf Share and a premium of approximately 34%, based on the
20-day volume weighted average prices of Aurora Shares and MedReleaf Shares on
the TSX as of May 11, 2018, the last trading day before the announcement of the
Arrangement.
The issuance of Aurora Shares in
connection with the Arrangement will require the approval of a simple majority
of the Aurora Shareholders present in person or represented by proxy and
entitled to vote at the Aurora Meeting. The Arrangement will require approval by
at least 66 2/3% of the votes cast by the MedReleaf Shareholders present in
person or represented by proxy and entitled to vote at the MedReleaf Meeting.
Certain directors and officers of Aurora and MedReleaf have entered into support
agreements pursuant to which they have agreed to vote their shares in favour of
the Arrangement. In addition, holders of approximately 56% of MedReleaf Shares
have entered into irrevocable hard lock-ups to vote their shares in favour of
the Arrangement, which terminate under certain specified circumstances,
including on the earlier of the Completion Deadline and six months from the date
of the Original Agreement.
As set out in more detail below
under “Arrangement Mechanics”, MedReleaf Shareholders will be entitled to
receive Aurora Shares and cash in exchange for each MedReleaf Share, subject to
the right of certain MedReleaf Shareholders to elect to receive only Aurora
Shares. In either event, MedReleaf Shareholders will, in general terms, have the
right to utilize certain tax-deferral opportunities under the
Income Tax Act
(Canada)(the “
Tax Act
”). Where such tax-deferral opportunities are
used, Aurora will, in very general terms, acquire the MedReleaf Shares at a cost
(for tax purposes under the Tax Act) reflective of the tax deferral and likely
substantially less than the fair market value of the consideration paid by
Aurora for the acquisition of such MedReleaf Shares. Such a reduced cost for tax
purposes under the Tax Act could impact Aurora in certain circumstances, for
example in the event of a subsequent resale of the MedReleaf Shares (which is
not currently contemplated).
35
Depositary
Aurora, together with MedReleaf,
has retained the services of the Depositary for the receipt of the Letters of
Transmittal and the certificates representing the MedReleaf Shares and for the
delivery and payment of the Cash Consideration and Share Consideration, as
applicable, payable for the MedReleaf Shares under the Arrangement. The
Depositary will receive reasonable and customary compensation for its services
in connection with the Arrangement, will be reimbursed for certain reasonable
out-of-pocket expenses and will be indemnified against certain liabilities,
including liabilities under securities laws and expenses in connection
therewith.
On the Effective Date, Aurora
shall: (i) deposit or cause to be deposited with the Depositary, for the benefit
of and to be held on behalf of the MedReleaf Shareholders entitled to receive
Aurora Shares, the Share Consideration that such MedReleaf Shareholders are
entitled to receive under the Arrangement, which certificates and cash shall be
held by the Depositary after the Effective Time as agent and nominee for the
former MedReleaf Shareholders for distribution to such former MedReleaf
Shareholders; and (ii) deposit or cause to be deposited with the Depositary, for
the benefit of the MedReleaf Shareholders entitled to receive Cash
Consideration, the aggregate amount of cash that such MedReleaf Shareholders are
entitled to receive under the Arrangement.
Upon surrender to the Depositary
for cancellation of a certificate which immediately prior to the Effective Time
represented one or more outstanding MedReleaf Shares, together with a duly
completed and executed Letter of Transmittal, and such additional documents and
instruments as the Depositary may reasonably require, the holder of such
surrendered certificate shall be entitled to receive in exchange therefor, and
the Depositary shall deliver to such holder as soon as practicable following the
Effective Time (in each case, less any amounts withheld pursuant to the terms of
the Plan of Arrangement): (i) the Share Consideration to which such holder is
entitled to receive under the Arrangement, as applicable; and (ii) the Cash
Consideration to which such holder is entitled to under the Arrangement, as
applicable.
Arrangement Mechanics
The following description is
qualified in its entirety by reference to the full text of the Plan of
Arrangement.
Commencing at the Effective Time,
the following shall occur and shall be deemed to occur, except to the extent
otherwise indicated, in the following order without any further act or
formality:
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(a)
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MedReleaf and MedReleaf Sub shall amalgamate (the
“
First Amalgamation
”) to continue as one corporation, Amalco, and
upon such First Amalgamation: (i) all of the issued and outstanding shares
of MedReleaf Sub shall be cancelled without any repayment of capital in
respect thereof; (ii) the by-laws and the articles of amalgamation of
Amalco shall be the same as the by-laws and the articles of amalgamation
of MedReleaf; (iii) the issued and outstanding MedReleaf Shares will not
be redeemed, acquired or cancelled, in whole or in part, but shall
continue to remain issued and outstanding as common shares of Amalco; (iv)
each issued and outstanding MedReleaf Plan Option will be exchanged for an
option issued by Amalco to purchase from Amalco the same number of
MedReleaf Shares which the holder would have been entitled to receive if
the holder had exercised such MedReleaf Plan Option immediately prior to
the First Amalgamation and the exercise price for each such option shall
remain unchanged; (v) each issued and outstanding MedReleaf Warrant will
be exchanged for a warrant issued by Amalco to purchase from Amalco the
same number of MedReleaf Shares which the holder would have been entitled
to receive if the holder had exercised such MedReleaf Warrant immediately
prior to the First Amalgamation and the exercise price for each such
warrant shall remain unchanged; (vi) the property of each of MedReleaf and
MedReleaf Sub shall continue to be the property of Amalco and, for greater
certainty, the First Amalgamation shall not constitute a transfer or
assignment of the property of MedReleaf or MedReleaf Sub; (vii) all
rights, contracts, permits and interest of MedReleaf or MedReleaf Sub shall continue as
rights, contracts, permits and interests of Amalco and, for greater certainty,
the First Amalgamation shall not constitute a transfer or assignment of the
rights or obligations of either of MedReleaf or MedReleaf Sub under any such
rights, contracts, permits and interests; (viii) Amalco shall continue to be
liable for the obligations of MedReleaf and MedReleaf Sub; (ix) all existing
causes of action, claims or liabilities to prosecution with respect to MedReleaf
and MedReleaf Sub shall be unaffected; (x) all civil, criminal or administrative
actions or proceedings pending by or against MedReleaf or MedReleaf Sub may be
continued to be prosecuted by or against Amalco; and (xi) all convictions
against, or rulings, orders or judgments in favour of or against MedReleaf or
MedReleaf Sub may be enforced by or against Amalco.
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(b)
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Each MedReleaf Share held by a Dissenting Shareholder
shall, without any further action by or on behalf of such Dissenting
Shareholder, be deemed to have been transferred and assigned to Aurora in
consideration for a debt claim against Aurora determined and payable in
accordance with Section 3.1 of the Plan of Arrangement.
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(c)
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Each MedReleaf Share outstanding immediately following
the First Amalgamation that is held by an Electing Holder shall, without
any further action by or on behalf of any Electing Holder, be deemed to be
assigned and transferred by the holder thereof to Aurora solely in
exchange for the Share Consideration, and (i) each holder of such
MedReleaf Shares shall cease to be the holder thereof and to have any
rights as a MedReleaf Shareholder other than the right to be paid the
Share Consideration per MedReleaf Share in accordance with the Plan of
Arrangement; (ii) the name of each such holder shall be removed from the
register of the MedReleaf Shares maintained by or on behalf of Amalco; and
(iii) Aurora shall be deemed to be the transferee of such MedReleaf Shares
and shall be entered in the register of the MedReleaf Shares maintained by
or on behalf of Amalco.
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(d)
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Concurrently with the step described in Section 2.3(c) of
the Plan of Arrangement, each MedReleaf Share outstanding immediately
following the First Amalgamation (other than MedReleaf Shares held by
Electing Holders and any MedReleaf Shares held by Aurora or any affiliates
thereof) shall, without any further action by or on behalf of any
MedReleaf Shareholder, be deemed to be assigned and transferred by the
holder thereof to Aurora in exchange for the Share Consideration and the
Cash Consideration, and (i) each holder of such MedReleaf Shares shall
cease to be the holder thereof and to have any rights as a MedReleaf
Shareholder other than the right to be paid the Share Consideration and
Cash Consideration per MedReleaf Share in accordance with the Plan of
Arrangement; (ii) the name of each such holder shall be removed from the
register of the MedReleaf Shares maintained by or on behalf of Amalco; and
(iii) Aurora shall be deemed to be the transferee of such MedReleaf Shares
and shall be entered in the register of the MedReleaf Shares maintained by
or on behalf of Amalco.
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(e)
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In accordance with the terms of the MedReleaf Stock
Option Plan, each MedReleaf Plan Option outstanding immediately following
the First Amalgamation (whether vested or unvested) will be exchanged for
an option of Aurora (a “
Replacement Option
”) to acquire such number
of Aurora Shares as is equal to: (A) that number of MedReleaf Shares that
were issuable upon exercise of such MedReleaf Plan Option immediately
following the First Amalgamation, multiplied by (B) the Exchange Ratio
and, on an aggregate basis, rounded down to the nearest whole number of
Aurora Shares, at an exercise price per Aurora Share equal to the greater
of (i) the quotient determined by dividing: (X) the exercise price per
MedReleaf Share at which such MedReleaf Plan Option was exercisable
immediately following the First Amalgamation, by (Y) the Exchange Ratio,
rounded up to the nearest whole cent, and (ii) such minimum amount that
meets the requirements of paragraph 7(1.4)(c) of the Tax Act. All terms
and conditions of a Replacement Option, including the term to expiry,
vesting, conditions to and manner of exercising, shall be the same as the
MedReleaf Plan Option for which it was exchanged, and any certificate or
option agreement previously evidencing the MedReleaf Plan Option shall
thereafter evidence and be deemed to evidence such Replacement
Option.
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(f)
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Each MedReleaf DSU (whether vested or unvested)
outstanding immediately following the First Amalgamation shall,
notwithstanding the terms of the MedReleaf DSU Plan, without any further
action by or on behalf of the holder of such MedReleaf DSU, be deemed to
have fully vested and be settled in exchange for the Share Consideration
and the Cash Consideration and each such MedReleaf DSU shall be
immediately cancelled.
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(g)
|
Each MedReleaf Share held by Aurora including the
MedReleaf Shares acquired pursuant to Sections 2.3(b), (c) and (d) of the
Plan of Arrangement shall be transferred to Aurora Sub in consideration of
the issue by Aurora Sub to Aurora of one common share of Aurora Sub for
each MedReleaf Share so transferred.
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(h)
|
The stated capital in respect of the MedReleaf Shares
shall be reduced to $1.00 without any repayment of capital in respect
thereof.
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(i)
|
Aurora Sub and Amalco shall amalgamate (the “
Second
Amalgamation
”) to continue as one corporation, New Amalco, with the
same effect (including as provided in section 179 of the OBCA) as if they
were amalgamated under section 177 of the OBCA.
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Exchange Procedure
Following receipt of the Final
Order and prior to the Effective Date in accordance with the terms of the
Arrangement Agreement, Aurora shall deposit with the Depositary, for the benefit
of MedReleaf Securityholders: (i) such number of Aurora Shares, and (ii) such
amount of cash, in each case, as is necessary to be delivered to the MedReleaf
Securityholders in order to effect the exchange or settlement under Section 2.3
of the Plan of Arrangement in accordance with the provisions of Article 5 of the
Plan of Arrangement.
Subject to surrender to the
Depositary of a certificate which immediately prior to the Effective Time
represented outstanding MedReleaf Shares, together with a duly completed and
executed Letter of Transmittal and such additional documents and instruments as
the Depositary may reasonably require, following the Effective Time the holder
of such surrendered certificate shall be entitled to receive in exchange
thereof, and the Depositary shall deliver to such holder, the Aurora Shares and,
if applicable, the cash amount which such holder has the right to receive under
Section 2.3 of the Plan of Arrangement, less any amounts withheld pursuant to
Section 5.5 and any certificate so surrendered shall forthwith be cancelled.
Until surrendered as contemplated
by Section 5.1 of the Plan of Arrangement, each certificate that immediately
prior to the Effective Time represented MedReleaf Shares shall be deemed after
the Effective Time to represent only the right to receive, upon such surrender,
the Aurora Shares and, if applicable, the cash amount to which the holder
thereof is entitled in lieu of such certificate as contemplated by Section 2.3
and Section 5.1, less any amounts withheld pursuant to Section 5.5 of the Plan
of Arrangement. Any such certificate formerly representing MedReleaf Shares not
duly surrendered on or before the sixth anniversary of the Effective Date shall:
(i) cease to represent a claim by, or interest of, any former holder of
MedReleaf Shares of any kind or nature against or in MedReleaf or Aurora (or any
successor to any of the foregoing); and (ii) be deemed to have been surrendered
to Aurora and shall be cancelled.
No MedReleaf Shareholder or
holder of MedReleaf Plan Options, MedReleaf legacy Options, MedReleaf Warrants
or MedReleaf DSUs shall be entitled to receive any consideration with respect to
such MedReleaf Shares, MedReleaf Plan Options, MedReleaf legacy Options,
MedReleaf Warrants or MedReleaf DSUs other than the consideration to which such
holder is entitled in accordance with Section 2.3 of the Plan of Arrangement
and, for greater certainty, no such holder will be entitled to receive any
interest, dividends, premium or other payment in connection therewith.
Any transfer of securities
pursuant to the Plan of Arrangement shall be free and clear of any Liens or
other claims of third parties of any kind. All calculations and determinations
made by Aurora, MedReleaf or the Depositary, as applicable, for the purposes of
the Plan of Arrangement shall be conclusive, final, and binding.
38
Unsurrendered Certificates
No dividend or other distribution
declared or paid after the Effective Time with respect to Aurora Shares shall be
delivered to the holder of any certificate formerly representing MedReleaf
Shares unless and until the holder of such certificate shall have complied with
the provisions of Section 5.1 of the Plan of Arrangement. Subject to applicable
law and to Section 5.5 at the time of such compliance, there shall, in addition
to the delivery of the Aurora Shares and, as applicable, cash to which such
holder is thereby entitled, be delivered to such holder, without interest, the
amount of any dividend or other distribution declared or made after the
Effective Time with respect to the Aurora Shares to which such holder is
entitled in respect of such holder’s Aurora Shares.
Fractional Shares and Rounding of Cash Consideration
No fractional Aurora Shares shall
be issued to any person pursuant to the Plan of Arrangement. The number of
Aurora Shares, to be issued to any person pursuant to the Plan of Arrangement
shall be rounded down to the nearest whole Aurora Share.
If the aggregate cash amount
which a MedReleaf Securityholder is entitled to receive pursuant to the Plan of
Arrangement would otherwise include a fraction of $0.01, then the aggregate cash
amount to which such MedReleaf Securityholder shall be entitled to receive shall
be rounded up to the nearest whole $0.01.
Withholding Rights
Aurora, MedReleaf, Amalco, New
Amalco and the Depositary, as applicable, shall be entitled to deduct and
withhold from any amount payable or any Aurora Shares payable or consideration
otherwise deliverable to any former MedReleaf Securityholder such amounts as
they may be required to deduct and withhold therefrom under any provision of
applicable Laws in respect of taxes. To the extent that any amounts are so
deducted and withheld, such amounts shall be treated for all purposes hereof as
having been paid to the person to whom such amounts would otherwise have been
paid, provided that such withheld amounts are actually remitted to the
appropriate Governmental Entity. To satisfy the amount required to be deducted
or withheld from any payment to any such MedReleaf Securityholder, Aurora,
MedReleaf, Amalco, New Amalco or the Depositary, as applicable, may sell or
otherwise dispose of any portion of the consideration (including Aurora Shares)
deliverable to such holder as is necessary to provide sufficient funds to enable
Aurora, MedReleaf, Amalco, New Amalco or the Depositary, as applicable, to
comply with such deduction and/or withholding requirements.
Warrants
In accordance with the terms of
the MedReleaf Warrant Indenture, at and following the time at which the
transactions contemplated in Section 2.3(d) of the Plan of Arrangement occur
(“
Relevant Time
”), each holder of a MedReleaf Warrant shall be entitled
to receive (and such holder shall accept) upon the exercise of such holder’s
MedReleaf Warrant, for the same aggregate consideration payable thereupon, as
reduced by an amount equal to the aggregate Cash Consideration such holder would
have received in respect of the MedReleaf Shares issuable upon exercise of such
MedReleaf Warrant if such holder exercised such MedReleaf Warrant immediately
prior to the Relevant Time, the Share Consideration which the holder would have
been entitled to receive as a result of the transactions contemplated by the
Plan of Arrangement if, immediately prior to the Relevant Time, such holder had
been the registered holder of the number of MedReleaf Shares to which such
holder would have been entitled if such holder had exercised such MedReleaf
Warrant immediately prior to the Relevant Time. Each MedReleaf Warrant shall
continue to be governed by and be subject to the terms of the MedReleaf Warrant
Indenture.
Upon any exercise of a MedReleaf
Warrant following the Relevant Time, Amalco or New Amalco, as applicable, shall:
(i) deliver the Aurora Shares needed to settle such exercise, and (ii) direct
Aurora to issue the necessary number of Aurora Shares needed to settle such
exercise.
39
Legacy Options
In accordance with the provisions
of the Arrangement Agreement and the MedReleaf Legacy Option agreements, the
MedReleaf Legacy Options will be conditionally exercised immediately before the
Effective Time and the underlying MedReleaf Shares exchanged for Aurora Shares
pursuant to the terms of the Plan of Arrangement.
Effective Date
The Arrangement will become
effective on the date shown on the Certificate of Arrangement to be endorsed by
the Director on the Articles of Arrangement in accordance with the OBCA.
Required Shareholder Approvals
Aurora Shareholder Approval
To be effective, the Share
Issuance Resolution must be approved, with or without variation, by the
affirmative vote of at least a majority of the votes cast on the Share Issuance
Resolution by Aurora Shareholders present in person or represented by proxy and
entitled to vote at the Aurora Meeting.
MedReleaf Shareholder Approval
To be effective, the Arrangement
Resolution must be approved, with or without variation, by the affirmative vote
of at least two-thirds of the votes cast on the Arrangement Resolution by
MedReleaf Shareholders present in person or represented by proxy and entitled to
vote at the MedReleaf Meeting.
Voting and Support Agreements
Director and Officer Voting and Support
Agreements
The following description of
certain provisions of the voting and support agreements entered into by certain
of the directors and executive officers of Aurora and MedReleaf (the “Director
and Officer Voting and Support Agreements”) is a summary only, is not
comprehensive and is qualified in its entirety by reference to the full text of
the Director and Officer Voting and Support Agreements, the form of which was
filed on SEDAR at www.sedar.com on Aurora’s profile on May 24, 2018.
Pursuant to the Director and
Officer Voting and Support Agreements, certain directors and officers of Aurora
and MedReleaf have agreed, subject to the terms and conditions of the respective
Director and Officer Voting and Support Agreement, among other things, (i) to
vote or to cause to be voted their Aurora Shares or MedReleaf Shares, and any
other securities of Aurora or MedReleaf, respectively, directly or indirectly
acquired by or issued to such shareholder after the date thereof (including
without limitation any Aurora Shares or MedReleaf Shares, respectively, issued
upon further exercise or settlement of options or other rights to acquire Aurora
Shares or MedReleaf Shares, respectively), if any, in favour of the Share
Issuance Resolution or Arrangement Resolution, respectively, and any other
matter necessary for the completion of the Arrangement (including in favour of
all matters recommended by management of Aurora or MedReleaf, respectively) at
the Aurora Meeting or MedReleaf Meeting, respectively, held to consider it or
any adjournment thereof, and to not dispose any of such Aurora Shares or
MedReleaf Shares, respectively, prior to the Aurora Meeting or MedReleaf
Meeting, respectively, (ii) if requested by such shareholder, acting reasonably,
to deliver or to cause to be delivered to Aurora or MedReleaf, respectively,
duly executed proxies or voting instruction forms voting in favour of the Share
Issuance Resolution or MedReleaf Arrangement Resolution, respectively, (with
copies to such shareholder) and (iii) to not exercise any rights of dissent or
contestation in connection with the Share Issuance Resolution or MedReleaf
Arrangement Resolution, respectively.
40
Nothing in the Director and
Officer Voting and Support Agreements affects the ability of a director or
executive officer of Aurora or MedReleaf from exercising their fiduciary duties
as a director or officer of Aurora or MedReleaf including, without limitation,
responding in their capacity as a director or officer of Aurora or MedReleaf to
an Aurora Acquisition Proposal or a MedReleaf Acquisition Proposal,
respectively, and making any determinations in that regard in the exercise of
their fiduciary duties, subject to compliance with the terms of the Arrangement
Agreement.
Each Director and Officer Voting
and Support Agreement shall terminate and be of no further force and effect upon
the earlier of (a) the termination of the Arrangement Agreement in accordance
with its terms, (b) the amendment of the Arrangement Agreement in any manner
adverse to the shareholder party to such Voting and Support Agreement, (c) the
Completion Deadline and (d) either Aurora or MedReleaf providing notice to the
other of termination of the Arrangement Agreement regardless of the validity or
effectiveness of such notice or any disputes with respect thereto.
Shareholder Voting and Support Agreements
The following description of
certain provisions of the voting and support agreements entered into by Aurora
and certain shareholders of MedReleaf (the “Shareholder Voting and Support
Agreements”) is a summary only, is not comprehensive and is qualified in its
entirety by reference to the full text of the applicable Shareholder Voting and
Support Agreements, copies of which were filed on SEDAR at www.sedar.com on
Aurora’s profile on May 24, 2018.
Holders of approximately 56% of
MedReleaf’s issued and outstanding MedReleaf Shares have entered into the
Shareholder Voting and Support Agreements.
Pursuant to the Shareholder
Voting and Support Agreements, each such shareholder has agreed to, until the
earlier of the closing of the Arrangement and the date the Shareholder Voting
and Support Agreement is terminated in accordance with its terms:
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(a)
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attend (either in person or by proxy) any meeting of the
MedReleaf Shareholders held to consider the Arrangement (including any
adjournments and postponements thereof), and at the Meeting, vote or cause
to be voted all of:
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(i)
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the MedReleaf Shares, and
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(ii)
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any MedReleaf Shares acquired by or issued to such
shareholder on or following the date of the Shareholder Voting and Support
Agreement,
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that are beneficially owned by, or over which control or
direction is exercised by, such shareholder and which are entitled to be
voted at the MedReleaf Meeting (the “
Subject Securities
”) in favour
of the Arrangement and all matters related thereto;
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(b)
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vote or cause to be voted (in person or by proxy) at any
meeting of the MedReleaf Shareholders any Subject Securities against, or
not tender or cause to be tendered any Subject Securities
to:
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(i)
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any corporate transaction, such as a merger,
amalgamation, arrangement, rights offering, reorganization,
recapitalization, or liquidation or take-over bid, sale or transfer of a
material amount of assets of MedReleaf or similar transaction involving
MedReleaf or the MedReleaf Shares other than the Arrangement and any
transaction related thereto;
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(ii)
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the issuance of any securities of MedReleaf (other than
pursuant to the exercise of options to purchase MedReleaf Shares or the
settlement of deferred share units) other than the Arrangement and any
transaction related thereto;
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(iii)
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any action that is reasonably likely to impede, interfere
with, delay, postpone, hinder, prevent, or adversely affect in any
material respect the Arrangement including, without limitation, any
MedReleaf Acquisition Proposal; or
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41
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(iv)
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any action or agreement that would result in a breach of
any representation, warranty, or covenant or other obligation of MedReleaf
in the Arrangement Agreement;
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(c)
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upon the request or direction of Aurora, have all of its
Subject Securities counted or not counted (as directed by Aurora) as part
of a quorum in connection with any meeting of MedReleaf Shareholders
relating to matters set forth in Section (b) above;
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(d)
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not, without the prior written consent of Aurora, sell,
transfer, assign, pledge, encumber or otherwise dispose of, the Subject
Securities or any interest therein, other than pursuant to the Arrangement
Agreement, or the Shareholder Voting and Support Agreement, pursuant to
any exercise of MedReleaf Warrants or MedReleaf Options for MedReleaf
Shares in accordance with their terms, or pursuant to any customary
brokerage account agreements; except that from and after the date of the
Final Order, the MedReleaf Shareholder shall be entitled to, without the
consent of Aurora, sell, transfer, assign, pledge, encumber or otherwise
dispose of, the Subject Securities, provided that any sales of Subject
Securities permitted to be made during the term of the Shareholder Voting
and Support Agreement shall be made in an orderly fashion as market
conditions permit;
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(e)
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not, except as required pursuant to the Shareholder
Voting and Support Agreement, grant or agree to grant any proxy or other
right to vote the Subject Securities or enter into any voting trust or
pooling agreement or arrangement or enter into or subject any of the
Subject Securities to any other agreement, arrangement, understanding or
commitment, formal or informal, with respect to or relating to the voting
or tendering thereof or revoke any proxy granted pursuant to the
Shareholder Voting and Support Agreement;
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(f)
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not exercise any rights of dissent or appraisal in
respect of any resolution approving the Arrangement or contest the
approval of the Arrangement by any Governmental Entity; and
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(g)
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not, directly or indirectly:
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(i)
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solicit, assist, initiate, knowingly encourage or
otherwise facilitate (including by way of furnishing information,
permitting any visit to any facilities or entering into any form of
agreement, arrangement or understanding) any inquiries or proposals,
whether publicly or otherwise, regarding a MedReleaf Acquisition Proposal
or potential MedReleaf Acquisition Proposal;
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(ii)
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enter into, engage, continue or participate in any
negotiations or discussions regarding, or provide any non-public
information with respect to MedReleaf or any of its subsidiaries, or offer
or provide access to the business, properties, assets, books or records of
MedReleaf or any of its subsidiaries or otherwise cooperate in any way
with, any MedReleaf Acquisition Proposal or potential MedReleaf
Acquisition Proposal;
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(iii)
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requisition or join in the requisition of any meeting of
the MedReleaf Shareholders for the purpose of considering any resolution;
or
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(iv)
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solicit proxies or become a participant in the
solicitation in opposition to or in competition with Aurora’s purchase of
the MedReleaf Shares as contemplated by the Arrangement Agreement or act
jointly or in concert with others with respect to voting securities of
MedReleaf for the purpose of opposing or competing with Aurora’s purchase
of the MedReleaf Shares as contemplated by the Arrangement Agreement;
or
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(h)
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use commercially reasonable efforts to ensure that no
action is taken under any of its brokerage account agreements that would
cause the MedReleaf Shareholder to breach its obligation under Section (b)
or (c) above or Section 5 of the Shareholder Voting and Support
Agreement.
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The obligations of each MedReleaf
Shareholder under the Shareholder Voting and Support Agreement shall terminate
automatically at the closing of the Arrangement. The obligations of each
MedReleaf Shareholder will also be terminated as follows:
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(a)
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at any time by mutual consent in writing of Aurora and
such shareholder;
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42
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(b)
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automatically if the Arrangement Agreement is terminated
pursuant to Section 7.2(c)(i) [
Aurora Change of Recommendation or
Aurora Acquisition Proposal
], 7.2(c)(ii) [
Breach of Aurora’s
obligations relating to non-solicitation or notices with respect to Aurora
Superior Proposal
], 7.2(d)(ii) [
Aurora’s failure to obtain
shareholder approval
], 7.2(h) [
Aurora Superior Proposal
],
7.2(j) [
Aurora’s breach of fundamental representations and warranties
or failure to comply with covenants
] or 7.2(l) [
Aurora Material
Adverse Effect
] thereof, upon termination of the Arrangement
Agreement;
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(c)
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when not in material default in the performance of its
obligations thereunder, upon written notice by the MedReleaf Shareholder
to Aurora if Aurora is in default of any covenant or condition contained
therein;
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(d)
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when not in material default in the performance of its
obligations hereunder, upon written notice by the MedReleaf Shareholder to
Aurora if the Arrangement Agreement is amended in a manner adverse to the
MedReleaf Shareholder, in contravention of Section 4(d) therein, if such
amendment was not approved by the MedReleaf Shareholder in writing; and
did not result solely from the modification or waiver of conditions that
Aurora is entitled to effect or waive without the MedReleaf Shareholder’s
consent pursuant to the terms of Section 4(d) thereof; and
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(e)
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automatically on the earlier of the Completion Deadline
and six months from the date thereof.
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Expenses of the Arrangement
Pursuant to the Arrangement
Agreement, each of Aurora and MedReleaf shall pay half of the governmental fees
in connection with the filings, notifications, applications and/or submissions
in relation to the Competition Act Approval. All out-of-pocket expenses incurred
in connection with the Arrangement Agreement and the Arrangement, the Meeting,
the Aurora Meeting and the preparation and mailing of the Aurora Circular and
the MedReleaf Circular, including legal and accounting fees, printing costs,
financial advisor fees and all disbursements by advisors, shall be paid by the
Party incurring such expense.
In the event of termination of
the Arrangement Agreement by Aurora or MedReleaf for failure to obtain
shareholder approval of MedReleaf Arrangement Resolution, MedReleaf will be
required to pay, within three business days of the termination of the
Arrangement Agreement, a $15 million expense fee to Aurora (the “
MedReleaf
Expense Fee
”). In the event of termination of the Arrangement Agreement by
Aurora or MedReleaf for failure to obtain shareholder approval of the Share
Issuance Resolution, Aurora will be required to pay, within three business days
of the termination of the Arrangement Agreement, a $15 million expense fee to
MedReleaf (the “
Aurora Expense Fee
”).
However, no MedReleaf Expense Fee
will be paid or payable by MedReleaf if MedReleaf has paid the MedReleaf
Termination Payment and no Aurora Expense Fee will be paid or payable if Aurora
has paid the Aurora Termination Payment, as the case may be. Neither the
MedReleaf Expense Fee nor the Aurora Expense Fee will be paid or payable if the
Arrangement Agreement is terminated by either Aurora or MedReleaf as a result of
the failure to obtain either the approval of the Arrangement Resolution (by
MedReleaf Shareholders) or the Share Issuance Resolution (by Aurora
Shareholders, if both of the Arrangement Resolution and the Share Issuance
Resolution have been rejected by the relevant shareholders.
If MedReleaf makes any payment of
the MedReleaf Expense Fee and is then required to pay a MedReleaf Termination
Payment, the amount paid in connection with the MedReleaf Expense Fee will be
credited towards payment of the MedReleaf Termination Payment. If Aurora makes
any payment of the Aurora Expense Fee and is then required to pay an Aurora
Termination Payment, the amount paid in connection with the Aurora Expense Fee
will be credited towards payment of the Aurora Termination Payment.
43
Court Sanction of the Arrangement and Completion of the
Arrangement
An arrangement of a company under
the OBCA requires sanction by the Court. On June 18, 2018, MedReleaf obtained
the Interim Order providing for the calling and holding of the MedReleaf Meeting
and other procedural matters.
If the Arrangement Resolution is
approved by the MedReleaf Shareholders at the MedReleaf Meeting in the manner
required by the Interim Order, MedReleaf will apply to the Court to obtain the
Final Order. The hearing in respect of the Final Order is scheduled to take
place at the Ontario Superior Court of Justice (Commercial List) located at 330
University Avenue, Toronto, Ontario on July 20, 2018 at 10:00 a.m. (Toronto
time), or as soon after such time as counsel may be heard.
The Court has broad discretion
under the OBCA when making orders with respect to arrangements. The Court, when
hearing the motion for the Final Order, will consider, among other things, the
fairness of the Arrangement to the MedReleaf Shareholders. The Court may approve
the Arrangement in any manner it may direct and determine appropriate.
Once the Final Order is granted
and the other conditions contained in the Arrangement Agreement are satisfied or
waived to the extent legally permissible, the Articles of Arrangement will be
filed with the Director under the OBCA for issuance of the Certificate of
Arrangement giving effect to the Arrangement.
Stock Exchange Listing and Reporting Issuer Status
The Aurora Shares are currently
listed on the TSX under the symbol ACB and will remain listed on the TSX on and
following the Effective Date. The MedReleaf Shares are currently listed on the
TSX under the symbol LEAF. MedReleaf expects that the MedReleaf Shares will be
de-listed from the TSX on or following the Effective Date.
Aurora has applied to the TSX to
list the Aurora Shares issuable under the Arrangement and the Aurora Shares to
be issued upon the exercise of the Replacement Options and the MedReleaf
Warrants on the TSX and it is a condition of closing that Aurora will have
obtained approval for this listing, subject only to the customary listing
conditions of the TSX.
Following the Effective Date,
MedReleaf will also seek exemptive relief to be deemed to have ceased to be a
reporting issuer under the securities legislation of each of the provinces and
territories in Canada under which it is currently a reporting issuer (or
equivalent) or take or cause to be taken such other measures as may be
appropriate to ensure that MedReleaf is not required to prepare and file its own
continuous disclosure documents. Aurora will continue to be a reporting issuer
under the securities legislation of each of the provinces and territories in
Canada under which it is currently a reporting issuer (or equivalent).
Effects on Aurora if Arrangement is not Completed
If the Share Issuance Resolution
is not approved by the Aurora Shareholders or if the MedReleaf Arrangement
Resolution is not approved by the MedReleaf Shareholders or if the Arrangement
is not completed for any other reason, Aurora will remain a public company and
the Aurora Shares will continue to be listed and traded on the TSX. In addition,
if the Arrangement is not completed, it is expected that management of Aurora
will operate Aurora in a manner similar to that in which it is currently being
operated and that Aurora Shareholders will continue to be subject to the same
risks and opportunities to which they are currently subject.
If the Arrangement is not
completed, any deposited MedReleaf Shares will be returned to the depositing
MedReleaf Shareholder by first class insured mail in the name of and to the
address specified by the MedReleaf Shareholders in their respective letter of
transmittal.
44
Regulatory Matters
Competition Act Approval
Part IX of the Competition Act
requires that the parties to certain classes of transactions provide prescribed
information to the Commissioner of Competition where the applicable thresholds
set out in sections 109 and 110 of the Competition Act are exceeded (a
“
Notifiable Transaction
”). Subject to certain exemptions discussed below,
a Notifiable Transaction cannot be completed until the parties to the
transaction have each submitted the information prescribed pursuant to
subsection 114(1) of the Competition Act (a “
Notification
”) to the
Commissioner of Competition and the applicable waiting period has expired or
been terminated early by the Commissioner of Competition.
The initial waiting period is 30
days after the day on which the parties to the Notifiable Transaction have both
submitted their respective Notifications. The parties are entitled to complete
their Notifiable Transaction at the end of the 30-day period, unless the
Commissioner of Competition notifies the parties, pursuant to subsection 114(2)
of the Competition Act, that the Commissioner of Competition requires additional
information that is relevant to the Commissioner of Competition’s assessment of
the Notifiable Transaction (a “
Supplementary Information Request
”). If
the Commissioner of Competition provides the parties with a Supplementary
Information Request, the applicable waiting period is extended until 30 days
after compliance by the parties with such Supplementary Information Request,
provided that there is no order issued by the Competition Tribunal in effect
that prohibits completion at the relevant time.
In addition to filing
Notifications, parties to a Notifiable Transaction may apply to the Commissioner
of Competition under subsection 102(1) of the Competition Act for an advance
ruling certificate (an “
ARC
”) or in the alternative a No-Action Letter
(as defined below).
A Notifiable Transaction may be
completed before the end of the applicable waiting period in two circumstances:
(i) the Commissioner of Competition notifies the parties that he does not, at
that time, intend to challenge the transaction by making an application under
section 92 of the Competition Act (a “
No-Action Letter
”); or (ii) the
Commissioner of Competition issues an ARC formally confirming that he is
satisfied that he does not have sufficient grounds on which to apply to the
Competition Tribunal for an order under section 92 of the Competition Act to
prohibit the completion of the transaction. In the case of a No-Action Letter,
the Commissioner of Competition will reserve the right to challenge the
transaction before the Competition Tribunal at any time within one year after
the transaction is completed.
The Commissioner of Competition
may apply to the Competition Tribunal for a remedial order under section 92 of
the Competition Act at any time before the transaction has been completed or, if
completed, within one year after it was substantially completed, provided that,
subject to certain exceptions, the Commissioner of Competition did not issue an
ARC in respect of the transaction. On application by the Commissioner of
Competition under section 92 of the Competition Act, the Competition Tribunal
may, where it finds that the transaction prevents or lessens, or is likely to
prevent or lessen, competition substantially, order that the transaction not
proceed or, if completed, order its dissolution or the disposition of the assets
or shares acquired; in addition to, or in lieu thereof, with the consent of the
person against whom the order is directed and the Commissioner of Competition,
the Competition Tribunal may order a person to take any other action. The
Commissioner of Competition may also seek interim relief from the Competition
Tribunal under sections 100 and 104 of the Competition Act. The Competition
Tribunal is prohibited from issuing a remedial order where it finds that the
transaction or proposed transaction has brought or is likely to bring about
gains in efficiency that will be greater than, and will offset, the effects of
any prevention or lessening of competition that will result or is likely to
result from the transaction and that the gains in efficiency would not likely be
attained if the order were made.
The Arrangement is a Notifiable
Transaction and it is a condition precedent to closing that the Competition Act
Approval shall have been received. Accordingly, Aurora submitted a request on
behalf of the parties to the Commissioner of Competition for an ARC or, in the alternative,
a No-Action Letter on May 30, 2018 and, as agreed by the parties, the parties
both submitted certified Notifications on June 8, 2018.
45
Canadian Securities Law Matters
The Aurora Shares to be issued in
exchange for MedReleaf Shares and MedReleaf DSUs pursuant to the Arrangement
will be issued in reliance upon exemptions from the prospectus requirements of
securities legislation in each province and territory of Canada. Subject to
certain disclosure and regulatory requirements and to customary restrictions
applicable to distributions of shares that constitute “control distributions”,
Aurora Shares issued pursuant to the Arrangement may be resold in each province
and territory in Canada, subject in certain circumstances, to the usual
conditions that no unusual effort, or no effort, has been made to prepare the
market or create demand.
United States Securities Law Matters
The securities to be issued under
the Arrangement have not been and will not be registered under the 1933 Act, and
such securities will be issued in reliance upon the exemption from the
registration requirements of the 1933 Act provided by section 3(a)(10) thereof.
Section 3(a)(10) of the 1933 Act exempts the issuance of securities issued in
exchange for one or more
bona fide
outstanding securities from the
general requirement of registration where the terms and conditions of such
issuance and exchange of such securities have been approved by a court of
competent jurisdiction, after a hearing upon the fairness of the terms and
conditions of the issuance and exchange at which all persons to whom the
securities will be issued have the right to appear and receive timely notice
thereof. The Court is authorized to conduct a hearing at which the fairness of
the terms and conditions of the Arrangement will be considered.
The Interim Order approving the
Meeting will specify that each Person to whom Replacement Securities will be
issued pursuant to the Arrangement will have the right to appear before the
Court at the hearing of the Court to give approval of the Arrangement so long as
such securityholder enters an appearance within a reasonable time. Each of
Aurora and MedReleaf will ensure that each Person entitled to receive
Replacement Securities on completion of the Arrangement will be given adequate
notice advising them of their right to attend the hearing of the Court to give
approval of the Arrangement and providing them with sufficient information
necessary for them to exercise that right.
The Aurora Shares to be issued
and distributed to MedReleaf Shareholders pursuant to the Arrangement will be
freely tradable in the United States under the 1933 Act, except by persons: (a)
who are (or any time within 90 days preceding such resale have been)
“affiliates” of Aurora; or (b) who have been “affiliates” of Aurora within 90
days of the Effective Date of the Arrangement. Persons who may be deemed to be
“affiliates” of an issuer include individuals or entities that control, are
controlled by, or are under common control with, the issuer, and generally
include executive officers and directors of the issuer as well as principal
shareholders of the issuer who beneficially own or control 10 percent or more of
the voting securities of the issuer. Any resale of such Aurora Shares by such an
affiliate (or, if applicable, former affiliate) may be subject to the
registration requirements of the 1933 Act, absent an exemption therefrom.
The Aurora Shares issuable upon
exercise of any Replacement Options, or upon exercise of any MedReleaf Warrants
following the Relevant Time, have not been and will not be registered under the
1933 Act or any state securities laws, and any such exercise of Replacement
Options or MedReleaf Warrants will not be eligible for the exemption provided by
section 3(a)(10) of the 1933 Act. Accordingly, any Replacement Options and
MedReleaf Warrants will not be exercisable by or for the account of any U.S.
person or any person in the United States in the absence of an exemption from
the registration requirements of the 1933 Act and any applicable state
securities laws. “U.S. person” and “United States” have the respective meanings
assigned in Regulation S under the 1933 Act.
46
Dissenting Shareholder Rights
Under applicable Canadian law,
Aurora Shareholders are not entitled to dissent rights with respect to the Share
Issuance Resolution. Registered MedReleaf Shareholders are entitled to Dissent
Rights with respect to the Arrangement Resolution. Any registered MedReleaf
Shareholder who properly dissents from the Arrangement Resolution in accordance
with the OBCA will be entitled, in the event the Arrangement becomes effective,
to be paid by MedReleaf in accordance with the terms of the Plan of Arrangement,
the fair value of the Shares held by the Dissenting Shareholder.
THE ARRANGEMENT AGREEMENT
The following description of
certain provisions of the Arrangement Agreement is a summary only, is not
comprehensive and is qualified in its entirety by reference to the full text of
the Arrangement Agreement, which is available on SEDAR under Aurora’s profile.
Unless indicated otherwise, references to “Sections” or “Articles” are to the
applicable provisions in the Arrangement Agreement and capitalized terms used
but not otherwise defined shall have the meanings specified in the Arrangement
Agreement.
Covenants
The Arrangement Agreement
contains customary covenants, including, among others, agreements by Aurora and
MedReleaf to, until the earlier of the Effective Time and the time that the
Arrangement Agreement is terminated in accordance with its terms, use
commercially reasonable efforts to maintain and preserve each of its own and its
subsidiaries’ business organization, properties, employees, goodwill and
business relationships with customers, suppliers, partners and others with which
it or any of its subsidiaries have material business relations, and to not
engage in certain kinds of transactions or take certain actions during this
period unless consented to in writing by the other party (such consent not to be
unreasonably withheld, delayed or conditioned). In addition, on the terms and
subject to conditions set forth in the Arrangement Agreement, each party has
agreed to use its commercially reasonable efforts to obtain all required
regulatory approvals, as outlined in the Arrangement Agreement.
Non-Solicitation
Each of Aurora and MedReleaf
(each, a “
Party
”, and together, the “
Parties
”) has agreed that
except as expressly provided in this covenant, they shall not, directly or
indirectly, through their officer, director, employee, representative, advisor
or agent or any of the Aurora Subsidiaries or MedReleaf Subsidiaries
(collectively “
Representatives
” which, for further clarity, does not
include the Aurora Shareholders or the MedReleaf Shareholders), or otherwise and
shall not permit or authorize any such Person to do so on its behalf:
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(a)
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solicit, initiate, knowingly facilitate, encourage or
promote (including by way of furnishing information, knowingly permitting
any visit to facilities or properties of each Party or any of its
Subsidiaries or entering into any form of agreement, arrangement or
understanding (other than a confidentiality agreement permitted by and in
accordance with Section 6.1(e)(ii)
[Notification of Aurora Acquisition
Proposals]
or Section 6.3(e)(ii)
[Notification of MedReleaf
Acquisition Proposals]
of the Arrangement Agreement, as applicable))
any inquiries, proposals, expressions of interest or offers regarding,
constituting or that may reasonably be expected to constitute or lead to
an Aurora Acquisition Proposal or a MedReleaf Acquisition Proposal (each,
an “
Acquisition Proposal
” and together, the “
Acquisition
Proposals
”), as applicable;
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(b)
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participate, directly or indirectly, in any discussions
or negotiations regarding, or furnish to any Person any information in
connection with or otherwise cooperate with, assist or participate in, any
effort or attempt to make an Acquisition Proposals, as applicable, or
inquiries, proposals, expressions of interest or offers that may
reasonably be expected to constitute or lead to an Acquisition Proposal,
as applicable;
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(c)
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make, or propose publicly to make an Aurora Change in
Recommendation or a MedReleaf Change in Recommendation (each, a “
Change
in Recommendation
” and together, the “
Changes in
Recommendation
”), as applicable; or
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(d)
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accept, enter into, or propose publicly to accept or
enter into, any letter of intent, agreement, understanding or arrangement
related to an Acquisition Proposals, as applicable, or that may reasonably
be expected to constitute or lead to an Acquisition Proposal, as
applicable, (other than a confidentiality agreement permitted by and in
accordance with Section 6.1(e)(ii) and Section 6.3(e)(ii), as applicable,
of the Arrangement Agreement).
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Each Party has agreed to, and to
cause its Subsidiaries and its Representatives to, immediately terminate and
cease, any discussions or negotiations with any parties (other than Aurora or
MedReleaf, as applicable, and its Representatives) with respect to any proposal
that constitutes, or may reasonably be expected to constitute, or lead to an
Acquisition Proposal, as applicable, and, in connection therewith, each Party
has agreed to, and to cause its Subsidiaries and its Representatives to:
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(a)
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discontinue or not allow access to its or its
Subsidiaries’ confidential information to any third party in connection
with any inquiries, proposals, expressions of interest or offers
constituting or that may reasonably be expected to constitute or lead to
an Acquisition Proposal, as applicable; and
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(b)
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promptly request the return or destruction of all
information provided to any third party that has entered into a
confidentiality agreement with it or any of its Subsidiary relating to an
Acquisition Proposal, as applicable, or that may reasonably be expected to
constitute or lead to an Acquisition Proposal, as applicable, to the
extent that such information has not previously been returned or
destroyed, and shall use all commercially reasonable efforts to ensure
that such requests are honoured.
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Each Party has agreed and
covenanted that they have not, in the year prior to the date of the Arrangement
Agreement, waived any confidentiality, standstill, non-disclosure,
non-solicitation, use, business purpose or similar agreement, restriction or
covenant to which a Party or any of its Subsidiary is a party. Each Party
covenants and agrees that they shall take all necessary action to enforce each
such confidentiality, standstill, non-disclosure, non-solicitation, use,
business purpose or similar agreement, restriction or covenant. Each Party
further covenants and agrees not to and shall cause their Subsidiaries and their
Representatives not to release any Person from, or waive, amend, suspend or
otherwise modify any Person’s obligations under any confidentiality, standstill,
non-disclosure, non-solicitation, use, business purpose or similar agreement,
restriction or covenant to which it, or any of its Subsidiary is a party without
the prior written consent of the other Party (which may be withheld or delayed
in the other Party’s sole and absolute discretion); provided, however, that the
Parties acknowledge and agree that the automatic termination or release of any
such agreement, restriction or covenant in accordance with its terms shall not
be a violation of Section 6.3(c)
[Aurora Covenant Regarding Non-Solicitation]
or Section 6.1(c)
[MedReleaf Covenant Regarding Non-Solicitation]
, as
applicable, of the Arrangement Agreement.
Notification of Acquisition Proposals
If either Party or any of its
Subsidiaries or any of its Representatives, receives or otherwise becomes aware
of any inquiry, proposal or offer that constitutes or may reasonably be expected
to constitute or lead to an Acquisition Proposal, as applicable, or any request
for copies of, access to, or disclosure of, confidential information relating to
it or any of its Subsidiaries in connection with an Acquisition Proposal, as
applicable, including but not limited to information, access, or disclosure
relating to it or its Subsidiaries’ properties, facilities, books or records, it
shall:
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(a)
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promptly notify the other Party, at first orally, and
then as soon as practicable and in any event within 24 hours in writing,
of such Acquisition Proposal, as applicable, inquiry, proposal, offer or
request, including a description of its material terms and conditions, and
the identity of all Persons making the Acquisition Proposal, as
applicable, inquiry, proposal, offer or request;
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(b)
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provide the other Party with copies of all written
documents, material or substantive correspondence or other material
received in respect of, from or on behalf of any such Persons;
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(c)
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keep the other Party fully informed on a current basis of
the status of developments and, to the extent permitted by Section 6.3(e)
or Section 6.1(e), as applicable, negotiations with respect to such
Acquisition Proposal, as applicable, inquiry, proposal, offer or request,
including any changes, modifications or other amendments to any such
Acquisition Proposal, as applicable, inquiry, proposal, offer or request;
and
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(d)
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provide to the other Party copies of all material or
substantive correspondence if in writing or electronic form, and if not in
writing or electronic form, a description of the material terms of such
correspondence communicated to it by or on behalf of any Person making any
such Acquisition Proposal, as applicable, inquiry, proposal, offer or
request.
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If at any time prior to obtaining
the approval by its shareholders of their applicable Arrangement Resolution,
either Party receives an unsolicited
bona fide
Acquisition Proposal, as
applicable, it may: (i) contact the Person making such Acquisition Proposal and
its representatives solely for the purpose of clarifying the terms and
conditions of such Acquisition Proposal; and (ii) engage in or participate in
discussions or negotiations with such Person regarding such Acquisition
Proposal, and subject to entering into a confidentiality and standstill
agreement with such Person (unless such Person is already a party to a
confidentiality and standstill agreement with the applicable Party) that
contains a standstill provision that is no less onerous or more beneficial to
such Person than that in the Exclusivity Agreement and is otherwise on terms
that are no less favourable to it than those found in the Confidentiality
Agreement, and any such copies, access or disclosure provided to such Person
already having been (or simultaneously being) provided to the other Party, may
provide copies of, access to or disclosure of information, its or its
Subsidiaries’ properties, facilities, books or records for a maximum of ten
Business Days after the day on which access or disclosure is first afforded to
the Person making the Acquisition Proposal, as applicable, if and only if:
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(a)
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its board of directors first determines in good faith,
after consultation with its financial advisors and its outside legal
counsel, that such Acquisition Proposal constitutes or could reasonably be
expected to constitute or lead to an Aurora Superior Proposal or MedReleaf
Superior Proposal (each, a “
Superior Proposal
” and together, the
“
Superior Proposals
”), as applicable, and, after consultation with
its outside legal counsel, that the failure to engage in such discussions
or negotiations or to provide such access or disclosure would be
inconsistent with its fiduciary duties;
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(b)
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such Person was not restricted from making such
Acquisition Proposal pursuant to an existing confidentiality, standstill,
non-disclosure, use, business purpose or similar agreement, restriction or
covenant with it or any of its Subsidiaries;
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(c)
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it has been, and continues to be, in compliance with its
obligations under Section 6.3
[Aurora Non-Solicitation Covenant]
and Section 6.4
[Notice of Aurora Superior Proposal
Determination]
, or Section 6.1
[MedReleaf Non-Solicitation
Covenant]
and Section 6.2
[Notice of MedReleaf Superior Proposal
Determination]
, as applicable, of the Arrangement Agreement;
and
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(d)
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it promptly provides the other Party
with:
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(i)
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written notice stating its intention to participate in
such discussions or negotiations and to provide such copies, access or
disclosure and that its board of directors has determined that failure to
take such action would be inconsistent with its fiduciary duties;
and
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(ii)
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prior to providing any such copies, access or disclosure
to such Person, it provides the other Party with a true, complete and
final executed copy of the confidentiality and standstill agreement
referred to in Section 6.1(e)(ii) or Section 6.3(e)(ii), as applicable, of
the Arrangement Agreement.
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49
Each Party has agreed to ensure
that its Subsidiaries and its Representatives are aware of the provisions of
Section 6.1 or Section 6.3, as applicable, and it shall be responsible for any
breach of Section 6.1 or Section 6.3, as applicable, of the Arrangement
Agreement by its Subsidiaries or its Representatives.
Notwithstanding any of the
provisions of the Arrangement Agreement:
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(a)
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the board of directors of each Party has the right to
respond, within the time and in the manner required by applicable
Securities Laws, to any take-over bid made for the Aurora Shares or
MedReleaf Shares (each a “
Share
” and together, the
“
Shares
”), as applicable, that it determines is not a Superior
Proposal, as applicable, provided that the other Party and its outside
legal counsel have been provided with a reasonable opportunity to review
and comment on any such response and the board of directors of such Party
shall give reasonable consideration to such comments;
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(b)
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prior to the Meeting, each Party and their board of
directors shall not be prohibited from making any disclosure to their
Shareholders, if:
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(i)
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a Material Adverse Effect with respect to the other Party
has occurred and is continuing; and
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(ii)
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its board of directors has reasonably determined in good
faith after consultation with its outside legal counsel that the failure
to do so would be inconsistent with the duties of the members of its board
of directors, under applicable Law; and
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(c)
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prior to the Meeting, each Party and their board of
directors shall not be prohibited from making a Change in Recommendation
if:
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(i)
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a Material Adverse Effect with respect to the other Party
has occurred and is continuing; and
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(ii)
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its board of directors has reasonably determined in good
faith after consultation with its outside legal counsel that the failure
to do so would be inconsistent with its fiduciary
duties.
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Notice of Superior Proposal Determination
If either Party receives an
Acquisition Proposal, as applicable, and its board of directors makes a
determination that such Acquisition Proposal constitutes a Superior Proposal, as
applicable, prior to the approval by its shareholders of the Arrangement
Resolution or Share Issuance Resolution, as applicable, such Party may make a
Change in Recommendation and enter into a definitive agreement with respect to
such Acquisition Proposal (other than a confidentiality agreement contemplated
by Section 6.3(e)(ii)
[Notification of Aurora Acquisition Proposals]
or
Section 6.1(e)(ii)
[Notification of MedReleaf Acquisition Proposals]
), as
applicable, of the Arrangement Agreement, if and only if:
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(a)
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the Person making such Superior Proposal was not
restricted from making such Superior Proposal pursuant to any existing
confidentiality, non-disclosure, standstill, business purpose or other
similar agreement, restriction or covenant with its
Subsidiaries;
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(b)
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it has complied with its obligations under Section 6.3
[Aurora Covenant
Regarding
Non-Solicitation
] or Section 6.1
[MedReleaf Covenant Regarding Non-Solicitation]
, as applicable, of
the Arrangement Agreement;
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(c)
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it has provided the other Party with written notice (a
“
Aurora Superior Proposal Notice
” or “
MedReleaf Superior
Proposal Notice
”, each a “
Superior Proposal Notice
” and
together, the “
Superior Proposal Notices
”) promptly following its
board of directors’ determination that such Acquisition Proposal
constitutes a Superior Proposal, as applicable,
that:
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(i)
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such Acquisition Proposal constitutes a Superior
Proposal, as applicable; and
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(ii)
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it intends to enter into an agreement with respect to
such Superior Proposal; the Superior Proposal Notice, as applicable, will
set forth the determinations of its board of directors regarding the value
and financial terms that its board of directors, in consultation with its
financial advisors and outside legal counsel, has determined should be
ascribed to any non-cash consideration offered under such Superior
Proposal;
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(d)
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it has delivered to the other Party a copy of the
proposed definitive agreement for such Superior Proposal and all
supporting materials, including any financing documents supplied to it in
connection therewith;
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(e)
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a period of five Business Days (the “
MedReleaf Match
Period
” or the “
Aurora Match Period”
, each, a “
Match
Period
” and together, the “
Match Periods
”) has elapsed from the
date that is the later of the date on which the other Party received a
Superior Proposal Notice, as applicable, and the date on which the other
Party received the materials set forth in Section 6.4(a)(iv) or Section
6.2(a)(iv), as applicable, of the Arrangement Agreement;
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(f)
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during a Match Period, as applicable, the other Party has
had the opportunity, but not the obligation, in accordance with Section
6.4(b)
[Notice of Aurora Superior Proposal Determination]
or
Section 6.2(b)
[Notice of MedReleaf Superior Proposal
Determination]
, as applicable, of the Arrangement Agreement, to offer
to amend the Arrangement Agreement and the Arrangement in order for such
Acquisition Proposal to cease to be a Superior Proposal, as
applicable;
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(g)
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after a Match Period, as applicable, the board of
directors of such Party:
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(i)
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has determined in good faith, after consultation with its
outside legal counsel and financial advisors, that such Acquisition
Proposal continues to constitute a Superior Proposal, as applicable, which
determination will consider the terms of the Arrangement as proposed to be
amended by the other Party if the other Party proposes any amendment in
accordance with Section 6.2(b) or Section 6.4(b), as applicable, of the
Arrangement Agreement; and
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(ii)
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has determined in good faith, after consultation with its
outside legal counsel and financial advisors, that the failure of its
board of directors to recommend that it enter into a definitive agreement
with respect to such Superior Proposal would be inconsistent with its
fiduciary duties; and
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(h)
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prior to or concurrently with entering into such
definitive agreement the Arrangement Agreement is terminated by it under
Section 7.2(h)
[Aurora Superior Proposal]
or Section 7.2(g)
[MedReleaf Superior Proposal]
, as applicable, of the Arrangement
Agreement and it pays the Aurora Termination Payment to MedReleaf, in the
case of MedReleaf, or the MedReleaf Termination Payment to Aurora, in the
case of Aurora, in accordance with Section 6.6
[Aurora Termination
Payment Event]
or Section 6.5
[MedReleaf Termination Payment
Event]
, as applicable, of the Arrangement
Agreement.
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Right to Match
Each Party has the reciprocal
right, but not the obligation, to propose in writing to amend the terms of the
Arrangement Agreement and the Arrangement. During a Match Period, as applicable,
each Party shall (i) review any proposal by the other Party to amend the terms
of the Arrangement Agreement and the Arrangement in order to determine, in good
faith and in a manner consistent with the fiduciary duties of its board of
directors, whether the proposed amendment by a Party upon acceptance by the
other Party would result in the an Acquisition Proposal, as applicable, not
being a Superior Proposal, as applicable; and (ii) negotiate with the other
Party in good faith, and in a manner consistent with the fiduciary duties of its
board of directors to make such amendments to the terms of the Arrangement
Agreement and the Arrangement as would enable such Party to proceed with the
Arrangement on such amended terms. If the board of directors of such Party
determines that the proposed amendment by the other Party upon acceptance by it
would result in such Acquisition Proposal not being a Superior Proposal, as
applicable, it shall promptly so advise the other Party and enter into an
amendment to the Arrangement Agreement with the other Party reflecting the
amended proposal of the other Party and will promptly reaffirm its
recommendation of the Arrangement as amended.
Each Party acknowledges and
agrees that each successive modification of any Acquisition Proposals, as
applicable, that results in an increase in, or modification of, the
consideration (or value of such consideration) to be received by their
shareholders, or other material terms or conditions thereof shall constitute a
new Acquisition Proposal, as applicable, for the purposes of
Section 6.4
[Notice of Aurora Superior Proposal Determination]
or Section
6.2
[Notice of MedReleaf Superior Proposal Determination]
, as applicable,
of the Arrangement Agreement and the other Party shall be afforded a new Match
Period, as applicable, and the rights afforded in Section 6.4 or Section 6.2, as
applicable, of the Arrangement Agreement shall apply in respect of each such
Acquisition Proposal.
51
The board of directors of each
Party shall promptly reaffirm its unanimous recommendation of the Arrangement by
press release after: (i) it determines any Acquisition Proposal, as applicable,
that has been publicly announced or publicly disclosed is not a Superior
Proposal, as applicable; or (ii) it determines that a proposed amendment to the
terms of the Arrangement would result in any Acquisition Proposal, as
applicable, which has been publicly announced or made not being a Superior
Proposal, as applicable, and the other Party has so amended the terms of the
Arrangement. The other Party and its counsel shall be given a reasonable
opportunity to review and comment on the form and content of any such press
release. Each Party shall make all reasonable amendments to such press release
as requested by the other Party and its counsel.
Nothing contained in Section 6.4
[Notice of Aurora Superior Proposal Determination]
or Section 6.2
[Notice of MedReleaf Superior Proposal Determination]
, as applicable, of
the Arrangement Agreement, shall limit in any way the obligation of each Party
to convene and hold the Meeting in accordance with Section 4.2(a)(v)
[Covenants of MedReleaf]
or Section 4.1(a)(v)
[Covenants of
Aurora]
, as applicable, of the Arrangement Agreement while the Arrangement
Agreement remains in force.
Where a Party has provided the
other Party with a notice under Section 6.4(a)(iii)
[Notice of Aurora
Superior Proposal Determination]
or Section 6.2(a)(iii)
[Notice of
MedReleaf Superior Proposal Determination]
, as applicable, of the
Arrangement Agreement and the Meeting is scheduled to be held during or within
two Business Days following the expiration of the Match Period, as applicable,
then, subject to applicable Laws, such Party will be entitled to, and will if so
requested by the other Party, postpone or adjourn the Meeting to a date that
shall not be less than three Business Days and not more than 10 Business Days
after the scheduled date of the Meeting, provided that in no event shall such
adjourned or postponed meeting be held on a date that is less than five Business
Days prior to the Completion Deadline, and shall, in the event that the Parties
amend the terms of the Arrangement Agreement pursuant to Section 6.4(b)
[Notice of Aurora Superior Proposal Determination]
or Section 6.2(b)
[Notice of MedReleaf Superior Proposal Determination]
, as applicable, of
the Arrangement Agreement, ensure that the details of such amended Arrangement
Agreement are communicated to its shareholders and the shareholders of the other
Party prior to the resumption of the adjourned or postponed Meeting.
MedReleaf Warrants
Aurora has agreed and covenanted
to comply with the terms and provisions of the MedReleaf Warrant Indenture, of
the obligations of MedReleaf as a successor following the Effective Time
pursuant to the MedReleaf Warrant Indenture.
MedReleaf has agreed and
covenanted to use commercially reasonable efforts to cooperate with Aurora, upon
Aurora’s reasonable request, in connection with the assumption by Aurora, or
such other party as required by the terms of the MedReleaf Warrant Indenture, of
the obligations of MedReleaf as a successor following the Effective Time
pursuant to the MedReleaf Warrant Indenture.
Representations and Warranties
The Arrangement Agreement
contains customary representations and warranties made by each of Aurora and
MedReleaf. The assertions embodied in those representations and warranties are
solely for the purposes of the Arrangement Agreement. Certain representations
and warranties may not be accurate or complete as of any specified date because
they are qualified by certain disclosure provided by either Aurora or MedReleaf
or are subject to a standard of materiality or are qualified by a
reference to Material Adverse Effect. Therefore, shareholders should not rely on
the representations and warranties as statements of factual information.
52
The Arrangement Agreement
contains certain representations and warranties of Aurora relating to the
following: organization and qualification; corporate authorization; directors’
approvals; no conflict; residence of Aurora; third party consents; governmental
approvals;
Investment Canada Act
; execution and binding obligation;
authorized and issued capital; significant shareholders; shareholders’ and
similar agreements; subsidiaries; securities laws matters; auditors; security
ownership; financial statements; absence of certain changes of events; no
undisclosed liabilities; stock exchange compliances; books and records;
compliance with laws and licenses; regulatory compliance; healthcare data
privacy and security; litigation; taxes; title to assets; real property;
material contracts; environmental matters; restrictions of business activities;
Health Canada; intellectual property; employees; employee plans; labour matters;
insurance; brokers; United States securities laws; non-arm’s length agreements;
Foreign Corrupt Practices Act
; money laundering laws; Office of Foreign
Assets Control of the U.S. Treasury Departments (OFAC) and no “collateral
benefit”. The representations and warranties of Aurora are subject to the
disclosure in Aurora Filings.
The Arrangement Agreement
contains certain representations and warranties of MedReleaf relating to the
following: organization and qualification; corporate authorization; directors’
approvals; no conflict; execution and binding obligation; residence of
MedReleaf; third party consents; governmental approvals; authorized and issued
capital; significant shareholders; shareholders’ and similar agreements;
subsidiaries; security law matters; auditors; disclosure controls and internal
control over financial reporting; financial statements; absence of certain
changes of events; no undisclosed liabilities; stock exchange compliance; books
and records; compliance with laws and licenses; regulatory compliance;
healthcare data privacy and security; litigation; taxes; title to assets; real
property; material contracts; environmental matters; restriction on business
activities; Health Canada; intellectual property; employees; employee plans;
labour matters; insurance; brokers; United States securities laws; non-arm’s
length agreements;
Foreign Corrupt Practices Act
; money laundering laws;
Office of Foreign Assets Control of the U.S. Treasury Departments (OFAC); and no
“collateral benefit”. The representations and warranties of MedReleaf are
subject to the disclosure in and MedReleaf Disclosure Letter.
Conditions Precedent to the Consummation of the
Arrangement
Mutual Conditions Precedent
The respective obligations of
MedReleaf and Aurora to complete the Arrangement are subject to the fulfillment
of the following conditions at or before the Completion Deadline or such other
time as is specified below:
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(a)
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Interim Order.
The Interim Order shall have been
granted on terms consistent with the Arrangement Agreement and in form and
substance satisfactory to Aurora and MedReleaf, each acting reasonably,
and shall not have been set aside or modified in a manner unacceptable to
Aurora or MedReleaf, each acting reasonably, on appeal or
otherwise.
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(b)
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Arrangement Resolutions.
The Share Issuance
Resolution shall have been passed by the Aurora Shareholders in accordance
with the requirements of the TSX. The Arrangement Resolution shall have
been passed by the MedReleaf Shareholders in accordance with the Interim
Order.
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(c)
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Final Order.
The Final Order shall have been
granted in form and substance satisfactory to Aurora and MedReleaf, each
acting reasonably, and shall not have been set aside or modified in a
manner unacceptable to Aurora or MedReleaf, each acting reasonably, on
appeal or otherwise.
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(d)
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Illegality.
There shall not be in force any laws,
ruling, order or decree, and there shall not have been any action taken
under any laws or by any Governmental Entity or other regulatory
authority, that makes it illegal or otherwise directly or indirectly
restrains, enjoins or prohibits the consummation of the Arrangement in
accordance with the terms under the Arrangement
Agreement.
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(e)
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TSX Approval.
The TSX shall have conditionally
approved the listing thereon of the Aurora Shares to be issued pursuant to
the Arrangement (including any Aurora Shares issuable upon the exercise or
vesting of the Replacement Options and the MedReleaf Warrants), subject in
each case only to compliance with the usual requirements of the TSX,
including customary post-closing deliveries.
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(f)
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Competition Act Approval.
The Competition Act
Approval shall have been obtained.
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(g)
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Dissent Rights
. Dissent Rights have not been
validly exercised with respect to greater than 5.0% of the issued and
outstanding MedReleaf Shares.
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The foregoing conditions are for
the mutual benefit of Aurora and MedReleaf and may be waived by mutual consent
of Aurora and MedReleaf in writing at any time.
Additional Conditions Precedent to the Obligations of
Aurora
The obligation of Aurora to
complete the Arrangement is subject to the fulfillment of the following
additional conditions at or before the Completion Deadline or such other time as
is specified below:
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(a)
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Representations and Warranties
. (i) The
representations and warranties made by MedReleaf in Sections (a), (b), (e)
and (i)(i) of Schedule C to the Arrangement Agreement shall be true and
correct in all material respects as of the Effective Date as if made on
and as of the Effective Date (except for those representations and
warranties made as of a specific date, which shall be true and correct in
all material respects on and as of such date), and (ii) all other
representations and warranties made by MedReleaf in the Arrangement
Agreement shall be true and correct in all respects as of the Effective
Date as if made on and as of the Effective Date (except for those
representations and warranties made as of a specific date, which shall be
true and correct in all respects on and as of such date), except where any
failure or failures of any such other representations and warranties to be
so true and correct in all respects would not, individually or in the
aggregate, have a Material Adverse Effect with respect to MedReleaf (and,
for this purpose, any reference to “material”, “Material Adverse Effect”
or any other concept of materiality in such representations and warranties
shall be ignored); and (iii) MedReleaf shall have provided to Aurora a
certificate of two officers thereof, certifying the foregoing.
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(b)
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Material Adverse Effect
. From the date of the
Arrangement Agreement, there shall not have occurred a Material Adverse
Effect with respect to MedReleaf.
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(c)
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Performance of Covenants
. MedReleaf shall have
complied in all material respects with each of the covenants of MedReleaf
contained in the Arrangement Agreement to be complied with by it on or
prior to the Effective Date, and MedReleaf shall have provided to Aurora a
certificate of two officers thereof, certifying the
foregoing.
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The foregoing conditions are for
the benefit of Aurora and may be waived, in whole or in part, by Aurora in
writing at any time.
Additional Conditions Precedent to the Obligations of
MedReleaf
The obligation of MedReleaf to
complete the Arrangement is subject to the fulfillment of the following
additional conditions at or before the Completion Deadline or such other time as
is specified below:
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(a)
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Representations and Warranties.
(i) The
representations and warranties made by Aurora in Sections (a), (b), (i)
and (j)(i) of Schedule D to the Arrangement Agreement shall be true and
correct in all material respects as of the Effective Date as if made on
and as of the Effective Date (except for those representations and
warranties made as of a specific date, which shall be true and correct in
all material respects on and as of such date); (ii) all other
representations and warranties made by Aurora in the Arrangement Agreement
shall be true and correct in all respects as of the Effective
Date as if made on and as of the Effective Date (except for those
representations and warranties made as of a specific date, which shall be true
and correct in all respects on and as of such date), except where any failure or
failures of any such other representations and warranties to be so true and
correct in all respects would not, individually or in the aggregate, have a
Material Adverse Effect with respect to Aurora (and, for this purpose, any
reference to “material”, “Material Adverse Effect” or any other concept of
materiality in such representations and warranties shall be ignored); and (iii)
Aurora shall have provided to MedReleaf a certificate of two officers thereof,
certifying the foregoing.
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(b)
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Material Adverse Effect.
From the date of the
Arrangement Agreement, there shall not have occurred a Material Adverse
Effect with respect to Aurora.
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(c)
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Performance of Covenants.
Aurora shall have
complied in all material respects with each of the covenants of Aurora
contained in the Arrangement Agreement to be complied with by it on or
prior to the Effective Date, and Aurora shall have provided to MedReleaf a
certificate of two officers thereof, certifying the
foregoing.
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The foregoing conditions are for
the benefit of MedReleaf and may be waived, in whole or in part, by MedReleaf in
writing at any time.
Termination
The Arrangement Agreement may be
terminated at any time prior to the Effective Date:
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(a)
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by the mutual written agreement of Aurora and MedReleaf,
duly authorized by the board of directors of each;
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(b)
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by Aurora if:
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(i)
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prior to the approval by the Shareholders of the
Arrangement Resolution, (A) the Board of Directors shall make a MedReleaf
Change in Recommendation or (B) MedReleaf enters into an agreement (other
than a confidentiality agreement that complies with Section 6.1(e)(ii) of
the Arrangement Agreement) with respect to any superior proposal made to
MedReleaf; or
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(ii)
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MedReleaf breaches its obligations under Section 6.1
[MedReleaf Non-Solicitation Covenant]
or Section 6.2 of the
Arrangement Agreement
[Notice of MedReleaf Superior Proposal
Determination]
in any material respect.
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(i)
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prior to the approval by the Aurora Shareholders of the
Aurora Resolution, (A) the Aurora Board of Directors makes an Aurora
Change in Recommendation or (B) Aurora enters into an agreement (other
than a confidentiality agreement that complies with Section 6.1(e)(ii) of
the Arrangement Agreement) in respect of any superior proposal made to
Aurora; or
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(ii)
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Aurora breaches its obligations under Section 6.3
[Aurora Non-Solicitation Covenant]
or Section 6.4 of the
Arrangement Agreement
[Notice of Aurora Superior Proposal
Determination]
in any material respect.
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(i)
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either Aurora or MedReleaf if the MedReleaf Meeting shall
have been held and completed and the Arrangement Resolution shall not have
been approved by the Shareholders in accordance with the Interim Order,
provided that MedReleaf shall not be entitled to terminate the Arrangement
Agreement pursuant to Section 7.2(d)(i) of the Arrangement Agreement
[Failure to obtain shareholder approval of MedReleaf Arrangement
Resolution]
if the failure to obtain the approval of the Shareholders
to the Arrangement Resolution has been caused by, or is the result of, a
breach by MedReleaf of any of its representations or warranties or the
failure of MedReleaf to perform any of its covenants or agreements under
the Arrangement Agreement; or
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(ii)
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either Aurora or MedReleaf if the Aurora Meeting shall
have been held and completed and the Share Issuance Resolution shall not
have been approved by the Aurora Shareholders in accordance with the
requirements of the TSX, provided that Aurora shall not be entitled to
terminate the Arrangement Agreement pursuant to Section 7.2(d)(ii) of the
Arrangement Agreement
[Failure to obtain shareholder approval of Aurora
Shareholders’ Resolution]
if the failure to obtain the approval of the
Aurora Shareholders to the Share Issuance Resolution has been caused by,
or is the result of, a breach by Aurora of any of its representations or
warranties or the failure of Aurora to perform any of its covenants or
agreements under the Arrangement Agreement;
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(e)
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by either Aurora or MedReleaf if the Effective Date shall
not have occurred by the Completion Deadline, provided
however:
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(i)
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if the failure of the Effective Date to occur by such
date has been caused by, or is the result of, a breach by MedReleaf of any
of its representations or warranties or the failure of MedReleaf to
perform any of its covenants or agreements under the Arrangement
Agreement, then MedReleaf shall not be entitled to terminate the
Arrangement Agreement pursuant to Section 7.2(e) of the Arrangement
Agreement
[Effective Date shall not have occurred by the Completion
Deadline]
; or
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(ii)
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if the failure of the Effective Date to occur by such
date has been caused by, or is the result of, a breach by Aurora of any of
its representations or warranties or the failure of Aurora to perform any
of its covenants or agreements under the Arrangement Agreement, then
Aurora shall not be entitled to terminate the Arrangement Agreement
pursuant to Section 7.2(e) of the Arrangement Agreement
[Effective Date
shall not have occurred by the Completion
Deadline]
;
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(f)
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by either party if after the date of the Arrangement
Agreement, any applicable law is enacted, made, enforced or amended, as
applicable, that makes the consummation of the Arrangement illegal or
otherwise prohibits or enjoins Aurora or MedReleaf from consummating the
Arrangement, and such applicable law has, if applicable, become final and
non-appealable, provided that the party seeking to terminate the
Arrangement Agreement pursuant to Section 7.2(f) of the Arrangement
Agreement
[Illegality]
has used its commercially reasonable efforts
to, as applicable, appeal or overturn such law or otherwise have it lifted
or rendered non-applicable in respect of the Arrangement;
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(g)
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by MedReleaf if it proposes to enter into any agreement,
arrangement or understanding in respect of a superior proposal in
compliance with Section 6.1
[MedReleaf Non-Solicitation Covenant]
and Section 6.2 of the Arrangement Agreement
[Notice of MedReleaf
Superior Proposal Determination],
provided that MedReleaf pays the
MedReleaf Termination Payment to Aurora contemporaneously with such
termination;
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(h)
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by Aurora if Aurora proposes to enter into any agreement,
arrangement or understanding in respect of a superior proposal in
compliance with Section 6.3
[Aurora Non-Solicitation Covenant]
and
Section 6.4 the Arrangement Agreement
[Notice of Aurora Superior
Proposal Determination],
provided that Aurora pays the Aurora
Termination Payment to MedReleaf contemporaneously with such
termination;
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(i)
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by Aurora, if MedReleaf breaches any representation or
warranty of MedReleaf set forth in the Arrangement Agreement which breach
would cause the condition in Section 5.2(a) of the Arrangement Agreement
[MedReleaf Representations and Warranties]
not to be satisfied or
MedReleaf fails to comply with any of its covenants set forth in the
Arrangement Agreement (other than the covenants in Section 6.1
[MedReleaf Non-Solicitation Covenant]
and Section 6.2 of the
Arrangement Agreement
[Notice of MedReleaf Superior Proposal
Determination]
) that would cause the condition in Section 5.2(c) the
Arrangement Agreement
[MedReleaf Performance of Covenants]
not to
be satisfied, and such breach or failure is incapable of being cured or is
not cured in accordance with the terms of Section 5.4 of the Arrangement
Agreement; provided that any wilful breach shall be deemed incapable of
being cured and Aurora is not then in breach of the Arrangement Agreement
so as to cause any condition in Section 5.3(a)
[Aurora Representations
and Warranties]
or Section 5.3(c) the Arrangement Agreement
[Aurora
Performance of Covenants]
not to be satisfied;
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(j)
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by MedReleaf, if Aurora breaches any representation or
warranty of Aurora set forth in the Arrangement Agreement which breach
would cause the condition in Section 5.3(a) of the Arrangement Agreement
[Aurora Representations and Warranties]
not to be satisfied or
Aurora fails to comply with any of its covenants set forth in the
Arrangement Agreement (other than the covenants in with Section 6.3
[Aurora Non-Solicitation Covenant]
and Section 6.4 of the
Arrangement Agreement
[Notice of Aurora Superior Proposal
Determination]
) that would cause the condition in Section 5.3(c) of
the Arrangement Agreement
[Aurora Performance of Covenants]
not to
be satisfied, and such breach or failure is incapable of being cured or is
not cured in accordance with the terms of Section 5.4 of the Arrangement
Agreement; provided that any wilful breach shall be deemed incapable of
being cured and MedReleaf is not then in breach of the Arrangement
Agreement so as to cause any condition in Section 5.2(a)
[MedReleaf
Representations and Warranties]
or Section 5.2(c) of the Arrangement
Agreement
[MedReleaf Performance of Covenants]
;
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(k)
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by Aurora, if there has occurred a Material Adverse
Effect with respect to MedReleaf after the date of the Arrangement
Agreement; or
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(l)
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by MedReleaf, if there has occurred a Material Adverse
Effect with respect to Aurora after the date of the Arrangement
Agreement;
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provided that any termination by a party in accordance with
paragraphs (b) to (l) above shall be made by such party delivering written
notice to the other party prior to the Effective Date and specifying in
reasonable detail the matter or matters giving rise to such termination
right.
Termination Fees and Expenses
Aurora Termination Fees
The Arrangement Agreement
provides for termination fees of $80 million to be paid by Aurora to MedReleaf
in the following circumstances:
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(a)
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the Arrangement Agreement is terminated by MedReleaf
pursuant to Section 7.2(c) of the Arrangement Agreement
[Aurora Change
in Recommendation or entering into an agreement with respect to any Aurora
Acquisition Proposal]
(but not including a termination by MedReleaf
pursuant to Section 7.2(b)(i) of the Arrangement Agreement in
circumstances where the Aurora Change in Recommendation resulted from the
occurrence of a Material Adverse Effect with respect to MedReleaf and
Aurora has complied with Section 6.3(g)(iii) of the Arrangement
Agreement);
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(b)
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the Arrangement Agreement is terminated by either Aurora
or MedReleaf pursuant to Section 7.2(d)(ii) of the Arrangement Agreement
[Failure to obtain shareholder approval of Aurora Shareholders’
Resolution]
if at such time MedReleaf was permitted to terminate the
Arrangement Agreement pursuant to Section 7.2(c) of the Arrangement
Agreement
[Aurora Change in Recommendation or entering into an
agreement with respect to any Aurora Acquisition Proposal]
(but not
including a termination by MedReleaf pursuant to Section 7.2(c)(i) of the
Arrangement Agreement in circumstances where the Aurora Change in
Recommendation resulted from the occurrence of a Material Adverse Effect
with respect to MedReleaf and Aurora has complied with Section 6.3(g)(iii)
of the Arrangement Agreement);
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(c)
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the Arrangement Agreement is terminated by Aurora
pursuant to Section 7.2(h) of the Arrangement Agreement
[Aurora
Superior Proposal]
; or
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(d)
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the Arrangement Agreement is terminated by either Aurora
or MedReleaf pursuant to Section 7.2(d)(ii)
[Failure to obtain
shareholder approval of Aurora Shareholders’ Resolution]
or Section
7.2(e) of the Arrangement Agreement
[Effective Date shall not have
occurred by the Completion Deadline]
and:
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(i)
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following the date of the Arrangement Agreement and prior
to such termination, an Aurora Acquisition Proposal shall have been made
to Aurora and made known to Aurora Shareholders generally or shall have been made directly to Aurora
Shareholders generally or any person shall have publicly announced an intention
to make an Aurora Acquisition Proposal; and
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(ii)
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within 365 days following the date of such
termination:
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(A)
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an Aurora Acquisition Proposal is consummated or effected
(whether or not such Aurora Acquisition Proposal is the same as the
Pending Aurora Acquisition Proposal); or
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(B)
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Aurora or one or more of its subsidiaries, directly or
indirectly, in one or more transactions, enters into a contract in respect
to an Aurora Acquisition Proposal (whether or not such Aurora Acquisition
Proposal is the same as the Pending Aurora Acquisition Proposal) and such
Aurora Acquisition Proposal is later consummated or effected (whether or
not such Aurora Acquisition Proposal is later consummated or effected
within 365 days of such termination).
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For the purposes of section (d)
above, all references to “20%” in the definition of “Aurora Acquisition
Proposal” in the Arrangement Agreement shall be deemed to be references to
“50%”.
MedReleaf Termination Fees
The Arrangement Agreement
provides for termination fees of $80 million to be paid by MedReleaf to Aurora
if:
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(a)
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the Arrangement Agreement is terminated by Aurora
pursuant to Section 7.2(b) of the Arrangement Agreement
[MedReleaf
Change in Recommendation or entering into an agreement with respect to any
MedReleaf Acquisition Proposal]
(but not including a termination by
Aurora pursuant to Section 7.2(b)(i) of the Arrangement Agreement in
circumstances where the MedReleaf Change in Recommendation resulted from
the occurrence of a Material Adverse Effect with respect to Aurora and
MedReleaf has complied with Section 6.1(g)(iii) of the Arrangement
Agreement);
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(b)
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the Arrangement Agreement is terminated by either Aurora
or MedReleaf pursuant to Section 7.2(d)(i) of the Arrangement Agreement
[Failure to obtain approval of MedReleaf Arrangement Resolution]
if
at such time Aurora was permitted to terminate the Arrangement Agreement
pursuant to Section 7.2(b) of the Arrangement Agreement
[MedReleaf
Change in Recommendation or entering into an agreement with respect to any
MedReleaf Acquisition Proposal]
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(but not including a termination by Aurora pursuant to
Section 7.2(b)(i) of the Arrangement Agreement in circumstances where the
MedReleaf Change in Recommendation resulted from the occurrence of a
Material Adverse Effect with respect to Aurora and MedReleaf has complied
with Section 6.1(g)(iii) of the Arrangement Agreement);
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(c)
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the Arrangement Agreement is terminated by MedReleaf
pursuant to Section 7.2(g) of the Arrangement Agreement
[MedReleaf
Superior Proposal]
; or
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(d)
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the Arrangement Agreement is terminated by either Aurora
or MedReleaf pursuant to Section 7.2(d)(i)
[Failure to obtain
shareholder approval of MedReleaf Arrangement Resolution]
or Section
7.2(e) of the Arrangement Agreement
[Effective Date shall not have
occurred by the Completion Deadline]
and:
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(i)
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following the date of the Arrangement Agreement and prior
to such termination, a MedReleaf Acquisition Proposal shall have been made
to MedReleaf and made known to Shareholders generally or shall have been
made directly to Shareholders generally or any person shall have publicly
announced an intention to make a MedReleaf Acquisition Proposal;
and
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(ii)
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within 365 days following the date of such
termination:
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(A)
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a MedReleaf Acquisition Proposal is consummated or
effected (whether or not such MedReleaf Acquisition Proposal is the same
as the Pending MedReleaf Acquisition Proposal); or
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(B)
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MedReleaf or one or more of its subsidiaries, directly or
indirectly, in one or more transactions, enters into a contract in respect
to a MedReleaf Acquisition Proposal (whether or not such MedReleaf
Acquisition Proposal is the same as the Pending MedReleaf Acquisition
Proposal) and such MedReleaf Acquisition Proposal is later consummated or
effected (whether or not such MedReleaf Acquisition Proposal is later
consummated or effected within 365 days of such
termination).
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For the purposes of section (d)
above, all references to “20%” in the definition of “MedReleaf Acquisition
Proposal” in the Arrangement Agreement shall be deemed to be references to
“50%”.
Reimbursement of Expenses
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(a)
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Subject to section (b) below, in the event of termination
of the Arrangement Agreement by:
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(i)
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either Aurora or MedReleaf in accordance with Section
7.2(d)(i) of the Arrangement Agreement
[Failure to obtain shareholder
approval of MedReleaf Arrangement Resolution]
, MedReleaf shall pay,
within three business days of the termination of the Arrangement
Agreement, a payment of $15,000,000 to Aurora as reimbursement for the
costs and expenses incurred by Aurora with respect to the Arrangement;
or
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(ii)
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either Aurora or MedReleaf in accordance with Section
7.2(d)(ii) of the Arrangement Agreement
[Failure to obtain shareholder
approval of Aurora Shareholders’ Resolution]
, Aurora shall pay, within
three business days of the termination of the Arrangement Agreement, a
payment of $15,000,000 to MedReleaf as reimbursement for the costs and
expenses incurred by MedReleaf with respect to the
Arrangement.
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(b)
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No amount shall be paid or payable by Aurora under
section (a)(ii) above if Aurora has paid the Aurora Termination Payment
payable pursuant to Section 6.6 of the Arrangement Agreement and no amount
shall be paid or payable by MedReleaf under section (a)(i) above if
MedReleaf has paid the MedReleaf Termination Payment payable pursuant to
Section 6.5 of the Arrangement Agreement, as the case may be. No amount
shall be paid or payable by Aurora under section (a)(ii) above if the
Arrangement Agreement is terminated by either MedReleaf or Aurora in
accordance with Section 7.2(d)(ii) of the Arrangement Agreement
[Failure to obtain shareholder approval of Aurora Shareholders’
Resolution]
in circumstances where either MedReleaf or Aurora is
permitted to terminate the Arrangement Agreement in accordance with
Section 7.2(d)(i) of the Arrangement Agreement
[Failure to obtain
shareholder approval of MedReleaf Arrangement Resolution]
. No amount
shall be paid or payable by MedReleaf under section (a)(i) above if the
Arrangement Agreement is terminated by either MedReleaf or Aurora in
accordance with Section 7.2(d)(i) of the Arrangement Agreement
[Failure
to obtain shareholder approval of MedReleaf Arrangement Resolution]
in
circumstances where either MedReleaf or Aurora is entitled to terminate
the Arrangement Agreement in accordance with Section 7.2(d)(ii) of the
Arrangement Agreement
[Failure to obtain shareholder approval of Aurora
Shareholders’ Resolution]
.
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(c)
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In the event Aurora makes any payment under section
(a)(ii) above and is then required to pay an Aurora Termination Payment,
the amount paid under section (a)(ii) above will be credited towards
payment of the Aurora Termination Payment. In the event MedReleaf makes
any payment under section (a)(i) above and is then required to pay a
MedReleaf Termination Payment, the amount paid under section (a)(i) above
will be credited towards payment of the MedReleaf Termination
Payment.
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Amendment
The Arrangement Agreement and the
Plan of Arrangement may, at any time and from time to time before or after the
holding of each of the Aurora Meeting and the MedReleaf Meeting but not later
than the Effective Time, and in the case of the Plan of Arrangement subject to
the provisions of Section 5.1 thereof, be amended by mutual written agreement of the Parties hereto without,
subject to applicable Laws, further notice to or authorization on the part of
the Aurora Shareholders or MedReleaf Shareholders and any such amendment may,
without limitation:
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(a)
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change the time for the performance of any of the
obligations or acts of either of the Parties;
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(b)
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waive any inaccuracies in or modify any representation or
warranty contained herein or in any document delivered pursuant
hereto;
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(c)
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waive compliance with or modify any of the covenants
herein contained and waive or modify the performance of any of the
obligations of any of the Parties; and
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(d)
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waive compliance with or modify any condition herein
contained; provided, however, that notwithstanding the foregoing,
following the Meeting, none of the Exchange Ratio, the Share Consideration
or the Cash Consideration shall be decreased without the approval of the
Shareholders.
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Governing Law
The Arrangement Agreement shall
be governed by, and be construed in accordance with, the laws of the Province of
Ontario and the laws of Canada applicable therein but the reference to such laws
shall not, by conflict of laws rules or otherwise, require the application of
the law of any jurisdiction other than the Province of Ontario.
RISK FACTORS
Aurora Shareholders should
carefully consider the following risk factors in evaluating whether to approve
the Share Issuance Resolution. These risk factors should be considered in
conjunction with the other information included in this Circular, including
certain sections of documents publicly filed, which sections are incorporated by
reference herein.
Risks Relating to the Arrangement
There can be no certainty that all conditions to the
Arrangement will be satisfied. Failure to complete the Arrangement could
negatively impact the share price of Aurora or otherwise adversely affect the
business of Aurora.
Each of Aurora and MedReleaf has
the right to terminate the Arrangement Agreement in certain circumstances.
Accordingly, there is no certainty, nor can Aurora provide any assurance, that
the Arrangement Agreement will not be terminated by either Aurora or MedReleaf
before the completion of the Arrangement. In addition, the completion of the
Arrangement is subject to a number of conditions precedent, certain of which are
outside the control of Aurora or MedReleaf, including MedReleaf Shareholders
approving the Arrangement Resolution, Aurora Shareholders approving the Share
Issuance Resolution and required regulatory approvals being obtained by the
Parties. There is no certainty, nor can Aurora provide any assurance, that these
conditions will be satisfied. If for any reason the Arrangement is not
completed, the market price of Aurora Shares and MedReleaf Shares may be
adversely affected. Certain costs related to the Arrangement, such as legal,
accounting and certain financial advisor fees, must be paid by Aurora even if
the Arrangement is not completed.
If Aurora is unable to complete the Arrangement or if
completion of the Arrangement is delayed, there could be an adverse effect on
Aurora’s business, financial condition, operating results and the price of
Aurora Shares.
The completion of the Arrangement
is subject to the satisfaction of numerous closing conditions, including
MedReleaf Shareholders approving the Arrangement Resolution, Aurora Shareholders
approving the Share Issuance Resolution, the Competition Act Approval, the approval
of the listing of the Aurora Shares by the TSX and receipt of the Final Order. A
substantial delay in obtaining satisfactory approvals and/or the imposition of
unfavourable terms or conditions in the approvals to be obtained could result in
the termination of the Arrangement Agreement and have an adverse effect on the
business, financial condition or results of operations of Aurora. If (a)
Shareholders choose not to approve the Share Issuance Resolution, (b) Aurora
otherwise fails to satisfy, or fails to obtain a waiver of the satisfaction of,
the closing conditions to the transaction and the Arrangement is not completed,
(c) a Material Adverse Effect has occurred that results in the termination of
the Arrangement Agreement, or (d) any applicable Law is enacted, made, enforced
or amended, as applicable, that makes the consummation of the Arrangement
illegal or otherwise prohibits or enjoins Aurora or MedReleaf from consummating
the Arrangement, Aurora could be subject to various adverse consequences,
including that Aurora would remain liable for significant costs relating to the
Arrangement, including, among others, legal, accounting, financial advisory and
financial printing expenses.
60
Even if the Arrangement Agreement is terminated without
payment of the Aurora Termination Payment, Aurora may, in the future, be
required to pay Aurora Termination Payment in certain circumstances.
Under the Arrangement Agreement,
Aurora may be required to pay the Termination Fee to MedReleaf at a date
subsequent to the termination of the Arrangement Agreement if the Arrangement
Agreement is terminated by either Aurora or MedReleaf pursuant to Section
7.2(d)(ii) [Failure to obtain shareholder approval of Share Issuance Resolution]
or Section 7.2(e) of the Arrangement Agreement [Effective Date shall not have
occurred by the Completion Deadline] and: (i) following the date of the
Arrangement Agreement and prior to such termination, an Aurora Acquisition
Proposal shall have been made to Aurora and made known to Aurora Shareholders
generally or shall have been made directly to Aurora Shareholders generally or
any person shall have publicly announced an intention to make an Aurora
Acquisition Proposal; and (ii) within 365 days following the date of such
termination (A) an Aurora Acquisition Proposal is consummated or effected
(whether or not such Aurora Acquisition Proposal is the same as the Pending
Aurora Acquisition Proposal) or (B) Aurora or one or more of its subsidiaries,
directly or indirectly, in one or more transactions, enters into a contract in
respect to an Aurora Acquisition Proposal (whether or not such Aurora
Acquisition Proposal is the same as the Pending Aurora Acquisition Proposal) and
such Aurora Acquisition Proposal is later consummated or effected (whether or
not such Aurora Acquisition Proposal is later consummated or effected within 365
days of such termination). For purposes of the above, all references to “20%” in
definition of “Aurora Acquisition Proposal” in the Arrangement Agreement shall
be deemed to be references to “50%”. See “The Arrangement Agreement –Termination
Payments and Expenses”.
Aurora may not realize the benefits of the combined
company’s growth projects.
The ability to realize the
benefits of the Arrangement will depend in part on successfully consolidating
functions and integrating operations, procedures and personnel in a timely and
efficient manner, as well as on Aurora’s ability to realize the anticipated
growth opportunities and synergies, efficiencies and cost savings from
integrating Aurora’s and MedReleaf’s businesses following completion of the
Arrangement. This integration will require the dedication of substantial
management effort, time and resources which may divert management’s focus and
resources from other strategic opportunities following completion of the
Arrangement and from operational matters during this process. The integration
process may result in the loss of key employees and the disruption of ongoing
business, and customer and employee relationships that may adversely affect the
ability of Aurora to achieve the anticipated benefits of the Arrangement.
The integration of Aurora and MedReleaf may not occur as
planned.
The Arrangement Agreement has
been entered into with the expectation that its successful completion will
result in enhanced production capacity, increased earnings and cost savings by
taking advantage of operating and other synergies to be realized from the
consolidation of Aurora and MedReleaf and enhanced growth opportunities for the
combined company. These anticipated benefits will depend in part on whether Aurora and MedReleaf’s operations can be integrated in an
efficient and effective manner. Most operational and strategic decisions and
certain staffing decisions with respect to the combined company have not yet
been made. These decisions and the integration of the two companies will present
challenges to management, including the integration of systems and personnel of
the two companies, and special risks, including possible unanticipated
liabilities, unanticipated costs, and the loss of key employees. The performance
of operations acquired from MedReleaf in the Arrangement after completion of the
Arrangement could be adversely affected if the combined company cannot retain
key employees to assist in the integration and operation of MedReleaf and
Aurora. As a result of these factors, it is possible that the cost reductions
and synergies expected from the combination of Aurora and MedReleaf will not be
realized.
61
The issuance of a significant number of Aurora Shares and
a resulting “market overhang” could adversely affect the market price of Aurora
Shares after completion of the Arrangement.
On completion of the Arrangement,
a significant number of additional Aurora Shares will be available for trading
in the public market. The increase in the number of Aurora Shares may lead to
sales of such shares or the perception that such sales may occur, either of
which may adversely affect the market for, and the market price of, Aurora
Shares. The potential that Aurora Shareholders may sell their Aurora Shares in
the public market (commonly referred to as “market overhang”), as well as any
actual sales of such Aurora Shares in the public market, could adversely affect
the market price of the Aurora Shares.
Market value received by MedReleaf Shareholders may
increase or decrease.
Pursuant to the provisions of the
Arrangement Agreement, each MedReleaf Shareholder, other than a MedReleaf
Shareholder who validly exercises their Dissent Rights, will receive the Share
Consideration and the Cash Consideration for each MedReleaf Share held.
Replacement Options will also be exchanged for MedReleaf Options. The
consideration is fixed and will not increase or decrease due to fluctuations in
the market price of the MedReleaf Shares or Aurora Shares. The market value of
the consideration that MedReleaf Shareholders will receive pursuant to the
Arrangement will depend on the market price of the Aurora Shares on the
Effective Date. If the market price of the Aurora Shares increases or decreases,
the market value of the Aurora Shares that MedReleaf Shareholders receive will
correspondingly increase or decrease. As a result, the market value being paid
by Aurora for all of the outstanding MedReleaf Shares could be greater (or less)
than anticipated by the Board. Many of the factors that affect the market price
of the MedReleaf Shares or Aurora Shares are beyond the control of MedReleaf or
Aurora. These factors include changes in the regulatory environment, adverse
political developments, prevailing conditions in the capital markets, interest
rate and exchange rate fluctuations.
There may be potential undisclosed liabilities associated
with the Arrangement.
In connection with the
Arrangement, there may be liabilities that Aurora failed to discover or was
unable to quantify in its due diligence (which was conducted prior to the
execution of the Arrangement Agreement). The representations, warranties and
indemnities contained in the Arrangement Agreement will not survive past the
Effective Date.
The unaudited pro forma condensed consolidated financial
statements of Aurora are presented for illustrative purposes only and may not be
an indication of Aurora’s financial conditions or results of operations
following the Arrangement.
The unaudited pro forma condensed
consolidated financial statements contained in this Circular are presented for
illustrative purposes only as of their respective dates and may not be an
indication of the financial condition or results of operations of Aurora
following the Arrangement for several reasons. For example, the unaudited pro
forma condensed consolidated financial statements have been derived from the
respective historical financial statements of Aurora and MedReleaf and certain
adjustments and assumptions made as of the dates indicated therein have been made to give effect to
the Arrangement and the other respective relevant transactions. The information
upon which these adjustments and assumptions have been made is preliminary and
these kinds of adjustments and assumptions are difficult to make with complete
accuracy. Moreover, the unaudited pro forma condensed consolidated financial
statements do not reflect all costs expected to be incurred by the Aurora and
MedReleaf in connection with the Arrangement. For example, the impact of any
incremental costs incurred in integrating Aurora and MedReleaf is not reflected
in the unaudited pro forma condensed consolidated financial statements.
62
Risk Factors Relating to MedReleaf
A description of the risk factors
applicable to MedReleaf is contained under the heading “Risk Factors“ in
MedReleaf’s annual information form dated
June
18, 2018, and MedReleaf’s
management’s discussion and analysis dated March 31, 2018. Further description
of the risk factors applicable to MedReleaf is contained in MedReleaf’s other
filings with Securities Authorities as filed on SEDAR.
Risk Factors Relating to Aurora
A description of the risk factors
applicable to Aurora is contained under the heading “Risk Factors“ in the
Aurora’s annual information form dated June 30, 2017 and Aurora’s management’s
discussion and analysis dated June 30, 2017. Further description of the risk
factors applicable to Aurora is contained in Aurora’s other filings with
Securities Authorities as filed on SEDAR.
|
INFORMATION CONCERNING MEDRELEAF
|
|
|
|
For further information regarding MedReleaf, please refer
to Appendix “E”.
|
|
|
|
INFORMATION CONCERNING AURORA
|
|
|
|
For further information regarding Aurora, please refer to
Appendix “F”.
|
|
|
|
|
|
INFORMATION CONCERNING THE COMBINED COMPANY
|
|
UPON COMPLETION OF THE ARRANGEMENT
|
For further information regarding
Aurora and MedReleaf upon completion of the Arrangement, please refer to
Appendix “G”.
63
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION
PLANS
The following table sets forth
the details of all equity compensation plans of Aurora as of June 13, 2018,
being (i) the Aurora Option Plan; (ii) the previous share option plan (the
“
2007 Share Option Plan
” and, together with the Share Option Plan, the
“
Share Option Plans
”); and (iii) the Aurora RSU Plan.
|
|
|
Number of securities
to
|
|
|
|
|
|
Number of securities
remaining
|
|
|
|
|
be issued upon
exercise of
|
|
|
Weighted-average
|
|
|
available for future
issuance under
|
|
|
|
|
outstanding
options,
|
|
|
exercise price of
|
|
|
equity compensation
plans
|
|
|
|
|
under equity
|
|
|
outstanding
options
|
|
|
(excluding securities
reflected in
|
|
|
Plan Category
|
|
compensation plans (a)
|
|
|
(b)
|
|
|
column (a)) (c)
(1)
|
|
|
Share Option Plans
|
|
27,926,784
(1)
|
|
|
$5.28
|
|
|
18,649,938
(2)(3)
|
|
|
RSU Plan
|
|
2,150,000
(4)
|
|
|
N/A
|
|
|
7,722,872
(5)
|
|
|
Equity compensation plans not
approved by securityholders
|
|
None
|
|
|
N/A
|
|
|
N/A
|
|
|
Total
|
|
30,076,784
|
|
|
$5.28
|
|
|
26,372,810
(2)(3)
|
|
_________
Notes:
|
(1)
|
The outstanding options are governed by the Aurora Option
Plan.
|
|
|
|
|
(2)
|
Represents the aggregate number of Aurora Shares
remaining available for issuance under the Aurora Option Plan at June 13,
2018, less the number of Aurora Shares issuable upon the exercise of
outstanding Aurora Options and less the number of Aurora Shares reserved
for issuance under the RSU Plan
(5)
.
|
|
|
|
|
(3)
|
Aurora has an incentive share option plan, which provides
that the Board may from time to time, in its discretion, and in accordance
with the TSX requirements, grant non-transferable options to purchase
Aurora Shares, provided that the number of Aurora Shares reserved for
issuance will not exceed 10% of the issued and outstanding Aurora Shares.
At June 13, 2018 there were 565,767,220 Aurora Shares issued and
outstanding.
|
|
|
|
|
(4)
|
The Aurora Shareholders approved the RSU Plan on November
13, 2017, and at the same time they approved the grant of 2,127,128 RSUs
issued on September 29, 2017. On January 15, 2018 an additional 150,000
RSUs were granted. As of June 13, 2018, 127,128 RSUs have been
exercised.
|
|
|
|
|
(5)
|
The aggregate maximum number of Aurora Shares that may be
reserved for issuance under the RSU Plan is 10,000,000, which at June 13,
2018 represented 1.77% of the issued and outstanding Aurora Shares. After
shareholder approval of the RSU Plan and the grant of an aggregate
2,277,128 RSUs, a total of 7,722,872 RSUs are available for grant under
the RSU Plan, representing 1.37% of the issued and outstanding Aurora
Shares at June 13, 2018.
|
MANAGEMENT CONTRACTS
Except as set out herein, there
are no management functions of Aurora which are to any substantial degree
performed by a person or company other than the directors or executive officers
of Aurora.
INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE
ACTED UPON
To the best of our knowledge,
except as otherwise disclosed herein, no person who has been a director or
executive officer of Aurora at any time since the beginning of Aurora’s last
completed financial year, nor any associate or affiliate of the foregoing
persons, has any substantial or material interest, direct or indirect, by way of
beneficial ownership of securities or otherwise, in the matters to be acted on
at the Meeting.
64
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
As of the date of this Circular,
no informed person of Aurora, proposed director of Aurora, or any associate or
affiliate of any informed person or proposed director, has had a material
interest in any transaction since the commencement of Aurora’s most recently
completed financial year or has a material interest in any proposed transaction
which has materially affected or would affect Aurora or any of its
subsidiaries.
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
As of the date of this Circular
no director, executive officer, employee, nor any associate of any such
director, executive officer, of Aurora or any of its subsidiaries, is indebted
to Aurora or any of its subsidiaries or indebted to another entity where such
indebtedness is or has been the subject of a guarantee, support agreement,
letter of credit or other similar arrangement or understanding provided by
Aurora or any of its subsidiaries, other than routine indebtedness.
INTERESTS OF EXPERTS
The following are the names of
each person or company who has prepared or certified a report, valuation,
statement or opinion in this Circular, either directly or in a document
incorporated by reference, and whose profession or business gives authority to
the report, valuation, statement or opinion made by the person or company:
|
|
•
|
MNP LLP, Aurora’s independent auditors, has prepared an
independent auditor’s report dated September 25, 2017 in respect of
Aurora’s audited consolidated financial statements for the years ended
June 30, 2017 and 2016. MNP LLP has advised that it is independent with
respect to each of Aurora and MedReleaf within the meaning of the Rules of
Professional Conduct of the Chartered Professional Accountants of British
Columbia.
|
|
|
|
|
|
|
•
|
KPMG LLP, MedReleaf’s independent auditors, has prepared
an independent auditor’s report dated June 18, 2018 in respect of
MedReleaf’s audited consolidated financial statements for the years ended
March 31, 2018 and 2017. KPMG LLP has advised that it is independent with
respect to MedReleaf within the meaning of the Rules of Professional
Conduct of the Chartered Professional Accountants of Ontario.
|
|
|
|
|
|
|
•
|
Deloitte LLP, CanniMed’s independent auditors, have
issued an independent auditor’s report dated January 29, 2018 in respect
of CanniMed’s audited consolidated financial statements for the years
ended October 31, 2017 and 2016 which are included in the business
acquisition report dated April 30, 2018 in connection with Aurora’s
completion of the acquisition of common shares of CanniMed. Deloitte LLP
is independent with respect to CanniMed within the meaning of the Rules of
Professional Conduct of the Chartered Professional Accountants of
Saskatchewan.
|
AUDITORS
MNP LLP, Chartered Professional
Accountants, of Suite 2200 – MNP Tower, 1021 West Hastings Street, Vancouver,
British Columbia, are the auditors of Aurora and are independent of Aurora
within the meanings of the Rules of Professional Conduct of the Chartered
Professional Accounts of British Columbia. MNP LLP was first appointed auditor
of Aurora on May 25, 2015.
65
LEGAL MATTERS
Certain legal matters in
connection with the Arrangement as they pertain to Aurora will be passed upon by
McMillan LLP.
OTHER INFORMATION AND MATTERS
As of the date of this Circular,
management of Aurora is not aware of any other matters which may come before the
Meeting other than as set forth in the Notice of Meeting that accompanies this
Circular. If any other matter properly comes before the Meeting, it is the
intention of the persons named in the enclosed Proxy to vote the Aurora Shares
represented thereby in accordance with their best judgment on such matter.
There is no information or matter
not disclosed in this Circular but known to Aurora that would be reasonably be
expected to affect the decision of the Aurora Shareholders to vote for or
against the Share Issuance Resolution.
ADDITIONAL INFORMATION
Additional information relating
to Aurora can be found on SEDAR at www.sedar.com or Aurora’s website at
auroramj.com. Information on Aurora’s website is not incorporated by reference
in this Circular. Copies of Aurora’s audited consolidated financial statements
and management’s discussion and analysis for the year ended June 30, 2017 are
available upon request from Aurora’s Corporate Secretary at 900 – 510 Seymour
Street
,
Vancouver, British Columbia, Canada V6B 1V5 telephone:
1-844-601-2448 or via email at ir@auroramj.com. Copies of these documents will
be provided free of charge to securityholders of Aurora.
Aurora may require the payment of
a reasonable charge from any person or company who is not a security holder of
Aurora, who requests a copy of any such document.
66
DIRECTORS’ APPROVAL
The contents of this Circular and
its distribution to Aurora Shareholders have been approved by the Board of
Directors.
MedReleaf has provided the
information contained in this Circular concerning MedReleaf and its business and
operations and MedReleaf’s financial information and financial statements.
Aurora assumes no responsibility for the accuracy or completeness of such
information, nor for any omission on the part of MedReleaf to disclose facts or
events which may affect the accuracy of any such information.
DATED
at Vancouver, British Columbia on June 18,
2018.
|
BY ORDER OF THE BOARD OF DIRECTORS
|
|
|
|
“Terry Booth”
|
|
|
|
Terry Booth
|
|
Chief Executive Officer
|
67
CONSENT OF BMO CAPITAL MARKETS
To: The Directors of Aurora Cannabis Inc.
We hereby consent to the references to our firm name and to the
references to our fairness opinion (the “
Opinion
”) dated May 13, 2018,
which we prepared in connection with the arrangement agreement dated May 14,
2018 entered into between Aurora and MedReleaf Corp., in the management
information circular of Aurora Cannabis Inc. dated June 18, 2018 (the
“
Circular
”) under the headings “Frequently Asked Questions About the
Arrangement and the Meeting“, “Summary – “Reasons for the Arrangement“, “Summary
– Fairness Opinion“, “The Arrangement – Background to the Arrangement“, and “The
Arrangement – Aurora Fairness Opinion“, to the filing of the Opinion with the
securities regulatory authorities, and to the inclusion of the text of the
Opinion as Appendix “D” to the Circular. The Opinion was given as at May 13,
2018 and remains subject to the assumptions, qualifications and limitations
contained therein. In providing our consent, we do not intend that any person
other than the Board of Directors of Aurora Cannabis Inc. will be entitled to
rely upon the Opinion.
(Signed)
“BMO Nesbitt Burns Inc.”
Toronto, Canada
June 18, 2018
68
|
APPENDIX “A”
|
|
SHARE ISSUANCE RESOLUTION
|
|
|
|
RESOLUTION OF THE SHAREHOLDERS
|
|
OF AURORA CANNABIS INC. (the “Company”)
|
BE IT RESOLVED THAT :
A. Aurora Cannabis Inc. (the “
Company
”) is hereby
authorized to issue such number of common shares in the capital of Aurora as is
necessary to allow Aurora to acquire 100% ownership of MedReleaf Corp.
(“
MedReleaf
”) and to satisfy its obligations under or in connection with
an arrangement agreement dated as of May 14, 2018, as amended by the amending
agreement dated May 24, 2018, between Aurora and MedReleaf, as it may be amended
from time to time (the “
Arrangement Agreement
”), and the Plan of
Arrangement contemplated thereby (the “
Arrangement
”), as more
particularly described in Aurora’s management information circular dated June
18, 2018 (the “
Circular
”), including, but not limited to, the issuance of
common shares in the capital of Aurora in exchange for, or upon the exercise of,
shares, options, warrants, and deferred share units of MedReleaf and its
subsidiaries (or replacement options of Aurora issued in connection with the
Arrangement) and the issuance of common shares in the capital of Aurora for any
other matters contemplated by or related to the Arrangement (as the Arrangement
may be, or may have been, modified or amended in accordance with its terms).
B. Notwithstanding that this resolution has been duly passed by
the holders of the common shares of the Company, the directors of the Company
are hereby authorized and empowered, if they decide not to proceed with the
aforementioned resolution, to revoke this resolution at any time prior to the
closing date of the Arrangement, without further notice to or approval of the
shareholders of the Company.
C. The directors and officers of the Company or any one or more
of them be and they are hereby authorized to do such things as may be necessary
or desirable to accomplish the foregoing.
A-1
|
APPENDIX “B”
|
|
REDUCTION OF CAPITAL RESOLUTION
|
|
|
|
RESOLUTION OF THE SHAREHOLDERS
|
|
OF AURORA CANNABIS INC. (the “Company”)
|
WHEREAS
A. Aurora Cannabis Inc. (the “
Company
”) intends to make
a single distribution (the “
Distribution
”) of all of the outstanding
common shares and common share purchase warrants of Australis Capital Inc.
(“
Australis
”), on a date (the “
Distribution Date
”) to be
determined by the board of directors of the Company (the “
Board
”), in its
sole discretion, to the holders of common shares (“
Common Shares
”) of the
Company of record on a date to be determined by the Board, in its sole
discretion, by way of a return of capital and corresponding reduction in the
capital of the Common Shares, in an aggregate amount equal to the fair market
value of the common shares and common share purchase warrants of Australis
comprising the Distribution as determined by the Board (the “
Distribution
Amount
”);
B. There are no reasonable grounds for believing that the
Company is, or would after the reduction be, unable to pay its liabilities as
they become due, or that the realizable value of the Company’s assets would
thereby be less than the aggregate of its liabilities; and
C. None of the Distribution Amount has been paid by the Company
on a previous reduction of the capital of any class of shares of the capital
stock of the Company;
BE IT RESOLVED, AS A SPECIAL RESOLUTION, THAT:
1. The aggregate capital of the Company attributable to the
Common Shares be reduced by the Distribution Amount;
2. The reduction of capital be effected by way of the
Distribution of common shares and common share purchase warrants of
Australis;
3. The directors and officers of the Company or any one or more
of them be and they are hereby authorized to do such things as may be necessary
or desirable to accomplish the foregoing; and
4. Notwithstanding that this special resolution has been duly
passed by the holders of Common Shares, the Board, in its sole and absolute
discretion, may defer acting on this special resolution or revoke this special
resolution at any time before it is acted upon without further approval,
ratification or confirmation by or prior notice to the holders of Common
Shares.
B-1
|
APPENDIX “C”
|
|
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
|
|
|
|
[
Please see attached.
]
|
C-1
|
AURORA CANNABIS INC.
|
|
Pro forma Interim Consolidated Statement of Financial
Position
|
|
As at March 31, 2018
|
|
(Unaudited – In
thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
Aurora
|
|
|
|
|
|
|
|
|
MedReleaf
|
|
|
|
|
|
|
|
Aurora
|
|
|
|
|
|
Pro forma
|
|
|
|
|
|
|
|
|
Pro forma
|
|
|
Pro forma
|
|
|
|
|
(Note 2)
|
|
|
Notes
|
|
|
Adjustments
|
|
|
MedReleaf
|
|
|
Notes
|
|
|
Adjustments
|
|
|
Consolidated
|
|
|
|
|
$
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
$
|
|
|
$
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
231,023
|
|
|
3(e)
|
|
|
(1,746
|
)
|
|
215,868
|
|
|
|
|
|
—
|
|
|
445,145
|
|
|
Short-term
investments
|
|
690
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
690
|
|
|
Accounts receivable
|
|
13,094
|
|
|
|
|
|
—
|
|
|
10,750
|
|
|
|
|
|
—
|
|
|
23,844
|
|
|
Marketable
securities
|
|
57,409
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
57,409
|
|
|
Advances to shareholder
|
|
—
|
|
|
|
|
|
—
|
|
|
341
|
|
|
|
|
|
—
|
|
|
341
|
|
|
Share
subscriptions
|
|
55,000
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
55,000
|
|
|
Inventory
|
|
26,779
|
|
|
|
|
|
—
|
|
|
32,856
|
|
|
|
|
|
—
|
|
|
59,635
|
|
|
Biological assets
|
|
5,583
|
|
|
|
|
|
—
|
|
|
3,202
|
|
|
|
|
|
—
|
|
|
8,785
|
|
|
Prepaid and other current assets
|
|
1,644
|
|
|
|
|
|
—
|
|
|
2,636
|
|
|
|
|
|
—
|
|
|
4,280
|
|
|
Letter of credit
|
|
—
|
|
|
|
|
|
—
|
|
|
845
|
|
|
|
|
|
|
|
|
845
|
|
|
Income taxes receivable
|
|
—
|
|
|
|
|
|
—
|
|
|
8,074
|
|
|
|
|
|
—
|
|
|
8,074
|
|
|
Loans receivable
|
|
3,400
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
3,400
|
|
|
|
|
394,622
|
|
|
|
|
|
(1,746
|
)
|
|
274,572
|
|
|
|
|
|
—
|
|
|
667,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
191,239
|
|
|
|
|
|
—
|
|
|
73,770
|
|
|
|
|
|
—
|
|
|
265,009
|
|
|
Derivatives
|
|
3,977
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
3,977
|
|
|
Investment in associates
|
|
136,555
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
136,555
|
|
|
Intangible assets
|
|
59,958
|
|
|
|
|
|
—
|
|
|
9,143
|
|
|
|
|
|
—
|
|
|
69,101
|
|
|
Goodwill
|
|
883,071
|
|
|
|
|
|
—
|
|
|
—
|
|
|
3(a)
|
|
|
3,214,842
|
|
|
4,097,913
|
|
|
Prepaid expenses
|
|
—
|
|
|
|
|
|
—
|
|
|
264
|
|
|
|
|
|
—
|
|
|
264
|
|
|
Deposits
|
|
1,978
|
|
|
|
|
|
—
|
|
|
241
|
|
|
|
|
|
—
|
|
|
2,219
|
|
|
Total assets
|
|
1,671,400
|
|
|
|
|
|
(1,746
|
)
|
|
357,990
|
|
|
|
|
|
3,214,842
|
|
|
5,242,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
and accrued liabilities
|
|
28,905
|
|
|
|
|
|
—
|
|
|
16,989
|
|
|
3(b)
|
|
|
13,720
|
|
|
60,899
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3(b)
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3(c)
|
|
|
285
|
|
|
|
|
|
Deferred revenue
|
|
1,324
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
1,324
|
|
|
Finance lease
|
|
281
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
281
|
|
|
Income taxes payable
|
|
774
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
774
|
|
|
Revolving line of
credit
|
|
—
|
|
|
|
|
|
—
|
|
|
845
|
|
|
|
|
|
—
|
|
|
845
|
|
|
Loans and borrowings
|
|
2,279
|
|
|
|
|
|
—
|
|
|
1,000
|
|
|
|
|
|
—
|
|
|
3,279
|
|
|
Contingent
consideration payable
|
|
22,583
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
22,583
|
|
|
|
|
56,146
|
|
|
|
|
|
—
|
|
|
18,834
|
|
|
|
|
|
15,005
|
|
|
89,985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance lease
|
|
226
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
226
|
|
|
Convertible notes
|
|
197,092
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
197,092
|
|
|
Asset retirement obligation
|
|
—
|
|
|
|
|
|
—
|
|
|
214
|
|
|
|
|
|
—
|
|
|
214
|
|
|
Loans and borrowings
|
|
9,295
|
|
|
|
|
|
—
|
|
|
8,421
|
|
|
|
|
|
—
|
|
|
17,716
|
|
|
Deferred gain on derivative
|
|
2,634
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
2,634
|
|
|
Deferred tax liability
|
|
19,234
|
|
|
|
|
|
—
|
|
|
2,477
|
|
|
|
|
|
—
|
|
|
21,711
|
|
|
|
|
284,627
|
|
|
|
|
|
—
|
|
|
29,946
|
|
|
|
|
|
15,005
|
|
|
329,578
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
1,416,124
|
|
|
3(e)
|
|
|
27,173
|
|
|
299,078
|
|
|
3(a)
|
|
|
3,520,528
|
|
|
4,963,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3(a)
|
|
|
(299,078
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3(c)
|
|
|
(285
|
)
|
|
|
|
|
Reserves
|
|
(4,134
|
)
|
|
3(e)
|
|
|
(22,594
|
)
|
|
24,285
|
|
|
3(a)
|
|
|
22,358
|
|
|
(4,370
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3(a)
|
|
|
(24,285
|
)
|
|
|
|
|
Deficit
|
|
(35,921
|
)
|
|
|
|
|
—
|
|
|
4,681
|
|
|
3(a)
|
|
|
(4,681
|
)
|
|
(50,641
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3(b)
|
|
|
(13,720
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3(b)
|
|
|
(1,000
|
)
|
|
|
|
|
Total equity attributable to
Aurora shareholders
|
|
1,376,069
|
|
|
|
|
|
4,579
|
|
|
328,044
|
|
|
|
|
|
3,199,837
|
|
|
4,908,529
|
|
|
Non-controlling interest
|
|
10,704
|
|
|
3(e)
|
|
|
(6,325
|
)
|
|
—
|
|
|
|
|
|
—
|
|
|
4,379
|
|
|
Total equity
|
|
1,386,773
|
|
|
|
|
|
(1,746
|
)
|
|
328,044
|
|
|
|
|
|
3,199,837
|
|
|
4,912,908
|
|
|
Total liabilities and equity
|
|
1,671,400
|
|
|
|
|
|
(1,746
|
)
|
|
357,990
|
|
|
|
|
|
3,214,842
|
|
|
5,242,486
|
|
See accompanying notes to the unaudited pro forma interim
consolidated financial statements.
C-2
|
AURORA CANNABIS INC.
|
|
Pro forma Interim Consolidated Statement of
Comprehensive Loss
|
|
Nine months ended March 31, 2018
|
|
(Unaudited – In
thousands of Canadian dollars, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
Aurora
|
|
|
|
|
|
|
|
|
MedReleaf
|
|
|
|
|
|
|
|
Aurora
|
|
|
|
|
|
Pro forma
|
|
|
|
|
|
|
|
|
Pro forma
|
|
|
Pro forma
|
|
|
|
|
(Note 2)
|
|
|
Notes
|
|
|
Adjustments
|
|
|
MedReleaf
|
|
|
Notes
|
|
|
Adjustments
|
|
|
Consolidated
|
|
|
|
|
$
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
$
|
|
|
$
|
|
|
Revenue
|
|
50,455
|
|
|
3(e)
|
|
|
(762
|
)
|
|
33,185
|
|
|
|
|
|
—
|
|
|
82,878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on changes in
fair value of biological assets
|
|
(23,452
|
)
|
|
3(e)
|
|
|
494
|
|
|
(33,425
|
)
|
|
|
|
|
—
|
|
|
(56,383
|
)
|
|
Unrealized loss on changes in fair value on
sale of inventory
|
|
10,751
|
|
|
3(e)
|
|
|
(285
|
)
|
|
21,269
|
|
|
|
|
|
—
|
|
|
31,735
|
|
|
Cost of sales
|
|
26,095
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
26,095
|
|
|
Production costs
|
|
2,906
|
|
|
|
|
|
—
|
|
|
10,300
|
|
|
|
|
|
—
|
|
|
13,206
|
|
|
Cost of sales (recovery)
|
|
16,300
|
|
|
|
|
|
209
|
|
|
(1,856
|
)
|
|
|
|
|
—
|
|
|
14,653
|
|
|
Gross profit
|
|
34,155
|
|
|
|
|
|
(971
|
)
|
|
35,041
|
|
|
|
|
|
—
|
|
|
68,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administration
|
|
25,376
|
|
|
3(e)
|
|
|
(377
|
)
|
|
29,297
|
|
|
|
|
|
—
|
|
|
54,296
|
|
|
Sales and
marketing
|
|
19,045
|
|
|
3(e)
|
|
|
(281
|
)
|
|
9,429
|
|
|
|
|
|
—
|
|
|
28,193
|
|
|
Research and development
|
|
2,070
|
|
|
3(e)
|
|
|
(95
|
)
|
|
746
|
|
|
|
|
|
—
|
|
|
2,721
|
|
|
Acquisition and
project evaluation costs
|
|
20,727
|
|
|
3(e)
|
|
|
67
|
|
|
—
|
|
|
|
|
|
—
|
|
|
20,794
|
|
|
Share of loss
from investment in associate
|
|
931
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
931
|
|
|
Initial public
offering related costs
|
|
—
|
|
|
|
|
|
—
|
|
|
102
|
|
|
|
|
|
—
|
|
|
102
|
|
|
Depreciation and amortization
|
|
2,659
|
|
|
3(e)
|
|
|
(35
|
)
|
|
2,218
|
|
|
|
|
|
—
|
|
|
4,842
|
|
|
Share-based
payments
|
|
26,573
|
|
|
|
|
|
—
|
|
|
—
|
|
|
3(d)
|
|
|
26,293
|
|
|
52,866
|
|
|
|
|
97,381
|
|
|
|
|
|
(720
|
)
|
|
41,792
|
|
|
|
|
|
26,293
|
|
|
164,746
|
|
|
Loss from operations
|
|
(63,226
|
)
|
|
|
|
|
(251
|
)
|
|
(6,751
|
)
|
|
|
|
|
(26,293
|
)
|
|
(96,521
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income
|
|
2,743
|
|
|
3(e)
|
|
|
(6
|
)
|
|
1,256
|
|
|
|
|
|
—
|
|
|
3,993
|
|
|
Finance and other
costs
|
|
(6,493
|
)
|
|
3(e)
|
|
|
44
|
|
|
(454
|
)
|
|
|
|
|
—
|
|
|
(6,903
|
)
|
|
Foreign exchange
|
|
(569
|
)
|
|
3(e)
|
|
|
14
|
|
|
—
|
|
|
|
|
|
—
|
|
|
(555
|
)
|
|
Gain on
disposition of subsidiary
|
|
35
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
35
|
|
|
Unrealized gain on debenture
|
|
6,937
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
6,937
|
|
|
Unrealized gain on
marketable securities
|
|
14,102
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
14,102
|
|
|
Unrealized loss on deferred share units
|
|
—
|
|
|
|
|
|
—
|
|
|
(428
|
)
|
|
|
|
|
—
|
|
|
(428
|
)
|
|
Unrealized gain
(loss) on derivative
|
|
46,057
|
|
|
3(e)
|
|
|
(5
|
)
|
|
—
|
|
|
|
|
|
—
|
|
|
46,052
|
|
|
Shared-based compensation income
|
|
324
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
324
|
|
|
|
|
63,136
|
|
|
|
|
|
47
|
|
|
374
|
|
|
|
|
|
—
|
|
|
63,557
|
|
|
Loss before income taxes
|
|
(90
|
)
|
|
|
|
|
(204
|
)
|
|
(6,377
|
)
|
|
|
|
|
(26,293
|
)
|
|
(32,964
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
(794
|
)
|
|
3(e)
|
|
|
(5
|
)
|
|
1,574
|
|
|
|
|
|
—
|
|
|
775
|
|
|
Deferred, net
|
|
(4,593
|
)
|
|
|
|
|
—
|
|
|
(3,136
|
)
|
|
|
|
|
—
|
|
|
(7,729
|
)
|
|
|
|
(5,387
|
)
|
|
|
|
|
(5
|
)
|
|
(1,562
|
)
|
|
|
|
|
—
|
|
|
(6,954
|
)
|
|
Net loss
|
|
(5,477
|
)
|
|
|
|
|
(209
|
)
|
|
(7,939
|
)
|
|
|
|
|
(26,293
|
)
|
|
(39,918
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of
Aurora
|
|
(3,370
|
)
|
|
|
|
|
(209
|
)
|
|
(7,939
|
)
|
|
|
|
|
(26,293
|
)
|
|
(37,811
|
)
|
|
Non-controlling interest
|
|
(2,107
|
)
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
(2,107
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
$
|
(0.09
|
)
|
|
|
|
|
|
|
$
|
(0.05
|
)
|
|
Diluted
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
$
|
(0.09
|
)
|
|
|
|
|
|
|
$
|
(0.05
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
427,180,423
|
|
|
|
|
|
|
|
|
91,119,745
|
|
|
|
|
|
|
|
|
809,149,790
|
|
|
Diluted
|
|
427,180,423
|
|
|
|
|
|
|
|
|
91,119,745
|
|
|
|
|
|
|
|
|
809,149,790
|
|
See accompanying notes to the unaudited pro forma interim
consolidated financial statements.
C-3
|
AURORA CANNABIS INC.
|
|
Pro forma Consolidated Statement of Comprehensive Income
(Loss)
|
|
Twelve months ended June 30, 2017
|
|
(Unaudited – In
thousands of Canadian dollars, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
Aurora
|
|
|
|
|
|
|
|
|
MedReleaf
|
|
|
|
|
|
|
|
Aurora
|
|
|
|
|
|
Pro forma
|
|
|
|
|
|
|
|
|
Pro forma
|
|
|
Pro forma
|
|
|
|
|
(Note 2)
|
|
|
Notes
|
|
|
Adjustments
|
|
|
MedReleaf
|
|
|
Notes
|
|
|
Adjustments
|
|
|
Consolidated
|
|
|
|
|
$
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
$
|
|
|
$
|
|
|
Revenue
|
|
33,098
|
|
|
|
|
|
—
|
|
|
41,996
|
|
|
|
|
|
—
|
|
|
75,094
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on changes in
fair value of biological assets
|
|
(11,763
|
)
|
|
|
|
|
—
|
|
|
(35,378
|
)
|
|
|
|
|
—
|
|
|
(47,141
|
)
|
|
Inventory expensed to cost of sales
|
|
10,995
|
|
|
|
|
|
—
|
|
|
25,999
|
|
|
|
|
|
—
|
|
|
36,994
|
|
|
Production costs
|
|
8,589
|
|
|
|
|
|
—
|
|
|
10,082
|
|
|
|
|
|
—
|
|
|
18,671
|
|
|
Cost of sales (recovery)
|
|
7,821
|
|
|
|
|
|
—
|
|
|
703
|
|
|
|
|
|
—
|
|
|
8,524
|
|
|
Gross profit
|
|
25,277
|
|
|
|
|
|
—
|
|
|
41,293
|
|
|
|
|
|
—
|
|
|
66,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administration
|
|
11,251
|
|
|
|
|
|
—
|
|
|
17,290
|
|
|
|
|
|
—
|
|
|
28,541
|
|
|
Sales and marketing
|
|
15,498
|
|
|
|
|
|
—
|
|
|
7,627
|
|
|
|
|
|
—
|
|
|
23,125
|
|
|
Research and
development
|
|
1,410
|
|
|
|
|
|
—
|
|
|
1,040
|
|
|
|
|
|
—
|
|
|
2,450
|
|
|
Acquisition and
project evaluation costs
|
|
1,551
|
|
|
3(e),(f)
|
|
|
9,000
|
|
|
—
|
|
|
3(b)
|
|
|
13,720
|
|
|
24,271
|
|
|
Initial public
offering related costs
|
|
—
|
|
|
|
|
|
—
|
|
|
2,509
|
|
|
|
|
|
—
|
|
|
2,509
|
|
|
Fair value loss on shareholder loans
|
|
—
|
|
|
|
|
|
—
|
|
|
192
|
|
|
|
|
|
—
|
|
|
192
|
|
|
Depreciation and
amortization
|
|
1,797
|
|
|
|
|
|
—
|
|
|
798
|
|
|
|
|
|
—
|
|
|
2,595
|
|
|
Share-based payments
|
|
8,544
|
|
|
|
|
|
—
|
|
|
—
|
|
|
3(d)
|
|
|
37,767
|
|
|
46,311
|
|
|
|
|
40,051
|
|
|
|
|
|
9,000
|
|
|
29,456
|
|
|
|
|
|
51,487
|
|
|
129,994
|
|
|
Income (loss) from operations
|
|
(14,774
|
)
|
|
|
|
|
(9,000
|
)
|
|
11,837
|
|
|
|
|
|
(51,487
|
)
|
|
(63,424
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other
income
|
|
1,377
|
|
|
|
|
|
—
|
|
|
86
|
|
|
|
|
|
—
|
|
|
1,463
|
|
|
Finance and other costs
|
|
(8,524
|
)
|
|
|
|
|
—
|
|
|
(338
|
)
|
|
|
|
|
—
|
|
|
(8,862
|
)
|
|
Foreign exchange
|
|
(824
|
)
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
(824
|
)
|
|
Unrealized loss on debenture
|
|
(1,135
|
)
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
(1,135
|
)
|
|
Unrealized gain on
marketable securities
|
|
1,334
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
1,334
|
|
|
Unrealized loss on derivative
|
|
(10,781
|
)
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
(10,781
|
)
|
|
|
|
(18,553
|
)
|
|
|
|
|
—
|
|
|
(252
|
)
|
|
|
|
|
—
|
|
|
(18,805
|
)
|
|
Income (loss) before income
taxes
|
|
(33,327
|
)
|
|
|
|
|
(9,000
|
)
|
|
11,585
|
|
|
|
|
|
(51,487
|
)
|
|
(82,229
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax recovery (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
19
|
|
|
|
|
|
—
|
|
|
(1,426
|
)
|
|
|
|
|
—
|
|
|
(1,407
|
)
|
|
Deferred, net
|
|
4,957
|
|
|
|
|
|
—
|
|
|
(2,086
|
)
|
|
|
|
|
—
|
|
|
2,871
|
|
|
|
|
4,976
|
|
|
|
|
|
—
|
|
|
(3,512
|
)
|
|
|
|
|
—
|
|
|
1,464
|
|
|
Net income (loss) –
continuing operations
|
|
(28,351
|
)
|
|
|
|
|
(9,000
|
)
|
|
8,073
|
|
|
|
|
|
(51,487
|
)
|
|
(80,765
|
)
|
|
Net income (loss) – discontinued operations
|
|
(13,247
|
)
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
(13,247
|
)
|
|
Net income (loss)
|
|
(41,598
|
)
|
|
|
|
|
(9,000
|
)
|
|
8,073
|
|
|
|
|
|
(51,487
|
)
|
|
(94,012
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.12
|
)
|
|
|
|
|
|
|
$
|
0.10
|
|
|
|
|
|
|
|
$
|
(0.13
|
)
|
|
Diluted
|
$
|
(0.12
|
)
|
|
|
|
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
$
|
(0.13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
351,776,072
|
|
|
|
|
|
|
|
|
84,051,204
|
|
|
|
|
|
|
|
|
730,327,488
|
|
|
Diluted
|
|
351,776,072
|
|
|
|
|
|
|
|
|
91,100,349
|
|
|
|
|
|
|
|
|
730,327,488
|
|
See accompanying notes to the unaudited pro forma
consolidated financial statements.
C-4
|
AURORA CANNABIS INC.
|
|
Notes to the Pro forma Consolidated Financial
Statements
|
|
(Unaudited – In
thousands of Canadian dollars, except share and per share amounts)
|
|
1.
|
Description of the Transaction
|
|
|
|
|
|
On May 14, 2018, Aurora Cannabis Inc. (“Aurora” or the
“Company”) and MedReleaf Corp. (“MedReleaf”) entered into a definitive
arrangement agreement, as amended on May 24, 2018 (the “Arrangement
Agreement”) whereby Aurora has agreed to acquire all of the issued and
outstanding common shares of MedReleaf, a licensed producer and
distributor of medical cannabis pursuant to the
Access to Cannabis for
Medical Purposes Regulations
(“ACMPR”) (the “Acquisition”).
MedReleaf’s and Aurora’s common shares are listed on the Toronto Stock
Exchange (“TSX”) under the symbol “LEAF” and “ACB”, respectively. Under
the terms of the Arrangement Agreement, holders of MedReleaf common shares
will receive 3.575 common shares of Aurora (the “Exchange Ratio”) and
$0.000001 in cash for each MedReleaf common share held.
|
|
|
|
|
|
The Exchange Ratio represents an implied price of $29.44
per MedReleaf common share and a premium of approximately 34%, based on
the 20-day volume weighted average prices of Aurora and MedReleaf common
shares as of May 11, 2018.
|
|
|
|
|
2.
|
Basis of Presentation
|
|
|
|
|
|
The unaudited pro forma consolidated statement of
financial position as at March 31, 2018, the unaudited pro forma interim
consolidated statement of comprehensive loss for the nine months ended
March 31, 2018, and the unaudited pro forma consolidated statement of
comprehensive income (loss) for the twelve months ended June 30, 2017 of
Aurora were prepared in compliance with National Instrument 51-102
Continuous Disclosure Obligations
(“NI 51-102”) to reflect the
Company’s proposal to purchase all of MedReleaf’s issued and outstanding
common shares.
|
|
|
|
|
|
The Aurora column in the pro forma interim consolidated
statement of financial position and the pro forma consolidated statement
of comprehensive income (loss) includes the financial results of the
Company’s recent significant acquisition of CanniMed Therapeutics Inc.
(“CanniMed”) (the “CanniMed Acquisition”). See Note 3(e) for the related
CanniMed pro forma adjustments. There were no other significant
acquisitions that required adjustments in the unaudited pro forma
consolidated financial statements.
|
|
|
|
|
|
The unaudited pro forma consolidated statement of
financial position and the unaudited pro forma consolidated statements of
comprehensive income (loss) of Aurora are comprised of information derived
from:
|
|
|
•
|
the audited consolidated financial statements
of Aurora for the year ended June 30, 2017;
|
|
|
|
|
|
|
•
|
the audited consolidated financial statements
of CanniMed for the year ended October 31, 2016;
|
|
|
|
|
|
|
•
|
the audited consolidated financial statements
of CanniMed for the year ended October 31, 2017;
|
|
|
|
|
|
|
•
|
the audited consolidated financial statements
of MedReleaf for the year ended March 31, 2018;
|
|
|
|
|
|
|
•
|
the audited consolidated financial statements
of MedReleaf for the year ended March 31, 2017;
|
|
|
|
|
|
|
•
|
the unaudited condensed interim consolidated financial
statements of Aurora for the three and nine months ended March 31, 2018,
which has been adjusted to remove the non-controlling interest portion of
CanniMed to give effect, as if Aurora’s 100% ownership of CanniMed had
taken place as at the date of the unaudited pro forma consolidated
statement of financial position as at March 31, 2018. It should be noted
that the unaudited condensed interim consolidated statements of Aurora for
the three and nine months ended March 31, 2018 reflects a 95.9% ownership
in the issued and outstanding shares of CanniMed and that on May 2, 2018,
Aurora acquired the remaining issued and outstanding shares of
CanniMed. The 16 days of profit and loss attributable to CanniMed included in
the unaudited condensed interim consolidated statement of comprehensive loss for
the three and nine months ended March 31, 2018 was also removed;
|
C-5
|
AURORA CANNABIS INC.
|
|
Notes to the Pro forma Consolidated Financial
Statements
|
|
(Unaudited – In
thousands of Canadian dollars, except share and per share amounts)
|
|
2.
|
Basis of Presentation
(Continued)
|
|
|
•
|
the unaudited condensed interim consolidated
financial statements of CanniMed for the three months ended January 31,
2018;
|
|
|
|
|
|
|
•
|
the unaudited condensed interim consolidated
financial statements of CanniMed for the three and six months ended April
30, 2017;
|
|
|
|
|
|
|
•
|
the unaudited condensed interim consolidated
financial statements of CanniMed for the three and nine months ended July
31, 2017;
|
|
|
|
|
|
|
•
|
the unaudited condensed interim consolidated
financial statements of CanniMed for the three and nine months ended July
31, 2016; and
|
|
|
|
|
|
|
•
|
the unaudited condensed interim consolidated financial
statements of MedReleaf for the three months ended June 30, 2017 and 2016.
|
The unaudited pro forma consolidated
financial statements do not include all of the information disclosures required
by International Financial Reporting Standards (“IFRS”) and should be read in
conjunction with the unaudited condensed interim consolidated financial
statements of Aurora as at and for the three and nine months ended March 31,
2018, the audited consolidated financial statements of Aurora for the year ended
June 30, 2017, the unaudited condensed interim consolidated financial statements
of CanniMed for the three months ended January 31, 2018, the audited
consolidated financial statements of CanniMed for the year ended October 31,
2017, and the audited consolidated financial statements of MedReleaf for the
year ended March 31, 2018.
The pro forma consolidated statement of
comprehensive income (loss) for the twelve months ended June 30, 2017 of
MedReleaf has been constructed using the audited consolidated financial
statements of MedReleaf for the twelve months ended March 31, 2017 and the
unaudited condensed interim consolidated financial statements for the three
months ended June 30, 2017 and 2016.
The pro forma consolidated statement of
comprehensive loss for the nine months ended March 31, 2018 of MedReleaf has
been constructed using the audited consolidated financial statements of
MedReleaf for the twelve months ended March 31, 2018 and the unaudited condensed
interim consolidated financial statements for the three months ended June 30,
2017.
The pro forma consolidated statement of
comprehensive loss for the twelve months ended June 30, 2017 of CanniMed has
been constructed using the audited consolidated financial statements of CanniMed
for the twelve months ended October 31, 2016, the unaudited condensed interim
consolidated financial statements for the three and nine months ended July 31,
2017, and the unaudited condensed interim consolidated financial statements for
the three and nine months ended July 31, 2016.
The pro forma consolidated statement of
comprehensive loss for the nine months ended March 31, 2018 of CanniMed has been
constructed using the audited consolidated financial statements of CanniMed for
the twelve months ended October 31, 2017, the unaudited condensed interim
consolidated financial statements for the three months ended January 31, 2018,
and the unaudited condensed interim consolidated financial statements of
CanniMed for the three and six months ended April 30, 2017 (“CanniMed
Constructed Profit and Loss for the Nine Months Ended March 31, 2018”).
C-6
|
AURORA CANNABIS INC.
|
|
Notes to the Pro forma Consolidated Financial
Statements
|
|
(Unaudited – In
thousands of Canadian dollars, except share and per share amounts)
|
|
2.
|
Basis of Presentation (Continued)
|
|
|
|
|
|
The unaudited pro forma interim consolidated statement of
financial position gives effect to the Acquisition as if it had occurred
on March 31, 2018. The unaudited pro forma consolidated statements of
comprehensive loss for the nine months ended March 31, 2018 and the twelve
months ended June 30, 2017 give effect to the acquisition as if it had
occurred at July 1, 2016.
|
|
|
|
|
|
The unaudited pro forma interim consolidated statement of
financial position gives effect to the acquisition of 100% of the issued
and outstanding shares of CanniMed as if it had occurred on March 31,
2018. The unaudited pro forma consolidated statement of comprehensive loss
for the nine months ended March 31, 2018 and the twelve months ended June
30, 2017 gives effect to the acquisition of 100% of the issued and
outstanding shares of CanniMed as if it had occurred at July 1,
2016.
|
|
|
|
|
|
The accounting policies used in the preparation of the
unaudited pro forma consolidated financial statements are consistent with
those described in the audited consolidated financial statements of Aurora
for the year ended June 30, 2017. There were no adjustments necessary to
align CanniMed’s and MedReleaf’s accounting policies with Aurora’s
accounting policies. Certain historical CanniMed and MedReleaf amounts
have been reclassified to conform to Aurora’s presentation.
|
|
|
|
|
|
The unaudited pro forma consolidated financial statements
are not necessarily indicative of the results of operations that would
have occurred had the acquisition of MedReleaf (and the previous
significant acquisition of CanniMed) been effected on the dates indicated,
nor are the unaudited pro forma consolidated financial statements
indicative of future periods. Actual amounts recorded upon consummation of
the acquisition of MedReleaf will differ from such unaudited pro forma
consolidated financial statements. Since the pro forma consolidated
financial statements have been developed to retroactively show the effect
of a transaction that is expected to complete at a later date, there are
limitations inherent in the very nature of such pro forma
data.
|
C-7
|
AURORA CANNABIS INC.
|
|
Notes to the Pro forma Consolidated Financial
Statements
|
|
(Unaudited – In
thousands of Canadian dollars, except share and per share amounts)
|
|
3.
|
Pro forma Consolidation Adjustments
|
|
|
|
|
|
The unaudited pro forma interim consolidated statement of
financial position of Aurora as at March 31, 2018 has been adjusted as if
the acquisition of MedReleaf had been completed on March 31,
2018:
|
|
|
(a)
|
The Acquisition will be accounted for as a business
combination under IFRS 3. The estimated fair value of net assets acquired
and consideration paid for 100% ownership of MedReleaf is allocated as
follows:
|
|
|
|
|
|
|
|
|
|
|
Adjusted
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
2018
|
|
|
Adjustments
|
|
|
2018
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Cash and cash equivalents
|
|
215,868
|
|
|
—
|
|
|
215,868
|
|
|
|
Accounts receivable
|
|
10,750
|
|
|
—
|
|
|
10,750
|
|
|
|
Inventories
|
|
32,856
|
|
|
—
|
|
|
32,856
|
|
|
|
Biological assets
|
|
3,202
|
|
|
—
|
|
|
3,202
|
|
|
|
Advances to shareholder
|
|
341
|
|
|
—
|
|
|
341
|
|
|
|
Prepaid expenses – current
|
|
2,636
|
|
|
—
|
|
|
2,636
|
|
|
|
Letter of credit
|
|
845
|
|
|
|
|
|
845
|
|
|
|
Income taxes receivable
|
|
8,074
|
|
|
—
|
|
|
8,074
|
|
|
|
Property, plant and equipment
|
|
73,770
|
|
|
—
|
|
|
73,770
|
|
|
|
Intangible assets
|
|
9,143
|
|
|
—
|
|
|
9,143
|
|
|
|
Security deposits
|
|
241
|
|
|
—
|
|
|
241
|
|
|
|
Prepaid expenses – long term
|
|
264
|
|
|
|
|
|
264
|
|
|
|
Total assets
|
|
357,990
|
|
|
—
|
|
|
357,990
|
|
|
|
Accounts payable and accrued liabilities
|
|
16,989
|
|
|
—
|
|
|
16,989
|
|
|
|
Revolving line of credit
|
|
845
|
|
|
|
|
|
845
|
|
|
|
Term credit facility
|
|
9,421
|
|
|
—
|
|
|
9,421
|
|
|
|
Asset retirement obligation
|
|
214
|
|
|
—
|
|
|
214
|
|
|
|
Deferred income tax liabilities
|
|
2,477
|
|
|
—
|
|
|
2,477
|
|
|
|
Total liabilities
|
|
29,946
|
|
|
—
|
|
|
29,946
|
|
|
|
Net assets acquired
|
|
328,044
|
|
|
—
|
|
|
328,044
|
|
|
|
Consideration paid
|
|
|
|
|
|
|
|
3,542,886
|
|
|
|
Goodwill
|
|
|
|
|
|
|
|
3,214,842
|
|
The total estimated consideration of
$3,542,886 is comprised of $22,357 fair value of Replacement Options and the
issuance of approximately 378,551,416 shares at $9.30 per share, being the fair
value of Aurora’s shares on March 31, 2018. The estimated 378,551,416 shares
issued for the Acquisition assumes all MedReleaf warrants, legacy options and
deferred share units outstanding as of the date of the Arrangement Agreement are
converted into Aurora shares at the Exchange Ratio.
In accordance with IFRS 3, the fair
value of equity securities issued as part of the consideration transferred will
be measured on the closing date of the acquisition at the then-current market
price. Accordingly, it is likely that Aurora’s share price used to determine
purchase consideration on closing of the acquisition will differ from the share
price used in the estimate of purchase consideration, and that difference may be
material. Aurora’s historical share price volatility was approximately 85%.
Accordingly, it is reasonable to expect that Aurora’s share price on closing of
the Acquisition may differ from the common share price used in these financial
statements by an amount up to at least this share price volatility. A change in
Aurora’s share price of 85% results in an increase or decrease to the estimate
of purchase consideration totaling approximately $2,988,338, with a
corresponding increase or decrease to goodwill.
C-8
|
AURORA CANNABIS INC.
|
|
Notes to the Pro forma Consolidated Financial
Statements
|
|
(Unaudited – In
thousands of Canadian dollars, except share and per share amounts)
|
|
3.
|
Pro forma Consolidation Adjustments
(Continued)
|
|
|
|
The pro forma purchase price is subject to change based
on the finalization of purchase price adjustments and completion of
management’s assessment of the fair values of the assets and liabilities
acquired. Due to the timing of the announcement of the Acquisition, Aurora
has not yet obtained sufficient information to accurately determine the
fair market value of MedReleaf’s net assets by category and has therefore
allocated the March 31, 2018 book values of the net assets acquired as a
proxy of fair value. Goodwill represents the amount by which the purchase
price exceeds the book value, being a proxy of fair value of the assets
acquired and liabilities assumed. The final calculation and allocation of
the purchase price will be based on the net assets purchased as of the
closing date of the Acquisition and other information available at that
time. There may be material differences from this pro forma purchase price
allocation as a result of finalizing the valuation. Based on management’s
preliminary estimates, the goodwill may be allocated to other items such
as certain identified intangible assets, including customer lists,
licenses, patents and a deferred tax asset.
|
|
|
|
|
|
|
|
As a result of the Acquisition, MedReleaf’s equity
accounts were eliminated on the pro forma consolidated statement of
financial position.
|
|
|
|
|
|
|
(b)
|
Estimated acquisition related costs of approximately
$13,720 consisting of investment banker, legal, proxy, accounting, and
other fees to be expensed on completion of the Acquisition. These costs
have been recorded in deficit of the pro forma consolidated statement of
financial position as at March 31, 2018 and reflected in the pro forma
consolidated statements of comprehensive income (loss) for the twelve
month period ended June 30, 2017.
|
|
|
|
|
|
|
|
Additional estimated transaction costs of approximately
$1,000 for investment bankers, legal, consulting, accounting, and other
fees incurred by MedReleaf prior to the Acquisition were accrued on the
pro forma consolidated statement of financial position.
|
|
|
|
|
|
|
(c)
|
Estimated share issuance costs of approximately $285
consisting of regulatory and transfer agent fees related to the issuance
of shares for the Acquisition have been recorded against share capital on
the pro forma consolidated statement of financial position.
|
|
|
|
|
|
|
(d)
|
Included in total consideration paid for the Acquisition
were 16,022,939 Replacement Options determined based on the number of
MedReleaf options outstanding as of the date of the Arrangement Agreement
at the Exchange Ratio. Included in the share-based compensation expense is
the impact of all remaining unvested options post acquisition. The
Black-Scholes option pricing model was used to establish the fair value of
MedReleaf options outstanding as of the date of the Arrangement Agreement
and the fair value Replaced Options. The difference in fair value,
adjusted for the number of options vested, is recognized and expensed over
the remaining vesting period. Share-based compensation for Replacement
Options was $37,767 for the year ended June 30, 2017 and $26,293 for the
nine months ended March 31, 2018. There were no adjustments to MedReleaf’s
previously recorded share-based compensation
expense.
|
C-9
|
AURORA CANNABIS INC.
|
|
Notes to the Pro forma Consolidated Financial
Statements
|
|
(Unaudited – In
thousands of Canadian dollars, except share and per share amounts)
|
|
3.
|
Pro forma Consolidation Adjustments
(Continued)
|
|
|
(e)
|
The unaudited pro forma consolidated financial statements
of Aurora have been adjusted to give effect as if Aurora’s acquisition of
100% of CanniMed’s issued and outstanding shares had taken place as at the
date of the unaudited pro forma consolidated statement of financial
position as at March 31, 2018. The financial results of CanniMed during
the period from March 15, 2018 to March 31, 2018 has been removed from
Aurora’s unaudited condensed interim consolidated statement of
comprehensive loss for the three and nine months ended March 31, 2018 as
the CanniMed Constructed Profit and Loss for the Nine Months Ended March
31, 2018 has been included in the pro forma consolidated statement of
comprehensive loss for the nine month period ended March 31, 2018. During
the period from March 15, 2018 to March 31, 2018, the amounts attributable
to CanniMed that were removed from Aurora’s unaudited condensed interim
consolidated statement of comprehensive loss for the three and nine months
ended March 31, 2018 were $762 in revenues, $971 in gross profits, $720 in
expenses, and $209 in net income.
|
|
|
|
|
|
|
|
The unaudited condensed interim consolidated statements
of Aurora for the three and nine months ended March 31, 2018 reflects a
95.9% ownership in the issued and outstanding shares of CanniMed and has
been adjusted to reflect a 100% ownership interest as of March 31, 2018.
Total consideration paid for the additional 4.1% interest was $28,919
comprised of $1,746 cash and 3,417,951 shares issued with a fair value of
$27,173, with offsetting adjustments made to equity reserves and
non-controlling interest.
|
|
|
|
|
|
|
|
Total consideration paid for the initial 87.2%
controlling interest in CanniMed was $837,853 comprised of $706,874 fair
value of 62,833,216 common shares issued to CanniMed shareholders and
$130,979 cash, including the $9,500 termination fee paid to Newstrike
Resources Ltd. Additionally, Aurora previously held 700,600 common shares
of CanniMed with a fair value of $26,567 on the acquisition
date.
|
C-10
|
AURORA CANNABIS INC.
|
|
Notes to the Pro forma Consolidated Financial
Statements
|
|
(Unaudited – In
thousands of Canadian dollars, except share and per share amounts)
|
|
3.
|
Pro forma Consolidation Adjustments
(Continued)
|
The total $837,853 consideration paid
for the 87.2% controlling interest in CanniMed was allocated based on the
estimated fair value of net assets acquired upon obtaining control on March 15,
2018, allocated as follows:
|
|
|
|
$
|
|
|
|
Cash and cash equivalents
|
|
38,883
|
|
|
|
Accounts receivable
|
|
3,233
|
|
|
|
Inventory
|
|
10,269
|
|
|
|
Biological assets
|
|
1,447
|
|
|
|
Prepaid expenses and other
assets
|
|
223
|
|
|
|
Investments in associates
|
|
213
|
|
|
|
Property, plant and equipment
|
|
35,753
|
|
|
|
Intangible assets
|
|
1,151
|
|
|
|
Total assets
|
|
91,172
|
|
|
|
Accounts payable and accrued liabilities
|
|
25,143
|
|
|
|
Loans and borrowings
|
|
11,825
|
|
|
|
Total liabilities
|
|
36,968
|
|
|
|
Net assets acquired
|
|
54,204
|
|
|
|
Consideration paid
|
|
837,853
|
|
|
|
Fair value of previously held
equity interest
|
|
26,567
|
|
|
|
Non-controlling interest
|
|
6,971
|
|
|
|
|
|
871,391
|
|
|
|
Net assets acquired
|
|
54,204
|
|
|
|
Goodwill
|
|
817,187
|
|
|
|
(f)
|
Acquisition related costs of approximately $9,000
consisting of investment banker, legal and accounting fees incurred in
relation to the CanniMed Acquisition. These costs have been reflected in
the pro forma consolidated statements of comprehensive income (loss) for
the twelve month period ended June 30, 2017.
|
|
4.
|
Pro Forma Net Loss Per Share
|
|
|
|
|
|
The pro forma basic and diluted net loss per share for
the nine months ended March 31, 2018 and the twelve months ended June 30,
2017 is as follows:
|
|
|
|
|
Nine Months
|
|
|
Twelve Months
|
|
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
|
|
March 31, 2018
|
|
|
June 30, 2017
|
|
|
|
Pro forma net loss
|
$
|
(39,918
|
)
|
$
|
(94,012
|
)
|
|
|
Weighted average number of shares outstanding
of Aurora
|
|
427,180,423
|
|
|
279,029,226
|
|
|
|
Pro forma shares issued to
CanniMed
|
|
3,417,951
|
|
|
72,746,846
|
|
|
|
Pro forma shares issued to MedReleaf
|
|
378,551,416
|
|
|
378,551,416
|
|
|
|
Pro forma weighted average
shares outstanding – basic and diluted
|
|
809,149,790
|
|
|
730,327,488
|
|
|
|
Pro forma net loss per share – basic and
diluted
|
$
|
(0.05
|
)
|
$
|
(0.13
|
)
|
C-11
|
APPENDIX “D”
|
|
FAIRNESS OPINION
|
|
|
|
[
Please see attached
.]
|
D-1
|
Investment & Corporate Banking
|
|
100 King Street West, 4
th
Floor
|
|
Toronto, Ontario M5X1H3
|
|
|
|
|
|
|
|
|
Tel : 416-359-4000
|
|
May 13, 2018
|
|
|
|
The Board of Directors
|
|
Aurora Cannabis Inc.
|
|
1500 – 1199 West Hastings St.
|
|
Vancouver, British Columbia
|
|
V6B 1V5
|
|
|
|
To the Board of Directors:
|
BMO Nesbitt Burns Inc. (“
BMO Capital Markets
” or
“
we
” or “
us
”) understands that Aurora Cannabis Inc. (the
“
Company
” or “
Aurora
”) and MedReleaf Corp. (“
MedReleaf
”)
propose to enter into an arrangement agreement to be dated as of May 13, 2018
(the “
Arrangement Agreement
”) pursuant to which, among other things,
Aurora will acquire all of the issued and outstanding shares of MedReleaf in
accordance with a plan of arrangement to be completed under the
Business
Corporations Act
(Ontario) (the “
Transaction
”). Pursuant to the terms
of the Arrangement Agreement, MedReleaf shareholders will receive 3.575 Aurora
common shares in exchange for each MedReleaf common share (the “
Exchange
Ratio
”). The terms and conditions of the Transaction are more fully set
forth in the Arrangement Agreement and will be summarized in the Company’s
management information circular (the “
Circular
”) to be prepared in
connection with a meeting of holders of the Company’s common shares to approve
the issuance of the Aurora common shares pursuant to the Transaction.
We have been retained to provide financial advice to the
Company, including our opinion (the “
Opinion
”) to the board of directors
of the Company (the “
Board of Directors
”) as to the fairness, from a
financial point of view, of the Exchange Ratio to the Company.
|
ENGAGEMENT OF BMO
CAPITAL MARKETS
|
The Company initially contacted BMO Capital Markets regarding a
potential advisory assignment in early April 2018. BMO Capital Markets was
formally engaged by the Company pursuant to an agreement dated May 4, 2018 and
effective as of April 6, 2018 (the “
Engagement Agreement
”). Under the
terms of the Engagement Agreement, BMO Capital Markets has agreed to provide the
Company and the Board of Directors with various advisory services in connection
with the Transaction including, among other things, the Opinion.
BMO Capital Markets will receive a fee for rendering the
Opinion. We will also receive certain fees for our advisory services under the
Engagement Agreement, a substantial portion of which is contingent upon the
successful completion of the Transaction. The Company has also agreed to
reimburse us for our reasonable out-of-pocket expenses and to indemnify us
against certain liabilities that might arise out of our engagement. The payment
by the Company of the fee for rendering the Opinion and the reimbursement of our
expenses is not dependent on the completion of a Transaction or on the
conclusions reached in the Opinion.
|
CREDENTIALS OF BMO
CAPITAL MARKETS
|
BMO Capital Markets is one of North America’s largest
investment banking firms, with operations in all facets of corporate and
government finance, mergers and acquisitions, equity and fixed income sales and
trading, investment research and investment management. BMO Capital Markets has
been a financial advisor in a significant number of transactions throughout North America
involving public and private companies in various industry sectors and has
extensive experience in preparing fairness opinions.
D-2
The Opinion represents the opinion of BMO Capital Markets, the
form and content of which have been approved for release by a committee of our
officers who are collectively experienced in merger and acquisition,
divestiture, restructuring, valuation, fairness opinion and capital markets
matters.
|
INDEPENDENCE OF
BMO CAPITAL MARKETS
|
Neither BMO Capital Markets, nor any of our affiliates, is an
insider, associate or affiliate (as those terms are defined in the
Securities
Act
(Ontario) or the rules made thereunder (the “
Act
”)) of the
Company, MedReleaf or any person known to BMO Capital Markets to be an associate
or affiliate of the Company or of MedReleaf (collectively, the “
Interested
Parties
”).
BMO Capital Markets has not been engaged to provide any
financial advisory services nor has it participated in any financings involving
the Interested Parties within the past two years, other than acting as financial
advisor to the Company and the Board of Directors pursuant to the Engagement
Agreement.
Subject to the immediately following paragraph, there are no
understandings, agreements or commitments between BMO Capital Markets and any of
the Interested Parties with respect to future business dealings. BMO Capital
Markets may, in the future, in the ordinary course of business, provide
financial advisory, investment banking, or other financial services to one or
more of the Interested Parties from time to time.
BMO Capital Markets and certain of our affiliates act as
traders and dealers, both as principal and agent, in major financial markets
and, as such, may have had and may in the future have positions in the
securities of one or more of the Interested Parties and, from time to time, may
have executed or may execute transactions on behalf of one or more Interested
Parties for which BMO Capital Markets or such affiliates received or may receive
compensation. As investment dealers, BMO Capital Markets and certain of our
affiliates conduct research on securities and may, in the ordinary course of
business, provide research reports and investment advice to clients on
investment matters, including with respect to one or more of the Interested
Parties or the Transaction. In addition, Bank of Montreal (“
BMO
”), of
which BMO Capital Markets is a wholly-owned subsidiary, or one or more
affiliates of BMO, may provide banking or other financial services to one or
more of the Interested Parties in the ordinary course of business.
In connection with rendering the Opinion, we have reviewed and
relied upon, or carried out, among other things, the following:
|
1.
|
a draft of the Arrangement Agreement dated May 13, 2018
and the draft schedules thereto;
|
|
|
|
|
2.
|
draft voting and support agreements between Aurora and
certain officers, directors and certain other significant shareholders of
MedReleaf (the “
Support Agreements
”);
|
|
|
|
|
3.
|
certain publicly available information relating to the
business, operations, financial condition and trading history of Aurora,
MedReleaf and other selected public companies we considered
relevant;
|
|
|
|
|
4.
|
certain internal financial, operating, corporate and
other information prepared or provided by or on behalf of Aurora relating
to the business, operations and financial condition of Aurora and
MedReleaf;
|
|
|
|
|
5.
|
internal management forecasts, projections, estimates and
budgets prepared or provided by or on behalf of management of Aurora and
MedReleaf;
|
D-3
|
6.
|
discussions with management of Aurora relating to Aurora
and MedReleaf’s current businesses, plans, financial conditions and
prospects;
|
|
|
|
|
7.
|
public information with respect to selected precedent
transactions we considered relevant;
|
|
|
|
|
8.
|
various reports published by equity research analysts and
industry sources we considered relevant;
|
|
|
|
|
9.
|
a letter of representation as to certain factual matters
and the completeness and accuracy of certain information upon which the
Opinion is based, addressed to us and dated as of the date hereof,
provided by senior officers of Aurora (“
Senior Officers
”);
and
|
|
|
|
|
10.
|
such other information, investigations, analyses and
discussions as we considered necessary or appropriate in the
circumstances.
|
BMO Capital Markets also participated in discussions regarding
the Transaction and related matters with McMillan LLP, legal counsel to
Aurora.
BMO Capital Markets has not, to the best of its knowledge, been
denied access by Aurora to any information under the Company’s control requested
by BMO Capital Markets.
|
ASSUMPTIONS AND
LIMITATIONS
|
We have relied upon and assumed the completeness, accuracy and
fair presentation of all financial and other information, data, advice,
opinions, representations and other material obtained by us from public sources
or provided to us by or on behalf of the Company or otherwise obtained by us in
connection with our engagement (the “
Information
”). The Opinion is
conditional upon such completeness, accuracy and fair presentation. We have not
been requested to, and have not assumed any obligation to, independently verify
the completeness, accuracy or fair presentation of any such Information. We have
assumed that forecasts, projections, estimates (including, without limitation,
with respect to transaction synergies) and budgets provided to us and used in
our analyses were reasonably prepared on bases reflecting the best currently
available assumptions, estimates and judgments of management of the Company or
MedReleaf, as applicable, as of the date they were prepared, having regard to
the Company’s and / or MedReleaf’s businesses, plans, financial conditions and
prospects.
Senior Officers have represented to BMO Capital Markets in a
letter of representation delivered as of the date hereof, among other things,
that: (i) the Information provided or made available to BMO Capital Markets
orally by, or in the presence of, an officer or employee of the Company, or in
writing by the Company, MedReleaf or any of their respective subsidiaries or
associates (as those terms are defined in the Act) or any of their respective
representatives in connection with our engagement was, at the date the
Information was provided to BMO Capital Markets, and is as of the date hereof,
complete, true and correct in all material respects, and did not and does not
contain a misrepresentation as defined in the Act, with such representation as
it relates to MedReleaf and its subsidiaries and associates limited to the best
of the Senior Officers’ knowledge, information and belief after due inquiry; and
(ii) since the dates on which the Information was provided to BMO Capital
Markets, except as disclosed in writing to BMO Capital Markets, there has been
no material change or change in material facts, financial or otherwise, in or
relating to the financial condition, assets, liabilities (contingent or
otherwise), business, operations or prospects of the Company, MedReleaf or any
of their respective subsidiaries or associates, and no change has occurred in
the Information or any part thereof which would have or which could reasonably
be expected to have a material effect on the Opinion, with such representation
as it relates to MedReleaf and its subsidiaries and associates limited to the
best of the Senior Officers’ knowledge, information and belief after due
inquiry. Senior officers of the Company have also represented to BMO Capital
Markets that the representations and warranties made by the Company and, to the
best of their knowledge, information and belief, after due inquiry, MedReleaf in
the Arrangement Agreement relating to the Transaction are true and correct in
all material respects.
In preparing the Opinion, we have assumed that the executed
Arrangement Agreement and Support Agreements will not differ in any material
respect from the drafts that we reviewed, and that the Transaction will be
consummated in accordance with the terms and conditions of the Arrangement
Agreement without waiver of, or amendment to, any term or condition that is in
any way material to our analyses.
D-4
The Opinion is rendered on the basis of securities markets,
economic, financial and general business conditions prevailing as of May 11,
2018 and the condition and prospects, financial and otherwise, of the Company
and MedReleaf as they are reflected in the Information and as they have been
represented to BMO Capital Markets in discussions with management of the Company
and its representatives. In our analyses and in preparing the Opinion, BMO
Capital Markets made numerous judgments and assumptions with respect to industry
performance, general business, market and economic conditions and other matters,
many of which are beyond our control or that of any party involved in the
Transaction.
The Opinion is provided to the Board of Directors for its
exclusive use only in considering the Transaction and may not be used or relied
upon by any other person or for any other purpose without our prior written
consent. The Opinion does not constitute a recommendation as to how the Company
or any holder of the Company’s common shares should vote or act on any matter
relating to the Transaction. Except for the inclusion of the Opinion in its
entirety and a summary thereof (in a form acceptable to us) in the Circular, the
Opinion is not to be reproduced, disseminated, quoted from or referred to (in
whole or in part) without our prior written consent.
We have not been asked to prepare and have not prepared a
formal valuation or appraisal of the securities or assets of the Company,
MedReleaf, or of any of their affiliates, and the Opinion should not be
construed as such. The Opinion is not, and should not be construed as, advice as
to the price at which the securities of the Company may trade at any time. BMO
Capital Markets was not engaged to review any legal, tax or regulatory aspects
of the Transaction and the Opinion does not address any such matters. We have
relied upon, without independent verification, the assessment by the Company and
its legal and tax advisors with respect to such matters. In addition, the
Opinion does not address the relative merits of the Transaction as compared to
any strategic alternatives that may be available to the Company.
The Opinion is rendered as of the date hereof, and BMO Capital
Markets disclaims any undertaking or obligation to advise any person of any
change in any fact or matter affecting the Opinion which may come or be brought
to the attention of BMO Capital Markets after the date hereof. Without limiting
the foregoing, if we learn that any of the information we relied upon in
preparing the Opinion was inaccurate, incomplete or misleading in any material
respect, BMO Capital Markets reserves the right to change or withdraw the
Opinion.
Based upon and subject to the foregoing, BMO Capital Markets is
of the opinion that, as of the date hereof, the Exchange Ratio is fair from a
financial point of view to the Company.
Yours truly,
BMO Nesbitt Burns Inc.
D-5
APPENDIX “E”
INFORMATION CONCERNING MEDRELEAF
General
MedReleaf is a licensed producer of cannabis-based
pharmaceutical products based in Markham, Ontario. MedReleaf is licensed by
Health Canada pursuant to the ACMPR to, among other things, produce at its
Markham facility an aggregate of up to 6,000 kilograms of dried cannabis and up
to 1,760 kilograms of cannabis oil, and to sell and distribute within Canada an
aggregate of up to 5,000 kilograms of dried cannabis, up to 1,319 kilograms of
bottled cannabis oil, and up to 440 kilograms of encapsulated cannabis oil
produced at its Markham facility.
MedReleaf is an R&D-driven company dedicated to innovation,
operational excellence and the production of top-quality cannabis. Sourced from
around the world and carefully cultivated in one of two state of the art ICH-GMP
and ISO 9001 certified facilities in Ontario, MedReleaf delivers a variety of
premium products for the global medical market and is committed to serving the
therapeutic needs of its medical patients and providing a compelling product
assortment for the adult-use recreational consumer.
MedReleaf cultivates and produces its cannabis-based
pharmaceutical products for direct sales to its patients across Canada.
MedReleaf interacts with its patients via its e-commerce platform as well as by
phone and email correspondence directed to its patient-care team. Currently,
MedReleaf sells dried cannabis, cannabis oils and cannabis oil capsules to its
patients from its Markham facility. MedReleaf’s sales are supported by a variety
of initiatives, including health conference sponsorships, as well as through its
cannabis education and outreach team of employees. MedReleaf expects both its
portfolio of products and the jurisdictions outside of Canada in which it
operates to expand as local laws allow, resources permit, and where market
research indicates opportunity.
MedReleaf was incorporated on February 28, 2013 under the laws
of the Province of Ontario. MedReleaf completed the IPO, together with a
secondary offering of MedReleaf Shares by certain selling shareholders, on June
7, 2017. The MedReleaf Shares are listed on the TSX under the trading symbol
“LEAF”. MedReleaf’s head office is located at Markham Industrial Park, Markham,
Ontario L3R 6G3.
Recent Developments Relating to the Business
Partnership with Niagara College
On April 27, 2018, MedReleaf announced that it has entered into
a memorandum of understanding (MoU) with Niagara College to foster the
development of cannabis production expertise in Canada through its Graduate
Certificate program in Commercial Cannabis Production – Canada’s first
postsecondary credential in this emerging field. By partnering with Niagara
College, MedReleaf is proud to be offering financial support for students and to
be sharing its expertise to help develop the program’s structure and curriculum
in order to advance the development of the Canadian cannabis industry through a
variety of activities that include:
|
|
•
|
Ongoing development of the Commercial Cannabis Production
program and idea generation for any new Niagara College programs or
educational seminars that may evolve with the cannabis industry;
|
|
|
|
|
|
|
•
|
Offering entrance scholarships for students who
demonstrate either 1) academic excellence, or a commitment to innovation
in the cannabis industry and 2) leadership in the cannabis industry by
women;
|
|
|
|
|
|
|
•
|
Creating work integrated learning opportunities for
students studying in the Commercial Cannabis Production program;
|
|
|
|
|
|
|
•
|
Creating graduate placement opportunities; and
|
|
|
|
|
|
|
•
|
Providing opportunities for applied research projects.
|
E-1
Addition of PINs to its Medical Cannabis
Products
On April 16, 2018, MedReleaf announced the introduction of
Product Identification Numbers, or “PINs”, which are similar to traditional Drug
Identification Numbers (DINs), designed to make it easier for employers and
payers to classify and incorporate pharmaceutical and health care products into
benefits coverage plans, for 57 of its unique medical cannabis products
including dried flower, oils and capsules. With this announcement, MedReleaf
continues to demonstrate leadership among Canadian licensed producers to
facilitate the coverage of medical cannabis on employer-sponsored benefits
plans.
Exeter Facility Agreement Closes
On April 12, 2018, MedReleaf announced that it has closed its
previously announced agreement to acquire 1 million square feet of existing
greenhouse infrastructure on a 69 acre property in Exeter, Ontario (“
Exeter
Facility
”) and 95 acres of adjacent land. The total purchase price for the
transaction is approximately $26 million, consisting of $21.5 million in cash
and 225,083 common shares of MedReleaf.
Work to retrofit the Exeter Facility for cannabis production
began in April with first harvest expected in the first quarter of 2019, subject
to receipt of a licence from Health Canada. MedReleaf is fully funded to
complete the project with cash on hand. The Exeter Facility, after full
retrofit, will have annual production capacity of up to 105,000 kilograms,
increasing MedReleaf’s fully funded annual production capacity to 140,000
kilograms.
Supply Agreement with the Société des alcools du Québec
Completes
On April 11, 2018, MedReleaf announced that it has completed a
supply agreement with Société des alcools du Québec to supply the future Société
Québécoise du cannabis (SQDC) with high quality adult recreational-use cannabis
products in accordance with the previously announced letter of intent.
Under the terms of the agreement, MedReleaf is committed to
supplying the Quebec market with 8,000 kilograms of cannabis products per year
with a minimum three-year term.
Documents Incorporated by Reference
Information has been incorporated by reference in this
information circular from documents filed with securities commissions or similar
authorities in the provinces of Canada. Copies of the documents incorporated
herein by reference may be obtained on request without charge from MedReleaf at
P.O. Box 3040, Markham Industrial Park, Markham, Ontario L3R 6G4, Attention:
Chief Financial Officer, or by accessing the disclosure documents available
electronically under MedReleaf’s profile on SEDAR at www.sedar.com.
The following documents, filed with securities commissions or
similar authorities in each of the provinces of Canada, are specifically
incorporated by reference in, and form an integral part of, this information
circular:
|
|
(a)
|
the annual information form of MedReleaf dated June 18,
2018, for the year ended March 31, 2018;
|
|
|
|
|
|
|
(b)
|
the material change report of MedReleaf dated May 24,
2018, relating to the Arrangement;
|
|
|
|
|
|
|
(c)
|
the audited consolidated financial statements of
MedReleaf for the year ended March 31, 2018, and related notes and
management’s discussion and analysis thereof; and
|
|
|
|
|
|
|
(d)
|
the management information circular of MedReleaf dated
August 21, 2017, distributed in connection with the annual general meeting
of MedReleaf Shareholders held on September 25,
2017.
|
Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for the purposes of this information
circular to the extent that a statement contained herein, or in any other subsequently filed
document which also is, or is deemed to be, incorporated by reference herein,
modifies or supersedes such statement. The modifying or superseding statement
need not state that it has modified or superseded a prior statement or include
any other information set forth in the document that it modifies or supersedes.
The making of a modifying or superseding statement shall not be deemed to be an
admission for any purposes that the modified or superseded statement, when made,
constituted a misrepresentation, an untrue statement of a material fact or an
omission to state a material fact that is required to be stated or that is
necessary to make a statement not misleading in light of the circumstances in
which it was made. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this information
circular.
E-2
Any document of the type required
by Item 11.1 of Form 44-101F1 – Short Form Prospectus to be incorporated by
reference into a short form prospectus, including any annual information forms,
material change reports (except confidential material change reports), business
acquisition reports, interim financial statements, audited annual financial
statements, management’s discussion and analysis and information circulars,
filed by MedReleaf with applicable securities commissions or similar authorities
in Canada on SEDAR at www.sedar.com after the date of this Circular and before
the Meeting, is also deemed to be incorporated by reference into this
Circular.
Dividends
MedReleaf has not paid dividends
since the date of its incorporation and it does not expect to pay dividends in
the near future. MedReleaf expects that it will retain earnings to finance
further growth. The Board of Directors will determine if and when dividends
should be declared and paid in the future and any such determination will be
based on MedReleaf’s financial position, business environment, operating
results, capital requirements, any contractual restrictions on the payment of
dividends and any other factors that the Board of Directors may deem relevant at
the time.
Prior Sales
The following table summarizes
issuances of MedReleaf Shares or securities convertible into MedReleaf Shares
during the 12-month period preceding the date of this Circular, as adjusted to
take into account the capital reorganization of MedReleaf completed in
connection with its IPO (see MedReleaf’s 2018 annual information form under
“Corporate Structure”, which is incorporated herein by reference, for more
information about the capital reorganization).
|
|
|
Number of
Securities
|
Issuance /
Exercise
|
|
Date of Issuance
|
Type of Security
|
Issued
|
Price per
Security
|
|
April 26, 2018
|
MedReleaf
Shares
|
52,241
(1)
|
$9.50
(1)
|
|
April 26, 2018
|
MedReleaf Shares
|
239,147
(1)
|
$0.00
(1)
|
|
April 11, 2018
|
MedReleaf
Shares
|
225,083
(2)
|
$19.99
(2)
|
|
April 2, 2018
|
MedReleaf Shares
|
38,700
(1)
|
$2.96
(1)
|
|
March 23, 2018
|
MedReleaf
Shares
|
464,054
(3)
|
$0.00
(3)
|
|
March 21, 2018
|
MedReleaf Shares
|
7,256
(1)
|
$9.50
(1)
|
|
March 13, 2018
|
MedReleaf
Shares
|
118,529
(1)
|
$0.00
(1)
|
|
March 2, 2018
|
MedReleaf Shares
|
150,686
(1)
|
$0.84
(1)
|
|
March 1, 2018
|
MedReleaf
Shares
|
18,416
(4)
|
$19.00
(4)
|
|
March 1, 2018
|
MedReleaf Shares
|
10,913
(1)
|
$0.00
(1)
|
|
February 28, 2018
|
MedReleaf
Shares
|
7,256
(1)
|
$9.50
(1)
|
E-3
|
|
|
Number of Securities
|
Issuance / Exercise
|
|
Date of Issuance
|
Type of Security
|
Issued
|
Price per Security
|
|
February 23, 2018
|
MedReleaf
Shares
|
7,256
(1)
|
$9.50
(1)
|
|
February 22, 2018
|
MedReleaf Shares
|
7,256
(1)
|
$9.50
(1)
|
|
February 15, 2018
|
MedReleaf
Shares
|
150,686
(1)
|
$0.84
(1)
|
|
February 15, 2018
|
MedReleaf Options
|
369,000
|
$19.46
|
|
February 1, 2018
|
MedReleaf
Warrants
|
375,000
(5)
|
$34.50
(5)
|
|
January 31, 2018
|
MedReleaf Warrants
|
2,500,000
(6)
|
$34.50
(6)
|
|
January 31, 2018
|
MedReleaf
Shares
|
5,000,000
(7)
|
$26.05
(7)
|
|
December 21, 2017
|
MedReleaf Shares
|
8,100
(8)
|
$9.50
(8)
|
|
December 11, 2017
|
MedReleaf
Shares
|
75,343
(9)
|
$0.84
(9)
|
|
December 8, 2017
|
MedReleaf Shares
|
488,313
(10)
|
$16.10
(10)
|
|
December 7, 2017
|
MedReleaf
Shares
|
10,796
(9)
|
$0.0001
(9)
|
|
December 7, 2017
|
MedReleaf Shares
|
75,343
(9)
|
$0.84
(9)
|
|
December 4, 2017
|
MedReleaf
Shares
|
3,625,470
(11)
|
$16.55
(11)
|
|
November 16, 2017
|
MedReleaf Options
|
272,500
|
$17.09
|
|
September 22, 2017
|
MedReleaf
Shares
|
118,761
(9)
|
$0.0001
(9)
|
|
August 25, 2017
|
MedReleaf Shares
|
10,913
(9)
|
$0.0001
(9)
|
|
August 10, 2017
|
MedReleaf
Options
|
124,827
|
$9.50
|
|
June 28, 2017
|
MedReleaf Shares
|
10,796
(9)
|
$0.0001
(9)
|
Notes:
|
(1)
|
These MedReleaf Shares were issued pursuant to the
exercise of options
|
|
(2)
|
These MedReleaf Shares were issued in connection with the
purchase of a greenhouse in Exeter, Ontario.
|
|
(3)
|
These MedReleaf Shares were issued pursuant to the
conversion all of the outstanding class B shares.
|
|
(4)
|
These MedReleaf Shares were issued in connection with
WoodStock Trademarks License Agreement.
|
|
(5)
|
These MedReleaf Shares were issued pursuant to the
exercise of warrants in connection with the over- allotment of a bought
deal offering.
|
|
(6)
|
These MedReleaf Shares were issued pursuant to the
exercise of warrants in connection with a bought deal offering.
|
|
(7)
|
These MedReleaf Shares were issued pursuant to a bought
deal offering.
|
|
(8)
|
These MedReleaf Shares were issued pursuant to the
exercise of options granted on completion of the IPO on the IPO Closing
Date.
|
|
(9)
|
These MedReleaf Shares were issued pursuant to the
exercise of legacy stock options, as adjusted to take into account the
capital reorganization of MedReleaf that was completed in connection with
the IPO.
|
|
(10)
|
These MedReleaf Shares were issued as partial
consideration for the acquisition by MedReleaf of certain
assets.
|
|
(11)
|
These MedReleaf Shares were issued pursuant to the
December 2017 Offering.
|
Prior Valuations
MedReleaf is not aware of any
“prior valuations”, as such term is defined in MI 61-101, of the MedReleaf
Shares within the 24-month period preceding the date of this Circular.
E-4
Market Price and Trading Volume of MedReleaf Shares
The outstanding MedReleaf Shares
are traded on the TSX under the trading symbol “LEAF” and began trading on June
7, 2017. Prior to June 7, 2017, no securities of MedReleaf were traded or quoted
on a Canadian marketplace. The following table sets out the price range (monthly
high and low prices) and monthly trading volumes of the MedReleaf Shares on the
TSX for the 12 month period prior to the date of this Circular:
|
Month
|
High
|
|
Low
|
|
Total Volume
|
|
|
June 1-14, 2018
|
$30.00
|
|
$24.48
|
|
7,084,617
|
|
|
May 2018
|
$26.74
|
|
$20.50
|
|
20,975,926
|
|
|
April 2018
|
$21.13
|
|
$14.57
|
|
9,008,778
|
|
|
March 2018
|
$21.07
|
|
$16.70
|
|
6,667,017
|
|
|
February 2018
|
$22.50
|
|
$14.75
|
|
13,248,667
|
|
|
January 2018
|
$31.25
|
|
$18.60
|
|
24,163,308
|
|
|
December 2017
|
$22.78
|
|
$14.83
|
|
11,296,320
|
|
|
November 2017
|
$18.90
|
|
$12.68
|
|
9,982,998
|
|
|
October 2017
|
$13.30
|
|
$9.08
|
|
3,789,578
|
|
|
September 2017
|
$9.45
|
|
$7.80
|
|
1,715,839
|
|
|
August 2017
|
$8.30
|
|
$7.45
|
|
1,081,604
|
|
|
July 2017
|
$8.73
|
|
$7.80
|
|
861,506
|
|
|
June 7-30, 2017
|
$9.65
|
|
$6.81
|
|
6,448,849
|
|
On May 11, 2018, the last trading
day on the TSX prior to the announcement of the execution of the Arrangement
Agreement, the closing price of the MedReleaf Shares on the TSX was $24.90.
Interest of Informed Persons in Material
Transactions
Certain directors and officers of
MedReleaf may have interests in the Arrangement or may receive benefits that
differ from, or be in addition to, the interests of MedReleaf Shareholders
generally. See “The Arrangement – Interests of Certain Persons in the
Arrangement” in the MedReleaf Circular.
Legal Matters
Certain legal matters in
connection with the Arrangement as they pertain to MedReleaf will be passed upon
by Stikeman Elliott LLP.
Auditors and Audit Committee
KPMG LLP has served as the
external auditors of MedReleaf since May 30, 2016. The Company is required to
have an audit committee. The directors who are members of the audit committee
are Deborah Rosati (Chair), Norma Beauchamp and Ronald Funk.
Interest of Experts
KPMG LLP are the external
auditors of MedReleaf and have confirmed that they are independent of MedReleaf
within the meaning of the Rules of Professional Conduct of the Chartered
Professional Accountants of Ontario (registered name of the Institute of
Chartered Accountants of Ontario).
E-5
APPENDIX “F”
INFORMATION CONCERNING AURORA
GENERAL
Aurora Cannabis Inc. was
incorporated under the
Business Corporations Act
(British Columbia) on
December 21, 2006 as Milk Capital Corp. On September 3, 2010, Aurora changed its
name to Prescient Mining Corp. Effective October 2, 2014, Aurora changed its
name to its present name, Aurora Cannabis Inc.
The head office of Aurora is
located at 900 – 510 Seymour Street, Vancouver, British Columbia, Canada V6B
1V5. The registered office of Aurora is located at Suite 1500, 1055 West Georgia
Street, Vancouver, British Columbia, V6E 4N7.
Aurora Shares are listed on the
TSX under the trading symbol “ACB”, on the OTCBB under the symbol “ACBFF” and on
the Frankfurt Stock Exchange under the symbol “21P”. Aurora is a reporting
issuer in Canada in the Provinces of British Columbia, Alberta, Saskatchewan,
Manitoba, Ontario, Québec, New Brunswick, Nova Scotia, Prince Edward Island and
Newfoundland.
Aurora’s principal business is
the production and distribution of medical cannabis in Canada pursuant to the
Access to Cannabis for Medical Purposes Regulations (“
ACMPR
”), through
its wholly-owned subsidiary, Aurora Cannabis Enterprises Inc. (“
ACE
”).
Through its wholly-owned German subsidiary, Pedanios GmbH (“
Pedanios
”),
Aurora is a licensed pharmaceutical wholesaler and licensed narcotics dealer of
medical marijuana in Germany and the European Union pursuant to section 52a of
the Medicinal Products Act, Arzneimittelgesetz, and section 3 of the German
Narcotic Drugs Act, Betäubungsmittelgesetz, respectively.
On February 17, 2015 and November
27, 2015, ACE received its licenses to produce and sell dried medical cannabis
respectively. The licenses qualify ACE as a “Licensed Producer” as defined in
the ACMPR, and are fundamental to the operation of the business of Aurora. On
January 4, 2016, ACE generated its first sale of dried cannabis products. On
February 16, 2016, ACE received its license to produce cannabis oil products,
and on January 20, 2017, ACE received its license to sell cannabis oil products
to registered patients under the ACMPR. On April 19, 2017, ACE generated its
first sale of cannabis oil products. On June 16, 2017, ACE obtained from Health
Canada a two-year renewal of its license to produce and sell dried cannabis and
cannabis oils at Aurora’s production facility in Mountain View County near
Cremona, Alberta. Additionally, Aurora has received a license to cultivate
cannabis at its facility in Pointe Claire, Québec and anticipates receiving a
license to sell cannabis from such facility in the coming months. Pedanios has a
permit under Section 3 of the German Narcotics Act, which is supervised by the
Bundesopiumstelle (the federal narcotics control board) and two licences
pursuant to Sections 52 and 72 of the German Medicinal Act, which is supervised
by Landesamt fur Gesundheit und Soziales, as a pharmaceutical wholesaler and
narcotics dealer of medical marijuana on July 23, 2015 and March 10, 2017,
respectively.
Aurora, through its wholly-owned
subsidiary, CanvasRx Inc. (“
CanvasRx
”), provides counseling and outreach
service to help patients learn about how to safely and effectively use medical
cannabis, select a strain from the hundreds available in Canada and register
with their choice of licensed producer.
Aurora, through its wholly-owned
subsidiaries, BC Northern Lights Enterprises Ltd. (“
BCNL
”) and Urban
Cultivator Inc. (“
UCI
”), is involved in the production and sale of
proprietary systems for the indoor cultivation of cannabis, organic microgreens,
vegetables and herbs which will cater to the home-growing adult-use recreational
market upon legalization, which is anticipated to occur in July 2018.
Aurora controls Hempco Foods and
Fiber Inc. (“
Hempco
”), a producer of industrial hemp products committed
to developing hemp foods, hemp fiber and hemp nutraceuticals, a “Tri-crop”
opportunity for producers and processors. On May 15, 2018, Aurora increased its
holdings in Hempco and now owns 52.7% of the outstanding shares of Hempco.
F-1
Aurora, through its wholly-owned
subsidiary, Aurora Larssen Projects Inc. (“
Aurora Larssen
”), is in the
business of consulting on the design, engineering, and construction oversight
for advanced greenhouse cultivation facilities.
Aurora’s strategy and vision is to
build a leading, integrated global cannabis company through:
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the construction of highly-efficient
purpose-built facilities that allow Aurora to produce significant volumes
of low-cost, high quality cannabis;
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an aggressive and strategically focused
international expansion;
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strong brand differentiation; and
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industry leading board, management and
production teams.
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In July 2017, Pedanios
successfully passed the first stage of the tender application process to become
a licensed producer of medical cannabis in Germany. As a result of initial stage
evaluations, the German Federal Institute for Medicines and Medical Products,
requested Pedanios’ participation in the second and final stage of the
application process which involves a competitive bid proposal and contract
negotiations to cultivate, process, store, package and deliver cannabis for
medical purposes in Germany (the “
German Bid Process
”). However, the
German Bid Process was cancelled by the German government following a legal
challenge which concerned an administrative process technicality. It is
anticipated that the a new German Bid Process will be re-introduced by the
German government in the future, although no firm dates have been provided as at
the date of this Circular. Upon such a bid process being re-introduced, Pedanios
intends to participate. In the meantime, Aurora will continue to increase the
quantity of product being exported into this heavily undersupplied market and
will continue to receive high margins and rapid demand growth as patient
adoption rates continue to rapidly increase in part due to insurance cost
coverage for medical cannabis available to all citizens across the country.
F-2
Intercorporate Relationships
The following chart sets out the
intercorporate relationships of Aurora.
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AURORA
INTERCORPORATE RELATIONSHIPS
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F-3
RECENT DEVELOPMENTS
CanniMed Takeover Bid
On March 15, 2018, Aurora
completed its initial take-up of the common shares (the “
CanniMed
Shares
”) of CanniMed Therapeutics Inc. (“
CanniMed
”) pursuant to its
offer (the “
CanniMed Offer
”) to purchase all of the issued and
outstanding CanniMed Shares. Aurora took up 21,309,517 CanniMed Shares
representing 86.8% of the total outstanding CanniMed Shares on a fully diluted
basis which, together with 700,600 shares purchased in the market prior to the
expiry of the CanniMed Offer by Aurora, represents 87.2% of the outstanding
CanniMed Shares. In consideration for the CanniMed Shares taken up on March 12,
2018, Aurora issued approximately 62.8 million Aurora common shares as share
consideration and paid cash consideration of approximately $130.9 million,
including the $9.5 million break fee paid to Newstrike Resources Ltd.
Shareholders of CanniMed who tendered before the original expiry of the CanniMed
Offer on March 9, 2018, predominantly elected to receive cash. On March 28,
2018, Aurora completed its second take-up of CanniMed Shares, acquiring 95.9% of
CanniMed Shares for consideration of approximately 6.5 million Aurora shares and
$12.6 million in cash. Based on the shares tendered in the first and second
take-up, CanniMed shareholders received approximately $5.70 per share in cash
and approximately 2.9486 common shares of Aurora. On May 1, 2018, Aurora
completed the take-over bid to purchase all of the issued and outstanding
CanniMed Shares by purchasing the remaining outstanding CanniMed Shares by way
of a compulsory acquisition under the
Canada Business Corporations Act
.
Approximately 1.2 million CanniMed Shares were acquired for a consideration of
approximately 3.4 million Aurora shares and $1.7 million in cash. CanniMed
shareholders under the compulsory acquisition each received on average $1.67
cash and 3.2678 common shares of Aurora. The CanniMed Shares were de-listed from
the TSX as at the close of business on May 1, 2018.
The Business of CanniMed
CanniMed is a Canadian-based,
international plant biopharmaceutical company and a leader in the Canadian
medical cannabis industry, with 15 years of pharmaceutical cannabis cultivation
experience, a state-of-the-art, GMP-compliant plant production process,
including 281 points of quality control, and world class research and
development platforms with a wide range of pharmaceutical-grade cannabis
products. In addition, CanniMed has an active plant biotechnology research and
product development program focused on the production of plant-based materials
for pharmaceutical, agricultural and environmental applications.
Each of CanniMed’s wholly owned
subsidiaries, Prairie Plant Systems Inc. (“
PPS
”) and CanniMed, Ltd.
(“
CMED
”) is a Licensed Producer under the ACMPR by continuation of the
Licenses granted to PPS and CMED under the MMPR and the exemptions granted
pursuant to section 56 of the Controlled Drugs and Substances Act (Canada). PPS
was also the sole producer of cannabis for the Government of Canada for more
than 13 years under the predecessor MMAR.
CanniMed cultivates and sells
pharmaceutical-grade cannabis products in both dried herbal and oil form to
Canadians registered under the ACMPR. CanniMed is also a leader in the
development of pharmaceutical products containing phytocannabinoids and other
compounds found in cannabis. CanniMed believes the emergence of cannabis-based
products, particularly cannabis oils and capsules, will have a significant
impact on the global pain management market and represents a significant
commercial opportunity for CanniMed. CanniMed staff has extensive experience in
a number of biopharmaceutical areas, providing CanniMed with a wide base of
capabilities to develop new cannabis products, improve existing technologies and
to service patients and customers.
CanniMed has developed a
proprietary cloning technique, which it currently uses in its propagation
techniques for many nutraceutical plants including cannabis. The sale of this
technology for uses other than cannabis propagation is pending.
CanniMed also has the capability
to purify and isolate cannabinoids and, through Prairie Plant Systems, owns a
19.9% interest in an entity that can manufacture a variety of plant-based active
pharmaceutical ingredients, such as high-value proteins (including enzymes and
cytokines). CanniMed is currently in discussions to divest its interest in the
entity that deals with proteins.
F-4
CanniMed was established in 1988
as a privately-held plant biotechnology company with a focus on research and
development. CanniMed’s initial research goal was to develop fruit trees hardy
enough to survive and thrive in the harsh Canadian climate
In December 2000, Health Canada
awarded PPS a five-year contract to develop comprehensive operations for the
growing and cultivation of medical cannabis. This began CanniMed’s long history
of cannabis cultivation, with the first crops being grown in a biosecure
underground growth chamber in Flin Flon, Manitoba. In 2001, PPS became a
Licensed Dealer under the NCR and the sole authorized source of dried marijuana
for Health Canada under the MMAR. After being awarded its license, CanniMed
engaged in an extensive research and development effort to gain a detailed
understanding of cannabis genealogy, to identify, catalogue and cultivate an
extensive number of cannabis strains, to design and build proprietary growing
technologies and to refine its cultivation process to ensure consistent output
and maximize yields. CanniMed began selling dried marijuana to the Government of
Canada in early 2004.
As CanniMed’s research and
development efforts continued as a Licensed Dealer, management of CanniMed
increasingly recognized the significant potential for medical cannabis to aid
patients in dealing with a large number of medical conditions, including chronic
pain. In particular, management of CanniMed believed that medical cannabis
products that were manufactured to a pharmaceutical-grade standard would
ultimately be accepted in the medical community as a safe and effective
treatment option that offers fewer side effects than existing, more aggressive,
medications such as opiates that are frequently used to manage chronic pain.
Between 2009 and 2011, CanniMed
employed seven patented growing technologies, processes and other trade secrets,
and expanded its cultivation infrastructure with a newly constructed 35,000 sq.
ft. above-ground facility in Saskatoon, Saskatchewan. Production in this
facility is compliant with current “Good Manufacturing Practices”, which are the
same standards and procedures that pharmaceutical companies must adhere to in
manufacturing their products in North America.
The MMPR came into force on June
19, 2013 and on September 19, 2013, CanniMed’s subsidiaries, PPS and CML, became
the first two Licensed Producers under the MMPR.
CanniMed operates biosecure
growth facilities located in Saskatoon, Saskatchewan, comprised of a 97,000 sq.
ft. above-ground production facility and a 96,000 sq. ft. support building. The
97,000 sq. ft. facility houses 30 large individual production growth chambers
and has a total growing capacity of 7,000 kg. The 96,000 sq. ft. support
building houses CanniMed’s administrative infrastructure, including
laboratories, quality control facilities, maintenance areas, a customer care
centre and shipping and distribution facilities. The Saskatoon facility is
equipped with a robust state-of-the-art security system, with over 400 separate
security devices, including over 160 cameras capturing approximately five
terabytes of recorded data per month. In compliance with the ACMPR, the footage
recorded by CanniMed’s cameras is stored for two years. The Saskatoon facility
also houses five separate Level 7 security compliant vaults, which are required
for the storage of controlled substances.
The facility in Saskatoon is
focused primarily on the commercialization of medical cannabis, as well as the
research and development of new strains of cannabis. The procedures at this
facility place a heavy emphasis on patient safety, with a 281-point quality
control process.
While traditional growing
methods, including greenhouses, are limited by soil conditions and climate,
CanniMed’s facilities are unique in the industry in that all crops are grown in
its patented biosecure growth chambers, resulting in several key benefits:
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Controlled Environment: Conditions are completely
controlled through automation of light, heat and water. With no drought,
floods, wind, insects or harsh natural elements, plants are afforded
uninterrupted and optimized growing cycles, resulting in
maximal product yields and consistent product quality on a continuous basis;
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F-5
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Rapid Plant Growth: Plants often grow faster and stronger
in biosecure facilities than they do in fields or greenhouses, potentially
as a result of slightly higher carbon dioxide levels in biosecure
facilities;
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Quality Control: The stable environment facilitates
CanniMed’s thorough application of “Good Manufacturing Practices”, “Good
Agricultural Practices”, “Good Production Practices” and “Good Laboratory
Practices”;
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Pesticides or Herbicides: With no threat of insect,
pests, or the plant diseases they can carry, there is no need for
pesticides or herbicides and no residues on unpurified bulk material from
the CanniMed’s plants. This provides at least two benefits. First,
facilitating regulatory compliance by eliminating the need to quantify
unwanted material residue throughout the production process, also
resulting in cost savings. Second, end-user/consumer perception that
CanniMed’s customers may have a preference for material prepared without
any contact with pesticides or herbicides; and
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Secrecy: CanniMed’s Saskatoon facility incorporates
extensive security features and provides a limited number of secure entry
and exit points. These features facilitate protecting trade secrets and
other intellectual property relating to high-value plants. Advanced
intrusion alarm systems further ensure plant safety.
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CanniMed has commenced a capital
project to increase its current cannabinoid oils processing capacity by
constructing a new facility on the existing site. The planned “Good
Manufacturing Practices”-compliant ethanol extraction facility is designed to
have the initial capacity to supply the equivalent of 12 million 60 ml bottles
of CanniMed oil per year. The project is estimated to employ 85 full-time
employees during a 20-month construction schedule and to commission and create
25 new full-time employment positions. The facility has been designed to
accommodate further modular increases in capacity in up to three subsequent
phases.
Alfred Pedersen & Søn Joint Venture
On January 4, 2018, Aurora signed
a binding term sheet for the formation of a Danish corporation with Alfred
Pedersen & Søn (“
APS
”) pursuant to which Aurora and APS agreed to
incorporate Aurora Nordic Cannabis A/S (“
Aurora Nordic
”). Aurora Nordic
was incorporated on February 12, 2018 and Aurora owns 51% of Aurora Nordic while
Scandinavian Cannabis A/S (“
SC
”), a Danish corporation owned by APS, owns
49 % of Aurora Nordic. Aurora and SC are currently negotiating the terms of a
shareholder agreement and Aurora anticipates executing this document in June
2018. Aurora Nordic plans to commence construction of a 1 million sq. ft. fully
automated cannabis production facility (the “
Aurora Nordic Facility
”). On
January 1, 2018, APS received a licence to cultivate cannabis from
Lægemiddelstyrelsen, the Danish Medicines Agency and APS transferred such
license to Aurora Nordic. The transfer of the license has been completed in
March 2018. Additionally, Aurora anticipates cannabis production capacity at the
Aurora Nordic Facility to be in excess of 120,000 kg per annum. Completion of
the first 200,000 sq. ft. of the Aurora Nordic Facility is expected in the 3rd
quarter of 2018, upon which cultivation will commence. Under the terms of the
agreement, Aurora Nordic has the option to access existing greenhouse space that
could be utilized for cannabis cultivation starting the summer of 2018. Upon the
completion of certain milestones, Aurora and SC intend to fund the Aurora Nordic
through a combination of non-dilutive project finance and direct investment by
each of Aurora and SC, on a on a pro-rata basis.
The Green Organic Dutchman Holdings Ltd. Investment
On January 12, 2018, Aurora
completed its investment in The Green Organic Dutchman Holdings Ltd.
(“
TGOD
”) to purchase an aggregate of $55 million of subscription receipts
of TGOD (the “
TGOD Subscription Receipts
”) at the price of $1.65 per
Subscription Receipt (the “
TGOD Investment
”). Each TGOD Subscription
Receipt converted into one unit of TGOD (a “
TGOD Unit
”) effective May 2,
2018, the date the common shares of TGOD commenced trading in the TSX. Each TGOD Unit consists
of one common share and one-half of one common share purchase warrant of TGOD.
Each full warrant is exercisable to acquire one common share of TGOD at the
exercise price of $3.00 per common share until February 28, 2021.
F-6
Additionally, Aurora and TGOD
entered into an investor rights agreement (the “
TGOD Investor Rights
Agreement
”), whereby Aurora will have the right to nominate a member to the
board of directors of TGOD so long as Aurora maintains an ownership interest in
TGOD of at least 10%, on a fully-diluted basis. Aurora will also have the right
to subscribe for that number of additional shares of TGOD upon TGOD achieving
the following milestones (the “
TGOD Milestones
”):
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a number of common shares equal to 8% of the issued and
outstanding common shares of TGOD (calculated on a fully-diluted basis),
by August 2, 2018, being three months after TGOD’s common shares were
listed on the TSX;
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b)
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a number of common shares equal to 8% of the issued and
outstanding common shares of TGOD (calculated on a fully-diluted basis) if
TGOD’s cannabis cultivation facility located in Valleyfield, Quebec (the
“
Quebec Project
”) is permitted and construction of the Quebec
Project has reached 50% completion, as determined based on the
construction budget of the Quebec Project;
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a number of common shares equal to 8% of the common
shares (calculated on a fully-diluted basis) upon the Quebec Project
receiving a license to cultivate cannabis in accordance with the ACMPR or
the Cannabis Act; and
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a number of common shares equal to 12% of the common
shares (calculated on a fully-diluted basis) when TGOD completes an
aggregate of $100,000,000 in sales.
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(the “
TGOD Milestone
Options
”)
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The price for common shares
issued pursuant to these TGOD Milestones shall be based on the volume-weighted
average trading price of the common shares of TGOD for the 10 consecutive
trading days following the achievement of the relevant TGOD Milestone minus a
discount of 10%. As such, until the milestones are achieved, the cost of further
investments in TGOD cannot be estimated.
TGOD shall provide a notice (the
“
TGOD Milestone Notice
”) to Aurora within five business days of the
achievement of each TGOD Milestone. If Aurora does not exercise any one of the
TGOD Milestone Options within 30 days after the date of the TGOD Milestone
Notice, then that TGOD Milestone Option and all remaining TGOD Milestone Options
will expire.
The TGOD Investor Rights
Agreement also provides Aurora with the right to participate in any new equity
offerings of TGOD to maintain its pro rata ownership.
In connection with the TGOD
Investment, Aurora and TGOD also entered into a cannabis supply agreement
whereby Aurora has the right to purchase up to 20% of TGOD’s annual production
of organic cannabis from TGOD’s Ancaster, Ontario and Valleyfield, Québec
facilities. Aurora will also have the right to purchase up to 33% of TGOD’s
organic cannabis production from the two facilities if Aurora increases its
equity ownership interest in TGOD to a minimum of 31%, on a fully-diluted basis.
In addition, Aurora Larssen, an indirect wholly-owned subsidiary of Aurora, has
entered into a consulting and design agreement with TGOD to assist TGOD with the
design and consulting for TGOD’s proposed cannabis greenhouse facility located
in Valleyfield, Québec. The approximate total value of the contract is $1
million. This is an ordinary course agreement for Aurora Larssen.
Alcanna Inc. (formerly Liquor Stores N.A. Ltd.)
Investment
Aurora, through its subsidiary
2095173 Alberta Ltd., agreed to make a strategic investment in Alcanna Inc.
(“
Alcanna
”), subject to Alcanna shareholder approval, by way of a
non-brokered private placement (the “
Alcanna Investment
”). The Alcanna Investment has been
structured in two phases, with an initial investment of $103.5 million for an
approximate 19.9% ownership interest in Alcanna, with an option for Aurora to
increase its ownership stake up to 40% through exercising warrants granted to
Aurora in the private placement. Details of the Alcanna Investment are more
particularly set out below.
F-7
Initial Investment
Pursuant to the Alcanna
Investment, Aurora subscribed for 6.9 million common shares in the capital of
Alcanna (the “
Alcanna Shares
”) at a price of $15.00 per Alcanna Share for
an aggregate subscription price of $103,500,000 (the “
Initial Alcanna
Investment
”), which results in Aurora acquiring approximately 19.9% of the
Alcanna Shares (calculated on a non-diluted basis). The Initial Alcanna
Investment did not require Alcanna shareholder approval and closed on February
14, 2018.
Additional Investment
On February 14, 2018, Aurora also
subscribed for 2,300,000 subscription receipts of Alcanna (the “
Alcanna
Subscription Receipts
”) at a price of $15.00 per Alcanna Subscription
Receipt for aggregate proceeds of $34,500,000 (the “
Alcanna Subscription
Receipt Funds
”). Each Alcanna Subscription Receipt entitles Aurora to
receive, without payment of additional consideration, one Alcanna Share for each
Alcanna Subscription Receipt held, subject to the satisfaction of certain escrow
release conditions. On May 10, 2018, the Alcanna Subscription Receipts were
converted into 2,300,000 Alcanna Shares, increasing Aurora’s shareholdings in
Alcanna to 9,200,000 Alcanna Shares.
In addition, Alcanna issued to
Aurora, for no additional consideration, two classes of Alcanna Share purchase
warrants: (1) 10,130,000 warrants with an exercise price of $15.75 per Alcanna
Share to allow Aurora to increase its pro rata equity interest in Alcanna to 40%
on a fully diluted basis (the “
Alcanna Sunshine Warrants
”); and (2) up
to 1,750,000 warrants with an exercise price of $15.00 per Alcanna Share
exercisable upon any conversion of any of the outstanding 4.70% convertible
unsecured subordinated debentures of Alcanna in such amount that is necessary to
allow Aurora to maintain its pro rata equity interest in Alcanna (the “
Alcanna Pro Rata Warrants
”). The exercise of each of the Alcanna Sunshine
Warrants and the Alcanna Pro Rata Warrants was conditional upon the approval of
Alcanna shareholders (other than Aurora and its associates or affiliates) at the
next annual general meeting of Alcanna shareholders and to approvals required
under the
Competition Act
(Canada). Alcanna received all regulatory and
shareholder approval and the Alcanna Sunshine Warrants and the Alcanna Pro Rata
Warrants are now exercisable. The Alcanna Sunshine Warrants expire on August 14,
2019 and the Alcanna Pro Rata Warrants expire on January 31, 2022.
The private placement of the
Alcanna Subscription Receipts, Alcanna Sunshine Warrants and Alcanna Pro Rata
Warrants collectively comprise the “
Alcanna Additional Investment
”.
The Alcanna Shares, Alcanna
Subscription Receipts,
Alcanna Sunshine Warrants
and the
Alcanna Pro
Rata Warrants
will each be subject to a hold period that will expire four
months and one day after the closing of the Alcanna Investment. The parties have
agreed that the Alcanna Shares issued pursuant to the Alcanna Investment as well
as any Alcanna Shares issuable pursuant to the exercise of the Alcanna
Subscription Receipts, the
Alcanna Sunshine Warrants
or the
Alcanna
Pro Rata Warrants
will be subject to a contractual escrow of twelve (12)
months from the closing date of the Alcanna Investment. The contractual escrow
is subject to termination upon the occurrence of certain stated events.
Shoppers Drug Mart Cannabis Supply Agreement
On February 28, 2018, Aurora
entered into a cannabis supply agreement with Shoppers Drug Mart Inc.
(“
SDM
”). Under the terms of the agreement, Aurora shall sell cannabis
products to SDM after SDM receives all applicable regulatory approvals to sell
such cannabis products under the ACMPR or its successor legislation, in accordance with purchase orders delivered by SDM to Aurora from
time to time. SDM is not obligated to purchase any specific amount of cannabis.
In the event SDM does not receive regulatory approval to sell cannabis products,
Aurora will sell cannabis products to other purchasers.
F-8
Collaboration Agreement with Heinrich Klenk GmbH &
Co.
On May 28, 2018, Aurora, through
its wholly owned subsidiary Pedanios, has signed a collaboration agreement with
Heinrich Klenk GmbH & Co. KG (“
Klenk
”), one of Europe’s largest
medicinal plant companies. Klenk, whose products are carried in over 25,000
pharmacies throughout Germany and Europe, has been importing, exporting, and
processing medicinal plants and herbal raw materials for the pharmaceutical
industry for over 90 years.
Under the terms of the agreement,
Aurora has launched a new cannabis brand in Germany called “Cannabis Klenk”
which is produced in Canada, imported by Pedanios, and sold to German pharmacies
through Klenk’s existing and wide-reaching pharmaceutical wholesale distribution
network.
Binding Term Sheet with Anandia Laboratories Inc.
On June 12, 2018, Aurora signed a
binding term sheet under which Aurora intends to acquire all of the issued and
outstanding common shares of Anandia Laboratories Inc. (“
Anandia
”), a
privately held company, in an all share transaction valued at approximately $115
million on a fully diluted basis. Aurora will purchase 100% of the issued and
outstanding common shares from Anandia’s shareholders in exchange for Aurora
Shares. In addition, each Aurora Share will also be accompanied with a warrant
exercisable for 1/2 of an Aurora Share at an exercise price equal to the issue
price plus 10% with a term of 5 years. The parties intend to complete the
transaction by way of a plan of arrangement under the
Business Corporations
Act
(British Columbia).
Anandia’s business includes
analytical testing services including potency, pesticides, microbes and
terpenes. Anandia’s intellectual property includes the rights to a number of key
genes in the cannabinoid pathway, as well as patents pending for genetic
markers.
Investment in Choom Holdings Inc.
On June 18, 2018, Aurora
announced the closing of a $7 million investment in Choom Holdings Inc.
(“Choom”), a reporting issuer trading on the CSE that is focused on the retail,
supply and branding of cannabis for recreational consumers. Pursuant to a
private placement whereby Choom issued 14,225,352 common shares of Choom at
$0.71 per Choom common share for gross proceeds of $10.1 million, Aurora
subscribed for and received 9,859,155 Choom common shares.
DOCUMENTS INCORPORATED BY REFERENCE
Information has been
incorporated by reference in this Circular from documents filed with securities
commissions or similar authorities in Canada.
Copies of the documents
incorporated herein by reference may be obtained from the Corporate Secretary of
Aurora Cannabis Inc., 900 – 510 Seymour Street, Vancouver, British Columbia,
Canada, V6B 1V5, Telephone: 1-844-601-2448. These documents are also available
under Aurora’s profile on SEDAR, which can be accessed online at
www.sedar.com.
The following documents, filed by
Aurora with the various securities commissions or similar authorities in the
provinces of Canada, are specifically incorporated by reference into and form an
integral part of this Circular:
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the annual information form of Aurora for the year ended
June 30, 2017 dated September 25, 2017 (the “
Annual Information
Form
”);
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the audited consolidated financial statements of Aurora,
and the notes thereto for the years ended June 30, 2017 and 2016, together
with the auditors’ report thereon;
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the management’s discussion and analysis of financial
condition and results of operations for the year ended June 30, 2017;
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F-9
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the unaudited condensed interim consolidated financial
statements of Aurora for the three and nine months ended March 31, 2018
and 2017, and the notes thereto;
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the management’s discussion and analysis of financial
condition and results of operations for the three and nine months ended
March 31, 2018;
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the management information circular of Aurora dated
October 2, 2017 distributed in connection with Aurora’s annual and special
meeting of shareholders to be held on November 13, 2017;
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the material change report dated July 10, 2017 regarding
the receipt of conditional approval to list on the TSX;
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the material change report dated July 12, 2017 regarding
passing the first stage of German domestic production tender application
process to become a licensed producer of medical cannabis in Germany;
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the material change report dated July 13, 2017 regarding
hosting an Australian delegation led by the Minister of Agriculture and
Minister of Regional Development;
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the material change report dated July 18, 2017 regarding
entering a technical services agreement with Cann Group Limited (“
Cann
Group
”);
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the material change report dated July 21, 2017 regarding
the listing and trading of the Aurora Shares on the TSX;
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the material change report dated July 24, 2017 regarding
ringing the bell at start of trading on the TSX;
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the material change report dated July 31, 2017 regarding
the proposed strategic investment in Hempco;
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the material change report dated July 31, 2017 regarding
the debenture conversion by Radient Technologies Inc. (“
Radient
”);
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the material change report dated August 8, 2017 regarding
the appointment of certain Vice Presidents;
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the material change report dated August 31, 2017
regarding an operation update;
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the material change report dated September 18, 2017
regarding the completion of an investment in Hempco;
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the material change report dated September 19, 2017
regarding the receipt of permits required to ship dried cannabis flower
from Canada to Germany;
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|
•
|
the material change report dated September 26, 2017
regarding the announcement of the fourth quarter and financial year end
financial results;
|
|
|
|
|
|
|
•
|
the material change report dated September 28, 2017
regarding entering into a hardware supply agreement with Namaste
Technologies Inc.;
|
|
|
|
|
|
|
•
|
the material change report dated September 29, 2017
regarding the grant of restricted share units and stock options;
|
|
|
|
|
|
|
•
|
the material change report dated October 2, 2017
regarding the acquisition of BCNL and UCI;
|
|
|
|
|
|
|
•
|
the material change report dated October 5, 2017
regarding the launch of Aurora Envoy™, a patent-pending live plant
transporter to target home the home grow market;
|
|
|
|
|
|
|
•
|
the material change report dated October 10, 2017
regarding the announcement of the offering units of Aurora;
|
|
|
|
|
|
|
•
|
the material change report dated October 10, 2017
regarding the upsize of the offering of units of Aurora;
|
F-10
|
|
•
|
the material change report dated October 16, 2017
regarding a private placement of units untaken concurrently with a public
offering of units;
|
|
|
|
|
|
|
•
|
the material change report dated October 23, 2017
regarding the extension towards finalizing an agreement with Radient;
|
|
|
|
|
|
|
•
|
the material change report dated November 2, 2017
regarding the completion of a $69 million unit offering and $6 million
concurrent private placement;
|
|
|
|
|
|
|
•
|
the material change report dated November 6, 2017
regarding the signing of a master services agreement and an investor
rights agreement with Radient;
|
|
|
|
|
|
|
•
|
the material change report dated November 6, 2017
regarding the start of vaporizer sales through Aurora’s website;
|
|
|
|
|
|
|
•
|
the material change report dated November 7, 2017
regarding the conversion of the balance of a $25 million debenture;
|
|
|
|
|
|
|
•
|
the material change report dated November 7, 2017
regarding the start of vaporizer sales through Aurora’s website;
|
|
|
|
|
|
|
•
|
the material change report dated November 9, 2017
regarding Aurora’s Q1 fiscal 2018 results;
|
|
|
|
|
|
|
•
|
the material change report dated November 9, 2017
regarding the approval by Hempco shareholders of Aurora’s investment;
|
|
|
|
|
|
|
•
|
the material change report dated November 14, 2017
announcing the 2017 annual general meeting results;
|
|
|
|
|
|
|
•
|
the material change report dated November 14, 2017
regarding the submission of a proposal to the CanniMed board;
|
|
|
|
|
|
|
•
|
the material change report dated November 15, 2017
regarding the acceleration of a warrant expiry date for anticipated
proceeds of $50.8 million;
|
|
|
|
|
|
|
•
|
the material change report dated November 16, 2017
announcing a $100 million financing;
|
|
|
|
|
|
|
•
|
the material change report dated November 16, 2017
regarding the conversion of the remaining balance of a $75 million
debenture;
|
|
|
|
|
|
|
•
|
the material change report dated November 20, 2017
announcing Aurora’s intention to launch a take-over bid for CanniMed;
|
|
|
|
|
|
|
•
|
the material change report dated November 29, 2017
announcing that Aurora launched a take-over bid for CanniMed;
|
|
|
|
|
|
|
•
|
the material change report dated November 29, 2017
announcing completion of a $115 million financing;
|
|
|
|
|
|
|
•
|
the material change report dated January 5, 2018
announcing a $200 million bought-deal offering;
|
|
|
|
|
|
|
•
|
the amended and restated press release dated January 12,
2018 prepared in connection with orders by certain securities regulators
that Aurora provide additional information in respect of the launch of the
take-over bid for CanniMed;
|
|
|
|
|
|
|
•
|
the material change report dated January 26, 2018
announcing that Aurora and CanniMed entered into a support agreement
whereby the CanniMed board of directors and the special committee of the
CanniMed board have agreed to support a new offer made by Aurora for the
acquisition of all of the issued and outstanding shares of CanniMed not
owned by Aurora;
|
|
|
|
|
|
|
•
|
the material change report dated February 8, 2018
announcing Aurora and Alcanna investment to develop western Canadian
retail cannabis business;
|
F-11
|
|
•
|
the material change report dated February 16, 2018
announcing the filing of a Notice of Variation to the CanniMed take-over
bid;
|
|
|
|
|
|
|
•
|
the management information circular dated December 8,
2017, in respect of shareholder approval for the Aurora Shares to be
issued by Aurora pursuant to the take-over bid for CanniMed, excluding
CanniMed’s interim condensed consolidated financial statements and related
management discussion and analysis as at (Q1) January 31, 2017, (Q2) April
30, 2017 and (Q3) July 31, 2017 filed on SEDAR on March 16, 2017, June 12,
2017 and September 11, 2017, respectively, and CanniMed’s audited
consolidated financial statements for the year ended October 31, 2017,
together with the notes thereto and the independent auditor’s report
thereon, as well as Aurora’s unaudited pro forma consolidated financial
statements attached thereto as Appendix “C”;
|
|
|
|
|
|
|
•
|
the material change report dated March 19, 2018
announcing Aurora’s success to purchase all of the issued and outstanding
common shares of CanniMed;
|
|
|
|
|
|
|
•
|
the business acquisition report dated April 30, 2018 in
connection with Aurora’s completion of the acquisition of common shares of
CanniMed; and
|
|
|
|
|
|
|
•
|
the material change report dated May 24, 2018 announcing
the entering into of an arrangement agreement, as amended, with MedReleaf
pursuant to which Aurora agreed to acquire all of the issued and
outstanding common shares of MedReleaf by way of a statutory plan of
arrangement.
|
Material change reports (other
than confidential reports), business acquisition reports, annual financial
statements, interim financial statements, the associated management’s discussion
and analysis of financial condition and results of operations and all other
documents of the type referred to in section 11.1 of Form 44-101F1 of National
Instrument 44-101 –
Short Form Prospectus Distributions
to be
incorporated by reference, filed by Aurora with a securities commission or
similar regulatory authority in Canada after the date of this Circular and
before the Meeting, will be deemed to be incorporated by reference into this
Circular. The documents incorporated or deemed to be incorporated herein by
reference contain meaningful and material information relating to Aurora and
readers should review all information contained in this Circular and the
documents incorporated or deemed to be incorporated by reference herein.
Any statement contained in a
document incorporated or deemed to be incorporated by reference herein will be
deemed to be modified or superseded for the purposes of this Circular to the
extent that a statement contained in this Circular or in any subsequently filed
document that also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
will not constitute a part of this Circular, except as so modified or
superseded. The modifying or superseding statement need not state that it has
modified or superseded a prior statement or include any other information set
forth in the statement or document that it modifies or supersedes. The making of
such a modifying or superseding statement will not be deemed an admission for
any purpose that the modified or superseded statement, when made, constituted a
misrepresentation, an untrue statement of a material fact or an omission to
state a material fact that is required to be stated or that is necessary to make
a statement not misleading in light of the circumstances in which it was
made.
Copies of the documents
incorporated herein by reference may also be obtained on request without charge
from the Corporate Secretary of Aurora Cannabis Inc., Suite 900, 510 Seymour
Street, Vancouver, British Columbia, V6B 1V5, Telephone: 1-844-601-2448.
F-12
DIRECTORS AND OFFICERS
The following table sets forth
information regarding our directors and executive officers. Each of the
directors is elected to hold office until the next annual meeting of Aurora or
until a successor is duly elected or appointed.
|
Name, Province or State
|
|
|
Date of
|
|
Principal Occupation Within the
|
|
and Country of Residence
|
Positions with Aurora
|
|
Appointment
|
|
Past Five Years
(1)
|
|
|
|
|
|
|
|
Michael Singer
(2)(3)(4)
Montreal, Quebec
Canada
|
Chairman of the Board and Director
|
|
May 20, 2016
|
|
Chairman of the Board and Director of Aurora; Chartered
Professional Accountant (CPA, CGA), Consultant and Entrepreneur; CFO of
Clementia Pharmaceuticals Inc. since May 2015; CFO of Bedrocan Cannabis
Corp. from May 2014 to June 2015; and CFO of Thallion Pharmaceuticals Inc.
from March 2007 to August 2013.
|
|
|
|
|
|
|
|
Terry Booth
(4)
Edmonton,
Alberta
Canada
|
Chief Executive Officer and Director
|
|
December 9, 2014
|
|
Chief Executive Officer and Director of Aurora; President
and part owner of Superior Safety Codes Inc.
|
|
|
|
|
|
|
|
Steve Dobler
(3)
Calgary,
Alberta
Canada
|
President and Director
|
|
December 9, 2014
|
|
President and Director of Aurora; Professional Engineer;
Vice President and part owner of Superior Safety Codes Inc.; President of
ICC Enterprises Corp. since May 2002.
|
|
|
|
|
|
|
|
Jason R.B. Dyck
(2)(4)
Sherwood
Park, Alberta
Canada
|
Director
|
|
March 9, 2015
|
|
Director of Aurora; Professor, Department of Pediatrics,
University of Alberta since July 1999; and Vice- President, Metabolic
Modulators Research Ltd. since July 1999.
|
|
|
|
|
|
|
|
Adam K. Szweras
(2)(3)(4)
Toronto, Ontario
Canada
|
Director
|
|
August 10, 2015
|
|
Director of Aurora; Barrister & Solicitor; Partner at
Fogler, Rubinoff LLP since February 2006; and Chairman of Foundation
Markets Inc. since December 2005.
|
|
|
|
|
|
|
|
Diane Jang
Director
British Columbia,
Canada
|
Director
|
|
November 13, 2017
|
|
Director of Aurora; Business Consultant; President,
Sunrise Soya Foods Inc. (from October 2015 to December 2016; General
Manager, Dairy Alternatives, Earth’s Own Food Company Inc. from May 2008
to 2015; General Manager, International, SoyaWorld Inc. from 2006 to 2008;
Director of Sales, SoyaWorld Inc., from 1998 to 2006; Sales and Marketing
Manager, Sunrise Soya Foods, from 1992 to 1998.
|
F-13
|
Name, Province or State
|
|
|
Date of
|
|
Principal Occupation Within the
|
|
and Country of Residence
|
Positions with Aurora
|
|
Appointment
|
|
Past Five Years
(1)
|
|
|
|
|
|
|
|
Glen Ibbott
Vancouver,
British Columbia
Canada
|
Chief Financial Officer
|
|
May 8, 2017
|
|
Chief Financial Officer of Aurora; Chartered Professional
Accountant (CPA, CA) and Certified Public Accountant; CFO of QLT Inc. from
January 2015 to April 2017; Vice President of Finance of Nordion Inc.
August 2010 to Dec 2014.
|
|
|
|
|
|
|
|
Cameron Battley
Toronto, Ontario
Canada
|
Chief Corporate Officer
|
|
November 7, 2016
|
|
Chief Corporate Officer of Aurora; President of Health
Strategy Group Inc. from January 1998 to March 2016.
|
|
|
|
|
|
|
|
Allan Cleiren
Edmonton, Alberta
Canada
|
Chief Operating Officer
|
|
May 22, 2017
|
|
Chief Operating Officer of Aurora; Chartered Professional
Accountant (CPA, CA); COO of Jardine Lloyd Thompson Canada Inc. from June
2016 to June 2017; Executive Vice- President of Universal Rail Systems
Inc., from April 2012 to February 2016.
|
|
|
|
|
|
|
|
Neil Belot
Vancouver, British
Columbia Canada
|
Chief Global Business Development Officer
|
|
March 21, 2017
|
|
Chief Global Business Development Officer of Aurora;
Chief Brand Officer at Aurora from September 8, 2015 to March 20, 2017;
Executive Director of Canadian Medical Cannabis Industry Association from
November 2014 to September 2015; Gas Portfolio & Energy Services
Manager of Housing Services Corp. from September 2012 to September 2014.
|
|
|
|
|
|
|
|
Darryl Vleeming
Edmonton, Alberta
Canada
|
Chief Information Officer
|
|
November 2, 2017
|
|
Chief Information Officer of Aurora; Vice-President, IS
and Chief Information Officer at Capital Power Corporation (2013 to 2017)
|
|
|
|
|
|
|
|
Nilda Rivera
Vancouver,
British Columbia
Canada
|
Vice President, Finance
Corporate Secretary
|
|
August 1, 2017
September 8, 2015
|
|
Vice President, Finance of Aurora; Controller of Aurora
from August 2015 to July 31, 2017; and CFO of Avarone Metals Inc. from
June 2010 to August 2015.
|
|
|
|
|
|
|
|
Jillian Swainson
Edmonton, Alberta
Canada
|
Senior Vice President and General Counsel
|
|
January 15, 2018
|
|
Senior Vice President and General Counsel of Aurora; and
Partner at Brownlee LLP
|
|
|
|
|
|
|
|
Andre Jerome
Lachute, Quebec
Canada
|
Senior Vice President, Business Integration
|
|
February 22, 2018
|
|
Senior Vice President, Business Integration of Aurora;
CEO and Co-Founder of H2 Biopharma Inc from September 2014 to February
2018
|
F-14
|
Name, Province or State
|
|
|
Date of
|
|
Principal Occupation Within the
|
|
and Country of Residence
|
Positions with Aurora
|
|
Appointment
|
|
Past Five Years
(1)
|
|
|
|
|
|
|
|
Debra Wilson
Edmonton, Alberta
Canada
|
Vice President, Human Resources
|
|
June 22, 2017
|
|
Vice President, Human Resources of Aurora; Instructor at
Northern Alberta Institute of Technology, August 2016 to July 2017;
Director of HR of Universal Rail from October 2013 to March 2016; VP of HR
& OD of Alberta Pensions Services from January 2011 to October 2016.
|
|
|
|
|
|
|
|
Nick Whitehead
Vancouver, British
Columbia
Canada
|
Vice President, Market Development
|
|
August 1, 2017
|
|
Vice President, Market Development of Aurora; Manager of
Public Affairs at Aurora from January 2016 to July 2017; Director of
Organizing for Sensible BC Campaign January 2013 to January 2016; Junior
Transportation Planner at McCormick-Rankin Corporation May 2012 to
September 2012.
|
|
|
|
|
|
|
|
Dieter MacPherson
Cochrane, Alberta
Canada
|
Vice President, Production
|
|
August 1, 2017
|
|
Vice President, Production of Aurora; Manager of
Production at Aurora from February 2017 to July 31, 2017; General Manager
at Trees Dispensary from February 2015 to January 2017; Executive Director
at Victoria Cannabis Buyers Club from March 2013 to February 2015; Shift
Manager at Victoria Cannabis Buyers Club from January 2012 to March 2013.
|
Notes:
|
(1)
|
The information as to the principal occupation, business
or employment is not within the knowledge of Aurora and has been furnished
by the respective director.
|
|
(2)
|
Member of the Audit Committee.
|
|
(3)
|
Member of the Compensation Committee
|
|
(4)
|
Member of the Nominating and Corporate Governance
Committee.
|
DIVIDENDS
Aurora has not declared nor paid
any cash dividends on any of its issued shares since its inception. Other than
requirements imposed under applicable corporate law, there are no other
restrictions on Aurora’s ability to pay dividends under Aurora’s constating
documents. Aurora has not paid any dividends on the Aurora Shares since its
incorporation. Aurora has no present intention of paying dividends on the Aurora
Shares, as it anticipates that all available funds will be invested to finance
the growth of its business and, when appropriate, retire debt.
F-15
PRIOR SALES
The following table sets forth
the issuance of Aurora Shares and securities convertible into Aurora Shares
during the 12-period prior to the date of this Circular:
|
Date of Issuance
|
Number of Securities Issued
|
|
Issue/Exercise Price
|
|
August 8, 2017
|
1,305,000 Aurora
Options
|
|
$ 2.39
|
|
September 29, 2017
|
3,130,000 Aurora Options
|
|
$ 2.76
|
|
November 13, 2017
|
2,865,000 Aurora
Options
|
|
$ 4.64
|
|
December 7, 2017
|
50,000 Aurora Options
|
|
$ 7.00
|
|
December 14, 2017
|
850,000 Aurora
Options
|
|
$ 7.00
|
|
December 15, 2017
|
100,000 Aurora Options
|
|
$ 7.10
|
|
December 12, 2017
|
350,000 Aurora
Options
|
|
$ 7.03
|
|
January 2, 2018
|
1,075,000 Aurora Options
|
|
$ 9.60
|
|
January 10, 2018
|
400,000 Aurora
Options
|
|
$13.63
|
|
January 12, 2018
|
200,000 Aurora Options
|
|
$12.24
|
|
January 15, 2018
|
650,000 Aurora
Options
|
|
$10.32
|
|
January 22, 2018
|
50,000 Aurora Options
|
|
$10.32
|
|
January 31, 2018
|
150,000 Aurora
Options
|
|
$11.50
|
|
February 2, 2018
|
100,000 Aurora Options
|
|
$10.22
|
|
February 7, 2018
|
1,750,000 Aurora
Options
|
|
$11.53
|
|
February 19, 2018
|
250,000 Aurora Options
|
|
$10.13
|
|
February 26, 2018
|
250,000 Aurora
Options
|
|
$10.57
|
|
March 5, 2018
|
150,000 Aurora Options
|
|
$10.63
|
|
March 7, 2018
|
150,000 Aurora
Options
|
|
$11.74
|
|
March 13, 2018
|
125,000 Aurora Options
|
|
$11.65
|
|
March 19, 2018
|
325,000 Aurora
Options
|
|
$10.95
|
|
March 21, 2018
|
100,000 Aurora Options
|
|
$10.30
|
|
March 28, 2018
|
50,000 Aurora
Options
|
|
$ 9.53
|
|
March 29, 2018
|
25,000 Aurora Options
|
|
$ 9.03
|
|
April 3, 2018
|
100,000 Aurora
Options
|
|
$ 9.07
|
|
April 9, 2018
|
250,000 Aurora Options
|
|
$ 8.10
|
|
April 12, 2018
|
100,000 Aurora
Options
|
|
$ 7.93
|
|
April 17, 2018
|
50,000 Aurora Options
|
|
$ 8.93
|
|
April 23, 2018
|
100,000 Aurora
Options
|
|
$ 8.61
|
|
April 24, 2018
|
50,000 Aurora Options
|
|
$ 8.02
|
|
April 25, 2018
|
100,000 Aurora
Options
|
|
$ 8.24
|
|
April 27, 2018
|
100,000 Aurora Options
|
|
$ 7.72
|
|
May 3, 2018
|
350,000 Aurora
Options
|
|
$ 7.95
|
|
May 7, 2018
|
50,000 Aurora Options
|
|
$ 8.03
|
|
May 10, 2018
|
100,000 Aurora
Options
|
|
$ 8.03
|
|
May 11, 2018
|
175,000 Aurora Options
|
|
$ 7.96
|
|
May 14, 2018
|
455,000 Aurora
Options
|
|
$ 8.07
|
|
May 23, 2018
|
275,000 Aurora Options
|
|
$ 8.38
|
|
May 28, 2018
|
125,000 Aurora
Options
|
|
$ 8.02
|
|
May 30, 2018
|
50,000 Aurora Options
|
|
$ 8.14
|
|
May 31, 2018
|
150,000 Aurora
Options
|
|
$ 8.18
|
|
June 5, 2018
|
250,000 Aurora Options
|
|
$ 8.71
|
|
October 10, 2017
|
582,890 Aurora
Warrants
(3)
|
|
$ 3.00
|
|
November 9, 2017
|
69,946 Aurora Warrants
(3)
|
|
$ 3.00
|
|
November 27, 2017
|
93,262 Aurora
Warrants
(3)
|
|
$ 3.00
|
|
December 1, 2017
|
93,262 Aurora Warrants
(3)
|
|
$ 3.00
|
F-16
|
Date of Issuance
|
Number of Securities Issued
|
|
Issue/Exercise Price
|
|
December 14, 2017
|
93,262 Aurora Warrants
(3)
|
|
$ 3.00
|
|
September 29, 2017
|
89,107 Aurora Warrants
(5)
|
|
$ 2.81
|
|
November 2, 2017
|
25,000,000 Aurora Warrants
(6)
|
|
$ 4.00
|
|
November 2, 2017
|
1,333,980 Aurora Warrants
|
|
$ 3.00
|
|
January 12, 2018
|
17,692,308 Aurora Debentures
|
|
$ 6.50
|
|
March 9, 2018
|
17,624,521 Aurora Debentures
|
|
$13.05
|
|
June 29, 2017
|
4,166 Aurora Shares
(1)
|
|
$ 1.30
|
|
July 11, 2017
|
60,000 Aurora Shares
(1)
|
|
$ 0.30
|
|
July 17, 2017
|
150 Aurora Shares
(1)
|
|
$ 1.30
|
|
July 21, 2017
|
40,000 Aurora Shares
(1)
|
|
$ 0.30
|
|
July 24, 2017
|
175,000 Aurora Shares
(1)
|
|
$ 2.25
|
|
July 31, 2017
|
43,749 Aurora Shares
(1)
|
|
$ 0.66
|
|
August 14, 2017
|
52,600 Aurora Shares
(1)
|
|
$ 0.30
|
|
August 14, 2017
|
250 Aurora Shares
(1)
|
|
$ 1.30
|
|
August 16, 2017
|
100,000 Aurora Shares
(1)
|
|
$ 0.30
|
|
August 21, 2017
|
14,584 Aurora Shares
(1)
|
|
$ 0.66
|
|
August 29, 2017
|
12,498 Aurora Shares
(1)
|
|
$ 0.30
|
|
August 30, 2017
|
4,166 Aurora Shares
(1)
|
|
$ 1.30
|
|
September 8, 2017
|
58,333 Aurora Shares
(1)
|
|
$ 0.66
|
|
September 18, 2017
|
250 Aurora Shares
(1)
|
|
$ 1.30
|
|
September 20, 2017
|
5,000 Aurora Shares
(1)
|
|
$ 0.30
|
|
September 20, 2017
|
17,000 Aurora Shares
(1)
|
|
$ 0.34
|
|
September 28, 2017
|
100,000 Aurora Shares
(1)
|
|
$ 0.46
|
|
September 28, 2017
|
13,500 Aurora Shares
(1)
|
|
$ 1.30
|
|
October 3, 2017
|
4,166 Aurora Shares
(1)
|
|
$ 1.30
|
|
October 5, 2017
|
31,250 Aurora Shares
(1)
|
|
$ 2.49
|
|
October 10, 2017
|
17,499 Aurora Shares
(1)
|
|
$ 0.30
|
|
October 10, 2017
|
24,999 Aurora Shares
(1)
|
|
$ 1.30
|
|
October 12, 2017
|
4,166 Aurora Shares
(1)
|
|
$ 1.30
|
|
October 25, 2017
|
7,500 Aurora Shares
(1)
|
|
$ 1.30
|
|
November 3, 2017
|
3,000 Aurora Shares
(1)
|
|
$ 1.30
|
|
November 14, 2017
|
12,500 Aurora Shares
(1)
|
|
$ 0.30
|
|
November 16, 2017
|
350,000 Aurora Shares
(1)
|
|
$ 2.18
|
|
November 16, 2017
|
350,000 Aurora Shares
(1)
|
|
$ 2.25
|
|
November 16, 2017
|
500 Aurora Shares
(1)
|
|
$ 1.30
|
|
November 17, 2017
|
14,583 Aurora Shares
(1)
|
|
$ 0.66
|
|
November 17, 2017
|
2,083 Aurora Shares
(1)
|
|
$ 0.30
|
|
November 17, 2017
|
16,666 Aurora Shares
(1)
|
|
$ 2.49
|
|
November 22, 2017
|
47,916 Aurora Shares
(1)
|
|
$ 2.49
|
|
November 28, 2017
|
2,000 Aurora Shares
(1)
|
|
$ 1.30
|
|
November 30, 2017
|
100,000 Aurora Shares
(1)
|
|
$ 0.46
|
|
November 30, 2017
|
100,000 Aurora Shares
(1)
|
|
$ 0.58
|
|
November 30, 2017
|
187,500 Aurora Shares
(1)
|
|
$ 2.56
|
|
November 30, 2017
|
20,833 Aurora Shares
(1)
|
|
$ 2.39
|
|
November 30, 2017
|
23,551 Aurora Shares
(1)
|
|
$ 0.30
|
|
December 11, 2017
|
33,332 Aurora Shares
(1)
|
|
$ 1.30
|
|
December 18, 2017
|
49,666 Aurora Shares
(1)
|
|
$ 1.30
|
|
December 19, 2017
|
2,000 Aurora Shares
(1)
|
|
$ 1.30
|
|
December 28, 2017
|
200,000 Aurora Shares
(1)
|
|
$ 2.49
|
|
December 28, 2017
|
9,800 Aurora Shares
(1)
|
|
$ 2.76
|
|
December 28, 2017
|
9,800 Aurora Shares
(1)
|
|
$ 2.76
|
F-17
|
Date of Issuance
|
Number of Securities Issued
|
|
Issue/Exercise Price
|
|
January 3, 2018
|
4,166 Aurora
Shares
(1)
|
|
$ 2.76
|
|
January 4, 2018
|
30,000 Aurora Shares
(1)
|
|
$ 0.30
|
|
January 4, 2018
|
4,168 Aurora
Shares
(1)
|
|
$ 1.30
|
|
January 8, 2018
|
22,500 Aurora Shares
(1)
|
|
$ 0.30
|
|
January 8, 2018
|
4,168 Aurora
Shares
(1)
|
|
$ 1.30
|
|
January 8, 2018
|
14,747 Aurora Shares
(1)
|
|
$ 0.30
|
|
January 9, 2018
|
20,000 Aurora
Shares
(1)
|
|
$ 2.76
|
|
January 9, 2018
|
25,500 Aurora Shares
(1)
|
|
$ 1.30
|
|
January 10, 2018
|
3,333 Aurora
Shares
(1)
|
|
$ 2.76
|
|
January 16, 2018
|
34,288 Aurora Shares
(1)
|
|
$ 0.30
|
|
January 17, 2018
|
1,800 Aurora
Shares
(1)
|
|
$ 1.30
|
|
January 18, 2018
|
18,747 Aurora Shares
(1)
|
|
$ 0.30
|
|
January 18, 2018
|
80,000 Aurora
Shares
(1)
|
|
$ 0.55
|
|
January 24, 2018
|
5,833 Aurora Shares
(1)
|
|
$ 0.30
|
|
January 24, 2018
|
8,334 Aurora
Shares
(1)
|
|
$ 1.30
|
|
January 24, 2018
|
3,333 Aurora Shares
(1)
|
|
$ 2.76
|
|
January 24, 2018
|
11,832 Aurora
Shares
(1)
|
|
$ 1.30
|
|
February 14, 2018
|
14,583 Aurora Shares
(1)
|
|
$ 0.66
|
|
February 14, 2018
|
22,500 Aurora
Shares
(1)
|
|
$ 0.30
|
|
February 14, 2018
|
20,833 Aurora Shares
(1)
|
|
$ 1.30
|
|
February 15, 2018
|
5,000 Aurora
Shares
(1)
|
|
$ 2.76
|
|
February 15, 2018
|
12,500 Aurora Shares
(1)
|
|
$ 4.64
|
|
February 22, 2018
|
2,000 Aurora
Shares
(1)
|
|
$ 0.34
|
|
February 22, 2018
|
50,000 Aurora Shares
(1)
|
|
$ 0.30
|
|
March 1, 2018
|
31,250 Aurora
Shares
(1)
|
|
$ 2.49
|
|
March 1, 2018
|
4,166 Aurora Shares
(1)
|
|
$ 2.76
|
|
March 7, 2018
|
8,334 Aurora
Shares
(1)
|
|
$ 2.49
|
|
March 9, 2018
|
4,166 Aurora Shares
(1)
|
|
$ 4.64
|
|
March 13, 2018
|
3,474 Aurora
Shares
(1)
|
|
$ 0.30
|
|
March 13, 2018
|
100,000 Aurora Shares
(1)
|
|
$ 0.46
|
|
March 13, 2018
|
22,082 Aurora
Shares
(1)
|
|
$ 2.76
|
|
March 14, 2018
|
59,782 Aurora Shares
(1)
|
|
$0.295
|
|
March 14, 2018
|
181,666 Aurora
Shares
(1)
|
|
$ 0.30
|
|
March 14, 2018
|
18,334 Aurora Shares
(1)
|
|
$ 2.25
|
|
March 14, 2018
|
35,833 Aurora
Shares
(1)
|
|
$ 2.39
|
|
March 14, 2018
|
187,500 Aurora Shares
(1)
|
|
$ 2.49
|
|
March 14, 2018
|
62,500 Aurora
Shares
(1)
|
|
$ 2.56
|
|
March 14, 2018
|
27,083 Aurora Shares
(1)
|
|
$ 2.76
|
|
March 15, 2018
|
5,833 Aurora
Shares
(1)
|
|
$ 0.30
|
|
March 15, 2018
|
17,833 Aurora Shares
(1)
|
|
$ 1.30
|
|
March 16, 2018
|
20,000 Aurora
Shares
(1)
|
|
$ 1.30
|
|
March 20, 2018
|
45,833 Aurora Shares
(1)
|
|
$ 1.30
|
|
March 20, 2018
|
26,667 Aurora
Shares
(1)
|
|
$ 2.39
|
|
March 20, 2018
|
25,000 Aurora Shares
(1)
|
|
$ 4.64
|
|
March 22, 2018
|
8,333 Aurora
Shares
(1)
|
|
$ 4.64
|
|
March 23, 2018
|
30,000 Aurora Shares
(1)
|
|
$ 1.30
|
|
March 23, 2018
|
8,000 Aurora
Shares
(1)
|
|
$ 7.03
|
|
March 26, 2018
|
350,000 Aurora Shares
(1)
|
|
$ 0.40
|
|
April 3, 2018
|
12,504 Aurora
Shares
(1)
|
|
$ 1.30
|
|
April 4, 2018
|
18,750 Aurora Shares
(1)
|
|
$ 2.76
|
|
April 11, 2018
|
13,333 Aurora
Shares
(1)
|
|
$ 2.39
|
F-18
|
Date of Issuance
|
Number of Securities Issued
|
|
Issue/Exercise Price
|
|
April 11, 2018
|
8,333 Aurora
Shares
(1)
|
|
$ 2.76
|
|
April 12, 2018
|
16,668 Aurora Shares
(1)
|
|
$ 1.30
|
|
April 20, 2018
|
4,416 Aurora
Shares
(1)
|
|
$ 2.76
|
|
April 27, 2018
|
6,000 Aurora Shares
(1)
|
|
$ 2.76
|
|
May 3, 2018
|
2,000 Aurora
Shares
(1)
|
|
$ 0.34
|
|
May 3, 2018
|
4,166 Aurora Shares
(1)
|
|
$ 4.64
|
|
May 4, 2018
|
5,836 Aurora
Shares
(1)
|
|
$ 0.30
|
|
May 4, 2018
|
8,334 Aurora Shares
(1)
|
|
$ 1.30
|
|
May 4, 2018
|
3,333 Aurora
Shares
(1)
|
|
$ 2.76
|
|
May 11, 2018
|
2,000 Aurora Shares
(1)
|
|
$ 0.34
|
|
May 14, 2018
|
8,500 Aurora
Shares
(1)
|
|
$ 1.30
|
|
May 15, 2018
|
50,000 Aurora Shares
(1)
|
|
$ 1.30
|
|
May 15, 2018
|
3,000 Aurora
Shares
(1)
|
|
$ 2.76
|
|
May 16, 2018
|
300 Aurora Shares
(1)
|
|
$ 1.30
|
|
May 16, 2018
|
11,032 Aurora
Shares
(1)
|
|
$ 2.76
|
|
May 18, 2018
|
350,000 Aurora Shares
(1)
|
|
$ 2.25
|
|
May 18, 2018
|
8,333 Aurora
Shares
(1)
|
|
$ 2.76
|
|
May 22, 2018
|
200 Aurora Shares
(1)
|
|
$ 1.30
|
|
May 22, 2018
|
31,250 Aurora
Shares
(1)
|
|
$ 2.49
|
|
May 22, 2018
|
3,333 Aurora Shares
(1)
|
|
$ 2.76
|
|
May 24, 2018
|
2,500 Aurora
Shares
(1)
|
|
$ 2.76
|
|
May 24, 2018
|
4,167 Aurora Shares
(1)
|
|
$ 4.64
|
|
May 25, 2018
|
18,000 Aurora
Shares
(1)
|
|
$ 1.30
|
|
May 28, 2018
|
3,000 Aurora Shares
(1)
|
|
$ 4.64
|
|
May 31, 2018
|
700 Aurora
Shares
(1)
|
|
$ 4.64
|
|
June 1, 2018
|
6,667 Aurora Shares
(1)
|
|
$ 2.39
|
|
June 1, 2018
|
4,166 Aurora
Shares
(1)
|
|
$ 7.03
|
|
June 8, 2018
|
200 Aurora Shares
(1)
|
|
$ 1.30
|
|
June 8, 2018
|
3,000 Aurora
Shares
(1)
|
|
$ 4.64
|
|
June 8, 2018
|
8,333 Aurora Shares
(1)
|
|
$ 2.49
|
|
June 15, 2017
|
10,909 Aurora
Shares
(2)
|
|
$ 0.55
|
|
June 16, 2017
|
20,000 Aurora Shares
(2)
|
|
$ 0.55
|
|
June 19, 2017
|
39,091 Aurora
Shares
(2)
|
|
$ 0.55
|
|
June 20, 2017
|
300,000 Aurora Shares
(2)
|
|
$ 0.55
|
|
June 21, 2017
|
25,609 Aurora
Shares
(2)
|
|
$ 0.55
|
|
June 29, 2017
|
100,000 Aurora Shares
(2)
|
|
$ 0.55
|
|
June 30, 2017
|
25,000 Aurora
Shares
(2)
|
|
$ 0.55
|
|
July 4, 2017
|
123,750 Aurora Shares
(2)
|
|
$ 0.55
|
|
July 6, 2017
|
50,000 Aurora
Shares
(2)
|
|
$ 0.55
|
|
July 25, 2017
|
5,000 Aurora Shares
(2)
|
|
$ 0.55
|
|
August 14, 2017
|
200,000 Aurora
Shares
(2)
|
|
$ 0.50
|
|
August 17, 2017
|
25,000 Aurora Shares
(2)
|
|
$ 0.55
|
|
August 18, 2017
|
25,000 Aurora
Shares
(2)
|
|
$ 0.55
|
|
August 21, 2017
|
25,000 Aurora Shares
(2)
|
|
$ 0.55
|
|
August 22, 2017
|
25,000 Aurora
Shares
(2)
|
|
$ 0.55
|
|
August 31, 2017
|
312,500 Aurora Shares
(2)
|
|
$ 0.55
|
|
September 7, 2017
|
300,000 Aurora
Shares
(2)
|
|
$ 0.50
|
|
September 18, 2017
|
100,000 Aurora Shares
(2)
|
|
$ 0.50
|
|
September 20, 2017
|
17,500 Aurora
Shares
(2)
|
|
$ 0.55
|
|
September 25, 2017
|
62,500 Aurora Shares
(2)
|
|
$ 0.55
|
|
October 6, 2017
|
38,000 Aurora
Shares
(2)
|
|
$ 0.55
|
F-19
|
Date of Issuance
|
Number of Securities Issued
|
|
Issue/Exercise Price
|
|
October 6, 2017
|
8,000 Aurora
Shares
(2)
|
|
$ 3.00
|
|
October 17, 2017
|
12,500 Aurora Shares
(2)
|
|
$ 0.55
|
|
October 17, 2017
|
67,500 Aurora
Shares
(2)
|
|
$ 3.00
|
|
October 23, 2017
|
160,000 Aurora Shares
(2)
|
|
$ 0.50
|
|
November 6, 2017
|
20,850 Aurora
Shares
(2)
|
|
$ 3.00
|
|
November 7, 2017
|
5,500 Aurora Shares
(2)
|
|
$ 3.00
|
|
November 8, 2017
|
1,400,000 Aurora
Shares
(2)
|
|
$ 0.50
|
|
November 8, 2017
|
179,500 Aurora Shares
(2)
|
|
$ 3.00
|
|
November 10, 2017
|
200,000 Aurora
Shares
(2)
|
|
$ 0.50
|
|
November 10, 2017
|
33,600 Aurora Shares
(2)
|
|
$ 3.00
|
|
November 10, 2017
|
59,125 Aurora
Shares
(2)
|
|
$ 0.55
|
|
November 13, 2017
|
144,150 Aurora Shares
(2)
|
|
$ 3.00
|
|
November 13, 2017
|
39,125 Aurora
Shares
(2)
|
|
$ 0.55
|
|
November 16, 2017
|
3,238,397 Aurora Shares
(2)
|
|
$ 3.00
|
|
November 16, 2017
|
20,000 Aurora
Shares
(2)
|
|
$ 0.55
|
|
November 16, 2017
|
168,670 Aurora Shares
(2)
|
|
$ 4.00
|
|
November 17, 2017
|
6,774,101 Aurora
Shares
(2)
|
|
$ 3.00
|
|
November 20, 2017
|
3,000 Aurora Shares
(2)
|
|
$ 4.00
|
|
November 20, 2017
|
473,450 Aurora
Shares
(2)
|
|
$ 3.00
|
|
November 20, 2017
|
175,875 Aurora Shares
(2)
|
|
$ 0.55
|
|
November 21, 2017
|
1,500 Aurora
Shares
(2)
|
|
$ 4.00
|
|
November 21, 2017
|
455,800 Aurora Shares
(2)
|
|
$ 3.00
|
|
November 22, 2017
|
101,900 Aurora
Shares
(2)
|
|
$ 4.00
|
|
November 22, 2017
|
960,451 Aurora Shares
(2)
|
|
$ 3.00
|
|
November 23, 2017
|
299,950 Aurora
Shares
(2)
|
|
$ 3.00
|
|
November 23, 2017
|
83,300 Aurora Shares
(2)
|
|
$ 4.00
|
|
November 24, 2017
|
1,425,096 Aurora
Shares
(2)
|
|
$ 3.00
|
|
November 24, 2017
|
6,500 Aurora Shares
(2)
|
|
$ 4.00
|
|
November 27, 2017
|
857,648 Aurora
Shares
(2)
|
|
$ 3.00
|
|
November 27, 2017
|
1,530 Aurora Shares
(2)
|
|
$ 4.00
|
|
November 28, 2017
|
5,015,850 Aurora
Shares
(2)
|
|
$ 4.00
|
|
November 28, 2017
|
125,000 Aurora Shares
(2)
|
|
$ 0.55
|
|
November 28, 2017
|
1,620,457 Aurora
Shares
(2)
|
|
$ 3.00
|
|
November 28, 2017
|
25,346 Aurora Shares
(2)
|
|
$ 3.00
|
|
November 29, 2017
|
31,250 Aurora
Shares
(2)
|
|
$ 0.55
|
|
November 29, 2017
|
2,000 Aurora Shares
(2)
|
|
$ 4.00
|
|
November 29, 2017
|
213,050 Aurora
Shares
(2)
|
|
$ 3.00
|
|
November 30, 2017
|
2,000 Aurora Shares
(2)
|
|
$ 4.00
|
|
November 30, 2017
|
62,500 Aurora
Shares
(2)
|
|
$ 0.55
|
|
November 30, 2017
|
305,942 Aurora Shares
(2)
|
|
$ 3.00
|
|
December 1, 2017
|
372,942 Aurora
Shares
(2)
|
|
$ 3.00
|
|
December 1, 2017
|
300 Aurora Shares
(2)
|
|
$ 4.00
|
|
December 1, 2017
|
18,750 Aurora
Shares
(2)
|
|
$ 0.55
|
|
December 4, 2017
|
25,000 Aurora Shares
(2)
|
|
$ 3.00
|
|
December 4, 2017
|
117,300 Aurora
Shares
(2)
|
|
$ 4.00
|
|
December 5, 2017
|
500,000 Aurora Shares
(2)
|
|
$ 0.55
|
|
December 6, 2017
|
62,650 Aurora
Shares
(2)
|
|
$ 3.00
|
|
December 6, 2017
|
1,000 Aurora Shares
(2)
|
|
$ 4.00
|
|
December 7, 2017
|
6,750 Aurora
Shares
(2)
|
|
$ 3.00
|
|
December 7, 2017
|
2,000 Aurora Shares
(2)
|
|
$ 4.00
|
|
December 8, 2017
|
97,000 Aurora
Shares
(2)
|
|
$ 3.00
|
F-20
|
Date of Issuance
|
Number of Securities Issued
|
|
Issue/Exercise Price
|
|
December 8, 2017
|
3,000 Aurora
Shares
(2)
|
|
$ 4.00
|
|
December 11, 2017
|
18,750 Aurora Shares
(2)
|
|
$ 0.55
|
|
December 12, 2017
|
1,550 Aurora
Shares
(2)
|
|
$ 4.00
|
|
December 12, 2017
|
103,000 Aurora Shares
(2)
|
|
$ 3.00
|
|
December 13, 2017
|
165,018 Aurora
Shares
(2)
|
|
$ 3.00
|
|
December 13, 2017
|
1,400 Aurora Shares
(2)
|
|
$ 4.00
|
|
December 14, 2017
|
750,000 Aurora
Shares
(2)
|
|
$ 0.55
|
|
December 14, 2017
|
93,262 Aurora Shares
(2)
|
|
$ 3.00
|
|
December 14, 2017
|
125 Aurora
Shares
(2)
|
|
$ 4.00
|
|
December 15, 2017
|
684,871 Aurora Shares
(2)
|
|
$ 3.00
|
|
December 18, 2017
|
4,200,000 Aurora
Shares
(2)
|
|
$ 4.00
|
|
December 20, 2017
|
4,183,000 Aurora Shares
(2)
|
|
$ 4.00
|
|
December 28, 2017
|
76,900 Aurora
Shares
(2)
|
|
$ 4.00
|
|
December 29, 2017
|
1,047,400 Aurora Shares
(2)
|
|
$ 4.00
|
|
January 2, 2018
|
200,000 Aurora
Shares
(2)
|
|
$ 4.00
|
|
January 3, 2018
|
27,500 Aurora Shares
(2)
|
|
$ 0.55
|
|
January 4, 2018
|
266,350 Aurora
Shares
(2)
|
|
$ 4.00
|
|
January 4, 2018
|
190,092 Aurora Shares
(2)
|
|
$ 3.00
|
|
January 8, 2018
|
20,760 Aurora
Shares
(2)
|
|
$ 4.00
|
|
January 8, 2018
|
250,000 Aurora Shares
(2)
|
|
$ 0.55
|
|
January 10, 2018
|
3,500 Aurora
Shares
(2)
|
|
$ 4.00
|
|
January 11, 2018
|
201,365 Aurora Shares
(2)
|
|
$ 4.00
|
|
January 12, 2018
|
25,346 Aurora
Shares
(2)
|
|
$ 3.00
|
|
January 12, 2018
|
150,000 Aurora Shares
(2)
|
|
$ 4.00
|
|
January 16, 2018
|
1,564 Aurora
Shares
(2)
|
|
$ 4.00
|
|
January 18, 2018
|
4,500 Aurora Shares
(2)
|
|
$ 4.00
|
|
January 19, 2018
|
210,225 Aurora
Shares
(2)
|
|
$ 4.00
|
|
January 22, 2018
|
311,210 Aurora Shares
(2)
|
|
$ 4.00
|
|
January 23, 2018
|
100,000 Aurora
Shares
(2)
|
|
$ 4.00
|
|
January 24, 2018
|
54,300 Aurora Shares
(2)
|
|
$ 4.00
|
|
January 25, 2018
|
195,900 Aurora
Shares
(2)
|
|
$ 4.00
|
|
January 26, 2018
|
122,500 Aurora Shares
(2)
|
|
$ 4.00
|
|
January 29, 2018
|
500,000 Aurora
Shares
(2)
|
|
$ 0.55
|
|
January 29, 2018
|
15,000 Aurora Shares
(2)
|
|
$ 4.00
|
|
January 30, 2018
|
80,000 Aurora
Shares
(2)
|
|
$ 4.00
|
|
February 1, 2018
|
4,200 Aurora Shares
(2)
|
|
$ 4.00
|
|
February 14, 2018
|
96,875 Aurora
Shares
(2)
|
|
$ 0.55
|
|
March 2, 2018
|
12 Aurora Shares
(2)
|
|
$ 4.00
|
|
March 15, 2018
|
75,281 Aurora
Shares
(2)
|
|
$ 4.00
|
|
April 4, 2018
|
75,000 Aurora Shares
(2)
|
|
$ 0.55
|
|
May 1, 2018
|
125,000 Aurora
Shares
(2)
|
|
$ 0.55
|
|
May 2, 2018
|
40 Aurora Shares
(2)
|
|
$ 4.00
|
|
May 24, 2018
|
17,050 Aurora
Shares
(2)
|
|
$ 4.00
|
|
June 5, 2018
|
158,330 Aurora Shares
(2)
|
|
$ 4.00
|
|
June 6, 2018
|
71,200 Aurora
Shares
(2)
|
|
$ 4.00
|
|
June 7, 2018
|
20,000 Aurora Shares
(2)
|
|
$ 4.00
|
|
June 15, 2018
|
360 Aurora
Shares
(2)
|
|
$ 4.00
|
|
October 10, 2017
|
1,165,781 Aurora Shares
(3)
|
|
$ 2.25
|
|
November 9, 2017
|
139,893 Aurora
Shares
(3)
|
|
$ 2.25
|
|
November 27, 2017
|
186,525 Aurora Shares
(3)
|
|
$ 2.25
|
|
December 1, 2017
|
186,525 Aurora
Shares
(3)
|
|
$ 2.25
|
F-21
|
Date of Issuance
|
Number of Securities Issued
|
|
Issue/Exercise Price
|
|
December 14, 2017
|
186,525 Aurora Shares
(3)
|
|
$ 2.25
|
|
June 30, 2017
|
45,593 Aurora Shares
(4)
|
|
$ 3.29
|
|
August 25, 2017
|
50,000 Aurora Shares
(4)
|
|
$ 2.00
|
|
September 26, 2017
|
75,000 Aurora Shares
(4)
|
|
$ 2.00
|
|
October 2, 2017
|
100,000 Aurora Shares
(4)
|
|
$ 2.00
|
|
October 4, 2017
|
7,598 Aurora Shares
(4)
|
|
$ 3.29
|
|
October 12, 2017
|
25,000 Aurora Shares
(4)
|
|
$ 2.00
|
|
November 7, 2017
|
57,750 Aurora Shares
(4)
|
|
$ 3.29
|
|
November 7, 2017
|
27,500 Aurora Shares
(4)
|
|
$ 2.00
|
|
November 8, 2017
|
72,948 Aurora Shares
(4)
|
|
$ 3.29
|
|
November 9, 2017
|
60,790 Aurora Shares
(4)
|
|
$ 3.29
|
|
November 10, 2017
|
47,720 Aurora Shares
(4)
|
|
$ 3.29
|
|
November 10, 2017
|
47,500 Aurora Shares
(4)
|
|
$ 2.00
|
|
November 13, 2017
|
100,000 Aurora Shares
(4)
|
|
$ 2.00
|
|
November 13, 2017
|
135,258 Aurora Shares
(4)
|
|
$ 3.29
|
|
November 14, 2017
|
65,500 Aurora Shares
(4)
|
|
$ 2.00
|
|
November 14, 2017
|
767,173 Aurora Shares
(4)
|
|
$ 3.29
|
|
November 15, 2017
|
35,000 Aurora Shares
(4)
|
|
$ 2.00
|
|
November 15, 2017
|
75,987 Aurora Shares
(4)
|
|
$ 3.29
|
|
November 16, 2017
|
304,255 Aurora Shares
(4)
|
|
$ 3.29
|
|
November 16, 2017
|
125,000 Aurora Shares
(4)
|
|
$ 2.00
|
|
November 17, 2017
|
12,500 Aurora Shares
(4)
|
|
$ 2.00
|
|
November 17, 2017
|
3,106,383 Aurora Shares
(4)
|
|
$ 3.29
|
|
November 20, 2017
|
12,500 Aurora Shares
(4)
|
|
$ 2.00
|
|
November 20, 2017
|
1,913,678 Aurora Shares
(4)
|
|
$ 3.29
|
|
November 21, 2017
|
75,000 Aurora Shares
(4)
|
|
$ 2.00
|
|
November 21, 2017
|
37,993 Aurora Shares
(4)
|
|
$ 3.29
|
|
November 22, 2017
|
100,000 Aurora Shares
(4)
|
|
$ 2.00
|
|
November 22, 2017
|
1,327,963 Aurora Shares
(4)
|
|
$ 3.29
|
|
November 23, 2017
|
37,993 Aurora Shares
(4)
|
|
$ 3.29
|
|
November 24, 2017
|
276,595 Aurora Shares
(4)
|
|
$ 3.29
|
|
November 27, 2017
|
12,321,275 Aurora Shares
(4)
|
|
$ 3.29
|
|
November 28, 2017
|
5,000 Aurora Shares
(4)
|
|
$ 2.00
|
|
November 28, 2017
|
95,136 Aurora Shares
(4)
|
|
$ 3.29
|
|
November 29, 2017
|
178,419 Aurora Shares
(4)
|
|
$ 3.29
|
|
November 30, 2017
|
9,118 Aurora Shares
(4)
|
|
$ 3.29
|
|
December 1, 2017
|
174,500 Aurora Shares
(4)
|
|
$ 2.00
|
|
December 1, 2017
|
3,951 Aurora Shares
(4)
|
|
$ 3.29
|
|
December 4, 2017
|
75,000 Aurora Shares
(4)
|
|
$ 2.00
|
|
December 4, 2017
|
30,395 Aurora Shares
(4)
|
|
$ 3.29
|
|
December 6, 2017
|
30,395 Aurora Shares
(4)
|
|
$ 3.29
|
|
December 8, 2017
|
497,500 Aurora Shares
(4)
|
|
$ 2.00
|
|
December 11, 2017
|
707,500 Aurora Shares
(4)
|
|
$ 2.00
|
|
December 14, 2017
|
47,416 Aurora Shares
(4)
|
|
$ 3.29
|
|
December 15, 2017
|
340,425 Aurora Shares
(4)
|
|
$ 3.29
|
|
December 18, 2017
|
1,464,133 Aurora Shares
(4)
|
|
$ 3.29
|
|
January 17, 2018
|
3,495,846 Aurora Shares
(4)
|
|
$ 6.50
|
|
January 18, 2018
|
196,153 Aurora Shares
(4)
|
|
$ 6.50
|
|
January 22, 2018
|
13,476,461 Aurora Shares
(4)
|
|
$ 6.50
|
|
January 23, 2018
|
80,000 Aurora Shares
(4)
|
|
$ 6.50
|
|
January 29, 2018
|
15,384 Aurora Shares
(4)
|
|
$ 6.50
|
F-22
|
Date of Issuance
|
Number of Securities Issued
|
|
Issue/Exercise Price
|
|
February 28, 2018
|
13,076 Aurora Shares
(4)
|
|
$ 6.50
|
|
March 12, 2018
|
11,846 Aurora Shares
(4)
|
|
$ 6.50
|
|
March 14, 2018
|
17,241 Aurora Shares
(4)
|
|
$13.05
|
|
March 19, 2018
|
7,692 Aurora Shares
(4)
|
|
$ 6.50
|
|
March 20, 2018
|
3,846 Aurora Shares
(4)
|
|
$ 6.50
|
|
April 2, 2018
|
19,230 Aurora Shares
(4)
|
|
$ 6.50
|
|
April 3, 2018
|
3,846 Aurora Shares
(4)
|
|
$ 6.50
|
|
April 5, 2018
|
19,230 Aurora Shares
(4)
|
|
$ 6.50
|
|
April 6, 2018
|
7,692 Aurora Shares
(4)
|
|
$ 6.50
|
|
April 10, 2018
|
229 Aurora Shares
(4)
|
|
$13.05
|
|
April 27, 2018
|
4,615 Aurora Shares
(4)
|
|
$ 6.50
|
|
May 15, 2018
|
6,153 Aurora Shares
(4)
|
|
$ 6.50
|
|
May 25, 2018
|
1,072 Aurora Shares
(4)
|
|
$13.05
|
|
June 5, 2018
|
7,692 Aurora Shares
(4)
|
|
$ 6.50
|
|
June 8, 2018
|
769 Aurora Shares
(4)
|
|
$ 6.50
|
|
June 14, 2018
|
24,615 Aurora Shares
(4)
|
|
$ 6.50
|
|
September 29, 2017
|
89,107 Aurora Shares
(5)
|
|
$ 2.78
|
|
November 30, 2017
|
4,789,273 Aurora Shares
(5)
|
|
$ 8.00
|
|
March 15, 2018
|
63,330,347 Aurora Shares
(5)
|
|
$11.25
|
|
March 26, 2018
|
5,998,548 Aurora Shares
(5)
|
|
$ 9.90
|
|
May 1, 2018
|
3,417,951 Aurora Shares
(5)
|
|
$ 7.88
|
|
November 2, 2017
|
25,000,000 Aurora Shares
(6)
|
|
$ 3.00
|
|
August 28, 2017
|
3,178,177 Aurora Shares
(7)
|
|
$2.135
|
|
October 30, 2017
|
1,838,116 Aurora Shares
(7)
|
|
$ 2.65
|
|
February 8, 2018
|
118,898 Aurora Shares
(7)
|
|
$10.51
|
|
May 24, 2018
|
182,853 Aurora Shares
(7)
|
|
$ 8.26
|
|
November 29, 2017
|
127,128 Aurora Shares
(8)
|
|
$ 6.75
|
Notes:
|
(1)
|
Issued on the exercise of stock options.
|
|
(2)
|
Issued on the exercise of warrants.
|
|
(3)
|
Issued on the exercise of compensation options.
|
|
(4)
|
Issued on the conversion of debentures.
|
|
(5)
|
Issued pursuant to business combinations and acquisition
of assets.
|
|
(6)
|
Issued pursuant to a private placement of units. Each
unit consisted of one common share and one warrant.
|
|
(7)
|
Issued on achievement of performance milestones pursuant
to a business combination.
|
|
(8)
|
Issued on the exercise of vested restricted share
units.
|
F-23
MARKET PRICE AND TRADING VOLUME OF AURORA SHARES
The Aurora Shares have been
listed on the TSX under the trading symbol “ACB” since July 24, 2017 and on the
OTCQX since March 30, 2017 under the trading symbol “ACBFF”. Prior to this the
Aurora Shares were listed on the TSX Venture Exchange (the “
TSXV
”). The
following tables set forth information relating to the trading of the Aurora
Shares on the TSX and the TSXV for the months indicated.
|
|
|
TSX Price Range ($)
|
|
|
|
|
|
Month
|
|
High
|
|
|
Low
|
|
|
Total Volume
|
|
|
July 24 -31 2017
|
|
2.820
|
|
|
2.630
|
|
|
12,867,225
|
|
|
August 2017
|
|
2.710
|
|
|
2.350
|
|
|
17,501,808
|
|
|
September 2017
|
|
2.890
|
|
|
2.490
|
|
|
31,775,052
|
|
|
October 2017
|
|
3.19
|
|
|
2.65
|
|
|
80,450,988
|
|
|
November 2017
|
|
8.66
|
|
|
3.01
|
|
|
554,248,727
|
|
|
December 2017
|
|
10.52
|
|
|
6.31
|
|
|
254,972,431
|
|
|
January, 2018
|
|
15.20
|
|
|
8.90
|
|
|
604,723,498
|
|
|
February, 2018
|
|
12.55
|
|
|
7.11
|
|
|
365,286,690
|
|
|
March 2018
|
|
11.98
|
|
|
8.81
|
|
|
217,623,205
|
|
|
April 2018
|
|
9.34
|
|
|
6.75
|
|
|
226,335,287
|
|
|
May 2018
|
|
8.77
|
|
|
7.17
|
|
|
149,828,955
|
|
|
June 1 – 14, 2018
|
|
10.22
|
|
|
8.02
|
|
|
109,800,447
|
|
|
|
|
TSXV Price Range ($)
|
|
|
|
|
|
Month
|
|
High
|
|
|
Low
|
|
|
Total Volume
|
|
|
June 2017
|
|
2.340
|
|
|
1.900
|
|
|
42,385,846
|
|
|
July 1 – 21, 2017
|
|
2.595
|
|
|
2.050
|
|
|
19,818,243
|
|
AUDIT COMMITTEE
Aurora’s audit committee has
various responsibilities as set forth in NI 52-110 made under securities
legislation, concerning constitution of its audit committee and its relationship
with its independent auditor and among such responsibilities being a requirement
that the audit committee establish a written charter that sets out its
responsibilities.
F-24
Composition of the Audit Committee
At the present time, Aurora’s Audit Committee is composed of
the following members:
|
|
Independent/Not
|
|
Financially Literate/Not
|
|
|
|
Member
|
Independent
(1)
|
|
Financially Literate
(2)
|
|
Relevant Education and Experience
|
|
|
|
|
|
|
|
|
Michael Singer Chair
|
Independent
|
|
Financially Literate
|
|
Mr. Singer is a CPA. He is currently CFO of Clementia
Pharmaceuticals Inc., a public company listed on the NASDAQ. He previously
served as a director, CFO and audit committee member for other publicly
traded companies.
|
|
|
|
|
|
|
|
|
Adam Szweras
|
Independent
|
|
Financially Literate
|
|
Mr. Szweras, LLB, is a partner at Fogler, Rubinoff LLP.
He is currently Chairman of a merchant bank and serves as a director
and/or officer and audit committee member for other publicly traded
companies.
|
|
|
|
|
|
|
|
|
Jason R. B. Dyck
|
Independent
|
|
Financially Literate
|
|
Mr Dyck is a professor in the Department of Pediatrics,
University of Alberta since July 1999; and Vice- President, Metabolic
Modulators Research Ltd. since July 1999.
|
Notes:
|
(1)
|
A member of an audit committee is independent if the
member has no direct or indirect material relationship with Aurora that
could, in the view of the Board, reasonably interfere with the exercise of
a member’s independent judgment.
|
|
(2)
|
An individual is financially literate if he has the
ability to read and understand a set of financial statements that present
a breadth of complexity of accounting issues that are generally comparable
to the breadth and complexity of the issues that can reasonably be
expected to be raised by Aurora’s financial
statements.
|
Audit Committee Charter
A copy of the charter of the
audit committee is available as Schedule “A” to the AIF.
Audit Committee Oversight
The Audit Committee has not made
any recommendations to the Board to nominate or compensate any auditor other
than MNP.
Reliance on Certain Exemptions
At no time has Aurora relied on
an exemption from NI 52-110, in whole or in part, granted under Part 8 of NI
52-110.
Pre-Approval Policies and Procedures
The Audit Committee has not
adopted specific policies and procedures for the engagement of non-audit
services, other than as set out in the audit committee charter.
F-25
External Auditor Service Fees (By Category)
The Audit Committee has reviewed
the nature and amount of the audit services provided by MNP to Aurora to ensure
auditor independence. The aggregate fees billed by Aurora’s external auditor
during the financial years ended June 30, 2017 and June 30, 2016 were as
follows:
|
|
|
|
|
|
Audit Related
|
|
|
|
|
|
All Other Fees
|
|
|
Financial Period Ending
|
|
Audit Fees ($)
(1
)
|
|
|
Fees ($)
(2
)
|
|
|
Tax Fees ($)
(3
)
|
|
|
($)
(4
)
|
|
|
2017
|
|
86,000
|
|
|
73,268
|
|
|
6,699
|
|
|
7,610
|
|
|
2016
|
|
79,759
|
|
|
Nil
|
|
|
22,644
|
|
|
47,652
|
|
|
(1)
|
“Audit Fees” includes fees for the performance of the
annual audit and for accounting consultations on matters reflected in the
financial statements.
|
|
(2)
|
“Audit-Related Fees” includes fees for assurance and
related services that are related to the performance of the review of the
financial statements including fees for Annual Information Form and
“earn-in” audit work and are not reported under (1).
|
|
(3)
|
“Tax Fees” includes fees for tax compliance, tax planning
and tax advice.
|
|
(4)
|
“All Other Fees” includes fees on consultations on
acquisition related matters.
|
F-26
APPENDIX “G”
INFORMATION CONCERNING THE COMBINED
COMPANY
Overview
On completion of the Arrangement,
MedReleaf will be a wholly-owned subsidiary of Aurora (hereinafter referred to
as the “
Combined Company
”) and will continue the operations of Aurora and
MedReleaf on a combined basis. The Combined Company will continue to be governed
by the laws of British Columbia.
The Combined Company’s head
office will continue to be located Suite 900, 510 Seymour Street, Vancouver,
British Columbia, V6B 1V5. Its registered and records office will continue to be
located at 1500 –1055 West Georgia Street, Vancouver, British Columbia, Canada,
V6E 4N7.
Organization Chart
The following chart illustrates
Combined Company’s principal subsidiaries after completion of the
Arrangement:
G-1
Description of Share Capital
The share capital of the Combined
Company will remain unchanged as a result of the completion of the Arrangement,
other than for the issuance of the Consideration Shares contemplated in the
Arrangement. The Combined Company’s authorized share capital will continue to
consist of an unlimited number of Aurora Shares without par value. Shareholders
of the Combined Company are entitled to receive notice of, and to one vote per
Aurora Share at, every meeting of shareholders, to receive such dividends as the
Combined Company’s board of directors declares and to share equally in the
assets of the Combined Company upon the liquidation, dissolution or winding up
of the Combined Company after the creditors of the Combined Company have been
satisfied.
Aurora’s share capital will also
continue to consist of an unlimited number of Class A Shares with a par value of
$1.00 each and an unlimited number of Class B Shares with a par value of $5.00
each. Holders of Aurora Shares are entitled to dividends, if, as and when
declared by the Combined Company’s board of directors and, upon liquidation, to
participate equally in such assets of Aurora as are distributed to the Aurora
Shareholders. Aurora has not paid dividends in the past and does not anticipate
paying dividends in the near future. Aurora expects to retain its earnings to
finance further growth and, when appropriate, retire debt.
Post-Arrangement Shareholdings
Assuming that no dissent rights
are exercised by holders of MedReleaf Shares in respect of the Arrangement
Resolution under the Arrangement, Aurora expects to issue up 368,273,291 Aurora
Shares to former shareholders of MedReleaf (including Aurora Shares issued for
MedReleaf Legacy Options and MedReleaf DSUs) and will reserve approximately
26,301,065 Aurora Shares for issuance pursuant to the MedReleaf Plan Options and
MedReleaf Warrants.
Following the successful
completion of the Arrangement, MedReleaf will be a wholly-owned subsidiary of
Aurora and the Combined Company expects to have approximately 934,040,511 Aurora
Shares issued and outstanding. Existing Aurora Shareholders and former MedReleaf
Shareholders will own approximately 61% and 39%, respectively, of the
outstanding Aurora Shares.
To the knowledge of the directors
and executive officers of Aurora, based on publicly available information
relating to Aurora and MedReleaf, as of the date of this Circular and after
giving effect to the Arrangement, no person will beneficially own, directly or
indirectly, or exercise control or direction over, securities of the Combined
Company carrying 10% or more of the voting rights attached to all outstanding
Aurora Shares.
G-2
Consolidated Capitalization
The following table sets forth
Aurora’s consolidated capitalization as at March 31, 2018, adjusted to give
effect to any material changes in the share capital of Aurora since March 31,
2018, the date of Aurora’s most recent unaudited consolidated interim financial
statements, and further adjusted to give effect to the Arrangement. The table
should be read in conjunction with the unaudited consolidated interim financial
statements of Aurora as at and for the three and nine months ended March 31,
2018 including the notes thereto, and management’s discussion and analysis
thereof, the audited consolidated annual financial statements of MedReleaf for
the year ended March 31, 2018 including the notes thereto, and management’s
discussion and analysis thereof, Aurora’s unaudited pro forma consolidated
financial statements and the accompanying notes thereto attached as Appendix “C”
to the Circular, and the other financial information contained in or
incorporated by reference in this Circular.
|
|
|
|
|
|
As at
|
|
|
|
|
|
|
|
March 31, 2018
|
|
|
|
|
As at
|
|
|
after giving effect
to
|
|
|
(in thousands of Canadian
dollars)
|
|
March 31, 2018
|
|
|
the Arrangement
|
|
|
Aurora share capital
|
$
|
1,416,124
|
|
$
|
4,841,066
|
(2)
|
|
Aurora Shares issued
(1)
(Authorized – Unlimited)
|
|
564,424,865
|
|
|
932,698,156
|
|
|
Total current assets
|
$
|
394,622
|
|
$
|
667,448
|
|
|
Long-term debt
|
$
|
228,481
|
|
$
|
239,593
|
|
_________
Notes:
|
(1)
|
Excluding 25,144,138 Aurora Shares issuable pursuant to
outstanding options, 8,615,348 Aurora Shares issuable to outstanding share
purchase warrants, 2,150,000 Aurora Shares underlying outstanding
restricted share unit awards, and adjusted for 3,417,951 Aurora Shares
issued in May 2018 for the CanniMed compulsory acquisition.
|
|
(2)
|
Assumes all MedReleaf Shares issued and outstanding as of
the date of the Arrangement Agreement are acquired by Aurora pursuant to
the Arrangement, no MedReleaf Shareholders exercise their Dissent Rights,
all MedReleaf Legacy Options and MedReleaf DSUs are exercised or settled,
as applicable, for Aurora Shares and that none of the MedReleaf Plan
Options or MedReleaf Warrants are exercised or converted, as applicable,
prior to the completion of the Arrangement.
|
Directors
On the Effective Date, the board
of directors of the Combined Company will be comprised of six of the current
directors of Aurora, namely Michael Singer, Terry Booth, Steve Dobler, Jason
Dyck, Adam Szweras and Diane Jang and the nominees of MedReleaf, namely, Norma
Beauchamp and Ronald Funk.
|
|
|
Position(s) held and
|
|
|
|
Name and Municipality
|
|
Period of Service as a
|
|
|
|
of
Residence
|
|
Director
|
|
Principal Occupation
|
|
|
|
|
|
|
Michael Singer
Chairman of the Board and Director
Quebec, Canada
|
|
Director Since May 20, 2016
Chairman of the Board Since November 29, 2016
|
|
Chairman of the Board and Director of Aurora Cannabis
Inc.; Chartered Professional Accountant, Consultant and Entrepreneur;
currently CFO and Corporate Secretary of Clementia Pharmaceuticals Inc.
since May 2015; previously CFO of Bedrocan Cannabis Corp. from May 2014
until June 2015; and CFO of Thallion Pharmaceuticals Inc. from March 2006
until August 2013.
|
G-3
|
|
|
Position(s) held and
|
|
|
|
Name and Municipality
|
|
Period of Service as a
|
|
|
|
of
Residence
|
|
Director
|
|
Principal Occupation
|
|
|
|
|
|
|
Terry Booth
Chief Executive Officer and Director
Alberta, Canada
|
|
Director and Officer Since December 9, 2014
|
|
Chief Executive Officer and Director of Aurora; President
and part owner of Superior Safety Codes Inc.
|
|
|
|
|
|
|
Steve Dobler
President and Director Alberta, Canada
|
|
Director and Officer Since 9, 2014
|
|
President and Director of Aurora; Professional Engineer;
Vice President and part owner of Superior Safety Codes Inc.; President of
ICC Enterprises Corp. since May 2002.
|
|
|
|
|
|
|
Jason R. B. Dyck
Director Alberta, Canada
|
|
Director Since March 10, 2015
|
|
Director of Aurora; Professor, Department of Pediatrics,
University of Alberta since July 1999; and Vice-President, Metabolic
Modulators Research Ltd. since July 1999.
|
|
|
|
|
|
|
Adam K. Szweras
Director Ontario, Canada
|
|
Director since August 10, 2015
|
|
Director of Aurora; Barrister & Solicitor; Partner,
Fogler, Rubinoff LLP since 2006; Chairman of Foundation Markets Inc. since
December 2005.
|
|
|
|
|
|
|
Diane Jang
Director British Columbia, Canada
|
|
Director Since November 13, 2017
|
|
Director of Aurora; Business Consultant; President,
Sunrise Soya Foods Inc. (from October 2015 to December 2016; General
Manager, Dairy Alternatives, Earth’s Own Food Company Inc. from May 2008
to 2015; General Manager, International, SoyaWorld Inc. from 2006 to 2008;
Director of Sales, SoyaWorld Inc., from 1998 to 2006; Sales and Marketing
Manager, Sunrise Soya Foods, from 1992 to 1998.
|
|
|
|
|
|
|
Norma Beauchamp
Director Ontario, Canada
|
|
Director of MedReleaf since June 7, 2017
|
|
Director of MedReleaf Corp., Board of Director, Acerus
Pharma and Eve Medical; Past President and CEO, Cystic Fibrosis Canada;
Past SVP Pharmaceuticals, Bayer Canada; Past VP, Global Strategic
Marketing, Gynecology and Andrology, Bayer AG.
|
|
|
|
|
|
|
Ronald Funk
Director Ontario, Canada
|
|
Director of MedReleaf since June 7, 2017
|
|
Director of MedReleaf Corp.l and Consultant.
|
The directors and senior officers
of the Combined Company will hold approximately 39,129,495 Aurora Shares
representing 4.18% of the 934,040,511 Aurora Shares anticipated to be issued and
outstanding following completion of the Arrangement on a non-diluted basis.
Selected Aurora Unaudited Pro Forma Consolidated Financial
Information
The selected unaudited pro forma
consolidated financial information set forth below should be read in conjunction
with Aurora’s unaudited pro forma consolidated financial statements and the
accompanying notes thereto attached as Appendix “C” to the Circular. The
unaudited pro forma consolidated statement of financial position and the unaudited pro forma consolidated statements of
comprehensive income (loss) of Aurora are comprised of information derived
from:
G-4
|
|
•
|
the audited consolidated financial statements of Aurora
for the year ended June 30, 2017;
|
|
|
|
|
|
|
•
|
the audited consolidated financial statements of CanniMed
for the year ended October 31, 2016;
|
|
|
|
|
|
|
•
|
the audited consolidated financial statements of CanniMed
for the year ended October 31, 2017;
|
|
|
|
|
|
|
•
|
the audited consolidated financial statements of
MedReleaf for the year ended March 31, 2018;
|
|
|
|
|
|
|
•
|
the audited consolidated financial statements of
MedReleaf for the year ended March 31, 2017;
|
|
|
|
|
|
|
•
|
the unaudited condensed interim consolidated financial
statements of Aurora for the three and nine months ended March 31, 2018,
which has been adjusted to remove the non-controlling interest portion of
CanniMed to give effect, as if Aurora’s 100% ownership of CanniMed had
taken place as at the date of the unaudited pro forma consolidated
statement of financial position as at March 31, 2018. It should be noted
that the unaudited condensed interim consolidated statements of Aurora for
the three and nine months ended March 31, 2018 reflects a 95.9% ownership
in the issued and outstanding shares of CanniMed and that on May 2, 2018,
Aurora acquired the remaining issued and outstanding shares of CanniMed.
The 16 days of profit and loss attributable to CanniMed included in the
unaudited condensed interim consolidated statement of comprehensive loss
for the three and nine months ended March 31, 2018 was also removed;
|
|
|
|
|
|
|
•
|
the unaudited condensed interim consolidated financial
statements of CanniMed for the three months ended January 31, 2018;
|
|
|
|
|
|
|
•
|
the unaudited condensed interim consolidated financial
statements of CanniMed for the three and six months ended April 30, 2017;
|
|
|
|
|
|
|
•
|
the unaudited condensed interim consolidated financial
statements of CanniMed for the three and nine months ended July 31, 2017;
|
|
|
|
|
|
|
•
|
the unaudited condensed interim consolidated financial
statements of CanniMed for the three and nine months ended July 31, 2016;
and
|
|
|
|
|
|
|
•
|
the unaudited condensed interim consolidated financial
statements of MedReleaf for the three months ended June 30, 2017 and 2016.
|
The unaudited pro forma
consolidated statement of financial position of Aurora gives effect to the
acquisition of 100% of the issued and outstanding shares of MedReleaf and
CanniMed as if both acquisitions had occurred on March 31, 2018. The unaudited
pro forma consolidated statement of comprehensive loss for the nine months ended
March 31, 2018 and the twelve months ended June 30, 2017 of Aurora gives effect
to the acquisition of 100% of the issued and outstanding shares of MedReleaf and
CanniMed as if both acquisitions had occurred at July 1, 2016.
G-5
The summary unaudited pro forma
consolidated financial information is not intended to be indicative of the
results that would actually have occurred, or the results expected in future
periods, had the events reflected herein occurred on the dates indicated. Actual
amounts recorded upon consummation of the Arrangement will differ from the pro
forma information presented below. No attempt has been made to calculate or
estimate potential synergies between Aurora and MedReleaf. The unaudited pro
forma consolidated financial statement information set forth below is extracted
from and should be read in conjunction with the unaudited pro forma consolidated
financial statements of Aurora and the accompanying notes included in Appendix
“C” to the Circular.
|
|
|
Nine months
|
|
|
|
|
|
|
|
ended
|
|
|
Year ended
|
|
|
Unaudited (in thousands of Canadian
dollars)
|
|
March 31, 2018
|
|
|
June 30, 2017
|
|
|
Pro Forma Statement of Operations Data:
|
|
|
|
|
|
|
|
Revenue
|
$
|
82,878
|
|
$
|
75,094
|
|
|
Net Loss
|
$
|
(39,918
|
)
|
$
|
(94,012
|
)
|
|
|
|
|
|
|
|
|
|
(in Canadian dollars)
|
|
|
|
|
|
|
|
Pro Forma Per Aurora Share
Data:
|
|
|
|
|
|
|
|
Basic earnings per share
|
$
|
(0.05
|
)
|
$
|
(0.13
|
)
|
|
Diluted earnings per share
|
$
|
(0.05
|
)
|
$
|
(0.13
|
)
|
|
|
|
As at
|
|
|
Unaudited (in thousands of Canadian
dollars)
|
|
March 31, 2018
|
|
|
Pro Forma Statement of Financial
Position Data:
|
|
|
|
|
Total current assets
|
$
|
667,448
|
|
|
Total assets
|
$
|
5,242,486
|
|
|
Total current liabilities
|
$
|
89,985
|
|
|
Total liabilities
|
$
|
329,578
|
|
|
|
|
|
|
|
Total equity
|
$
|
4,912,908
|
|
Stock Exchange Listings
On completion of the Arrangement,
the Aurora Shares will continue trading on the TSX.
The Aurora Shares are listed on
the TSX under the symbol “ACB”. The obligation of Aurora and MedReleaf to
complete the Arrangement is subject to, among other matters, the TSX approving
the listing and posting for trading on the TSX of the Aurora Shares that are
issuable in connection with the Arrangement, subject only in each case to the
satisfaction of the customary listing conditions of the TSX.
If permitted by applicable Laws,
Aurora intends to delist the MedReleaf Shares from the TSX.
Aurora has applied to have the
Aurora Shares issuable in exchange for MedReleaf Shares, MedReleaf Options,
MedReleaf DSUs, and MedReleaf Warrants, listed and posted for trading on the
TSX. Listing will be subject to Aurora receiving approval from, and fulfilling
all of the requirements of, the TSX.
Auditors
The auditors of the Combined
Company after the Effective Date will be the auditors of Aurora.
Transfer Agent and Registrar
The transfer agent and registrar
for the Combined Company’s common shares will be Computershare Trust Company of
Canada, 510 Burrard Street, 32nd Floor, Vancouver, British Columbia, V6C
3B9.
G-6
APPENDIX “H”
TAX CONSIDERATIONS RELATING TO THE
DISTRIBUTION
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS RELATING
TO THE DISTRIBUTION
The following is a general summary of certain of the Canadian
federal income tax considerations arising in respect of the receipt, holding and
disposition of Australis Shares and Australis Warrants by an Aurora Shareholder
who, as beneficial owner, receives such Australis Shares and Australis Warrants
as components of Australis Units under the Distribution and who, for the
purposes of the Income Tax Act (Canada)(the “
Tax Act
”) and the
regulations thereunder (the “
Regulations
”) and at all relevant times, (i)
deals at arm’s length with Australis and Aurora, (ii) is not affiliated with
Australis or Aurora, and (iii) holds Aurora Shares, Australis Shares, Australis
Warrants and Australis Warrant Shares as capital property. Australis Shares and
Australis Warrant Shares are sometimes collectively referred to as “Australis
Shares” in this summary. A holder who meets all of the foregoing requirements is
referred to as a “
Holder
” in this summary, and this summary only
addresses such Holders.
This summary is based on the provisions of the Tax Act and the
Regulations thereunder in force on the date hereof and our understanding of the
current administrative policies and assessing practices of the Canada Revenue
Agency (the “
CRA
”) published in writing prior to the date hereof. This
summary takes into account all specific proposals to amend the Tax Act or the
Regulations announced by or on behalf of the Minister of Finance (Canada) prior
to the date hereof (the “
Proposed Amendments
”) and assumes that all such
Proposed Amendments will be enacted in their present form. No assurance can be
given that any Proposed Amendments will be enacted in the form proposed, or at
all. This summary does not otherwise take into account or anticipate any changes
in law, whether by judicial, governmental or legislative decision or action, or
changes in the administrative policies and assessing practices of the CRA, nor
does it take into account provincial, territorial or foreign income tax
legislation or considerations, which may differ materially from those described
in this summary.
This summary is not applicable to (i) a Holder that is a
“specified financial institution”, (ii) a Holder an interest in which is a “tax
shelter investment”, (iii) a Holder that is for purposes of certain rules in the
Tax Act (referred to as the mark-to-market rules) a “financial institution”,
(iv) a Holder that reports its “Canadian tax results” in a currency other than
Canadian currency, or (v) a Holder that has entered into or will enter into a
“derivative forward agreement” with respect to the relevant securities, in each
case as such terms are defined in the Tax Act. This summary is also not
applicable to any other Holder of special status or in special circumstances.
All such foregoing Holders should consult their own tax advisors.
Additional considerations, not discussed herein, may be
applicable to a Holder that is a corporation resident in Canada, and is, or
becomes, controlled by a non-resident corporation for purposes of the “foreign
affiliate dumping” rules in section 212.3 of the Tax Act. Such Holders should
also consult their own tax advisors.
This summary is of a general nature only and is not
exhaustive of all possible Canadian federal income tax considerations. It does
not take into account or consider the tax laws of any province or territory or
of any jurisdiction outside Canada. This summary is not intended to be, nor
should it be construed to be, legal or tax advice to any particular holder
(including a Holder as defined above), and no representations concerning the tax
consequences to any particular Holder are made. Holders should consult their own
tax advisers regarding the income tax considerations applicable to them having
regard to their own particular circumstances.
The Distribution is a taxable event to Aurora, the tax effect
to Aurora of which depends on the fair market value of the Australis Units at
the time the Distribution is effected, Aurora’s adjusted cost base of the
constituent components of such Australis Units, relevant tax shelter available
to Aurora, if any, and other relevant factors. There can be no guarantee that
the Distribution will not result in a net cash tax liability to Aurora, and the
potential tax consequences to Aurora are not further discussed in this
summary.
H-1
Assumptions Regarding Return of Capital
The achievement of the intended tax treatment of the
Distribution depends on the fair market value of the Australis Units, the
“paid-up capital” of Aurora shares as defined below, and on a number of other
important assumptions, including those referenced below. No third-party
determination of such fair market value or paid-up capital has been sought or
obtained, and no legal opinion or advance tax ruling has been sought or obtained
with respect to the various assumptions or the tax treatment of the
Distribution. Accordingly, there is a risk that the actual tax treatment under
the Tax Act could be different from the intended tax treatment. All Holders are
advised to consult with their own tax advisors in this regard in light of their
particular circumstances.
Distributions made by corporations that are “public
corporations” for purposes of the Tax Act, such as Aurora, are generally
characterized as taxable dividends for the purposes of the Tax Act, unless a
specific exemption applies. Subsection 84(2) of the Tax Act provides, in effect,
that a distribution made to shareholders on a “winding up, discontinuance or
reorganization of its [Aurora’s] business”, will not be taxed as a dividend so
long as the amount or value of the funds or property distributed does not exceed
the amount by which the “paid-up capital”, as defined for the purposes of the
Tax Act (the “
PUC
”), of the relevant shares is reduced on the
distribution.
It is noted that the Distribution is being made by Aurora as
part of a number of intended business changes comprising the Reorganization that
are contemplated in order to divest Aurora of certain non-core U.S. assets and
maximize the overall value of the Aurora assets for Aurora Shareholders. Other
changes include the transfer of PPS’ interests in SubTerra LLC to Australis, the
disposition by Aurora of certain intercompany debt owed by Aurora Marijuana
Inc., the related transfer of the Australis Units to Aurora by Aurora Marijuana
Inc., the funding agreement between Aurora and Australis, the application to
list the Australis Shares and Australis Warrants on the CSE, and the related
transactions as described under “Matters to be Considered at the Meeting –
Reduction of Capital Resolution –
Background to the Reduction of Capita
l”
of the Circular. Management believes that the Distribution is effectively being
made on the reorganization of Aurora’s business, although this determination is
not free from doubt under the Tax Act or CRA policy, and no legal opinion or
advance tax ruling has been sought or obtained in this regard.
Subsection 84(4.1) of the Tax Act applies in certain
circumstances to deem a return of PUC by a public corporation (such as Aurora)
to be a dividend. However, subsection 84(4.1) of the Tax Act should not apply to
the Distribution provided that: (i) the Distribution can reasonably be
considered to have been derived from proceeds of disposition realized by Aurora
from a transaction that occurred outside the ordinary course of the business of
Aurora but and the period that commenced 24 months before the Distribution; and
(ii) no other amount that may reasonably be considered to have been derived from
such proceeds was paid by Aurora as a reduction of PUC prior to the
Distribution. Management of Aurora believes that within the context of the
Reorganization, the Australis Units can reasonably be considered to represent
proceeds of disposition realized by Aurora from a transaction that occurred
outside the ordinary course of Aurora’s business (and that no amount that may
reasonably be considered to have been derived from such proceeds will have been
paid by Aurora on a reduction of PUC prior to the Distribution), although this
determination is not free from doubt under the Tax Act or CRA policy, and no
legal opinion or advance tax ruling has been sought or obtained in this
regard.
PUC is computed according to the relevant provisions of the Tax
Act. The general starting point for computing PUC is the stated capital of the
Aurora Shares for corporate law purposes, which amount is then subject to
adjustment according to detailed rules contained in the Tax Act. Aurora
management believes that the PUC of the Aurora Shares will exceed the fair
market value of the Australis Units on the date the Distribution is effected,
and it is therefore assumed that no dividend will be considered or deemed to
arise for purposes of the Tax Act with respect to the Distribution.
H-2
The summary of tax consequences set out below assumes that:
|
|
•
|
the Distribution is made on a “winding up, discontinuance
or reorganization” of Aurora’s business;
|
|
|
|
|
|
|
•
|
the Distribution can reasonably be considered to have
been derived from proceeds of disposition realized by Aurora from a
transaction that occurred outside the ordinary course of the business of
Aurora and within the period that commenced 24 months before the
Distribution; and no other amount that may reasonably be considered to
have derived from such proceeds was paid by Aurora on a reduction of PUC
prior to the Distribution; and
|
|
|
|
|
|
|
•
|
the PUC of the Aurora Shares will exceed the fair market
value of the Australis Units on the date the Distribution is effected.
|
Therefore, the summary of tax consequences set out below
assumes that the Distribution should be treated as a return of PUC under
subsection 84(2) of the Tax Act and not be deemed to give rise to a dividend (or
a taxable shareholder benefit) under the Tax Act. However, the validity of these
assumptions is not free from doubt under the Tax Act or CRA policy, and no legal
opinion or advance tax ruling has been sought or obtained in this regard or with
respect to any of the assumptions made in this summary.
If the Distribution is treated as a dividend (including a
deemed dividend) or taxable shareholder benefit under the Tax Act, the tax
results to Holders would be materially different, and likely materially adverse,
compared to those set out in the summary of tax consequences below. Such
potentially different and adverse tax treatment is not further referenced or
discussed in this summary, and Holders should consult their own tax advisors in
this regard.
Resident Holders
The following is a discussion of the consequences under the Tax
Act to Holders who, for the purposes of the Tax Act and at all relevant times,
are resident or deemed to be resident in Canada (“
Resident Holders
”).
The Distribution
The Distribution of the Australis Units as a return of PUC will
reduce the adjusted cost base of a Resident Holder’s Aurora Shares by an amount
equal to the fair market value, on the date the Distribution is effected, of the
Australis Units that are issued to or for the benefit of such Holder. For this
purpose, the CRA is not bound by any determination of fair market value made by
Aurora. If the amount so required to be deducted from the adjusted cost base of
the Aurora Shares to a particular Resident Holder exceeds the Resident Holder’s
adjusted cost base of such Aurora Shares for purposes of the Tax Act, the excess
will be deemed to be a capital gain realized by such Resident Holder from a
disposition of Aurora Shares. Generally, a Resident Holder is required to
include in computing income for a taxation year one-half of the amount of any
capital gain (a “
taxable capital gain
”). A Resident Holder that is,
throughout the relevant taxation year, a “Canadian-controlled private
corporation” (as defined in the Tax Act) may be liable to pay an additional tax
(refundable in certain circumstances) on certain investment income, including
taxable capital gains. Capital gains realized by an individual or certain trusts
may give rise to a liability for alternative minimum tax.
Australis Shares and Australis Warrants received by a Resident
Holder should have a cost to the Resident Holder for tax purposes equal to their
respective fair market values at the time of such receipt. In computing the
adjusted cost base of the Australis Shares at any time, the adjusted cost base
of a Resident Holder’s Australis Shares will be averaged with the respective
adjusted cost base of all of the Aurora Shares held by the Resident Holder as
capital property at that particular time.
Aurora has not currently determined, for its own purposes, the
fair market value of the Australis Units nor the breakdown of such fair market
value as between Australis Shares and Australis Warrants, but Aurora has engaged third-party valuation specialists to make such
determination for its own purposes in due course following the Distribution and
intends to communicate such determination on its website when available. Any
such determination will be made by Aurora for its own purposes, and will not be
binding on a Holder or on the CRA. Resident Holders should consult their own tax
advisors in this regard.
H-3
Expiry of Australis Warrants
In the event of the expiry of an unexercised Australis Warrant,
a Resident Holder should generally realize a capital loss equal to the Resident
Holder’s adjusted cost base of such Australis Warrant. The tax treatment of
capital gains and capital losses is generally as discussed with respect to a
disposition of Australis Shares under “
Disposition of Australis Shares or
Australis Warrants
” below.
Exercise of Australis Warrants
No gain or loss will be realized by a Resident Holder on the
exercise of an Australis Warrant to acquire additional Australis Shares. When an
Australis Warrant is exercised, the Resident Holder’s cost of the Australis
Share so acquired will be equal to the adjusted cost base of the Australis
Warrant to the Resident Holder, plus the amount paid on the exercise of the
Australis Warrant. For the purpose of computing the adjusted cost base of each
Australis Share acquired on the exercise of Australis Warrants, the cost of such
Australis Share must be averaged with the adjusted cost base to such Resident
Holder of all other Australis Shares held as capital property immediately before
the exercise of the Australis Warrant.
Disposition of Australis Shares or Australis
Warrants
On a disposition or deemed disposition of an Australis Share or
an Australis Warrant (other than on the exercise thereof), a Resident Holder
will realize a capital gain (or capital loss) equal to the amount by which the
proceeds of disposition for the Australis Share (or Australis Warrant) exceed
(or are less than) the aggregate of any reasonable costs of disposition and the
adjusted cost base to the Resident Holder of the Australis Share (or Australis
Warrant) immediately before the disposition or deemed disposition.
A Resident Holder of Australis Shares or Australis Warrants who
disposes or is deemed to dispose of such shares or warrants will generally be
required to include in such Resident Holder’s income the amount of any taxable
capital gain and may deduct one-half of the amount of any capital loss (an
“
allowable capital loss
”) against taxable capital gains realized by the
Holder in the year of the disposition. Allowable capital losses in excess of
taxable capital gains may be carried back and deducted in any of the three
preceding years or carried forward and deducted in any following year against
taxable capital gains realized in such years, to the extent and under the
circumstances described in the Tax Act.
In the case of a Resident Holder that is a corporation, the
amount of any capital loss otherwise determined resulting from the disposition
of an Australis Share may be reduced by the amount of dividends previously
received or deemed to have been received by it on such Australis Share, to the
extent and under the circumstances prescribed by the Tax Act. Similar rules may
apply where an Australis Share is owned by a partnership or trust of which a
corporation, trust or partnership is a member or beneficiary. Affected Resident
Holders should consult their own tax advisors.
A Resident Holder that is throughout the relevant taxation year
a “Canadian-controlled private corporation” as defined in the Tax Act may be
liable to pay an additional tax (refundable in certain circumstances) on any
taxable capital gains.
Capital gains realized by an individual or certain trusts may
give rise to a liability for alternative minimum tax.
H-4
Dividends
In the case of a Resident Holder that is an individual (other
than certain trusts), dividends received or deemed to be received on the
Australis Shares, if any, will be included in computing the Resident Holder’s
income and will be subject to the normal gross-up and dividend tax credit rules
applicable to dividends paid by taxable Canadian corporations under the Tax Act,
including the potentially enhanced gross-up and dividend tax credit applicable
to any dividend designated by Australis as an “eligible dividend” in accordance
with the provisions of the Tax Act. There may be limitations on Australis’
ability to designate dividends as “eligible dividends” and Australis has made no
commitments in this regard.
A Resident Holder that is a corporation will be required to
include in income any dividend received or deemed to be received on the
Australis Shares, and generally will be entitled to deduct an equivalent amount
in computing its taxable income subject to all restrictions under the Tax Act.
In certain circumstances, subsection 55(2) of the Tax Act will treat a taxable
dividend received by a Resident Holder that is a corporation as proceeds of
disposition or a capital gain. Resident Holders that are corporations should
consult their own tax advisors having regard to their own circumstances.
“Private corporations” (as defined in the Tax Act) and certain
other corporations controlled by or for the benefit of an individual (other than
a trust) or related group of individuals (other than trusts) generally will be
liable to pay a special tax (refundable in certain circumstances) under Part IV
of the Tax Act on dividends to the extent such dividends are deductible in
computing the corporation’s taxable income.
Non-Resident Holders
The following portion of the summary is relevant to a Holder
who, for purposes of the Tax Act and any applicable tax treaty or convention,
and at all relevant times, is a non-resident or is deemed to be a non-resident
of Canada and does not beneficially own, acquire or hold and is not deemed to
beneficially own, acquire or hold Aurora Shares, Australis Shares or Australis
Warrants in the course of carrying on a business in Canada (a “
Non-Resident
Holder
”). Special rules, which are not discussed below, may apply to a
non-resident that is an insurer which carries on business in Canada and
elsewhere. Such non-residents should consult their own tax advisors.
As referenced in the Circular under “Matters to be Considered
at the Meeting – Reduction of Capital Resolution –
Background to the
Reduction of Capita
l”, Australis Units will not be delivered to Non-Resident
Holders, and instead, such Australis Units will be sold by the Custodian through
the Selling Agent on behalf of the Non-Residents. This portion of the summary
assumes that for all purposes of the Tax Act, the Distribution will be
considered as having been made to the Non-Residents, who shall be treated as the
owners of the Australis Shares and Australis Warrants held by the Custodian on
their behalf, and that the sales of the Australis Shares and Australis Warrants
(and related transactions) will effectively be considered as a sale by such
Non-Residents, although this determination is not free from doubt under the Tax
Act or the CRA policy and no legal opinion or advance tax ruling has been sought
or obtained in this regard.
The Distribution
The distribution of the Australis Units as a return of PUC will
reduce the adjusted cost base of a Non-Resident Holder’s Aurora Shares by an
amount equal to the fair market value, on the date the Distribution is effected,
of the Australis Units that are issued for the benefit of such Holder. For this
purpose, the CRA is not bound by any determination of fair market value made by
Aurora. If the amount so required to be deducted from the adjusted cost base of
the Aurora Shares to a particular Non-Resident Holder exceeds the Non-Resident
Holder’s adjusted cost base of such Aurora Shares, the excess will be deemed to
be a capital gain realized by such Non-Resident Holder from a disposition of
Aurora Shares. Any capital gain so realized will, in general terms, be subject
to considerations similar to those discussed below in respect of Australis
Shares under “
Disposition of Australis Shares or Australis Warrants
”.
H-5
Australis Shares and Australis Warrants distributed in respect
of a Non-Resident Holder should have a cost to the Non-Resident Holder for tax
purposes equal to their respective fair market values at the time of such
receipt. In computing the adjusted cost base of the Australis Shares at any
time, the adjusted cost base of a Non-Resident Holder’s Australis Shares will be
averaged with the respective adjusted cost base of all of the Aurora Shares
owned by the Non-Resident Holder as capital property at that particular
time.
Aurora has not currently
determined, for its own purposes, the fair market value of the Units nor the
breakdown of such fair market value as between Australis Shares and Australis
Warrants, but Aurora has engaged third-party valuation specialists to make such
determination for its own purposes in due course following the Distribution and
intends to communicate such determination on its website when available. Any
such determination will be made by Aurora for its own purposes, and will not be
binding on a Holder or on the CRA. Non-Resident Holders should consult their own
tax advisors in this regard.
Disposition of Australis Shares or Australis
Warrants
A Non-Resident Holder generally will not be subject to tax
under the Tax Act in respect of a capital gain realized on the disposition or
deemed disposition of an Australis Share or Australis Warrant, nor will capital
losses arising therefrom be recognized under the Tax Act, unless the Australis
Share or Australis Warrant constitutes “taxable Canadian property” to the
Non-Resident Holder for purposes of the Tax Act and the gain is not exempt from
tax pursuant to the terms of an applicable income tax treaty or convention.
Provided the Australis Shares are listed on a “designated stock
exchange”, as defined in the Tax Act (which currently includes the CSE) at the
time of their disposition, the Australis Shares and Australis Warrants generally
will not constitute “taxable Canadian property” of a Non-Resident Holder at that
time, unless, at any time during the 60 month period immediately preceding the
disposition, the following two conditions are met concurrently: (a) the
Non-Resident Holder, persons with whom the Non-Resident Holder did not deal at
arm’s length, partnerships in which the Non-Resident Holder or a person with
whom the Non-Resident Holder did not deal at arm’s length holds a membership
interest directly or indirectly through one or more partnerships, or the
Non-Resident Holder together with all such foregoing persons, owned 25% or more
of the issued shares of any class or series of shares of Australis; and (b) more
than 50% of the fair market value of the Australis Shares was derived directly
or indirectly from one or any combination of real or immovable property situated
in Canada, “Canadian resource property” (as defined in the Tax Act), “timber
resource property” (as defined in the Tax Act) or an option, an interest or
right in respect of such property, whether or not such property exists.
Notwithstanding the foregoing, an Australis Share or Australis Warrant may also
be deemed to be taxable Canadian property to a Non-Resident Holder in other
circumstances for purposes of the Tax Act.
Generally, a Non-Resident Holder who realizes a capital gain on
a disposition of Australis Shares or Australis Warrants that constitute or are
deemed to constitute “taxable Canadian property” of the Non-Resident Holder and
that is not exempt from tax under an applicable income tax treaty or convention
will be subject to the tax treatment described above under the heading
“
Resident Holders
–
Disposition of Australis Shares or Australis
Warrants
”.
Non-Resident Holders in respect of whom Australis Shares may
constitute “taxable Canadian property” should consult their own tax advisors
with respect to the tax considerations relevant in their particular
circumstances and any applicable Canadian tax compliance requirements.
Eligibility for Investment
Based on the current provisions of the Tax Act and the
Regulations thereunder in force on the date hereof and any relevant Proposed
Amendments,
(a) the Australis Shares would be a “qualified investment” for
a trust governed by a “registered retirement savings plan”, “registered
retirement income fund”, “tax-free savings account”, “registered education
savings plan” and “registered disability savings plan”, as those terms
are defined in the Tax Act (collectively, the “
Plans
”) if and provided
that the Australis Shares are listed on a “designated stock exchange” as defined
in the Tax Act (which currently includes the CSE) at the relevant time, and
H-6
(b) the Australis Warrants would be a “qualified investment”
for such Plans if and provided that the Australis Shares are so listed as
described in (a) above at the relevant time and neither Australis, nor any
person with whom Australis does not deal at arm’s length, is an annuitant, a
beneficiary, an employer or a subscriber under or a holder of such Plan.
The Australis Shares are not currently so listed on a
“designated stock exchange”, and the timing of such a listing, if any, cannot be
guaranteed
. The CRA’s published policy is that in order for a security to
qualify for this purpose, the listing must be full and unconditional, and that a
mere approval or conditional approval is insufficient. It is our understanding
that Australis has applied to list the Australis Shares on the CSE as of a time
that is shortly before the Distribution is effected. However, listing will be
subject to Australis fulfilling all of the requirements of the CSE. In addition,
there can be no guarantee that CSE approval of a listing (if at all) as of a
time that is shortly before the Distribution is effected would be granted or
would be in a form that is, or is acceptable to the CRA as, a full and
unconditional listing. No legal opinion or advance tax ruling has been sought or
obtained in respect of the listing application or the status of the Australis
Shares as listed on a designated stock exchange as of any particular time. If
the Australis Shares are not appropriately listed on the CSE at the effective
time of the Distribution (and Australis is not otherwise a “public corporation”
at that time), neither the Australis Shares nor the Australis Warrants will be
qualified investments for the Plans at that time. In general terms, adverse
consequences under the Tax Act, not discussed in this summary, apply to a Plan
and/or its annuitant, subscriber or holder (as the case may be) where a Plan
acquires or holds a non-qualified investment.
Holders who would receive Australis Shares and Australis
Warrants within a Plan upon the Distribution should consult their own tax
advisors in this regard in advance of the Distribution
.
Notwithstanding that Australis Shares and Australis Warrants
may become a qualified investment for a Plan, the holder, subscriber or
annuitant of the Plan, as the case may be, will be subject to a penalty tax as
set out in the Tax Act if such securities are a “prohibited investment” for the
Plan for purposes of the Tax Act. A security will generally be a “prohibited
investment” for a Plan if the holder, subscriber or annuitant, as the case may
be, does not deal at arm’s length with Australis for the purposes of the Tax Act
or has a “significant interest” (as defined in the Tax Act) in Australis.
Holders who would receive Australis Shares and Australis Warrants within a Plan
upon the Distribution should consult their own tax advisors in this regard in
advance of the Distribution.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
RELATING TO THE DISTRIBUTION
The following is a summary of
certain anticipated U.S. federal income tax consequences to U.S. Holders (as
defined below) arising from and relating to the receipt, holding and disposition
of Australis Shares and Australis Warrants received by the Custodian for the
benefit of such U.S. Holders pursuant to the Distribution. This summary is based
upon the U.S. Internal Revenue Code of 1986, as amended, referred to as the
“
Code
,” U.S. Treasury Regulations promulgated under the Code,
administrative rulings of the U.S. Internal Revenue Service, referred to as the
“
IRS
,” judicial decisions of the U.S. courts, and the Canada-United
States Income Tax Convention (1980), as amended, referred to as the
“
Canada-U.S. Tax Convention
,” in each case as in effect on the date
hereof. Changes in the laws may alter the U.S. federal income tax treatment of
the tax consequences discussed in this summary, possibly with retroactive
effect.
This summary is based on certain
assumptions and is subject to the limitations and qualifications set forth in
this summary. The assumptions on which the summary is based include that there
are no changes in existing facts and law, and that the Distribution is completed
in the manner contemplated. If any of these assumptions is not correct, this
summary cannot be relied upon and the U.S. federal income tax consequences to
U.S. Holders discussed herein could differ significantly and adversely from
those described in this summary.
H-7
This summary does not address
aspects of U.S. taxation other than U.S. federal income taxation, nor does it
address any aspects of state, local or non-U.S. tax law. In addition, this
summary does not address all U.S. federal income tax consequences that may be
relevant to the particular circumstances of a U.S. Holder of Aurora Shares, nor
to a U.S. Holder of Aurora Shares with a special status, such as:
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a person that owns, has owned, or will own 5% or more (by
voting power or value, and taking into account certain attribution rules)
of the issued and outstanding Aurora Shares or Australis Shares;
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a broker, dealer or trader in securities or currencies,
or any person who owns Aurora Shares, Australis Shares, or Australis
Warrants other than as capital assets within the meaning of Section 1221
of the Code;
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a bank, mutual fund, life insurance company or other
financial institution;
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a tax-exempt organization;
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a real estate investment trust or regulated investment
company;
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a qualified retirement plan or individual retirement
account;
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a person that holds or will hold the Aurora Shares,
Australis Shares, or Australis Warrants as part of a straddle, hedge,
constructive sale or other integrated transaction for tax purposes;
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a partnership, S corporation or other “pass-through”
entity, as determined for U.S. federal income tax purposes;
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an investor in a partnership, S corporation or other
“pass-through” entity, as determined for U.S. federal income tax purposes;
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a person whose functional currency for tax purposes is
not the U.S. dollar;
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U.S. expatriates;
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a person who is not a U.S. Holder;
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a person required to accelerate the recognition of any
item of gross income with respect to Aurora Shares, Australis Shares, or
Australis Warrants as a result of such income being recognized on an
applicable financial statement; or
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a person liable for alternative minimum tax.
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Unless otherwise specifically
indicated, this summary does not address the U.S. federal income tax
consequences of transactions effectuated prior or subsequent to, or concurrently
with, the Distribution including, without limitation, the exercise, sale, or
holding of the options, convertible securities or other rights to acquire Aurora
Shares or Shares. In addition, except as discussed below, this summary does not
address tax reporting requirements.
THIS SUMMARY IS OF A GENERAL
NATURE ONLY, IS NOT EXHAUSTIVE OF ALL POSSIBLE U.S. FEDERAL TAX CONSIDERATIONS
AND IS NOT INTENDED TO BE, AND SHOULD NOT BE CONSTRUED TO BE, LEGAL, BUSINESS OR
TAX ADVICE TO ANY PARTICULAR U.S. HOLDER OF AURORA SHARES. EACH U.S. HOLDER OF
AURORA SHARES SHOULD CONSULT ITS OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO IT OF THE RECEIPT OF AUSTRALIS SHARES AND AUSTRALIS WARRANTS BY
THE CUSTODIAN FOR THE BENEFIT OF U.S. HOLDERS PURSUANT TO THE DISTRIBUTION AND
THE HOLDING AND DISPOSITION BY THE CUSTODIAN OF THE AUSTRALIS SHARES AND
AUSTRALIS WARRANTS RECEIVED, INCLUDING THE EFFECTS OF APPLICABLE U.S. FEDERAL,
STATE AND LOCAL TAX LAWS AND NON-U.S. TAX LAWS AND POSSIBLE CHANGES IN TAX
LAWS.
For purposes of this discussion, a “
U.S. Holder
” means a
beneficial owner of an Aurora Share, Australis Share or Australis Warrant, as
the case may be, who is, for U.S. federal income tax purposes:
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an individual citizen or resident of the United
States;
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a corporation or other entity classified as a corporation
created or organized in or under the laws of the United States or any
political subdivision thereof;
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an estate the income of which is subject to U.S. federal
income taxation regardless of its source; or
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a trust if: (i) a court within the United States can
exercise primary supervision over it, and one or more United States
persons have the authority to control all substantial decisions of the
trust, or (ii) the trust has a valid election in effect under applicable
U.S. Treasury regulations to be treated as a United States person.
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If a “pass-through” entity holds
Aurora Shares, Australis Shares or Australis Warrants, the tax treatment of an
owner of such “pass-through” entity generally will depend upon the status of
such owner and upon the activities of the “pass-through” entity. An owner of a
“pass-through” entity which holds or Aurora Shares or Shares should consult such
owner’s tax advisor regarding the specific tax consequences of receiving the
Australis Shares and Australis Warrants through the Custodian in the
Distribution and the disposition of such Australis Shares and Australis Warrants
by the Custodian.
Pre-April July 1, 2015 Shareholders Not
Addressed
Aurora believes that it was not a
“passive foreign investment company” under Section 1297 of the Code
(“
PFIC
”) for tax years ending on June 30, 2016 and June 30, 2017, and
based on current business plans and financial expectations, Aurora does not
expect to be a PFIC for its current tax year ending June 30, 2018 and does not
expect to become a PFIC in subsequent tax years. No opinion of legal counsel or
ruling from the IRS concerning the status of the Aurora as a PFIC has been
obtained or is currently planned to be requested. A non-U.S. corporation is
classified as a PFIC for U.S. federal income tax purposes in any taxable year in
which, after applying relevant look-through rules with respect to the income and
assets of its subsidiaries, either: (i) 50% or more of the value of the
corporation’s assets either produce passive income or are held for the
production of passive income, based on the quarterly average of the fair market
value of such assets; or (ii) at least 75% of the corporation’s gross income is
passive income.
Aurora has not made and has no
plans to make a formal determination as to whether it was a PFIC for tax years
prior to July 1, 2015. U.S. Holders should be aware that Aurora may have been
PFIC for tax years prior to July 1, 2015. If Aurora was a PFIC at any time
during a U.S. Holder’s holding period for Aurora Shares, then (absent certain
elections) it would continue to be a PFIC as to that U.S. Holder and as to those
Aurora Shares. The tax consequences to U.S. Holders for whom Aurora may be a
PFIC are beyond the scope of this discussion. Therefore, this discussion
addresses only the U.S. federal income tax consequences of U.S. Holders who
purchased their Aurora Shares after June 30, 2015.
The determination of whether any
corporation was, or will be, a PFIC for a tax year depends, in part, on the
application of complex U.S. federal income tax rules, which are subject to
differing interpretations. In addition, whether any corporation will be a PFIC
for any tax year depends on the assets and income of such corporation over the
course of each such tax year and, as a result, cannot be predicted with
certainty as of the date of this document. Accordingly, there can be no
assurance that the IRS will not challenge any determination made by Aurora
concerning its PFIC status. Each U.S. Holder should consult its own tax advisors
regarding the PFIC status of Aurora.
U.S. Holders who acquired Aurora
Shares before July 1, 2015, or after that date by gift or inheritance, should
consult their own tax advisors regarding the PFIC rules.
Tax Consequences of the Distribution
The Distribution will be effected
under applicable provisions of Canadian corporate law, which are technically
different from analogous provisions of U.S. corporate law. Therefore, the U.S.
federal income tax consequences of certain aspects of the Distribution are not
certain. This summary assumes that: (a) the transfer of the Australis Shares and
Australis Warrants to the Custodian by Aurora shall be treated as a distribution
to its shareholders; and (b) that the U.S. Holders shall be treated as the
owners of the Australis Shares and Australis Warrants held by the Custodian for
their benefit. Under such characterization, the U.S. Holders will be treated as
receiving a taxable distribution equal to the fair market value of the Australis
Shares and Australis Warrants distributed to the Custodian for their benefit in
the Distribution (determined as of the date of the Distribution and without
reduction for any Canadian tax withheld) under section 301 of the Code. There
can be no assurance that the IRS will not challenge this characterization of the
Distribution or that, if challenged, a U.S. court would not agree with the IRS.
Each U.S. Holder should consult its own tax advisor regarding the proper
treatment of the Distribution for U.S. federal income tax purposes.
H-9
A U.S. Holder would be required
to include the fair market value of the Australis Shares and Australis Warrants
received by the Custodian for the benefit of such U.S. holder pursuant to the
Distribution (without reduction for any Canadian income tax withheld) in gross
income as a dividend to the extent of the current or accumulated “earnings and
profits” of Aurora. To the extent the fair market value of the Australis Shares
and Australis Warrants distributed pursuant to the Distribution exceeds Aurora’s
adjusted tax basis in such shares (as calculated for U.S. federal income tax
purposes), the Distribution can be expected to generate additional earnings and
profits for Aurora. To the extent that the fair market value of the Australis
Shares and Australis Warrants exceeds the current and accumulated “earnings and
profits” of Aurora, the distribution of the Australis Shares and Australis
Warrants pursuant to the Distribution will be treated: (a) first, as a tax free
return of capital to the extent of a U.S. Holder’s tax basis in the Aurora
Shares; and (b) thereafter, as gain from the sale or exchange of such Aurora
Shares. Aurora may not calculate its earnings and profits in accordance with
U.S. federal income tax principles and as a result, each U.S. Holder may have to
assume that the Distribution by Aurora constitutes ordinary dividend income.
Dividends received on Aurora Shares by corporate U.S. Holders generally will not
be eligible for the “dividends received deduction.” Subject to applicable
limitations and provided the Aurora is eligible for the benefits of the
Canada-U.S. Tax Convention or the Aurora Shares are readily tradable on a United
States securities market, dividends paid by Aurora to non-corporate U.S.
Holders, including individuals, generally will be eligible for the preferential
tax rates applicable to long-term capital gains for dividends, provided certain
holding period and other conditions are satisfied, including that Aurora not be
classified as a PFIC in the tax year of distribution or in the preceding tax
year.
A U.S. Holder’s initial tax basis
in the Australis Shares received will equal the fair market value of such
Australis Shares at the time of the Distribution. A U.S. Holder’s initial tax
basis in the Australis Warrants received will equal the fair market value of
such Australis Warrants at the time of the Distribution. The holding period for
such Australis Shares and Australis Warrants should begin on the day after the
date of the Distribution.
Preferential tax rates apply to
long term capital gains of a U.S. Holder that is an individual, estate, or
trust. There are currently no preferential tax rates for long term capital gains
of a U.S. Holder that is a corporation. The distribution rules are complex, and
each U.S. Holder should consult its own tax advisors regarding the receipt of
the Australis Shares and Australis Warrants.
Sale of Australis Shares and Australis Warrants by the
Custodian
Subject to the PFIC rules
discussed below, upon the sale or other taxable disposition by the Custodian of
Australis Shares and Australis Warrants beneficially held for a U.S. Holder,
such U.S. Holder generally will recognize capital gain or loss in an amount
equal to the difference between the amount of cash plus the fair market value of
any property received by the Custodian, less expenses, and such U.S. Holder’s
tax basis in such Australis Shares and Australis Warrants sold or otherwise
disposed of. Subject to the PFIC rules, gain or loss recognized on such sale or
other disposition generally will be long-term capital gain or loss if, at the
time of the sale or other disposition, the Australis Shares and Australis
Warrants have been held for more than one year. Preferential tax rates apply to
long-term capital gain of a U.S. Holder that is an individual, estate, or trust.
There are currently no preferential tax rates for long-term capital gain of a
U.S. Holder that is a corporation. Deductions for capital losses are subject to
significant limitations under the Code.
H-10
Special, generally adverse, U.S.
federal income tax consequences apply to U.S. taxpayers who hold interests in a
PFIC, unless certain elections are available and timely and effectively made. As
discussed below, Australis may be a PFIC for its current tax year and may be
PFIC for future tax years.
If Australis is classified as a
PFIC, a U.S. Holder may be subject to increased tax liability and an interest
charge in respect of gain, if any, realized on the sale of Australis Shares and
Australis Warrants by the Custodian and receipt of certain “excess
distributions” as discussed below. Other adverse U.S. tax consequences may
result. The adverse tax consequences of the PFIC rules with respect to the
Australis Shares can be mitigated in some circumstances if a timely and
effective QEF Election is made by a U.S. Holder. However, U.S. Holders should be
aware that Australis does not provide any assurances that it will satisfy the
record keeping requirements that apply to a QEF and that Australis does not
provide any assurances that it will supply U.S. Holders with information that
such U.S. Holders require to report under the QEF rules, in the event that
Australis is a PFIC. Thus, U.S. Holders may not be able to make a QEF Election
with respect to their Australis Shares. Each U.S. Holder should consult its own
tax advisor regarding the availability of, and procedure for making, a QEF
Election.
If the value of the Australis
Shares and Australis Warrants declines significantly while such Australis Shares
and Australis Warrants are held by the Custodian, it is possible for the
proceeds from the sale of the Australis Shares and Australis Warrants to be
exceeded by the combined U.S. federal income and state taxes on the arising from
the Distribution. In general, the magnitude of this adverse effect is likely to
increase to the extent the fair market value of the Australis Shares and
Australis Warrants at the time of the Distribution exceeds the proceeds from the
sale of the Australis Shares and Australis Warrants by the Custodian.
Passive Foreign Investment Company Rules
If Australis is considered a PFIC
at any time during a U.S. Holder’s holding period, the following sections will
generally describe the potentially adverse U.S. federal income tax consequences
to U.S. Holders of the ownership and disposition of Australis Shares or
Australis Warrants.
Australis may be a PFIC for its
current tax year and may be a PFIC in future tax years. No opinion of legal
counsel or ruling from the IRS concerning the status of Australis as a PFIC has
been obtained or is currently planned to be requested. The determination of
whether any corporation was, or will be, a PFIC for a tax year depends, in part,
on the application of complex U.S. federal income tax rules, which are subject
to differing interpretations. In addition, whether any corporation will be a
PFIC for any tax year depends on the assets and income of such corporation over
the course of each such tax year and, as a result, Australis’ PFIC status for
the current year and future years cannot be predicted with certainty as of the
date of this document. Accordingly, there can be no assurance that the IRS will
not challenge any PFIC determination made by Australis(or by one of the
Australis’ subsidiaries). Each U.S. Holder should consult its own tax advisor
regarding Australis’ status as a PFIC and the PFIC status of each non-U.S.
subsidiary of Australis.
In any year in which Australis is
classified as a PFIC, a U.S. Holder will be required to file an annual report
with the IRS containing such information as Treasury Regulations and/or other
IRS guidance may require. In addition to penalties, a failure to satisfy such
reporting requirements may result in an extension of the time period during
which the IRS can assess a tax. U.S. Holders should consult their own tax
advisors regarding the requirements of filing such information returns under
these rules, including the requirement to file an IRS Form 8621.
Australis generally will be a
PFIC for any tax year in which (a) 75% or more of the gross income of Australis
for such tax year is passive income (the “PFIC income test”) or (b) 50% or more
of the value of the assets of Australis either produce passive income or are
held for the production of passive income, based on the quarterly average of the
fair market value of such assets (the “PFIC asset test”). “Gross income”
generally includes sales revenues less the cost of goods sold, plus income from
investments and from incidental or outside operations or sources, and “passive
income” generally includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and
securities, and certain gains from commodities transactions. Active business
gains arising from the sale of commodities generally are excluded from passive
income if substantially all of a foreign corporation’s commodities are stock in
trade or inventory, depreciable property used in a trade or business, or
supplies regularly used or consumed in the ordinary course of its trade or
business, and certain other requirements are satisfied.
H-11
For purposes of the PFIC income
test and PFIC asset test described above, if Australis owns, directly or
indirectly, 25% or more of the total value of the outstanding shares of another
corporation, Australis will be treated as if it (a) held a proportionate share
of the assets of such other corporation and (b) received directly a
proportionate share of the income of such other corporation. In addition, for
purposes of the PFIC income test and PFIC asset test described above, “passive
income” does not include any interest, dividends, rents, or royalties that are
received or accrued by Australis from a “related person” (as defined in Section
954(d)(3) of the Code), to the extent such items are properly allocable to the
income of such related person that is not passive income.
Under certain attribution rules,
if Australis is a PFIC, U.S. Holders will be deemed to own their proportionate
share of any of Australis’ subsidiaries which is also a PFIC (a “
Subsidiary
PFIC
”), and will generally be subject to U.S. federal income tax under the
“Default PFIC Rules Under Section 1291 of the Code” discussed below on their
proportionate share of any (i) distribution on the shares of a Subsidiary PFIC
and (ii) disposition or deemed disposition of shares of a Subsidiary PFIC, both
as if such U.S. Holders directly held the shares of such Subsidiary PFIC.
Accordingly, U.S. Holders should be aware that they could be subject to tax
under the PFIC rules even if no distributions are received and no redemptions or
other dispositions of Australis Shares or Australis Warrants are made. In
addition, U.S. Holders may be subject to U.S. federal income tax on any indirect
gain realized on the stock of a Subsidiary PFIC on the sale or disposition of
Australis Shares or Australis Warrants.
Default PFIC Rules Under Section 1291 of the Code
If Australis is a PFIC, the U.S.
federal income tax consequences to a U.S. Holder of the receipt of Australis
Shares and Australis Warrants and the acquisition, ownership, and disposition of
Australis Shares and Australis Warrants will depend on whether such U.S. Holder
makes a “qualified electing fund” or “
QEF
” election (a “
QEF
Election
”) or makes a mark-to-market election under Section 1296 of the Code
(a “
Mark-to-Market Election
”) with respect to Australis Shares. A U.S.
Holder that does not make either a QEF Election or a Mark-to-Market Election (a
“
Non-Electing U.S. Holder
”) will be taxable as described below.
A Non-Electing U.S. Holder will
be subject to the rules of Section 1291 of the Code with respect to (a) any gain
recognized on the sale or other taxable disposition of Australis Shares and
Australis Warrants and (b) any excess distribution received on the Australis
Shares. A distribution generally will be an “excess distribution” to the extent
that such distribution (together with all other distributions received in the
current tax year) exceeds 125% of the average distributions received during the
three preceding tax years (or during a U.S. Holder’s holding period for the
Australis Shares, if shorter).
Under Section 1291 of the Code,
any gain recognized on the sale or other taxable disposition of Australis Shares
and Australis Warrants of a PFIC (including an indirect disposition of shares of
a Subsidiary PFIC), and any excess distribution received on such Australis
Shares (or a distribution by a Subsidiary PFIC to its shareholder that is deemed
to be received by a U.S. Holder) must be rateably allocated to each day in a
Non-Electing U.S. Holder’s holding period for the Australis Shares. The amount
of any such gain or excess distribution allocated to the tax year of disposition
or distribution of the excess distribution and to years before the entity became
a PFIC, if any, would be taxed as ordinary income (and not eligible for certain
preferential tax rates, as discussed below). The amounts allocated to any other
tax year would be subject to U.S. federal income tax at the highest tax rate
applicable to ordinary income in each such year, and an interest charge would be
imposed on the tax liability for each such year, calculated as if such tax
liability had been due in each such year. A Non-Electing U.S. Holder that is not
a corporation must treat any such interest paid as “personal interest,” which is
not deductible.
H-12
If Australis is a PFIC for any
tax year during which a Non-Electing U.S. Holder holds Australis Shares or
Australis Warrants, it will continue to be treated as a PFIC with respect to
such Non-Electing U.S. Holder, regardless of whether it ceases to be a PFIC in
one or more subsequent tax years. If Australis ceases to be a PFIC, a
Non-Electing U.S. Holder may terminate this deemed PFIC status with respect to
Australis Shares by electing to recognize gain (which will be taxed under the
rules of Section 1291 of the Code as discussed above) as if such Australis
Shares were sold on the last day of the last tax year for which Australis was a
PFIC. No such election, however, may be made with respect to the Australis
Warrants.
QEF Election
A U.S. Holder that makes a QEF
Election for the first tax year in which its holding period of its Australis
Shares begins generally will not be subject to the rules of Section 1291 of the
Code discussed above with respect to its Australis Shares. However, a U.S.
Holder that makes a QEF Election will be subject to U.S. federal income tax on
such U.S. Holder’s pro rata share of (a) Australis’ net capital gain, which will
be taxed as long-term capital gain to such U.S. Holder, and (b) Australis’
ordinary earnings, which will be taxed as ordinary income to such U.S. Holder.
Generally, “net capital gain” is the excess of (a) net long-term capital gain
over (b) net short-term capital loss, and “ordinary earnings” are the excess of
(a) “earnings and profits” over (b) net capital gain. A U.S. Holder that makes a
QEF Election will be subject to U.S. federal income tax on such amounts for each
tax year in which Australis is a PFIC, regardless of whether such amounts are
actually distributed to such U.S. Holder by Australis. However, for any tax year
in which Australis is a PFIC and has no net income or gain, U.S. Holders that
have made a QEF Election would not have any income inclusions as a result of the
QEF Election. If a U.S. Holder that made a QEF Election has an income inclusion,
such a U.S. Holder may, subject to certain limitations, elect to defer payment
of current U.S. federal income tax on such amounts, subject to an interest
charge. If such U.S. Holder is not a corporation, any such interest paid will be
treated as “personal interest,” which is not deductible.
A U.S. Holder that makes a timely
QEF Election generally (a) may receive a tax-free distribution from Australis to
the extent that such distribution represents “earnings and profits” that were
previously included in income by the U.S. Holder because of such QEF Election
and (b) will adjust such U.S. Holder’s tax basis in the Australis Shares to
reflect the amount included in income or allowed as a tax-free distribution
because of such QEF Election. In addition, a U.S. Holder that makes a QEF
Election generally will recognize capital gain or loss on the sale or other
taxable disposition of Australis Shares.
The procedure for making a QEF
Election, and the U.S. federal income tax consequences of making a QEF Election,
will depend on whether such QEF Election is timely. A QEF Election will be
treated as “timely” for purposes of avoiding the default PFIC rules discussed
above if such QEF Election is made for the first year in the U.S. Holder’s
holding period for the Australis Shares in which Australis was a PFIC. A U.S.
Holder may make a timely QEF Election by filing the appropriate QEF Election
documents at the time such U.S. Holder files a U.S. federal income tax return
for such year.
A QEF Election will apply to the
tax year for which such QEF Election is made and to all subsequent tax years,
unless such QEF Election is invalidated or terminated or the IRS consents to
revocation of such QEF Election. If a U.S. Holder makes a QEF Election and, in a
subsequent tax year, Australis ceases to be a PFIC, the QEF Election will remain
in effect (although it will not be applicable) during those tax years in which
Australis is not a PFIC. Accordingly, if Australis becomes a PFIC in another
subsequent tax year, the QEF Election will be effective and the U.S. Holder will
be subject to the QEF rules described above during any subsequent tax year in
which Australis qualifies as a PFIC.
As discussed above, under
proposed Treasury Regulations, if a U.S. holder has an option, warrant or other
right to acquire stock of a PFIC (such as the Australis Warrants), such option,
warrant or right is considered to be PFIC stock subject to the default rules of
Section 1291 of the Code. However, a U.S. Holder of an option, warrant or other
right to acquire stock of a PFIC may not make a QEF Election that will apply to
the option, warrant or other right to acquire PFIC stock. In addition, under proposed
Treasury Regulations, if a U.S. Holder holds an option, warrant or other right
to acquire stock of a PFIC, the holding period with respect to shares of stock
of the PFIC acquired upon exercise of such option, warrant or other right will
include the period that the option, warrant or other right was held.
H-13
U.S. Holders should be aware that
there can be no assurances that Australis will satisfy the record keeping
requirements that apply to a QEF, or that Australis will supply U.S. Holders
with a PFIC Annual Information Statement or other information that such U.S.
Holders are required to report under the QEF rules, in the event that Australis
is a PFIC. Thus, U.S. Holders may not be able to make a QEF Election with
respect to their Australis Shares. Each U.S. Holder should consult its own tax
advisors regarding the availability of, and procedure for making, a QEF
Election.
A U.S. Holder makes a QEF
Election by attaching a completed IRS Form 8621, including a PFIC Annual
Information Statement, to a timely filed U.S. federal income tax return.
However, if Australis does not provide the required information with regard to
Australis or any of its Subsidiary PFICs, U.S. Holders will not be able to make
a QEF Election for such entity and will continue to be subject to the rules of
Section 1291 of the Code discussed above that apply to Non-Electing U.S. Holders
with respect to the taxation of gains and excess distributions.
Mark-to-Market Election
A U.S. Holder may make a
Mark-to-Market Election with respect to Australis Shares only if the Australis
Shares are marketable stock. The Australis Shares generally will be “marketable
stock” if the Australis Shares are regularly traded on (a) a national securities
exchange that is registered with the SEC, (b) the national market system
established pursuant to Section 11A of the U.S. Exchange Act or (c) a foreign
securities exchange that is regulated or supervised by a governmental authority
of the country in which the market is located, provided that (i) such foreign
exchange has trading volume, listing, financial disclosure, and other
requirements and the laws of the country in which such foreign exchange is
located, together with the rules of such foreign exchange, ensure that such
requirements are actually enforced and (ii) the rules of such foreign exchange
ensure active trading of listed stocks. If such stock is traded on such a
qualified exchange or other market, such stock generally will be considered
“regularly traded” for any calendar year during which such stock is traded,
other than in de minimis quantities, on at least 15 days during each calendar
quarter. Provided that the Australis Shares are “regularly traded” as described
in the preceding sentence, the Australis Shares are expected to be marketable
stock.
A U.S. Holder that makes a
Mark-to-Market Election with respect to its Australis Shares generally will not
be subject to the rules of Section 1291 of the Code discussed above with respect
to such Australis Shares. However, if a U.S. Holder does not make a
Mark-to-Market Election beginning in the first tax year of such U.S. Holder’s
holding period for the Australis Shares and such U.S. Holder has not made a
timely QEF Election, the rules of Section 1291 of the Code discussed above will
apply to certain dispositions of, and distributions on, the Australis
Shares.
A U.S. Holder that makes a
Mark-to-Market Election will include in ordinary income, for each tax year in
which Australis is a PFIC, an amount equal to the excess, if any, of (a) the
fair market value of the Australis Shares, as of the close of such tax year over
(b) such U.S. Holder’s tax basis in the Australis Shares. A U.S. Holder that
makes a Mark-to-Market Election will be allowed a deduction in an amount equal
to the excess, if any, of (i) such U.S. Holder’s adjusted tax basis in the
Australis Shares, over (ii) the fair market value of such Australis Shares (but
only to the extent of the net amount of previously included income as a result
of the Mark-to-Market Election for prior tax years).
A U.S. Holder that makes a
Mark-to-Market Election generally also will adjust such U.S. Holder’s tax basis
in the Australis Shares to reflect the amount included in gross income or
allowed as a deduction because of such Mark-to-Market Election. In addition, upon a sale or other
taxable disposition of Australis Shares, a U.S. Holder that makes a
Mark-to-Market Election will recognize ordinary income or ordinary loss (not to
exceed the excess, if any, of (a) the amount included in ordinary income because
of such Mark-to-Market Election for prior tax years over (b) the amount allowed
as a deduction because of such Mark-to-Market Election for prior tax years).
H-14
A U.S. Holder makes a
Mark-to-Market Election by attaching a completed IRS Form 8621 to a timely filed
U.S. federal income tax return. A timely Mark-to-Market Election applies to the
tax year in which such Mark-to-Market Election is made and to each subsequent
tax year, unless the Australis Shares cease to be “marketable stock” or the IRS
consents to revocation of such election. Each U.S. Holder should consult its own
tax advisor regarding the availability of, and procedure for making, a
Mark-to-Market Election.
Although a U.S. Holder may be
eligible to make a Mark-to-Market Election with respect to the Australis Shares,
no such election may be made with respect to the stock of any Subsidiary PFIC
that a U.S. Holder is treated as owning because such stock is not marketable.
Hence, the Mark-to-Market Election will not be effective to eliminate the
interest charge and other income inclusion rules described above with respect to
deemed dispositions of Subsidiary PFIC stock or distributions from a Subsidiary
PFIC to its shareholder.
Other PFIC Rules
Under Section 1291(f) of the
Code, the IRS has issued proposed Treasury Regulations that, subject to certain
exceptions, would cause a U.S. Holder that had not made a timely QEF Election to
recognize gain (but not loss) upon certain transfers of Australis Shares that
would otherwise be tax-deferred (e.g., gifts and exchanges pursuant to corporate
reorganizations). However, the specific U.S. federal income tax consequences to
a U.S. Holder may vary based on the manner in which Australis Shares or
Australis Warrants are transferred.
If finalized in their current
form, the proposed Treasury Regulations applicable to PFICs would be effective
for transactions occurring on or after April 1, 1992. Because the proposed
Treasury Regulations have not yet been adopted in final form, they are not
currently effective, and there is no assurance that they will be adopted in the
form and with the effective date proposed. Nevertheless, the IRS has announced
that, in the absence of final Treasury Regulations, taxpayers may apply
reasonable interpretations of the Code provisions applicable to PFICs and that
it considers the rules set forth in the proposed Treasury Regulations to be
reasonable interpretations of those Code provisions. The PFIC rules are complex,
and the implementation of certain aspects of the PFIC rules requires the
issuance of Treasury Regulations which in many instances have not been
promulgated and which, when promulgated, may have retroactive effect. U.S.
Holders should consult their own tax advisors about the potential applicability
of the proposed Treasury Regulations.
Certain additional adverse rules
will apply with respect to a U.S. Holder if Australis is a PFIC, regardless of
whether such U.S. Holder makes a QEF Election. For example under Section
1298(b)(6) of the Code, a U.S. Holder that uses Australis Shares or Australis
Warrants as security for a loan will, except as may be provided in Treasury
Regulations, be treated as having made a taxable disposition of such Australis
Shares or Australis Warrants.
In addition, a U.S. Holder who
acquires Australis Shares or Australis Warrants from a decedent will not receive
a “step up” in tax basis of such Australis Shares or Australis Warrant to fair
market value.
Special rules also apply to the
amount of foreign tax credit that a U.S. Holder may claim on a distribution from
a PFIC. Subject to such special rules, foreign taxes paid with respect to any
distribution in respect of stock in a PFIC are generally eligible for the
foreign tax credit. The rules relating to distributions by a PFIC and their
eligibility for the foreign tax credit are complicated, and a U.S. Holder should
consult with their own tax advisor regarding the availability of the foreign tax
credit with respect to distributions by a PFIC.
H-15
The PFIC rules are complex, and
each U.S. Holder should consult its own tax advisor regarding the PFIC rules
(including the applicability and advisability of a QEF Election and
Mark-to-Market Election) and how the PFIC rules may affect the U.S. federal
income tax consequences of the acquisition, ownership, and disposition of
Australis Shares and Australis Warrants.
Distributions on Australis Shares
The following discussion is
subject in its entirety to the special rules described below under the heading
“Passive Foreign Investment Company Rules.”
A U.S. Holder that receives a
distribution, including a constructive distribution, with respect to a Australis
Share (as well as any constructive distribution on a Australis Warrant as
described below) will be required to include the amount of such distribution in
gross income as a dividend (without reduction for any Canadian income tax
withheld from such distribution) to the extent of Australis’ current and
accumulated “earnings and profits”, as computed under U.S. federal income tax
principles. A dividend generally will be taxed to a U.S. Holder at ordinary
income tax rates if Australis is a PFIC for the tax year of such distribution or
the preceding tax year. To the extent that a distribution exceeds the current
and accumulated “earnings and profits” of Australis, such distribution will be
treated first as a tax-free return of capital to the extent of a U.S. Holder’s
tax basis in the Australis Shares and thereafter as gain from the sale or
exchange of such Australis Shares. However, Australis may not maintain the
calculations of earnings and profits in accordance with U.S. federal income tax
principles, and each U.S. Holder may be required to assume that any distribution
by Australis with respect to the Australis Shares will constitute ordinary
dividend income. Dividends received on Australis Shares generally will not be
eligible for the “dividends received deduction” generally applicable to
corporations. Subject to applicable limitations and provided Australis is
eligible for the benefits of the Canada-U.S. Tax Convention or the Australis
Shares are readily tradable on a United States securities market, dividends paid
by Australis to non-corporate U.S. Holders, including individuals, generally
will be eligible for the preferential tax rates applicable to long-term capital
gains for dividends, provided certain holding period and other conditions are
satisfied, including that Australis not be classified as a PFIC in the tax year
of distribution or in the preceding tax year. The dividend rules are complex,
and each U.S. Holder should consult its own tax advisor regarding the
application of such rules.
Under Section 305 of the Code, an
adjustment to the number of Australis Warrant Shares that will be issued on the
exercise of the Australis Warrants, or an adjustment to the exercise price of
the Australis Warrants, may be treated as a constructive distribution to a U.S.
Holder of the Australis Warrants if, and to the extent that, such adjustment has
the effect of increasing such U.S. Holder’s proportionate interest in the
“earnings and profits” or Australis’ assets, depending on the circumstances of
such adjustment (for example, if such adjustment is to compensate for a
distribution of cash or other property to the shareholders). Adjustments to the
exercise price of Australis Warrants made pursuant to a bona fide reasonable
adjustment formula that has the effect of preventing dilution of the interest of
the holders of the Australis Warrants should generally not be considered to
result in a constructive distribution. Any such constructive distribution would
be taxable whether or not there is an actual distribution of cash or other
property. (See more detailed discussion of the rules applicable to distributions
discussed above).
Additional Tax Considerations
Receipt of Foreign Currency
The amount of any distribution
paid to a U.S. Holder in foreign currency or on the sale, exchange or other
taxable disposition of Australis Shares or Australis Warrants generally will be
equal to the U.S. dollar value of such foreign currency based on the exchange
rate applicable on the date of receipt (regardless of whether such foreign
currency is converted into U.S. dollars at that time). If the foreign currency
received is not converted into U.S. dollars on the date of receipt, a U.S.
Holder will have a tax basis in the foreign currency equal to its U.S. dollar
value on the date of receipt. Any U.S. Holder who receives payment in foreign
currency and engages in a subsequent conversion or other disposition of the
foreign currency may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss, and
generally will be U.S. source income or loss for foreign tax credit purposes.
Different rules apply to U.S. Holders who use the accrual method of tax
accounting. Each U.S. Holder should consult its own U.S. tax advisor regarding
the U.S. federal income tax consequences of receiving, owning, and disposing of
foreign currency.
H-16
Foreign Tax Credit
Subject to the PFIC rules
discussed above, a U.S. Holder that pays (whether directly or through
withholding) Canadian income tax with respect to dividends paid on the Australis
Shares (or with respect to any constructive dividend on the Australis Warrants)
generally will be entitled, at the election of such U.S. Holder, to receive
either a deduction or a credit for such Canadian income tax paid. Generally, a
credit will reduce a U.S. Holder’s U.S. federal income tax liability on a
dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holder’s income
subject to U.S. federal income tax. This election is made on a year-by-year
basis and applies to all foreign taxes paid or accrued (whether directly or
through withholding) by a U.S. Holder during a year.
Complex limitations apply to the
foreign tax credit, including the general limitation that the credit cannot
exceed the proportionate share of a U.S. Holder’s U.S. federal income tax
liability that such U.S. Holder’s “foreign source” taxable income bears to such
U.S. Holder’s worldwide taxable income. In applying this limitation, a U.S.
Holder’s various items of income and deduction must be classified, under complex
rules, as either “foreign source” or “U.S. source.” Generally, dividends paid by
a foreign corporation (including constructive dividends) should be treated as
foreign source for this purpose, and gains recognized on the sale of stock of a
foreign corporation by a U.S. Holder should be treated as U.S. source for this
purpose, except as otherwise provided in an applicable income tax treaty, and if
an election is properly made under the Code. However, the amount of a
distribution with respect to the Australis Shares or Australis Warrants that is
treated as a “dividend” may be lower for U.S. federal income tax purposes than
it is for Canadian federal income tax purposes, resulting in a reduced foreign
tax credit allowance to a U.S. Holder. In addition, this limitation is
calculated separately with respect to specific categories of income. The foreign
tax credit rules are complex, and each U.S. Holder should consult its own tax
advisor regarding the foreign tax credit rules.
Additional Tax on Passive Income
Certain U.S. Holders that are
individuals, estates or trusts (other than trusts that are exempt from tax) will
be subject to a 3.8% tax on all or a portion of their “net investment income,”
which includes dividends on the Australis Shares and net gains from the
disposition of the Australis Shares or Australis Warrants. Further, excess
distributions treated as dividends, gains treated as excess distributions, and
mark-to-market inclusions and deductions under the PFIC rules discussed above
are all included in the calculation of net investment income.
Treasury Regulations provide,
subject to the election described in the following paragraph, that solely for
purposes of this additional tax, distributions of previously taxed income will
be treated as dividends and included in net investment income subject to the
additional 3.8% tax. Additionally, to determine the amount of any capital gain
from the sale or other taxable disposition of Australis Shares that will be
subject to the additional tax on net investment income, a U.S. Holder who has
made a QEF Election will be required to recalculate its basis in the Australis
Shares by excluding QEF basis adjustments.
Alternatively, a U.S. Holder may
make an election which will be effective with respect to all interests in a PFIC
for which a QEF Election has been made and which is held in that year or
acquired in future years. Under this election, a U.S. Holder pays the additional
3.8% tax on QEF income inclusions and on gains calculated after giving effect to
related tax basis adjustments. U.S. Holders that are individuals, estates or
such trusts should consult their own tax advisors regarding the applicability of
this tax to any of their income or gains in respect of the Australis Shares and
Australis Warrants and the advisability of making this election.
H-17
Information Reporting; Backup Withholding Tax
Under U.S. federal income tax
laws certain categories of U.S. Holders must file information returns with
respect to their investment in, or involvement in, a foreign corporation. For
example, U.S. return disclosure obligations (and related penalties) are imposed
on U.S. Holders that hold certain specified foreign financial assets in excess
of certain threshold amounts. The definition of specified foreign financial
assets includes not only financial accounts maintained in foreign financial
institutions, but also, unless held in accounts maintained by a financial
institution, any stock or security issued by a non-U.S. person. U. S. Holders
may be subject to these reporting requirements unless their Australis Shares and
Australis Warrants are held in an account at certain financial institutions.
Penalties for failure to file certain of these information returns are
substantial. U.S. Holders should consult their own tax advisors regarding the
requirements of filing information returns, including the requirement to file
IRS Form 8938.
Payments made within the U.S., or
by a U.S. payor or U.S. middleman, of dividends on, and proceeds arising from
the sale or other taxable disposition of the Australis Shares and Australis
Warrants generally may be subject to information reporting and backup
withholding tax, currently at the rate of 24%, if a U.S. Holder (a) fails to
furnish its correct U.S. taxpayer identification number (generally on Form W-9),
(b) furnishes an incorrect U.S. taxpayer identification number, (c) is notified
by the IRS that such U.S. Holder has previously failed to properly report items
subject to backup withholding tax, or (d) fails to certify, under penalty of
perjury, that it has furnished its correct U.S. taxpayer identification number
and that the IRS has not notified such U.S. Holder that it is subject to backup
withholding tax. However, certain exempt persons, such as U.S. Holders that are
corporations, generally are excluded from these information reporting and backup
withholding tax rules. Any amounts withheld under the U.S. backup withholding
tax rules will be allowed as a credit against a U.S. Holder’s U.S. federal
income tax liability, if any, or will be refunded, if such U.S. Holder furnishes
required information to the IRS in a timely manner.
The discussion of reporting
requirements set forth above is not intended to constitute a complete
description of all reporting requirements that may apply to a U.S. Holder. A
failure to satisfy certain reporting requirements may result in an extension of
the time period during which the IRS can assess a tax and, under certain
circumstances, such an extension may apply to assessments of amounts unrelated
to any unsatisfied reporting requirement. Each U.S. Holder should consult its
own tax advisors regarding the information reporting and backup withholding
rules.
THIS SUMMARY IS OF A GENERAL NATURE ONLY, IS NOT EXHAUSTIVE
OF ALL POSSIBLE U.S. FEDERAL TAX CONSIDERATIONS AND IS NOT INTENDED TO BE, AND
SHOULD NOT BE CONSTRUED TO BE, LEGAL, BUSINESS OR TAX ADVICE TO ANY PARTICULAR
U.S. HOLDER OF AURORA SHARES. EACH U.S. HOLDER OF AURORA SHARES SHOULD CONSULT
ITS OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO IT OF THE RECEIPT
OF AUSTRALIS SHARES AND AUSTRALIS WARRANTS RECEIVED BY THE CUSTODIAN FOR THE
BENEFIT OF THE SHAREHOLDERS PURSUANT TO THE DISTRIBUTION AND THE OWNERSHIP AND
DISPOSITION OF THE AUSTRALIS SHARES AND AUSTRALIS WARRANTS RECEIVED BY THE
CUSTODIAN FOR THE BENEFIT OF THE U.S. HOLDERS FOR THE BENEFIT OF THE
SHAREHOLDERS PURSUANT TO THE DISTRIBUTION, INCLUDING THE EFFECTS OF APPLICABLE
U.S. FEDERAL, STATE AND LOCAL TAX LAWS AND NON-U.S. TAX LAWS AND POSSIBLE
CHANGES IN TAX LAWS.
H-18
APPENDIX “I”
GLOSSARY OF TERMS
|
“
1933 Act
”
|
means the United States
Securities Act of 1933
, as
amended, and the rules and regulations promulgated from time to time
thereunder;
|
|
|
|
|
“
1934 Act
”
|
means the United States
Securities Exchange Act of
1934
, as amended, and the rules and regulations promulgated from time
to time thereunder;
|
|
|
|
|
“
ACE
”
|
means Aurora Cannabis Enterprises Inc., a wholly-owned
subsidiary of Aurora;
|
|
|
|
|
“
ACMPR
”
|
means the
Access to Cannabis for Medical Purposes
Regulations
(Canada) issued pursuant to the
Controlled Drugs and
Substances Act
(Canada);
|
|
|
|
|
“
Action
”
|
means, with respect to any Person, any litigation, legal
action, lawsuit, claim, audit, arbitration or other proceeding (whether
civil, administrative, quasi- criminal or criminal) before any
Governmental Entity against such Person or its business or affecting any
of its assets;
|
|
|
|
|
“
Additional Investment
”
|
means the Private Placement of the Alcanna Subscription
Receipts, Sunshine Warrants and Pro Rata Warrants;
|
|
|
|
|
“
affiliate
”
|
has the meaning ascribed thereto in the Canadian
Securities Administrators’ National Instrument 45-106 –
Prospectus
Exemptions
, unless stated otherwise;
|
|
|
|
|
“
Alcanna Investment
”
|
has the meaning given to such term under “Appendix “F”
Information Concerning Aurora – Recent Developments – Alcanna Inc.
(formerly Liquor Stores N.A. Ltd.) Investment”;
|
|
|
|
|
“
Alcanna Pro Rata
Warrants
”
|
has the meaning given to such term under “Appendix “F”
Information Concerning Aurora – Recent Developments – Alcanna Inc.
(formerly Liquor Stores N.A. Ltd.) Investment”;
|
|
|
|
|
“
Alcanna Shares
”
|
means the common shares in the capital of Alcanna;
|
|
|
|
|
“
Alcanna Subscription
Receipt Funds
”
|
has the meaning given to such term under “Appendix “F”
Information Concerning Aurora – Recent Developments – Alcanna Inc.
(formerly Liquor Stores N.A. Ltd.) Investment”;
|
|
|
|
|
“
Alcanna Subscription
Receipts
”
|
has the meaning given to such term under “Appendix “F”
Information Concerning Aurora – Recent Developments – Alcanna Inc.
(formerly Liquor Stores N.A. Ltd.) Investment”;
|
|
|
|
|
“
Alcanna Sunshine
Warrants
”
|
has the meaning given to such term under “Appendix “F”
Information Concerning Aurora – Recent Developments – Alcanna Inc.
(formerly Liquor Stores N.A. Ltd.) Investment”;
|
|
|
|
|
“
Alcanna
”
|
means Alcanna Inc. (formerly, Liquor Stores N.A. Ltd.), a
company existing under the CBCA;
|
|
|
|
|
“
allowable capital loss
”
|
has the meaning given to such term under “Appendix “H”
Tax Considerations Relating to the Distribution – Certain Canadian Federal
Income Tax Considerations Relating to the Distributions – Resident Holders
– Disposition of Australis Shares or Australis Warrants”;
|
|
|
|
|
“
Amalco
”
|
means the amalgamated entity resulting from the
amalgamation of MedReleaf and MedReleaf Sub pursuant to Section 2.3(a) of
the Plan of Arrangement;
|
I-1
|
“
Amending Agreement
”
|
means the May 24, 2018 amending agreement to the
Arrangement Agreement between Aurora and MedReleaf, with the schedules
attached thereto, amended and restated or supplemented from time to time;
|
|
|
|
|
“
Anandia
”
|
means Anandia Laboratories Inc.;
|
|
|
|
|
“
Annual Information Form
”
|
means the annual information form of Aurora for the year
ended June 30, 2017 dated September 25, 2017;
|
|
|
|
|
“
APS
”
|
means Alfred Pedersen & Søn;
|
|
|
|
|
“
ARC
”
|
means an advance ruling certificate issued by the
Commissioner under Section 102(1) of the
Competition Act
in respect
of the Arrangement;
|
|
|
|
|
“
Arrangement Agreement
”
|
means the May 14, 2018 arrangement agreement between
Aurora and MedReleaf, as amended by the Amending Agreement, together with
the schedules attached thereto, amended and restated or supplemented from
time to time;
|
|
|
|
|
“
Arrangement
”
|
means an arrangement pursuant to s. 182 of the OBCA on
the terms and conditions set forth in the Plan of Arrangement, subject to
any amendment or supplement thereto made in accordance therewith, herewith
or made at the direction of the Court either in the Interim Order or the
Final Order with the consent of Aurora and MedReleaf, each acting
reasonably;
|
|
|
|
|
“
Articles of Arrangement
”
|
means the articles of arrangement of MedReleaf in respect
of the Arrangement, to be sent to the Director pursuant to the OBCA after
the Final Order is made, which shall be in form and substance satisfactory
to Aurora and MedReleaf, each acting reasonably;
|
|
|
|
|
“
Aurora Acquisition
Proposal
”
|
means, other than the Arrangement and other than any
transaction involving only Aurora and/or one or more of the wholly-owned
Aurora Subsidiaries, any offer, proposal, expression of interest or
inquiry (written or oral) from any Person or group of Persons acting
“jointly or in concert” other than MedReleaf (or any of its affiliates or
joint actors) after the date of the Arrangement Agreement relating to: (i)
any sale, disposition, alliance or joint venture (or any lease, long-term
supply agreement or other arrangement having the same economic effect as a
sale), direct or indirect, in a single transaction or a series of related
transactions, of assets representing 20% or more of the consolidated
assets or contributing 20% or more of the consolidated revenue of Aurora
and the Aurora Subsidiaries, in each case taken as a whole, or of 20% or
more of any class of voting, equity or other securities or any securities
exchangeable for or convertible into voting, equity or other securities of
Aurora and the Aurora Subsidiaries (or rights or interests therein or
thereto); (ii) any direct or indirect take-over bid, tender offer,
exchange offer, treasury issuance or other transaction that, if
consummated, would result in a Person or group of Persons beneficially
owning 20% or more of any class of voting, equity or other securities
(including securities convertible into or exercisable or exchangeable for
voting, equity or other securities) of Aurora or the Aurora Subsidiaries;
(iii) any plan of arrangement, merger, amalgamation, consolidation, share
exchange, business combination, reorganization, recapitalization,
liquidation, dissolution, winding up or exclusive license or other similar
transaction involving Aurora or the Aurora Subsidiaries pursuant to which
any Person or group of Persons would acquire, directly or indirectly, 20%
or more of the voting or equity securities of Aurora or the surviving
entity or the resulting direct or indirect parent of Aurora or the surviving entity; or
any other similar transaction or series of related transactions involving Aurora
or the Aurora Subsidiaries;
|
I-2
|
“
Aurora Board
Recommendation
”
|
means the unanimous determination of the Aurora Board,
after consultation with its legal and financial advisors, that the
Arrangement is in the best interests of Aurora and is fair to Aurora
Shareholders and the unanimous recommendation of the Aurora Board to
Aurora Shareholders that they vote in favour of the Aurora Shareholders’
Resolution;
|
|
|
|
|
“
Aurora Board
”, “
Board
” or “
Board of
Directors
”
|
means the board of directors of Aurora as the same is
constituted from time to time;
|
|
|
|
|
“
Aurora Change in
Recommendation
”
|
means the Aurora Board fails to recommend or withdraws,
amends, modifies or qualifies (or proposes publicly to withdraw, amend,
modify or qualify), in a manner adverse to MedReleaf, the Aurora Board
Recommendation, or the Aurora Board accepts, approves, endorses or
recommends or publicly proposes to accept, approve, endorse or recommend
an Aurora Acquisition Proposal, or takes no position or remains neutral
with respect to, any publicly announced Aurora Acquisition Proposal (it
being understood that publicly taking no position or a neutral position
with respect to a publicly announced, or otherwise publicly disclosed,
Aurora Acquisition Proposal for a period of no more than five Business
Days following such public announcement or public disclosure will not be
considered to be an Aurora Change in Recommendation provided the Aurora
Board has rejected such Aurora Acquisition Proposal and affirmed the
Aurora Board Recommendation before the end of such five Business Day
period (or in the event that the Aurora Meeting is scheduled to occur
within such five Business Day period, no later than the later of one
Business Day following the public announcement or public disclosure of
such Aurora Acquisition Proposal or the third Business Day prior to the
date of the Aurora Meeting));
|
|
|
|
|
“
Aurora Debentures
”
|
means the convertible debentures of Aurora bearing an
interest at 6% per annum and having an exercise price of $6.50 per
convertible debenture (with an expiry date of November 28, 2022) and
$13.05 per convertible debenture (with an expiry date of March 9, 2020);
|
|
|
|
|
“
Aurora Expense Fee
”
|
has the meaning given to such term under “The Arrangement
– Expenses of the Arrangement”;
|
|
|
|
|
“
Aurora Fairness Opinion
” or the “
Opinion
”
|
means the opinion of BMO Capital Markets dated effective
May 13, 2018, a copy of which is attached as Appendix “D” to this
Circular;
|
|
|
|
|
“
Aurora Filings
”
|
means all documents publicly filed under the profile of
Aurora on SEDAR since July 1, 2016;
|
|
|
|
|
“
Aurora Financial Advisor
”
|
means BMO Capital Markets, as exclusive financial advisor
to the Aurora Board;
|
|
|
|
|
“
Aurora Larssen
”
|
means Aurora Larssen Projects Inc., a wholly-owned
subsidiary of Aurora;
|
|
|
|
|
“
Aurora Match Period
”
|
has the meaning given to such term under “The Arrangement
Agreement – Covenants – Notice of Superior Proposal
Determination
“
;
|
|
|
|
|
“
Aurora Nordic Facility
”
|
has the meaning given to such term under “Appendix “F”
Information Concerning Aurora – Recent Developments – Alfred Pedersen
& Søn Joint Venture “;
|
|
|
|
|
“
Aurora Nordic
”
|
means Aurora Nordic Cannabis A/S;
|
I-3
|
“
Aurora Options
”
|
means options to purchase Aurora Shares issued pursuant
to or governed by the Aurora Stock Option Plan;
|
|
|
|
|
“
Aurora RSU Plan
”
|
means the restricted share unit plan of Aurora effective
September 25, 2017 allowing for the grant of a maximum of 10,000,000
restricted share units;
|
|
|
|
|
“
Aurora RSUs
”
|
means restricted share units granted under or governed by
the Aurora RSU Plan;
|
|
|
|
|
“
Aurora Shareholders
”
|
means, at any time, the holders of Aurora Shares;
|
|
|
|
|
“
Aurora Shares
”
|
means the common shares in the capital of Aurora;
|
|
|
|
|
“
Aurora Stock Option Plan
”
|
means the 10% rolling share option plan of Aurora
effective September 25, 2017;
|
|
|
|
|
“
Aurora Subsidiaries
”
|
means, collectively, the Subsidiaries of Aurora;
|
|
|
|
|
“
Aurora Superior Proposal
Notice
”
|
has the meaning ascribed thereto in Section 6.4(a)(iii)
of the Arrangement Agreement;
|
|
|
|
|
“
Aurora Superior Proposal
”
|
means any bona fide unsolicited written Aurora
Acquisition Proposal made by an arm’s length third party or arm’s length
third parties acting jointly that is made after the date of the
Arrangement Agreement, that relates to the acquisition of all or
substantially all of the assets of Aurora (on a consolidated basis) or
100% of the issued and outstanding Aurora Shares not beneficially owned by
the party making such Aurora Acquisition Proposal and any joint actor or
any of their respective affiliates, whether by way of a single or
multistep transaction or a series of related transactions, that: (i)
complies with Securities Laws in all material respects; (ii) did not
result from or involve a breach of Section 6.3 of the Arrangement
Agreement or the Exclusivity Agreement, the Confidentiality Agreement or
any other agreement between the Person making the Aurora Acquisition
Proposal and Aurora or any of its Subsidiaries; (iii) is reasonably
capable of being completed in accordance with its terms without undue
delay relative to the Arrangement, taking into account all legal,
financial, regulatory and other aspects of such proposal (including,
required shareholder approvals and minimum tender requirements) and the
Person making such proposal; (iv) is not subject to any financing
condition or contingency and in respect of which adequate arrangements
have been made and have been demonstrated to be available to ensure that
the required funds or other consideration will be available to effect
payment in full for all of the Aurora Shares or the assets of Aurora to be
acquired, as the case may be; (v) is not subject to a due diligence or
access to information condition; (vi) the Aurora Board of Directors
determines, in its good faith judgment, after receiving the advice of its
outside legal and financial advisors and after taking into account all the
terms and conditions of the Aurora Acquisition Proposal, including all
legal, financial, regulatory and other aspects of such Aurora Acquisition
Proposal and the Person making such Aurora Acquisition Proposal, would, if
consummated in accordance with its terms, but not assuming away any risk
of non-completion, result in a transaction more favourable to Aurora
Shareholders from a financial point of view than the terms of the
Arrangement (including any amendments to the terms and conditions proposed
by Aurora as contemplated by Section 6.4(b)); and (vii) in the event that
Aurora does not have the financial resources to pay the Aurora Termination
Payment, the terms of such Aurora Acquisition Proposal provide that the
Person making such Aurora Acquisition Proposal shall advance or otherwise provide
Aurora with the cash for Aurora to make the Aurora Termination Payment, and such
amount will be advanced or provided on or before such Aurora Termination Payment
becomes payable;
|
I-4
|
“
Aurora Supporting
Shareholders
”
|
means Terry Booth; Steve Dobler; Michael Singer; Glen
Ibbott; Neil Belot; Cam Battley; Allan Clerein; Diane Jang; Adam Szweras;
and Jason Dyck;
|
|
|
|
|
“
Aurora Termination
Payment
”
|
has the meaning ascribed thereto in Section 6.6 of the
Arrangement Agreement;
|
|
|
|
|
“
Aurora Warrants
”
|
means the outstanding warrants to purchase Aurora Shares;
|
|
|
|
|
“
Aurora
” or the “
Company
”
|
means Aurora Cannabis Inc.;
|
|
|
|
|
“
Australis
”
|
means Australis Capital Inc., a corporation organized
under the laws of Alberta;
|
|
|
|
|
“
Australis Shares
”
|
means common shares in the capital of Australis;
|
|
|
|
|
“
Australis Units
”
|
means the units of Australis to be distributed to the
Aurora Shareholders as a return of capital, with each Australis Unit
consisting of one Australis Share and one Australis Warrant;
|
|
|
|
|
“
Australis Warrants
”
|
means common share purchase warrants in the capital of
Australis;
|
|
|
|
|
“
Authorization
”
|
means, with respect to any Person, any authorization,
order, permit, approval, grant, licence, registration, consent, right,
notification, condition, franchise, privilege, certificate, judgment,
writ, injunction, award, determination, direction, decision, decree,
by-law, rule or regulation, that is binding upon or applicable to such
Person or its business, assets or securities, and includes any
Environmental Approval;
|
|
|
|
|
“
BCBCA
”
|
means the
Business Corporations Act
(British
Columbia);
|
|
|
|
|
“
BCNL
”
|
means BC Northern Lights Enterprises Ltd., a wholly-owned
subsidiary of Aurora;
|
|
|
|
|
“
Beneficial Shareholders
”
|
means a non-registered, beneficial holder of Aurora
Shares whose Aurora Shares are held through an Intermediary.
|
|
|
|
|
“
BMO Capital Markets
”
|
means BMO Nesbitt Burns Inc.;
|
|
|
|
|
“
Broadridge
”
|
means Broadridge Financial Solutions, Inc.;
|
|
|
|
|
“
Business Day
”
|
means any day, other than a Saturday, a Sunday or a
statutory holiday in Toronto, Ontario; Edmonton, Alberta; or Vancouver,
British Columbia;
|
|
|
|
|
“
Canaccord
”
|
means Canaccord Genuity Corp.;
|
|
|
|
|
“
Canada-U.S. Tax
Convention
”
|
has the meaning given to such term under “Appendix “H”
Tax Considerations Relating to the Distribution – Certain United States
Federal Income Tax Considerations Relating to the Distribution”;
|
|
|
|
|
“
Cann Group
”
|
means Cann Group Limited;
|
|
|
|
|
“
CanniMed Offer
”
|
has the meaning given to such term under “Appendix “F”
Information Concerning Aurora – Recent Developments – CanniMed Takeover
Bid”;
|
|
|
|
|
“
CanniMed Shares
”
|
means the common shares of CanniMed;
|
|
|
|
|
“
CanniMed
”
|
means CanniMed Therapeutics Inc., a company existing
under CBCA;
|
|
|
|
|
“
CanvasRx
”
|
means CanvasRx Inc., a wholly-owned subsidiary of Aurora;
|
I-5
|
“
Cash Consideration
”
|
means $0.000001 per Common Share (or MedReleaf DSU, as
applicable);
|
|
|
|
|
“
CBCA
”
|
means the
Canada Business Corporations Act
;
|
|
|
|
|
“
Certificate of Arrangement
”
|
means the certificate of arrangement giving effect to the
Arrangement, issued pursuant to Section 183(2) of the OBCA;
|
|
|
|
|
“
Change in
Recommendation
”
|
has the meaning given to such term under “The Arrangement
Agreement – Covenants – Non-Solicitation“;
|
|
|
|
|
“
Choom
”
|
means Choom Holdings Inc.;
|
|
|
|
|
“
Circular
”
|
means this management information circular of Aurora
dated June 18, 2018;
|
|
|
|
|
“
CMED
”
|
means CanniMed, Ltd., a wholly-owned subsidiary of
CanniMed;
|
|
|
|
|
“
Code
”
|
has the meaning given to such term under “Appendix “H”
Tax Considerations Relating to the Distribution – Certain United States
Federal Income Tax Considerations Relating to the Distribution”;
|
|
|
|
|
“
Commissioner
”
|
means the Commissioner of Competition under the
Competition Act
or any person duly authorized to exercise the
powers of the Commissioner of Competition;
|
|
|
|
|
“
Competition Act Approval
”
|
means that (a) the Commissioner shall have issued an ARC,
or (b) the applicable waiting period under Section 123 of the Competition
Act shall have expired or been terminated by the Commissioner, or the
obligation to submit a notification shall have been waived under Section
113(c) of the
Competition
Act
, and the Commissioner shall
have issued a No-Action Letter;
|
|
|
|
|
“
Competition Act
”
|
means the
Competition Act
(Canada);
|
|
|
|
|
“
Competition Tribunal
”
|
means the Competition Tribunal established under the
Competition Tribunal Act;
|
|
|
|
|
“Competition Tribunal Act”
|
means the
Competition Tribunal Act
(Canada), as
amended;
|
|
|
|
|
“
Completion Deadline
”
|
means September 14, 2018, or such later date as may be
agreed to in writing by the Parties, provided that if the Effective Date
has not occurred by September 14, 2018 as a result of the failure to
obtain the Competition Act Approval, then either Party may elect, by
notice in writing delivered to the other Party, to extend the Completion
Deadline on no more than two occasions by a period of 30 days, provided
that in aggregate such extensions shall not exceed 60 days from September
14, 2018, and provided further that, notwithstanding the foregoing, a
Party shall not be permitted to extend the Completion Deadline if the
failure to obtain the Competition Act Approval is primarily the result of
such Party’s failure to comply with their covenants herein;
|
|
|
|
|
“
Computershare
”
|
means Computershare Trust Company of Canada;
|
|
|
|
|
“Confidentiality Agreement
”
|
means the confidentiality agreement dated April 30, 2018
entered into between Aurora and MedReleaf;
|
|
|
|
|
“
Consideration Shares
”
|
means the Aurora Shares to be issued to the MedReleaf
Shareholders in exchange for their MedReleaf Shares pursuant to the Plan
of Arrangement;
|
|
|
|
|
“
Court
”
|
means the Ontario Superior Court of Justice (Commercial
List);
|
|
|
|
|
“
CRA
”
|
has the meaning given to such term under “Appendix “H”
Tax Considerations Relating to the Distribution – Certain Canadian Federal
Income Tax Considerations Relating to the Distributions”;
|
I-6
|
“
CSE
”
|
means the Canadian Securities Exchange;
|
|
|
|
|
“
Depositary Agreement
”
|
means the depositary agreement to be entered into between
the Aurora, MedReleaf and the Depositary pursuant to which Aurora will
deposit with the Depositary the Share Consideration and the aggregate Cash
Consideration to the Depositary and provide the Depositary with an
irrevocable direction for the issuance of the aggregate Share
Consideration (the terms and conditions of such escrow and direction to be
satisfactory to Aurora and MedReleaf, acting reasonably);
|
|
|
|
|
“
Depositary
”
|
means Computershare Investor Services Inc. or such Person
as Aurora may appoint to act as depositary in relation to the Arrangement,
with the approval of Aurora, acting reasonably;
|
|
|
|
|
“Director and Officer Voting
and Support
Agreements
”
|
has the meaning given to such term under “The Arrangement
– Voting and Support Agreements – Director and Officer Voting and Support
Agreements“;
|
|
|
|
|
“
Director
”
|
means the Director appointed pursuant to Section 278 of
the OBCA;
|
|
|
|
|
“
Dissent Rights
”
|
means the rights of dissent in respect of the Arrangement
granted pursuant to the Interim Order;
|
|
|
|
|
“
Distribution
”
|
means the proposed distribution of the Australis Units to
the Aurora Shareholders as a return of capital;
|
|
|
|
|
“
Effective Date
”
|
means the date upon which the Arrangement becomes
effective as established by the date shown on the Certificate of
Arrangement;
|
|
|
|
|
“
Effective Time
”
|
means 12:01 a.m. (Toronto time) on the Effective Date;
|
|
|
|
|
“
Electing Holder
”
|
means an Eligible Holder who has validly elected (in a
duly completed Letter of Transmittal deposited with the Depositary no
later than the Effective Date) to transfer such holder’s MedReleaf Shares
to Aurora in consideration for the Share Consideration as provided for in
Section 2.3(c) of the Plan of Arrangement;
|
|
|
|
|
“
Eligible Holder
”
|
has the meaning given to such term under “The Arrangement
– Joint Tax Election” of the MedReleaf Circular;
|
|
|
|
|
“
Exchange Ratio
”
|
means 3.575 Aurora Shares for each MedReleaf Share (or
MedReleaf DSU, as applicable);
|
|
|
|
|
“
Exclusivity Agreement
”
|
means the exclusivity agreement between Aurora and
MedReleaf dated as of May 3, 2018;
|
|
|
|
|
“
Exeter Facility
”
|
has the meaning given to such term under “Appendix “E”
Information Concerning MedReleaf – Recent Developments Relating to the
Business – Exeter Facility Agreement Closes”;
|
|
|
|
|
“
Final Order
”
|
means the order made after application to the Court
approving the Arrangement, as such order may be amended by the Court (with
the consent of the Parties, each acting reasonably) at any time prior to
the Effective Date or, if appealed, then unless such appeal is withdrawn
or denied, as affirmed or as amended on appeal;
|
|
|
|
|
“
First Amalgamation
”
|
has the meaning given to such term under “The Arrangement
– Arrangement Mechanics“;
|
|
|
|
|
“
German Bid Process
”
|
has the meaning given to such term under “Appendix “F”
Information Concerning Aurora – General”;
|
I-7
|
“
GMP
”
|
means GMP Securities L.P.;
|
|
|
|
|
“
Governmental Entity
”
|
means any: (i) supranational, international,
multinational, national, federal, provincial, territorial, state,
regional, municipal, local or other government, governmental or public
department, central bank, court, tribunal, arbitral body, commission,
board, bureau, stock exchange or agency, whether domestic or foreign; (ii)
any subdivision, agency, commission, board or authority of any of the
foregoing; or (iii) any quasi-governmental or private body exercising any
regulatory, expropriation, land use or occupation, or taxing authority
under or for the account of any of the foregoing;
|
|
|
|
|
“
H2
”
|
means H2 Biopharma Inc.;
|
|
|
|
|
“
Hempco
”
|
means Hempco Foods and Fiber Inc.;
|
|
|
|
|
“
Holder
”
|
has the meaning given to such term under “Appendix “H” –
Certain Tax Considerations Relating to the Distribution – Certain Canadian
Federal Income Tax Considerations Relating to the Distribution”;
|
|
|
|
|
“
IFRS
”
|
means International Financial Reporting Standards as
issued by the International Accounting Standards Board that are applicable
to public issuers in Canada;
|
|
|
|
|
“
Initial Alcanna Investment
”
|
has the meaning given to such term under “Appendix “F”
Information Concerning Aurora – Recent Developments – Alcanna Inc.
(formerly Liquor Stores N.A. Ltd.) Investment”;
|
|
|
|
|
“
Intellectual Property
”
|
means domestic and foreign: (i) patents, applications for
patents and reissues, divisions, continuations, renewals, extensions and
continuations-in-part of patents or patent applications; (ii) proprietary
and nonpublic business information, including inventions (whether
patentable or not), invention disclosures, improvements, discoveries,
trade secrets, confidential information, know-how, methods, processes,
designs, technology, technical data, schematics, formulae and customer
lists, and documentation relating to any of the foregoing; (iii)
copyrights, copyright registrations and applications for copyright
registration; (iv) mask works, mask work registrations and applications
for mask work registrations; (v) designs, design registrations, design
registration applications and integrated circuit topographies; (vi) trade
names, business names, corporate names, domain names, website names and
world wide web addresses, common law trade-marks, trade-mark
registrations, trade mark applications, trade dress and logos, and the
goodwill associated with any of the foregoing; (vii) software; and (viii)
any other intellectual property and industrial property;
|
|
|
|
|
“
Interim Order
”
|
means the order made after application to the Court,
containing declarations and directions in respect of the notice to be
given and the conduct of the MedReleaf Meeting and the Arrangement, as
such order may be amended, supplemented or varied by the Court (with the
consent of the Parties, each acting reasonably);
|
|
|
|
|
“
Investment Canada Act
”
|
means the
Investment Canada Act
(Canada);
|
|
|
|
|
“
IRS
”
|
has the meaning given to such term under “Appendix “H”
Tax Considerations Relating to the Distribution – Certain United States
Federal Income Tax Considerations Relating to the Distribution”;
|
|
|
|
|
“
Klenk
”
|
means Heinrich Klenk GmbH & Co. KG;
|
I-8
|
“
Laurel Hill
”
|
means Laurel Hill Advisory Group, Aurora’s proxy
solicitation agent;
|
|
|
|
|
“
Laws
”
|
means all laws, by-laws, statutes, rules, regulations,
orders, ordinances, protocols, codes, guidelines, instruments, policies,
notices, directions and judgments or other requirements of any
Governmental Entity, including Securities Laws and U.S. Securities Laws,
and the term “
applicable
” with respect to such Laws and in a
context that refers to one or more Persons, means such Laws as are
applicable to such Person or its business, undertaking, assets, property
or securities and emanate from a Person having jurisdiction over the
Person or Persons or its or their business, undertaking, assets, property
or securities;
|
|
|
|
|
“
Liens
”
|
means any hypothecs, mortgages, pledges, assignments,
liens, charges, security interests, encumbrances and adverse rights or
claims, other third person interest or encumbrance of any kind, whether
contingent or absolute, and any agreement, option, right or privilege
(whether by law, contract or otherwise) capable of becoming any of the
foregoing;
|
|
|
|
|
“
marijuana
”
|
has the meaning given to the term “marihuana” in the
ACMPR;
|
|
|
|
|
“
Mark-to-Market Election
”
|
has the meaning given to such term under “Appendix “H”
Tax Considerations Relating to the Distribution – Certain United States
Federal Income Tax Considerations Relating to the Distribution” – Passive
Foreign Investment Company Rules – Default PFIC Rules Under Section 1291
of the Code”;
|
|
|
|
|
“
Match Period
”
|
has the meaning given to such term under “The Arrangement
Agreement – Covenants – Notice of Superior Proposal Determination
“;
|
|
|
|
|
“
Material Adverse Effect
”
|
means, in respect of any Party, as applicable, any one or
more changes, events, occurrences or states of fact, which, either
individually or in the aggregate, are, or would reasonably be expected to
be, material and adverse to the business, operations, results of
operations, properties, assets, liabilities, or condition (financial or
otherwise) of that Party and its Subsidiaries, on a consolidated basis,
other than any change, effect, event, occurrence or state of facts: (i)
relating to any change in global, national or regional political
conditions (including the outbreak or escalation of war, acts of
terrorism, strikes, lockouts, riots or outbreaks of illness) or the global
economy or securities markets in general; (ii) affecting the cannabis
industry or the price of cannabis in general; (iii) relating to any
natural disaster; (iv) relating to any change in Law or any interpretation
of Law by any Governmental Entity; (v) relating to any generally
applicable change in applicable accounting principles, including IFRS;
(vi) relating to a change in the market trading price of publicly traded
securities of that Party, it being understood that the causes underlying
such change may be taken into account in determining whether a Material
Adverse Effect has occurred; (vii) relating to the failure in and of
itself to meet any internal or published projections, forecasts or
guidance or estimates of revenues, earnings or cash flows, it being
understood that the causes underlying such failure may be taken into
account in determining whether a Material Adverse Effect has occurred; or
(viii) resulting from the announcement of the Arrangement Agreement, the
pendency of the transactions contemplated herein or compliance with the
covenants herein or the satisfaction of the conditions herein; provided,
however, that if a change, effect, event, occurrence or state of facts
referred to in clauses (i) through to and including (v) has a materially
disproportionate effect on that Party and its Subsidiaries, on a
consolidated basis, relative to other comparable companies and entities
operating in the Canadian cannabis industry, such effect may be taken into
account in determining whether a Material Adverse Effect has occurred; and
provided that references in the Arrangement Agreement to dollar amounts are not
intended to be, and shall not be deemed to be, interpretive of the amount used
for the purpose of determining whether a Material Adverse Effect has occurred or
whether a state of facts exists that has or could have a Material Adverse
Effect;
|
I-9
|
“
Material Contract
”
|
means, in respect of a Party, any Contract to which such
Party or any of its Subsidiaries is a party or its or their respective
assets are bound which: (i) if terminated, breached or not renewed would
or would reasonably be expected to have a Material Adverse Effect with
respect to such Party; (ii) relates to the purchase of materials,
supplies, equipment or services involving payments, individually or in the
aggregate, in excess of $1,000,000 over the life of such Contract; (iii)
relates directly or indirectly (including any guarantees or similar
obligations) to indebtedness (currently outstanding or which may become
outstanding) for borrowed money in excess of $1,000,000 in the aggregate;
(iv) under which such Party or any of its Subsidiaries is obligated to
make or expects to receive payments on an annual basis in excess of
$1,000,000 or in excess of $2,500,000 over the remaining term; (v) limits
or restricts in any material respect (A) the ability of such Party or any
of its Subsidiaries to engage in any line of business or carry on business
in any geographic area, (B) the ability of such Party or any of its
Subsidiaries to solicit or hire any Person, or (C) the scope of Persons to
whom such Party or any of its Subsidiaries may sell products or deliver
services; (vi) contemplates an exclusive business relationship between a
Party and any other Person; (vii) gives another Person the right to
purchase or license an unlimited quantity or volume of, or enterprise-wide
scope of use of, that Party’s products or services (or licenses to that
Party’s products or services) for a fixed aggregate price at no additional
charge, or under which that Party grants most-favored customer pricing,
rights of first refusal or similar rights or terms to any Person; (viii)
relates to any joint venture, strategic alliance, partnership or sharing
of profits, revenue or proprietary information or similar arrangement that
is material to such Party and its Subsidiaries, on a consolidated basis;
or (ix) remains in full force and effect and has been filed with the
Securities Authorities as a Material Contract in accordance with
applicable Securities Laws;
|
|
|
|
|
“
MedReleaf Acquisition
Proposal
”
|
means, other than the Arrangement and other than any
transaction involving only Aurora and/or one or more of the wholly-owned
MedReleaf Subsidiaries, any offer, proposal, expression of interest, or
inquiry (written or oral) from any Person or group of Persons acting
“jointly or in concert” other than Aurora (or any of its affiliates or
joint actors) after the date of the Arrangement Agreement relating to: (i)
any sale, disposition, alliance or joint venture (or any lease, long-term
supply agreement or other arrangement having the same economic effect as a
sale), direct or indirect, in a single transaction or a series of related
transactions, of assets representing 20% or more of the consolidated
assets, or contributing 20% or more of the consolidated revenue of Aurora
and the MedReleaf Subsidiaries, in each case taken as a whole, or of 20%
or more of any class of voting, equity or other securities or any
securities exchangeable for or convertible into voting, equity or other
securities of Aurora and the MedReleaf Subsidiaries (or rights or
interests therein or thereto); (ii) any direct or indirect take-over bid,
tender offer, exchange offer, treasury issuance or
other transaction that, if consummated, would result in a
Person or group of Persons beneficially owning 20% or more of any class of
voting, equity or other securities (including securities convertible into or
exercisable or exchangeable for voting, equity or other securities) of Aurora or
the MedReleaf Subsidiaries; (iii)any plan of arrangement, merger, amalgamation,
consolidation, share exchange, business combination, reorganization,
recapitalization, liquidation, dissolution, winding up or exclusive license or
other similar transaction involving Aurora or the MedReleaf Subsidiaries
pursuant to which any Person or group of Persons would acquire, directly or
indirectly, 20% or more of the voting or equity securities of Aurora or the
surviving entity or the resulting direct or indirect parent of Aurora or the
surviving entity; or (iv) any other similar transaction or series of related
transactions involving Aurora or the MedReleaf Subsidiaries;
|
I-10
|
“
MedReleaf Arrangement
Resolution
”
|
means the special resolution of the MedReleaf
Shareholders approving the Plan of Arrangement;
|
|
|
|
|
“
MedReleaf Board
Recommendation
”
|
means the unanimous determination of the MedReleaf Board,
after consultation with its legal and financial advisors and following the
receipt and review of a unanimous recommendation from the MedReleaf
Special Committee, that the Arrangement is in the best interests of
MedReleaf and is fair to the MedReleaf Shareholders and the unanimous
recommendation of the MedReleaf Board to MedReleaf Shareholders that they
vote in favour of the Arrangement Resolution;
|
|
|
|
|
“
MedReleaf Board
”
|
means the board of directors of MedReleaf;
|
|
|
|
|
“
MedReleaf Change in
Recommendation
”
|
means the Board of Directors fails to recommend or
withdraws, amends, modifies or qualifies (or proposes publicly to
withdraw, amend, modify or qualify), in a manner adverse to Aurora, the
MedReleaf Board Recommendation, or the Board of Directors accepts,
approves, endorses or recommends or publicly proposes to accept, approve,
endorse or recommend a MedReleaf Acquisition Proposal, or takes no
position or remains neutral with respect to, any publicly announced
MedReleaf Acquisition Proposal (it being understood that publicly taking
no position or a neutral position with respect to a publicly announced, or
otherwise publicly disclosed, MedReleaf Acquisition Proposal for a period
of no more than five Business Days following such public announcement or
public disclosure will not be considered to be a MedReleaf Change in
Recommendation provided the Board of Directors has rejected such MedReleaf
Acquisition Proposal and affirmed the MedReleaf Board Recommendation
before the end of such five Business Day period (or in the event that the
Meeting is scheduled to occur within such five Business Day period, no
later than the later of one Business Day following the public announcement
or public disclosure of such MedReleaf Acquisition Proposal or the third
Business Day prior to the date of the Meeting));
|
|
|
|
|
“
MedReleaf Circular
”
|
means the notice of the MedReleaf Meeting to be sent to
MedReleaf Shareholders and the management information circular to be
prepared in connection with the MedReleaf Meeting and the schedules,
appendices and exhibits thereto, together with any amendments or
modifications thereto or supplements thereof;
|
|
|
|
|
“
MedReleaf Disclosure
Letter
”
|
means the letter dated as of the date of the Arrangement
Agreement, delivered by MedReleaf to Aurora pursuant to Section 3.3 with
respect to certain matters in the Arrangement Agreement;
|
I-11
|
“
MedReleaf DSU Plan
”
|
means the deferred share unit plan of Aurora instituted
effective as of June 7, 2017;
|
|
|
|
|
“
MedReleaf DSUs
”
|
means deferred share units granted under or governed by
the MedReleaf DSU Plan;
|
|
|
|
|
“
MedReleaf Expense Fee
”
|
has the meaning given to such term under “The Arrangement
– Expenses of the Arrangement“;
|
|
|
|
|
“
MedReleaf Fairness
Opinions
”
|
means the opinions of Canaccord and GMP to the effect
that, as of May 24, 2018, and subject to the assumptions, limitations and
qualifications set forth therein, the consideration to be received under
the Arrangement Agreement is fair, from a financial point of view, to the
Shareholders;
|
|
|
|
|
“
MedReleaf Filings
”
|
means all documents publicly filed under the profile of
MedReleaf on SEDAR since April 19, 2017;
|
|
|
|
|
“
MedReleaf Legacy Option
Agreements
”
|
means the option agreements entered into prior to the
adoption of the MedReleaf Stock Option Plan and the completion of Aurora’s
initial public offering;
|
|
|
|
|
“
MedReleaf Legacy Options
”
|
means options to acquire MedReleaf Shares issued by
Aurora pursuant to or governed by the MedReleaf Legacy Option Agreements;
|
|
|
|
|
“
MedReleaf Match Period
”
|
has the meaning given to such term under “The Arrangement
Agreement – Covenants – Notice of Superior Proposal
Determination
“
;
|
|
|
|
|
“
MedReleaf Meeting
”
|
means the special meeting of Shareholders, including any
adjournment or postponement of such special meeting in accordance with the
terms of the Arrangement Agreement, to be called and held in accordance
with the Interim Order to consider the Arrangement Resolution;
|
|
|
|
|
“
MedReleaf Nominees
”
|
means Ronald Funk and Norma Beauchamp;
|
|
|
|
|
“
MedReleaf Options
”
|
means the MedReleaf Plan Options and the MedReleaf Legacy
Options;
|
|
|
|
|
“
MedReleaf Plan
Optionholders
”
|
means at any time, any holder of MedReleaf Plan Options;
|
|
|
|
|
“
MedReleaf Plan Options
”
|
means options to acquire MedReleaf Shares issued by
Aurora pursuant to or governed by the MedReleaf Stock Option Plan;
|
|
|
|
|
“
MedReleaf
Securityholders
”
|
means at any time, any holder of MedReleaf Shares,
MedReleaf Plan Options, MedReleaf Warrants or MedReleaf DSUs;
|
|
|
|
|
“
MedReleaf Shareholders
”
|
means, at any time, the holders of MedReleaf Shares;
|
|
|
|
|
“
MedReleaf Shares
”
|
means the common shares in the capital of MedReleaf;
|
|
|
|
|
“
MedReleaf Special
Committee
”
|
means the special committee of the MedReleaf Board;
|
|
|
|
|
“
MedReleaf Stock Option
Plan
”
|
means the incentive stock option plan of Aurora dated
June 7, 2017;
|
|
|
|
|
“
MedReleaf Sub
”
|
means •, a wholly-owned subsidiary of Aurora incorporated
under the OBCA;
|
|
|
|
|
“
MedReleaf Subsidiaries
”
|
means, collectively, the Subsidiaries of MedReleaf;
|
|
|
|
|
“
MedReleaf Superior
Proposal
Notice
”
|
has the meaning ascribed thereto in Section 6.2(a)(iii)
of the Arrangement Agreement;
|
I-12
|
“
MedReleaf Superior
Proposal
”
|
means any bona fide unsolicited written MedReleaf
Acquisition Proposal made by an arm’s-length third party or arm’s length
third parties acting jointly that is made after the date of the
Arrangement Agreement, that relates to the acquisition of all or
substantially all of the assets of Aurora (on a consolidated basis) or
100% of the issued and outstanding MedReleaf Shares not beneficially owned
by the party making such MedReleaf Acquisition Proposal and any joint
actor or any of their respective affiliates, whether by way of a single or
multistep transaction or a series of related transactions, that: (i)
complies with Securities Laws in all material respects; (ii) did not
result from or involve a breach of Section 6.1 of the Arrangement
Agreement, the Exclusivity Agreement, the Confidentiality Agreement or any
other agreement between the Person making the MedReleaf Acquisition
Proposal and Aurora or any of its Subsidiaries; (iii) is reasonably
capable of being completed in accordance with its terms without undue
delay relative to the Arrangement, taking into account all legal,
financial, regulatory and other aspects of such proposal (including,
required shareholder approvals and minimum tender requirements) and the
Person making such proposal; (iv) is not subject to any financing
condition or contingency and in respect of which adequate arrangements
have been made and have been demonstrated to be available to ensure that
the required funds or other consideration will be available to effect
payment in full for all of the MedReleaf Shares or the assets of Aurora to
be acquired, as the case may be; (v) is not subject to a due diligence or
access to information condition; (vi) the Board of Directors determines,
in its good faith judgment, after receiving the advice of its outside
legal and financial advisors and after taking into account all the terms
and conditions of the MedReleaf Acquisition Proposal, including all legal,
financial, regulatory and other aspects of such MedReleaf Acquisition
Proposal and the Person making such MedReleaf Acquisition Proposal, would,
if consummated in accordance with its terms, but not assuming away any
risk of non-completion, result in a transaction more favourable to
Shareholders from a financial point of view than the terms of the
Arrangement (including any amendments to the terms and conditions proposed
by Aurora as contemplated by Section 6.2(b)); and (vii) in the event that
Aurora does not have the financial resources to pay the MedReleaf
Termination Payment, the terms of such MedReleaf Acquisition Proposal
provide that the Person making such MedReleaf Acquisition Proposal shall
advance or otherwise provide Aurora with the cash for MedReleaf to make
the MedReleaf Termination Payment, and such amount will be advanced or
provided on or before such MedReleaf Termination Payment becomes payable;
|
|
|
|
|
“
MedReleaf Supporting
Shareholders
”
|
means Zola Finance Inc.; Rayray Investments Inc.; AJA
Holdings 2013 Inc. and MENA Investment Network Inc.; Baronford Capital
Corporation; Tikun Olam Ltd.; Eva Fashion Ltd.; Eitan Popper; Lloyd M.
Segal; Deborah Rosati; Ronald Funk; Norma Beauchamp; Igor Gimelshtein; and
Darren Karasiuk.
|
|
|
|
|
“
MedReleaf Termination
Payment
Event
”
|
has the meaning ascribed thereto in Section 6.5 of the
Arrangement Agreement;
|
|
|
|
|
“
MedReleaf Termination
Payment
”
|
has the meaning ascribed thereto in Section 6.5 of the
Arrangement Agreement;
|
|
|
|
|
“
MedReleaf Warrant
Indenture
”
|
means the common share purchase warrant indenture dated
January 31, 2018 between Aurora and TSX Trust Company;
|
I-13
|
“
MedReleaf Warrants
”
|
means the outstanding warrants to purchase MedReleaf
Shares;
|
|
|
|
|
“
MedReleaf
”
|
means MedReleaf Corp.;
|
|
|
|
|
“
Meeting
”
|
means the special meeting of Shareholders, including any
adjournment or postponement of such special meeting in accordance with the
terms of the Arrangement Agreement, to consider the Share Issuance
Resolution;
|
|
|
|
|
“
MI 61-101
”
|
means Multilateral Instrument 61-101 –
Protection of
Minority Security Holders
in Special Arrangements
;
|
|
|
|
|
“
No-Action Letter
”
|
has the meaning given to such term under “The Arrangement
– Regulatory Matters – Competition Act Approval“;
|
|
|
|
|
“
NOBOs
”
|
has the meaning given to such term under “General Proxy
Information – Aurora Beneficial Shareholders”;
|
|
|
|
|
“
Non-Electing U.S. Holder
”
|
has the meaning given to such term under “Appendix “H”
Tax Considerations Relating to the Distribution – Certain United States
Federal Income Tax Considerations Relating to the Distribution” – Passive
Foreign Investment Company Rules – Default PFIC Rules Under Section 1291
of the Code”;
|
|
|
|
|
“
Non-Resident Holder
”
|
has the meaning given to such term under “Appendix “H”
Tax Considerations Relating to the Distribution – Certain Canadian Federal
Income Tax Considerations Relating to the Distributions – Non-Resident
Holders”;
|
|
|
|
|
“
Non-Resident
”
|
has the meaning given to such term under “Matters To Be
Considered at the Meeting – Reduction of Capital Resolution – Background
to the Reduction of Capital”;
|
|
|
|
|
“
Notice of Meeting
”
|
means the notice of special meeting of Shareholders
accompanying this Circular;
|
|
|
|
|
“
Notifiable Transaction
”
|
has the meaning given to such term under The Arrangement
– Regulatory Matters – Competition Act Approval“;
|
|
|
|
|
“
Notification
”
|
has the meaning given to such term under The Arrangement
– Regulatory Matters – Competition Act Approval“;
|
|
|
|
|
“
OBCA
”
|
means the
Business Corporations Act
(Ontario);
|
|
|
|
|
“
OBOs
”
|
has the meaning given to such term under “General Proxy
Information – Aurora Beneficial Shareholders”;
|
|
|
|
|
“
Original Agreement
”
|
means the May 14, 2018 arrangement agreement between
Aurora and MedReleaf, together with the schedules attached thereto,
amended and restated or supplemented from time to time;
|
|
|
|
|
“
Parties
”
|
shall have the meaning ascribed thereto on the first page
of the Arrangement Agreement;
|
|
|
|
|
“
Pedanios
”
|
means Pedanios GmbH, a German wholly-owned subsidiary of
Aurora;
|
|
|
|
|
“
Pending Aurora Acquisition
Proposal
”
|
shall have the meaning ascribed thereto in Section 6.5(d)
of the Arrangement Agreement;
|
|
|
|
|
“
Pending MedReleaf
Acquisition
Proposal
”
|
shall have the meaning ascribed thereto in Section 6.5(d)
of the Arrangement Agreement;
|
I-14
|
“
Person
”
|
means an individual, partnership, association, body
corporate, a partnership or limited partnership, a trust, a trustee,
executor, administrator or other legal personal representative, a
syndicate, a joint venture, government (including any Governmental Entity)
or any other entity, whether or not having legal status;
|
|
|
|
|
“
PFIC asset test
”
|
has the meaning given to such term under “Appendix “H”
Tax Considerations Relating to the Distribution – Certain United States
Federal Income Tax Considerations Relating to the Distribution” – Passive
Foreign Investment Company Rules”;
|
|
|
|
|
“
PFIC income test
”
|
has the meaning given to such term under “Appendix “H”
Tax Considerations Relating to the Distribution – Certain United States
Federal Income Tax Considerations Relating to the Distribution” – Passive
Foreign Investment Company Rules”;
|
|
|
|
|
“
PFIC
”
|
has the meaning given to such term under “Appendix “H”
Tax Considerations Relating to the Distribution – Certain United States
Federal Income Tax Considerations Relating to the Distribution – Pre-April
July 1, 2015 Shareholders Not Addressed”;
|
|
|
|
|
“
Plans
”
|
has the meaning given to such term under “Appendix “H”
Tax Considerations Relating to the Distribution – Certain Canadian Federal
Income Tax Considerations Relating to the Distributions – Eligibility for
Investment”;
|
|
|
|
|
“
Plan of Arrangement
”
|
means the plan of arrangement of MedReleaf under the OBCA
substantially in the form and content of Schedule A to the Arrangement
Agreement;
|
|
|
|
|
“
PPS
”
|
means Prairie Plant Systems Inc., a wholly-owned
subsidiary of CanniMed;
|
|
|
|
|
“
Proposed Amendments
”
|
has the meaning given to such term under “Appendix “H”
Tax Considerations Relating to the Distribution – Certain Canadian Federal
Income Tax Considerations Relating to the Distributions”;
|
|
|
|
|
“
Proxy Solicitation Agent
”
|
means Laurel Hill Group Company Ltd.;
|
|
|
|
|
“
Proxy
”
|
means the proxy to be sent to Aurora Shareholders for use
in connection with the Meeting;
|
|
|
|
|
“
PUC
”
|
has the meaning given to such term under “Appendix “H”
Tax Considerations Relating to the Distribution – Certain Canadian Federal
Income Tax Considerations Relating to the Distributions – Assumptions
Regarding Return of Capital”;
|
|
|
|
|
“
QEF Election”
|
has the meaning given to such term under “Appendix “H”
Tax Considerations Relating to the Distribution – Certain United States
Federal Income Tax Considerations Relating to the Distribution” – Passive
Foreign Investment Company Rules – Default PFIC Rules Under Section 1291
of the Code”;
|
|
|
|
|
“
Quebec Project
”
|
has the meaning given to such term under “Appendix “F”
Information Concerning Aurora – Recent Developments – The Green Organic
Dutchman Holdings Ltd. Investment”;
|
|
|
|
|
“
Radient
”
|
means Radient Technologies Inc.;
|
I-15
|
“
Record Date
”
|
means June 13, 2018;
|
|
|
|
|
“
Reduction of Capital
Resolution
”
|
means the special resolution of the shareholders of
Aurora authorizing Aurora to reduce the capital of the common shares of
Aurora in connection with the Distribution, substantially in the form and
content of Appendix “B”;
|
|
|
|
|
“
Registered Shareholder
”
|
means a registered holder of Aurora Shares as recorded in
the registers maintained by the Transfer Agent;
|
|
|
|
|
“
Regulations
”
|
has the meaning given to such term under “Appendix “H”
Tax Considerations Relating to the Distribution – Certain Canadian Federal
Income Tax Considerations Relating to the Distributions”;
|
|
|
|
|
“
Relevant Time
”
|
means the time at which the transactions contemplated in
Section 2.3(d) of the Plan of Arrangement occur;
|
|
|
|
|
“
Reorganization
”
|
means the business changes intended to divest Aurora of
its non-core U.S. assets and maximize the overall value of the Aurora
assets for Aurora Shareholders, including the transfer of PPS’ interests
in SubTerra LLC to Australis, the disposition by Aurora of certain
intercompany debt owed by Aurora Marijuana Inc., the related transfer of
the Australis Units to Aurora Shareholders as a return of capital and the
related transactions as described under “Matters to be Considered at the
Meeting – Reduction of Capital Resolution – Background to the Reduction of
Capital”;
|
|
|
|
|
“
Replacement Option
”
|
has the meaning given to such term under “The Arrangement
– Arrangement Mechanics“;
|
|
|
|
|
“
Replacement Securities
”
|
means one or both of, as applicable, the Share
Consideration and the Replacement Options;
|
|
|
|
|
“
Representatives
”
|
has the meaning given to such term under “The Arrangement
Agreement – Covenants – Non-Solicitation“;
|
|
|
|
|
“
Resident Holders
”
|
has the meaning given to such term under “Appendix “H”
Tax Considerations Relating to the Distribution – Certain Canadian Federal
Income Tax Considerations Relating to the Distributions – Resident
Holders”;
|
|
|
|
|
“
SDM
”
|
means Shoppers Drug Mart Inc.;
|
|
|
|
|
“
SEC
”
|
means the United States Securities and Exchange
Commission;
|
|
|
|
|
“
Second Amalgamation
”
|
has the meaning given to such term under “The Arrangement
– Arrangement Mechanics“;
|
|
|
|
|
“
Securities Authorities
”
|
means collectively, the British Columbia Securities
Commission, the Ontario Securities Commission and the other applicable
securities regulatory authorities in the provinces and territories of
Canada;
|
|
|
|
|
“
Securities Laws
”
|
means the
Securities Act
(British Columbia), the
Securities Act
(Ontario) and any other applicable securities Laws
of a province or territory of Canada;
|
|
|
|
|
“
SEDAR
”
|
means the System for Electronic Document Analysis and
Retrieval;
|
|
|
|
|
“
Share Consideration
”
|
means 3.575 Aurora Shares for each MedReleaf Share (or
MedReleaf DSU, as applicable);
|
I-16
|
“
Share Issuance Resolution
”
|
means the ordinary resolution of the shareholders of
Aurora approving the issuance of the Consideration Shares (including any
Aurora Shares to be issued or which are issuable upon the exercise of any
(i) MedReleaf Options, (ii) MedReleaf Warrants, (iii) MedReleaf DSUs, and
(v) in connection with other share issuance obligations of MedReleaf which
are being assumed by Aurora in connection with the Arrangement), at the
Meeting substantially in the form and content of Appendix “A”, in
accordance with the policies and rules of the TSX;
|
|
|
|
|
“
Shareholder Voting and
Support
Agreements
”
|
has the meaning given to such term under “The Arrangement
– Voting and Support Agreements – Shareholder Voting and Support
Agreements“;
|
|
|
|
|
“
Shareholders
”
|
means, collectively, the Registered Shareholders and the
Beneficial Shareholders;
|
|
|
|
|
“
Subject Securities
”
|
has the meaning given to such term under “The Arrangement
– Voting and Support Agreements – Shareholder Voting and Support
Agreements;
|
|
|
|
|
“
Subsidiary PFIC
”
|
has the meaning given to such term under “Appendix “H”
Tax Considerations Relating to the Distribution – Certain United States
Federal Income Tax Considerations Relating to the Distribution” – Passive
Foreign Investment Company Rules”;
|
|
|
|
|
“
Subsidiary
”
|
means, with respect to a Person, any entity, whether
incorporated or unincorporated: (i) of which such Person or any other
subsidiary of such Person is a general partner; or (ii) at least a
majority of the securities or other interests of which having by their
terms ordinary voting power to elect a majority of the board of directors
or other Persons performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or
controlled by such Person and/or by any one or more of its subsidiaries;
and shall include any body corporate, partnership, joint venture or other
entity over which it exercises direction or control. For purposes of this
definition, “control” when used with respect to any Person means the power
to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by
contract or otherwise;
|
|
|
|
|
“
Superior Proposal Notice
”
|
has the meaning given to such term under “The Arrangement
Agreement – Covenants – Notice of Superior Proposal
Determination
“
;
|
|
|
|
|
“
Superior Proposal
”
|
has the meaning given to such term under “The Arrangement
Agreement – Covenants – Notification of Acquisition
Proposals
“
;
|
|
|
|
|
“
Supplementary Information
|
has the meaning given to such term under “The Arrangement
– Regulatory
|
|
|
|
|
Request
”
|
Matters – Competition Act Approval“;
|
|
|
|
|
“
Tax Act
”
|
means the
Income Tax Act
(Canada), as amended;
|
I-17
|
“
Tax
” and “
Taxes
”
|
means all taxes, assessments, charges, dues, duties,
rates, fees, imposts, levies and similar charges of any kind lawfully
levied, assessed or imposed by any Governmental Entity, including all
income taxes (including any tax on or based upon net income, gross income,
income as specially defined, earnings, profits or selected items of
income, earnings or profits) and all capital taxes, gross receipts taxes,
environmental taxes, sales taxes, use taxes, ad valorem taxes, value added
taxes, transfer taxes (including, without limitation, taxes relating to
the transfer of interests in real property or entities holding interests
therein), franchise taxes, licence taxes, withholding taxes, payroll
taxes, employment taxes, Canada Pension Plan or Quebec Pension Plan
premiums, excise, severance, social security, workers’ compensation,
employment insurance or compensation taxes or premiums, stamp taxes,
occupation taxes, premium taxes, property taxes, windfall profits taxes,
alternative or add-on minimum taxes, goods and services tax, harmonized
sales tax, customs duties or other taxes, fees, imports, assessments or
charges of any kind whatsoever, together with any interest and any
penalties or additional amounts imposed by any Governmental Entity on such
entity, and any interest, penalties, additional taxes and additions to tax
imposed with respect to the foregoing;
|
|
|
|
|
“
Taxable Capital Gain
”
|
has the meaning given to such term under “Appendix “H”
Tax Considerations Relating to the Distribution – Certain Canadian Federal
Income Tax Considerations Relating to the Distributions – Resident Holders
– The Distribution”;
|
|
|
|
|
“
Termination Fees
”
|
has the meaning given to such term under “The Arrangement
Agreement – Termination Fees and Expenses – Aurora Termination Fees“ and
“The Arrangement Agreement – Termination Fees and Expenses – MedReleaf
Termination Fees“;
|
|
|
|
|
“
TGOD Investment
”
|
has the meaning given to such term under “Appendix “F”
Information Concerning Aurora – Recent Developments – The Green Organic
Dutchman Holdings Ltd. Investment”;
|
|
|
|
|
“
TGOD Investor Rights
Agreement
”
|
has the meaning given to such term under “Appendix “F”
Information Concerning Aurora – Recent Developments – The Green Organic
Dutchman Holdings Ltd. Investment”;
|
|
|
|
|
“
TGOD Milestone Notice
”
|
has the meaning given to such term under “Appendix “F”
Information Concerning Aurora – Recent Developments – The Green Organic
Dutchman Holdings Ltd. Investment”;
|
|
|
|
|
“
TGOD Milestone Options
”
|
has the meaning given to such term under “Appendix “F”
Information Concerning Aurora – Recent Developments – The Green Organic
Dutchman Holdings Ltd. Investment”;
|
|
|
|
|
“
TGOD Milestones
”
|
has the meaning given to such term under “Appendix “F”
Information Concerning Aurora – Recent Developments – The Green Organic
Dutchman Holdings Ltd. Investment”;
|
|
|
|
|
“
TGOD Subscription
Receipts
”
|
has the meaning given to such term under “Appendix “F”
Information Concerning Aurora – Recent Developments – The Green Organic
Dutchman Holdings Ltd. Investment”;
|
|
|
|
|
“
TGOD Unit
”
|
has the meaning given to such term under “Appendix “F”
Information Concerning Aurora – Recent Developments – The Green Organic
Dutchman Holdings Ltd. Investment”;
|
I-18
|
“
TGOD
”
|
The Green Organic Dutchman Holdings Ltd., a company
existing under CBCA;
|
|
|
|
|
“
Transfer Agent
”
|
means Computershare Trust Company of Canada;
|
|
|
|
|
“
TSX
”
|
means the Toronto Stock Exchange;
|
|
|
|
|
“
TSXV
”
|
means the TSX Venture Exchange;
|
|
|
|
|
“
U.S. Holder
”
|
has the meaning given to such term under “Appendix “H”
Tax Considerations Relating to the Distribution – Certain United States
Federal Income Tax Considerations Relating to the Distribution”;
|
|
|
|
|
“
U.S. Securities Laws
”
|
means the 1933 Act, the 1934 Act and any applicable U.S.
state securities Laws;
|
|
|
|
|
“
U.S
.” and “
United States
”
|
means the United States of America, its territories and
possessions, any state of the United States and the District of Columbia;
|
|
|
|
|
“
UCI
”
|
means Urban Cultivator Inc., a wholly-owned subsidiary of
Aurora;
|
|
|
|
|
“
VIF
”
|
means the voting instruction form; and
|
|
|
|
|
“
Voting and Support
Agreements
”
|
means the Director and Officer Voting and Support
Agreements and the Shareholder Voting and Support Agreements.
|
I-19
QUESTIONS MAY BE DIRECTED TO AURORA CANNABIS INC.’S PROXY
SOLICITOR:
|
|
|
|
|
|
NORTH AMERICAN TOLL-FREE
|
|
|
|
1-877-452-7184
|
|
|
|
Collect calls outside North America
|
|
|
|
416-304-0211
|
|
|
|
Email: assistance@laurelhill.com
|
|
|
|
|
|
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY
|
AURORA CANNABIS INC.
900 – 510 Seymour Street
Vancouver, British Columbia
Canada V6B 1V5
auroramj.com | +1-844-601-2448
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TAKE NOTICE
that a special
meeting (the “
Meeting
”) of shareholders of Aurora Cannabis Inc. (the
“
Company
” or “
Aurora
”) will be held at the offices of McMillan
LLP, 1500 – 1055 West Georgia Street, Vancouver, British Columbia, Canada on
Wednesday, July 18, 2018, at 9:00 a.m. (Vancouver time):
(a) to consider, and if deemed
advisable, to approve, with or without variation, an ordinary resolution (the
“
Share Issuance Resolution
”), the full text of which is attached as
Appendix “A” to the accompanying management information circular (the
“
Circular
”) of Aurora, approving the issuance of Aurora common shares
(the “
Aurora Shares
”), including but not limited to (i) the Aurora Shares
to be issued to MedReleaf Shareholders under the Arrangement; (ii) the Aurora
Shares issuable upon the exercise of Replacement Options to be issued to
MedReleaf Plan Optionholders in exchange for their MedReleaf Plan Options under
the Arrangement; (iii) the Aurora Shares issuable upon the exercise of the
MedReleaf Warrants following the Arrangement; and (iv) Aurora Shares issuable in
connection with the vesting of the MedReleaf DSUs following the Arrangement, in
each case, in connection with a court-approved plan of arrangement to be
completed under section 182 of the
Business Corporations Act
(Ontario),
pursuant to which Aurora will acquire all of MedReleaf’s common shares and
MedReleaf will become a wholly-owned subsidiary of Aurora, in accordance with
the arrangement agreement dated May 14, 2018, as amended by the amending
agreement dated May 24, 2018, entered into between Aurora and MedReleaf, all as
more particularly set forth in the Circular.
(b) to consider, and if deemed
advisable, to approve, with or without variation, a special resolution (the
“
Reduction of Capital Resolution
”), the full text of which is attached as
Appendix “B” to the Circular, authorizing Aurora to reduce the capital of the
common shares of Aurora in the context of a reorganization, all as more
particularly set forth in the Circular.
Specific details of the matters
proposed to be put before the Meeting are set forth in the Circular which
accompanies and is deemed to form part of this Notice of Meeting of Aurora
Shareholders.
Regardless of whether a
shareholder (an “
Aurora Shareholder
”) plans to attend the Meeting in
person, we request that each Aurora Shareholder complete and deliver the
enclosed form of proxy, or follow the other voting procedures, all as set out in
the form of proxy and Circular. Beneficial Aurora Shareholders who plan to
attend the Meeting must follow the instructions set out in the form of proxy or
voting instruction form and in the Circular to ensure that their Aurora Shares
will be voted at the Meeting.
The board of directors of Aurora
have fixed the close of business (Vancouver time) on June 13, 2018 as the record
date for the determination of the Aurora Shareholders that will be entitled to
receive notice of the Meeting, and any adjournment or postponement of the
Meeting, and that will be entitled to vote at the Meeting. Proxies to be used or
acted upon at the Meeting must be deposited with Aurora’s transfer agent
Computershare Trust Company of Canada by 9:00 a.m. (Vancouver time) on July 16,
2018 (or a day other than a Saturday, Sunday or holiday which is at least two
business days before the Meeting or any adjournment or postponement of the
Meeting). The proxy deadline may be waived or extended by the Chair of the
Meeting in their sole discretion without notice.
DATED
at Vancouver, British Columbia, June 18, 2018.
|
BY ORDER OF THE BOARD OF DIRECTORS
|
|
|
|
“Terry Booth”
|
|
|
|
Terry Booth
|
|
Chief Executive Officer
|
Aurora Cannabis Announces Mailing of Management Information
Circular with Respect to Acquisition of MedReleaf Corp.
Board Unanimously Recommends Shareholders Vote in Favour of
Resolution – Combination Creating Pre-eminent Global Cannabis Company
TSX: ACB
EDMONTON, June 20, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
announced today that it has filed its management information circular and
related voting materials (collectively, the "Meeting Materials") under its
profile on SEDAR at www.sedar.com. The Meeting Materials will be mailed to
Aurora shareholders (the "Shareholders") in connection with the special meeting
to be held on July 18, 2018 (the "Meeting"). The Company recommends shareholders
vote in favour of the resolution to approve the issuance of Aurora common shares
forming the consideration to be issued to MedReleaf Corp. ("MedReleaf")
securityholders pursuant to the Transaction (defined below). Management believes
this combination will establish the world's pre-eminent cannabis company
positioned for accelerated growth.
Note to shareholders: to ensure that your Aurora shares will
be represented at the meeting, please return the proxy form you will receive,
properly completed and signed, prior to 9:00 a.m. (Vancouver time) on July 16,
2018.
As announced previously, Aurora entered into an arrangement
agreement with MedReleaf dated May 14, 2018, as amended by the amending
agreement dated May 24, 2018 (the "Arrangement Agreement") whereby Aurora
intends to acquire all of the issued and outstanding common shares of MedReleaf
in an all-share transaction (the "Transaction"). Under the terms of the
Arrangement Agreement, holders of MedReleaf common shares will receive 3.575
Aurora common shares and, in general, $0.000001 in cash for each MedReleaf
common share held.
A copy of the Meeting Materials are also available for download
at https://investor.auroramj.com
Key Benefits of the Transaction
|
|
•
|
Industry leading scale:
Unifying two
leading operators with a total funded capacity of over 570,000 kg per year
of high-quality cannabis, through nine facilities in Canada and two in
Europe.
|
|
|
•
|
Low production costs and industry leading yields:
Aurora's automated 'Sky Class' greenhouses are expected to provide
industry-leading efficiencies and ultra-low production costs, delivering
sustainably robust margins. MedReleaf's high-yield cultivation techniques
are expected to further enhance productivity and reduce costs across the
combined entity's facilities.
|
|
|
•
|
International distribution:
Aurora has established
a strong and rapidly growing footprint in the international medical
market. The combined entity can rapidly gain market share and establish an
unmatched position in very substantial markets (the EU, after Brexit, will
have well over 400 million people), while being subject to very limited
competition.
|
|
|
•
|
Brand leadership
: Aurora, CanniMed and MedReleaf,
three established cannabis brands, coupled with a portfolio of consumer
and wellness brands, San Rafael '71, Woodstock, and AltaVie, backed by
detailed consumer and marketplace insights and advanced analytical
frameworks.
|
|
|
•
|
Scientific leadership
: Each company is
actively engaged in clinical trials and medical studies, which has
resonated exceptionally well with the international medical community,
driving above average prescription rates and referrals. Furthermore, both
companies have developed considerable expertise at the genetics end of the
cannabis science value chain, enabling the development of new cultivars
with specific traits for a variety of domestic and international markets.
|
|
|
•
|
R&D
: The combined company will have an
industry leading science and R&D team, approaching 40 PhDs and MScs.
Both companies have a proven track record in developing new products,
adopting innovations throughout the value chain, and integrating exciting
innovations from third parties. Combining these capabilities will
accelerate product development and technology adoption, creating strong,
defensible competitive advantages, including, management believes,
higher-margin offerings to drive above average profitability.
|
Management Commentary
"Simply put, our joint management teams believe that the
combination establishes a pre-eminent global cannabis company, positioned
exceptionally well to rapidly accelerate growth in multiple large domestic and
international markets, while achieving an unmatched margin profile," said Terry
Booth, CEO of Aurora. "Aurora and MedReleaf are complementary in many ways;
sharing philosophies and strategies with respect to corporate values,
cultivation and production, international expansion, focus on aggressive
development of global medical cannabis markets, as well as the establishment of
leading consumer brands in Canada and additional international markets as laws
and regulations permit. This strategic and cultural alignment creates the
foundation to further strengthen our vertical integration – capturing more
margin, and developing strong, defensible competitive advantages, while
servicing a rapidly growing customer base through well-developed distribution
channels."
Recommendation of the Board of Directors
After consulting with its financial and legal advisors and
careful consideration of the transaction, the Board of Directors has unanimously
recommended that Aurora Shareholders vote FOR the Share Issuance Resolution.
If you have any questions or require assistance voting your
shares, please contact Aurora's strategic advisor and proxy solicitation agent,
Laurel Hill Advisory Group at 1-877-452-7184 (toll free) or 416-304-0211
(collect) or by email at assistance@laurelhill.com.
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 430,000 kg per year and operations across Canada and in Europe, Aurora
is one of the world's largest cannabis companies. The Company is vertically
integrated and horizontally diversified across every key segment of the value
chain, from facility design and engineering, to cannabis breeding and genetics
research, cannabis and hemp production, extraction and high value-add product
development, home cultivation and wholesale and retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes. Intended to be replicable and scalable globally, these production
facilities are designed to produce cannabis on a massive scale, with high flower
quality, industry-leading yields, and ultra-low per gram production costs. Each
of the Company's facilities is built to meet European Union (EU) GMP standards,
and both its first production facility and its wholly owned European medical
cannabis distributor Pedanios have achieved that level of certification.
In addition to its rapid organic growth and strategic M&A,
which to date includes nine companies acquired, Aurora is distinguished by its
reputation as a partner of choice in the cannabis sector, having invested in and
established strategic partnerships with a range of leading innovators,including: The Green Organic Dutchman Holdings Ltd. (TSX:
TGOD), Radient Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV:
HEMP), Cann Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM),
Choom Holdings Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), and
Alcanna Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website investor.auroramj.com.
About MedReleaf
Voted Top Licensed Producer at the 2017 Lift Canadian Cannabis
Awards, MedReleaf is an R&D-driven company dedicated to innovation,
operational excellence and the production of top-quality cannabis. Sourced from
around the world and carefully cultivated in one of two state of the art ICH-GMP
and ISO 9001 certified facilities in Ontario, the Company delivers a variety of
premium products for the global medical market and is committed to serving the
therapeutic needs of its medical patients and providing a compelling product
assortment for the adult-use recreational consumer. For more information on
MedReleaf, its products, research and how the company is helping patients
#livefree, please visit MedReleaf.com or follow @medreleaf.
Forward looking statements
Certain information in this news release constitutes
forward-looking statements under applicable securities laws. Any statements that
are contained in this news release that are not statements of historical fact
may be deemed to be forward-looking statements. Forward looking statements are
often identified by terms such as "may", "should", "anticipate", "expect",
"potential", "believe", "intend" or the negative of these terms and similar
expressions. Forward-looking statements in this news release include, but are
not limited to, statements with respect to accretive earnings, anticipated
benefits associated with the acquisition of MedReleaf, statements with respect
to the effect of the Transaction on the combined company and its strategy going
forward, the completion of any capital project or expansions, the timing for the
completion of the Transaction; the consideration to be received by shareholders
of MedReleaf, which may fluctuate in value due to Aurora common shares forming
the consideration; the satisfaction of closing conditions including, without
limitation (i) required Aurora and MedReleaf shareholder approvals; (ii)
necessary court approval in connection with the plan of arrangement, (iii)
receipt of any required approvals under the Competition Act; (iv) certain
termination rights available to the parties under the Arrangement Agreement; (v)
Aurora obtaining the necessary approvals from the TSX for the listing of its
common shares in connection with the Transaction; and (vi) other closing
conditions, including, without limitation, compliance by Aurora and MedReleaf
with various covenants contained in the Arrangement Agreement. In particular,
there can be no assurance that the Transaction will be completed. Forward
looking statements are based on certain assumptions regarding Aurora and
MedReleaf, including expected growth, results of operations, performance,
industry trends and growth opportunities. While Aurora and MedReleaf consider
these assumptions to be reasonable, based on information currently available,
they may prove to be incorrect. Readers are cautioned not to place undue
reliance on forward-looking statements. Forward-looking statements also
necessarily involve known and unknown risks, including, without limitation,
risks associated with general economic conditions; adverse industry events;
future legislative and regulatory developments; inability to access sufficient
capital from internal and external sources, and/or inability to access
sufficient capital on favourable terms; the cannabis industry in Canada
generally, income tax and regulatory matters; the ability of Aurora to implement
its business strategies; competition; currency and interest rate fluctuations
and other risks.
Readers are cautioned that the foregoing list is not
exhaustive. Readers are further cautioned not
to place undue reliance on forward-looking statements as
there can be no assurance that the plans, intentions or expectations upon which
they are placed will occur. Such information, although considered reasonable by
management at the time of preparation, may prove to be incorrect and actual
results may differ materially from those anticipated.
Forward-looking statements contained in this news release
are expressly qualified by this cautionary statement and reflect our
expectations as of the date hereof, and thus are subject to change thereafter.
Aurora and MedReleaf disclaim any intention or obligation to update or revise
any forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by law. Factors that could cause
anticipated opportunities and actual results to differ materially include, but
are not limited to, matters referred to above and elsewhere in Aurora's
MedReleaf's public filings and the material change reports that will be filed in
respect of this Transaction, which are, or will be, available on SEDAR.
Notice to U.S. Holders. Both Aurora and MedReleaf have been
formed outside of the United States. Transaction will be subject to disclosure
requirements of Canada that are different from those of the United States.
Financial statements included in the documents, if any, will be prepared in
accordance with Canadian accounting standards and may not be comparable to the
financial statements of United States companies. It may be difficult for a
securityholder in the United States to enforce his/her/its rights and any claim
a securityholder may have arising under the U.S. federal securities laws, since
the companies are located in Canada, and some or all of their officers or
directors may be residents of Canada or another country outside of the United
States. A securityholder may not be able to sue a Canadian company or its
officers or directors in a court in Canada or elsewhere outside of the United
States for violations of U.S. securities laws. It may be difficult to compel a
Canadian company and its affiliates to subject themselves to a U.S. court's
judgment.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Terry Booth, CEO
Aurora Cannabis Inc.
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/June2018/20/c8411.html
%SEDAR: 00025675E
For further information:
For Aurora, Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com, www.auroramj.com; Rob Kelly,
+1.647.331.7228, rob.kelly@auroramj.com, www.auroramj.com; Laurel Hill Advisory
Group, North America Toll Free: 1-877-452-7184, Collect Calls Outside North
America: 1-416-304-0211, Email: assistance@laurelhill.com; U.S. investors, Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com /ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 17:00e 20-JUN-18
Aurora Cannabis Welcomes Royal Assent of Canada's Cannabis
Act
First G7 Country to Legalize Adult Consumer Use – Sales to
Commence October 17
TSX: ACB
EDMONTON, June 21, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
commented today on the granting of Royal Assent to Bill C-45, the
Cannabis
Act
. With Royal Assent received, the legislation legalizing cannabis for
adult consumer use has now passed its final official step, and retail sales are
to commence October 17, 2018, as announced by Canada's federal government
yesterday.
"The granting of Royal Assent today ends nearly a century of
cannabis prohibition, marking a truly historic moment for all Canada, for
Canadian public policy, and for this country's cannabis sector," said Terry
Booth, CEO. "International delegates have been coming to Canada for years to
study our medical cannabis system, which is globally renowned for its efficiency
and success. Canada's legal framework is increasingly serving as a model for
other countries looking to implement their own medical cannabis legislation.
With the
Cannabis Act,
Canada further establishes its global leadership
as the only G7 country to legalize adult consumer use. The federal government
has provided intelligent and rational public policy focused on clearly defined
objectives that will reduce the negative impact of prohibition, while
establishing a well-regulated system designed to protect youth, public health
and public safety. Aurora is proud to be a leader in this new industry, both as
a producer of high-quality cannabis, and as an advocate for fairness and
justice, including amnesty on past non-violent cannabis-related offenses, and on
achieving tax-exempt status for medical cannabis."
Mr. Booth continued, "Aurora is executing on a broad, deep and
innovative consumer market strategy, supported by massive production, extensive
distribution channels and strong brands. With production at our facilities,
including Aurora Sky, ramping up very rapidly, we look forward to provide this
large and exciting market with an excellent portfolio of Aurora Standard
products, ensuring unique user experiences to a new group of customers from
October 17, 2018 onwards."
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 430,000 kg per year and operations across Canada and in Europe, Aurora
is one of the world's largest cannabis companies. The Company is vertically
integrated and horizontally diversified across every key segment of the value
chain, from facility design and engineering, to cannabis breeding and genetics
research, cannabis and hemp production, extraction and high value-add product
development, home cultivation and wholesale and retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes. Intended to be replicable and scalable globally, these production
facilities are designed to produce cannabis on a massive scale, with high flower
quality, industry-leading yields, and ultra-low per gram production costs. Each
of the Company's facilities is built to meet European Union (EU) GMP standards,
and both its first production facility and its wholly owned European medical
cannabis distributor Pedanios have achieved that level of certification.
In addition to its rapid organic growth and strategic M&A,
which to date includes nine companies acquired, Aurora is distinguished by its
reputation as a partner of choice in the cannabis sector, having invested in and
established strategic partnerships with a range of leading innovators,
including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient
Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann
Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings
Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), and Alcanna Inc. (TSX:
CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website investor.auroramj.com.
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange)
accepts responsibility for the adequacy or accuracy of this
release.
Terry Booth, CEO
Aurora Cannabis Inc.
c
View
original content:
http://www.prnewswire.com/news-releases/aurora-cannabis-welcomes-royal-assent-of-canadas-cannabis-act-300670494.html
SOURCE Aurora Cannabis Inc.
View original content:http://www.newswire.ca/en/releases/archive/June2018/21/c4907.html
%SEDAR: 00025675E
For further information:
For Aurora: Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com, www.auroramj.com; Rob Kelly,
+1.647.331.7228, rob.kelly@auroramj.com, www.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com / ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 16:23e 21-JUN-18
Aurora Cannabis Ships Products to Maltese Medical Cannabis
Market
Company Becomes First Supplier of Medical Cannabis to
Patients in Malta
TSX: ACB
EDMONTON, June 25, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today
announced that the Company, through its wholly owned German subsidiary Pedanios
GmbH ("Pedanios"), has become the first licensed supplier of medical cannabis to
patients in Malta. The import license issued by the Malta Medicines Authority
("MMA") was received on June 5, 2018, and Pedanios received the necessary export
license from German authorities on June 21, 2018. After Germany and Italy, Malta
is the third European Union member country where Pedanios currently sells
medical cannabis.
Two products, Pedanios 22/1 and 20/1, are being shipped to
Malta today, and will become available in Maltese pharmacies shortly. Pedanios
expects pharmacists will be able to fill patient prescriptions within
approximately two weeks. These orders will include medically approved
vaporization devices for patients' consumption of Aurora cannabis products.
Market entrance in Malta was achieved through close
collaboration with Aurora's local distribution partner Cherubino Ltd.
("Cherubino"), the largest pharmaceutical wholesaler in Malta, who have over 100
years of operating history. This partnership was instrumental in navigating the
rigorous legislative requirements of the MMA to supply high-quality medical
cannabis to Maltese patients. Medical cannabis was initially legalized by the
Maltese parliament on March 26, 2018.
"We are very pleased that through Pedanios, Aurora is the first
supplier of medical cannabis to Maltese patients," said Neil Belot, Chief Global
Business Development Officer. "With an established and highly regarded team, as well as unique regional distribution
relationships, Pedanios provides Aurora with an early mover advantage in the
large, highly regulated European market. Supplying products to the Maltese
medical cannabis system further strengthens our visibility and brand recognition
in Europe and internationally.
"Mario Reichenbach, Head of Business Development at Pedanios
added, "Pedanios is focused on improving patient welfare through the delivery of
high-quality medical products, and we're very proud to now extend our reach to
the citizens of Malta. This is a significant milestone for Maltese patients who
have been waiting for medical cannabis to become available in their country. Our
success was driven by the professionalism of our local partner, Cherubino, the
commitment of the Maltese government to implement a legislative framework to
support its citizens, and the hard work of our European team. Our relationship
with Cherubino will continue to develop, as we intend to provide ongoing support
for education of Maltese physicians about the benefits, risks and side effects
that may apply with respect to the use of medical cannabis in the management of
symptoms associated with a range of chronic health conditions."
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 430,000 kg per year and operations across Canada and in Europe, Aurora
is one of the world's largest cannabis companies. The Company is vertically
integrated and horizontally diversified across every key segment of the value
chain, from facility design and engineering, to cannabis breeding and genetics
research, cannabis and hemp production, extraction and high value-add product
development, home cultivation and wholesale and retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes. Intended to be replicable and scalable globally, these production
facilities are designed to produce cannabis on a massive scale, with high flower
quality, industry-leading yields, and ultra-low per gram production costs. Each of the Company's facilities is
built to meet European Union (EU) GMP standards, and both its first production
facility and its wholly owned European medical cannabis distributor Pedanios
have achieved that level of certification.
In addition to its rapid organic growth and strategic M&A,
with to date nine companies acquired, Aurora is distinguished by its reputation
as a partner of choice in the cannabis sector, having invested in and
established strategic partnerships with a range of leading innovators,
including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient
Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann
Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings
Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), and Alcanna Inc. (TSX:
CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website investor.auroramj.com.
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-
looking statements, whether as a result of new information,
future events or otherwise, except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Terry Booth, CEO
Aurora Cannabis Inc.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/June2018/25/c5559.html
%SEDAR: 00025675E
For further information:
For Aurora: Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com, www.auroramj.com;
Rob Kelly,
+1.647.331.7228, rob.kelly@auroramj.com, www.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com / ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 07:00e 25-JUN-18
Aurora Cannabis Announces $200 Million Debt Facility with
BMO
Major Non-Dilutive Financing Deal with Canadian Tier 1 Bank
Represents Significant Milestone in the Cannabis Sector
TSX: ACB
EDMONTON, June 26, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
announced today that it has agreed to a new $200 million debt facility,
with a potential upsize to $250 million, with the Bank of Montreal
("BMO").
The facility will consist of a $150 million term loan
and a $50 million revolving credit facility (together, the "Loans"),
both of which will mature in 2021. A short period after the implementation of
Bill C-45 in October 2018, the Company may request an increase of up to a
further $45 million to the term loan subject to agreement by BMO and
satisfaction of certain legal and business conditions. BMO will also be
providing up to $5 million in other credit instruments. Closing of the
debt facility is subject to completion of final due diligence, negotiation of
definitive documentation, and satisfaction of conditions precedent customary to
a financing of this nature.
The debt facility will be primarily secured by Aurora's
production facilities, including Aurora Sky, Aurora Mountain, and Aurora Vie.
Strategically located at Edmonton International Airport, Aurora Sky is the
world's most technologically advanced cannabis facility, projected to produce in
excess of 100,000 kg per year of high-quality cannabis at low per gram costs,
and slated to deliver its first harvest this week.
"Having successfully met all of BMO's stringent risk assessment
and other due diligence criteria to establish this facility reflects well on the
maturity, progress and prospects of Aurora, as well as the quality and economic
value of our production facilities," said Terry Booth, CEO. "This is by far the
largest traditional debt facility in the cannabis industry to date. The funds
provide us additional fuel to complement our end-to-end portfolio of vertically
integrated, geographically and horizontally diversified assets, aimed at
building a pre-eminent global cannabis company with a superior margin
profile.
Glen Ibbott, CFO of Aurora, added, "The shift to traditional
debt financing is significant. Our cost of capital continues to decrease,
providing us a distinct competitive advantage as we execute on our growth
strategy. The non-dilutive nature and attractive pricing are consistent with
Aurora's commitment to generating shareholder value. We believe this is a major
milestone in the cannabis industry and a validation of our operational
effectiveness. It also marks an exciting new stage of our long-term relationship
with BMO, a Tier 1 bank with a sterling domestic and international
reputation."
The Loans can be repaid without penalty at Aurora's
discretion. The pricing of the Loans is a set margin over the BMO CAD Prime Rate
or a Bankers' Acceptance of appropriate term. Based on the current BMO CAD Prime
Rate, the interest payable is expected to be in the mid to high 4% per annum
range over the term of the Loans.
More details on this new sector benchmark debt facility can be
found in the Company's documents once filed on www.sedar.com.
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 430,000 kg per year and operations across Canada and in Europe, Aurora
is one of the world's largest cannabis companies. The Company is vertically
integrated and horizontally diversified across every key segment of the value
chain, from facility design and engineering, to cannabis breeding and genetics
research, cannabis and hemp production, extraction and high value-add product
development, home cultivation and wholesale and retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes. Intended to be replicable and scalable globally, these production
facilities are designed to produce cannabis on a massive scale, with high flower
quality, industry-leading yields, and ultra-low per gram production costs. Each
of the Company's facilities is built to meet European Union (EU) GMP standards,
and both its first production facility and its wholly owned European medical
cannabis distributor Pedanios have achieved that level of certification.
In addition to its rapid organic growth and strategic M&A,
which to date includes nine companies acquired, Aurora is distinguished by its
reputation as a partner of choice in the cannabis sector, having invested in and
established strategic partnerships with a range of leading innovators,
including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient
Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann
Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings
Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), and Alcanna Inc. (TSX:
CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website https://investor.auroramj.com.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions
were used in drawing the conclusions or making the
projections contained in the forward-looking statements throughout this news
release
.
Forward-looking statements are based on the opinions and
estimates of management at the date the statements are made, and are subject to
a variety of risks and uncertainties and other factors that could cause actual
events or results to differ materially from those projected in the
forward-looking statements. The Company is under no obligation, and expressly
disclaims any intention or obligation, to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Terry Booth, CEO
Aurora Cannabis Inc.
View original content:http://www.prnewswire.com/news-releases/aurora-cannabis-announces-200-million-debt-facility-with-bmo-300672104.html
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/June2018/26/c3949.html
%SEDAR: 00025675E
For further information:
Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com, www.auroramj.com; Rob Kelly,
+1.647.331.7228, rob.kelly@auroramj.com, www.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com / ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 07:00e 26-JUN-18
Operational Update: Aurora Cannabis Receives Sales License
for Vie Facility in Quebec; First Harvest at Aurora Sky
Rapid New Product Development Pays Off, with Health Canada
Approval for Capsule Sales at CanniMed, Capsule Production at Aurora Mountain
TSX: ACB
EDMONTON, July 3, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) is
pleased to provide the following operational update.
Aurora Vie Sales License
On June 29, 2018, eight months after receiving its cultivation
license, the Aurora Vie production facility in Pointe-Claire, Quebec, has been
granted its Health Canada sales license. The facility, now in full commercial
operation, is on target to produce at a rate of 4,000 kg per year of
high-quality cannabis by October 2018. Multiple harvests have been completed to
date.
Modifications of the facility required for softgel
manufacturing are materially complete. The Company's strategic partner, Capcium,
is now installing equipment to commence high-volume production of cannabis
softgels, a premium market segment.
Aurora Sky Completes First Harvest
Located at Edmonton International Airport, Aurora Sky, the
world's most technologically advanced cannabis production facility, continues to
progress on track towards full operation in late summer. The first harvest was
completed on June 28, 2018, with a second harvest planned within the next two
weeks.
Upon completion of the second harvest, the Company will request a
Health Canada inspection towards receiving a sales license for the facility.
Installation of most automation systems, as well as irrigation
and climate control is complete, and the facility's critical systems are being
commissioned. The Company anticipates planting of all bays in the coming months,
ensuring ample dried flower and extracted product supply in advance of consumer
legalization in October, 2018, with the facility ramping up to full capacity of
more than 8,000 kg each month by the beginning of 2019. Consequently, the
Company expects a dramatic increase in product availability across all three
market segments: Canadian medical; Canadian adult consumer use; and
international medical.
With a total footprint exceeding 800,000 sq. ft., Aurora Sky is
expected to produce more than 100,000 kg per year of high-quality cannabis.
Capsules Licenses Granted
Aurora is poised to enter new high value-added, high margin
segments of the medical and consumer markets. CanniMed has received Health
Canada approval to commence sales of CanniMed Capsules, a line of vegan
capsules, the first of which - CanniMed Capsules 3:3 – will be available in
August, 2018. Each capsule contains a balanced dose of THC and CBD. A high CBD
capsule is also under development. Capsules as a delivery mechanism are highly
valued for their precision dosing.
In addition, Aurora has received its Health Canada license for
the production of encapsulated oil for its Mountain facility. The Company will
be producing unique, integral hard shells for the medical markets, as well as
for the adult consumer use market, once legalized.
Construction Well Underway at Aurora Sun
Ground has been broken for construction of the Aurora Sun
production facility in Medicine Hat, Alberta, known as the "Sunniest City in
Canada". Excavation is 75% complete. The considerable experience gained through
the construction of Aurora Sky, the acquisition of Larssen Ltd. and the
establishment of facility design and engineering division Aurora Larssen
Projects Inc. ("ALPS"), as well as the business-friendly climate in Medicine Hat
are anticipated to expedite completion of the Aurora Sun project.
Aurora Sun, the second of the Company's EU GMP compliant high
technology "Sky Class" facilities with precision environmental controls and a
high degree of automation, is currently slated to be 50% larger than Aurora Sky,
at 1.2 million sq. ft., and to produce more than 150,000 kg of high-quality
cannabis per year.
CanniMed Integration Complete
The integration of CanniMed Therapeutics into Aurora has now
been successfully completed, within the targeted 90 day period, combining
Aurora's execution and agility with CanniMed's strong medical brand, assets and
exceptionally experienced team of scientists and operational cannabis
professionals. The implementation program developed for CanniMed will support
the integration of future acquisitions. Financial and fiscal synergies,
predominantly in supply chain management, HR and IT, have also been realized.
The operational teams have fully completed their technical and
process review, and production synergies are being realized. The Company
anticipates that by bringing CanniMed's cultivation processes in line with the
Aurora Standard, the production capacity within the current footprint will
increase significantly over the coming quarters. Similarly, the integration team
is implementing enhancements to the extraction operations at CanniMed, which,
management expects will increase oil production substantially.
The integration process has also enabled the Company to
leverage CanniMed's currently unused licensed space to support the development
and delivery of new product forms in addition to the recently announced launch
of a Topical cream and the CanniMed Capsules. The integrated science team is
continuing to progress on existing CanniMed initiatives, as well is establishing
new projects, leveraging CanniMed's considerable research and science
capabilities.
CanniMed is now integrated into Aurora's international sales
and distribution channels. Additional opportunities to increase Aurora's and
CanniMed's international reach are being pursued, such as through CanniMed's
relationships in South Africa, the Cayman Islands, and Australia. CanniMed
continues to ship oils to both of the latter jurisdictions. These shipments are
expected to show continued growth in line with demand in these markets and as
additional oil production capacity comes online.
Strengthening the Company's medical brand recognition to
support further growth in the international medical cannabis markets is being
pursued through the continuation of various clinical trials. This program is
also anticipated to yield marketable IP.
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 430,000 kg per year and operations across Canada and in Europe, Aurora
is one of the world's largest cannabis companies. The Company is vertically
integrated and horizontally diversified across every key segment of the value
chain, from facility design and engineering, to cannabis breeding and genetics
research, cannabis and hemp production, extraction and high value-add product
development, home cultivation and wholesale and retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes. Intended to be replicable and scalable globally, these production
facilities are designed to produce cannabis on a massive scale, with high flower
quality, industry-leading yields, and ultra-low per gram production costs. Each
of the Company's facilities is built to meet European Union (EU) GMP standards, and both its first production facility and its
wholly owned European medical cannabis distributor Pedanios have achieved that
level of certification.
In addition to its rapid organic growth and strategic M&A,
which to date includes nine companies acquired, Aurora is distinguished by its
reputation as a partner of choice in the cannabis sector, having invested in and
established strategic partnerships with a range of leading innovators,
including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient
Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann
Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings
Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), and Alcanna Inc. (TSX:
CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website https://investor.auroramj.com.
Aurora Cannabis Inc.
Terry Booth
CEO
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/July2018/03/c2632.html
%SEDAR: 00025675E
For further information:
Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com, www.auroramj.com; Rob Kelly,
+1.647.331.7228, rob.kelly@auroramj.com, www.auroramj.com; For U.S. investors:
Phil Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212)
896-1233 / (212) 896-1203, Email: pcarlson@kcsa.com / ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 07:00e 03-JUL-18
Aurora Cannabis Establishes Supply Agreement with the
Alberta Gaming, Liquor & Cannabis Commission (AGLC)
Aurora to supply a Wide Variety of Premium Cannabis Products
to Support the Adult Consumer Market
TSX: ACB
EDMONTON, July 5, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora")
(TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today announced that it
has entered into an agreement with the Alberta Gaming, Liquor & Cannabis
Commission ("AGLC") to supply high-quality cannabis products for the adult
consumer use market in the province. Consequently, Aurora will initially
allocate up to 25,000 kg of product for the first 6 months of sales to this
market. The AGLC is responsible for regulating private retail cannabis
licensing, distribution of cannabis to retail stores, and operation of the
online cannabis store, www.albertacannabis.org.
Aurora's three facilities in Alberta - Aurora Sky, Mountain,
and Sun - with a combined funded production capacity of more than 250,000 kg per
year, uniquely position Aurora to provide a reliable, high-quality supply of
cannabis to the Province. Through this agreement, Aurora, which is the leader in
the medical cannabis market in Alberta, will play an important role in ensuring
sufficient product is available to the adult consumer market in the province.
"The AGLC and Alberta government have been steadfast in their
commitment to developing the best possible framework for a well-functioning
legal adult consumer use market that prevents cannabis from ending up in the
hands of youth," said Terry Booth, CEO. "The province's common-sense approach
and this agreement are the result of many months of discussions with the AGLC
towards achieving these goals. Consequently, adult consumers in Alberta will
have access to a broad selection of high-quality cannabis products from October
17, 2018 onward. Aurora already is the pre-eminent provider of medical cannabis
in Alberta, with a dominant market share, serving more Alberta patients than any
other licensed producer. Aurora also employs more Albertans than all other
licensed producers combined. We have a brand recognized for quality, which we
intend to leverage to capture significant share of the adult consumer market in
Alberta and Canada, both organically and through our strategic retail
partnerships. We look forward to working with the AGLC and becoming a key part
of the province's cannabis infrastructure to ensure Alberta's successful entry
into the burgeoning consumer cannabis market."
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 430,000 kg per year and operations across Canada and in Europe, Aurora
is one of the world's largest cannabis companies. Aurora is vertically
integrated and horizontally diversified across every key segment of the value
chain, from facility design and engineering, to cannabis breeding and genetics
research, cannabis and hemp production, extraction and high value-add product
development, home cultivation and wholesale and retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes. Intended to be replicable and scalable globally, these production
facilities are designed to produce cannabis on a massive scale, with high flower
quality, industry-leading yields, and ultra-low per gram production costs. Each
of Aurora's facilities is built to meet European Union (EU) GMP standards, and
both its first production facility and its wholly owned European medical
cannabis distributor Pedanios have achieved that level of certification.
In addition to its rapid organic growth and strategic M&A,
which to date includes nine companies acquired, Aurora is distinguished by its
reputation as a partner of choice in the cannabis sector, having invested in and
established strategic partnerships with a range of leading innovators,
including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient
Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann Group Ltd. (ASX: CAN),
Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO),
Namaste Technologies Inc. (TSXV: N), and Alcanna Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website investor.auroramj.com.
Terry Booth, CEO
Aurora Cannabis Inc.
Forward Looking Statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/July2018/05/c6383.html
%SEDAR:
00025675E
For further information:
For Aurora: Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com, www.auroramj.com; Rob Kelly,
+1.647.331.7228, rob.kelly@auroramj.com, www.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com / ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 07:43e 05-JUL-18
Aurora Cannabis Receives Competition Bureau Clearance for
MedReleaf Acquisition
TSX:ACB TSX:LEAF
EDMONTON and MARKHAM, ON, July 6, 2018 /CNW/ - Aurora Cannabis
Inc. ("Aurora") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) and
MedReleaf Corp. ("MedReleaf") (TSX: LEAF) today announced that the Canadian
Competition Bureau has issued a no-action letter under the
Competition
Act
(Canada) indicating that it does not intend to challenge the proposed
arrangement (the "Arrangement") between Aurora and MedReleaf, whereby Aurora
intends to acquire all of the issued and outstanding common shares of MedReleaf
(the "Transaction").
The Arrangement remains subject to customary closing
conditions, including approval by each of Aurora shareholders and MedReleaf
shareholders at shareholder meetings scheduled to be held on July 18, 2018, and
final court approval. Subject to satisfaction of these closing conditions, the
Transaction is expected to close later in July, 2018.
The Arrangement has been unanimously recommended by the Aurora
board of directors and the MedReleaf board of directors. Certain directors and
officers of Aurora and MedReleaf have also entered into support agreements
pursuant to which they have agreed to vote their shares in favour of the
Arrangement. In addition, holders of approximately 56% of MedReleaf's issued and
outstanding common shares have entered into irrevocable hard lock-ups to vote
their shares in favour of the Arrangement.
YOUR VOTE IS IMPORTANT
•
PLEASE VOTE TODAY. Your vote
is important regardless of the number of shares you own. Aurora shareholders and
MedReleaf shareholders are encouraged to read their respective Circulars in
detail.
Aurora shareholders who have questions regarding the
Arrangement or who require assistance with voting may contact Aurora's strategic
advisor and proxy solicitation agent, Laurel Hill Advisory Group at
1-877-452-7184 (toll free) or 416-304-0211 (collect) or by email at
assistance@laurelhill.com.
MedReleaf shareholders who have questions regarding the
Arrangement or who require assistance with voting may contact D.F. King,
MedReleaf's proxy solicitation agent, by telephone toll free at 1-866-521-4425
(1-212-771-1133 by collect call) or by email at inquiries@dfking.com.
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 430,000 kg per year and operations across Canada and in Europe, Aurora
is one of the world's largest cannabis companies. Aurora is vertically
integrated and horizontally diversified across every key segment of the value
chain, from facility design and engineering, to cannabis breeding and genetics
research, cannabis and hemp production, extraction and high value-add product
development, home cultivation and wholesale and retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes. Intended to be replicable and scalable globally, these production
facilities are designed to produce cannabis on a massive scale, with high flower
quality, industry-leading yields, and ultra-low per gram production costs. Each
of Aurora's facilities is built to meet European Union (EU) GMP standards, and
both its first production facility and its wholly owned European medical
cannabis distributor Pedanios have achieved that level of certification.
In addition to its rapid organic growth and strategic M&A,
which to date includes nine companies acquired, Aurora is distinguished by its
reputation as a partner of choice in the cannabis sector, having invested in and
established strategic partnerships with a range of leading innovators,
including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient
Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann
Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO), Namaste
Technologies Inc. (TSXV: N), and Alcanna Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website https://investor.auroramj.com.
About MedReleaf
Canada's most awarded licensed producer, MedReleaf is an
R&D-driven company dedicated to innovation, operational excellence and the
production of industry leading, top-quality cannabis. Sourced from around the
world and carefully cultivated in one of two state-of-the-art ICH-GMP and ISO
9001 certified facilities in Ontario, with a third facility currently in
development, a full range of premium MedReleaf products are delivered to the
global medical market. We serve the therapeutic needs of patients seeking safe,
consistent and effective medical cannabis and provide a compelling product
offering for the adult-use recreational market.
For more information on MedReleaf, its products, research and
how the company is helping patients #livefree, please visit MedReleaf.com or
follow @medreleaf.
|
AURORA CANNABIS INC.
|
MEDRELEAF CORP.
|
|
Terry Booth
|
Neil Closner
|
|
CEO
|
CEO
|
Forward looking statements
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS:
Certain information in this news release constitutes forward-looking
statements under applicable securities laws. Any statements that are contained
in this news release that are not statements of historical fact may be deemed to
be forward-looking statements. Forward looking statements are often identified
by terms such as "may", "should", "anticipate", "expect", "potential",
"believe", "intend" or the negative of these terms and similar expressions.
Forward looking statements in this news release include, but are not limited to,
statements with respect to the timing for the completion of the Transaction and
the satisfaction of closing conditions. There can be no assurance that the
Transaction will be completed. Forward looking statements are based on certain
assumptions. While Aurora and MedReleaf consider these assumptions to be
reasonable, based on information currently available, they may prove to be
incorrect. Readers are cautioned not to place undue reliance on forward-looking
statements.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/July2018/06/c1862.html
%SEDAR:
00025675E
For further information:
For Aurora: Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com, www.auroramj.com; Rob Kelly,
+1.647.331.7228, rob.kelly@auroramj.com, www.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com / ebarker@kcsa.com; For MedReleaf:
Darren Karasiuk, SVP & GM, Recreational, dkarasiuk@medreleaf.com,
+1.855.473.5323, Dennis Fong, LodeRock Advisors, Investor Relations,
investorrelations@medreleaf.com, +1.416.283.9930
CO: Aurora Cannabis Inc.
CNW 07:00e 06-JUL-18
ISS and Glass Lewis Recommend Aurora Cannabis Shareholders
Vote in Favour of the MedReleaf Acquisition and Australis Capital Spin-Out
Leading Proxy Advisors Highlight Strong Strategic Rationale
for Combination with MedReleaf Capital Reduction Enables Distribution to
Shareholders
TSX: ACB
EDMONTON, July 6, 2018 /CNW/ - Aurora Cannabis Inc.
("Aurora"
or the
"Company")
(TSX: ACB) (OTCQB: ACBFF) (Frankfurt:
21P; WKN: A1C4WM) is pleased to announce that Institutional Shareholder Services
Inc. ("ISS") and Glass Lewis and Co., LLC ("Glass Lewis"), two leading advisory
firms, have recommended that shareholders of Aurora vote for the Share Issuance
Resolution with respect to the plan of arrangement to acquire all of the shares
issued and outstanding of MedReleaf Corp. ("MedReleaf") (the "Transaction").
Additionally, both firms recommend shareholders vote for the
Reduction of Capital Resolution in regard to the proposed spin-out of Aurora's
U.S. assets by way of a distribution of capital to Aurora Shareholders of the
common shares of Australis Capital Inc. ("Australis").
As previously announced on May 14, 2018, under the proposed
Transaction, holders of MedReleaf common shares will receive 3.575 Aurora common
shares and, in general, $0.000001 in cash for each MedReleaf common share held.
Details of the transaction are provided in the Company's documents relating to
the proposed plan of arrangement on www.sedar.com as well as on the Company's
dedicated transaction site https://medreleaf.auroramj.com.
"We are bringing together two leading cannabis companies with
very complementary assets, teams, brands, cultures and philosophies, in order to
further capitalize on unique and immediate opportunities in the global cannabis
sector, and to accelerate growth," said Terry Booth, CEO. "The two leading
independent shareholder advisory firms have now validated this proposal and
recommend shareholders vote in favour of the combination due to its strategic
synergies. The Board and management of Aurora recommend shareholders vote their
proxies in favour of both resolutions as soon as possible, including the capital
reduction related to the proposed spin-out of Australis."
For questions, shareholders should connect with Aurora's
advisory firm Laurel Hill, whose contact details are provided below in this
press release.
The Glass Lewis reports states that:
"In terms of
strategic merit, we believe there is a fairly straightforward case here. The
transaction creates a Canadian cannabis firm with significantly increased scale
and expanded product development capabilities in anticipation of legalized
recreational cannabis consumption in Canada, which is set to take effect in
mid-October 2018. These benefits will be paired with existing distribution
agreements expected to place the combined firm's more diversified product suite
in a strong competitive position in Canada and North America more generally,
while also prospectively positioning the joint enterprise to compete
internationally. We see no cause to question this general framework
."
The ISS report states that:
"The proposed arrangement makes strategic sense as it
combines two companies in the same cannabis segment with complementary assets
and products, distribution networks, and capabilities. The combined entity is
expected to benefit from a stronger competitive positioning in the evolving
cannabis industry due larger production scale, improved efficiency, extensive
distribution channels, better diversified products portfolio, improved brand
leadership and enhanced capital markets profile."
The ISS report also noted a number of expected benefits of the
proposed business combination, including the following:
|
•
|
The arrangement brings together two leading operators
with a total funded capacity of over 570,000 kg per year of high-quality
cannabis.
|
|
•
|
MedReleaf's high-yield cultivation is expected to further
enhance productivity and reduce costs across the combined entity's
facilities.
|
|
•
|
The combined entity will have distribution agreements
with Alberta's AGLC, Quebec's SAQ, Shoppers Drug Mart, and Pharmasave,
among others.
|
|
•
|
The combined entity will have strong, complementary
distribution channels internationally, enabling both companies to more
strongly leverage their early mover advantage in these potentially large
and lucrative markets.
|
|
•
|
A more broadly diversified portfolio of award-winning
high-quality flower and derivative products will enable the combined
entity to establish strong brands across the various market segments, as
well as establish a strong margin profile.
|
|
•
|
Three established cannabis brands, Aurora, CanniMed and
MedReleaf, coupled with a portfolio of consumer and wellness brands – San
Rafael '71, Woodstock, and AltaVie – all backed by detailed consumer and
marketplace insights and advanced analytical frameworks.
|
|
•
|
Aurora's Medical Centre of Excellence together with
MedReleaf's ongoing studies with recognized research institutes are
expected to create scientific momentum on a global scale.
|
Australis Spin-Out
The record date for the distribution of Australis shares to
Aurora shareholders will now be subsequent to the anticipated completion of the
transaction, thus providing distribution to MedReleaf shareholders also.
Consequently, the distribution ratio of Australis shares is anticipated to be
adjusted accordingly.
The Board of Directors recommends that Aurora shareholders
vote FOR the Share Issuance Resolution and FOR the Reduction of Capital
Resolution.
Your vote is very important. Shareholders should vote FOR the
Share Issuance Resolution and
FOR the Reduction of Capital Resolution using the
form of proxy or voting instruction form in
advance of the proxy voting deadline
on Monday July 16, 2018 at 9:00 a.m. (Vancouver time)
Shareholders who have questions about the meeting resolutions
or need assistance voting may contact Laurel Hill Advisory Group, Aurora's
strategic advisor and proxy solicitation agent at:
|
Laurel Hill
Advisory Group:
|
|
North America Toll Free: 1-877-452-7184
|
|
Collect Calls Outside North America: 1-416-304-0211
|
|
Email: assistance@laurelhill.com
|
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 430,000 kg per year and operations across Canada and in Europe, Aurora
is one of the world's largest cannabis companies. Aurora is vertically
integrated and horizontally diversified across every key segment of the value
chain, from facility design and engineering, to cannabis breeding and genetics
research, cannabis and hemp production, extraction and high value-add product
development, home cultivation and wholesale and retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes. Intended to be replicable and scalable globally, these production
facilities are designed to produce cannabis on a massive scale, with high flower
quality, industry-leading yields, and ultra-low per gram production costs. Each
of Aurora's facilities is built to meet European Union (EU) GMP standards, and
both its first production facility and its wholly owned European medical
cannabis distributor Pedanios have achieved that level of certification.
In addition to its rapid organic growth and strategic M&A,
which to date includes nine companies acquired, Aurora is distinguished by its
reputation as a partner of choice in the cannabis sector, having invested in and
established strategic partnerships with a range of leading innovators,
including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient
Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann
Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings
Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), and Alcanna Inc. (TSX:
CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website https://investor.auroramj.com.
Terry Booth, CEO
Aurora Cannabis Inc.
Forward Looking Statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. Forward-looking statements in this news
release include, but are not limited to, statements with respect to the
anticipated benefits associated with the Transaction, statements with respect to
the expected timing of the legalization of cannabis in Canada, and the expected
completion of the spin out of Aurora assets. Forward looking statements are
based on certain assumptions regarding Aurora and MedReleaf, including expected
growth, results of operations, performance, industry trends and growth
opportunities, that the Government of Canada proceeds with legalization as
previously announced, and that all necessary approvals for the spin out,
including the approval the securities regulatory authorities and the Canadian
Stock Exchange, are received. While Aurora considers these assumptions to be
reasonable, based on information currently available, they may prove to be
incorrect. The forward looking statements are subject to a number of known and
unknown risks, including: the fact that completion of the Transaction is subject
to the satisfaction of closing conditions which remain outstanding including,
without limitation (i) required Aurora and MedReleaf shareholder approvals; (ii)
necessary court approval in connection with the plan of arrangement, (iii)
certain termination rights available to the parties under the Arrangement
Agreement; and (iv) other closing conditions, including, without limitation
,compliance by Aurora and MedReleaf with various covenants contained in the
Arrangement Agreement; risks associated with general economic conditions;
adverse industry events; future legislative and regulatory developments;
inability to access suf icient capital from internal and external sources,
and/or inabilityto access sufficient capital on favourable terms; the cannabis
industry yin Canada generally, income tax and regulatory matters; the ability of
Aurora to implement its business strategies; competition; currency and interest
rate fluctuations and other risks. Readers are cautioned that the foregoing list
is not exhaustive. Readers are furthercautioned not to place unduereliance on
forward looking statements as there can be no assurance that the plans,
intentions or expectations upon which they are placed will occur. Such
information, although considered reasonable by management at the time of
preparation, may prove to be incorrect and actual results may differ materially
from those anticipated. Forward-looking statements contained in this news
release are expressly qualified by this cautionary statement and reflect our
expectations as of the date hereof, and thus are subject to change thereafter.
Aurora disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by law. Factors that could cause
anticipated opportunities and actual results to differ materially include, but
are not limited to, matters referred to above and elsewhere in Aurora's or
MedReleaf's public filings, including the management information circulars and
the material change reports have been in respect of the Transaction, which are,
or will be, available on SEDAR.
In There can be no assurance that the
Transaction will be completed, or if completed, that the underlying assumptions
for the benefits of the Transaction prove correct. Readers are cautioned not to
place undue reliance on forward-looking statements. The Company is under no
obligation, and expressly disclaims any intention or obligation, to
update or revise any forward-looking statements, whether as
a result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/July2018/06/c7237.html
%SEDAR: 00025675E
For further information:
Laurel Hill Advisory Group:
North America Toll Free: 1-877-452-7184, Collect Calls Outside North America:
1-416-304-0211, Email: assistance@laurelhill.com; For Aurora: Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com, www.auroramj.com; Rob Kelly,
+1.647.331.7228, rob.kelly@auroramj.com, www.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com / ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 08:00e 06-JUL-18
Aurora Cannabis Acquires Exclusive Canadian License for
World-Leading Pre-Roll Technology from CannaRoyalty
TSX: ACB CSE: CRZ
EDMONTON and OTTAWA, July 11, 2018 /CNW/ - Aurora Cannabis Inc.
("Aurora") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) and
CannaRoyalty Corp. (CSE: CRZ) (OTCQX: CNNRF) ("CannaRoyalty") (together the
"Companies") today announced that the Companies have signed a binding term sheet
(the "Agreement") whereby Aurora is purchasing CannaRoyalty's exclusive Canadian
license to use and commercialize pre-roll technology developed by Wagner Dimas
for an aggregate consideration of C$7 million in Aurora common shares (the
"Purchase Price"). Closing of the Agreement is subject to certain conditions,
including regulatory approval.
"Pre-rolls are a rapidly growing, in-demand segment of the
international cannabis market and the Wagner Dimas's technology has substantial
competitive advantages over peers in terms of throughput, quality and
diversity," said Terry Booth, CEO of Aurora. "This Agreement reflects Aurora's
strategy to continue broadening our high-quality product portfolio by expanding
into value add products for both the medical and adult consumer markets. Wagner
Dimas has a proven record of producing many of the leading pre-roll brands in a
number of mature cannabis markets, and we look forward to introducing this high
throughput, high-quality pre-roll technology to the Canadian market."
Marc Lustig, CEO of CannaRoyalty, added, "The Agreement to
transfer our Canadian license to the Wagner Dimas technology aligns with and
advances our focused business strategy of building out our distribution and
brand network in our core market of California. This successful liquidity event
for one of our early investments validates our approach as a strategic investor
in the cannabis industry, while at the same time providing us with equity
exposure to Aurora's future growth"
Unless otherwise agreed to by both parties, the Agreement will
be closed within 15 business days of its signing.
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 430,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution. Aurora, from day one of its existence, has been steadfast
in its respect for the cannabis community, the culture and its pioneers, as well
as has been a strong supporter of and advocate for access to cannabis.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes. Intended to be replicable and scalable globally, these production
facilities are designed to produce cannabis of significant scale, with high
quality, industry-leading yields, and ultra-low per gram production costs. Each
of Aurora's facilities is built to meet European Union (EU) GMP standards, and
both its first production facility and its wholly owned European medical
cannabis distributor Pedanios have achieved this level of certification.
In addition to our rapid organic growth to over 1000 employees
world-wide, and strong execution on strategic M&A, which to date includes
nine companies acquired - CanvasRX, Peloton Pharmaceutical, Pedanios, H2
Biopharma, Urban Cultivator, BC Northern Lights, Larssen, CanniMed Therapeutics,
and Anandia Labs - Aurora is distinguished by its reputation as a partner of
choice and employer of choice in the global cannabis sector, having invested in
and established strategic partnerships with a range of leading innovators,
including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient
Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann
Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings
Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), and Alcanna Inc. (TSX:
CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For detailed investor information about Aurora, please visit
our investor website investor.auroramj.com.
About CannaRoyalty
CannaRoyalty is an active operator and investor in the global
cannabis industry, with a strong focus on California, the world's largest
cannabis market. Our core mission is to become the leading global consumer
product goods company for discerning cannabis consumers. We are currently
focused on building a diversified portfolio of manufacturing, distribution,
intellectual property, and infrastructure assets to achieve this goal. Our
leadership team combines a passion and hands-on understanding of the cannabis
industry, with seasoned financial and legal expertise. CannaRoyalty's shares
trade on the Canadian Stock Exchange (CSE) under the symbol CRZ and
internationally on the OTCQX under the symbol CNNRF.
About Wagner Dimas
Wagner Dimas is an Intellectual Property company focused on
engineering and developing technology for large scale manufacturing in a variety
of applications including automated high production scale rolling machines to
mass manufacture hemp and cannabis pre-rolls and cones. Wagner Dimas has assumed
the leadership position in pre-roll manufacturing equipment and process. The
company's licensees have experienced significant demand for both its co-packing
and contract manufacturing services with over 20 cannabis brands, dispensaries,
and cultivators, who are now able to provide their patients and customers with
an unparalleled quantity and quality of finished product.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Terry Booth, CEO
Aurora Cannabis Inc.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/July2018/11/c8956.html
%SEDAR:
00025675E
For further information:
For Aurora: Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com, www.auroramj.com; Rob Kelly,
+1.647.331.7228, rob.kelly@auroramj.com, www.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com / ebarker@kcsa.com; For CannaRoyalty:
Marc Lustig, CannaRoyalty Corp., info@cannaroyalty.com, 1-844-556-5070,
www.cannaroyalty.com; Jonathan Ross, CFA, LodeRock Advisors Inc.,
jon.ross@loderockadvisors.com, 1-416-283-0178, loderockadvisors.com
CO: Aurora Cannabis Inc.
CNW 06:00e 11-JUL-18
Aurora Cannabis and Evio Beauty Group Agree to Strategic
Partnership
Partners to Collaborate on the Innovative Production of
Cannabidiol (CBD) Infused Cosmetic Products
TSX: ACB
EDMONTON, July 11, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
announced today that it has established a partnership agreement ("the
Agreement") with Evio Beauty Group Ltd. ("Evio Beauty") pursuant to which Aurora
has made a strategic investment in Evio Beauty. Under the terms of the
Agreement, Aurora and Evio Beauty Group will collaborate to develop a line of
co-branded hemp seed oil cosmetic products ("Non-Infused Products") as well as a
collection of CBD infused cosmetic products ("Infused Products").
Evio Beauty is a portfolio of conscious lifestyle brands. The
well-developed cosmetic sister brand, Evelyn Iona, has a strong e-commerce
presence based on inclusivity, empowerment and choice, aimed at people of all
demographics. Evelyn Iona products are based on sustainability principles. They
are made with natural ingredients and are always cruelty-free.
The partnership between Evio Beauty and Aurora is aimed at
creating a new line of approved hemp seed oil based product formulations, as
well as approved CBD based products. Aurora and Evio Beauty anticipate that the
partnership will result in greater brand recognition and cross-selling
opportunities to customers of both companies.
The concept for Evio Beauty Group was developed by founder
Brandi Leifso who, while living in a women's shelter, identified a need for
lifestyle products that offered stakeholders a greater opportunity to engage.
Evio Beauty Group's brand personifies quality, sustainability, equality, and
community engagement, as manifested through the company's events, sponsorships,
educational activities and outreach initiatives. A respected entrepreneur within
lifestyle and social engagement circles, Brandi Leifso is a sought-after
spokesperson for events that align with the company's motto of empowerment. This
broad recognition and high visibility have resulted in Evio Beauty successfully
establishing relationships with over 50 coveted retailers.
Evio Beauty is supported by a strong board of directors
including Paul Rosen, Managing Partner of BreakWater Venture Capital, Hugh
Winters, President of Azure Beauty Inc and David Price, Vice President of sales
for Hunter Amenities International.
Management Commentary
"Through this partnership with Evio, Aurora further diversifies
its rapidly growing offering across the cannabis value chain, while capturing a
unique opportunity to bring the Aurora Standard to cannabis derived lifestyle
and cosmetic products," said Terry Booth, CEO. "Innovative, pioneering, noble
entrepreneurs like Brandi closely align with Aurora's internal culture,
strengthening our spirit of diversity and furthering our female empowerment
initiatives. My personal efforts have for many years supported the effort to end
family violence, and have been aimed at helping society understand that we must
support female empowerment. Aurora's culture, since the first seed sown, has
been one of fairness, inclusion and equality. This has resulted in positions
being awarded based on merit, regardless of gender, race or religion. There is
no alternative. We're excited to work with Brandi and the team at Evio Beauty to
develop and launch this innovative new line of hemp seed and CBD-based cosmetic
products to a large and growing audience worldwide."
Brandi Leifso, CEO of Evio Beauty, added, "The cannabis
industry is uniquely positioned to champion more women in leadership roles. With
the strong support of a dedicated partner like Aurora, we will continue to scale
our female empowerment initiatives while addressing pain points in the cosmetics
industry. By utilizing hemp seed oil and cannabis derivatives, we can enhance
ingredient transparency, reducing the use of hurtful animal by-products and
ecologically unsustainable inputs."
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 430,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution. Aurora, from day one of its existence, has been steadfast
in its respect for the cannabis community, the culture and its pioneers, as well
as has been a strong supporter of and advocate for access to cannabis.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes. Intended to be replicable and scalable globally, these production
facilities are designed to produce cannabis of significant scale, with high
quality, industry-leading yields, and ultra-low per gram production costs. Each
of Aurora's facilities is built to meet European Union (EU) GMP standards, and
both its first production facility and its wholly owned European medical
cannabis distributor Pedanios have achieved this level of certification.
In addition to our rapid organic growth to over 1000 employees
world-wide, and strong execution on strategic M&A, which to date includes
nine companies acquired - CanvasRX, Peloton Pharmaceutical, Pedanios, H2
Biopharma, Urban Cultivator, BC Northern Lights, Larssen, CanniMed Therapeutics,
and Anandia Labs - Aurora is distinguished by its reputation as a partner of
choice and employer of choice in the global cannabis sector, having invested in
and established strategic partnerships with a range of leading innovators,
including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient
Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann
Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings
Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), and Alcanna Inc. (TSX:
CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For detailed investor information about Aurora, please visit
our investor website investor.auroramj.com.
About Evio Beauty Group
Evio Beauty Group Ltd. is a portfolio of conscious lifestyle
brands. Evio Beauty Group was created with a vision for a conscious future and a
mission to break stigmas with products that are good for your skin, your planet
and your community. Amongst the growing Evio Beauty Group portfolio is Evelyn
Iona Cosmetics (www.evelyniona.com), a line of natural products that fill the
gap of hard-to-find cosmetics. Evelyn Iona has earned recognition from Vogue,
The New York Times, Elle, Flare, Chatelaine and Allure for its unique founding
story and high performing products. Additionally, The Evio Beauty Group
portfolio is home to Evio Community (www.eviocommunity.com), an online platform
of curated content stimulating conversation and collecting data on beauty,
cannabis, fashion, feminism, wellness and entrepreneurship. Most recently, Evio
Beauty Group announced its subsidiary housing all Evio Beauty Group cannabis
activity, Iona Cannabis Corp.
Social impact is at the core of why Evio Beauty Group exists.
Evio Beauty Group is formally partnered with the Canadian Women's Foundation
through awareness activities and by donating $1 from every product sold at
www.evelyniona.com to advance equality efforts.
Evio Beauty Group is a proud alumni of the esteemed Sephora's
Accelerate program. Sephora is a leader in global prestige retail. Owned by LVMH
(Moët Hennessy Louis Vuitton), Sephora has earned its reputation as a beauty
trailblazer with its expertise, innovation, and entrepreneurial spirit.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur and include, but are not limited to a) the
success of the collaboration between the Company and Evio and b) the development
of the Infused Products and Non Infused Products Various assumptions were used
in drawing the conclusions or making the projections contained in the
forward-looking statements throughout this news release. Forward-looking
statements are based on the opinions and estimates of management at the date the
statements are made, and are subject to a variety of risks and uncertainties and
other factors that could cause actual events or results to differ materially
from those projected in the forward-looking statements. The Company is under no
obligation, and expressly disclaims any intention or obligation, to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Terry Booth, CEO
Aurora Cannabis Inc.
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/July2018/11/c5519.html
%SEDAR: 00025675E
For further information:
For Aurora: Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com, www.auroramj.com; Rob Kelly,
+1.647.331.7228, rob.kelly@auroramj.com, www.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com / ebarker@kcsa.com; For Evio Beauty
Group: Lori Harito, 416.523.9602, lori@evio.ca,www.evio.ca
CO: Aurora Cannabis Inc.
CNW 07:00e 11-JUL-18
Aurora Cannabis Joint Partnership with Wagner Dimas Disrupts
Pre-Roll Market
Entering High-Volume, High-Margin Product Category with
Industry-Leading Technology
TSX: ACB
EDMONTON, July 11, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
announced today that the Company has entered into an agreement with Wagner Dimas
Inc. ("Wagner Dimas") the transaction includes cash and the issuance of common
shares of Aurora relative to the achievement of certain milestones for the joint
commercialization of Wagner Dimas's technology. This technology targets the
high-volume, higher-margin pre-rolled segment of the cannabis market.
Under the terms of the agreement, Aurora and Wagner Dimas will
form a new Canadian entity to which Wagner Dimas has agreed to assign
intellectual property with exclusive rights to Aurora. The transaction is
subject to completion of definitive agreements, delivery of certain equipment
from Wagner Dimas to Aurora - expected within the next 21 days - as well as
customary TSX and regulatory approvals.
Aurora has identified the pre-roll market segment as a
high-volume, higher-margin opportunity. BDS-Analytics, for instance, determined
that pre-rolls account for 12% of total revenue generated from the adult
consumer market in Washington State (2017). Wagner Dimas produced over 5 million
pre-rolls in 2017, and, following scale-up to a new facility, the company is on
pace to produce over 50 million pre-rolls in 2018 for the Californian market
alone. Furthermore, the Wagner Dimas technology enables the production of over
75 different pre-rolled product types, addressing a wide variety of market
demands. Wagner Dimas provides pre-rolls to a wide range of the most popular
brands in the California market.
Management Commentary
"Aurora searched the globe for scalable pre-roll technologies,
and ended up in California, which has the best-established pre-roll market with
the highest demand," said Terry Booth, CEO. "Wagner Dimas was selected due to
its market-leading, unique, patented technology and proprietary processes that
enable the massive-scale production of high-quality joints. The proven Wagner
Dimas technology provides us with significant competitive advantages in this
high-volume, high-margin segment of the cannabis market. We will be able to meet
Canadian consumer demand, and, additionally, with a capacity of over 100,000
pre-rolls per machine per day, we have phenomenal scalability to rapidly expand
production and service growing demand in the global market. This agreement
enables the creation of another Aurora product category to our growing portfolio
of value added brands."
Dean Arbit, CEO of Wagner Dimas, added, "This agreement
launches Wagner Dimas onto the global stage. Wagner Dimas is delighted to
partner with Aurora, the industry innovation leader with a large and rapidly
growing domestic and international footprint, to advance the development and
commercialization of our next generation of manufacturing technology. In
addition to the adult consumer market for traditional joints, this technology
also provides us with the ability to further serve global CBD market demand,
which is experiencing unprecedented growth and acceptance."
Under the terms of the agreement, the new company will be owned
40.5% by Aurora and 59.5% by Wagner Dimas. Additionally, Aurora will be granted
exclusive licenses to the pre-roll technology subject to certain conditions.
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 430,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution. Aurora, from day one of its existence, has been steadfast
in its respect for the cannabis community, the culture and its pioneers, as
well as has been a strong supporter of and advocate for access to cannabis.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes. Intended to be replicable and scalable globally, these production
facilities are designed to produce cannabis of significant scale, with high
quality, industry-leading yields, and ultra-low per gram production costs. Each
of Aurora's facilities is built to meet European Union (EU) GMP standards, and
both its first production facility and its wholly owned European medical
cannabis distributor Pedanios have achieved this level of certification.
In addition to our rapid organic growth to over 1000 employees
world-wide, and strong execution on strategic M&A, which to date includes
nine companies acquired - CanvasRX, Peloton Pharmaceutical, Pedanios, H2
Biopharma, Urban Cultivator, BC Northern Lights, Larssen, CanniMed Therapeutics,
and Anandia Labs - Aurora is distinguished by its reputation as a partner of
choice and employer of choice in the global cannabis sector, having invested in
and established strategic partnerships with a range of leading innovators,
including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient
Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann
Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings
Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), and Alcanna Inc. (TSX:
CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For detailed investor information about Aurora, please visit
our investor website investor.auroramj.com.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur and include, but are not limited to: a) the
popularity and success of the sale of pre-rolled cannabis in the domestic market
b) the completion of definitive agreements, c) the delivery of equipment from
Wagner Dimas to Aurora, and d) the completion of the Transaction. These
statements are only predictions. Various assumptions were used in drawing the
conclusions or making the projections contained in the forward-looking
statements throughout this news release. Forward-looking statements are based on
the opinions and estimates of management at the date the statements are made,
and are subject to a variety of risks and uncertainties and other factors that
could cause actual events or results to differ materially from those projected
in the forward-looking statements. The Company is under no obligation, and
expressly disclaims any intention or obligation, to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Terry Booth, CEO
Aurora Cannabis Inc.
SOURCE Aurora Cannabis Inc.
View original content:http://www.newswire.ca/en/releases/archive/July2018/11/c1430.html
%SEDAR: 00025675E
For further information:
For Aurora: Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com, www.auroramj.com, Rob Kelly,
+1.647.331.7228, rob.kelly@auroramj.com, www.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com / ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 07:30e 11-JUL-18
Aurora Cannabis Selects Shopify to Power Global ECommerce
Platform
New ECommerce Platform to Benefit Both Medical and
Adult-Consumer Use Customers
TSX: ACB
EDMONTON, July 16, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora" or
the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) announced
today that it has reached an agreement with Shopify Inc. ("Shopify"), one of the
world's leading multi-channel, online commerce companies, to leverage the
Shopify platform as Aurora's ecommerce engine for medical and recreational
cannabis distribution globally.
Working closely with Aurora Cannabis' industry-leading software
engineering team, Shopify will assist in transitioning Aurora's current
ecommerce site to a new, Shopify-developed platform, improving the customer
experience for Aurora's current medical and future adult consumer use customers.
One of the key benefits of the Shopify platform is its rapid and seamless
scalability as Aurora executes on its domestic and international expansion
strategy.
"Selecting Shopify allows Aurora to bring a world-class
ecommerce solution to our patients and future adult consumer use customers,"
said Darryl Vleeming, CIO of Aurora Cannabis Inc. "Shopify's unique, industry
leading platform provides a safe, secure and flexible ecommerce site that we can
build on as we execute our global growth initiatives and enter new markets."
Loren Padelford, VP at Shopify, added: "While both companies
originate in Canada, this is a true global success story, combining our
industry-leading technology, helping to power the international expansion of one
of the global leaders in the exciting and rapidly growing cannabis industry. The
Shopify platform will allow Aurora to provide a tailored customer experience
that embraces and adapts to the unique demands of both consumers and regulators,
adapted to the specific needs of the various jurisdictions in which Aurora
operates."
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 430,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution. Aurora, from day one of its existence, has been steadfast
in its respect for the cannabis community, the culture and its pioneers, as well
as has been a strong supporter of and advocate for access to cannabis.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes. Intended to be replicable and scalable globally, these production
facilities are designed to produce cannabis of significant scale, with high
quality, industry-leading yields, and ultra-low per gram production costs. Each
of Aurora's facilities is built to meet European Union (EU) GMP standards, and
both its first production facility and its wholly owned European medical
cannabis distributor Pedanios have achieved this level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes nine companies acquired -
CanvasRX, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban Cultivator, BC
Northern Lights, Larssen, CanniMed Therapeutics, and Anandia Labs - Aurora is
distinguished by its reputation as a partner of choice and employer of choice in
the global cannabis sector, having invested in and established strategic
partnerships with a range of leading innovators, including: The Green Organic
Dutchman Holdings Ltd. (TSX: TGOD), Radient Technologies Inc. (TSXV: RTI),
Hempco Food and Fiber Inc. (TSXV: HEMP), Cann Group Ltd. (ASX: CAN), Micron
Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO),
Namaste Technologies Inc. (TSXV: N), Evio Beauty Group (private), and Alcanna
Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website investor.auroramj.com.
Terry Booth, CEO
Aurora Cannabis Inc.
Forward Looking Statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/July2018/16/c3633.html
%SEDAR: 00025675E
For further information:
For Aurora: Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com, www.auroramj.com, Rob Kelly,
+1.647.331.7228, rob.kelly@auroramj.com, www.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com / ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 07:00e 16-JUL-18
High Hampton Engages Leading Global Greenhouse Design Firm
Aurora Larssen Projects Inc. for Design and Support of CoachellaGro Cannabis
Cultivation Facility
/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR
FOR RELEASE, PUBLICATION, DISTRIBUTION OR DISSEMINATION DIRECTLY, OR INDIRECTLY,
IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES./
TSX: ACB CSE: HC
TORONTO and EDMONTON, July 16, 2018 /CNW/ - High Hampton
Holdings Corp. (CSE: HC) ("High Hampton") and Aurora Cannabis Inc. ("Aurora")
(TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) are pleased to announce
that High Hampton has engaged with globally leading hybrid greenhouse
engineering and design consultancy Aurora Larssen Projects Inc. ("ALPS"), a
wholly owned subsidiary of Aurora, for the design of its cannabis cultivation
facility at CoachellaGro, near Palm Springs, California. With the recently
awarded Conditional Use Permit (CUP) (see High Hampton press releases from May 3
and June 7, 2018), High Hampton now enters an active construction phase at
CoachellaGro, and ALPS will advise the Company on aspects of design, engineering
and the construction of its facilities.
Larssen Ltd ("Larssen"), now ALPS, was acquired by Aurora as a
dedicated hybrid greenhouse design and consulting arm for its global operations.
Led by renowned engineer Thomas Larssen, ALPS has set the industry standard in
high-tech, automated, environmentally controlled cultivation facilities for over
30 years and excels in the successful implementation of cutting-edge automation
features, and proprietary design characteristics that generate exceptional
yields, as well as the use of advanced energy efficient materials and
technologies. Larssen has been involved with over 1,000 projects around the
globe, including Aurora Sky, a high-technology, 800,000 square feet, 100,000 kg
per annum, low production cost hybrid facility, and is currently engaged with
over 15 cannabis industry clients globally, including 5 Canadian licensed
producers.
David E. Argudo, CEO/Director of High Hampton, commented, "As
we near the start of construction in Coachella, we continue to assemble a
best-in-class team for this next phase. By engaging and integrating the work of
ALPS with Infrastructure Engineers Ltd and general contractor Vertical
Construction Inc. we will be able to finetune our design plans ensuring the
construction of highly-efficient cultivation facilities, resulting in
high-quality, low-cost production. We are looking forward to working closely
with ALPS and strongly believe that our operation will greatly benefit from
their experience and technological advancements."
Terry Booth, CEO of Aurora Cannabis, stated, "ALPS continues to
expand its footprint as the designer of choice for highly automated,
hyper-efficient, low production cost cannabis facilities around the world. The
differences between a typical glass house and what will be the ALPS-designed
CoachellaGro facility are numerous and significant. CoachellaGro is better
described as an environmentally controlled indoor grow operation with
supplemental sun."
Thomas Larssen, President of ALPS, added, "The Coachella team
are well organized and have chosen a proven, efficient design, taking advantage
of the world's most advanced cultivation technologies. Eliminating the risk of
weather, disease and pests, combined with strict environmental controls, has
been proven to provide substantially higher yields and consistently high-quality
product. We look forward to working with the ChoachellaGro team in developing
this new project."
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 430,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution. Aurora, from day one of its existence, has been steadfast
in its respect for the cannabis community, the culture and its pioneers, as well
as has been a strong supporter of and advocate for access to cannabis.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes. Intended to be replicable and scalable globally, these production
facilities are designed to produce cannabis of significant scale, with high
quality, industry-leading yields, and ultra-low per gram production costs. Each
of Aurora's facilities is built to meet European Union (EU) GMP standards, and
both its first production facility and its wholly owned European medical
cannabis distributor Pedanios have achieved this level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes nine companies acquired -
CanvasRX, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban Cultivator, BC
Northern Lights, Larssen, CanniMed Therapeutics, and Anandia Labs - Aurora is
distinguished by its reputation as a partner of choice and employer of choice in
the global cannabis sector, having invested in and established strategic
partnerships with a range of leading innovators, including: The Green Organic
Dutchman Holdings Ltd. (TSX: TGOD), Radient Technologies Inc. (TSXV: RTI),
Hempco Food and Fiber Inc. (TSXV: HEMP), Cann Group Ltd. (ASX: CAN), Micron
Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO), Namaste
Technologies Inc. (TSXV: N), Evio Beauty Group (private), and Alcanna Inc. (TSX:
CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website investor.auroramj.com.
About High Hampton
High Hampton Holdings Corp. is a cannabis sector investment
company focused on opportunities in California. The Company's wholly owned
subsidiary, CoachellaGro Corp., is a California corporation focused on the
development of their 254,000 sq ft. greenhouse facility situated in the cannabis
industrial park located in Coachella, California. CoachellaGro has received a
conditional use permit (CUP) for development of a full-service production
facility in order to serve third party state licensed medicinal marijuana
operators. The City of Coachella has been progressive in setting up city
ordinance that sets aside over 90 acres within which will be a legal framework
for the cultivation, production, extraction and transportation of cannabis. The
complex is intended to contain all the necessary; security, infrastructure,
equipment, labour and skilled management, supplies and ancillary services for a
closed loop production process flow.
Social Media
Facebook: facebook.com/highhampton
Twitter:
twitter.com/highhamptonHC
LinkedIn: linkedin.com/HighHampton
|
On behalf of the Board of Directors
|
On behalf of the Board of Directors
|
|
Terry Booth, CEO
|
David
E. Argudo, CEO/Director
|
|
Aurora Cannabis Inc.
|
High Hampton Holdings Corp.
|
Marijuana Industry Involvement
Canadian listings (CSE) will remain in good standing as long as
they provide the disclosure that is required by regulators and complying with
applicable licensing requirements and the regulatory framework enacted by the
applicable state in which they operate. Marijuana is legal in certain states
however marijuana remains illegal under US federal law and the approach to
enforcement of US federal law against marijuana is subject to change.
Shareholders and investors need to be aware that adverse enforcement actions
could affect their investments and that High Hampton's ability to access private
and public capital could be affected and or could not be available to support
continuing operations.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
companies are under no obligation, and expressly disclaim any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Stock Exchanges
High Hampton trades in Canada, ticker symbol HC on the CSE.
The CSE has not approved or disapproved the contents of this press release, nor
does it accept responsibility for the adequacy or accuracy of this
release.
Aurora trades in Canada, ticker symbol ACB, on the TSX.
Neither TSX nor its Regulation Services Provider (as that term is defined in the
policies of Toronto Stock Exchange) accepts responsibility for the adequacy or
accuracy of this release.
All monetary references herein refer to Canadian dollars
unless otherwise specified.
SOURCE High Hampton Holdings Corp.
View original content:http://www.newswire.ca/en/releases/archive/July2018/16/c5964.html
%SEDAR: 00025675E
For further information:
For Aurora: Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com, www.auroramj.com; Rob Kelly,
+1.647.331.7228, rob.kelly@auroramj.com, www.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com /ebarker@kcsa.com; For High Hampton, 8 Wellington St. E.
Mezzanine Level | Toronto, On | M5E 1C5 | www.HighHampton.com; David E. Argudo,
Chief Executive Officer, Email: david@highhampton.com, Phone: 1.844.420. CALI Or
Christian Scovenna, Director & VP Corporate Finance, Email:
christian@HighHampton.com, Phone: 1.844.420. CALI
CO: High Hampton Holdings Corp
CNW 11:00e 16-JUL-18
Aurora Shareholders Approve Acquisition of MedReleaf and
Australis Spin-Out
Combination of Complementary Teams and Assets Creates
Industry Leader Positioned for Accelerated Growth
TSX: ACB
EDMONTON, July 18, 2018 /CNW/ - Aurora Cannabis Inc. (TSX:ACB)
(OTCQX: ACBFF) (Frankfurt: 21P;WKN:A1C4WM) ("Aurora" or the "Company") announces
it has received shareholder approval at a special meeting, held today, for the
issuance of shares in consideration for the planned acquisition of MedReleaf
Corp. ("MedReleaf"), a well-known Canadian Licensed Producer based in Markham,
Ontario that delivers premium medical cannabis products to domestic and global
markets, and compelling brands to the adult-use recreational market.
The combination of Aurora and MedReleaf, will yield a number of
important strategic synergies allowing for accelerated growth:
|
|
•
|
Industry-leading scale:
Funded capacity will
increase to over 570,000 kg of high-quality cannabis per year, to be
delivered through nine facilities in Canada and two in Europe
|
|
|
•
|
Low production costs and industry-leading yields:
Aurora's automated 'Sky Class' greenhouses are expected to deliver
industry-leading efficiencies and ultra-low production costs of well below
$1 per gram, delivering sustainably robust margins. MedReleaf's high-yield
cultivation techniques are expected to further enhance productivity and
reduce costs across the combined entity's facilities.
|
|
|
•
|
International distribution:
Aurora has established
a strong and rapidly growing footprint in the international medical
market. The combined entity is now well-positioned to rapidly gain market
share in a number of significant markets. Most notable among these, is the
European Union, which will have in excess of 400 million people following
Brexit.
|
|
|
•
|
Expanding brand leadership
: Aurora, CanniMed and
MedReleaf represent three well- established medical cannabis brands, and a
growing portfolio of premium consumer and wellness brands including San
Rafael '71, Woodstock, and AltaVie that are backed by detailed consumer
and marketplace insights and advanced analytical frameworks. This brand
leadership positions the combined entity well to drive accelerated growth
through its existing distribution channels for the domestic medical and
consumer markets, as well as the international medical markets.
|
|
|
•
|
Scientific leadership
: Each company is actively
engaged in clinical trials and medical studies, which has resonated
strongly with the international medical community, driving above-average
prescription rates and referrals. Further, both companies have developed
considerable expertise in cannabis plant genetics, enabling the
development of new cultivars with specific traits for a variety of
domestic and international markets, as well as strains optimized for
automated cultivation.
|
|
|
•
|
R&D
: The combined company will have an
industry leading Science and Research & Development team that includes
approximately 40 PhDs and MScs. Both companies have a proven track record
in developing new products, adopting new technology throughout the value
chain, and integrating innovations from third parties. Combining these
capabilities will accelerate product development and technology adoption,
creating strong, defensible competitive advantages, including, management
believes higher-margin offerings to drive above average profitability.
|
At the Meeting, approximately 23.24% of the outstanding Aurora
shares were represented in person or by proxy. The Share Issuance Resolution was
approved by approximately 98.65% of the votes cast by Aurora shareholders at the
Meeting. The Share Issuance Resolution required approval of a majority of the votes cast by shareholders present in person or
represented by proxy at the Meeting.
Australis Capital Inc.
At the Meeting, Aurora shareholders also approved the reduction
of capital resolution (the"
Reduction of Capital Resolution
") with respect
to the proposed spin-out of Aurora's U.S. assets by way of a distribution of
capital to Aurora shareholders of the common shares of Australis Capital Inc.
("Australis"). The Reduction of Capital Resolution was approved by approximately
97.74% of the votes cast by Aurora shareholders at the Meeting. The Reduction of
Capital Resolution required approval by 66•% of the votes cast by shareholders
present in person or represented by proxy at the Meeting. Following the spin-out
of Australis, Aurora will hold two back-in warrants that provide the Company
with the right to acquire an interest in Australis, subject to the approval of
the TSX, if laws in the U.S. and TSX regulatory requirements change to permit
the Company to do so. More information on this can be found in Australis'
materials on www.sedar.com.
MedReleaf separately announced today that its shareholders also
voted to approve the arrangement resolution in respect of the Arrangement with
Aurora at a special meeting of the MedReleaf shareholders held today.
Completion of the transaction remains conditional on approval
by the Ontario Superior Court of Justice (Commercial List) and certain other
closing conditions. Assuming the conditions to closing are satisfied, it is
expected that the Arrangement will be completed on or around July 25, 2018.Following completion of the Arrangement, Aurora intends to
cause MedReleaf shares to be de-listed from the Toronto Stock Exchange and
applications will be made for it to cease to be a reporting issuer with the
relevant securities regulatory authorities.
Each of the matters voted upon at the Meeting is discussed in
detail in the Aurora's management information circular dated June 18, 2018 which
can also be found on the Aurora's website at:
https://medreleaf.auroramj.com.
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 430,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and both its first production
facility and its wholly owned European medical cannabis distributor Pedanios
have achieved this level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes nine companies acquired -
CanvasRX, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban Cultivator, BC
Northern Lights, Larssen, CanniMed Therapeutics, and Anandia Labs - Aurora is
distinguished by its reputation as a partner of choice and employer of choice in
the global cannabis sector, having invested in and established strategic
partnerships with a range of leading innovators, including: The Green Organic
Dutchman Holdings Ltd. (TSX: TGOD), Radient Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc.
(TSXV: HEMP), Cann Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE:
MWM), Choom Holdings Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), Evio
Beauty Group (private), and Alcanna Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website investor.auroramj.com.
Terry Booth, CEO
Aurora Cannabis Inc.
Forward Looking Statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. Forward-looking statements in this news
release include, but are not limited to, statements with respect to the
anticipated benefits associated with the Transaction, statements with respect to
the expected timing of the legalization of cannabis in Canada, and the expected
completion of the spin out of Aurora assets. Forward looking statements are
based on certain assumptions regarding Aurora and MedReleaf, including expected
growth, results of operations, performance, industry trends and growth
opportunities, that the Government of Canada proceeds with legalization as
previously announced, and that all necessary approvals for the spin out,
including the approval the securities regulatory authorities and the Canadian
Stock Exchange, are received. While Aurora considers these assumptions to be
reasonable, based on information currently available, they may prove to be
incorrect. The forward looking statements are subject to a number of known and
unknown risks, including: the fact that completion of the Transaction is subject
to the satisfaction of closing conditions which remain outstanding including,
without limitation (i) necessary court approval in connection with the plan of
arrangement, (ii) certain termination rights available to the parties under the
Arrangement Agreement; and (iii) other closing conditions, including, without
limitation ,compliance by Aurora and MedReleaf with various covenants contained
in the Arrangement Agreement; risks associated with general economic conditions;
adverse industry events; future legislative and regulatory developments;
inability to access suf icient capital from internal and external sources,
and/or inabilityto access sufficient capital on favourable terms; the cannabis
industry yin Canada generally, income tax and regulatory matters; the ability of
Aurora to implement its business strategies; competition; currency and interest
rate fluctuations and other risks. Readers are cautioned that the foregoing list
is not exhaustive. Readers are further cautioned not to place undu ereliance on
forward looking statements as there can be no assurance that the plans,
intentions or expectations upon which they are placed will occur. Such
information, although considered reasonable by management at the time of
preparation, may prove to be incorrect and actual results may differ materially
from those anticipated. Forward-looking statements contained in this news
release are expressly qualified by this cautionary statement and reflect our
expectations as of the date hereof, and thus are subject to change thereafter.
Aurora disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by law. Factors that could cause
anticipated opportunities and actual results to differ materially include, but
are not limited to, matters referred to above and elsewhere in Aurora's or
MedReleaf's public filings, including the management information circulars and
the material change reports have been in respect of the Transaction, which are,
or will be, available on SEDAR.
There can be no assurance that the
Transaction will be completed, or if completed, that the underlying assumptions
for the benefits of
the Transaction prove correct. The Company is under no
obligation, and expressly disclaims any intention or obligation, to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that term is defined in the
policies of Toronto Stock Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/July2018/18/c6507.html
%SEDAR: 00025675E
For further information:
For Aurora: Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com, www.auroramj.com; Rob Kelly,
+1.647.331.7228, rob.kelly@auroramj.com, www.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com / ebarker@kcsa.com>
CO: Aurora Cannabis Inc.
CNW 16:00e 18-JUL-18
REPORT OF VOTING RESULTS
Pursuant to Section 11.3 of National Instrument 51-102 –
Continuous Disclosure Obligations
, the following is the report on voting results
for the special meeting (the “
Special Meeting
”) of shareholders of Aurora
Cannabis Inc. (“
Aurora
” or the “
Company
”) held on July 18, 2018. Each of the
matters voted upon at the Special Meeting is discussed in detail in the
Company’s management information circular dated June 18, 2018 which can be found
on the Company's website at:
auroramj.com
.
The Company wishes to disclose that the total number of votes
cast by shareholders in person and by proxy at the Special Meeting was
131,511,254 votes. The voting in relation to both of the shareholder votes
described below was conducted by way of ballot at the Special Meeting. According
to the proxies received and such votes by ballot, the results were as follows:
Matters Voted Upon
|
|
|
Votes For
|
%
|
Votes Against
|
%
|
|
|
|
|
|
|
|
|
1.
|
An ordinary resolution, the full text of which is set out
in Appendix “A” of the management information circular of Aurora to
authorize the issuance, pursuant to an arrangement agreement, as amended,
between Aurora and MedReleaf Corp. (“
MedReleaf
”), of such number of common
shares as are required to allow Aurora to acquire 100% of the outstanding
and issuable common shares of MedReleaf (the “
Share Issuance Resolution
”).
|
129,731,107
|
98.65
|
1,780,147
|
1.35
|
|
|
|
|
|
|
|
|
2.
|
A special resolution, the full text
of which is set out in Appendix “B” of the
management information circular of Aurora, to reduce the capital of the
Aurora common shares (the “
Reduction of Capital Resolution
”).
|
128,535,690
|
97.74
|
2,975,321
|
2.26
|
DATES
this 18
th
day of July, 2018.
AURORA CANNABIS INC.
By: “Terry Booth”
(Signed)
Name: Terry Booth
Title: Chief Executive Officer
Aurora Cannabis Employee Benefits Plan Now Reimburses
Medical Cannabis
Leading Benefit Providers Increasingly Offer Medical Cannabis
Coverage
TSX: ACB
EDMONTON, July 23, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) is
proud to announce that effective August 1, 2018, the company will offer a new
employee benefits plan that will include coverage for medical cannabis
authorized by a physician or nurse practitioner.
The new benefits plan, administered by Sun Life Financial, will
allow employees and their dependants to receive coverage for medical cannabis
under the Extended Health Care plan.
"The speed with which Canada's largest insurers are moving to
cover the costs of medical cannabis reflects the increasing recognition of
cannabis-based therapies, and marks a significant milestone for patients across
the country, said Debra Wilson, Senior VP of Human Resources. "Including medical
cannabis in the Company's benefits plan reflects our position as one of the
leading advocates for the availability of medical cannabis, as well as employee
health and wellness being major pillars in Aurora's mission to be the employer
of choice in the sector."
Jonathan Zaid, Director of Advocacy and Corporate Social
Responsibility, added, "Offering insurance coverage for medical cannabis, and
making the reimbursement process easy, is the right thing to do, and Aurora is
proud to be a leader in this area. At the same time, we recognize there is still
more work to be done to ensure patients across Canada receive coverage for
medical cannabis, and we intend to continue supporting advocacy initiatives in
this area."
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 430,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and both its first production
facility and its wholly owned European medical cannabis distributor Pedanios
have achieved this level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes nine companies acquired -
CanvasRX, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban Cultivator, BC
Northern Lights, Larssen, CanniMed Therapeutics, and Anandia Labs - Aurora is
distinguished by its reputation as a partner of choice and employer of choice in
the global cannabis sector, having invested in and established strategic
partnerships with a range of leading innovators, including: The Green Organic
Dutchman Holdings Ltd. (TSX: TGOD), Radient Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc.
(TSXV: HEMP), Cann Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE:
MWM), Choom Holdings Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), Evio
Beauty Group (private), Wagner Dimas (private), CTT Pharmaceuticals (OTCC:
CTTH), and Alcanna Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website investor.auroramj.com.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Terry Booth, CEO
Aurora Cannabis Inc.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/July2018/23/c4582.html
%SEDAR:
00025675E
For further information:
For media: Heather MacGregor,
+1.365.338.1565, heather.macgregor@auroramj.com, www.auroramj.com; For
Investors: Marc Lakmaaker, +1.647.269.5523, marc.lakmaaker@auroramj.com,
https://investor.auroramj.com; Rob Kelly +1.647.331.7228,
rob.kelly@auroramj.com, https://investor.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com /ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 07:00e 23-JUL-18
Aurora Cannabis Approved for Republic of Malta's First
Cannabis Cultivation Facility
Company's New EU-Based Cannabis Production Facility Will
Serve Maltese and EU Export Markets
TSX: ACB
EDMONTON, July 24, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today
announced that the Company has received a Letter of Intent from Malta
Enterprise, approving its application for the establishment of a seed-to-pharma
cannabis operation subject to certain conditions. The project includes the
construction of a hybrid cultivation, manufacturing, and distribution facility,
with operations to be carried out by a new subsidiary, Aurora Malta, to be
formed with Aurora's local Maltese partner Cherubino Ltd. ("Cherubino"), the
largest pharmaceutical wholesaler in the country with an operating history of
over 100 years.
Highlights
|
|
•
|
This is the first cultivation LOI issued by the Maltese
authorities to date
|
|
|
•
|
Aurora will be the majority shareholder in the new
venture
|
|
|
•
|
True seed-to-pharma operation, including the processing
of cannabis into oils and other derivative products
|
|
|
•
|
Aurora will be allocated land for the development of the
facility by Malta Industrial Parks Ltd.
|
|
|
•
|
The facility will be designed by Aurora Larssen Projects
Ltd. ("ALPS"), and built using additional local expertise
|
|
|
•
|
Both cultivation and processing operations to be
completed to EU GMP standards
|
|
|
•
|
Aurora, through Pedanios, has worked closely with its
local partner Cherubino Ltd. to develop a concept for the cultivation of
medicinal cannabis that fulfills all necessary requirements in accordance
with the Maltese "Production of Cannabis for Medicinal and Research
Purpose Act, 2018"
|
|
|
•
|
Final size and design of the facility will be announced
shortly
|
|
|
•
|
In addition to serving the domestic Maltese market, Malta
is strategically located to serve export markets throughout Europe
|
"Aurora already was the first company to export medical
cannabis to both Italy and Malta, and now are the first to receive approval for
the production, processing, and distribution of cannabis in the country," said
Neil Belot, Chief Global Business Development Officer. "Having an EU GMP
compliant facility in Malta will position us well to serve multiple
international markets, including Southern Europe and beyond. We are delighted
top have Cherubinoas our local partner, whose professionalism, reputation and
standing in Malta were instrumental in establishing a local presence. We look
forward to creating a thriving Maltese business, generating significant
employment opportunities, and serving medical patients with high-quality
cannabis products."
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 430,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and both its first production
facility and its wholly owned European medical cannabis distributor Pedanios
have achieved this level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes nine companies acquired -
CanvasRX, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban Cultivator, BC
Northern Lights, Larssen, CanniMed Therapeutics, and Anandia Labs - Aurora is
distinguished by its reputation as a partner of choice and employer of choice in
the global cannabis sector, having invested in and established strategic
partnerships with a range of leading innovators, including: The Green Organic
Dutchman Holdings Ltd. (TSX: TGOD), Radient Technologies Inc. (TSXV: RTI),
Hempco Food and Fiber Inc. (TSXV: HEMP), Cann Group Ltd. (ASX: CAN), Micron
Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO), Namaste
Technologies Inc. (TSXV: N), Evio Beauty Group (private), Wagner Dimas
(private), CTT Pharmaceuticals (OTCC: CTTH), and Alcanna Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website investor.auroramj.com.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Terry Booth, CEO
Aurora Cannabis Inc.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/July2018/24/c4092.html
%SEDAR:
00025675E
For further information:
For media: Heather MacGregor,
+1.365.338.1565, heather.macgregor@auroramj.com, www.auroramj.com; For
Investors: Marc Lakmaaker, +1.647.269.5523, marc.lakmaaker@auroramj.com,
https://investor.auroramj.com; Rob Kelly, +1.647.331.7228,
rob.kelly@auroramj.com, https://investor.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com /ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 08:00e 24-JUL-18
Aurora Mountain Facility Receives Health Canada Dealer's
License
New Authorization Will Facilitate Domestic and International
Transport, Enhancing Global Distribution
TSX: ACB
EDMONTON, July 30, 2018
/CNW/ - Aurora Cannabis Inc.
("Aurora" or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN:
A1C4WM) today announced that it has obtained a Health Canada Dealer's License
("Dealer's License") under the
Controlled Drugs and Substances Act
for
its EU GMP certified Aurora Mountain facility in Alberta. The new license will
allow Aurora additional opportunities to produce, assemble, and sell cannabis
oils and future novel, derivative products from Aurora Mountain, Furthermore,
the license provides additional opportunities to transport cannabis products for
import from and export to international markets, subject to applicable
regulations.
"Aurora Mountain is our third facility to be granted a Dealer's
License by Health Canada, and this milestone is fundamental to bolstering our
supply chain across Canada and around the world," said Terry Booth, CEO of
Aurora. "Being able to more freely transport and export cannabis oils,
derivatives and concentrates allows us to develop new products that respond to
market demand in a variety of regulatory frameworks in different countries."
A dealer's license is also critical for expanding research and
development capacity as it provides the potential for working with cannabinoids
and their derivatives not covered under an ACMPR license. This will enable
Aurora and its subsidiaries to drive innovation in the form of marketable
intellectual property, and new value-added products.
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 570,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and both its first production
facility and its wholly owned European medical cannabis distributor Pedanios
have achieved this level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes nine companies acquired -
CanvasRX, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban Cultivator, BC
Northern Lights, Larssen, CanniMed Therapeutics, Anandia Labs and MedReleaf -
Aurora is distinguished by its reputation as a partner of choice and employer of
choice in the global cannabis sector, having invested in and established
strategic partnerships with a range of leading innovators, including: The Green
Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient Technologies Inc. (TSXV:
RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM),
Choom Holdings Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), Evio
Beauty Group (private), Wagner Dimas (private), CTT Pharmaceuticals (OTCC:
CTTH), and Alcanna Inc. (TSX: CLIQ).
For more information about Aurora, please visit our investor
website investor.auroramj.com.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Terry Booth, CEO
Aurora Cannabis Inc.
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/July2018/30/c4486.html
%SEDAR: 00025675E
For further information:
Investor Relations: Marc
Lakmaaker, +1.647.269.5523, marc.lakmaaker@auroramj.com, www.auroramj.com; Rob
Kelly, +1.647.331.7228, rob.kelly@auroramj.com, www.auroramj.com; Media: Heather
MacGregor, +1.416.509.5416, heather.macgregor@auroramj.com, www.auroramj.com
CO: Aurora Cannabis Inc.
CNW 07:00e 30-JUL-18
Aurora Cannabis Provides Further Clarification on Letter of
Intent for Production of Cannabis for Medical purposes in Malta
TSX: ACB
EDMONTON, July 28, 2018 /CNW/ - Further to the Company's press
release dated July 24, 2018, Aurora Cannabis Inc. ("Aurora" or the "Company")
(TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today provides further
clarification on its statement in regard to receiving a Letter of Intent to
establish one of the first medical cannabis production facilities in Malta. The
Company received a Letter of Intent from Malta Enterprise for the establishment
of a seed-to-pharma cannabis operation, including the construction of a hybrid
production facility that will be focused predominantly on the production of oils
and derivatives. Operations will be carried out by a new company, to be formed
by Aurora and its local partner Cherubino Ltd., the largest pharmaceutical
wholesaler in Malta with an operating history of over 100 years. Aurora will be
the majority shareholder in the new venture.
Highlights
|
|
•
|
True seed-to-pharma operation, including the processing
of cannabis into oils and other derivate products
|
|
|
•
|
Aurora will be allocated industrial land for the
development of the facility by Malta Industrial Parks Ltd.
|
|
|
•
|
The facility will be designed by ALPS, using additional
local expertise
|
|
|
•
|
Production operations to be completed to EU GMP
standards.
|
|
|
•
|
Aurora, through Pedanios, has worked closely with its
local partner Cherubino Ltd. to develop a concept for the production of
medicinal cannabis that fulfills all necessary requirements in accordance
with the Maltese "Production of Cannabis for Medicinal and Research
Purpose Act, 2018".
|
|
|
•
|
Size and design of the facility will be determined
shortly,
|
|
|
•
|
In addition to serving the domestic (Maltese) market,
Malta is strategically located to serve export markets throughout Europe
|
"Aurora continues to be the industry leader in the EU by being
one of the first producers to have been granted a letter of intent for the
production of cannabis for medicinal and research purpose in Malta," said Neil
Belot, Chief Global Business Development Officer. "Being able to cover the
entire cannabis value chain from seed or clone to sales, including the
production of extracts and other derivatives, positions us well to serve
multiple markets with high-margin product. We are grateful to Malta Enterprise
for their trust in Aurora. This letter of intent is also very much the result of
our close collaboration with our local partner Cherubino, whose reputation and
standing in Malta were instrumental in establishing our local presence. We look
forward to establishing a thriving business, create significant employment, and
serve the Maltese and EU population with an broad range of high quality cannabis
and cannabis based products."
About Aurora
Headquartered in Edmonton, Alberta, Canada with funded capacity
in excess of 570,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and both its first production
facility and its wholly owned European medical cannabis distributor Pedanios
have achieved this level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes nine companies acquired
–MedReleaf, CanvasRX, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban
Cultivator, BC Northern Lights, Larssen, CanniMed Therapeutics, and Anandia Labs
- Aurora is distinguished by its reputation as a partner of choice and employer
of choice in the global cannabis sector, having invested in and established
strategic partnerships with a range of leading innovators, including: The Green
Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient Technologies Inc. (TSXV:
RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann Group Ltd. (ASX: CAN),
Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO),
Namaste Technologies Inc. (TSXV: N), Evio Beauty Group (private), Wagner Dimas
(private), CTT Pharmaceuticals (OTCC: CTTH), and Alcanna Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website investor.auroramj.com.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Terry Booth, CEO
Aurora Cannabis Inc.
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/July2018/28/c4714.html
%SEDAR: 00025675E
For further information:
For media: Heather MacGregor,
+1.365.338.1565, heather.macgregor@auroramj.com, www.auroramj.com; For
Investors: Marc Lakmaaker, +1.647.269.5523, marc.lakmaaker@auroramj.com,
https://investor.auroramj.com; Rob Kelly, +1.647.331.7228,
rob.kelly@auroramj.com, https://investor.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com / ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 12:21e 28-JUL-18
FORM 51-102F3
Material Change Report
|
Item 1:
|
Name and Address of Company
|
Aurora Cannabis Inc. (“
Aurora
”
or the “
Company
”)
Suite 900 – 510 Seymour Street
Vancouver, BC
V6B 1V5
|
Item 2:
|
Date of Material Change
|
July 25, 2018
A news release (attached as Schedule
A) announcing the material change referred to in this report was jointly issued
by Aurora and MedReleaf Corp. (“
MedReleaf
”) on July 25, 2018 through the
facilities of Global Newswire and a copy of the same was filed on SEDAR under
each of Aurora’s and MedReleaf’s profiles on July 25, 2018.
|
Item 4:
|
Summary of Material Change
|
On July 25, 2018, Aurora acquired all
of the issued and outstanding common shares of MedReleaf (the “
MedReleaf
Shares
”) pursuant to a statutory Plan of Arrangement under section 182 of
the
Business Corporations Act
(Ontario) (the “
Arrangement
”) for consideration consisting of 3.575
Aurora common shares (each an “
Aurora Share
”) and $0.000001 in cash for
each MedReleaf Share. Existing Aurora and MedReleaf shareholders now own
approximately 61% and 39% of the combined company, respectively, on a fully
diluted basis. MedReleaf is now a wholly owned subsidiary of Aurora.
The Plan of Arrangement was executed
pursuant to an arrangement agreement between Aurora and MedReleaf dated May 14,
2018 (the “
Original Agreement
”), as amended by an amending agreement
dated May 24, 2018 (the “
Amending Agreement
”, and together with the
Original Agreement, hereinafter defined as the “
Agreement
”).
|
Item 5:
|
Full Description of Material Change
|
|
5.1
|
Full Description of Material
Change
|
On May 14, 2018, Aurora and MedReleaf
entered into the Original Agreement and on May 24, 2018, Aurora and MedReleaf
entered into the Amending Agreement. Pursuant to the Agreement, Aurora agreed to
acquire all of the issued and outstanding MedReleaf Shares by way of the
Arrangement. In connection with the Agreement, certain directors and officers of
MedReleaf, holding approximately 2% of the MedReleaf Shares, entered into
support agreements with Aurora pursuant to which they agreed to vote their
shares in favour of the Arrangement. In addition, holders of approximately 56%
of the MedReleaf Shares entered into lock-up agreements with Aurora to vote
their MedReleaf Shares in favour of the Arrangement.
On July 25, 2018, Aurora acquired all
of the issued and outstanding common shares of MedReleaf pursuant to the
Arrangement. Pursuant to the Arrangement, holders of MedReleaf Shares received
consideration consisting of 3.575 Aurora Shares (the “Share Consideration”) and
$0.000001 in cash (the “Cash Consideration”) for each MedReleaf Share held
immediately prior to completion of the Arrangement. In connection with the
Arrangement, Aurora issued and made issuable approximately 380 million shares
for delivery to former MedReleaf shareholders. Taxable Canadian resident
MedReleaf shareholders were entitled to elect to receive tax-deferred roll-over
treatment in connection with the acquisition by Aurora of their MedReleaf Shares
under the transaction. Taxable Canadian resident MedReleaf shareholders were
also entitled to elect to solely receive the Share Consideration (and, not
receive the Cash Consideration).
Each outstanding stock option under
the MedReleaf stock option plan was exchanged for a replacement option to
purchase Aurora Shares and each outstanding MedReleaf deferred share unit
(whether vested or unvested) was deemed to fully vest and was settled in
exchange for the Share Consideration and the Cash Consideration, with each such
MedReleaf deferred share unit being cancelled.
In connection with the Arrangement,
pursuant to the terms of the Arrangement and the supplemental common share
purchase warrant indenture dated July 25, 2018 between MedReleaf, Aurora and TSX
Trust Company (the "Supplemental Indenture"), which governs the common share
purchase warrants of MedReleaf (the “MedReleaf Warrants”) and supplements the
base common share purchase warrant indenture dated January 31, 2018 between
MedReleaf and TSX Trust Company, each holder of a MedReleaf Warrant became
entitled to receive (and such holder shall accept) upon the exercise of such
holder's MedReleaf Warrant, in lieu of MedReleaf Shares to which such holder was
theretofore entitled upon such exercise and for the same aggregate consideration
payable theretofore, the number of Aurora Shares and the amount of cash which
the holder would have been entitled to receive as a result of the transactions
contemplated by the Arrangement if, immediately prior to the closing of the
Arrangement, such holder had been the registered holder of the number of
MedReleaf Shares to which such holder would have been entitled if such holder
had exercised such holder's MedReleaf Warrants immediately prior to the closing
of the Arrangement.
Aurora shareholders approved the
issuance of Aurora shares pursuant to the Arrangement at a meeting of
shareholders held on July 18, 2018 (the “
Meeting
”) and, on the same day,
the shareholders of MedReleaf also approved the Arrangement.
A final order approving the
Arrangement was issued by the Ontario Superior Court of Justice on July 20,
2018. The Canadian Competition Bureau previously issued a no-action letter on
July 6, 2018 under the Competition Act (Canada) indicating that it did not
intend to challenge the Arrangement.
The MedReleaf shares were delisted
from the TSX as of the close of trading on or about July 27, 2018. MedReleaf has
also made application to cease to be a reporting issuer with the relevant
securities regulatory authorities.
In connection with the completion of
the Arrangement, the board of directors of Aurora has been increased to eight
(8) members, with Norma Beauchamp and Ronald Funk, formerly independent
Directors of MedReleaf, being appointed to the board of directors of Aurora.
Further information pertaining to the
Arrangement is set forth in the materials prepared by Aurora and MedReleaf in
respect of the shareholder meetings which were mailed to Aurora and
MedReleaf shareholders and filed under
Aurora’s and MedReleaf’s SEDAR profiles, respectively. Additionally, the
Original Agreement and the Amending Agreement have been filed on the SEDAR
profiles of Aurora and MedReleaf. The summary of the material terms provided
herein is qualified by reference to the entirety of such documents.
|
5.2
|
Disclosure for Restructuring
Transactions
|
Not applicable.
|
Item 6:
|
Reliance on subsection 7.1(2) of National
Instrument 51-102
|
Not applicable.
|
Item 7:
|
Omitted Information
|
Not applicable.
|
Item 8:
|
Executive Officer
|
Terry Booth
Chief Executive
Officer
(604) 362-5207
August 3, 2018
Cautionary Note Regarding
Forward-Looking Statements
This news release includes statements
containing certain "forward-looking information" within the meaning of
applicable securities law ("forward-looking statements"). Forward-looking
statements are frequently characterized by words such as "plan", "continue",
"expect", "project", "intend", "believe", "anticipate", "estimate", "may",
"will", "potential", "proposed" and other similar words, or statements that
certain events or conditions "may" or "will" occur. Forward-looking statements
in this news release include, but are not limited to, statements with respect to
the anticipated benefits associated with the Transaction, statements with
respect to the expected timing of the legalization of cannabis in Canada, and
the expected completion of the spin out of Aurora assets. Forward looking
statements are based on certain assumptions regarding Aurora and MedReleaf,
including expected growth, results of operations, performance, industry trends
and growth opportunities, that the Government of Canada proceeds with
legalization as previously announced, and that all necessary approvals for the
spin out, including the approval the securities regulatory authorities and the
TSX, are received. While Aurora considers these assumptions to be reasonable,
based on information currently available, they may prove to be incorrect. The
forward looking statements are subject to a number of known and unknown risks,
including: risks associated with general economic conditions; adverse industry
events; future legislative and regulatory developments; inability to access
sufficient capital from internal and external sources, and/or inability to
access sufficient capital on favourable terms; the cannabis industry in Canada
generally, income tax and regulatory matters; the ability of Aurora to implement
its business strategies; competition; currency and interest rate fluctuations
and other risks. Readers are cautioned that the foregoing list is not
exhaustive. Readers are further cautioned not to place undue reliance on forward
looking statements as there can be no assurance that the plans, intentions or
expectations upon which they are placed will occur. Such information, although
considered reasonable by management at the time of preparation, may prove to be
incorrect and actual results may differ materially from those anticipated.
Forward-looking statements contained in this material change report are
expressly qualified by this cautionary statement and reflect our expectations as
of the date hereof, and thus are subject to change thereafter. Aurora disclaims
any intention or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
required by law.
SCHEDULE A
[
Please see attached.
]
Aurora Cannabis and MedReleaf Close the World's Largest
Cannabis Industry Transaction
Creating a Global Industry Leader Positioned for Long-Term,
Accelerated Growth
TSX: ACB TSX: LEAF
EDMONTON, July 25, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora")
(TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) and MedReleaf Corp.
("MedReleaf") (TSX: LEAF) today announced the closing of the previously
announced arrangement agreement (the "Arrangement Agreement"). Under the terms
of the Arrangement Agreement, holders of MedReleaf common shares received 3.575
common shares of Aurora for each MedReleaf common share held (the "Exchange
Ratio").
Upon closing of the transaction, Aurora will submit
applications with the Toronto Stock Exchange (the "TSX") and the Ontario
Securities Commission (the "OSC") to delist MedReleaf's existing common shares
and for MedReleaf to cease to be a reporting issuer, respectively.
Management Commentary
"The closing of this transaction brings together two vertically
integrated, successful pioneers in the cannabis industry, creating a company
with more than 1,200 employees and a rapidly growing domestic and international
footprint," said Terry Booth, CEO of Aurora. "The combination of MedReleaf and
Aurora creates a well capitalized company positioned exceptionally well to
generate further shareholder value, driven by the low-cost production of
high-quality cannabis products. We will be applying our proven integration
methodology, and will continue to execute to the Aurora Standard in capitalizing
on the significant opportunities in the domestic and global cannabis industry."
Mr. Booth added "Each of the strategic transactions Aurora has
concluded have further advanced our envisioned business strategy of establishing
a powerful, integrated and strongly differentiated cannabis company – positioned
for continued rapid growth, and built to last. Our large-scale, high technology
production facilities, strong science, R&D and product development
capabilities, diversified product portfolio, and growing domestic and
international distribution networks provide Aurora with significant competitive
advantages in both the Canadian and global cannabis markets."
Scale & Efficiency
Completion of the transaction creates a unified cannabis
industry leader with a combined funded capacity of more than 570,000 kg of
high-quality cannabis per year, to be delivered via nine facilities in Canada
and two in Europe. Combining MedReleaf's industry-leading cultivation yields and
Aurora's ultra low-cost Sky Class production facilities, which management
believes will result in production costs well below $1 per gram, position the
Company to deliver high-margin growth in all domestic and international market
segments.
With the addition of MedReleaf's three Ontario-based facilities
and a combined Ontario workforce of more than 400 people, the transaction now
makes Aurora one of the largest cannabis companies in Ontario, the country's
largest by population.
Science and R&D
Aurora and MedReleaf share a strong belief in the importance of
science to drive innovations in the form of marketable IP and new value-added
products, with the objective of creating a differentiated and broadly
diversified high-margin operator. The combined science and R&D teams,
including approximately 40 PhDs and MScs will be active in research projects
throughout the global cannabis industry.
Both companies maintain a strong commitment to clinical trials
and medical studies, which has led to increased visibility and brand recognition
with the domestic and international medical communities, leading to
above-average prescription rates and referrals. In addition to studies completed
and in progress at Aurora and CanniMed, MedReleaf's completed and in-progress
initiatives include a Pharmacokinetics trial, a Phase II cancer pain trial, a
Phase III epilepsy trial, an observational chronic pain study, and a study to
assess the potential correlation between genetic signatures and cannabis
efficacy.
Furthermore, each company has developed considerable expertise
in cannabis plant genetics, enabling the development of new cultivars with
specific traits for a variety of domestic and international markets, as well as
strains optimized for automated cultivation.
In addition to in-house efforts, ongoing innovation will
continue to be driven through the identification and integration of
high-potential, third-party technologies. Aurora's strong execution record in
this regard is based on the close collaboration between its R&D and
opportunities teams. This function will be further strengthened through the
integration of MedReleaf's business development efforts, adding a robust
pipeline of promising opportunities.
International Markets
With MedReleaf's Markham facility, the Company now has two GMP
certified facilities, increasing product availability for higher-margin
international markets featuring strong barriers to entry, such as Germany and
Italy. Leveraging the distribution and operational capabilities of Aurora's
wholly owned EU subsidiary Pedanios, as well as that of other distribution
partners secured by both companies, the Company is actively targeting market
entry into multiple new EU and other international jurisdictions.
Brands
In support of the upcoming legalization of the Canadian adult
consumer use market, Aurora and MedReleaf have launched a portfolio of premium
consumer and wellness brands. These brands, which include San Rafael '71,
Woodstock, and AltaVie were developed based on detailed consumer and marketplace
insights and advanced analytical frameworks. The combined entity has multiple
provincial-level supply agreements in place, and is actively pursuing further
agreements.
The combined companies' are positioned well for growth through
an expansive network of nongovernmental distribution partners, such as Shoppers
Drug Market, Pharmasave and Pharmachoice. Furthermore, through investees such as
Alcanna and Choom Holdings, the Company anticipates further expanding its
domestic market reach.
Management and Board Changes
Following today's closing of the Arrangement Agreement, Neil
Closner has stepped down as CEO of MedReleaf and during the integration process,
Allan Cleiren, Aurora's Chief Operating Officer, will assume the role of
interim-CEO of MedReleaf. In addition, Lloyd Segal, Deborah Rosati and Neil
Closner have stepped down from MedReleaf's Board, while Norma Beauchamp and
Ronald Funk have been appointed to Aurora's Board of Directors. Steve Dobler,
President of Aurora, has been appointed to MedReleaf's Board of Directors.
Mr. Booth added, "On behalf of Aurora and MedReleaf, I'd like
to thank Neil and MedReleaf's Board for their incredible hard work, dedication
and support for this transaction. Under their guidance, MedReleaf has matured
into a world-class medical grade cannabis organization."
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 570,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and low cost per gram production. Each of Aurora's facilities is built
to meet European Union (EU) GMP standards.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes 10 companies acquired -
CanvasRX, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban Cultivator, BC
Northern Lights, Larssen, CanniMed Therapeutics, Anandia Labs and MedReleaf -
Aurora is distinguished by its reputation as a partner of choice and employer of
choice in the global cannabis sector, having invested in and established
strategic partnerships with a range of leading innovators, including: The Green
Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient Technologies Inc. (TSXV:
RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann Group Ltd. (ASX: CAN),
Micron Waste Technologies Inc. (CSE: MWM),
Choom Holdings Inc. (CSE: CHOO), Namaste Technologies Inc.
(TSXV: N), Evio Beauty Group (private), Wagner Dimas (private), CTT
Pharmaceuticals (OTCC: CTTH), and Alcanna Inc. (TSX: CLIQ).
For more information about Aurora, please visit our investor
website, investor.auroramj.com, Twitter or Instagram
About MedReleaf
Canada's most awarded licensed producer, MedReleaf is an
R&D-driven company dedicated to innovation, operational excellence and the
production of industry leading, top-quality cannabis. Sourced from around the
world and carefully cultivated in one of two state-of-the-art ICH-GMP and ISO
9001 certified facilities in Ontario, with a third facility currently in
development, a full range of premium MedReleaf products are delivered to the
global medical market. We serve the therapeutic needs of patients seeking safe,
consistent and effective medical cannabis and provide a compelling product
offering for the adult-use recreational market.
For more information on MedReleaf, its products, research and
how the company is helping patients #livefree, please visit MedReleaf.com or
follow @medreleaf.
AURORA CANNABIS INC.
Terry Booth
CEO
MEDRELEAF CORP.
Allan Cleiran
CEO
Forward Looking Statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. Forward-looking statements in this news
release include, but are not limited to, statements with respect to the
anticipated benefits associated with the transaction, including the anticipated
reduced cost of production. Forward looking statements are based on certain
assumptions regarding Aurora and MedReleaf, including expected growth, results
of operations, performance, industry trends and growth opportunities, synergies
expected to result from the transaction, and that the Government of Canada
proceeds with legalization as previously announced. While Aurora considers these
assumptions to be reasonable, based on information currently available, they may
prove to be incorrect. The forward looking statements are subject to a number of
known and unknown risks, including: risks associated with general economic
conditions; adverse industry events; future legislative and regulatory
developments; inability to access sufficient capital from internal and external
sources, and/or inability to access sufficient capital on favourable terms; the
cannabis industry in Canada generally, income tax and regulatory matters; the
ability of Aurora to implement its business strategies; competition; currency
and interest rate fluctuations and other risks. Readers are cautioned that the
foregoing list is not exhaustive. Readers are further cautioned not to place
undue reliance on forward looking statements as there can be no assurance that
the plans, intentions or expectations upon which they are placed will occur.
Such information, although considered reasonable by management at the time of
preparation, may prove to be incorrect and actual results may differ materially
from those anticipated. Forward-looking statements contained in this news
release are expressly qualified by this cautionary statement and reflect our
expectations as of the date hereof, and thus are subject to change thereafter.
Aurora disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by law. Factors that could cause
anticipated opportunities and actual results to differ materially include, but
are not limited to, matters referred to above and elsewhere in Aurora's or
MedReleaf's public filings, including the management information circulars and
the material change reports have been in respect of the Transaction, which are,
or will be, available on SEDAR. The Company is under no obligation, and
expressly disclaims any intention or obligation, to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
MedReleaf Corp. (CNW Group/Aurora Cannabis Inc.)
SOURCE Aurora Cannabis Inc.
View original content with multimedia:
http://www.newswire.ca/en/releases/archive/July2018/25/c1284.html
%SEDAR: 00025675E
For further information:
For Aurora: Investors: Marc
Lakmaaker, +1.647.269.5523, marc.lakmaaker@auroramj.com, www.auroramj.com; Rob
Kelly, +1.647.331.7228, rob.kelly@auroramj.com, www.auroramj.com; Media: Heather
MacGregor, +1.416.509.5416, heather.macgregor@auroramj.com, www.auroramj.com;
U.S. Investors: Phil Carlson / Elizabeth Barker, KCSA Strategic Communications,
Phone: (212) 896-1233 / (212) 896-1203, Email: pcarlson@kcsa.com /
ebarker@kcsa.com; For MedReleaf: Darren Karasiuk, SVP & GM, Recreational,
dkarasiuk@medreleaf.com, +1.855.473.5323; Dennis Fong, LodeRock Advisors,
Investor Relations, investorrelations@medreleaf.com, +1.416.283.9930
CO: Aurora Cannabis Inc.
CNW 13:45e 25-JUL-18
Aurora Cannabis to Acquire leading Greenhouse Crop
Consulting company, HotHouse Consulting Inc.
Further Strengthening Aurora's Technologically Advanced
Hybrid Greenhouse Operations
TSX: ACB
EDMONTON, Aug. 7, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM)
announced today that it has entered into a letter of intent whereby Aurora
intends to acquire the cannabis business of HotHouse Consulting Inc.
("HotHouse"), a provider of advanced greenhouse consulting services.
Founded by industry veteran Laust Dam in 2004, HotHouse
specializes in hybrid greenhouse growing techniques. Since its founding,
HotHouse has consulted on a variety of agricultural crops but has focused in
recent years on the specialized requirements of large scale cannabis production.
With more than 70 years of combined experience, HotHouse's team of consultants
currently provide services for approximately 50 customers globally. Upon closing
of the acquisition, Laust Dam will join Aurora Larssen Projects ("ALPS") as VP
of Horticultural Development.
Through this acquisition, Aurora enhances ALPS
post-construction services offering, providing customers with ongoing support
and consulting by HotHouse's crop specialists. These services will include
grower training to ensure ALPS designed facilities continue to run at optimal
efficiency following client handover in addition to crop planning, irrigation
strategies, control, nutrition, climate and integrated pest management. Aurora
and its clients also gain industry leading insight and knowledge of large scale,
component-based irrigation systems which offer more precision but require a
detailed operational understanding. For example, the systems deployed at Aurora
Sky in Alberta require the ability to monitor crop health, determine
deficiencies and make corrections while being aware of several interrelating
factors. Producing results such as an improvement of just 1% in this area will
yield measurable increases in top line annual revenue growth from a facility of
Aurora Sky's scale.
Management Commentary
"Developing efficient and technologically advanced greenhouses
allows Aurora to produce and harvest the highest quality cannabis at incredible
scale while maintaining unmatched, ultra-low costs per gram, per square foot,
per year" said Thomas Larssen, President of Aurora Larssen Projects. "Through
the addition of Laust and the entire team at HotHouse, ALPS gains significant
insight and experience that we can apply to our industry leading cultivation
design, engineering and consulting projects. With the significant exposure and
strategic support gained through the backing of Aurora, ALPS has emerged as the
cannabis industry's preeminent hybrid greenhouse engineering and consulting
partner."
Laust Dam, Founder of HotHouse Consulting, added, "Managing
potential disease, varying climate conditions, energy use, and emergencies
become greatly amplified in a greenhouse environment. Together with ALPS, we can
leverage our existing relationships with key technology providers and the latest
implementation techniques along with our collective insight to develop the most
advanced hybrid greenhouse facilities."
Closing of the transaction is subject to the completion of
definitive agreements and approval of the TSX.
Option and RSU grants
The Company granted a total of 1,940,000 options to purchase
common shares of Aurora to Officers of the Company. The options vest annually
over 36 months and are exercisable at $7.39 per common share. Additionally, the
Company granted a total of 345,000 restricted stock units to officers of the
Company, vesting annually over 36 months.
About Aurora
Headquartered in Edmonton, Alberta, Canada with funded capacity
in excess of 570,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and both its first production
facility and its wholly owned European medical cannabis distributor Pedanios
have achieved this level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes nine companies acquired
–MedReleaf, CanvasRX, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban
Cultivator, BC Northern Lights, Larssen Greenhouses, CanniMed Therapeutics, and
Anandia Labs - Aurora is distinguished by its reputation as a partner of choice
and employer of choice in the global cannabis sector, having invested in and
established strategic partnerships with a range of leading innovators,
including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient
Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann
Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings
Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), Evio Beauty Group
(private), Wagner Dimas (private), CTT Pharmaceuticals (OTCC: CTTH), and Alcanna
Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website, investor.auroramj.com, Twitter or Instagram
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking
statements.
The Company is under no obligation, and expressly disclaims
any intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Terry Booth, CEO
Aurora Cannabis Inc.
SOURCE Aurora Cannabis Inc.
View original content:http://www.newswire.ca/en/releases/archive/August2018/07/c6843.html
%SEDAR: 00025675E
For further information:
For Media: Heather MacGregor,
+1.416.509.5416, heather.macgregor@auroramj.com, www.auroramj.com; For
Investors: Marc Lakmaaker, +1.647.269.5523, marc.lakmaaker@auroramj.com,
https://investor.auroramj.com; Rob Kelly, +1.647.331.7228,
rob.kelly@auroramj.com, https://investor.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com /ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 07:00e 07-AUG-18
Aurora Cannabis and Alcanna Enter into Exclusive License
Agreement for Alcanna Operated, Aurora-branded Retail Stores
Retail Strategy and Store Concept Unveiled
TSX: ACB TSX: CLIQ
EDMONTON, Aug. 8, 2018 Aurora Cannabis Inc. ("Aurora")(TSX:
ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) and Alcanna Inc. ("Alcanna")
(TSX: CLIQ) today announced the companies have reached a license agreement
whereby Alcanna has been given exclusive rights to open retail cannabis stores
under the brand name "Aurora" across Canada. Alcanna's position as the biggest
private sector liquor retailer in Canada, aligns with Aurora's position as one
of the world's leading cannabis companies.
In February, Aurora announced its strategic investment in
Alcanna (formerly Liquor Stores NA), the Edmonton, Alberta-based retailer of
alcoholic beverages with 229 retail outlets in Western Canada and Alaska, with a
view to establishing a leading brand of cannabis retail outlets. This
forward-thinking partnership combines Aurora's brand leadership, high-quality
products, customer care and scientific innovations with Alcanna's
well-established retailing infrastructure and expertise. Over the last 25 years,
Alcanna has established an exemplary track-record of responsibly retailing
controlled substances in retail environments that require strict compliance with
government regulations.
Aurora and Alcanna have created a unique and engaging, state-of
the art consumer retail concept that aims to deliver an inviting, inclusive, and
educational experience. Highly trained Category Specialists will engage both new
and experienced consumers with superior product knowledge and socially
responsible advice. The stores will operate under the "Aurora" banner, but will
represent a house of brands, carrying a carefully curated, but broad selection
of products from Licensed Producers across Canada, including Aurora, MedReleaf
and CanniMed.
Highlights
|
|
•
|
Alcanna will build, own and operate the new cannabis
stores, where permitted, leveraging its experience and expertise as a
responsible retailer of controlled substances.
|
|
|
•
|
The stores will operate under the Aurora name, providing
immediate brand recognition based on the company's reputation as a
producer of high-quality cannabis products.
|
|
|
•
|
Alcanna is currently converting several of its existing
liquor stores into cannabis retail outlets.
|
|
|
•
|
Additionally, Alcanna has leveraged its long-standing
relationships with commercial landlords to secure a multitude of primary
locations across Alberta.
|
|
|
•
|
When permitted by government, Alcanna is well-prepared to
open a large number of retail stores in any province in Canada.
|
|
|
•
|
In Alberta, Alcanna anticipates opening 37 stores,
starting October 17, 2018, the maximum number permitted to a single
operator under provincial regulations in year one of legalized adult
consumer use.
|
|
|
•
|
Alcanna will use its deep connections with general
contractors and trades, enabling it to quickly mobilize construction teams
at approved sites.
|
|
|
•
|
Alcanna will retain Aurora through CanvasRx, CanniMed and
MedReleaf, which have deep experience working with cannabis users, and
unparalleled data regarding efficacy and customer
experience to assist in training its in-store associates know
as Category Specialists.
|
"This Agreement between Aurora and Alcanna, combining physical
presence, retail experience, capacity and expertise with our brand strength,
product know-how and deep data, creates a significant competitive advantage that
will allow for the rapid development of a robust retail network in Alberta, and
any other jurisdiction that permits private retail of cannabis for adult
consumer use," said Aurora CEO Terry Booth. "We have collaborated on store
design and layout to ensure the ultimate customer-focused experience, based on a
broad selection of products that we anticipate will resonate strongly with the
adult consumer use market."
James Burns, CEO of Alcanna, added, "For the last five months,
expert teams in store development, merchandising, training and product knowledge
have been working steadily toward bringing the best cannabis retail stores to
life in Alberta" "We have deep capabilities that will enable us to rapidly
develop a large network of well-located cannabis stores, delivering a unique
customer experience from October 17, 2018 onwards. Launching this retail network
under the Aurora name will capitalize on its reputation as a leader in producing
high-quality cannabis products, created with the consumer in mind. We are
excited to operationalize this vision, and execute rapidly in Alberta, and
across Canada, wherever we are permitted to do so."
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 570,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and both its first production
facility and its wholly owned European medical cannabis distributor Pedanios
have achieved this level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes nine companies acquired -
CanvasRX, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban Cultivator, BC
Northern Lights, Larssen, CanniMed Therapeutics, Anandia Labs and MedReleaf -
Aurora is distinguished by its reputation as a partner of choice and employer of
choice in the global cannabis sector, having invested in and established
strategic partnerships with a range of leading innovators, including: The Green
Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient Technologies Inc. (TSXV:
RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann Group Ltd. (ASX: CAN),
Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO),
Namaste Technologies Inc. (TSXV: N), Evio Beauty Group (private), Wagner Dimas
(private), CTT Pharmaceuticals (OTCC: CTTH), and Alcanna Inc. (TSX: CLIQ).
For more information about Aurora, please visit our investor
website www.investor.auroramj.com
About Alcanna Inc.
Alcanna (formerly Liquor Stores N.A. Ltd.), headquartered in
Edmonton Alberta is one of the three largest private sector retailers of alcohol
in North America and by far the largest private sector retailer in Canada – owning and operating 229 locations in
Alberta, B.C. and Alaska. With revenues in excess of $600 million per year,
Alcanna processes over 20 million individual retail transactions of beverage
alcohol.
Alcanna's innovative Wine and Beyond brand brought an entirely
new concept to alcohol sales in Alberta in a large format experiential
environment with over 12,000 different products to choose from, many sold only
at Alcanna stores, at extremely competitive prices. Our Liquor Depot brand is
ubiquitous throughout Alberta and our new Deep Discount Liquor banner has
brought the lowest prices in an attractive consumer-friendly environment to
Albertans. Aurora Cannabis invested $138 million to buy a 25% stake in Alcanna
in 2018. Alcanna's common shares and convertible subordinated debentures trade
on the Toronto Stock Exchange under the symbols "CLIQ" and "CLIQ.DB",
respectively.
Additional information about Alcanna Inc. is available at
www.sedar.com and the Company's website at www.alcanna.ca/investors.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities laws
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. In particular, this news release contains
forward looking statements regarding, without limitation: the license granted by
Aurora to Alcanna to brand its retail cannabis stores and the option to use the
Aurora brand in other Canadian jurisdictions; the timing and receipt of required
regulatory and third party approvals, including the receipt of retail cannabis
licenses in Alberta; Alcanna's proposed retail cannabis operations in Canada,
including its ability to secure retail locations; Alcanna's ability to build,
own and operate retail cannabis stores and convert existing liquor stores into
retail cannabis stores in a timely manner; the design, completion and operation
of retail cannabis stores; the branding, staffing and customer experience of
retail cannabis stores; product selection; and the growth of a retail cannabis
business in Canada and Aurora's and Alcanna's anticipated market share
thereof.
These statements are only predictions. Various assumptions
were used in drawing the conclusions or making the projections contained in the
forward-looking statements throughout this news release. Forward-looking
statements are based on the opinions and estimates of management at the date the
statements are made. Any number of risks and uncertainties and other factors
that could cause actual events or results to differ materially from those
projected in the forward-looking statements including, but not limited to: the
ability of the parties to receive and maintain, in a timely manner, the required
government, regulatory and other third party approvals required to participate
in the retail adult use market for cannabis in Canada, including retail cannabis
licenses in Alberta; that, under applicable laws or rules in respect of
cannabis, Aurora and its affiliates will be permitted to take certain actions
with Alcanna in furtherance of the development of a retail cannabis business
together, including permitting Alcanna to own and operate Aurora-branded retail
cannabis stores; the availability of appropriate retail locations in the
identified areas; the timing and opening of retail cannabis locations; the
assets and employees of Alcanna and Aurora; the availability of retail-cannabis
products; the timing and legalization of recreational cannabis products; changes
to cannabis laws; and changes in general market conditions.
Readers are cautioned that the foregoing list of risk
factors is not exhaustive. Additional information on other factors that could
affect the operations or financial results of Alcanna and Aurora are included in
reports on file with applicable securities regulatory authorities which may be
accessed on Alcanna's and Aurora's respective company profiles on SEDAR at
www.sedar.com
.
Aurora and Alcanna are under no obligation, and expressly
disclaim any intention or obligation, to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
except as expressly required by applicable law.
|
Terry Booth, CEO
|
James Burns, Vice Chair and CEO
|
|
Aurora Cannabis Inc.
|
Alcanna Inc.
|
Alcanna Inc. (CNW Group/Aurora Cannabis Inc.)
Aurora Cannabis and Alcanna Enter into Exclusive License
Agreement for Alcanna Operated,Aurora-branded Retail Stores (CNW Group/Aurora
Cannabis Inc.)
Aurora Cannabis and Alcanna Enter into Exclusive License
Agreement for Alcanna Operated,Aurora-branded Retail Stores (CNW Group/Aurora
Cannabis Inc.)
Aurora Cannabis and Alcanna Enter into Exclusive License
Agreement for Alcanna Operated,Aurora-branded Retail Stores (CNW Group/Aurora
Cannabis Inc.)
Aurora Cannabis and Alcanna Enter into Exclusive License
Agreement for Alcanna Operated, Aurora-branded Retail Stores (CNW Group/Aurora
Cannabis Inc.)
SOURCE Aurora Cannabis Inc.
View original content with http://www.newswire.ca/en/releases/archive/August2018/08/c4100.html
%SEDAR: 00025675E
For further information:
MEDIA CONTACTS (Aurora),
Heather MacGregor, Director of Communications, Aurora Cannabis, M : (416)
509-5416, heather.macgregor@auroramj.com, www.auroramj.com; INVESTOR RELATIONS
(Aurora), Marc Lakmaaker, Vice President, Investor Relations, Aurora Cannabis,
M: (647) 269-5523, marc.lakmaaker@auroramj.com, www.auroramj.com; INVESTOR
RELATIONS (Aurora), Rob Kelly, Director, Investor Relations, Aurora Cannabis, M:
(647) 331-7228, rob.kelly@auroramj.com, www.auroramj.com; MEDIA CONTACTS
(Alcanna), Dave Crapper, SVP, Communications and Investor Relations, Alcanna
Inc., M: (819) 923 1782, O: (780) 702 7437, dave.crapper@alcanna.com,
www.alcanna.ca; INVESTOR RELATIONS (Alcanna), James Burns, Vice Chair and Chief
Executive Officer, Alcanna Inc., M: 587-460-1026, james.burns@Alcanna.com, www.alcanna.ca
CO: Aurora Cannabis Inc.
CNW 07:00e 08-AUG-18
Aurora Cannabis Appoints Dr. Debra Wilson Chief Human
Resources Officer
TSX: ACB
EDMONTON, Aug. 10, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) is
pleased to announce that Dr. Debra Wilson has been promoted to Chief Human
Resources Officer (CHRO), effective immediately.
Dr. Debra Wilson, Aurora’s Chief Human Resource Officer (CNW
Group/Aurora Cannabis Inc.)
Dr. Wilson joined the Company in June, 2017 and previously
served as Vice President and Senior Vice President of Human Resources. She is a
seasoned leader with more than 25 years' experience in human resources,
developing and practicing leading edge methods. Debra earned her PhD in
industrial and organizational psychology from Capella University, and her MBA
from Royal Roads University, with a concentration in Human Resource Management.
Believing strongly in professional development, Debra is also an adjunct
instructor for courses in Human Resource at the Northern Alberta Institute of
Technology (NAIT).
Prior to joining Aurora, Debra was a leader in the areas of
Human Resources and Organizational Development for various organizations across
several industries. Debra was Director of Human Resources for Universal Rail
Systems, a specialized rail construction and maintenance company with offices
across Canada. Prior to that, Debra was Vice President of Human Resources and
Organizational Development at Alberta Pensions Services Corporation, Senior
Director of HR and Administration for Afexa Life Sciences, Vice President of
Human Resources for Maclab Enterprises Inc. and Vice President of Human
Resources for Bentall Kennedy.
Management Commentary
"Debra has built what I believe is the finest HR function in
the industry, and she has also become a key source of wise counsel on pivotal
business decisions. Her promotion reflects both her functional excellence and
the leadership and organizational insights she contributes, as Aurora rapidly
expands its global operations," said Terry Booth, CEO. "Since joining the
Company, she and her team have seamlessly onboarded more than 800 people – a
350% increase in employees in just over a year. Her professionalism and passion,
as well as her dedication to ensuring that Aurora's unique culture will continue
to thrive as we expand around the world, have established human resources as a
core capability of the Company."
About Aurora
Headquartered in Edmonton, Alberta, Canada with funded capacity
in excess of 570,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and both its first production
facility and its wholly owned European medical cannabis distributor Pedanios
have achieved this level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes 10 companies acquired –
MedReleaf, CanvasRX, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban
Cultivator, BC Northern Lights, Larssen Greenhouses, CanniMed Therapeutics, and
Anandia Labs - Aurora is distinguished by its reputation as a partner of choice
and employer of choice in the global cannabis sector, having invested in and
established strategic partnerships with a range of leading innovators,
including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient
Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann
Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings
Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), Evio Beauty Group
(private), Wagner Dimas (private), CTT Pharmaceuticals (OTCC: CTTH), and Alcanna
Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website, investor.auroramj.com, Twitter or Instagram
Terry Booth, CEO
Aurora Cannabis Inc.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or
otherwise, except as expressly required by applicable
law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content with multimedia:http://www.newswire.ca/en/releases/archive/August2018/10/c3702.html
%SEDAR:
00025675E
For further information:
For Media: Heather MacGregor,
+1.416.509.5416,heather.macgregor@auroramj.com,
www.auroramj.com;For Investors: Marc Lakmaaker, +1.647.269.5523,
marc.lakmaaker@auroramj.com, https://investor.auroramj.com; Rob Kelly,
+1.647.331.7228, rob.kelly@auroramj.com, https://investor.auroramj.com; U.S.
investors: Phil Carlson / Elizabeth Barker, KCSA Strategic Communications,
Phone: (212) 896-1233 / (212) 896-1203, Email: pcarlson@kcsa.com / ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 07:00e 10-AUG-18
Aurora Cannabis International Operational Update: Company
Ships Mother Plants to Denmark to Populate Aurora Nordic Phase I
MedReleaf Markham Facility now Fully EU GMP Certified
TSX: ACB
EDMONTON, Aug. 13, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) is
pleased to provide the following update on its international operations.
EUROPE
Denmark
The Company has successfully shipped cultivars from its
Mountain facility to Denmark to commence populating the Phase I Aurora Nordic
facility, a 100,000 square foot, retrofitted hybrid greenhouse, which will be
ramping up to full production capacity of 8,000 kg per year of medical cannabis
over the coming months. Aurora Nordic is a 51%-Aurora owned subsidiary owned in
partnership with Alfred Pederson & Son. Both the Phase I facility and Phase
II, a 1,000,000 square foot, hybrid greenhouse facility with a cultivation
capacity of more than 120,000 KG per year, have been designed by Aurora Larssen
Projects Ltd. ("ALPS"), and will be completed to EU GMP standards, incorporating
leading edge technologies.
EU GMP
Following a provisional EU GMP certification of a single
shipment, as announced on July 11, 2018, Aurora's new wholly-owned subsidiary,
MedReleaf Corp., has now received full EU GMP (Good Manufacturing Practices)
certification for its Markham facility.
In total globally, there are currently only 6 EU GMP certified
cannabis production facilities, two of which are based in Canada and belong to
Aurora. Through Pedanios, Aurora also owns an EU GMP certified distribution
center for medical cannabis based in Germany. The new certification will
increase product availability for the rapidly growing, higher-margin and heavily
regulated EU market. All of the Company's facilities are being designed and
built to EU GMP standards.
EU Operations
The Company is focused on introducing the Aurora Standard to
new, emerging international markets, including the establishment of local
production facilities, initiating new distribution channels, expanding access to
genetics, technologies and product formulations, as well as providing
governments, patients and physicians with science-based data and educational
tools and resources. The Company has established a strong position as the
partner of choice in the various jurisdictions it operates in, enabling it to
enter into collaborations with leading local partners, who themselves have deep
track records as trusted and exceptional business operators.
Reflecting the growth of this international constellation of
partnerships in Europe and the importance of the European market for Aurora, the
Company has established a pan-European company, Aurora Europe GmbH,
headquartered in Berlin, Germany. Furthermore, the Company has incorporated a
number of local subsidiaries, an important step towards becoming part of the
cannabis infrastructure in each of these countries. Pedanios GmbH, Europe's
largest distributor of cannabis, will henceforth operate as Aurora Deutschland
GmbH, while the Company has also formed Aurora Italia, Aurora Nordic (Denmark), as well as a number of other, local
companies. Aurora currently employs over 70 people in Europe and anticipates
this number to grow substantially over the coming months as the Company expands
its business activities across the European continent.
Germany
The German government recently announced it is restarting the
tender process towards selecting a number of Companies for domestic cultivation.
Aurora was in the final round of the original tender process, and intends to
participate in the restarted process. This is part of the Company's strategy to
establish a strong and highly recognizable presence in key European markets.
Aurora anticipates the tender process to be completed in 2019, in the meantime
Aurora will continue to ship product to Germany from its EU GMP certified
facilities in Canada. The original tender process was discontinued following a
court decision to grant certain stakeholders more time to complete submissions.
Aurora were on time in its submissions and were not a part of the court
proceedings.
Earlier this month, MedReleaf announced it had commenced
shipping product to a German distribution partner. Through MedReleaf, the
Company believes it will be able to increase product availability to the
European market, increasing brand recognition and generating further growth.
CanvasRx - Malta
The Company recently hosted a highly successful medical
information session, organized in collaboration with the Company's local
partner, Cherubino Ltd., where CanvasRx provided information on the therapeutic
utility of cannabis-based therapies to a large group of Maltese physicians,
along with other members of the medical community. The event showed the level of
interest in, and need for science-based information on cannabinoid therapies,
and reflected Aurora's leadership in medical educational activities.
AUSTRALIA
Aurora owns 22.9% of Australia's first licensed cannabis
company, Cann Group Limited ("Cann"). Now 12 months since its IPO, in which
Aurora participated as cornerstone investor, Cann's share price has increased by
approximately 900%, while the company has significantly expanded its
capabilities and resources.
Cann, which has selected Aurora Larssen Projects ("ALPS") as
its project consultancy for a high-technology, high efficiency production, GMP
compliant facility, has secured a lease with Australia Pacific Airports for a
five-hectare (12.4 acres) site which is part of the Melbourne Airport precinct.
Project preparations, including environmental and regulatory approvals continue
to progress well.
Genetics were successfully shipped in the form of plantlets
from Aurora's Mountain facility and from plant tissue culture (PTC) from Anandia
Laboratories Inc ("Anandia"), a wholly-owned subsidiary of Aurora. PTC is a form
of plant propagation that has scale, consistency and space advantages over
traditional clone-based propagation. The imported tissue culture, once released
from quarantine to Cann, will allow Cann to establish a bank of various genetics
and foster a plant breeding program. The successful international transport from
Canada to Australia of PTC is an important validation in the development of this
technology.
CanniMed is now integrated into Aurora's international sales
and distribution channels and continues to develop distribution channels. In
Australia, the Company has developed relationships with multiple companies, and
is shipping cannabis oil products, both for wholesale and for clinical trials.
These shipments are expected to show continued growth in line with market
demand.
SOUTH AFRICA
South Africa, with a population of approximately 57 million,
recently approved the home use of Cannabis following a constitutional legal challenge, and is
expected to implement broader legislation to legalize medical and adult consumer
use. The Company, through its wholly-owned subsidiary CanniMed, had signed an
agreement with Akula Trading Pty Ltd to supply product for the South African
market. Aurora has been working with Akula in preparation for the commencement
of legalized sales in South Africa, which are anticipated for 2019.
LATIN AMERICA
Aurora's wholly-owned subsidiary MedReleaf, as announced on
July 24, 2018, acquired MED-Colombia, a company with licenses in Colombia for
the cultivation of cannabis and the production of cannabis oil extracts. Through
this acquisition, Aurora and MedReleaf gain an extensive library of cannabis
genetics which Aurora anticipates will resonate well with the market.
Diversification of cultivars is considered of great importance for the various
markets Aurora services around the world, including the Canadian adult consumer
use market. The acquisition also provides Aurora with the ability to develop
additional, low-cost production capacity in Latin America from which the Company
can potentially service a number of export markets, in addition to the domestic
Colombian market.
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 570,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution. Aurora's science division, with the recent additions of
CanniMed, MedReleaf and Anandia Labs, is arguably the largest and most
experienced group of scientists on the planet focused on the cannabis plant, its
production and its applications.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and both its first production
facility and its wholly owned European medical cannabis distributor Pedanios
have achieved this level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes ten companies acquired –
CanvasRx, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban Cultivator, BC
Northern Lights, Larssen, CanniMed Therapeutics, Anandia Labs and MedReleaf -
Aurora is distinguished by its reputation as a partner of choice and employer of
choice in the global cannabis sector, having invested in and established
strategic partnerships with a range of leading innovators, including: The Green
Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient Technologies Inc. (TSXV:
RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann Group Ltd. (ASX: CAN),
Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO),
Namaste Technologies Inc. (TSXV: N), Evio Beauty Group (private), Wagner Dimas
(private), CTT Pharmaceuticals (OTCC: CTTH), and Alcanna Inc. (TSX: CLIQ).
For more information about Aurora, please visit our investor
website https://investor.auroramj.com.
Terry Booth, CEO
Aurora Cannabis Inc.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/August2018/13/c2399.html
%SEDAR:
00025675E
For further information:
Investor Relations: Marc
Lakmaaker, +1.647.269.5523, marc.lakmaaker@auroramj.com, www.auroramj.com; Rob
Kelly, +1.647.331.7228, rob.kelly@auroramj.com, www.auroramj.com; Media: Heather
MacGregor, +1.416.509.5416, heather.macgregor@auroramj.com, www.auroramj.com
CO: Aurora Cannabis Inc.
CNW 07:00e 13-AUG-18
Aurora Cannabis Completes Acquisition of Anandia
Laboratories
Creates Cannabis Industry's Leading Science Operation;
to
Deliver Improved Efficiencies and Higher Margin Products and Services
TSX: ACB
EDMONTON, Aug. 14, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today
announced that its acquisition of Anandia Laboratories Inc. ("Anandia") is now
complete. The previously announced arrangement, under the provisions of the
Business Corporations Act (British Columbia), means that among other things,
Aurora has now acquired all of the issued and outstanding shares of Anandia in
an all-share transaction (the "Transaction").
Anandia is a world-leading cannabis-focused science company,
specialized in genomics, metabolite profiling, plant breeding, disease
characterization, and cultivar certification, as well as providing testing
services to producers and patient-cultivators.
Dr. Jonathan Page, co-founder of Anandia, is a globally
renowned cannabis scientist, whose 37 peer-reviewed publications include key
studies on cannabinoid and terpene biosynthesis. He previously led the Canadian
team of scientists who were first to publish the cannabis genome sequence. As a
result, Anandia now holds intellectual property with significant commercial
value that can be applied towards highly specialized and customized cultivar and
product development. Dr. Page is also an accomplished inventor with 8 issued
patents or patent applications, and a frequent lecturer on cannabis science at
international conferences.
The acquisition of Anandia represents a critical piece of
Aurora's vertical integration strategy – to create a company that captures
margin along the entire cannabis industry value chain, enhances cultivation
yields to improve financial performance, develops industry-leading intellectual
property, and builds a broad portfolio of high value-added products.
In addition to providing strong competitive advantages to
Aurora, Anandia provides access to several new revenue streams, delivering
services to licensed cannabis producers, such as:
|
|
•
|
Tissue culture archiving and propagation with services to
provide off-site back-up to secure crucial genetics and provide
disease-free material
|
|
|
•
|
Genetic testing including plant genotyping to
"fingerprint" valuable cultivars and sex ID assays, which provide early
genetic screening capability to help growers prevent crops from developing
seeds and breeders choose parental material
|
|
|
•
|
Predictive chemotype profiling where chemical analysis is
used to predict the cannabinoid and terpene profiles of a cultivar at an
early stage.
|
Anandia is the Canadian leader in independent third-party
testing and was awarded "Top Testing Lab" at the 2017 Lift Canadian Cannabis
Awards. The Company has developed the most stringent testing protocols to assess
that the cannabis produced for the Canadian medical system is free from
contaminants such as pesticides and microbes. Anandia issues a simplified
certificate of analysis for each batch tested that confirms the credibility and
safety of cannabis produced for medical markets. Aurora, for its part, pioneered
the establishment of these certificates, and their online publication. Anandia
will continue to offer these services to the wider LP community, both for
medical cannabis and cannabis produced for the adult consumer use market.
With a view to enhancing its capacity and broadening its
research capabilities, Anandia is currently in the process of developing a unique, purpose-built Cannabis
Innovation Centre on Vancouver Island which will include expansion to a new
laboratory in Vancouver. Strategically located minutes away from a major
regional airport, the 22,500 square foot greenhouse facility in Comox, BC,
designed by Aurora Larssen Projects Inc., and associated 10,000 square foot
laboratory, will house one of the main sites of Aurora's cannabis breeding and
genetics program. The site has already obtained municipal zoning approval for
cannabis production and processing, and has the option to expand to 100,000+
square feet.
Management Commentary
"This transaction will enable us to develop new, customized
cultivars for specific applications, creating high-margin products that generate
positive health outcomes in relation to specific medical indications, while
further enhancing efficiencies at our facilities" said Terry Booth, CEO of
Aurora. "For years, Jon and his team have been on the cutting-edge of
plant-based developments in the cannabis industry, and this acquisition will now
allow us to leverage our deep repository of data on the efficacy of
cannabis-based therapies. We are incredibly excited to have closed this
transformative transaction, and look forward working with Jon and his team on
delivering major innovations throughout the value chain."
Jonathan Page, CEO of Anandia, added, "Aurora and Anandia share
a thirst for innovation and passion for science. The cultures of the two
companies are well-suited, with long-standing relationships across the science
and production areas, which will allow for a straightforward integration of the
two companies. We look forward to working with the impressive science teams
throughout the Aurora organization and leading together in the developing
applications of this amazing plant for medical and adult consumer use purposes.
Cannabis 2.0 is on its way."
Transaction Details
Pursuant to the terms of the arrangement agreement, the Company
has issued, post-closing of the acquisition, 12,716,482 shares and 6,358,210
warrants. In accordance with the terms of the Transaction, upon the achievement
of future milestones, Aurora will pay an additional $10 million by way of the
issuance of additional shares and warrants.
Canadian License
Additionally, pursuant to the Company's announcement on July
11, 2018, the Company completed its acquisition of certain Canadian license
rights in relation to pre-roll technology, and issued 756,348 shares of the
Company to CannaRoyalty Corp.
About Aurora
Headquartered in Edmonton, Alberta, Canada with funded capacity
in excess of 570,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and both its first production
facility and its wholly owned European medical cannabis distributor Pedanios
have achieved this level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes 10 companies acquired –
MedReleaf, CanvasRX, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban
Cultivator, BC Northern Lights, Larssen Greenhouses, CanniMed Therapeutics, and
Anandia – Aurora is distinguished by its reputation as a partner of choice and
employer of choice in the global cannabis sector, having invested in and
established strategic partnerships with a range of leading innovators,
including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient
Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann
Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings
Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), Evio Beauty Group
(private), Wagner Dimas (private), CTT Pharmaceuticals (OTCC: CTTH), and Alcanna
Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website, investor.auroramj.com, Twitter or Instagram
About Anandia
Anandia has been established to provide the science, technical
innovations and services that underpin the global cannabis industry. Anandia
provides industry-leading analytical testing services including potency,
pesticides, microbes and terpenes to Licensed Producers and patients. In
addition, the Company uses modern plant breeding approaches to develop next
generation cannabis varieties.
Anandia holds a Dealer's Licence by Health Canada pursuant to
the provisions of the Controlled Drugs and Substances Act and the Narcotic
Control Regulations. The Dealer's Licence permits Anandia to analyze and extract
cannabis, as well as cultivate cannabis for breeding purposes.
Anandia has achieved important recognition in various national
and international publications, as well as received the accolade of Top Testing
Lab at the 2017 Lift Canadian Cannabis Awards.
Terry Booth, CEO
Aurora Cannabis Inc.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/August2018/14/c1227.html
%SEDAR: 00025675E
For further information:
For Media: Heather MacGregor,
+1.416.509.5416, heather.macgregor@auroramj.com, www.auroramj.com; For
Investors: Marc Lakmaaker, +1.647.269.5523, marc.lakmaaker@auroramj.com,
https://investor.auroramj.com; Rob Kelly, +1.647.331.7228,
rob.kelly@auroramj.com, https://investor.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com / ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 07:00e 14-AUG-18
Aurora Cannabis and Alcanna Applaud Ontario Government
Decision to Open Province to Private Retail of Cannabis
Alcanna to Rapidly Establish "Significant Presence" of
Aurora-Branded Cannabis Stores in Ontario
TSX: ACB & CLIQ
EDMONTON, Aug. 14, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora")
(TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) and Alcanna Inc.
("Alcanna") (TSX: CLIQ) applaud the Ontario Government on its new plans for the
responsible sale of recreational cannabis products through government-operated
online sales, and the private sector.
Video: Alcanna Inc. B-roll
Click image to play
video
Aurora and Alcanna have entered into a license agreement which
– as soon as regulations permit –will allow Alcanna to open retail cannabis
stores under the brand name "Aurora". Alcanna has made considerable progress in
preparing for this exciting opportunity and has identified over 100 potential
retail locations throughout the province already. This agreement represents a
significant competitive advantage and will allow for the rapid establishment of
a robust network of cannabis retail stores that comply with all provincial and
municipal requirements, making product, consumer and public safety a top
priority. Together, the two companies have the technology, relationships, and
supply chain and retail expertise to quickly establish a full network of stores
across the province as soon as they are permitted.
"Allowing a private retail channel in Ontario for recreational
cannabis is good news for industry, consumers, and taxpayers, and will go a long
way to making a meaningful impact on the grey market," said Aurora CEO Terry
Booth. "It's the right thing to do, and we commend Premier Ford and his
government for taking this bold step. Through Alcanna, the nation's largest
private retailer of a controlled substance, we will leverage long-standing
relationships with landlords, regulators and other stakeholders, and through
superior capitalization, we will rapidly establish a significant presence in the
province."
"Alcanna has made considerable progress in preparing for this
exciting opportunity. We started leveraging our existing relationships with
commercial landlords across Ontario the day after the June 7
th
election. We have identified over 100 potential retail locations throughout the
province already, and we will be ready to go with fully functional stores as
soon as we are permitted," said James Burns, CEO of Alcanna. "For the last six
months, our expert teams in store development, merchandising, training and
product knowledge have been working steadily toward bringing the first cannabis
retail stores to life in Alberta. We're thrilled about the prospect of bringing
that expertise to Ontario and will open as many stores as the government will
allow after April 1, 2019."
Aurora and Alcanna will reimagine the customer retail
experience with fully immersive, state-of-the-art stores that offer an inviting
and educational brand experience. Highly trained Category Specialists will
engage new and experienced customers with superior product knowledge and
socially responsible advice.
In February, Aurora announced its strategic investment in
Alcanna (formerly Liquor Stores NA), the Edmonton, Alberta-based beverage
alcohol retailer with approximately 230 retail outlets in Western Canada and
Alaska, with a view to establishing a leading brand of cannabis retail outlets.
This forward-thinking partnership leverages Aurora's brand leadership,
high-quality products, customer care and scientific innovation with Alcanna's
well-established retailing infrastructure and expertise, particularly it's
25-year history of safely selling controlled substances in retail settings
requiring strict compliance with government regulations. In preparing for the
roll-out of this network, the companies have entered into an agreement governing
the branding and operational aspects of the new cannabis stores.
Highlights
|
|
•
|
Alcanna will build and operate the new cannabis
stores, leveraging its 25-year track-record of operating an extensive
network of retail stores, selling a government-controlled substance
(alcohol)
|
|
|
•
|
The stores will operate under the Aurora name,
providing immediate brand recognition based on the company's high
visibility as a producer of high-quality cannabis products, combined with
its reputation as a provider of an industry leading customer experience.
|
|
|
•
|
Alcanna has leveraged its deep connections with
commercial landlords and, initially, is targeting approximately 90
locations throughout Ontario, if permitted. Locations have been selected
based on an in-depth economic analysis, of household income, population
density and anticipated growth rates, and have been cross-referenced with
LCBO data on its top- performing locations.
|
|
|
•
|
Alcanna has deep connections to general
contractors and trades, enabling it to quickly mobilize teams in its
various locations to develop new retail outlets.
|
|
|
•
|
All staff will be trained by Aurora through
CanvasRx, CanniMed and MedReleaf, which have deep experience working with
cannabis users, and unparalleled data regarding efficacy and customer
experience.
|
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 570,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the massive scale production of high quality product at
ultra-low costs. Intended to be replicable and scalable globally, these
production facilities are designed to produce cannabis of significant scale,
with high quality, industry-leading yields, and ultra-low per gram production
costs. Each of Aurora's facilities is built to meet European Union (EU) GMP
standards, and both its first production facility and its wholly owned European
medical cannabis distributor Pedanios have achieved this level of
certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes nine companies acquired -
CanvasRX, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban Cultivator, BC
Northern Lights, Larssen, CanniMed Therapeutics, Anandia Labs and MedReleaf -
Aurora is distinguished by its reputation as a partner of choice and employer of
choice in the global cannabis sector, having invested in and established
strategic partnerships with a range of leading innovators, including: The Green
Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient Technologies Inc. (TSXV:
RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann Group Ltd. (ASX: CAN),
Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO),
Namaste Technologies Inc. (TSXV: N), Evio Beauty Group (private), Wagner Dimas
(private), CTT Pharmaceuticals (OTCC: CTTH), and Alcanna Inc. (TSX: CLIQ).
For more information about Aurora, please visit our investor
website www.investor.auroramj.com
About Alcanna Inc.
Alcanna (formerly Liquor Stores North America) is one of the
top three largest private sector retailers of alcohol in North America and by
far the largest in Canada – owning and operating 229 locations in Alberta, B.C.
and Alaska. With revenues in excess of $600 million per year, Alcanna processes
over 20 million individual retail transactions of beverage alcohol.
Alcanna's innovative Wine and Beyond brand brought an entirely
new concept to alcohol sales in Alberta in a large format experiential
environment with over 12,000 different products to choose from, many sold only
at Alcanna stores, at extremely competitive prices. Our Liquor Depot brand is
ubiquitous throughout Alberta and our new Deep Discount Liquor banner has
brought the lowest prices in an attractive consumer-friendly environment to
Albertans. Aurora Cannabis invested $138 million to buy a 25% stake in Alcanna
in 2018 and will partner with Alcanna in entering cannabis retail on any
jurisdiction where private cannabis stores are allowed.
Alcanna's common shares and convertible subordinated debentures
trade on the Toronto Stock Exchange under the symbols "CLIQ" and "CLIQ.DB",
respectively.
Additional information about Alcanna Inc. is available at
www.sedar.com and the Company's website at www.alcanna.ca/investors.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities laws
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. In particular, this news release contains
forward looking statements regarding, without limitation: the license granted by
Aurora to Alcanna to brand its retail cannabis stores and the option to use the
Aurora brand in other Canadian jurisdictions; the timing and receipt of required
regulatory and third party approvals, including the receipt of retail cannabis
licenses in Alberta and Ontario; Alcanna's proposed retail cannabis operations
in Canada, including its ability to secure retail locations; Alcanna's ability
to build, own and operate retail cannabis stores and convert existing liquor
stores into retail cannabis stores in a timely manner; the design, completion
and operation of retail cannabis stores; the
branding, staffing and customer experience of retail
cannabis stores; product selection; and the growth of a retail cannabis business
in Canada and Aurora's and Alcanna's anticipated market share thereof.
These statements are only predictions. Various assumptions
were used in drawing the conclusions or making the projections contained in the
forward-looking statements throughout this news release. Forward-looking
statements are based on the opinions and estimates of management at the date the
statements are made. Any number of risks and uncertainties and other factors
that could cause actual events or results to differ materially from those
projected in the forward-looking statements including, but not limited to: the
ability of the parties to receive and maintain, in a timely manner, the required
government, regulatory and other third party approvals required to participate
in the retail adult use market for cannabis in Canada, including retail cannabis
licenses in Alberta; that, under applicable laws or rules in respect of
cannabis, Aurora and its affiliates will be permitted to take certain actions
with Alcanna in furtherance of the development of a retail cannabis business
together, including permitting Alcanna to own and operate Aurora-branded retail
cannabis stores; the availability of appropriate retail locations in the
identified areas; the timing and opening of retail cannabis locations; the
assets and employees of Alcanna and Aurora; the availability of retail-cannabis
products; the timing and legalization of recreational cannabis products; changes
to cannabis laws; and changes in general market conditions.
Readers are cautioned that the foregoing list of risk
factors is not exhaustive. Additional information on other factors that could
affect the operations or financial results of Alcanna and Aurora are included in
reports on file with applicable securities regulatory authorities which may be
accessed on Alcanna's and Aurora's respective company profiles on SEDAR at www
.sedar.com
.
Aurora and Alcanna are under no obligation, and expressly
disclaim any intention or obligation, to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
except as expressly required by applicable law.
Terry Booth, CEO
Aurora Cannabis Inc.
James Burns, Vice Chair & CEO
Alcanna Inc.
Alcanna Inc. (CNW Group/Aurora Cannabis Inc.)
Aurora Cannabis and Alcanna Applaud Ontario Government Decision
to Open Province to Private Retail of Cannabis (CNW Group/Aurora Cannabis
Inc.)
Aurora Cannabis and Alcanna Applaud Ontario Government Decision
to Open Province to Private Retail of Cannabis (CNW Group/Aurora Cannabis
Inc.)
Aurora Cannabis and Alcanna Applaud Ontario Government Decision
to Open Province to Private Retail of Cannabis (CNW Group/Aurora Cannabis
Inc.)
Aurora Cannabis and Alcanna Applaud Ontario Government Decision
to Open Province to Private Retail of Cannabis (CNW Group/Aurora Cannabis Inc.)
SOURCE Aurora Cannabis Inc.
View original content with multimedia:http://www.newswire.ca/en/releases/archive/August2018/14/c8974.html
%SEDAR: 00025675E
For further information:
MEDIA CONTACTS: Heather
MacGregor, Director of Communications, Aurora Cannabis, M : (416) 509-5416,
heather.macgregor@auroramj.com, www.auroramj.com; Dave Crapper, SVP
Communications & Investor Relations, Alcanna Inc., M: (819) 923 1782, O:
(780) 702 7437, dave.crapper@alcanna.com, www.alcanna.ca; INVESTOR RELATIONS:
Marc Lakmaaker, Vice President, Investor Relations, Aurora Cannabis, M: (647)
269-5523, marc.lakmaaker@auroramj.com, www.auroramj.com; Rob Kelly, Director,
Investor Relations, Aurora Cannabis, M: (647) 331-7228, rob.kelly@auroramj.com,
www.auroramj.com; James Burns, Vice Chair and Chief Executive Officer, Alcanna
Inc., M: 587-460-1026, james.burns@Alcanna.com,www.alcanna.ca
CO: Aurora Cannabis Inc.
CNW 07:30e 14-AUG-18
Aurora Cannabis and McGill University Partner in
International Research Project
Project Aims to Study Outcomes of CBD Therapy for Pain Relief
TSX: ACB
MONTREAL, Aug. 16, 2018
/CNW/ - Aurora Cannabis Inc.
("
Aurora
") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) and
McGill University today announced the launch of an international collaborative
medical research project that will comprehensively examine the therapeutic
impact and human health outcomes of cannabidiol (CBD) oil as a therapy for
chronic pain and related anxiety and depression.
Following an extensive provincial government review, the study
received funding from Quebec's Ministère de l'Économie, de la Science et de
l'Innovation ("MESI"), under the program called:
Programme de soutien à la
recherche, Soutien à des initiatives internationales de recherche et
d'innovation
(PSR-SIIRI). In addition to Aurora's financial contribution and
provision of the CBD oil the research project will jointly be conducted at
research institutions in Canada, Italy and France.
The project that will be led by Dr. Gabriella Gobbi, a leading
researcher at the Faculty of Medicine of McGill University. Dr. Gobbi and her
team will work with a group of international research scientists at the
Université Paris Descartes in France, and the Universities of Campania
"L.Vanvitelli" and Vita – Salute San Raffaele in Italy. This three year
translational collaborative research project will investigate the pain relief
properties of CBD oil by exploring its mechanism of action in pain and
associated depression and anxiety.
"Based on our extensive experience with more than 60,000
registered Canadian patients, we believe CBD to be one of the most impactful
medical compounds to become legally available to people in need of non-addictive
therapies to treat pain," stated Terry Booth, CEO. "Our support for and
involvement with this project underlines Aurora's leadership in the medical
cannabis space, as well as our long-term commitment to a science-based approach
to deepen understanding of this amazing substance. This comprehensive study will
deliver important data to support a rapidly growing international network of
physicians who have started prescribing cannabis, or who are considering doing
so. This is especially important considering the growing international momentum
in legalizing medical cannabis, with numerous new markets anticipated to come
online in the coming years. We are proud to be partnering on this project a with
a world-renowned research institution such as McGill University, and are
grateful for the support of the Quebec government."
Dr. Gobbi added, "The cannabis plant and its components are yet
to be fully understood and more evidence-based studies are needed. While an
increasing body of scientific and anecdotal evidence shows that CBD has
substantial potential in medical applications without any addictive liability,
this project will ultimately elucidate the mechanism and the clinical
application of the CBD. CBD oil is increasingly prescribed by physicians around
the globe who are looking for clinical and other scientific studies to provide
further guidance. We are very pleased to be working with Aurora on this project,
underlining the continued leadership in this field and with our international
partner universities in France and Italy, who will be contributing their
expertise in the field of pharmacology of pain and cannabis science."
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 570,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and
design to cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and both its first production
facility and its wholly owned European medical cannabis distributor Pedanios
have achieved this level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes nine companies acquired -
CanvasRX, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban Cultivator, BC
Northern Lights, Larssen, CanniMed Therapeutics, Anandia Labs and MedReleaf -
Aurora is distinguished by its reputation as a partner of choice and employer of
choice in the global cannabis sector, having invested in and established
strategic partnerships with a range of leading innovators, including: The Green
Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient Technologies Inc. (TSXV:
RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann Group Ltd. (ASX: CAN),
Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO),
Namaste Technologies Inc. (TSXV: N), Evio Beauty Group (private), Wagner Dimas
(private), CTT Pharmaceuticals (OTCC: CTTH), and Alcanna Inc. (TSX: CLIQ).
For more information about Aurora, please visit our investor
website investor.auroramj.com.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Terry Booth, CEO
Aurora Cannabis Inc.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/August2018/16/c1078.html
%SEDAR: 00025675E
For further information:
MEDIA CONTACTS: Nicole
Lascelle, Gestionnaire des Relations, communautaires et communications,
Community Relations & Communications Manager, Aurora Cannabis, M: (438)
828-4834, nicole.lascelle@auroramj.com, www.auroramj.com; Heather MacGregor,
Director of Communications, Aurora Cannabis, M: (416) 509-5416,
heather.macgregor@auroramj.com, www.auroramj.com; Katherine Gombay, Service de
relations avec les médias/Media Relations McGill Univerity, M: (514) 398-2189,
katherine.gombay@mcgill.ca, www.mcgill.ca; INVESTOR RELATIONS: Marc Lakmaaker,
Vice President, Investor Relations, Aurora Cannabis, M: (647) 269-5523,
marc.lakmaaker@auroramj.com, www.auroramj.com; Rob Kelly, Director, Investor
Relations Aurora Cannabis, M: (647) 331-7228, rob.kelly@auroramj.com,
www.auroramj.com
CO: Aurora Cannabis Inc.
CNW 14:23e 16-AUG-18
Execution Version
DEPOSITARY AGREEMENT
June 18, 2018
Computershare Investor Services Inc.
100 University Avenue,
8
th
Floor
Toronto, Ontario
M5J 2Y1
Attention: Michael Cagayat, Project Manager, Corporate Actions
Dear Sir:
Aurora Cannabis Inc. (“
Aurora
”) and MedReleaf Corp.
(“
MedReleaf
”, and together with MedReleaf, the “
Companies
”) wish
to engage Computershare Investor Services Inc. (“
Computershare
”) as
depositary in connection with a proposed plan of arrangement (the
“
Arrangement
”) involving the Companies under an agreement dated May 14,
2018, as amended by an amending agreement dated May 24, 2018 (the
“
Arrangement Agreement
”).
The Arrangement will be conducted by way of a statutory plan of
arrangement (the “
Plan of Arrangement
”) pursuant to section 182 of the
Business Corporations Act
(Ontario) (the “
OBCA
”). Pursuant to the
Arrangement, Aurora will acquire all of the issued and outstanding common shares
of MedReleaf (each a “
MedReleaf Share
”). In exchange, each registered
holder of MedReleaf Shares (“
MedReleaf Shareholders
”), other than
MedReleaf Shareholders who have properly exercised dissent rights in accordance
with the Plan of Arrangement, will receive from Aurora 3.575 common shares (each
an “
Aurora Share
”) of Aurora (the “
Share Consideration
”) and
$0.000001 (the “
Cash Consideration
”, together with the Share
Consideration the “
Consideration
”) for each MedReleaf Share
(collectively, the “
Consideration
”). The aggregate number of Aurora
Shares to be issued to any MedReleaf Shareholder will be rounded down to the
nearest whole Aurora Share, as applicable, with no consideration being paid for
the remaining fractional share. The aggregate Cash Consideration to be paid to
any MedReleaf Shareholder will be rounded up to the nearest whole $0.01, as
applicable. Certain MedReleaf Shareholders will also be entitled to elect to
receive only the Share Consideration (and not to receive the Cash
Consideration). The Consideration will also be payable in respect of each
outstanding MedReleaf deferred share unit (each a “
MedReleaf DSU
”).
The Companies wish to confirm the terms of Computershare’s
appointment as depositary under the Arrangement.
Terms used herein without definition but with initial capital
letters have the same meaning herein as in the Arrangement Agreement. Any
reference herein to the Arrangement Agreement includes any amendment or
modification thereof.
1. Appointment
1.1 Computershare is hereby appointed
to act as depositary, and Computershare accepts such appointment in accordance
with the terms and conditions of this agreement (the “
Agreement
”).
1.2 Computershare is to satisfy the
oral or written requests of brokers, bankers and other persons for copies of the
MedReleaf letter of transmittal (the “
Letter of Transmittal
”). The
Companies will supply Computershare with sufficient copies of the Letter of
Transmittal for this purpose. Computershare is not authorized to offer, or to pay, any concessions or commissions
to brokers, bankers or other persons, except as expressly provided in this
Agreement, or to engage or request any persons to solicit deposits.
1.3 After the sixth (6
th
)
month anniversary of the effective date of the Arrangement (the “
Effective
Date
”), Computershare will mail to each registered MedReleaf Shareholder who
has not deposited MedReleaf Shares under the Arrangement at the time of such
mailing (a) a letter from Aurora reminding the MedReleaf Shareholder of the
Arrangement, (b) a revised Letter of Transmittal and (c) a self-addressed
envelope for use by such MedReleaf Shareholder (collectively, the “
Reminder
Notice
”). TheReminder Notice
will be sent by first class mail to the
address of the MedReleaf Shareholder as shown on the register of MedReleaf
Shareholders maintained by the transfer agent for the MedReleaf Shares. Upon the
request of Computershare, Aurora will prepare and deliver to Computershare the
form of reminder letter and Letter of Transmittal for use in the Reminder
Notice.
2. Deposit of MedReleaf
Shares
2.1 Computershare is hereby authorized
to accept certificates and, if applicable, Direct Registration Advices (“
DRS
Advices
”), for MedReleaf Shares which are deposited to Computershare and to
hold same upon the terms and conditions set forth herein. In doing so,
Computershare will ascertain that all deposits of MedReleaf Shares under the
Arrangement are accompanied by a signed and completed Letter of Transmittal,
with signatures guaranteed, as applicable, the certificate(s) representing such
MedReleaf Shares and all other documents that may be required to give Aurora
good title to the MedReleaf Shares so deposited. References to certificates for
MedReleaf Shares herein include DRS Advices.
2.2 Computershare will be entitled to
treat as issued and outstanding the MedReleaf Shares represented by any
certificate for MedReleaf Shares deposited under the Arrangement, if the name on
such certificate conforms to the name of a registered MedReleaf Shareholder as
it appears on the register of MedReleaf Shareholders maintained by the transfer
agent for the MedReleaf Shares.
2.3 Computershare will direct any
holder of MedReleaf Shares whose certificate for MedReleaf Shares has been lost,
stolen or destroyed to submit a Letter of Transmittal completed to the best of
their ability and to submit a letter describing the loss, theft or destruction.
Computershare will supply a declaration of loss and indemnity bond in the forms
supplied by the Companies as applicable, or the Companies will otherwise inform
Computershare of the requirements to be communicated to any holder of MedReleaf
Shares inquiring as to the procedures to be followed to obtain a replacement
certificate for a certificate lost, stolen or destroyed and instruct such holder
to properly complete such documents.
2.4 Holders of MedReleaf Legacy Options
(the “
Legacy Optionholders
”) who conditionally exercise such MedReleaf
Legacy Options in connection with the Arrangement will be required to deposit a
Letter of Transmittal with Computershare under the Plan of Arrangement in
respect of the MedReleaf Shares issuable upon such conditional exercise, but
will not be required to deposit share certificates representing the MedReleaf
Shares issued upon such conditional exercise.
2.5 All Letters of Transmittal will be
dated and time stamped by Computershare when received in duly completed form
(together with all other required documentation including share certificates,
except as provided for in Section 2.4, representing the MedReleaf Shares).
2.6 The Companies hereby agree to the
use of the Automated Tender Offer Program (“
ATOP
”) currently utilized by
The Depository Trust Company (“
DTC
”) and its Participants. It is hereby
understood and agreed by the Companies that the use of ATOP requires that
Computershare execute an online Letter of Agreement with DTC. The Companies
hereby authorize and direct Computershare to execute the Letter of Agreement
online with DTC.
|
Depository Agreement
|
2
|
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LEGAL_29253214.9
|
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2.7 The Companies acknowledge and
accept that the delivery by DTC of an Agent's Message (in accordance with the
provisions of the ATOP Agents Procedures) to Computershare will satisfy the
terms of the Arrangement as to the execution and delivery of a Letter of
Transmittal by the Participant identified in such Agent's Message, without such
Participant physically completing and surrendering such Letter of Transmittal.
2.8 The Companies hereby authorize and
direct Computershare to use the clearing and settlement system (“
CDSX”
)
currently utilized by CDS Clearing and Depository Services Inc. (“
CDS
”)
and its Participants.
2.9 The Companies acknowledge and
accept the use of CDSX by a Participant of CDS (in accordance with the
provisions of the CDS Participant Rules) will satisfy the terms of the
Arrangement as to the execution and delivery of a Letter of Transmittal by the
Participant, without such Participant physically completing and surrendering
such Letter of Transmittal
3. Improper Deposits
3.1 If a Letter of Transmittal or other
required document has been improperly completed or signed, or the certificate(s)
representing MedReleaf Shares accompanying a Letter of Transmittal are not in
proper form for deposit under the Arrangement, or some other irregularity in
connection with a deposit exists, Computershare will make reasonable efforts to
contact such holder of MedReleaf Shares to cause such irregularity to be
corrected.
3.2 If Computershare has any doubt
whether any MedReleaf Shares have been properly deposited under the Arrangement,
Computershare will seek the advice of Aurora’s legal counsel, McMillan LLP, as
to the acceptability of the deposit. If reasonable efforts to correct an
improper deposit prove to be unsuccessful, Computershare will seek the advice of
such legal counsel with respect to the procedures to be followed. Computershare
will reject any deposit if, in the opinion of Aurora’s legal counsel, McMillan
LLP, the deposit has been made improperly and Computershare will take such
action as directed to by such legal counsel.
3.3 Notwithstanding any other provision
of this Agreement, in the case of the loss, theft or destruction of a
certificate for MedReleaf Shares, the holder of such certificate must deliver to
Aurora and Computershare (a) evidence satisfactory to Aurora and Computershare
of the loss, theft or destruction of such certificate and (b) an indemnity bond
satisfactory to Aurora and Computershare, before such MedReleaf Shares will be
considered properly deposited under the Arrangement.
3.4 Subject to Section 3.3 above,
Aurora will have full discretion to determine whether any type of deposit is
complete and proper and Aurora has the absolute right to determine whether to
accept or reject any category of deposit not in proper form.
4. Payment
4.1 For properly deposited MedReleaf
Shares (other than MedReleaf Shares held by Dissenting Holders) received by
Computershare prior to the Effective Date, as well as the MedReleaf DSU’s that
are outstanding on the Effective Date. Computershare will, as soon as
practicable (but in any event no later than three business days following the
Effective Date) following its receipt of (i) the aggregate amount of Cash
Consideration to be paid by Aurora pursuant to the Arrangement by wire transfer
in accordance with the wire transfer instructions provided by Computershare to
Aurora at least two Business Days prior to the Effective Date, or such other
arrangements for the provision of funds as may be agreeable to Computershare,
(ii) properly executed treasury directions in respect of the Aurora Shares to be
issued under the Arrangement in accordance with Section 4.2, and (iii)
a written notice from the Companies that the Effective Time has occurred,
arrange for the delivery of the Consideration in exchange for the MedReleaf
Shares and MedReleaf DSU’s, less any amounts deducted or withheld pursuant to
the Plan of Arrangement, by first class mail to the holder of such deposited
MedReleaf Shares or such MedReleaf DSU’s, in accordance with the terms and
conditions of the Plan of Arrangement and, as applicable, the instructions in
the Letters of Transmittal. Computershare will not arrange for payment of the
MedReleaf Shares until the certificate(s) (as applicable), Letters of
Transmittal and all required documents are received by Computershare unless
Computershare is otherwise instructed in writing by the Companies. Thereafter,
for deposits of MedReleaf Shares received by Computershare on or after the
Effective Date, payment will be made as soon as practicable (but in any event
within five business days of such deposit).
|
Depository Agreement
|
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|
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LEGAL_29253214.9
|
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4.2 On or prior to the Effective Date,
Aurora will issue one or more treasury directions to Computershare as transfer
agent, to issue the Aurora Shares payable as the aggregate Share Consideration
to be registered in the name of Computershare, in trust for the MedReleaf
Shareholders entitled to receive Share Consideration, as well as a treasury
direction to Computershare, as transfer agent, to issue Aurora shares payable in
consideration for the MedReleaf DSU’s to be registered as directed by MedReleaf.
Promptly following the Effective Time, the Companies will provide written notice
to Computershare that the Effective Time has occurred.
4.3 If the Companies determine and
advise Computershare in writing that delivery by mail may be delayed,
Computershare will make arrangements for MedReleaf Shareholders to take delivery
of the Share Consideration at Computershare’s offices at which the MedReleaf
Shares were deposited until the Companies determine that delivery by mail will
no longer be delayed. Any additional costs associated therewith will be paid by
the Companies.
4.4 In the event of a transfer of
ownership of MedReleaf Shares which is not registered in the transfer records of
MedReleaf, a certificate/DRS representing the proper share payment will be
delivered to a transferee if the certificate representing such MedReleaf Shares
is presented to Computershare, accompanied by all documents and instruments
required to evidence and effect such transfer.
4.5 All of the issued and outstanding
MedReleaf Shares under the terms of the Arrangement are to be transferred to and
registered in the name of Aurora as of the Effective Date.
4.6 Until deposited as described above,
each certificate which immediately prior to the Effective Date represented
outstanding MedReleaf Shares will be deemed at any time after the Effective
Date, subject to the terms of the Arrangement Agreement and the Plan of
Arrangement, to represent only the right to receive upon such deposit, the share
payment of Aurora shares, which such MedReleaf Shareholder is entitled to
receive pursuant to the Arrangement in exchange for the MedReleaf Shares.
4.7 Notwithstanding the foregoing, in
accordance with the Plan of Arrangement but subject to any applicable unclaimed
property laws, any certificates formerly representing MedReleaf Shares that have
not been duly deposited to Computershare with all other documents as required by
the Arrangement on or before the day that is six (6) years less one day from the
Effective Date, will cease to represent claim or interest of any kind or nature,
including a claim for dividends or other distributions, against Aurora or the
Depositary by a former MedReleaf Shareholder. Upon receipt by Computershare on
or before the day that is six (6) years less one day from the Effective Date of
a written request from Aurora (the “
Written Request
”), Computershare will
return to Aurora the Aurora MedReleaf Shares held by Computershare at such time
in respect of such former MedReleaf Shareholders. Unless otherwise advised in
writing, Computershare will continue to make payment for deposits of MedReleaf
Shares received by Computershare up to and including the date that Computershare
receives the Written Request.
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LEGAL_29253214.9
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5. Placement of Amount
Held
5.1 The funds initially delivered to
Computershare pursuant to Section 4.1 hereunder, less any amounts paid pursuant
to this Agreement (collectively, the “
Amount Held
”), shall be held in an
account of Computershare designated in the name of Aurora.
5.2 Until paid out in accordance
with this Agreement, the Amount Held shall be kept segregated in Computershare’s
records and shall be deposited in one or more trust accounts to be maintained by
Computershare in Computershare’s name at one or more banks listed in Schedule
“B” to this Agreement (each such bank, an “
Approved Bank
”).
All amounts held by Computershare pursuant to this Agreement
shall be held by Computershare for Aurora. The amounts held by Computershare
pursuant to this Agreement are at the sole risk of Aurora and, without limiting
the generality of the foregoing, Computershare shall have no responsibility or
liability for any diminution of the Amount Held which may result from any
deposit made with an Approved Bank pursuant to this Section 5.2, including any
losses resulting from a default by the Approved Bank. Aurora acknowledges and
agrees that Computershare acts prudently in depositing the Amount Held at any
Approved Bank, and that Computershare is not required to make any further
inquiries in respect of any such bank.
At any time and from time to time, Aurora shall be entitled to
direct Computershare by written notice (a) not to deposit any new amounts in any
Approved Bank specified in the notice and/or (b) to withdraw all or any of the
Amount Held that may then be deposited with any Approved Bank specified in the
notice. With respect to any withdrawal notice, Computershare will endeavor to
withdraw such amount specified in the notice as soon as reasonably practicable
and Aurora acknowledges and agrees that such specified amount remains at the
sole risk of the Aurora prior to and after such withdrawal.
5.3 Computershare does not have any
interest in the Amount Held but is serving as depositary only and is not a
debtor of Aurora in respect of the Amount Held.
6. Return of Deposited MedReleaf
Shares
If the Companies give Computershare a joint written notice that
the Arrangement will not be completed, Computershare will arrange, as soon as
practicable after receipt of such written notice, for the return of deposited
certificates for MedReleaf Shares to the presenter or depositor of such
certificates by registered mail to the name and address provided in the Letter
of Transmittal of such presenter or depositor.
7. Notices
Any demand, notice or communication required or contemplated by
this Agreement will be in writing and sent by personal delivery, courier, mail
or electronic mail addressed to Aurora or MedReleaf as indicated below, and to
Computershare as indicated in the heading of this Agreement or to an email
address, or to such other address, individual or an email address as may be
designated by notice provided by any party to the others. In the event of actual
or anticipated postal disruption, courier service personal delivery or
electronic mail will be used. Any demand, notice or other communication will be
deemed conclusively to have been received by the addressee (i) if sent by mail,
five (5) business days after posting; (ii) if sent by courier service or
personal delivery, upon actual delivery; and (iii) if sent by electronic mail,
upon the same business day if given during the ordinary business hours of the
addressee, or the next following business day if given outside of such hours.
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Depository Agreement
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LEGAL_29253214.9
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If to Aurora:
Aurora Cannabis Inc.
Suite 900, 510 Seymour
Street
Vancouver, BC V6B 1V5
|
Attention:
|
Terry Booth, Chief Executive Officer
|
|
Email:
|
terry@auroramj.com
|
with a copy (which will not constitute notice) to:
|
Attention:
|
Jillian Swainson, General Counsel
|
|
Email:
|
jill@auroramj.com
|
and
McMillan LLP
1500 – 1055 West Georgia Street
Vancouver,
BC V6E 4N7
|
Attention:
|
Desmond Balakrishnan / Cory Kent
|
|
Email:
|
desmond.balakrishnan@mcmillan.ca /
cory.kent@mcmillan.ca
|
If to MedReleaf:
MedReleaf Corp.
3800 – 200 Bay Street
Toronto, ON M5J
2Z4
|
Attention:
|
Neil J. Closner, Chief Executive Officer
|
|
Email:
|
NClosner@medreleaf.com
|
with a copy (which will not constitute notice) to:
Stikeman Elliot LLP
5300 Commerce Court West
199 Bay
Street
Toronto Ontario M5L 1B9
|
Attention:
|
Stewart Sutcliffe / Sean Vanderpol
|
|
Email:
|
ssutcliffe@stikeman.com /
svanderpol@stikeman.com
|
8. Fees
Computershare’s fees for acting hereunder will be those set
forth in Schedule “A” attached hereto. The Companies will each pay one-half of Computershare’s fees and
reasonable out-of-pocket expenses in connection with Computershare’s duties
hereunder (including, without limitation, overtime expenses, postage, courier,
long distance calls, G.S.T., P.S.T., H.S.T., mailing insurance, photocopying,
and expert consultant and counsel fees and disbursements). All fees and out-of
pocket expenses will be paid by the Companies within thirty (30) days from the
date of invoice and the Companies acknowledge that late payment may be subject
to interest charges as indicated on the invoice. The Companies acknowledge and
agree that Computershare’s fees are confidential information. As such, the
Companies agree not to disclose any such fees to any third party without
Computershare’s prior written consent, save and except for disclosure (a) to the
Companies’ professional advisors, held to strict confidence; and (b) as required
or otherwise compelled by law.
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9. Liability and Indemnity
9.1 Computershare will not be liable
for any action taken or omitted to be taken by it under or in connection with
this Agreement, except for losses caused by its bad faith, wilful misconduct or
gross negligence.
9.2 The Companies jointly and severally
indemnify and hold harmless Computershare, its affiliates, successors and
permitted assigns, and its and their respective current and former directors,
officers and employees, from and against any and all claims, demands,
assessments, interest, penalties, actions, suits, proceedings, liabilities,
losses, damages, costs and expenses (including, without limiting the foregoing,
consultant fees and counsel fees and disbursements on a solicitor and client
basis), arising from or in connection with this Agreement, except, subject to
Section 9.4, where same results from bad faith, willful misconduct or gross
negligence on the part of Computershare.
9.3 Notwithstanding any other provision
of this Agreement, and whether such losses or damages are foreseeable or
unforeseeable, Computershare will not be liable under any circumstances
whatsoever for any (a) breach by any other party of securities law or other rule
of any securities regulatory authority, (b) lost profits or (c) special,
indirect, incidental, consequential, exemplary, aggravated or punitive losses or
damages.
9.4 Notwithstanding any other provision
of this Agreement, Computershare’s liability will be limited, in the aggregate,
to the amount of fees jointly paid by the Companies to Computershare under this
Agreement in the twelve (12) months immediately prior to Computershare receiving
the first notice of claim.
9.5 In the event of any claim, action
or proceeding brought or commenced against Computershare, Computershare will
notify the Companies promptly after Computershare has received written assertion
of such claim or will have been served with a summons or other legal process,
giving information as to the nature and basis of the claim, action or
proceeding. The Companies will undertake the investigation and defence of any
such claim, action or proceeding and Computershare will have the right to retain
other counsel, at Computershare’s own expense, to act on Computershare’s behalf,
provided that, if Computershare reasonably determines that a conflict of
interest or other circumstances wherein Computershare’s best interests
would not be adequately represented exist that make representation by counsel
chosen by the Companies not advisable, the fees and disbursements of such other
counsel will be paid by the Companies.
9.6 The provisions of this Section 9
will survive indefinitely, including the termination of this Agreement.
9.7 Computershare will retain the right
not to act and will not be liable for refusing to act under this Agreement if,
due to a lack of information or for any other reason whatsoever, Computershare,
in Computershare’s sole judgment, determines that such act might
cause Computershare to be in non-compliance with any applicable anti-money
laundering, anti-terrorist or economic sanctions legislation, regulation or
guideline. Further, should Computershare, in Computershare’s sole judgment,
determine at any time that Computershare’s acting under this Agreement has
resulted in Computershare being in non-compliance with any applicable anti-money
laundering, anti-terrorist or economic sanctions legislation, regulation or
guideline, then Computershare will have the right to resign on 10 days written
notice to the Companies, provided (a) that Computershare’s written notice will
describe the circumstances of such non-compliance; and (b) that if such
circumstances are rectified to Computershare’s satisfaction within such 10 day
period, then such resignation will not be effective.
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LEGAL_29253214.9
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10. Tax
10.1 The Companies will be solely
responsible for all tax processing relating to or arising from the duties or
actions contemplated by this Agreement, including evaluation, reporting,
remittance, filing, and issuance of tax slips, summaries and reports, except as
is specifically delegated to Computershare pursuant to this Agreement or as may
be agreed subsequently, as confirmed in writing by the parties.
10.2 Computershare will process only
such tax matters as have been specifically delegated to Computershare pursuant
to this Agreement or as may be agreed subsequently, and, in so doing,
Computershare does not undertake to carry out any inquiry, evaluation,
reporting, remittance, filing or issuance of tax slips, summaries and reports
necessarily incidental thereto, which will remain the sole responsibility of the
Companies. Computershare will be entitled to rely upon and assume, without
further inquiry or verification, the accuracy and completeness of any tax
processing information, documentation or instructions received by Computershare,
directly or indirectly, from or on behalf of the Companies. It is agreed that
any such direction must be supplied to Computershare prior to processing any
deposits of the MedReleaf Shares.
11. Termination
11.1 Computershare or the Companies
(acting jointly) may terminate this Agreement for any reason whatsoever upon
thirty (30) days written notice to the other parties or such other shorter
period as the parties may agree to in writing. In the event of any termination
pursuant to this Section 11.1, all cash and other payments, and all other
property then held by Computershare hereunder, shall be delivered by
Computershare to any successor depositary appointed by the Companies (provided,
that the Companies notify Computershare of the name and address of such
successor and provide any other necessary information) or as otherwise
designated in writing by the Companies. Notwithstanding anything to the contrary
herein, following the Effective Date, any determination, instruction or
notification required to be made by the Companies under this Section 11.1 may be
made solely by Aurora.
11.2 This Agreement will
automatically terminate upon the earlier of (i) all of the consideration being
distributed in accordance with the provisions hereof, or (ii) three months after
the sixth anniversary of the Effective Date.
12. General
12.1 In acting as depositary,
Computershare:
(a) will have
no duties or obligations other than those set forth herein or as may
subsequently be agreed to by Computershare and the Companies;
(b) will have
no obligation to make payment for any deposited MedReleaf Shares unless
Computershare will have been provided the necessary funds in advance to pay in
full all amounts due and payable with respect thereto;
(c) will not be
obliged to take any legal action that might in Computershare’s judgment involve
any expense or liability unless Computershare will have been furnished with
reasonable funding and indemnity;
(d) may consult
counsel satisfactory to Computershare (including Aurora’s counsel) at the
Companies’ expense and the advice or opinion of such counsel will be full and
complete authorization or protection in respect of any action or
omission taken by Computershare thereunder, in good faith, in accordance with
the advice or opinion of such counsel;
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LEGAL_29253214.9
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(e) will not be
called upon at any time to advise any person depositing or considering
depositing MedReleaf Shares under the terms of the Arrangement as to the wisdom
in making such deposit or as to the increase or decrease in the market value of
the MedReleaf Shares; and
(f) may rely
upon any instruction, instrument, certificate, report or paper believed by
Computershare to be genuine and to have been signed or presented by the proper
person(s) and Computershare will be under no duty to make any investigation or
inquiry as to any signature or statement contained therein, but may accept the
same as having been properly given and as conclusive evidence of the truth and
accuracy of any statements therein contained.
12.2 It is agreed that, except as
expressly stated to the contrary in the MedReleaf circular concerning the
arrangement (together with the Letter of Transmittal, the “
Meeting
Materials
”) or in the Arrangement Agreement, Computershare and the Companies
will treat all MedReleaf Shareholders in the same manner and will not provide
preferential treatment to any MedReleaf Shareholder or MedReleaf Shareholders in
connection with deposits, deficiency of such deposits, and payment.
12.3 This Agreement will not be
assigned by any of the parties hereto without the prior written consent of the
other parties.
12.4 This Agreement will enure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns.
12.5 This Agreement will be governed by
and construed in accordance with the laws of the Province of Ontario and the
laws of Canada applicable therein.
12.6 This Agreement may be signed in
any number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
12.7 Time will be of the essence of
this Agreement.
12.8 All dollar references in this
Agreement are in Canadian dollars unless otherwise noted.
12.9 Any inconsistency between this
Agreement and the Meeting Materials, as they may from time to time be amended,
will be resolved in favour of the latter, except with respect to the duties,
liabilities and indemnifications of Computershare as depositary, which will be
resolved in favour of this Agreement.
12.10 No modification of or amendment
to this Agreement will be valid or binding unless set forth in writing and duly
executed by all of the parties hereto. This Agreement and the schedules attached
hereto represent the entire Agreement between the parties with respect to the
subject matter hereof.
12.11 The use of headings and division
of sections and paragraphs is for convenience of reference only and does not
affect the construction or interpretation of the Agreement.
12.12 Computershare will not be liable,
or held in breach of this Agreement, if prevented, hindered, or delayed in the
performance or observance of any provision contained herein by reason of act of
God, riots, terrorism, acts of war, epidemics, governmental action or judicial
order, earthquakes, or any other similar causes (including, but not limited to,
mechanical, electronic or communication interruptions, disruptions or failures). Performance times under this
Agreement will be extended for a period of time equivalent to the time lost
because of any delay that is excusable under this Section.
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LEGAL_29253214.9
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12.13 The Companies hereby represent
that any account to be opened by Computershare, and any money, securities or
other assets to be held by Computershare, in connection with this Agreement, for
or to the credit of the Companies, are not intended to be used by or on behalf
of any party other than the Companies.
12.14 The parties hereto confirm that
it is their wish that this Agreement as well as all other documents relating
hereto, including notices, have been and will be drawn up in English. Les
parties aux pr´sentes confirment leur consentement à ce que cette convention de
même que tous les documents, ainsi que tout avis s'y rattachant, soient r´dig´s
en anglais.
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LEGAL_29253214.9
|
|
Kindly indicate Computershare’s acceptance of the terms of this
letter by signing and returning to the Companies the duplicate hereof, in which
case this letter will form an Agreement between us.
|
|
AURORA CANNABIS INC.
|
|
|
|
|
|
|
|
|
|
|
Per:
|
“
Terry Booth
”
|
|
|
|
Name: Terry Booth
|
|
|
|
Title: CEO
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
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MEDRELEAF CORP.
|
|
|
|
|
|
|
|
|
|
|
Per:
|
“
Lloyd Segal
”
|
|
|
|
Name: Lloyd Segal
|
|
|
|
Title: Chairman
|
Accepted and agreed to as of the
18
day of June, 2018.
|
|
COMPUTERSHARE INVESTOR SERVICES
INC.
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Per:
|
“
Michael Cagayat
”
|
|
|
|
Authorized Signatory
|
|
|
|
|
|
|
|
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|
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|
|
Per:
|
“
Eamon O’Leary
”
|
|
|
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Authorized Signatory
|
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Depository Agreement
|
11
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LEGAL_29253214.9
|
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SCHEDULE “A”
AURORA CANNABIS INC.
PLAN OF ARRANGEMENT
[
Redacted
]
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|
12
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[
Redacted
]
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LEGAL_29253214.9
|
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SCHEDULE “B”
APPROVED BANKS
|
Bank
|
Relevant S&P Issuer
Credit
Rating
(as at June 1,
2018)
|
|
ANZ Banking Group
|
AA-
|
|
Bank of America NA
|
A+
|
|
Bank of Montreal
|
A+
|
|
The Bank of Nova Scotia
|
A+
|
|
Bank of Scotland
|
A+
|
|
Bank of Tokyo-Mitsubishi UFJ
|
A
|
|
BNP Paribas
|
A
|
|
Canadian Imperial Bank of Commerce
|
A+
|
|
Citibank NA
|
A+
|
|
HSBC Bank of Canada
|
AA-
|
|
National Australia Bank Limited
|
AA-
|
|
National Bank of Canada
|
A
|
|
Royal Bank of Canada
|
AA-
|
|
Societe Generale (Canada Branch)
|
A
|
|
The Toronto-Dominion Bank
|
AA-
|
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Depository Agreement
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LEGAL_29253214.9
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THIS FIRST SUPPLEMENTAL
INDENTURE
is entered into as of the 25th day of July, 2018.
BETWEEN:
MEDRELEAF CORP.
, a corporation
amalgamated under the laws of the Province of Ontario
(
“
Amalco
”
)
AND
AURORA CANNABIS INC.
a
corporation amalgamated under the laws of the Province of British Columbia
(
“
Aurora
”
)
AND
TSX TRUST COMPANY,
a trust
company existing under the laws of Canada
(
the
“
Warrant
Agent
”
)
WHEREAS:
A.
MedReleaf Corp., a predecessor corporation of Amalco (the
“Original Issuer”
),
and the Warrant Agent entered into a common share purchase warrant indenture
dated as of January 31, 2018 (the
“Base Indenture”
), providing for the issuance
of up to 2,875,000 Warrants in accordance with the terms and conditions of the
Base Indenture;
B.
Original Issuer entered into an arrangement agreement dated May 14, 2018, as
amended by an amending agreement dated May 24, 2018 (the
“Arrangement
Agreement”
) with Aurora Cannabis Inc. (
“Aurora”
) whereby Aurora agreed to
acquire all of the issued and outstanding common shares in the capital of the
Original Issuer by way of a plan of arrangement (the
“Arrangement”
) under
section 182 of the
Business Corporations Act
(Ontario) (the
“OBCA”
)
pursuant to the terms of a plan of arrangement (the
“Plan of Arrangement”
);
C.
The Original Issuer filed articles of arrangement under section 182 of the OBCA
and a certificate of arrangement was issued giving effect to the Arrangement as
of 12.01 a.m. Eastern Daylight Time (the
“Effective Time”
) on the date hereof
(the
“Effective Date”
);
D.
In accordance with Section 2.3(d) of the Plan of Arrangement, (i) the Original
Issuer amalgamated with 2646282 Ontario Inc., a wholly-owned subsidiary of the
Original Issuer (
“New MedReleaf”
) and continued in existence as one and the same
company, being New MedReleaf; and (ii) New MedReleaf subsequently amalgamated
with 2645362 Ontario Limited, a wholly-owned subsidiary of Aurora, and continued
in existence as one and the same company, being Amalco, effective as of the date
hereof;
E.
Pursuant to the Arrangement, shareholders of the Original Issuer received 3.575
common shares of Aurora (the
“Share Consideration”
) and $0.000001 in cash (the
“Cash Consideration”
) for each Common Share held at the Effective Time, and
where the aggregate Cash Consideration an Original Issuer shareholder was
entitled to was less than $0.01, the aggregate Cash Consideration to be paid to such
shareholder was rounded up to $0.01;
- 2 -
F.
Section 4.1 of the Plan of Arrangement contemplates that each Warrantholder
shall be entitled to receive (and shall accept) upon the exercise of such
holder’s Warrants, for the same consideration payable therefor, as reduced by an
amount equal to $0.000001 per Common Share, 3.575 common shares of Aurora for
each Common Share as more particularly described in Section 4.1 of the Plan of
Arrangement;
G.
Section 2.13(4) of the Base Indenture requires that any adjustments in the
application of the provisions set forth in Article 2 of the Base Indenture as a
result of a Capital Reorganization shall be made by and set forth in an
indenture supplemental to the Base Indenture;
H.
Pursuant to Section 7.2 of the Base Indenture, Amalco, as successor, wishes to
assume all of the covenants and obligations of the Original Issuer under the
Base Indenture, in accordance with the terms thereof;
I.
Aurora has agreed to execute and deliver this First Supplemental Indenture (as
defined below) to, among other things, evidence its agreement to deliver, upon
the exercise by a holder of a Warrant, in lieu of each Original Issuer Common
Share to which such holder was entitled upon exercise, the Share Consideration,
at the Exercise Price (as defined below);
J.
The execution and delivery of this first supplemental indenture (the
“First
Supplemental Indenture”
and together with the Base Indenture, the
“Indenture”
)
have been duly authorized by a resolution of the directors of Amalco and
Aurora;
K.
The foregoing recitals are made as statements of fact by Amalco and not by the
Warrant Agent;
NOW THEREFORE
in
consideration of the foregoing and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, Amalco and the
Warrant Agent mutually covenant, agree and declare as follow
s:
ARTICLE 1
INTERPRETATION
|
Section 1.1
|
Definitions and Interpretation
|
In this First Supplemental
Indenture, except as otherwise defined herein or unless the context otherwise
requires, all terms used but not defined herein (including the recitals hereto)
shall have the meanings specified in the Base Indenture. This First Supplemental
Indenture shall, unless otherwise required, be subject to the interpretation
provisions contained in Article 1 of the Base Indenture. When entered into by
the parties, this First Supplemental Indenture shall be supplemental to, part of
and read together with the Base Indenture as a single instrument, and all of the
provisions of the Base Indenture, as supplemented by this First Supplemental
Indenture, shall apply to the Warrants.
- 3 -
If any term or provision
contained in this First Supplemental Indenture shall conflict or be inconsistent
with any term or provision of the Base Indenture, the terms and provisions of
the First Supplemental Indenture shall govern.
When used in this First
Supplemental Indenture, the following terms shall have the following
meanings:
“Amalco”
has the meaning set out
in the recitals hereto.
“Arrangement”
has the meaning set
out in the recitals hereto.
“Arrangement Agreement”
has the
meaning set out in the recitals hereto.
“Aurora”
has the meaning set out
in the recitals hereto.
“Base Indenture”
has the meaning
set out in the recitals hereto.
“Cash Consideration”
has the
meaning set out in the recitals hereto.
“Effective Date”
has the meaning
set out in the recitals hereto.
“Effective Time”
has the meaning
set out in the recitals hereto.
“First Supplemental Indenture”
has the meaning set out in the recitals hereto.
“Indenture”
has the meaning set
out in the recitals hereto.
“New MedReleaf”
has the meaning
set out in the recitals hereto.
“OBCA”
has the meaning set out in
the recitals hereto.
“Original Issuer”
has the meaning
set out in the recitals hereto.
“Share Consideration”
has the
meaning set out in the recitals hereto.
|
Section 1.2
|
Amendments to the Base Indenture
|
|
(1)
|
As of and from the date hereof, the Base Indenture is
amended by removing the Original Issuer as a party to the Base Indenture
and replacing the Original Issuer with its successor, Amalco, along with
all changes necessary to give the full and intended effect to this
amendment and to ensure consistency in the Base Indenture.
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(2)
|
References to the Original Issuer in the Base Indenture
shall be changed to refer to Amalco.
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- 4 -
ARTICLE 2
SUCCESSOR ENTITY
|
Section 2.1
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Assumption of Obligations
|
Amalco hereby covenants and
agrees to assume and does assume all the covenants and obligations of the
Original Issuer in and to the Base Indenture. Without limiting the generality of
the foregoing, from and after the date hereof, the Warrants will be valid and
binding obligations of Amalco entitling the holders thereof, as against Amalco,
to all rights of Warrantholders under the Base Indenture.
ARTICLE 3
ADJUSTMENT OF EXCHANGE BASIS AND
EXERCISE PRICE
|
Section 3.1
|
Adjustment of Exchange Basis
|
In accordance with the
Arrangement and Section 2.13(4) and Section 2.13(5) of the Base Indenture, from
and after the Effective Time, the Exchange Basis upon which each Warrantholder
shall be entitled to receive (and such Warrantholder shall accept) Warrant
Shares upon the exercise of such holder’s Warrant, shall be 3.575 common shares
of Aurora for each Warrant Share which such Warrantholder would have been
entitled to receive on exercise before the Effective Time.
|
Section 3.2
|
Adjustment of Exercise Price
|
In accordance with the Arrangement, from and after the
Effective Time, the Exercise Price shall be $34.499999 per Warrant Share with
the aggregate exercise price being rounded down to the nearest whole penny.
ARTICLE 4
OBLIGATION OF AURORA TO ISSUE AURORA
COMMON SHARES
|
Section 4.1
|
Agreement to Issue Shares
|
Aurora hereby agrees that Aurora
will issue and deliver Aurora common shares on behalf of Amalco upon any
Warrantholder’s exercise of a Warrant on the basis set out in this First
Supplemental Indenture, with the intent and to the extent that any and all such
obligations of Amalco in respect of the issuance and delivery of Warrant Shares
under the Indenture will be satisfied by the issuance or delivery by Aurora of
Aurora common shares on behalf of Amalco.
- 5 -
ARTICLE 5
MISCELLANEOUS PROVISIONS
|
Section 5.1
|
Confirmation of Indenture
|
On the date hereof, the Base
Indenture shall be supplemented in accordance with this First Supplemental
Indenture, and this First Supplemental Indenture shall form part of the Base
Indenture for all purposes, and the holder of every Warrant heretofore or
hereafter authenticated and delivered under the Base Indenture shall be bound
thereby. The Base Indenture, as supplemented by this First Supplemental
Indenture, shall remain in full force and effect and is in all respects ratified
and confirmed.
|
Section 5.2
|
Specific Amendments
|
In addition to the amendments set
out above, the following specific amendments are made to the following
provisions of the Base Indenture:
(a) The definition of Common
Shares in Section 1.1 of the Base Indenture shall be replaced in its entirety
with the following:
“Common Shares”
means, prior to
the Effective Time, MedReleaf common shares and, from and after the Effective
Time, Aurora common shares;
(b) The definition of Current
Market Price in Section 1.1 of the Base Indenture shall be replaced in its
entirety with the following:
“Current Market Price”
means, at
any date, the volume weighted average price per share at which the Common Shares
have traded:
(i) on the TSX;
(ii) if the Common Shares are not
listed on the TSX, on any stock exchange upon which the Common Shares are listed
as may be selected for this purpose by the board of directors of the Company,
acting reasonably; or
(iii) if the Common Shares are not
listed on any stock exchange, on any over the counter market on which the Common
Shares are trading, as may be selected for this purpose by the board of
directors of the Company, acting reasonably, during the 20 consecutive Trading Days
(on each of which at least 100 Common Shares are traded in board lots) ending
the third Trading Day before such date and the volume weighted average price
shall be determined by (i) dividing the aggregate sale price of all Original
Issuer Common Shares sold in board lots on the exchange or market, as the case
may be, during the Trading Days that occurred before the Effective Date after
giving effect to the Exchange Basis of 3.575 Aurora common shares for each
original Common Share by the number of Common Shares sold on said exchange or market, and (ii) dividing the aggregate sale
price of all Aurora common shares sold in board lots on the exchange or market,
as the case may be, during the Trading Days that occurred on and after the
Effective Date by the number of Aurora common shares sold on such exchange or
market, or (iii) if not traded on any recognized market or exchange, as
determined by the directors of Aurora, acting reasonably;
- 6 -
(c)
Section 9.1(1)(a) of the Base Indenture will be read as follows:
|
|
(a) If to Amalco, to:
|
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MEDRELEAF CORP.
|
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1500-1199 West Hastings Street
|
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Vancouver, British Columbia, V6E 3T5
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Attention: Glen Ibbot
|
|
|
Email: glen@auroramj.com
|
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with a copy to (which shall not constitute
notice):
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Attention:
|
Jillian Swainson, General Counsel
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Email:
|
Jill@auroramj.com
|
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and
|
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MCMILLAN LLP
|
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1500-1055 West Georgia Street
|
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Vancouver, British Columbia, V6E 4N7
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Attention: Desmond Balakrishnan
|
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Email: Desmond.Balakrishnan@mcmillan.ca
|
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Section 5.3
|
Acceptance of Duties
|
The Warrant Agent hereby accepts
the terms of this First Supplemental Indenture and the modifications of the
terms under Base Indenture as declared and provided for herein, and the Warrant
Agent agrees to perform the same upon the terms and conditions of the Indenture,
as amended hereby, as agent for the various persons who shall from time to time
be Warrantholders.
|
Section 5.4
|
Counterparts and Formal Date
|
This First Supplemental Indenture
shall be effective as of the date and year first set forth above. This First
Supplemental Indenture may be executed in several counterparts, each of which
when so executed, shall be deemed to be an original and such counterparts
together shall constitute one and the same instrument. Delivery of an executed
signature page to this First Supplemental Indenture by a party hereto by
facsimile transmission or PDF shall be as effective as the delivery of a
manually executed copy of this First Supplemental Indenture by such party.
- 7 -
|
Section 5.5
|
Applicable Law
|
This First Supplemental Indenture
shall be construed and enforced in accordance with the laws of the Province of
Ontario and the federal laws of Canada applicable therein and shall be treated
in all respects as Ontario contracts.
[Remainder of page left intentionally blank]
IN WITNESS WHEREOF
the
parties hereto have executed this First Supplemental Indenture as of the day and
year first written above.
|
MEDRELEAF CORP.
|
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Per:
|
“
Igor Gimelshtein
”
|
|
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Authorized Signatory
|
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TSX TRUST COMPANY
|
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Per:
|
“
Janet Shodipo
”
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|
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Authorized Signatory
|
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Per:
|
“
Donald Crawford
”
|
|
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Authorized Signatory
|
(
Signature Page to First Supplemental Indenture
)
|
AURORA CANNABIS INC.
|
|
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Per:
|
“
Terry Booth
”
|
|
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Authorized Signatory
|
(
Signature Page to First Supplemental Indenture
)
Form 51–102F3
MATERIAL CHANGE REPORT
|
Item 1.
|
Name and Address of Company
|
Aurora Cannabis Inc. ("
Aurora
"
or the "
Company
")
Suite 900 - 510 Seymour Street
Vancouver,
British Columbia V6B 1V5
|
Item 2.
|
Date of Material Change
|
August 8, 2018.
News Release dated August 14, 2018 was disseminated via Canada
Newswire and filed on SEDAR on August 14, 2018.
|
Item 4.
|
Summary of Material Change
|
The Company has completed the previously announced acquisition
of all of the issued and outstanding common shares of Anandia Laboratories Inc.
(“
Anandia
”).
|
Item 5.
|
Full Description of Material Change
|
|
5.1
|
Full Description of Material
Change
|
The previously announced arrangement, under the provisions of
the
Business Corporations Act
(British Columbia), means that among other
things, Aurora has now acquired all of the issued and outstanding shares of
Anandia in an all-share transaction (the "
Transaction
").
Pursuant to the terms of the arrangement agreement, the Company
has issued 12,716,482 shares and 6,358,210 warrants. In accordance with the
terms of the Transaction, Aurora has withheld an additional $10 million, to be
paid by way of the issuance of additional shares and warrants upon the
achievement of future milestones.
|
5.2
|
Disclosure for Restructuring
Transactions
|
Not applicable.
|
Item 6.
|
Reliance on subsection 7.1(2) of National
Instrument 51–102
|
Not applicable.
- 2 -
|
Item 7.
|
Omitted Information
|
None.
|
Item 8.
|
Executive Officers
|
The following senior officer of the Company is knowledgeable
about the material change and this Material Change Report and may be contacted:
Terry Booth, Chief Executive Officer
Telephone: (604) 362-5207
DATED at Vancouver, BC, this 16
th
day of August,
2018.
Aurora Cannabis Obtains Receipt of Australis Capital Final
Prospectus and Provides Update With Respect to Australis Distribution to Aurora
Shareholders
Australis' Non-Brokered, Over-Subscribed Private Placement
Raises $17 Million - Australis Expects to List on the CSE in September
2018
TSX: ACB
EDMONTON, Aug. 17, 2018 /CNW/ - Further to its press release of
June 20, 2018, Aurora Cannabis Inc. ("Aurora" or the "Company") (TSX: ACB)
(OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today announced, in connection with
the spin-out of its subsidiary Australis Capital Inc. ("Australis"), Australis
has received a receipt for its final prospectus dated August 14, 2018 (the
"Final Prospectus"). The Final Prospectus was filed with the securities
regulatory authorities in all provinces and territories of Canada and is
available under Australis' SEDAR profile at www.sedar.com. Receipt of the Final
Prospectus will permit Aurora's Board of Directors (the "Board") to set the
Record date of the transaction, which the company expects the Board will
announce within the coming days. Additionally, Australis received conditional
approval to list its shares and warrants on the Canadian Securities Exchange
("CSE"), as well as completed an oversubscribed private placement for proceeds
of $17 million.
Australis Capital
Australis will identify and invest in U.S. cannabis and real
estate assets. Investments may include and are not limited to equity, debt or
other securities of both public and private companies, financings in exchange
for royalties or other distribution streams, and the possible acquisition of
certain entities. Investments will be reviewed on an on-going basis to determine
the appropriateness of their weighting within the greater portfolio, at least
monthly and more often as required to provide optimal returns and grow
shareholder value. Australis' stringent investment criteria for growth will
maximize returns to shareholders, while focusing on significant near and
mid-term opportunities with a commitment to governance and community. Australis'
Board, Management and Advisory Committee have material experience with, and
knowledge of, the U.S cannabis space and expect to execute successfully with
accretive deals in the near term.
Management Commentary
"The spin-out of Australis delivers additional value to
Aurora's shareholders, while creating a vehicle with considerable upside
potential," said Terry Booth, CEO of Aurora. "Australis provides its
shareholders with access to deal-flow in the U.S market, where many successful
operators have struggled to access growth capital in an opportunity rich market.
With a deeply networked and experienced management team, and a strong balance
sheet, Australis is well positioned to capitalize in the U.S. by acquiring
attractively priced cannabis assets with high growth potential. The
non-brokered, substantially oversubscribed private placement that Australis
recently completed to fuel its growth is a reflection of investor appetite for
access to U.S. cannabis assets, while recognizing the Australis team's domain
expertise and successful track record of operating in highly regulated and
rapidly evolving industries. We look forward to providing additional updates
shortly on our progress towards the distribution."
Capital distribution of Australis shares to Aurora
shareholders
The spin-out of Australis will occur in the form of a
distribution of units (the "Units") in Australis to Canadian resident holders of
Aurora shares (the "Distribution"). Non-resident holders will receive cash
instead of units pursuant to the spin-out, as explained below.
The Distribution will be paid on the basis of one Unit for
every 34 Aurora shares outstanding on the record date, to be fixed by the board
of directors of Aurora. Each Unit will consist of one common share ("Share") and
one Share purchase warrant ("Warrant") of Australis. Each Warrant will entitle
the holder thereof to acquire one Share at an exercise price of $0.25 per
Australis share, on or prior to 4:00 p.m. (Eastern Time) on the date that is one
year from the date of the Distribution.
Aurora shareholders are not required to pay for the Units they
receive by way of the Distribution, to tender or surrender their Aurora shares,
or to take any other action in connection with the Distribution, other than
providing a declaration of residency.
Spin-out to Non-resident Holders
As described in further detail in the Final Prospectus, no
Units will be issued to shareholders who are (or are deemed to be) non-residents
of Canada. Rather, such Units will be delivered to a custodian for sale in the
open market following the Distribution, and the net cash proceeds will be
delivered to non-resident shareholders, net of any withholding taxes.
Shareholders who fail to provide a declaration of Canadian residency in the form
that will be provided following the record date will be deemed to be a
non-resident for these purposes. Canadian shareholders who hold their shares in
Aurora through a brokerage or other account are therefore urged to contact their
brokers to avoid being deemed a non-resident.
Record Date
The Aurora Board anticipates announcing the record date within
the coming days.
CSE Listing
Australis has received conditional approval to list its Shares
and Warrants on the CSE and Australis anticipates completing the listing in
September 2018. Listing will be subject to Australis fulfilling all of the
listing requirements of the CSE. Australis' ticker symbol once listed on the CSE
is expected to be CSE: AUSA.
Private Placement
Australis completed an oversubscribed, non-brokered private
placement (the "Private Placement") of 85,000,000 Shares at an offering price of
$0.20 per Share for gross proceeds of $17 million. The Shares issued pursuant to
the Private Placement are subject to a statutory four-month hold period, as
applicable. Funds will be used to execute on Australis' investment strategy.
Certain Aurora insiders, including Directors and Officers
participated in the private placement, and consequently have become shareholders
of Australis. No insiders of Aurora will become insiders of Australis.
This news release does not constitute an offer to sell or the
solicitation of an offer to buy securities in any jurisdiction. The Australis
Shares to be distributed have not been approved or disapproved by any Canadian
or U.S. regulatory authority nor has any such authority passed upon the accuracy
or adequacy of the final prospectus.
The U.S. Cannabis Market
While 29 states have legalized medical cannabis and 9 states
plus the District of Columbia have proceeded with consumer legalization,
cannabis remains a Schedule I controlled substance at the federal level in the United States. Consequently, the U.S.
cannabis market is fragmented in nature and includes many high-quality
operations and technology innovators with limited access to capital. This has
created a compelling opportunity for well-connected and capitalized companies to
invest in U.S. assets, especially considering anticipated market growth, with
over 50% of the U.S. population currently living in states with legal
access.
Recent changes in U.S. federal positioning with respect to
cannabis have positively impacted the perception of risk to invest in U.S.
cannabis assets. This has further incentivized capital market participants to
seek opportunities to fund U.S. based operations. Entering the U.S. market now,
in compliance with regulatory requirements, represents a risk/reward balance
attractive to well-connected and funded operators with an ability to execute
delivering significant shareholder value.
Assets
Aurora has completed a series of intercorporate transactions in
connection with the proposed Distribution, resulting in Australis holding the
following investments:
|
|
•
|
a 100% interest in Australis Holdings LLP, a limited
liability partnership organized under the laws of Washington State, which
holds two parcels of land totaling 24.5 acres in Whatcom County,
Washington;
|
|
|
•
|
SubTerra LLC ("SubTerra"), consisting of (a) a royalty of
five percent (5%) of the gross revenues of SubTerra earned annually from
the potential sale of cannabis and cannabis based products grown and/or
processed at its facility during the period commencing June 1, 2018 and
ending May 31, 2028; (b) a payment of $150,000 annually during the period
commencing June 1, 2018 and ending May 31, 2028; and (c) a two-year option
to purchase the White Pine land parcel for $3,000. SubTerra does not
currently conduct any cannabis related activities, but has applied to the
State of Michigan for a license for the production, research and
processing of medical cannabis.
|
Furthermore, Australis raised $17 million through a
non-brokered private placement, well-capitalizing the company to execute on
opportunities.
Funding Agreement and Restricted Back-in Right
Aurora and Australis entered into the Funding Agreement on June
14, 2018 pursuant to which Aurora will advance $500,000 to Australis, in
consideration for which Australis will issue to Aurora: (a) a warrant to
purchase a number of Shares equal to 20% of the issued and outstanding Shares as
of the date on which the Shares commence trading on the CSE, which will be
exercisable for a period of ten years from the date of issue at an exercise
price of $0.20 per Share, and (b) a warrant to purchase a number of Shares equal
to 20% of the number of Shares issued and outstanding as of the date of
exercise, which will be exercisable for a period of ten years from the date of
issue at an exercise price equal to the five day volume weighted average trading
price of the Shares on the CSE or such other stock exchange on which the Shares
may then be listed at the time of exercise, or if the Shares are not then listed
on a stock exchange at the fair market value of the Shares at the time of
exercise (collectively, the "Restricted Back-in Right").
Aurora will be prohibited from exercising the Restricted
Back-in Right unless all of Australis' business operations in the United States
are allowed under applicable federal and state laws and Aurora has received the
consent of the Toronto Stock Exchange and any other stock exchange on which
Aurora may be listed, as required.
About Aurora
Headquartered in Edmonton, Alberta, Canada with funded capacity
in excess of 570,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified
across every key segment of the value chain, from facility engineering
and design to cannabis breeding and genetics research, cannabis and hemp
production, derivatives, high value-add product development, home cultivation,
wholesale and retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and both its first production
facility and its wholly owned European medical cannabis distributor Pedanios
have achieved this level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes 10 companies acquired –
MedReleaf, CanvasRX, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban
Cultivator, BC Northern Lights, Larssen Greenhouses, CanniMed Therapeutics, and
Anandia – Aurora is distinguished by its reputation as a partner of choice and
employer of choice in the global cannabis sector, having invested in and
established strategic partnerships with a range of leading innovators,
including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient
Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann
Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings
Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), Evio Beauty Group
(private), Wagner Dimas (private), CTT Pharmaceuticals (OTCC: CTTH), and Alcanna
Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website, investor.auroramj.com, Twitter, Facebook or Instagram
Terry Booth, CEO
Aurora Cannabis Inc.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur and include, but are not limited to: statements
in respect of the timing and details of the Distribution, the financial
prospects of Australis, the listing of Australis Shares and Warrants on the CSE
and the terms of the Restricted Back-in Right. These statements are only
predictions. Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking statements throughout this news
release. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. Investors should refer to the final prospectus filed by Australis in
connection with the Distribution for more information, in particular the risk
factors described therein under the heading "Risk Factors". The Company is under
no obligation, and expressly disclaims any intention or obligation, to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/August2018/17/c5799.html
%SEDAR: 00025675E
For further information:
For Media: Heather MacGregor,
+1.416.509.5416, heather.macgregor@auroramj.com, www.auroramj.com; For
Investors: Marc Lakmaaker, +1.647.269.5523, marc.lakmaaker@auroramj.com,
https://investor.auroramj.com; Rob Kelly, +1.647.331.7228,
rob.kelly@auroramj.com, https://investor.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com /ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 07:00e 17-AUG-18
Aurora Cannabis Sets Record Date of Australis Capital
Distribution
Completion of Distribution and CSE Listing Expected September
2018
TSX: ACB
EDMONTON, Aug. 20, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today
announced that, in connection with the spin-out of its subsidiary Australis
Capital Inc. ("Australis"), Aurora has set Friday August 24, 2018 as the record
date for the distribution of Australis units (the "Distribution").
Canadian shareholders as at the record date will be eligible to
receive the Distribution. Non-resident shareholders will be entitled to receive
a cash payment net of any applicable withholding taxes following a sale of their
respective units in the open market by an independent custodian following the
Distribution. Consequently, Aurora anticipates the completion of the
Distribution to shareholders and the public listing of Australis on the CSE to
be completed in September 2018.
As previously announced on August 17, 2018, the Distribution
will be paid on the basis of one unit for every 34 Aurora shares outstanding on
the record date. Each unit will consist of one common share and one share
purchase warrant of Australis. Each warrant will entitle the holder thereof to
acquire one share at an exercise price of $0.25 per Australis share, on or prior
to 4:00 p.m. (Eastern Time) on the date that is one year after the
Distribution.
In accordance with applicable securities laws, only Canadian
beneficial shareholders can participate in the Distribution. Canadian beneficial
shareholders or their broker representatives are required to confirm Canadian
residency by no later than September 14, 2018, otherwise they will be deemed to
be non-resident shareholders and will receive the net cash proceeds from the
sale of their units. Canadian shareholders who hold their shares in Aurora
through a brokerage or other account are therefore urged to contact their
brokers to ensure that their brokers have confirmed Canadian residency in the
manner to be provided by CDS following the record date.
Management Commentary
"There is massive demand for additional capital to fuel the
growth of the U.S. cannabis industry, as well as intense interest among
investors to gain access to the American market. We are very pleased to have
created this opportunity for Aurora's shareholders," said Terry Booth, CEO of
Aurora. "The unparalleled access to numerous compelling business opportunities
in the U.S., positions Australis well to generate significant shareholder
value."
Scott Dowty, CEO of Australis, added, "We are well capitalized
through our oversubscribed initial non-brokered private placement to execute on
our investment strategy in the cannabis industry. The undercapitalized and
fragmented nature of the U.S. cannabis industry creates ample opportunities for
Australis to leverage its access to capital and secure attractively valued
assets. Our teams have already begun evaluating several opportunities, and we
are looking forward to responsible and sound execution post completion of the
Distribution. We look forward to informing our shareholders and the market in
this regard."
Board and Management
Australis' Board, Management team and Investment Advisory
Committee have considerable financial, M&A, regulatory compliance and
cannabis industry experience. The team members have deep domain expertise and a
track record of success operating in highly competitive and rapidly evolving
industries, consisting of the following people:
Executive Officers
Scott Dowty, CEO and Director
Mr. Dowty has 25 years of experience evaluating companies and
markets to identify key business drivers, spur rapid revenue and profit growth
in competitive and highly regulated global markets. Mr. Dowty has held executive
and corporate officer positions with numerous publicly traded U.S. based
companies, and founded several successful start-up companies in North America
and abroad. Mr. Dowty's extensive operational experience in the International
fintech and gambling sectors is closely aligned to the regulatory path of the
U.S. cannabis industry.
Campbell Birge, CFO
Mr. Birge has more than 20 years' experience advising and
working with public and private companies in Canada, the United States and
Mexico. He is currently President and Director of U.S. listed CTT Pharmaceutical
Holdings Inc. and previously served with other U.S. based public companies as
CEO, CFO and Director. Mr. Birge is well connected in the capital markets and an
adviser to public companies in the cannabis industry.
Directors
Arlene Dickinson
Arlene Dickinson is the owner and CEO of Venture
Communications, a marketing and communications company she grew from a small,
local firm to one of the largest independent agencies in Canada. Her marketing
firm and venture fund, District Venture Capital, are focused on helping market,
fund and grow entrepreneurs and entrepreneurial companies. She is a two-time
best-selling author, accomplished public speaker, and is best known for her role
as a Dragon/Venture Capitalist for ten seasons on the award-winning television
series Dragons Den. Ms. Dickinson's leadership has been extensively recognized,
including Canada's Most Powerful Women Top 100, the Pinnacle Award for
Entrepreneurial Excellence, as well as PROFIT and Chatelaine's Top 100 Women
Business Owners. She is also a Marketing Hall of Legends inductee.
Roger Swainson, Q.C.
Roger Swainson is a practicing lawyer with 35 years' experience
in structuring and closing complex commercial and finance transactions
throughout Canada. He is a senior partner and heads the Business Law Practice
Group with the law firm of Brownlee LLP, a western Canadian regional law firm
headquartered in Edmonton, Alberta. His areas of expertise include real estate,
finance and commercial legal documentation. In his practice, Mr. Swainson has
acted on numerous transactions involving the creation and financing of Real
Estate Investment Trusts, the development and financing of large commercial real
estate projects and the acquisitions of large commercial real estate portfolios.
He has been a sessional lecturer at the University of Alberta Faculty of Law and
has taught numerous courses through the Legal Education Society of Alberta on
real estate and finance law and practice.
John Dover
John Dover is CEO of NelCorp Inc., a Canada-based operations
management consultancy specializing in enhancing organizational performance
and/or establishing effective Supply Chain Management (SCM) Programs for small
to medium-sized firms across North America. In addition, Mr. Dover has broad
experience in asset-based and structured financing transactions specific to more
complex supply chain strategies. An experienced and engaged investor in diverse
industries including cannabis, real estate, B2B and fintech. Mr. Dover is
actively involved in raising investment capital for various Canadian nascent
public companies on TSX and Venture exchange through an expansive private
network.
Investment Advisory Committee
Desmond Balakrishnan
Desmond has practiced law as a partner at McMillan LLP since
February 2002. Mr. Balakrishnan has served as Director and Corporate Secretary
of a number of listed issuers. He received his Law Degree from the University of
Alberta in 1997 and was called to the British Columbia Bar in 1998. A leader and
pioneer in the sector, Mr. Balakrishnan has served as legal counsel for numerous
public and private companies within the cannabis industry. Mr. Balakrishnan has
developed a deep and well-respected understanding of the sector and has
developed a large network of cannabis executives, enabling him to vet promising
investment opportunities.
Graham Saunders
Graham Saunders has served as Vice Chairman, Head of Capital
Markets Origination at Canaccord Genuity Corp. since January 2016. Mr. Saunders
has been instrumental in Canaccord Genuity's entry and expansion into the
cannabis sector. Prior to his current role, Mr. Saunders acted as Co-Head of
Institutional Equity Sales and Managing Director at Canaccord Genuity Corp. Mr.
Saunders' extensive involvement in both the U.S. and Canadian cannabis markets,
and Canaccord Genuity's track record as the number one investment bank in the
Cannabis sector results in excellent exposure to Cannabis opportunities, which
Australis anticipates will contribute to the quality of the opportunities under
review.
Neil Belot
Mr. Belot has been the Chief Global Business Development
Officer at Aurora since March 2017, where he focuses on developing business
opportunities that drive Aurora's domestic and international growth. Prior to
this, he had held the position of Chief Brand Officer at Aurora since September
2015 with operational oversight of brand, sales, marketing, client care, and
digital technology. Mr. Belot has been deeply involved with Canada's medical
cannabis industry and community for more than seven years. He also serves on the
Board of Directors for Australia's first licensed cannabis company Cann Group
Limited, as well as for North America's largest public chain of liquor stores,
Alcanna Inc. Prior to joining Aurora, he was the inaugural Executive Director of
the trade association for commercial licensed producers; Cannabis Canada,
formally known as the Canadian Medical Cannabis Industry Association.
About Australis
Australis Capital seeks to identify and invest in U.S. cannabis
and real estate assets. Investments may include and are not limited to equity
positions and/or debt in both public and private companies, financings in
exchange for royalties or other distribution streams, and the possible
acquisition of certain entities. Investments will be reviewed on an on-going
basis to determine the appropriateness of their weighting within the greater
portfolio, to provide optimal returns and grow shareholder value. Australis'
stringent investment criteria for growth will maximize returns to shareholders,
while focusing on significant near and mid-term opportunities with a commitment
to regulatory requirements, governance, community and culture. Australis' Board,
Management and Advisory Committee have material experience with, and knowledge
of, the U.S cannabis space and expect to execute successfully with accretive
deals in the near term.
About Aurora
Headquartered in Edmonton, Alberta, Canada with funded capacity
in excess of 570,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production, derivatives,
high value-add product development, home cultivation, wholesale and retail
distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and both its first production
facility and its wholly owned European medical cannabis distributor Pedanios
have achieved this level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes 10 companies acquired –
MedReleaf, CanvasRx, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban
Cultivator, BC Northern Lights, Larssen Greenhouses, CanniMed Therapeutics, and
Anandia – Aurora is distinguished by its reputation as a partner of choice and
employer of choice in the global cannabis sector, having invested in and
established strategic partnerships with a range of leading innovators,
including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient
Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann
Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings
Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), Evio Beauty Group
(private), Wagner Dimas (private), CTT Pharmaceuticals (OTCC: CTTH), and Alcanna
Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website, investor.auroramj.com, Twitter, Facebook or Instagram
Terry Booth, CEO
Aurora Cannabis Inc.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur and include, but are not limited to: statements
in respect of the timing and details of the Distribution, the financial
prospects of Australis, the listing of Australis Shares and Warrants on the CSE
and the terms of the Restricted Back-in Right. These statements are only
predictions. Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking statements throughout this news
release. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. Investors should refer to the final prospectus filed by Australis in
connection with the Distribution for more information, in particular the risk
factors described therein under the heading "Risk Factors". The Company is under
no obligation, and expressly disclaims any intention or obligation, to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/August2018/20/c2883.html
%SEDAR: 00025675E
For further information:
For Media: Heather MacGregor,
+1.416.509.5416, heather.macgregor@auroramj.com, www.auroramj.com; For
Investors: Marc Lakmaaker, +1.647.269.5523, marc.lakmaaker@auroramj.com,
https://investor.auroramj.com; Rob Kelly, +1.647.331.7228,
rob.kelly@auroramj.com, https://investor.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com / ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 07:00e 20-AUG-18
Aurora Cannabis and MedReleaf Confirm Supply Agreements with
Ontario Cannabis Stores
Companies to Supply a Broad Variety of Products for the
Emerging Adult Consumer Market
TSX: ACB
EDMONTON, Aug. 21, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) is
pleased to confirm it, and its wholly-owned subsidiary MedReleaf, have entered
into supply agreements with the Ontario Cannabis Stores, a key market in the
Company's adult consumer use strategy. When government-run online sales commence
on October 17, Aurora and MedReleaf will supply a broad range of dried flower
and higher margin products, such as pre-rolls, oils and capsules.
"We are proud of the strong relationships we have built with
provinces across the country. Our supply agreements with the Ontario Cannabis
Stores are evidence of our commitment to working closely with them to deliver
the products consumers want to buy, including those under the Aurora brand, San
Raphael '71 and AltaVie." said Terry Booth, Aurora CEO. "With a population of
more than 14 million people, Ontario is the largest adult consumer use market in
Canada. Being a supplier to this market though the Aurora and MedReleaf brands
provides us with a strong presence that positions us well to generate growth and
build further brand recognition. We look forward to making our high-quality
products available to the Ontario market, and to initiating a meaningful
educational conversation about our products and the appropriate use of
them."
Aurora, through its strategic investment in Alcanna (formerly
Liquor Stores NA), the Edmonton, Alberta-based beverage alcohol retailer with
approximately 230 retail outlets in Western Canada and Alaska, will establish a
leading brand of cannabis retail outlets, as soon as government regulations
permit. In preparing for the roll-out of a retail network, the companies have
entered into an agreement governing the branding and operational aspects of the
new cannabis stores.
Alcanna will reimagine the customer retail experience with
fully immersive, state-of-the-art stores that offer an inviting and educational
brand experience. Highly trained Category Specialists will engage new and
experienced customers with superior product knowledge and socially responsible
advice.
Aurora, its wholly owned subsidiaries and strategic partners
have four production facilities and 29 patient education and counselling rooms
in the province, making it one of the largest employers in the cannabis
industry, in Ontario, with more than 400 employees. Regarded by many as the
employer of choice in the global cannabis space, the Company expects to grow
this number exponentially as it prepares to enter the private adult consumer use
market in Ontario with its trusted and experienced retail partners.
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 570,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on purpose-built
facilities that integrate leading-edge technologies across all processes,
defined by extensive automation and customization, resulting in the massive
scale production of high quality product at ultra-low costs. Intended to be
replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and its first production
facility, its recently acquired MedReleaf Markham facility and its wholly owned
European medical cannabis distributor Pedanios have achieved this level of
certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes nine companies acquired -
CanvasRX, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban Cultivator, BC
Northern Lights, Larssen, CanniMed Therapeutics, Anandia Labs and MedReleaf -
Aurora is distinguished by its reputation as a partner of choice and employer of
choice in the global cannabis sector, having invested in and established
strategic partnerships with a range of leading innovators, including: The Green
Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient Technologies Inc. (TSXV:
RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann Group Ltd. (ASX: CAN),
Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO),
Namaste Technologies Inc. (TSXV: N), Evio Beauty Group (private), Wagner Dimas
(private), CTT Pharmaceuticals (OTCC: CTTH), and Alcanna Inc. (TSX: CLIQ).
For more information about Aurora, please visit our investor
website investor.auroramj.com.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Terry Booth, CEO
Aurora Cannabis Inc.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/August2018/21/c4541.html
%SEDAR: 00025675E
For further information:
MEDIA CONTACTS: Heather
MacGregor, Director of Communications, Aurora Cannabis, M : (416) 509-5416,
heather.macgregor@auroramj.com, www.auroramj.com; INVESTOR RELATIONS: Marc
Lakmaaker, Vice President, Investor Relations, Aurora Cannabis, M: (647)
269-5523, marc.lakmaaker@auroramj.com, www.auroramj.com; Rob Kelly, Director,
Investor Relations, Aurora Cannabis, M: (647) 331-7228,
rob.kelly@auroramj.com, www.auroramj.com
CO: Aurora Cannabis Inc.
CNW 07:00e 21-AUG-18
Aurora Cannabis Obtains Health Canada Approval for Softgel
Capsule Production at Aurora Vie Facility and launches CanniMed Capsules
3:3
Broadening Product Portfolio for Medical Market Creates
Exciting Growth Opportunities
TSX: ACB
EDMONTON, Aug. 22, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) is
pleased to announce it has received Health Canada authorization to produce
cannabis softgel capsules at its state-of-the-art Aurora Vie facility in
Pointe-Claire, Québec. Aurora will begin production of softgel capsules
immediately, in partnership with Capcium Inc. ("Capcium"), the Montreal-based
manufacturer that specializes in high-volume softgel encapsulation. Aurora holds
a 19.99 per cent ownership stake in Capcium and is Aurora's exclusive
manufacturer of cannabis softgel products in North America.
CanniMed Capsules 3:3 (CNW Group/Aurora Cannabis Inc.)
Aurora is also proud to announce the launch, through its
wholly-owned subsidiary CanniMed, of a line of hardshell, vegan, precision-dose,
medical cannabis capsules. Balanced with a blend of equal concentrations of THC
and CBD (3mg/capsule of each cannabinoid), the product has no taste and offers
reliable, long-lasting and consistent effects. CanniMed Capsules are a
game-changer for patients and healthcare professionals who have been seeking
alternative delivery systems for medical cannabis.
"Aurora continues to deliver on its strategy to build a robust
portfolio of higher-margin products, and we are proud of the scientific
innovation and dedication to patient well-being reflected by the launch of our
cannabis capsules that offer a discreet and smoke free method of consumption for
patients," said Terry Booth, CEO of Aurora. "While many people continue to use
dried buds for medical symptom relief, there is growing global demand for
alternative drug delivery technologies. Through CanniMed and our partnership
with Capcium, we are well-positioned to lead in this segment of the Cannabis
market. We look forward to reporting on future innovations from the combined
product development teams at Aurora, CanniMed, CTT pharmaceutical,
Capcium and MedReleaf."
Cannabis capsules are preferred by healthcare professionals as
they offer discreet, precision dosage, and have consistent and predictable
efficacy. It is anticipated that once cannabis is legal for adult recreational
use there will be significant consumer demand for encapsulated cannabis
products. Aurora, its subsidiaries and partners share a strong, mutual belief in
the importance of science to drive innovation in the form of marketable
intellectual property, and new value-added products. Easy-to-use hardshell
capsules and softgels deliver on this key mandate.
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 570,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and its first production
facility, its recently acquired MedReleaf Markham facility and its wholly owned
European medical cannabis distributor Pedanios have achieved this level of
certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes nine companies acquired -
CanvasRX, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban Cultivator, BC
Northern Lights, Larssen, CanniMed Therapeutics, Anandia Labs and MedReleaf -
Aurora is distinguished by its reputation as a partner of choice and employer of
choice in the global cannabis sector, having invested in and established
strategic partnerships with a range of leading innovators, including: The Green
Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient Technologies Inc. (TSXV:
RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann Group Ltd. (ASX: CAN),
Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO),
Namaste Technologies Inc. (TSXV: N), Evio Beauty Group (private), Wagner Dimas
(private), Capcium Inc. (private), CTT Pharmaceuticals (OTCC: CTTH), and Alcanna
Inc. (TSX: CLIQ).
For more information about Aurora, please visit our investor
website investor.auroramj.com.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update
or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Terry Booth, CEO
Aurora Cannabis Inc.
SOURCE Aurora Cannabis Inc.
View original content with multimedia:
http://www.newswire.ca/en/releases/archive/August2018/22/c2076.html
%SEDAR: 00025675E
For further information:
MEDIA CONTACTS: Heather
MacGregor, Director of Communications, Aurora Cannabis, M : (416) 509-5416,
heather.macgregor@auroramj.com, www.auroramj.com; Nicole Lascelle, Gestionnaire
des Relations communautaires et communications, Community Relations &
Communications Manager, Aurora Cannabis, M : (438) 828-4834,
Nicole.lascelle@auroramj.com, www.auroramj.com; INVESTOR RELATIONS: Marc
Lakmaaker, Vice President, Investor Relations, Aurora Cannabis, M: (647)
269-5523, marc.lakmaaker@auroramj.com, www.auroramj.com; Rob Kelly, Director,
Investor Relations, Aurora Cannabis, M: (647) 331-7228, rob.kelly@auroramj.com,
www.auroramj.com
CO: Aurora Cannabis Inc.
CNW 16:30e 22-AUG-18
Aurora Cannabis Contributes $50,000 to Support
the Campaign for Cannabis Amnesty
Contribution to Support Grassroots Justice
Reform Efforts towards Amnesty for Individuals with Cannabis Possession
Offenses
TSX: ACB
TORONTO, Aug. 27, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today
reaffirmed its commitment to advocating for the amnesty of cannabis possession
offenses through a $50,000 contribution to the Campaign for Cannabis Amnesty.
The organization will use the funds to advocate for the expungement of criminal
records for personal possession cannabis offences that will no longer be illegal
after October 17, 2018, and to educate Canadians about the injustices that
currently exist as a result of the prohibition of cannabis.
The legalization of cannabis in Canada represents a monumental
and positive policy shift. However, more than 500,000 Canadians will continue to
carry the burden of criminal records from simple possession offenses, many of
them from marginalized communities. Without pardons and record expungement, the
negative impact of these records will continue to limit their ability to find
housing or employment, to travel, or volunteer.
"Aurora strongly believes that the negative socio-economic
impact of maintaining criminal records for simple possession needs to be
addressed urgently," said Jonathan Zaid, Aurora's Director of Advocacy and
Corporate Social Responsibility. "We look to the Canadian government to provide
amnesty to these people, largely from marginalized communities, ensuring their
broad exclusion from Canadian society is lifted. The work of the Campaign for
Cannabis Amnesty is making a very positive contribution towards this much needed
policy change. Even through there is still a lot of work to be done to encourage
justice reform in this area, Aurora is proud to support organizations like
Campaign for Cannabis Amnesty that are leading the way forward."
Aurora defines corporate social responsibility (CSR) in terms
of how The Company does business, interacts with consumers, patients and
stakeholders, and minimizes its impact on the environment. Championing advocacy
with respect to justice reform and fairness is part of the CSR mandate.
Annamaria Enenajor, Director of the Campaign for Cannabis
Amnesty, added: "We are very excited about Aurora's decision to support the
campaign. Aurora's commitment to social responsibility makes it a perfect ally
for this important work. We believe that adding Aurora's voice to our own will
allow us to shine a brighter light on the urgent need for cannabis amnesty.
Granting pardons for cannabis possession will directly help over half a million
Canadians, and benefit our economy at the same time. It's a no-brainer and we
are looking to work closely with legislators in Ottawa to make this happen."
Through the campaign's website
www.CannabisAmnesty.ca
, Canadians can take action on
this pressing issue by signing a petition or sharing how cannabis
criminalization has affected their lives.
About Campaign for Cannabis Amnesty (
www.cannabisamnesty.ca
)
The Campaign for Cannabis Amnesty is a non-partisan,
not-for-profit group composed of lawyers,
activists, and entrepreneurs brought together by the belief
that the harms caused by decades of marijuana prohibition must be made right. We
started an online petition platform and will develop education and advocacy
resources to help Canadians across the country learn more about the harms caused
by cannabis criminalization and what we can do to create a more fair and just
national framework for cannabis legalization.
About Aurora
Headquartered in Edmonton, Alberta, with funded capacity in
excess of 570,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and its first production
facility, its recently acquired MedReleaf Markham facility and its wholly owned
European medical cannabis distributor Pedanios have achieved this level of
certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes nine companies acquired -
CanvasRX, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban Cultivator, BC
Northern Lights, Larssen, CanniMed Therapeutics, Anandia Labs and MedReleaf -
Aurora is distinguished by its reputation as a partner of choice and employer of
choice in the global cannabis sector, having invested in and established
strategic partnerships with a range of leading innovators, including: The Green
Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient Technologies Inc. (TSXV:
RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann Group Ltd. (ASX: CAN),
Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO),
Namaste Technologies Inc. (TSXV: N), Evio Beauty Group (private), Wagner Dimas
(private), Capcium Inc. (private), CTT Pharmaceuticals (OTCC: CTTH), and Alcanna
Inc. (TSX: CLIQ).
For more information about Aurora, please visit our investor
website investor.auroramj.com.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Terry Booth, CEO
Aurora Cannabis Inc.
KEY FACTS ABOUT CRIMINALIZATION AND CANNABIS
|
•
|
A criminal record for cannabis can interfere with a
person's ability to lease an apartment, qualify for a mortgage, get a job,
be accepted into certain university programs or even volunteer. For
non-Canadians and permanent residents, a criminal record can slow down
have negative implications on the immigration or citizenship process.
|
|
|
|
|
•
|
Over the last 5 years, Canadian police agencies reported
more than 800,000 cannabis possession "incidents" to Statistics Canada.
Between 2008/2009 and 2011/2012, cannabis possession accounted for
approximately 59,000 adults and 14,000 youth cases in Canadian courts and
25,000 adults and almost 6,000 youth convictions.
|
|
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•
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Although there is no evidence to suggest that Canadians
of different backgrounds consume cannabis at different rates, racialized,
Indigenous and low-income Canadians are more likely to be arrested and
receive a harsher disposition for possessing marijuana. Consider the
following examples:
|
|
|
o
|
In 2017, the
Toronto Star
obtained data showing
that over the decade from 2003 to 2013, Black Torontonians were three
times more likely to be arrested for marijuana possession, than white
Torontonians with similar backgrounds.
|
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|
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|
o
|
In the two years between 2015 and 2017, black people in
Halifax were more than five times more likely to get arrested for
possessing marijuana than white Haligonians.
|
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|
o
|
Indigenous Canadians have been particularly harmed by
cannabis prohibition. In one shocking example, between 2015 and mid- 2017,
Indigenous people in Regina were almost nine times more likely to be
arrestedfor cannabis possession than white people.
|
|
•
|
The Conservative government of Stephen Harper eliminated
Canada's pardon regime and substituted it with a "record suspension"
regime that increased the cost of the application to $631. This has made
it more difficult for Canadians to seek formal forgiveness past mistakes.
|
|
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•
|
On legalization day, October 17, 2018, there will be no
mechanism for Canadians with previous criminal records for simple cannabis
consumption to apply for pardons.
|
|
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|
•
|
The goal of the campaign is to compel the federal
government to pass legislation that results in blanket pardons for
personal possession of cannabis convictions. Canadians overwhelmingly
support our mission: A poll conducted in May 2017 by Nanos Research and
the Globe and Mail, revealed that 62% of Canadians "support or somewhat
support pardons for people with criminal records for marijuana possession.
|
|
|
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•
|
Through its petition (
https://www.cannabisamnesty.ca/petition
), the
campaign aims to raise the level of support for amnesty through a
nation-wide outreach and education that will compel federal law makers in
Ottawa to take action on this important issue.
|
Campaign for Cannabis Amnesty (CNW Group/Aurora Cannabis Inc.)
SOURCE Aurora Cannabis Inc.
View original content with
multimedia:
http://www.newswire.ca/en/releases/archive/August2018/27/c7199.html
%SEDAR: 00025675E
For further information:
MEDIA CONTACT (AURORA): Heather
MacGregor, Director of Communications, Aurora Cannabis, M : (416) 509-5416, E :
heather.macgregor@auroramj.com, www.auroramj.com; MEDIA CONTACT (CAMPAIGN FOR
CANNABIS AMNESTY): Tyler James, Director, Ontario Cannabis Consumer & Retail
Alliance, M : 647-523-0285, E :tyler@occra.ca, www.sensibleontario.ca CO: Aurora
Cannabis Inc.
CNW 10:00e 27-AUG-18
Aurora Cannabis Closes $200 Million Debt
Facility with BMO
Historic Financing with a Canadian Tier 1 Bank Provides
Additional Capital to Drive Growth
EDMONTON, Sept. 4, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today
announced that it has closed its previously announced debt facility with the
Bank of Montreal ("BMO"). The facility consists of a $150 million term loan and
a $50 million revolving credit facility (together, the "Loans"), both of which
mature in 2021. Included in the facility is an option to upsize the facility to
$250 million total following the implementation of Bill C-45 on October 17,
2018, subject to agreement by BMO and satisfaction of certain legal and business
conditions.
The debt facility is primarily secured by Aurora's production
facilities, including Aurora Sky, Aurora Mountain, and Aurora Vie. Strategically
located at Edmonton International Airport, Aurora Sky is the world's most
technologically advanced cannabis facility, projected to produce in excess of
100,000 kg per year of high-quality, low-cost per gram, cannabis upon
completion.
Management Commentary
"We are incredibly proud to have successfully closed this
historic debt facility supported by a premier Canadian bank, BMO, who
understands our needs and potential. This is both a reflection of the rapidly
maturing nature of the broader cannabis industry and strong validation of the
economic potential of Aurora's best-in-class, technologically advanced
production facilities," said Terry Booth, CEO of Aurora. "With BMO and the
syndicate lenders, Aurora gains significant runway to expansion opportunities
that will positively contribute to our long-term margin profile and provide
accelerated entry into multiple international markets. This additional capital
positions us well to continue building the pre-eminent global cannabis company
with a focus on vertically integrated, geographically and horizontally
diversified assets." Glen Ibbott, CFO of Aurora, added, "The closing conditions
of this debt facility included stringent due diligence of Aurora's current
production facilities as well as a thorough review of Aurora's projected revenue
growth across all of our divisions. With our extremely strong balance sheet,
Aurora is well positioned to execute on our business strategy, including
accelerated development and launch of new products, continued rapid expansion of
our domestic and international operations, and entry into new global markets."
Pursuant to the agreed upon conditions of the Loans, Aurora may, at its
discretion, repay the balance of the Loans without penalty, at any time. The
pricing of the Loans is a set margin over the BMO CAD Prime Rate or a Bankers'
Acceptance of appropriate term. Based on the current BMO CAD Prime Rate, the
interest payable is expected to be in the mid to high 4% per annum range over
the term of the Loans. Additional details on this new sector benchmark debt
facility can be found in the Company's documents that have been filed on
www.sedar.com
.
About Aurora
Headquartered in Edmonton, Alberta, Canada with funded capacity
in excess of 570,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and its first production
facility, the recently acquired MedReleaf Markham facility, and its wholly owned
European medical cannabis distributor Aurora Europe GmbH, have achieved this
level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which date includes 10 companies acquired –
MedReleaf, CanvasRx, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban
Cultivator, BC Northern Lights, Larssen Greenhouses, CanniMed Therapeutics, and
Anandia – Aurora is distinguished by its reputation as a partner of choice and
employer of choice in the global cannabis sector, having invested in and
established strategic partnerships with a range of leading innovators,
including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient
Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann
Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings
Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), Evio Beauty Group
(private), Wagner Dimas (private), CTT Pharmaceuticals (OTCC: CTTH), Capcium
Inc. (private), and Alcanna Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website,
investor.auroramj.com
,
Twitter
,
Facebook
or
Instagram
.
Terry Booth, CEO
Aurora Cannabis Inc.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content:
http://www.newswire.ca/en/releases/archive/September2018/04/c3094.html
%SEDAR: 00025675E
For further information:
For Media: Heather MacGregor, +1.416.509.5416, heather.macgregor@auroramj.com, www.auroramj.com; For Investors: Marc Lakmaaker, +1.647.269.5523, marc.lakmaaker@auroramj.com, https://investor.auroramj.com; Rob Kelly,
+1.647.331.7228, rob.kelly@auroramj.com, https://investor.auroramj.com; U.S. investors: Phil Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233 / (212) 896-1203, Email: pcarlson@kcsa.com/ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 07:00e 04-SEP-18
Aurora Cannabis Receives Production License for Aurora Eau
Facility and Oils Production License for MedReleaf's Bradford Facility
GMP Compliant Quebec Facility Company's
7
th
Production License
EDMONTON, Sept. 7, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today
announced that the Company has received a Health Canada production license for
its Aurora Eau facility in Lachute, Quebec. The Company now has seven facilities
licensed for production, with a combined production capacity in excess of
160,000 kg per annum. Aurora has additional facilities under development,
bringing the total funded capacity to more than 500,000 kg per annum.
Additionally, Aurora, through its wholly-owned subsidiary
MedReleaf Corp. ("MedReleaf"), has received its oils production license for its
Bradford facility ("MedReleaf Bradford"), which at full capacity is a 28,000 kg
per annum cultivation facility. MedReleaf Bradford features a high-volume
CO2 extraction facility, which will significantly increase oils
production, and is in the process ofstockpiling significant quantities of
derivative products in anticipation of receipt of its sales license.
Differentiated Cultivation Facility
Aurora Eau, located in Lachute, Quebec (CNW Group/Aurora
Cannabis Inc.)
http://acb-assets.s3.amazonaws.com/assets/press-release-assets/aurora-eau.jpg
Aurora Eau, a 48,000 square foot facility with a production
capacity of 4,500 kg per year, was purpose-built to EU GMP standards and
represents the next evolution in Aurora's indoor-grow facilities. Aurora Eau has
been built to allow flexibility in all key production parameters to optimally
accommodate the Company's current "exotic" cultivars as well as new strains not
yet launched and new genetics under development, intended for both the medical
and adult consumer use markets.
Located in Lachute, Quebec, Aurora Eau is built on 46 acres of
prime agricultural land, which Aurora has the right to purchase for $136,000 for
future expansion purposes. This would expand the Company's weighted footprint in
Quebec, providing additional capacity to support future product development and
distribution.
The Company will continue to progress, as with its other
facilities, towards obtaining EU GMP certification, as part of the Company's
commitment to the Aurora Standard and further supply chain diversification. To
date, Aurora has two EU GMP cultivation facilities in Canada, as well as an EU
GMP certified facility located in Germany, run by its wholly owned subsidiary
Aurora Europe GmbH, for the import, release, and distribution of cannabis.
Cultivation Commenced at Eau
Cultivation has commenced at Aurora Eau, following receipt of a
mix of clones and mature plants using a custom built, environmentally controlled
transporter, designed by Aurora's wholly owned subsidiary BC Northern Lights.
The new transporter allows Aurora to transport high-volumes of Clones and
Mothers cost-effectively, enabling the rapid population of new facilities.
Following the successful transfer, Aurora Eau is now in full production.
External View: BC Northern Lights Developed Clone Transporter
(CNW Group/Aurora Cannabis Inc.)
http://acb-assets.s3.amazonaws.com/assets/press-release-assets/clone-can3.jpg
Internal View: BC Northern Lights Developed Clone Transporter
(CNW Group/Aurora Cannabis Inc.)
http://acb-assets.s3.amazonaws.com/assets/press-release-assets/clone-can3-inside.jpg
Management Commentary
"We are proud of the achievements at Aurora Eau, and with seven
production licenses we are exceptionally well positioned to continue executing
on our early mover advantage, in both the Canadian and the international
markets," said Terry Booth, CEO of Aurora. "With large-scale production scaling
up at Aurora Sky, we have the ability to dedicate production from Aurora Eau to
niche markets, thereby growing our brand recognition and enhancing our margin
profile. Our new oils production license at Bradford further increases our
capacity to produce higher margin oils, and drive growth."
Option and RSU Grant
The Company granted a total of 116,000 options to a director of
the Company exercisable at $9.03 per share. The options have a term of five
years and vest annually over 36 months. Additionally, 128,527 restricted stock
units were awarded to a director of the Company, of which, 8,859 vest December
31, 2018 and 119,668 vest annually over 36 months.
About Aurora
Headquartered in Edmonton, Alberta, Canada with funded capacity
in excess of 570,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and its first production
facility, as well as the recently acquired MedReleaf Markham facility, and its
wholly owned European medical cannabis distributor Aurora Europe, have achieved
this level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes 10 companies acquired –
MedReleaf, CanvasRx, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban
Cultivator, BC Northern Lights, Larssen Greenhouses, CanniMed Therapeutics, and
Anandia – Aurora is distinguished by its reputation as a partner of choice and
employer of choice in the global cannabis sector, having invested in and
established strategic partnerships with a range of leading innovators,
including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient
Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann
Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings
Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), Evio Beauty Group
(private), Wagner Dimas (private), CTT Pharmaceuticals (OTCC: CTTH), Capcium
Inc. (private), and Alcanna Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website,
investor.auroramj.com,
Twitter, Facebook
or
Instagram
Terry Booth, CEO
Aurora Cannabis Inc.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto
Stock Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content with multimedia:
http://www.newswire.ca/en/releases/archive/September2018/07/c8186.html
%SEDAR: 00025675E
For further information:
For Media: Heather MacGregor,
+1.416.509.5416, heather.macgregor@auroramj.com, www.auroramj.com; For
Investors: Marc Lakmaaker, +1.647.269.5523, marc.lakmaaker@auroramj.com,
https://investor.auroramj.com; Rob Kelly, +1.647.331.7228,
rob.kelly@auroramj.com, https://investor.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com /ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 11:27e 07-SEP-18
Aurora Cannabis to Acquire South American Market Leader ICC
Labs
Transaction Establishes Strong Foundation for Aurora's South
American Growth Strategy in
Medical, Adult Consumer Use and CBD Wellness
Markets
TSX: ACB TSX-V: ICC
EDMONTON and VANCOUVER, Sept. 10, 2018 /CNW/ - Aurora Cannabis
Inc. (Aurora or the Company) (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN:
A1C4WM) and ICC Labs Inc. (TSX-V: ICC) (
ICC
) announced today that the
companies have entered into a definitive arrangement agreement pursuant to which
Aurora intends to acquire all of the issued and outstanding common shares of ICC
(the
ICC Shares
) for $1.95 per share (payable in common shares of Aurora
(the
Aurora Shares
) (the
Share Consideration
), reflecting an
aggregate purchase price of approximately $290 million (the
Transaction
).
The Transaction has been unanimously approved by the Board of Directors of each
ICC and Aurora.
Strategic Rationale
Led by CEO Alejandro Antalich, a widely-recognized leader in
the South American cannabis market with over 25 years of experience in the
pharmaceutical sector, the acquisition of ICC will establish Aurora as the
industry leader in South America, a continent with over 420 million people. ICC
presently has over 70% market share in Uruguay, the first country in the world
to legalize cannabis for adult consumer use. In addition, ICC holds licenses in
Colombia for the production of medical cannabis.
The Transaction, once approved, creates a strong foundation for
expansion, and will leverage ICC's first mover advantage in South America,
bringing significant low-cost production capacity, a well-diversified product
portfolio, and extensive distribution channels throughout South America and
internationally.
ICC brings Aurora, among other strategic synergies, the
following:
Significant, low-cost Capacity
|
|
•
|
Significant expansion of low-cost production and
processing capacity
: ICC is expanding rapidly, with both established
facilities and a number of projects nearing completion to bring the
estimated production capacity to over 450,000 kg per annum, adding
significant value to Aurora's funded footprint:
|
|
|
°
|
Two greenhouse facilities: currently operational -
approximately 92,000 square feet
|
|
|
°
|
Three outdoor grow sites, with a potential total area of
over 800 acres, 590 acres of which are in Uruguay and which are being
prepared for cultivation start later this calendar year
|
|
|
°
|
Two facilities currently under construction, adding
124,000 square feet of greenhouse production in Colombia and a 1,000,000
sq ft facility in Uruguay
|
Strong Foundation to Capitalize on the Significant Global
CBD Wellness Market Opportunity
|
|
•
|
CBD Rich Production
: Uruguay is the only country
where regulations currently permit the cultivation of CBD-rich hemp on a
commercial scale, allowing licensed producers to grow hemp with THC
concentrations of up to 1%, providing a significant yield advantage over
global competitors. ICC's deep background in pharma and the ability to
grow low-cost CBD-rich hemp at very large scale, positions the companies
exceptionally well to capitalize on global opportunities in the
high-growth CBD wellness market.
|
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•
|
CBD Brand and Distribution
: ICC recently launched
its BIDIOL brand of CBD products, and is developing a broad international
distribution network, including a presales agreement to export product to
Mexico, a market with over 125 million people.
|
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•
|
Significant Extraction Capacity
: ICC is
progressing well towards the completion of a state-of- the-art large-scale
extraction facility with capacity to process 150,000 kg of CBD feed per
annum. Phase I of the facility is anticipated to be completed in October
2018, with the full facility online and operational by late 2018.
|
|
|
|
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•
|
Free Trade
: ICC's new CBD extraction facility is
strategically located approximately five minutes from the Canelones
international airport and within Uruguay's "Science Park" free trade zone,
exempting facility exports from any applicable local tax on exports and
imports.
|
Science, High-margin Products and Strong Genetics
|
|
•
|
The First South American GMP Compliant Science
Lab
: ICC is close to completing South America's first state-of-the-art
cannabis science laboratory, designed to the highest international
standards and in compliance with applicable GMP standards. Soon to be
certified, the facility will provide an early mover advantage over other
producers in South America. to drive sales to international cannabis
markets.
|
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|
|
|
|
|
•
|
Product Diversification
: ICC are leaders in South
America, offering a broad portfolio of dried flower and higher margin
products, including tablets, softcaps, ointments, creams, drops, infused
syrups, and patches.
|
|
|
|
|
|
|
•
|
Genetics
: ICC have secured a portfolio of high CBD
strains that are exclusive to ICC in South America, and are highly sought
after.
|
Anticipated benefits for ICC shareholders
In addition to the benefits described above, related to the
combined entity, ICC shareholders will receive the following additional
benefits:
|
|
•
|
Premium
: The Share Consideration represents a
premium of approximately 34% on the 20 day volume-weighted average trading
price of ICC Shares on the TSX-V for the period ending August 22, 2018,
the last trading day prior to ICC issuing a news release in respect of a
media report speculating as to a potential transaction involving the
acquisition of ICC.
|
|
|
|
|
|
|
•
|
Liquidity
: Aurora Shares are listed and posted for
trading on the TSX, providing ICC shareholders with potentially greater
liquidity.
|
|
|
|
|
|
|
•
|
Aurora Shares
: ICC shareholders, who will
represent approximately 3.6% of outstanding Aurora Shares after giving
effect to the Transaction, will have the opportunity to participate in the
future potential increase in the value of Aurora, one of the world's
largest vertically integrated cannabis companies with a well-developed
international footprint across five continents.
|
Management Commentary
"ICC is an ideal partner for Aurora to establish leadership in
the South American cannabis market, delivering clear first mover advantage on a
continent with over 420 million people," said Terry Booth, CEO of Aurora. "ICC
and its management team have shown exceptional vision and execution across
production, expansion, distribution and product development. The company has a
very strong management team with deep connections throughout the continent,
which we believe will facilitate successful expansion into all South American
markets."
Neil Belot, Chief Global Business Development Officer, added
"ICC, as the first company globally to be federally legalized for the sale of
cannabis for adult consumer use, is a trailblazer in, and has set the example
for the responsible production and distribution to this exciting market. The
ICC/Aurora combination is the trusted partner for governments and other
stakeholders to develop opportunities in emerging South American cannabis
markets. We are extremely excited to be working with Alejandro and the team at
ICC, and look forward to jointly pursuing a wide variety of opportunities in the
adult consumer use, medical and CBD wellness markets."
Alejandro Antalich, CEO of ICC added, "ICC was the first
company in the world to receive a cannabis production license for adult consumer
use, making Uruguay the first country globally in the modern era to legalize
cannabis. This has provided us with significant early mover advantage. Combining
with Aurora, its industry-leading plant, medical and product development science
teams, broad international reach, and strong brands, positions us well to extend
our leadership in the South American cannabis markets and the emerging global
cannabis industry. The complementary nature of the two organizations and the
shared philosophies made this an ideal match for us to realize our ambitious
growth plans. This is a value-maximizing transaction that provides our
shareholders with a significant premium and an exciting opportunity to
participate in the upside of Aurora, one of the largest and fastest growing
cannabis companies in the world. With multiple initiatives, such as our
expanding international operations and our state-of-the-art science lab near to
completion, it is time for ICC to move to the next level, and we believe that
Aurora is an ideal partner to achieve this with."
Terms of the Transaction
The Transaction will be effected by way of a plan of
arrangement under the Business Corporations Act (British Columbia) (the
Arrangement
). Under the terms of the Transaction, each shareholder of ICC
(
ICC Shareholder
) will receive $1.95 per ICC Share, payable in Aurora
Shares valued at the volume-weighted average trading price of Aurora Shares on
the TSX during the 20 trading day period ending the second to last trading day
on the TSX immediately prior to the Effective Date (as defined in the
Arrangement Agreement), being the date the Transaction is completed (the
Aurora Share Price
).
Pursuant to the terms of the Transaction, based on the
volume-weighted average trading price of Aurora Shares on the TSX during the 20
trading day period ending September 7, 2018 an ICC Shareholder would receive
0.2448 Aurora Shares for each ICC Share held, resulting in Aurora issuing
approximately 36.2 million Aurora Shares (fully diluted, treasury method) in
connection with the Transaction, representing approximately 3.6% of outstanding
Aurora Shares after giving effect to the Transaction (actual number of shares
received and issued will be based on the volume-weighted average trading price
of Aurora Shares on the TSX during the applicable 20 day period preceding the
completion of the Transaction).
The Transaction is subject to the approval of the Supreme Court
of British Columbia and the approval of two-thirds of the votes cast by ICC
Shareholders at a special meeting to be called of ICC Shareholders to approve
the Transaction (the
ICC Special Meeting
).
Union Group International Holdings Limited (
Union Group
)
has entered into a support agreement with Aurora to, among other things, vote
the ICC Shares owned by it in favour of the Transaction and to otherwise support
its completion, subject to the terms and conditions of such support agreement.
Union Group holds approximately 29% of the issued and outstanding ICC Shares.
All of the directors and senior officers of ICC (who hold in the aggregate
approximately 0.4% of the issued and outstanding ICC Shares on a non-diluted
basis) have entered into similar support agreements with Aurora pursuant to
which they have agreed, among other things, to support the Transaction and vote
their ICC Shares in favour of the Transaction.
The Transaction remains subject to certain other closing
conditions including the receipt of certain approvals (including certain
Uruguayan regulatory approvals and the consent of Aurora's lenders), and the satisfaction of certain customary closing conditions.
Approval by shareholders of Aurora is not required.
The Board of Directors of ICC (the
ICC Board
)
unanimously recommends that ICC Shareholders vote in favour of the resolution to
approve the Arrangement, which will be the subject of the ICC Special Meeting
expected to be held in the fourth quarter of 2018. The recommendation of the ICC
Board is supported by a fairness opinion from each of Canaccord Genuity Corp.
and INFOR Financial Inc. to the effect that, as of the date of each opinion, and
subject to the assumptions, limitations and qualifications on which each such
opinion is based, the consideration to be received by ICC Shareholders pursuant
to the Transaction is fair, from a financial point of view, to such
shareholders.
The Arrangement Agreement provides for, among other things, the
ICC Board being able to consider a superior proposal in certain circumstances
and a right in favour of Aurora to match any superior proposal. The Arrangement
Agreement also provides for the payment by ICC of a termination fee of
$9,500,000 in favour of Aurora in certain circumstances. In addition, the
Arrangement Agreement provides that, under certain circumstances, where the
Transaction is not completed because of the failure of Aurora to obtain certain
consents, Aurora would be required to (i) reimburse ICC's expenses up to
$750,000, and (ii) pay a reverse break fee to ICC in the amount of
$1,250,000.
It is currently expected that, subject to receipt of all
regulatory, court, shareholder and other approvals, and the satisfaction or
waiver of all conditions, the Transaction will be completed in the fourth
quarter of 2018.
Further information regarding the Transaction will be included
in ICC's management information circular to be mailed to ICC Shareholders in
advance of the ICC Special Meeting and in ICC's material change report in
respect of the announcement of the Transaction, each of which will be filed with
the Canadian securities regulators and will be available under ICC's profile at
www.sedar.com.
Financial and Legal Advisors
Canaccord Genuity Corp. is acting as financial advisor to ICC
and Norton Rose Fulbright Canada LLP is acting as legal counsel to ICC. INFOR
Financial Inc. was also engaged by the ICC Board as an independent financial
advisor to provide an independent fairness opinion in respect of the
Transaction.
McMillan LLP is acting as legal counsel to Aurora.
About Aurora
Headquartered in Edmonton, Alberta, Canada with funded capacity
in excess of 500,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and its first production
facility, the recently acquired MedReleaf Markham facility, and its wholly owned
European medical cannabis distributor Aurora Europe GmbH, have achieved this
level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes 10 companies acquired –
MedReleaf, CanvasRx, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban
Cultivator, BC Northern Lights, Larssen Greenhouses, CanniMed Therapeutics, and
Anandia – Aurora is distinguished by its reputation as a partner of choice and
employer of choice in the global cannabis sector, having invested in and
established strategic partnerships with a range of leading innovators,
including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient
Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann
Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings
Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), Evio Beauty Group
(private), Wagner Dimas (private), CTT Pharmaceuticals (OTCC: CTTH), Capcium
Inc. (private), and Alcanna Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website, investor.auroramj.com, Twitter, Facebook or Instagram.
About ICC
ICC is a fully licensed producer and distributor of medicinal
cannabinoid extracts, recreational cannabis and industrial hemp products in
Uruguay as well as a fully licensed producer of medicinal cannabis in Colombia.
The Company has active operations in Uruguay, and is focused on becoming the
worldwide leading producer of cannabinoid extracts, giving support and promoting
responsible use for medicinal purposes, backed by scientific research and
innovation, while following strict compliance with standards for quality and
safety.
For more information, please visit www.icclabs.com.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. Forward-looking statements in this news
release include, but are not limited to statements with respect to accretive
earnings, future financial position and results of operations, anticipated
benefits and costs synergies associated with the Transaction, internal
expectations, estimated margins, expectations for future growing capacity, costs
and opportunities, liquidity of Aurora Shares, effect of the Transaction on the
combined company and its future strategy, plans, objectives, goals, targets and
future developments, expectations for receipt of licenses to process or
distribute cannabis in legal markets, the completion of any capital projects or
expansions, the anticipated timing for the special meeting of ICC Shareholders
and the closing of the Transaction, the anticipated consideration to be received
by ICC Shareholders, the satisfaction of closing conditions including: (i)
required ICC Shareholder approval; (ii) necessary court approval in connection
with the Arrangement; (iii) certain termination rights available to the parties
under the Arrangement Agreement; (iv) ICC obtaining the necessary approvals from
the TSX-V; (v) Aurora obtaining necessary approvals from the TSX for the listing
of the Aurora Shares issuable under the Transaction; (vi) the parties obtaining
all requisite Uruguayan regulatory approvals; (vii) Aurora obtaining the
necessary consent from its lenders; and (viii) other closing conditions,
including, without limitation, the operation and performance of the ICC business
in the ordinary course until the closing of the Transaction and compliance by
ICC with various covenants contained in the Arrangement Agreement.
These statements are only predictions. Various assumptions
were used in drawing the conclusions or making the projections contained in the
forward-looking statements throughout this news release, including assumptions
regarding the expected growth, results of operations, performance, industry
trends and growth opportunities for Aurora and ICC.
Forward-looking statements are based on the opinions and
estimates of management of Aurora and ICC at the date the statements are made,
and are subject to a variety of risks and uncertainties and other factors that
could cause actual events or results to differ materially from those projected
in the forward-looking statements, including, without limitation, risks
associated with general economic conditions; adverse industry events; marketing
costs; loss of markets; a change in the volume-weighted average trading price of
the Aurora Shares from the date hereof to the Effective Date; market or other
events limiting the liquidity of the Aurora Shares; inability to realize
anticipated synergies; future legislative and regulatory developments involving
cannabis; inability to access sufficient capital from internal and external
sources, and/or inability to access sufficient capital on favourable terms; the
cannabis industry in Canada and elsewhere generally; income tax and regulatory
matters; the ability of ICC and Aurora to implement their business strategies;
competition; crop failure; currency and interest rate fluctuations and other
risks. Readers are cautioned that the foregoing list is not exhaustive.
Management provides forward-looking statements because it
believes they provide useful information to readers when considering their
investment objectives and cautions readers that the information may not be
appropriate for other purposes. Consequently, all of the forward-looking
statements made in this news release are qualified by these cautionary
statements and other cautionary statements or factors contained herein, and
there can be no assurance that the actual results or developments will be
realized or, even if substantially realized, that they will have the expected
consequences to, or effects on, ICC or Aurora. In particular, there can be no
assurance that the Transaction will be completed. Readers are further cautioned
not to place undue reliance on forward-looking statements as there can be no
assurance that the plans, intentions or expectations upon which they are placed
will occur. Such information, although considered reasonable by management at
the time of preparation, may prove to be incorrect and actual results may differ
materially from those anticipated.
The foregoing share exchange ratio is for illustrative
purposes only: the actual number of Aurora Shares to be received by ICC
Shareholders will be determined based on the volume-weighted average trading
price of Aurora Shares on the TSX during the 20 trading days preceding the date
the Transaction is completed (with such 20 day period ending on the second last
TSX trading day immediately preceding the date the Transaction is
completed).
These forward-looking statements are made as of the date of
this news release and neither ICC nor Aurora assumes any obligation to update or
revise them to reflect subsequent information, events or circumstances or
otherwise, except as expressly required by applicable law.
Neither TSX, nor TSX-V, nor their Regulation Services
Provider (as that term is defined in the policies of Toronto Stock Exchange and
TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of
this release.
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/September2018/10/c2587.html
%SEDAR: 00025675E
For further information:
For Media concerning Aurora:
Heather MacGregor, +1.416.509.5416,
heather.macgregor@auroramj.com, www.auroramj.com; For Media
concerning ICC: Ian Robertson, Executive Vice President, Communication Strategy,
Kingsdale Advisors, +1.416.867.2333 (Work), +1.647.621.2646 (Cell),
irobertson@kingsdaleadvisors.com; For Aurora Investors: Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com, https://investor.auroramj.com; Rob
Kelly, +1.647.331.7228, rob.kelly@auroramj.com, https://investor.auroramj.com;
For Aurora U.S. Investors: Phil Carlson / Elizabeth Barker, KCSA Strategic
Communications, +1.212.896.1233 / +1.212.896.1203, pcarlson@kcsa.com /
ebarker@kcsa.com; For ICC Investors: Ian Robertson, Executive Vice President,
Communication Strategy, Kingsdale Advisors, +1.416.867.2333 (Work),
+1.647.621.2646 (Cell), irobertson@kingsdaleadvisors.com; Alejandro Antalich,
Chief Executive Officer, 598.2900.0000 ext. 404, ir@icclabs.com CO:
Aurora Cannabis Inc.
CNW 07:30e 10-SEP-18
AURORA CANNABIS INC.
as Borrower
- and -
THE LENDERS FROM TIME TO TIME PARTY TO THIS AGREEMENT
as
Lenders
- and -
BANK OF MONTREAL
as Administrative Agent
- and -
BANK OF MONTREAL
as Lead Arranger and Sole Bookrunner
|
|
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|
|
CREDIT AGREEMENT
|
|
|
|
August 29, 2018
|
|
|
|
|
TABLE OF CONTENTS
- ii -
- iii -
- iv -
[Execution Copy]
CREDIT AGREEMENT
This Agreement dated August 29, 2018 is made among:
AURORA CANNABIS INC.
as
Borrower
- and -
THE LENDERS FROM TIME TO TIME
PARTY TO THIS AGREEMENT
as Lenders
- and -
BANK OF MONTREAL
as
Administrative Agent
- and -
BANK OF MONTREAL
as Lead
Arranger and Sole Bookrunner
For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each party, the parties agree as
follows:
ARTICLE I -
INTERPRETATION
In this Agreement, the words and phrases set out in the CBA
Model Provisions (as hereinafter defined) shall have the respective meanings set
forth therein (subject to section 12.01 hereof). In addition, the following
words and phrases shall have the respective meanings set forth below:
"
Acceleration Date
" means the
earlier of (i) the date of the occurrence of an Insolvency Event in respect of
any Material Company; and (ii) the date on which the Borrower fails to repay all
or any portion of the Obligations pursuant to an Acceleration Notice issued by
the Agent.
"
Acceleration Notice
" is defined
in section 10.02.
"
Acquisition
" means (a) a
purchase or other acquisition by a Company of all or substantially all of the
assets (or any division or business line thereof) of any Person, or (b) a
purchase or other acquisition (whether by means of a merger, consolidation, or
otherwise) by any Company of all or substantially all of the shares or other
equity interests in any Person.
- 2 -
"
Advance
" means an extension of
credit by one or more of the Lenders to the Borrower pursuant to this Agreement,
including for greater certainty an extension of credit in the form of a Loan, a
Bankers' Acceptance, a BA Equivalent Loan or the issuance of a Letter of Credit.
"
Affiliate
" is defined in the
CBA Model Provisions.
"
Agent
" means BMO in its
capacity as the administrative agent hereunder, and its successors in such
capacity.
"
Agreement
" means this credit
agreement (including the Exhibits and Schedules) as it may be amended,
supplemented, replaced or restated from time to time.
"
Aggregate Actual Hedge
Liability
" means, on any date of determination, the net aggregate amount of
the Borrower's liability under all Hedge Transactions outstanding on such date
in the event of a default or termination thereunder, calculated in accordance
with the terms thereof (and for greater certainty, determined after netting any
amounts payable to the Borrower thereunder against amounts payable by the
Borrower thereunder).
"
AML Legislation
" means all
anti-money laundering, anti-terrorist financing, government sanction and "know
your client" Laws in effect in any jurisdiction in which any Company carries on
business or owns assets, including any guidelines or orders thereunder,
specifically including the
Proceeds of Crime (Money Laundering) and Terrorist
Financing Act
(Canada).
"
Annual Business Plan
" is
defined in section 7.04(e) .
"
Applicable Law
" is defined in
the CBA Model Provisions.
"
Applicable Margin
" means, in
respect of any Availment Option and in respect of any Fiscal Quarter, the
percentage in the column relating to such Availment Option in the following
table which corresponds to the applicable Total Funded Debt to EBITDA Ratio in
respect of such Fiscal Quarter, which percentage shall be subject to adjustment
from time to time as provided in section 5.01(d); provided that from and after
the Closing Date until the Conversion Date the Applicable Margin for each
Availment Option shall be based on pricing level 5 in the table below:
Pricing
Level
|
Total Funded
Debt to EBITDA
|
Prime Rate
Loan
|
Bankers’
Acceptance / BA
Equivalent Loan /
Letter of
Credit
|
Standby Fee
|
|
1
|
< 1.00:1
|
1.00%
|
2.25%
|
0.45%
|
|
2
|
>
1.00:1 < 1.50:1
|
1.25%
|
2.50%
|
0.50%
|
|
3
|
>
1.50:1 < 2.00:1
|
1.50%
|
2.75%
|
0.55%
|
|
4
|
>
2.00:1 < 2.50: 1
|
1.75%
|
3.00%
|
0.60%
|
|
5
|
>
2.50:1
|
2.00%
|
3.25%
|
0.65%
|
- 3 -
"
Associate
" has the meaning
ascribed thereto in the
Canada Business Corporations Act
.
"
Availment Option
" means a
method of borrowing which is available to the Borrower as provided herein.
"
BA Equivalent Loan
" means an
Advance in Canadian Dollars made by a Non-BA Lender to the Borrower in respect
of which the Borrower has issued a BA Equivalent Note.
"
BA Equivalent Note
" means a
promissory note payable by the Borrower to a Non-BA Lender in the form of
Exhibit "J" attached hereto.
"
BA Lender
" means a Lender
identified in Exhibit "A" attached hereto as a Lender which will accept Bankers'
Acceptances hereunder.
"
Bankers' Acceptance
" means a
bill of exchange or a blank non-interest bearing depository bill as defined in
the
Depository Bills and Notes Act
(Canada) drawn by the Borrower and
accepted by a BA Lender in respect of which the Borrower becomes obligated to
pay the face amount thereof to the holder (which may be a third party or such BA
Lender) upon maturity.
"
BIA
" means the
Bankruptcy
and Insolvency Act
(Canada).
"
BMO
" means Bank of Montreal and
its successors and permitted assigns.
"
Borrower
" means Aurora Cannabis
Inc., a corporation subsisting under the federal Laws of Canada.
"
Borrowing Base Certificate
"
means a certificate delivered by the Borrower to the Agent in the form of
Exhibit "F".
"
Business Day
" means any day on
which the Agent is open for over-the-counter business in both Toronto, Ontario
and Edmonton, Alberta, excluding Saturday, Sunday and any other day that is a
statutory holiday in Toronto, Ontario or Edmonton, Alberta.
"
Canadian Dollars
" or
"
CDN$
" means the lawful money of Canada.
"
Cannabis
" includes dried
marijuana, fresh marijuana, cannabis oil and starting materials with respect
thereto.
"
Cannabis Act
" means
An Act
respecting cannabis and to amend the Controlled Drugs and Substances Act, the
Criminal Code and other Acts
(and having the short title the "
Cannabis
Act
") which received Royal Assent on June 21, 2018 and is expected to come
into force on or about October 17, 2018 (formerly known as “Bill C-45”).
"
Cannabis-Related Activities
"
means any activities, including advertising or promotional activities, relating
to or in connection with the importation, cultivation, production, purchase,
distribution or sale of Cannabis or Cannabis-related products.
- 4 -
"
Cannabis Regulations
" means the
Access to Cannabis for Medical Purposes Regulations
under the
Controlled Drugs and Substances Act
(Canada) and all other regulations
made from time to time under the Cannabis Act or any other statute with respect
to Cannabis-Related Activities.
"
Capital Expenditures
" means
expenditures made directly or indirectly which are considered to be in respect
of the acquisition or leasing of capital assets in accordance with GAAP,
including the acquisition or improvement of Land, plant, machinery or equipment,
whether fixed or removable.
"
Capital Lease
" means any lease
of assets which in accordance with GAAP is required to be capitalized on the
balance sheet of the lessee.
"
Cash Taxes
" in respect of any
fiscal period means amounts actually paid by the Companies in such fiscal period
in respect of income and capital Taxes (whether relating to such fiscal period
or any other fiscal period).
"
CBA Model Provisions
" means the
model credit agreement provisions attached hereto as Exhibit "K", which have
been revised under the direction of the Canadian Bankers' Association Secondary
Loan Market Specialist Group from provisions prepared by The Loan Syndications
and Trading Association, Inc.
"
CDOR Rate
" means on any day the
annual rate of interest which is the rate determined as being the arithmetic
average of the quotations of all institutions listed in respect of the rate for
Canadian Dollar denominated bankers’ acceptances for the relevant period
displayed and identified as such on the "Reuters Screen CDOR Page" (as defined
in the International Swap Dealer Association, Inc. definitions, as modified and
amended from time to time) as of 10:00 a.m. Toronto, Ontario local time on such
day and, if such day is not a Business Day, then on the immediately preceding
Business Day (as adjusted by the Agent after 10:00 a.m. Toronto, Ontario local
time to reflect any error in a posted rate of interest or in the posted average
annual rate of interest with notice of such adjustment in reasonable detail
evidencing the basis for such determination being concurrently provided to the
Borrower); provided that if such rates are not available on the Reuters Screen
CDOR Page on any particular day, then the CDOR Rate on that day shall be the
average of the rates applicable to Canadian Dollar bankers’ acceptances for the
relevant period quoted for customers in Canada by the Agent as of 10:00 a.m.
Toronto, Ontario local time on such day; or if such day is not a Business Day,
then on the immediately preceding Business Day; and provided further that the
CDOR Rate shall not be less than zero.
"
Closing Date
" means the date on
which the first Advance is made hereunder.
"
Code of Conduct
" means the
document entitled “Aurora Cannabis Inc. Code of Business Conduct and Ethics”
adopted by the board of directors of the Borrower, a copy of which has been
provided to the Lenders.
"
Collateral
" means all property,
assets and undertaking of the Secured Companies encumbered by the Security,
together with all proceeds of the foregoing.
"
Commitment
" means, in respect
of any Lender, such Lender's commitment to make Advances to the Borrower under
all Facilities (or a Facility, if required by the context).
- 5 -
"
Companies
" means the Borrower
and all of its Subsidiaries from time to time; and "Company" means any of them
as the context requires.
"
Control
" is defined in the CBA
Model Provisions.
"
Conversion Date
" means the
earlier of the following dates: (i) if the Cannabis Act comes into force on
terms satisfactory to the Lenders before January 1, 2019, the end of the second
complete Fiscal Quarter following such implementation, and (ii) June 30, 2019 if
the Cannabis Act comes into force on terms satisfactory to the Lenders between
January 1, 2019 and June 30, 2019; or such other date as may be mutually agreed
among the Agent, the Lenders and the Borrower; provided that no Default, Event
of Default or Material Adverse Change shall have occurred and be continuing and
the Borrower shall be in compliance with all terms and conditions herein,
including all financial covenants which will apply after such date, and the
Borrower shall have provided a certificate to the Agent and the Lenders
confirming such compliance.
"
Convertible Debentures
" means
the convertible debentures issued by the Borrower pursuant to the trust
indenture made between the Borrower and Computershare Trust Company of Canada
dated March 9, 2018.
"Copyrights"
means all rights,
title and interests (and all related IP Ancillary Rights) arising under any
requirement of Law in copyrights and all mask work, database and design rights,
whether or not registered or published, all registrations and recordations
thereof and all applications in connection therewith.
“
Currency Hedge Transaction
”
mean an agreement made between the Borrower and a Lender for the purpose of
hedging currency risk, including a currency exchange agreement or a foreign
exchange forward contract.
“
Deeds of Hypothec
” means,
collectively, (i) the deeds of hypothec executed on or prior to the Closing Date
by any of the Secured Companies named therein, and (ii) each deed of hypothec
executed after the Closing Date by any existing or new Secured Company having
its domicile (within the meaning of the Civil Code of Québec) or Administrative
situated in the Province of Quebec, in each case in favor of the Agent acting in
the capacity of hypothecary representative (within the meaning of Article 2692
of the Civil Code of Québec) and in form and substance (x) substantially
consistent with the deed of hypothec referred to in the preceding clause (i), or
(y) otherwise reasonably satisfactory to the Agent, as each of such deeds of
hypothec may be amended, supplemented, replaced or otherwise modified from time
to time.
"
Default
" is defined in the CBA
Model Provisions.
"
Defined Benefit Pension Plan
"
means any Pension Plan which contains a "defined benefit provision" as defined
in subsection 147.1(1) of the
Income Tax Act
(Canada).
"
Distribution
" in respect of any
Company means any amount paid by such Company to or on behalf of its
shareholders, partners or unitholders or to any Related Person thereto,
including amounts paid in respect of dividends or profits, a return of capital
(including a redemption or purchase of shares for cancellation), management
fees, bonuses, commissions, directors' fees and payments of principal, interest
or other amounts on account of indebtedness, and whether such payments are made to such Persons
in their capacity as shareholders, partners, unitholders, directors, officers,
employees or creditors of such Company or otherwise, or any other direct or
indirect payment in respect of earnings or capital; provided however that the
following shall not be considered Distributions: payments made to directors,
officers and employees of the Companies from time to time in respect of
salaries, bonuses, commissions, reimbursement of expenses, payments under
profit-sharing and benefit plans and directors’ fees, in each case in the
ordinary course of business and in reasonable amounts; and (ii) payments made
pursuant to Permitted Related Person Transactions.
- 6 -
"
Draw Request
" means a notice in
the form of Exhibit "B" given by the Borrower to the Agent for the purpose of
requesting an Advance.
"
Early Maturity Date
" is defined
in section 2.04.
"
EBITDA
" means, in respect of
any fiscal period, the consolidated net income of the Borrower in such fiscal
period determined in accordance with GAAP (but excluding the following:
extraordinary or non-recurring income and gains, non-cash gains (such as
unrealized foreign exchange gains) and income of the Unsecured Subsidiaries
(except to the extent that dividends in respect of such income have been paid in
cash by such Unsecured Subsidiaries to a Secured Company); plus the following
amounts (to the extent such amounts were deducted in determining such
consolidated net income, and without duplication):
|
|
(a)
|
Interest, fees and expenses paid in connection with
Permitted Funded Debt;
|
|
|
|
|
|
|
(b)
|
income and capital taxes;
|
|
|
|
|
|
|
(c)
|
depreciation and amortization;
|
|
|
|
|
|
|
(d)
|
non-cash charges and expenses such as unrealized foreign
exchange losses and charges relating to the impairment of goodwill and
other intangible assets;
|
|
|
|
|
|
|
(e)
|
non-cash share-based compensation;
|
|
|
|
|
|
|
(f)
|
extraordinary non-recurring expenses or losses to the
extent approved by the Required Lenders in writing; and
|
|
|
|
|
|
|
(g)
|
any other expenses approved in writing by the Required
Lenders in their discretion;
|
and provided further that:
|
|
•
|
in respect of each Company which became a Subsidiary of
the Borrower in any fiscal period, EBITDA for such fiscal period shall be
determined as if such Company had been a Subsidiary of the Borrower
throughout the entire said fiscal period; and
|
|
|
|
|
|
|
•
|
in respect of each Company which ceased to be a
Subsidiary of the Borrower in any fiscal period, EBITDA for such fiscal
period shall be determined as if such Company had not been a Subsidiary of
the Borrower during such fiscal period.
|
- 7 -
"
Eligible Receivable
" in respect
of any Secured Company means an account receivable of such Company (in this
definition, individually called an "account") which satisfies all of the
following eligibility criteria:
|
|
(a)
|
the account arises from a bona fide, fully-completed
transaction consisting of the sale of goods or the provision of services
by the Company to an account debtor;
|
|
|
|
|
|
|
(b)
|
the account is subject to a First-Ranking Security
Interest held by the Agent pursuant to the Security and is not subject to
any other Lien except Permitted Liens;
|
|
|
|
|
|
|
(c)
|
if the account debtor is a Governmental Authority, all
requirements of applicable legislation have been satisfied in order that
the assignment of such Eligible Receivables in favour of the Agent shall
be valid and enforceable;
|
|
|
|
|
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(d)
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the account debtor is located in a Qualified
Jurisdiction;
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(e)
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the account debtor is not a Company or a Related Person
thereto;
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(f)
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the account is not in dispute or subject to any defence,
counterclaim or claim by the account debtor for credit, set-off, allowance
or adjustment;
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(g)
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the Company does not have an obligation to hold any
portion of the account in trust or as agent for any other Person (except
pursuant to a Statutory Lien securing obligations which are not
overdue);
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(h)
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an invoice relating to the account has been issued by the
Company and sent to the account debtor;
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(i)
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the account is not outstanding for more than ninety-one
(91) days from the date of the invoice relating thereto (regardless of the
due date specified in such invoice for payment);
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(j)
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the account debtor is not insolvent or subject to any
proceeding under Insolvency Legislation; and
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(k)
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the account is not subject to undue credit risk in the
opinion of the Required Lenders.
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"
Equity Issuance
" means an
issuance or sale by any Company of shares, partnership interests or other equity
interests, except any such issuance or sale (i) to any other Company, or (ii) to
management or employees of any Company under any employee stock option or stock
purchase plan stock appreciation rights plan, phantom stock plan or other
employee benefit plan or arrangement in existence from time to time.
"
Equivalent Amount
" means, in
relation to an amount in one currency, the amount in another currency that could
be purchased by the amount in the first currency, determined by reference to the
applicable Exchange Rate at the time of such determination.
"
Event of Default
" is defined in
section 10.01.
- 8 -
"
Exchange Rate
" means, on the
date of determination of any amount of Canadian Dollars to be converted into
another currency pursuant to this Agreement for any reason, or vice-versa, the
spot rate of exchange for converting Canadian Dollars into such other currency
or vice-versa, as the case may be, established by the Bank of Canada at
approximately 4:30 p.m. (Toronto time) on the date of such determination (or
such other date as may be specified herein).
"
Facilities
" means Facility A
and Facility B; and "
Facility
" means either of them as the context
requires.
"
Facility A
" is defined in
section 2.01.
"
Facility A Lenders
" means those
Lenders which have issued Commitments under Facility A.
"
Facility A Margin Limit
" is
defined in section 2.07.
"
Facility A Maximum Amount
"
means Fifty Million Dollars ($50,000,000).
"
Facility B
" is defined in
section 3.01.
"
Facility B Maximum Amount
"
means One Hundred Fifty Million Dollars ($150,000,000).
"
First-Ranking Security
Interest
" in respect of any Collateral means a Lien in such Collateral which
is registered as required under this Agreement to record and perfect the charges
contained therein and which ranks in priority to all other Liens in such
Collateral, except for any Permitted Liens which may have priority in accordance
with Applicable Law.
"
Fiscal Quarter
" means a fiscal
quarter of the Borrower, ending on the last day of September, December, March
and June in each year.
"
Fiscal Year
" means a fiscal
year of the Borrower, ending on the last day of June in each year.
"
Fixed Charge Coverage Ratio
"
means, in respect of any twelve (12) month fiscal period, the ratio of: (i)
EBITDA in such fiscal period less the aggregate of the following amounts in
respect of such fiscal period (without duplication): (A) Cash Taxes, (B)
Distributions paid in cash; (C) Investments made in Unsecured Subsidiaries and
(D) Capital Expenditures to the extent not financed by Permitted Funded Debt; to
(ii) Funded Debt Service in respect of such fiscal period.
"
Funded Debt
" in respect of any
Person means obligations of such Person which are considered to constitute debt
in accordance with GAAP, including indebtedness for borrowed money (in the case
of the Borrower, specifically including the Outstanding Principal Amount,
Subordinated Debt, obligations secured by Purchase-Money Security Interests and
obligations under Capital Leases), capitalized interest, and the redemption
price of any securities which are redeemable at the option of the holder, plus
the Aggregate Actual Hedge Liability at the time of determination; but excluding
the following: accounts payable, payroll accruals, accruals in respect of normal
business expenses and future income Taxes (both current and long-term).
"
Funded Debt Service
" means, in
respect of any fiscal period, without duplication: (i) the aggregate amount of
Interest paid or payable in respect of the Funded Debt of the Borrower on a
consolidated basis in respect of such fiscal period (but for greater certainty,
excluding any Interest which is capitalized and not
paid or payable during such fiscal period); plus (ii) the aggregate amount of
scheduled principal payments and scheduled Capital Lease payments paid or
payable in respect of the Funded Debt of the Borrower on a consolidated basis in
respect of such fiscal period (except the portion of any final payment due in
respect of such Funded Debt which constitutes a "balloon payment" and any amount
paid in connection with the exercise of an option to purchase equipment under a
Capital Lease).
- 9 -
"
GAAP
" means generally accepted
accounting principles in Canada as in effect from time to time as set forth in
the opinions and pronouncements of the relevant Canadian public and private
accounting boards and institutes which are applicable to the relevant Person and
the circumstances as of the date of determination, consistently applied
including, without limitation, International Financial Reporting Standards
adopted by the Accounting Standards Board of the Canadian Institute of Chartered
Accountants (which have been adopted by the Borrower).
"
Governmental Authority
" is
defined in the CBA Model Provisions, and for greater certainty includes Health
Canada.
"
Guarantee
" means any agreement
by which any Person assumes, guarantees, endorses, contingently agrees to
purchase or provide funds for the payment of, or otherwise becomes liable upon,
the obligation of any other Person, or agrees to maintain the net worth or
working capital or other financial condition of any other Person or otherwise
assures any creditor of such Person against loss, and shall include any
contingent liability under any letter of credit or similar document or
instrument.
"
Hazardous Materials
" means any
contaminant, pollutant, waste or substance that is likely to cause immediately
or at some future time harm or degradation to the surrounding environment or
risk to human health; and without restricting the generality of the foregoing,
including any pollutant, contaminant, waste, hazardous waste or dangerous goods
that is regulated by any Requirements of Environmental Law or that is
designated, classified, listed or defined as hazardous, toxic, radioactive or
dangerous or as a contaminant, pollutant or waste by any Requirements of
Environmental Law.
“
Hedge Transaction
” means an
Interest Rate Hedge Transaction or a Currency Hedge Transaction.
“
Hedging Obligations
” means all
obligations of the Borrower to the respective Lenders pursuant to or arising in
connection with Hedge Transactions.
"
Immaterial Unsecured
Subsidiary
" means an Unsecured Subsidiary which (i) owns assets having a
value of less than One Million Dollars ($1,000,000) and is not expected to own
assets having a greater value at any time prior to the Maturity Date; (ii) does
not have an annual net income greater than Five Hundred Thousand Dollars
($500,000) and is not expected to have annual net income in excess of such
amount in any fiscal year up to and including its fiscal year in which the
Maturity Date occurs; and (iii) is not material to the business, operations,
financial condition or properties of the Companies taken as a whole; as
designated in writing by the Borrower and confirmed by the Agent upon the
instructions of the Required Lenders.
- 10 -
"
Indemnitees
" means the Lenders,
the Agent and their respective successors and permitted assignees, any agent of
any of them (specifically including a receiver or receiver-manager) and the
respective officers, directors and employees of the foregoing.
"
Insolvency Event
" means, in
respect of any Person, the occurrence of any one or more of the following
events:
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such Person ceases to carry on its business; or commits
an act of bankruptcy or becomes insolvent (as such terms are used in the
BIA); or makes an assignment for the benefit of creditors, files a
petition in bankruptcy, makes a proposal or commences a proceeding under
Insolvency Legislation; or petitions or applies to any tribunal for, or
consents to, the appointment of any receiver, trustee or similar
liquidator in respect of all or a substantial part of its property; or
admits the material allegations of a petition or application filed with
respect to it in any proceeding commenced in respect of it under
Insolvency Legislation; or takes any corporate action for the purpose of
effecting any of the foregoing; or
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•
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any proceeding or filing is commenced against such Person
seeking to have an order for relief entered against it as debtor or to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding-up,
reorganization, arrangement, adjustment or composition of it or its debts
under any Insolvency Legislation, or seeking appointment of a receiver,
trustee, custodian or other similar official for it or any of its property
or assets; unless (i) such Person is diligently defending such proceeding
in good faith and on reasonable grounds as determined by the Required
Lenders and (ii) such proceeding does not in the reasonable opinion of the
Required Lenders materially adversely affect the ability of such Person to
carry on its business and to perform and satisfy all of its obligations;
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"
Insolvency Legislation
" means
legislation in any applicable jurisdiction relating to reorganization,
arrangement, compromise or re-adjustment of debt, dissolution or winding-up, or
any similar legislation, and specifically includes for greater certainty the
BIA, the
Companies' Creditors Arrangement Act
(Canada) and the
Winding-Up and Restructuring Act
(Canada).
"
Intellectual Property
" means
all rights, title and interests in intellectual property and all IP Ancillary
Rights relating thereto, including all Copyrights, Patents, Trademarks, Internet
Domain Names, Trade Secrets, industrial designs, integrated circuit
topographies, plant breeders’ rights and rights under IP Licenses.
"
Interest
" means interest on
loans, stamping fees in respect of bankers' acceptances, the difference between
the proceeds received by the issuers of bankers' acceptances and the amounts
payable upon the maturity thereof, issuance fees in respect of letters of
credit, and any other charges or fees in connection with the extension of credit
which are determined by reference to the amount of credit extended, plus standby
fees in respect of the unutilized portion of any credit facility; but for
greater certainty "Interest" shall not include agency fees, arrangement fees,
structuring fees, fees relating to the granting of consents, waivers,
amendments, extensions or restructurings, the reimbursement of costs and
expenses, and any similar amounts which may be charged from time to time in
connection with the establishment, administration or enforcement of the
Facilities.
- 11 -
“
Interest Rate Hedge
Transaction
” mean an agreement made between the Borrower and a Lender for
the purpose of hedging interest rate risk, including an interest rate exchange
agreements (commonly known as an “interest rate swap”) or a forward rate
agreement.
"
Interim Financial Statements
"
means, at any time, the unaudited financial statements of the Borrower, on a
consolidated and unconsolidated basis, in respect of the most recently completed
Fiscal Quarter (and also on a year-to-date basis in respect of such Fiscal
Quarter and all previous Fiscal Quarters in the same Fiscal Year) prepared in
accordance with GAAP except that such financial statements shall not include any
notes thereto and shall be subject to normal year-end adjustments.
"
Internet Domain Names
" means
all right, title and interest (and all related IP Ancillary Rights) in internet
domain names.
"
Investment
" means an investment
made or held by a Person, directly or indirectly, in another Person (whether
such investment was made by the first-mentioned Person in such other Person or
was acquired from a third party), including a contribution of capital and
including the acquisition or holding of the following: all or substantially all
of the assets used in connection with a business; common or preferred shares;
debt obligations; partnership interests; and investments in joint ventures;
provided however that if a transaction would satisfy the definition of "Capital
Expenditure" herein and also the definition of "Investment" herein, it shall be
deemed to constitute an Investment and not a Capital Expenditure.
"
IP Ancillary Rights
" means,
with respect to an item of Intellectual Property all foreign counterparts to,
and all divisionals, reversions, continuations, continuations-in-part, reissues,
reexaminations, renewals and extensions of, such Intellectual Property and all
income, royalties, proceeds and liabilities at any time due or payable or
asserted under or with respect to any of the foregoing or otherwise with respect
to such Intellectual Property, including all rights to sue or recover at Law or
in equity for any past, present or future infringement, misappropriation,
dilution, violation or other impairment thereof, and, includes in each case, all
rights to obtain any other IP Ancillary Right.
"
IP License
" means all
contractual obligations (and all related IP Ancillary Rights), whether written
or oral, granting any right, title and interest in any Intellectual Property.
"
Issuing Bank
" means BMO.
"
Land
" means real property
(including a leasehold interest in land) and all buildings, improvements,
fixtures and plant situated thereon.
"
Landlord Agreement
" means an
agreement in form and substance satisfactory to the Agent given in favour of the
Agent by the landlord of a Material Leased Property and acknowledged by all
mortgagees of such landlord, which shall include the following provisions: the
landlord consents to the granting of a security interest in the lease by the
Secured Company which is a tenant thereunder in favour of the Agent and agrees
that the Agent may assign the lease to a third party with the landlord's consent
which shall not be unreasonably withheld; the landlord agrees to give written
notice to the Agent in respect of and a reasonable opportunity to cure any
default before terminating the lease; and the landlord agrees to waive (or
subordinate and defer the enforcement of) its right of distraint and any other
rights and remedies and any security it may hold in respect of any
property of the tenant located on such Material Leased Property or affixed to
such Material Leased Property which the tenant is entitled to remove under
Applicable Law or pursuant to the terms of the lease.
- 12 -
"
Laws
" means all statutes,
codes, ordinances, decrees, rules, regulations, municipal by-laws, judicial or
arbitral or administrative or ministerial or departmental or regulatory
judgments, orders, decisions, rulings or awards, or any provisions of such laws,
including general principles of common and civil law and equity or policies or
guidelines, to the extent such policies or guidelines have the force of law,
binding on the Person referred to in the context in which such word is used; and
"Law" means any of the foregoing.
"
Lenders
" means the lenders
identified in Exhibit "A" attached hereto and any other Persons which may from
time to time become lenders pursuant to this Agreement; and their respective
successors and permitted assigns.
"
Lender-Related Distress Event
"
means, with respect to any Lender or any Person that directly or indirectly
Controls such Lender (such Lender and each such Person being individually
referred to in this definition as a "distressed person"), (i) the commencement
of a voluntary or involuntary proceeding with respect to such distressed person
under any Insolvency Legislation, (ii) the appointment of a custodian,
conservator, receiver or similar official in respect of such distressed person
or any substantial part of its assets, (iii) a forced liquidation, merger, sale
or other change of Control of such distressed person supported in whole or in
part by Guarantees or other support (including, without limitation, the
nationalization or assumption of ownership or operating control of such
distressed person by any Governmental Authority), or (iv) such distressed person
makes a general assignment for the benefit of its creditors or is otherwise
adjudicated as, or determined by any Governmental Authority having regulatory
authority over such distressed person or its assets to be, insolvent, bankrupt,
or deficient in meeting any capital adequacy or liquidity standard of any such
Governmental Authority.
"
Letter of Credit
" means a
stand-by letter of guarantee or documentary letter of credit.
"
Lien
" means: (i) a lien,
charge, mortgage, hypothec, pledge, security interest or conditional sale
agreement; (ii) an assignment, lease, consignment, trust or deemed trust that
secures payment or performance of an obligation; (iii) a garnishment; (iv) any
other encumbrance of any kind; and (v) any commitment or agreement to enter into
or grant any of the foregoing.
"
Loan
" means a Prime Rate Loan
or an extension of credit under the Swingline (other than the issuance of a
Letter of Credit).
"
Loan Documents
" collectively,
this Agreement, the Security, any promissory notes issued by the Borrower to the
Agent or the Lenders hereunder, all agreements relating to Hedge Transactions,
all Service Agreements, any certificate completed and executed by any Secured
Company and all other certificates, instruments, agreements and other documents
delivered, or to be delivered, by a Secured Company to the Agent or the Lenders
or any of them, as applicable, under or in connection with this Agreement or the
Facilities, and any fee letters entered into between the Borrower and the Agent
in respect of fees payable to the Agent or the Lenders.
"
MasterCard Line
" is defined in
section 4.02.
- 13 -
"
Material Adverse Change
" means
any change or event which: (i) constitutes a material adverse change in the
business, operations, financial condition or properties of the Companies taken
as a whole; or (ii) materially impairs the Companies' ability, taken as a whole,
to timely and fully perform any of their material obligations under the Loan
Documents, or (iii) materially impairs the ability of the Agent and the Lenders
to enforce their rights and remedies under this Agreement or the Security.
"
Material Agreements
" means each
agreement listed in Schedule 6.01(n) hereto and each other agreement made
between any Company and another Person from time to time which if terminated
would result, or would have a reasonable likelihood of resulting, in a Default,
Event of Default or a Material Adverse Change.
"
Material Company
" means a
Company which is not an Immaterial Unsecured Company.
"
Material Leased Properties
"
means all Land leased by the Secured Companies as tenants from time to time
which the Required Lenders acting reasonably consider to be material,
specifically including as at the date of this Agreement the leased Land
described in Schedule 6.01(k) attached hereto, but excluding Land leased solely
for office purposes and excluding any individual parcel of leased Land in
respect of which the annual gross rent is less than Two Million Dollars
($2,000,000).
"
Material Permit
" means each
licence or permit listed in Schedule 6.01(h) hereto and each other licence,
permit, approval, registration or qualification granted to or held by any
Material Company which if terminated would result, or would have a reasonable
likelihood of resulting, in a Default, Event of Default or a Material Adverse
Change.
"
Maturity Date
" means the
earlier of (i) the date which is three (3) years after the date of this
Agreement; and (ii) the Early Maturity Date.
"
Medical Cannabis Qualified
Jurisdiction
" means any country (i) which is approved in writing by the
Required Lenders in their discretion and (ii) in which it is legal in all
political subdivisions therein (including for greater certainty on a federal,
state and municipal basis) to undertake Medical Cannabis-Related Activities, as
confirmed by a legal opinion provided by the Borrower's counsel in such
jurisdiction in form and substance satisfactory to the Agent and the Lenders.
The Required Lenders may in their discretion from time to time (i) upon receipt
of a written request by the Borrower, designate any jurisdiction a Medical
Cannabis Qualified Jurisdiction provided that all above criteria set have been
satisfied; and (ii) revoke the designation of any jurisdiction as a Medical
Cannabis Qualified Jurisdiction by written notice to the Borrower if the
condition set out in clause (ii) above is no longer satisfied. Canada is a
Medical Cannabis Qualified Jurisdiction as at the date of this Agreement.
"
Medical Cannabis-Related
Activities
" means any activities, including advertising or promotional
activities, relating to or in connection with the importation, cultivation,
production, purchase, distribution or sale of Cannabis or Cannabis-related
products solely for medical purposes.
"
Minimum Cash Ratio
" is defined
in section 7.03(a) .
- 14 -
"
Monthly Compliance Certificate
"
means a certificate delivered by the Borrower to the Agent in the form of
Exhibit "G".
"
Non-BA Lender
" means a Lender
identified in Exhibit "A" attached hereto as a Lender which will make BA
Equivalent Loans instead of accepting Bankers' Acceptances hereunder.
"
Non-Funding Lender
" means any
Lender (i) that has failed to fund any payment or Advance required to be made by
it hereunder or to purchase all participations required to be purchased by it
hereunder and under the Loan Documents, or (ii) that has given verbal or written
notice to the Borrower, the Agent or any other Lender, or has otherwise publicly
announced, that it believes that it may be unable to fund advances under one or
more credit agreements to which it is a party, or (iii) with respect to which
one or more Lender-Related Distress Events has occurred, or (iv) with respect to
which the Agent believes, acting reasonably, that such Lender has defaulted or
may default in fulfilling its obligations (whether as an agent, lender or letter
of credit issuer) under one or more other credit agreements to which it is a
party, or (v) with respect to which the Agent believes, acting reasonably, that
there is a reasonable chance that such Lender will fail to fund any payment or
Advance required to be made hereunder.
"
Non-Medical Cannabis-Related
Activities
" means Cannabis-Related Activities other than Medical
Cannabis-Related Activities.
"
Non-Medical Cannabis Qualified
Jurisdiction
" means any country (i) which is approved in writing by the
Required Lenders in their discretion and (ii) in which it is legal in all
political subdivisions therein (including for greater certainty on a federal,
state and municipal basis) to undertake Non-Medical Cannabis-Related Activities,
as confirmed by a legal opinion provided by the Borrower's counsel in such
jurisdiction in form and substance satisfactory to the Agent and the Lenders.
The Required Lenders may in their discretion from time to time (i) upon receipt
of a written request by the Borrower, designate any jurisdiction a Non-Medical
Cannabis Qualified Jurisdiction provided that all above criteria set have been
satisfied; and (ii) revoke the designation of any jurisdiction as a Non-Medical
Cannabis Qualified Jurisdiction by written notice to the Borrower if the
condition set out in clause (ii) above is no longer satisfied. Canada is not a
Non-Medical Cannabis Qualified Jurisdiction as at the date of this Agreement,
but shall be deemed to be a Non-Medical Cannabis Qualified Jurisdiction upon the
coming into force of the Cannabis Act.
"
Non-Swingline Tranche
" means
the portion of Facility A other than the Swingline.
"
Obligations
" means, at any time
and without duplication: (i) all direct and indirect, contingent and absolute
indebtedness, obligations and liabilities of the Companies to the Agent and the
Lenders (or if the context requires, to any Lender) under or in connection with
this Agreement and the other Loan Documents (specifically including for greater
certainty all Guarantees provided hereunder) at such time, specifically
including the Outstanding Principal Amount, all accrued and unpaid Interest
thereon, and all fees, expenses and other amounts payable pursuant to this
Agreement and the Loan Documents; plus (ii) indebtedness outstanding under the
MasterCard Line at such time; plus (iii) the Hedging Obligations at such time;
plus (iv) all obligations under Service Agreements at such time; provided that
if otherwise specified or required by the context, "
Obligations
" shall
mean any portion of the foregoing.
- 15 -
"
Outstanding Principal Amount
"
means, at any time, the aggregate of the Borrower's obligations in respect of
all Advances made under the Facilities (or a Facility if the context requires)
which have not been repaid or satisfied at such time, determined as follows: (i)
in the case of Prime Rate Loans, the principal amount thereof; (ii) in the case
of Bankers' Acceptances, BA Equivalent Notes and Letters of Credit, the face
amount thereof; and (iii) in the case of Hedge Transactions, the Aggregate
Actual Hedge Liability.
"
Owned Properties
" means all
Land owned by the Secured Companies from time to time, specifically including as
at the date of this Agreement the Land described in Schedule 6.01(j) attached
hereto.
"
Patents
" means all rights,
title and interests (and all related IP Ancillary Rights) arising under any
requirement of Law in or relating to patents and applications therefor.
"
Pension Plan
" means (i) a
"pension plan" or "plan" which is subject to the funding requirements of
applicable pension benefits legislation in any jurisdiction, or (ii) any pension
benefit plan or similar arrangement applicable to employees of any Company.
"
Permitted Acquisition
" means an
Acquisition of shares or other equity interests in a Person (referred to herein
as a "share purchase"), or an Acquisition of assets of a Person not in the
ordinary course of business (referred to herein as an "asset purchase"), in
either case if all of the following criteria are satisfied (except to the extent
otherwise agreed in writing by the Required Lenders in their discretion):
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the Required Lenders acting reasonably shall have
provided their prior written consent to such Acquisition after conducting
such due diligence they may consider appropriate in the circumstances (for
greater certainty, specifically including in respect of financial matters,
the corporate and capital structure of such Person, key management, and
business, environmental, regulatory, tax and legal matters, and the
Borrower shall provide all information requested by the Required Lenders
in connection with such due diligence at least thirty (30) days prior to
the proposed completion of such Acquisition); provided that such prior
written consent shall not be required in respect of a Small Acquisition if
the purchase price for such Small Acquisition and all other Small
Acquisitions in the same Fiscal Year, plus the amount of any Funded Debt
assumed in connection with such Small Acquisition and all other Small
Acquisitions in the same Fiscal Year, is less than
[Redacted:
Threshold]
;
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such Person is engaged in a business similar to
the business conducted by the Borrower;
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if the Acquisition involves a hostile or unsolicited
take-over, no portion of the Facilities is used, directly or indirectly,
in connection with the financing of the Acquisition unless approved by all
Lenders in their sole discretion; and without limiting the Lenders' said
discretion any such approval will not be provided before the Conversion
Date;
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the Acquisition shall be accretive to EBITDA on a twelve
month
pro forma
prospective basis, after giving effect to (i)
normalization adjustments and (ii)
pro forma
synergies reasonably
expected to result from such Acquisition, in each case as may be advised
by the Borrower and approved by the Required Lenders;
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- 16 -
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in the case of a share purchase, immediately
thereafter such Person will be a wholly- owned Subsidiary of the Borrower;
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in the case of a share purchase, upon the completion of
such Acquisition (i) all Funded Debt (except Funded Debt which will
constitute Permitted Funded Debt hereunder) of such Person shall be repaid
and all Liens (except Liens which will constitute Permitted Liens
hereunder) affecting the assets of such Person shall be released and
discharged; and (ii) such Person shall provide a Guarantee and all other
Security required herein to be provided by a Subsidiary of the Borrower
hereunder (including registrations, searches, legal opinions and ancillary
documentation);
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in the case of an asset purchase, upon the completion of
such transaction (i) all Funded Debt (except Funded Debt which will
constitute Permitted Funded Debt hereunder) secured by the acquired assets
shall be repaid and all Liens (except Liens which will constitute
Permitted Liens hereunder) affecting such assets shall be released and
discharged; and (ii) all Security required herein to be provided to the
Agent in respect of such assets (including registrations, searches, legal
opinions and ancillary documentation) shall be provided;
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the Acquisition does not involve the assumption of any
material environmental liabilities, and all representations and warranties
contained herein with respect to environmental matters shall be true and
correct both immediately before and immediately after such Acquisition;
and if as a result of the Acquisition any Company will acquire ownership
of any Land, the Borrower shall have provided an environmental
questionnaire in form and substance satisfactory to the Agent in respect
of such Land which evidences compliance with all such representations and
warranties;
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if the acquired business includes any Medical
Cannabis-Related Activities, the Company which will carry on the acquired
business will own assets and carry on business only in one or more Medical
Cannabis Qualified Jurisdictions;
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•
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if the acquired business includes any Non-Medical
Cannabis-Related Activities, the Company which will carry on the acquired
business will own assets and carry on business only in one or more
Non-Medical Cannabis Qualified Jurisdictions;
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•
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the Borrower is in compliance with all covenants and
representations and warranties under this Agreement and will remain in
compliance after giving effect to such Acquisition; and no Default, Event
of Default or Material Adverse Change shall have occurred and be
continuing or would result from the completion of such Acquisition;
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•
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if the Borrower proposes to incur Subordinated
Debt to finance all or any portion of such Acquisition, the terms and
conditions of such Subordinated Debt shall be satisfactory to the Required
Lenders, and the holder(s) of such Subordinated Debt shall enter into a
subordination and postponement agreement with the Agent containing terms
and conditions contemplated in the definition of "Subordinated Debt"
herein;
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- 17 -
and provided further that if any such
transaction would constitute both a Capital Expenditure and a Permitted
Acquisition, it shall be deemed to constitute a Permitted Acquisition and not a
Capital Expenditure.
"
Permitted Funded Debt
" means,
without duplication: (i) the Outstanding Principal Amount; (ii) indebtedness of
the Borrower to each holder of a Bankers' Acceptance (and for greater certainty,
the Borrower's contingent obligation to each Lender which has accepted a
Bankers' Acceptance comprises part of the Outstanding Principal Amount); (iii)
indebtedness of any Company to another Company; (iv) Subordinated Debt; (v)
Funded Debt of the Companies secured by Permitted Liens; and (vi) Unsecured
Subsidiaries’ Permitted Project Debt.
"
Permitted Liens
" means:
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(a)
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Statutory Liens in respect of any amount which is not at
the time overdue;
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(b)
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Statutory Liens in respect of any amount which may be
overdue but the validity of which is being contested in good faith and in
respect of which reserves have been established in accordance with
GAAP;
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(c)
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Liens or rights of distress reserved in or exercisable
under any lease for rent not at the time overdue or for compliance with
the terms of such lease not at the time in default; and security deposits
given under leases not in excess of six (6) months' rent;
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(d)
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any obligations or duties affecting any Land due to any
public utility or to any municipality or government, or to any statutory
or public authority, with respect to any franchise, grant, licence or
permit in good standing and any defects in title to structures or other
facilities arising solely from the fact that such structures or facilities
are constructed or installed on Land under government permits, leases or
other grants in good standing; which obligations, duties and defects in
the aggregate do not materially impair the use of such property,
structures or facilities for the purpose for which they are
held;
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(e)
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Liens incurred or deposits of cash made or pledged to
secure obligations under workers' compensation legislation or similar
legislation, or in connection with contracts, bids, tenders or
expropriation proceedings, surety or appeal bonds, costs of litigation
when required by Law, public and statutory obligations, and
warehousemen's, storers', repairers', carriers' and other similar Liens
and deposits;
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(f)
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security given to a public utility or any municipality or
government or to any statutory or public authority to secure obligations
incurred to such utility, municipality, government or other authority in
the ordinary course of business and not at the time overdue;
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(g)
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Liens and privileges arising out of a judgment or an
award (not otherwise constituting a Default) in respect of which an appeal
or proceeding for review has been commenced and a stay of execution
pending such appeal or proceedings for review has been obtained, and in
respect of which reserves have been established in accordance with
GAAP;
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- 18 -
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(h)
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any Lien affecting any Land arising in connection with
the construction or improvement of such Land or arising out of the
furnishing of materials or supplies therefor, provided that such Lien
secures moneys not at the time overdue (or if overdue, the validity of
which is being contested in good faith and in respect of which reserves
have been established in accordance with GAAP), notice of such Lien has
not been given to the Agent or any Lender and such Lien has not been
registered against title to such Land;
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(i)
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Liens affecting any Land arising in connection with
registered restrictions, covenants, land use contracts, building schemes,
declarations of covenants, conditions and restrictions, servicing
agreements in favour of any Governmental Authority, easements,
rights-of-way, servitudes or other similar rights in or with respect to
such Land (including open space and conservation easements, restrictions
or similar agreements and rights of way and servitudes for railways,
water, sewer, drainage, gas and oil pipelines, electricity, light, power,
telephone, telegraph, internet or cable television services and utilities)
granted to or reserved by other Persons or properties, which, in the
aggregate, do not materially impair the use of such Land for its intended
purposes or the operation of the business thereon, and provided that same
have been complied with;
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(j)
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Liens affecting any Land arising in connection with site
plan agreements, subdivision agreements, development agreements and
similar instruments registered or recorded in the ordinary course of
business which do not, in the aggregate, materially impair the use of such
Land for its intended purposes or the operation of the business thereon,
and provided that same have been complied with;
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(k)
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Liens affecting any Land arising in connection with any
right reserved to or vested in any Governmental Authority, by the terms of
any permit, licence, certificate, order, grant, classification (including
any zoning Laws and ordinances and similar legal requirements),
registration or other consent, approval or authorization acquired by such
Person from any Governmental Authority or by any Law, to terminate any
such permit, licence, certificate, order, grant, classification,
registration or other consent, approval or authorization or to require
annual or other payments as a condition to the continuance thereof and
which, in the aggregate, do not materially impair the use of such Land for
its intended purposes or the operation of the business thereon, and
provided that same have been complied with;
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(l)
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Liens affecting any Land arising in connection with the
reservations, limitations, provisos and conditions, if any, expressed in
any grants of such Land from any Governmental Authority, which, in the
aggregate, do not materially impair the use of such Land for its intended
purposes or the operation of the business thereon, and provided that same
have been complied with;
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(m)
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Permitted Purchase-Money Security Interests;
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(n)
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Liens affecting the assets of the Unsecured Companies as
security for Unsecured Subsidiaries’ Permitted Project Debt;
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(o)
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Liens securing Subordinated
Debt;
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- 19 -
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(p)
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the Specific Permitted Liens; and
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(q)
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the Security;
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provided that the use of the term
"Permitted Liens" to describe the foregoing Liens shall mean that such Liens are
permitted to exist (whether in priority to or subsequent in priority to the
Security, as determined by Applicable Law); and for greater certainty such Liens
shall not be entitled to priority over the Security by virtue of being described
in this Agreement as "Permitted Liens".
"
Permitted Purchase-Money Security
Interests
" means Purchase-Money Security Interests incurred or assumed in
connection with the purchase, leasing or acquisition of capital equipment in the
ordinary course of business and without resulting in a contravention of any
applicable provisions of this Agreement; and provided further that the aggregate
amount thereof incurred or assumed in each Fiscal Year does not exceed Two
Million Dollars ($2,000,000).
"
Permitted Related Person
Transaction
" means any transaction, contract or other dealing (i) between
two or more Companies, each of which has provided all Security required to be
provided by it hereunder; (ii) relating to Subordinated Debt; or (iii) between
any Company and a Related Person thereto in the ordinary course of business upon
commercially reasonable terms and conditions.
"
Person
" is defined in the CBA
Model Provisions.
"
Potential Statutory Priority
Amount
" at any time means the amount of all employee source deductions,
goods and services tax and all other similar amounts payable by the Companies at
such time which have not been paid or remitted when due and could result in a
Statutory Lien ranking in priority to or
pari passu
with the Security.
"
Prime Rate
" means the greater
of the following: (i) the rate of interest announced from time to time by BMO as
its reference rate then in effect for determining rates of interest on Canadian
dollar loans to its customers in Canada and designated as its prime rate; and
(ii) the thirty (30) day CDOR Rate plus one-half percent (0.5%) per annum.
"
Prime Rate Loan
" means a loan
made by a Lender to the Borrower in Canadian Dollars in respect of which
interest is determined by reference to the Prime Rate, but excluding Advances in
the form of BA Equivalent Loans.
"
Proceeds of Realization
", in
respect of the Security or any portion thereof, means all amounts received by
the Agent and any Lender in connection with:
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•
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any realization thereof, whether occurring as a
result of enforcement or otherwise;
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•
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any sale, expropriation, loss or damage or
other disposition of the Collateral or any portion thereof (other than a
disposition of Collateral made pursuant to section 7.02(d)); and
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- 20 -
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•
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the dissolution, liquidation, bankruptcy or
winding-up of any Company or any other distribution of its assets to
creditors;
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and all other amounts which are
expressly deemed to constitute "Proceeds of Realization" in this Agreement.
"
Properties
" means the Owned
Properties and the Material Leased Properties.
"
Proportionate Share
" in respect
of any Lender means:
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•
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in the context of such Lender's obligation to make
Advances under the Non-Swingline Tranche, such Lender's Commitment to make
Advances under the Non-Swingline Tranche divided by the aggregate amount
of all Lenders' Commitments to make Advances under the Non-Swingline
Tranche;
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•
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in the context of such Lender's obligation to make
Advances under Facility B, such Lender's Commitment to make Advances under
Facility B divided by the aggregate amount of all Lenders' Commitments to
make Advances under Facility B;
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•
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in the context of such Lender's entitlement to receive a
portion of the standby fee in respect of the Non-Swingline Tranche, such
Lender's Commitment to make Advances under the Non-Swingline Tranche
divided by the aggregate amount of all Lenders' Commitments to make
Advances under the Non-Swingline Tranche;
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•
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subject to section 11.03, in the context of any Lender's
entitlement to receive payments of principal, interest or fees (other than
standby fees) under the Non-Swingline Tranche, the Outstanding Principal
Amount due to such Lender under the Non-Swingline Tranche divided by the
aggregate amount of the Outstanding Principal Amount due to all Lenders
under the Non-Swingline Tranche;
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•
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subject to section 11.03, in the context of any Lender's
entitlement to receive payments of principal, interest or fees under
Facility B, the Outstanding Principal Amount due to such Lender under
Facility B divided by the aggregate amount of the Outstanding Principal
Amount due to all Lenders under Facility B; and
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•
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in any other context, such Lender's Commitment
divided by the aggregate of all Lenders' Commitments.
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"
Purchase-Money Security
Interest
" means (i) a Capital Lease; or (ii) a Lien on any property or asset
which is created, issued or assumed to secure the unpaid purchase price thereof,
provided that such Lien is restricted to such property or asset (and all
additions thereto, replacements and proceeds thereof) and secures an amount not
in excess of the purchase price thereof and any interest and fees payable in
respect thereof.
"
Qualified Currency
" means, in
respect of any Qualified Jurisdiction, the legal tender of such Qualified
Jurisdiction.
"
Qualified Jurisdiction
" means a
Medical Cannabis Qualified Jurisdiction or a Non-Medical Cannabis Qualified
Jurisdiction.
- 21 -
"
Quarterly Compliance
Certificate
" means a certificate delivered by the Borrower to the Agent in
the form of Exhibit "H".
"
Related Person
" in relation to
any Person means a Subsidiary, Affiliate, Associate or employee of such Person.
"
Repayment
" means a repayment by
the Borrower on account of the Outstanding Principal Amount.
"
Repayment Notice
" means a
notice delivered by the Borrower to the Agent committing it to make a Repayment,
in the form of Exhibit "E".
"
Required Lenders
" means, (i) at
any time prior to the occurrence of an Event of Default which is continuing, any
two or more Lenders which have issued Commitments hereunder representing
two-thirds (2/3) or more of the aggregate amount of all Lenders' Commitments;
and (ii) at any time after the occurrence of an Event of Default which is
continuing, any two or more Lenders which have made Advances representing
two-thirds (2/3)or more of the total amount of the Outstanding Principal Amount
under the Facilities; provided however that if at any time there are only two
(2) Lenders under this Agreement, "Required Lenders" shall mean both such
Lenders, and if at any time there is only one (1) Lender under this Agreement,
"Required Lenders" shall mean such Lender.
"
Requirements of Environmental
Law
" means: (i) obligations under common law; (ii) requirements imposed by
or pursuant to statutes, regulations and by-laws whether presently or hereafter
in force; (iii) directives, policies and guidelines issued or relied upon by any
Governmental Authority to the extent such directives, policies or guidelines
have the force of law; (iv) permits, licenses, certificates and approvals from
Governmental Authorities which are required in connection with air emissions,
discharges to surface or groundwater, noise emissions, solid or liquid waste
disposal, the use, generation, storage, transportation or disposal of Hazardous
Materials; and (v) requirements imposed under any clean-up, compliance or other
order made pursuant to any of the foregoing, in each and every case relating to
environmental, health or safety matters including all such obligations and
requirements which relate to (A) solid, gaseous or liquid waste generation,
handling, treatment, storage, disposal or transportation of Hazardous Materials
and (B) exposure to Hazardous Materials.
"
Responsible Person
" means (i)
an officer or director of any Company or (ii) any other Person required to hold
a security clearance pursuant to the
Access to Cannabis for Medical Purposes
Regulations
under the
Controlled Drugs and Substances Act
(Canada),
the Cannabis Act or the Cannabis Regulations.
"
Rollover
" means the renewal of
an Availment Option upon its maturity in the same form.
"
Rollover Notice
" means a notice
substantially in the form of Exhibit "C" given by the Borrower to the Agent for
the purpose of requesting a Rollover.
“
Sanctions
” means the sanctions
laws, regulations, embargoes or restrictive measures administered, enacted or
enforced by any Sanctions Authority.
- 22 -
“
Sanctions Authority
” means
Canada or any other country having jurisdiction over any of the Companies or the
respective Governmental Authorities of any of the foregoing.
“
Sanctioned Entity
” means (a) a
country or a government of a country, (b) an agency of the government of a
country, (c) an organization directly or indirectly controlled by a country or
its government, (d) a Person resident in or determined to be resident in a
country, in each case, that is subject to a sanctions program administered and
enforced by a Sanctions Authority.
“
Sanctioned Person
” means a
Person that is, or is owned or Controlled by Persons that are, the subject of
any Sanctions.
"
Secured Companies
" means the
Borrower and the Secured Subsidiaries.
"
Secured Subsidiaries
" means all
present and future Subsidiaries of the Borrower except the Unsecured
Subsidiaries.
"
Security
" means all Guarantees,
security agreements, mortgages, debentures and other documents required to be
provided to the Agent or the Lenders pursuant to Article VIII and all other
documents and agreements delivered by the Secured Companies and any other
Persons to the Agent for the benefit of the Lenders from time to time as
security for the payment and performance of the Obligations, and the security
interests, assignments and Liens constituted by the foregoing.
"
Service Agreements
" is defined
in section 4.03.
"
Small Acquisition
" means an
Acquisition in respect of which the following criteria are satisfied: (A) the
purchase price for such Acquisition plus the amount of any Funded Debt assumed
in connection therewith is less than
[Redacted: Threshold]
.
"
Solvent
" means, with respect to
any Company as of the date of determination, (i) the aggregate property of such
Company is sufficient, if disposed of at a fairly conducted sale under legal
process, to enable payment of all its obligations, due and accruing due; (ii)
such Company is able to meet its obligations as they generally become due; and
(iii) such Company has not ceased paying its current obligations in the ordinary
course of business as they generally become due; for purposes of this
definition, the amount of any contingent obligation at such time shall be
computed as the amount that, in light of all of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability; provided however that with respect to any
Company incorporated or organized under the Laws of a jurisdiction other than
Canada, such Company shall be considered "Solvent" if it satisfies the foregoing
requirements and also satisfies all other solvency requirements under Applicable
Law in such jurisdiction.
"
Specific Permitted Liens
" means
the Liens described in Schedule 6.01(i), as such Liens may be amended or
replaced from time to time on substantially similar terms and conditions
provided that the principal amount of the indebtedness secured thereby is not
increased.
"
Statutory Lien
" means a Lien in
respect of any property or assets of a Company created by or arising pursuant to
any applicable legislation in favour of any Governmental Authority to secure any
obligation, including a Lien for the purpose of securing such Company's
obligation to deduct and remit employee source deductions
and goods and services tax pursuant to the
Income Tax Act
(Canada), the
Excise Tax Act
(Canada), the Canada Pension Plan (Canada), the
Employment Insurance Act
(Canada) and any legislation in any jurisdiction
similar to or enacted in replacement of the foregoing from time to time.
- 23 -
"
Subordinated Debt
" means (i)
the Borrower’s indebtedness under the Convertible Debentures and (ii) any other
indebtedness of any Company to any Person which the Required Lenders in their
sole discretion have consented to in writing and in respect of which the holder
thereof has entered into a subordination and postponement agreement in favour of
the Agent in form and substance satisfactory to the Agent and registered in all
places where necessary or desirable to protect the priority of the Security,
which shall provide (among other things) that: (A) the maturity date of such
indebtedness is later than the Maturity Date; (B) the holder of such
indebtedness may not receive any payments on account of principal or interest
thereon (except to the extent, if any, expressly permitted therein); (C) any
security held in respect of such indebtedness is subordinated to the Security;
(D) the holder of such indebtedness may not take any enforcement action in
respect of any such security (except to the extent, if any, otherwise expressly
provided therein) without the prior written consent of the Agent; and (E) any
enforcement action taken by the holder of such indebtedness will not interfere
with the enforcement action (if any) being taken by the Agent in respect of the
Security.
"
Subsidiary
" means a business
entity which is Controlled, directly or indirectly, by another business entity
(as used herein, "business entity" includes a corporation, company, partnership,
limited partnership, trust or joint venture); and for greater certainty includes
a Subsidiary of a Subsidiary.
"
Substitution
" means the
substitution of one Availment Option for another, and does not constitute a
fresh or new Advance.
"
Substitution Notice
" means a
notice substantially in the form of Exhibit "D" given by the Borrower to the
Agent for the purposes of requesting a Substitution.
"
Swingline
" is defined in
section 2.08.
"
Swingline Commitment
" means the
commitment of the Swingline Lender to extend credit under the Swingline up to
the Swingline Limit, and comprising a portion of such Lender’s Facility A
Commitment.
"
Swingline Lender
" means BMO and
its successors and permitted assigns in such capacity, or any other Lender
appointed in writing from time to time by the Required Lenders.
"
Swingline Limit
" means Five
Million Dollars ($5,000,000).
"
Tangible Net Worth
" means the
shareholders' equity of the Borrower on a consolidated basis determined in
accordance with GAAP (specifically including for greater certainty any
accumulated retained earnings and contributed surplus), plus or minus any
unrealized foreign currency gains or losses, plus any Subordinated Debt which
has also been assigned by the holders thereof in favour of the Agent as security
for the Obligations, less any amounts payable by the Unsecured Companies, and
less any value attributed to assets considered by the Lenders to be intangible
assets such as, but not limited to, goodwill, long-term Investments, leasehold
improvements, organization expenses,
Intellectual Property, licenses, deferred costs, and deferred charges.
- 24 -
"
Taxes
" is defined in the CBA
Model Provisions.
"
Total Funded Debt
" means, at
any time, the Funded Debt of the Borrower on a consolidated basis at such time,
specifically including for greater certainty the Outstanding Principal Amount
and Subordinated Debt.
“
Total Funded Debt to EBITDA
Ratio
” means, at any time, the ratio of (i) Total Funded Debt at such time
to (ii) EBITDA in the immediately preceding twelve (12) month period.
"
Trade Secrets
" means all right,
title and interest (and all related IP Ancillary Rights) arising under any
requirement of Law in or relating to trade secrets.
"
Trademarks
" means all right,
title and interest (and all related IP Ancillary Rights) in trademarks, trade
names, corporate names, company names, business names, fictitious business
names, trade styles, service marks, logos and other source or business
identifiers and, in each case, all goodwill associated therewith, all
registrations and recordations thereof and all applications in connection
therewith.
"
Unsecured Subsidiaries
" is
defined in section 8.10(a) .
"
Unsecured Subsidiaries’ Permitted
Project Debt
" means indebtedness incurred by the Unsecured Subsidiaries,
respectively, for the purpose of financing specific projects, provided that no
other Company is directly or indirectly liable for the payment or performance of
any obligations of the Unsecured Subsidiaries in respect thereof and any
security given by the applicable Unsecured Subsidiary for such indebtedness is
restricted to the assets of such Unsecured Subsidiary and does not directly or
indirectly affect the assets of any other Company.
"
Year-end Financial Statements
"
means, at any time, the financial statements the Borrower, each on an audited
consolidated and unaudited unconsolidated basis, in respect of the most recently
completed Fiscal Year prepared in accordance with GAAP (and for greater
certainty including the notes thereto and an unqualified opinion of the
Borrower's auditor with respect thereto).
|
1.02
|
Accounting Principles
|
Unless otherwise specifically provided herein, any accounting
term used in this Agreement shall have the meaning customarily given such term
in accordance with GAAP, and all financial computations hereunder shall be
computed in accordance with GAAP consistently applied. That certain items or
computations are explicitly modified by the phrase "in accordance with GAAP"
shall in no way be construed to limit the foregoing. If there occurs after the
date hereof any change in GAAP from that used in the preparation of the
financial statements referred to herein, after the date hereof the Borrower and
its Subsidiaries adopt any other accounting principles for use in the
preparation of their financial statements (such changes in GAAP and such
adoption being referred to herein as "Accounting Changes") that affects in any
respect the calculation of any covenants contained in this Agreement (including
those in section 7.03), the Lenders and the Borrower shall discuss whether they
wish to amend any relevant provisions of this Agreement that relate to the
calculation of such covenants with the intent of having their respective positions after such
Accounting Changes conform as nearly as possible to their respective positions
as of the date of this Agreement. Unless any such amendments have been agreed
upon by all parties hereto in writing, compliance with the financial covenants
in this Agreement shall be determined as if no such Accounting Change had
occurred. In such event, the financial statements required to be provided by the
Borrower hereunder shall be prepared in accordance with GAAP in effect on the
date of such financial statements (after giving effect to such Accounting
Change), and the Borrower shall concurrently deliver to the Agent a
reconciliation in form and substance satisfactory to the Lenders showing all
adjustments made to financial statements in order to determine compliance with
such financial covenants on the basis of GAAP in effect prior to such Accounting
Change.
- 25 -
All amounts referred to in this Agreement are in Canadian
Dollars unless otherwise noted.
Unless otherwise specified, words importing the singular
include the plural and vice versa and words importing gender include all
genders. Unless otherwise specified, references in this Agreement to sections,
Schedules and Exhibits are to sections of, and Schedules and Exhibits to, this
Agreement. Unless otherwise specified, each reference to an enactment of
legislation is deemed to be a reference to that enactment of legislation, and to
the regulations made under that enactment, as amended or re-enacted from time to
time. Unless otherwise specified, references to time of day or date mean the
local time or date in the City of Toronto, Ontario. "Including" means "including
without limitation" and the term "including" shall not be construed to limit any
general statement that precedes such term to the specific or similar items or
matters immediately following it. Unless expressly qualified by the phrase
"acting reasonably" or an equivalent phrase, the phrase "discretion" means "sole
discretion" and any action to be taken or decision to be made by the Agent or
the Lenders in their discretion shall mean that such discretion is absolute and
unfettered.
|
1.05
|
Exhibits and Schedules
|
The following Exhibits and Schedules are attached to this
Agreement and incorporated herein by reference (but with respect to Exhibit I,
subject to section 12.01 hereof):
- 26 -
ARTICLE II -
FACILITY A
|
2.01
|
Establishment of Facility
A
|
Subject to the terms and conditions in this Agreement, each
Lender hereby establishes a revolving credit facility for the Borrower in the
maximum principal amount indicated opposite such Lender's name in Exhibit "A"
under the heading "Facility A Commitments". The said credit facilities are
established by the Lenders severally and not jointly, and are hereinafter
collectively referred to as "Facility A". Each Advance by a Lender under
Facility A shall be made in its Proportionate Share of Facility A.
Advances under Facility A shall be used by the Borrower for
working capital purposes and other general corporate purposes.
Facility A shall be a revolving facility. For greater
certainty, the Borrower shall be entitled to obtain Advances under Facility A
from time to time and repay all or any portion of the Outstanding Principal
Amount under Facility A from time to time; provided that the Outstanding
Principal Amount under Facility A shall not exceed the Facility A Margin Limit
in effect at such time.
The Obligations under Facility A shall become due and payable
on the earlier of: (i) the Acceleration Date; and (ii) the Maturity Date. The
Borrower acknowledges that the Convertible Debentures mature and are payable on
March 9, 2020, to the extent that such debentures have not prior to such date
been converted into equity of the Borrower in accordance with the terms thereof.
Not later than six (6) months prior to the said maturity date of the Convertible
Debentures the Borrower shall deliver a written notice to the Agent setting out
its proposal to finance the repayment of its remaining indebtedness under the
Convertible Debentures (such as an extension of such maturity date, a cash
payment from the Borrower’s resources, an equity issuance, or conversion of such
indebtedness into equity) which shall include satisfactory evidence of the
Borrower’s ability to comply with all financial covenants and other terms and
conditions herein both before and after such transaction, and requesting the Lenders’ consent to the repayment of such
Convertible Debentures. If the Lenders in their sole discretion do not provide
their consent to such proposal within thirty (30) days after receipt of such
notice, the Facilities shall mature and be payable on the date which is three
(3) months prior to the said maturity date of the Convertible Debentures. In
addition, the Facilities shall mature and become immediately payable on the date
that the Borrower becomes obliged to make any repayment on account of the
Convertible Debentures for any other reason, including for greater certainty as
a result of a change of Control of the Borrower. The date on which the
Facilities mature and become payable pursuant to this paragraph is herein called
the “
Early Maturity Date
”.
- 27 -
Subject to the restrictions contained in this Agreement (and in
particular, sections 5.02 and 5.03), the Borrower may receive Advances under
Facility A from each Lender by any one or more of the following Availment
Options (or any combination thereof):
|
(a)
|
Prime Rate Loans; or
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(b)
|
Bankers' Acceptances from BA Lenders with a maturity
between 28 and 182 days (inclusive), subject to availability; or
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(c)
|
BA Equivalent Loans from Non-BA Lenders with a maturity
between 28 and 182 days (inclusive), subject to availability; or
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(d)
|
Letters of Credit, subject to section
2.09.
|
Bankers’ Acceptances and BA Equivalent Loans will not be issued
with a maturity date later than the Maturity Date. The Borrower may convert all
or any portion of the Outstanding Principal Amount under Facility A in the form
of any above Availment Option into another form of Availment Option denominated
in the same currency, subject to and in accordance with the terms and conditions
of this Agreement (but for greater certainty, Bankers’ Acceptances and BA
Equivalent Loans may not be converted into another Availment Option prior to the
maturity thereof).
In respect of Advances under Facility A, the Borrower agrees to
pay the following to the Agent on behalf of the Lenders (or if specified below,
to the Issuing Bank for its own account):
|
(a)
|
interest on Prime Rate Loans at the Prime Rate plus the
Applicable Margin per annum, payable monthly in arrears on the last day of
each and every month;
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(b)
|
in respect of each Bankers' Acceptance, a stamping fee
equal to the Applicable Margin, multiplied by the face amount of the
Bankers' Acceptance with the product thereof further multiplied by the
number of days to maturity of the Bankers' Acceptance and divided by 365,
payable at the time of acceptance;
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(c)
|
in respect of each BA Equivalent Note, a stamping fee
equal to the Applicable Margin multiplied by the face amount of the BA
Equivalent Note with the product thereof further multiplied by the number
of days to maturity of the BA Equivalent Note and divided by 365, payable
at the time of acceptance;
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- 28 -
|
(d)
|
the following fees in respect of each Letter of Credit:
(i) in respect of the period from the date of issuance of such Letter of
Credit to the last day of the then current Fiscal Quarter, a fee equal to
the Applicable Margin in effect on the date of issuance multiplied by the
face amount of such Letter of Credit multiplied by the number of days in
such period (including the first day but excluding the last day of such
period) and divided by three hundred and sixty-five (365), payable on the
last Business Day of such Fiscal Quarter; (ii) in respect of each
subsequent Fiscal Quarter (other than the Fiscal Quarter in which the
Letter of Credit shall expire), a fee equal to the Applicable Margin in
effect on the first Business Day of such Fiscal Quarter multiplied by the
face amount of such Letter of Credit multiplied by the number of days in
such Fiscal Quarter (including the first day but excluding the last day)
and divided by three hundred and sixty-five (365), payable on the last
Business Day of such Fiscal Quarter; and (iii) in respect of the Fiscal
Quarter in which such Letter of Credit shall expire, a fee equal to the
Applicable Margin in effect on the first day of such Fiscal Quarter
multiplied by the face amount of such Letter of Credit multiplied by the
number of days in such period (including the first day but excluding the
last day of such period) and divided by three hundred and sixty-five
(365), payable on the last Business Day of such Fiscal Quarter;
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(e)
|
an administrative fee in respect of each Letter of Credit
payable to the Issuing Bank for its own account as follows: (i) in respect
of the period from the date of issuance of such Letter of Credit to the
last day of the then current Fiscal Quarter, a fee equal to the
one-quarter of one percent (0.25%) multiplied by the face amount of such
Letter of Credit multiplied by the number of days in such period
(including the first day but excluding the last day of such period) and
divided by three hundred and sixty-five (365), payable on the last
Business Day of such Fiscal Quarter; (ii) in respect of each subsequent
Fiscal Quarter (other than the Fiscal Quarter in which the Letter of
Credit shall expire), a fee equal to one-quarter of one percent (0.25%)
multiplied by the face amount of such Letter of Credit multiplied by the
number of days in such Fiscal Quarter (including the first day but
excluding the last day) and divided by three hundred and sixty-five (365),
payable on the last Business Day of such Fiscal Quarter; and (iii) in
respect of the Fiscal Quarter in which such Letter of Credit shall expire,
a fee equal to one-quarter of one percent (0.25%) multiplied by the face
amount of such Letter of Credit multiplied by the number of days in such
period (including the first day but excluding the last day of such period)
and divided by three hundred and sixty-five (365), payable on the last
Business Day of such Fiscal Quarter;
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(f)
|
administrative fees payable to the Issuing Bank for its
own account in accordance with its usual practice in respect of the
issuance, amendment and renewal of Letters of Credit; and
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(g)
|
a standby fee payable in Canadian Dollars with respect to
the unused portion of the Non- Swingline Tranche, calculated on a daily
basis as being the difference between (i) the Facility A Maximum Amount
(less the Commitments of any Non-Funding Lenders under Facility A), less
the Swingline Limit and (ii) the Outstanding Principal Amount under the
Non-Swingline Tranche, multiplied by the Applicable Margin and divided by
365; which standby fee shall be payable quarterly in arrears on the last
Business Day of each Fiscal Quarter based on the number of days in such
Fiscal Quarter (including the first day and excluding the last day in such
Fiscal Quarter) and on the Maturity Date.
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- 29 -
|
2.07
|
Facility A Margin
Limit
|
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(a)
|
In this Agreement, "
Facility A Margin Limit
"
means, at any time, an amount equal to the lesser of: (A) the Facility A
Maximum Amount; and (B) an amount determined at such time as
follows:
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(i)
|
one hundred percent (100%) of cash in Qualified
Currencies held on deposit in bank accounts maintained by the Secured
Companies with the Agent in respect of which the Agent has an express
contractual right of set-off and a First-Ranking Security Interest;
plus
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(ii)
|
eighty-five percent (85%) of Eligible Receivables owing
by Governmental Authorities domiciled in Canada; plus
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(iii)
|
seventy-five percent (75%) of Eligible Receivables owing
by other account debtors domiciled in Canada; plus
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(iv)
|
in the discretion of the Required Lenders from time to
time, a percentage (which shall not exceed sixty-five percent (65%)) of
any or all Eligible Receivables owing by account debtors domiciled in
other Qualified Jurisdictions, less
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(v)
|
the Potential Statutory Priority Amount at such
time.
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(b)
|
The Facility A Margin Limit shall be adjusted as at the
date of each receipt by the Agent of a Borrowing Base Certificate and
shall remain in effect until receipt by the Agent of a subsequent
Borrowing Base Certificate; provided that if the Agent does not receive a
Borrowing Base Certificate on or before the date required pursuant to
section 7.04(a), the Facility A Margin Limit shall be reduced to the
lowest Facility A Margin Limit in the preceding twelve (12) months or such
lower amount estimated by the Facility A Lenders acting reasonably to be
the Facility A Margin Limit determined in accordance with the formula in
paragraph (a) above, until such time as a Borrowing Base Certificate is
thereafter received by the Agent.
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(c)
|
The Facility A Lenders shall have no obligation to make
any Advance under Facility A if after making such Advance the Outstanding
Principal Amount under Facility A would exceed the Facility A Margin Limit
then in effect.
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(d)
|
If at any time the aggregate amount of the Outstanding
Principal Amount under Facility A is in excess of the Facility A Margin
Limit for any reason (specifically including as a result of a fluctuation
in currency exchange rates), the Borrower agrees that immediately after
receipt of a written request from the Agent it will make Repayments under
Facility A in such amount as will result in the aggregate amount of the
Outstanding Principal Amount under Facility A not exceeding the Facility A
Margin Limit. The Agent shall firstly apply such Repayment against Loans
under Facility A; and any remaining portion of such Repayment shall be
held by the Agent and applied against Bankers’ Acceptances, BA Equivalent
Loans and Letters of Credit under Facility A upon the maturity
thereof.
|
- 30 -
A portion of Facility A in the maximum amount of the Swingline
Limit (the "
Swingline
") shall be subject to the following terms and
conditions, in addition to any other applicable terms and conditions contained
in this Agreement:
|
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(a)
|
The Swingline shall be established and maintained by the
Swingline Lender only, and the Swingline Lender shall not have the right
to assign or grant a participation in the Swingline in whole or in part to
any other Person.
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(b)
|
The Outstanding Principal Amount under the Swingline
shall not at any time exceed the Swingline Limit.
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(c)
|
The Swingline shall form a part of Facility A and, except
to the extent provided in this section, shall be subject to all terms and
conditions of this Article II, specifically including the Facility A
Margin Limit.
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(d)
|
Subject to paragraph (f) below, Advances to and
Repayments by the Borrower under the Swingline shall be made in the
following manner. The Swingline Lender will make Advances to the Borrower
into one or more Canadian Dollar bank accounts designated by the Borrower
as required in order to honour cheques drawn by the Borrower on such
accounts presented to the Swingline Lender for payment. As deposits are
made into such accounts by the Borrower, the Swingline Lender shall
withdraw funds from such accounts from time to time and apply such funds
as repayments under the Swingline. Advances to the Borrower and Repayments
by the Borrower under the Swingline shall be made without notice and shall
be on a dollar for dollar basis (i.e. not subject to minimum amounts or
multiples).
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(e)
|
The obligation of the Swingline Lender to make each
Advance under the Swingline shall be subject to the satisfaction of all
conditions precedent in section 9.02, except for the requirement in
section 9.02(d) to provide a Draw Request.
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(f)
|
Interest on the Outstanding Principal Amount under the
Swingline shall be payable by the Borrower to the Swingline Lender (for
its own account) at the Prime Rate plus the Applicable Margin per annum,
payable monthly in arrears on the last day of each and every
month.
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(g)
|
The Borrower hereby agrees to pay a standby fee with
respect to the unused portion of the Swingline, payable to the Swingline
Lender (for its own account), calculated on a daily basis as being the
difference between (i) the Swingline Limit and (ii) the Outstanding
Principal Amount under the Swingline, multiplied by the Applicable Margin
and divided by 365; which standby fee shall be payable quarterly in
arrears on the last Business Day of each Fiscal Quarter based on the
number of days in such Fiscal Quarter (including the first day and
excluding the last day in such Fiscal Quarter) and on the Maturity
Date.
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(h)
|
The Swingline Lender may in its discretion at any time,
by written notice to the Borrower, require the Borrower to request an
Advance under Facility A from the Facility A Lenders in an amount (in this
paragraph called the "Swingline Reduction Amount")
for the purpose of reducing the
Outstanding Principal Amount under the Swingline; and the Borrower agrees to
promptly comply with any such request. The proceeds of such Advance shall be
applied to reduce the Outstanding Principal Amount under the Swingline
accordingly. If the Borrower fails to comply with any such request from the
Swingline Lender within two (2) Business Days after receipt thereof, each
Facility A Lender agrees that upon request by the Swingline Lender it will make
an Advance under Facility A in an amount equal to its Proportionate Share of the
Swingline Reduction Amount, the proceeds of which shall be applied to reduce the
Outstanding Principal Amount under the Swingline. In addition, each Facility A
Lender hereby accepts from the Swingline Lender a participation (which
participation shall be non-recourse to the Swingline Lender) in the Outstanding
Principal Amount under the Swingline from time to time, in such Lender's
Proportionate Share of Facility A. Each Facility A Lender hereby absolutely and
unconditionally agrees to indemnify and hold the Swingline Lender harmless from
liability in respect of, such Lender's said Proportionate Share of such
Outstanding Principal Amount under the Swingline. Each said Facility A Lender
acknowledges and agrees that its obligation to acquire a participation in such
Outstanding Principal Amount under the Swingline and its said indemnity
obligation are absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or Event of Default hereunder. For greater certainty however, nothing herein
shall require a Facility A Lender to make Advances under Facility A in excess of
its Commitment under Facility A.
|
- 31 -
Letters of Credit shall be issued only under the Non-Swingline
Tranche and shall be subject to the following additional terms and conditions:
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|
(a)
|
Letters of Credit may be issued in all Qualified
Currencies. Letters of Credit will not be issued for the purpose of
guaranteeing obligations of any Person (except a Company). Each Letter of
Credit shall have a term not in excess of one (1) year. The Equivalent
Amount expressed in Canadian Dollars of the aggregate face amount of all
Letters of Credit outstanding at any time may not exceed Ten Million
Dollars ($10,000,000).
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(b)
|
If a Letter of Credit is issued in a Qualified Currency
other than Canadian Dollars, each fee in respect of such Letter of Credit
payable pursuant to section 2.06 herein shall be payable in Canadian
Dollars in accordance with section 5.06.
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(c)
|
Each request for the issuance of a Letter of Credit shall
be delivered by the Borrower to the Issuing Bank in accordance with the
notice requirements in section 5.02(a) herein, together with the Issuing
Bank's customary form of application and indemnity agreement completed to
its satisfaction and the proposed form of the Letter of Credit (which
shall be satisfactory to the Issuing Bank) and such other certificates,
documents and other information as the Issuing Bank may reasonably
request.
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(d)
|
The obligation of the Borrower to reimburse the Issuing
Bank for all drawings under Letters of Credit shall be absolute,
unconditional and irrevocable and shall be satisfied strictly in
accordance with their terms, irrespective of:
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|
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(i)
|
any lack of validity or enforceability of any Letter of
Credit;
|
- 32 -
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|
(ii)
|
the existence of any claim, setoff, defence or other
right which the Borrower or any other Person may at any time have against
the beneficiary under any Letter of Credit, the Issuing Bank or any Lender
(other than the defence of payment in accordance with the terms of this
Agreement or a defence based on the negligence or wilful misconduct of the
Issuing Bank or any Lender) or any other Person in accordance with this
Agreement or other transaction;
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(iii)
|
any draft or other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect; and
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(iv)
|
any other circumstance or event whatsoever, whether or
not similar to any of the foregoing.
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(e)
|
In making any payment under any Letter of Credit (i) the
Issuing Bank's exclusive reliance on the documents presented to it under
such Letter of Credit as to any and all matters set forth therein,
including reliance on the amount of any draft presented under such Letter
of Credit, whether or not the amount due to the beneficiary equals the
amount of such draft and whether or not any document presented pursuant to
such Letter of Credit proves to be insufficient in any respect, if such
document on its face appears to be in order, and whether or not any other
statement or any other document presented pursuant to such Letter of
Credit proves to be forged or invalid or any statement therein proves to
be inaccurate or untrue in any respect whatsoever and (ii) any
non-compliance in any immaterial respect of the documents presented under
such Letter of Credit with the terms thereof shall, in each case, not be
deemed wilful misconduct or negligence of the Issuing Bank.
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(f)
|
The Issuing Bank and its correspondents may accept and
act upon the name, signature, or act of any party purporting to be the
executor, administrator, receiver, trustee in bankruptcy or other legal
representative of any party designated in any Letter of Credit in the
place of the name, signature, or act of such party.
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(g)
|
Concurrently with each request for the issuance of a
Letter of Credit the Agent shall notify each Lender of the principal
amount, the reference number and the expiration date thereof and the
amount of such Lender's participation therein. By the issuance of a Letter
of Credit hereunder and without further action on the part of the Issuing
Bank or the Lenders, each said Lender hereby accepts from the Issuing Bank
a participation (which participation shall be without recourse to the
Issuing Bank) in such Letter of Credit in such Lender's Proportionate
Share of Facility A, effective upon the issuance of such Letter of Credit.
Each Lender hereby absolutely and unconditionally assumes, as primary
obligor and not as a surety, and agrees to pay and discharge and to
indemnify and hold the Issuing Bank harmless from liability in respect of,
such Lender's said Proportionate Share of the amount of any drawing under
a Letter of Credit. Each said Lender acknowledges and agrees that its
obligation to acquire participations in each Letter of Credit issued by
the Issuing Bank and its obligation to make the payments specified herein,
and the right of the Issuing Bank to receive the same, in the manner
specified herein, are absolute and unconditional and shall not be affected
by any circumstance whatsoever, including the occurrence and continuance
of a Default or Event of Default hereunder, and that
each such payment shall be made without any offset, abatement, withholding or
reduction whatsoever. The Issuing Bank shall review each draft and any
accompanying documents presented under a Letter of Credit and shall notify each
said Lender of any such presentment. Promptly after it shall have ascertained
that any draft and any accompanying documents presented under such Letter of
Credit appear on their face to be in substantial conformity with the terms and
conditions of the Letter of Credit, the Issuing Bank shall give notice to each
said Lender and the Borrower of the receipt and amount of such draft and the
date on which payment thereon will be made, and each said Lender shall, by 11:00
a.m. Toronto time on the date such payment is to be made, pay its said
Proportionate Share of the amount so drawn under the Letter of Credit in
immediately available funds, and the Issuing Bank shall make the appropriate
payment to the beneficiary of such Letter of Credit. The Borrower agrees to
immediately reimburse each said Lender in an amount equal to the said payment by
such Lender with interest thereon payable at the same rate and in the same
manner as Prime Rate Loans under Facility A.
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- 33 -
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(h)
|
On or before the Maturity Date the Borrower shall (i)
arrange for the cancellation and return of all outstanding Letters of
Credit to the Issuing Bank or (ii) provide cash collateral in favour of
the Agent in respect of all outstanding Letters of Credit in an amount
equal to the aggregate of the face amounts of all such Letters of Credit,
plus an additional amount estimated by the Issuing Bank in respect of its
anticipated fees and expenses associated with the settlement of such
Letters of Credit. For greater certainty, the Agent shall have no
obligation to release all or any portion of the Security unless and until
all Letters of Credit are cancelled or such cash collateral is provided in
respect thereof to the satisfaction of the Issuing
Bank.
|
The Borrower may from time to time upon two (2) Business Days’
prior written notice to the Agent, permanently cancel any unadvanced portion of
Facility A in a minimum amount of One Hundred Thousand Dollars ($100,000)
without payment of any penalty or fee (provided that such required minimum
amount shall not apply in the case of a cancellation of Facility A in its
entirety). The Facility A Maximum Amount shall be automatically and permanently
reduced by the amount so cancelled and each Lender’s Commitment under Facility A
shall be reduced by its Proportionate Share of the amount so cancelled.
ARTICLE III -
FACILITY B
|
3.01
|
Establishment of Facility
B
|
Subject to the terms and conditions in this Agreement, each
Lender hereby establishes a committed, non-revolving credit facility for the
Borrower in the maximum principal amount indicated opposite such Lender's name
in Exhibit "A" under the heading "Facility B Commitments". The said credit
facilities are established by the Lenders severally and not jointly, and are
hereinafter collectively referred to as "Facility B". Each Advance by a Lender
under Facility B shall be made in its Proportionate Share of Facility B.
- 34 -
Advances under Facility B shall be used by the Borrower for
working capital purposes and other general corporate purposes.
|
3.03
|
Non-Revolving Nature; Limit on
Advances
|
Facility B is a non-revolving facility, and any Repayment under
Facility B may not be reborrowed. Each Advance under Facility B shall relate to
a Material Property, and the principal amount of such Advance shall be based on
the value of such Material Property as estimated by the Required Lenders after
consideration of any appraisals received, determined as the lesser of the
following amounts: (a) 75% of alternate use value (“
Alt Use Value
”) on a
hypothetical best use facility; and (b) 95% of normal orderly liquidation value
(“
NOLV
”). If Alt Use Value is not available or cannot be determined, the
estimated value of such Material Property shall be the lesser of (i) 95% of NOLV
and (ii) 50% of fair value determined using the cost approach, with appropriate
adjustments if such Material Property is not complete. The Borrower shall be
entitled to request not more than five (5) Advances under Facility B, and the
Borrower may request a single Advance in respect of two or more Properties. The
final Advance under Facility B shall be made by no later than December 31, 2018,
after which date any undrawn amount under Facility B shall be cancelled.
|
(a)
|
On the last Business Day of the Fiscal Quarter in which
the final Advance under Facility B is made, and on the last Business Day
of each Fiscal Quarter thereafter, the Borrower shall make quarterly
Repayments under Facility B as follows:
|
|
|
(i)
|
in respect of each Fiscal Quarter ending on or before
September 30, 2019, an amount equal to 1.25% of the Outstanding Principal
Amount under Facility B immediately following the said final Advance;
and
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(ii)
|
in respect of each Fiscal Quarter thereafter ending prior
to the Maturity Date, an amount equal to 3.125% of the Outstanding
Principal Amount under Facility B immediately following the said final
Advance;
|
and the remaining balance of the
Outstanding Principal Amount under Facility B shall be due and payable on the
Maturity Date. For greater certainty, the provisions set out in section 2.04
relating to the Early Maturity Date apply to Facility B as well as Facility A.
|
(b)
|
The following Repayments shall be required in addition to
all other Repayments required under this
Agreement:
|
|
|
(i)
|
If any Company receives net proceeds from a policy of
insurance, the Borrower shall make a Repayment in an amount equal to such
net proceeds within three (3) Business Days after such net proceeds are
received, except to the extent that such proceeds are permitted to be
retained as provided in sections 8.08 or 8.09.
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(ii)
|
If any Company receives net proceeds from an Equity
Issuance or a transaction involving the creation of Subordinated Debt,
within one-hundred eighty (180) days after receipt of such net proceeds
the Borrower shall make a Repayment in an amount equal to
the portion of such net proceeds which
have not been applied in connection with a Permitted Acquisition, an Investment
permitted herein or a Capital Expenditure permitted herein.
|
- 35 -
|
|
(iii)
|
If any Company receives net proceeds equal to or greater
than Two Million Five Hundred Thousand Dollars ($2,500,000) from a
transaction involving the sale, leasing or other disposition of any
individual asset or a group of related assets in one or a series of
related transactions, within three hundred sixty-four (364) days after
receipt of such net proceeds the Borrower shall make a Repayment in an
amount equal to the portion of such net proceeds which have not been
applied to purchase similar assets (other than current
assets).
|
As used herein, "net proceeds" in
respect of any above transaction means the gross amount payable in respect of
such transaction less any Taxes, sales commissions and other reasonable expenses
incurred in connection with the transaction, usual and reasonable adjustments in
connection with the transaction and any other amount specifically approved in
writing by the Required Lenders acting reasonably. Each Repayment under this
section 3.04(b) shall be applied against the Borrower’s obligation to make the
remaining scheduled Repayments under Facility B in reverse chronological order.
In addition, if a Repayment is required under this section 3.04(b) and all
Obligations under Facility B have been repaid in full, such Repayment shall be
applied against the Outstanding Principal Amount under Facility A, but for
greater certainty such Repayment shall not reduce the Facility A Maximum Amount
and the Borrower shall thereafter be entitled to receive further Advances under
Facility A upon the satisfaction of all applicable conditions precedent.
Subject to the restrictions contained in this Agreement (and in
particular, sections 5.02 and 5.03), the Borrower may receive Advances under
Facility B by any one or more of the following Availment Options (or any
combination thereof):
|
(a)
|
Prime Rate Loans; or
|
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|
|
(b)
|
Bankers' Acceptances from BA Lenders with a maturity
between 28 and 182 days (inclusive), subject to availability; or
|
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|
|
(c)
|
BA Equivalent Loans from Non-BA Lenders with a maturity
between 28 and 182 days (inclusive), subject to
availability.
|
Bankers' Acceptances and BA Equivalent Loans will not be issued
with a maturity date later than the Maturity Date. The Borrower may convert all
or any portion of the Outstanding Principal Amount under Facility B in the form
of any above Availment Option into another form of Availment Option denominated
in the same currency, subject to and in accordance with the terms and conditions
of this Agreement (but for greater certainty, Bankers’ Acceptances and BA
Equivalent Loans may not be converted into another Availment Option prior to the
maturity thereof).
In respect of Advances under Facility B, the Borrower agrees to
pay the following:
- 36 -
|
(a)
|
interest on Prime Rate Loans at the Prime Rate plus the
Applicable Margin per annum, payable monthly in arrears on the last day of
each and every month;
|
|
|
|
|
(b)
|
in respect of each Bankers' Acceptance, a stamping fee
equal to the Applicable Margin, multiplied by the face amount of the
Bankers' Acceptance with the product thereof further multiplied by the
number of days to maturity of the Bankers' Acceptance and divided by 365,
payable at the time of acceptance; and
|
|
|
|
|
(c)
|
in respect of each BA Equivalent Note, a stamping fee
equal to the Applicable Margin multiplied by the face amount of the BA
Equivalent Note with the product thereof further multiplied by the number
of days to maturity of the BA Equivalent Note and divided by 365, payable
at the time of acceptance.
|
Except as otherwise provided in this Agreement, such payments
shall be made to the Agent on behalf of the Lenders; and the Agent shall
promptly remit to each Lender its Proportionate Share of each such payment.
|
3.07
|
Interest Rate Hedge
Transactions
|
Within ninety (90) days after each Advance under Facility B the
Borrower shall enter into Interest Rate Hedge Transactions with the Lenders such
that the aggregate notional amount of all Interest Rate Hedge Transactions is at
least fifty percent (50%) of the Outstanding Principal Amount under Facility B
after such Advance.
|
3.08
|
Voluntary Repayments
|
Upon not less than three (3) Business Days' prior written
notice to the Agent, the Borrower may make a Repayment on account of Prime Rate
Loans outstanding under Facility B in a minimum amount of One Hundred Thousand
Dollars ($100,000) without payment of any penalty or fee (provided that such
required minimum amounts shall not apply in the case of a Repayment of the
Outstanding Principal Amount under Facility B). Any such voluntary Repayment
shall be applied against the Borrower's obligations to make scheduled Repayments
under Facility B in reverse chronological order; and the Facility B Maximum
Amount shall be automatically and permanently reduced by any such voluntary
Repayment. The Agent shall promptly remit to each Lender its Proportionate Share
of any such voluntary Repayment. For greater certainty however, Bankers’
Acceptances and BA Equivalent Loans may not be repaid prior to the maturity
thereof.
|
|
(a)
|
After the Conversion Date, upon sixty (60) days' prior
written notice to the Lenders and not more than once per Fiscal Year, the
Borrower may request that the Lenders increase their respective
Commitments under Facility B, provided that the following conditions are
satisfied:
|
|
|
(a)
|
each such increase shall be in a multiple of Fifteen
Million Dollars ($15,000,000), and the aggregate maximum amount of all
such increases shall not exceed Forty-Five Million Dollars
($45,000,000);
|
- 37 -
|
|
(b)
|
all representations and warranties in section 6.01 herein
shall remain true and correct in all material respects immediately prior
to the effective date of each such increase and will remain true and
correct in all material respects immediately thereafter;
|
|
|
|
|
|
|
(c)
|
no Default, Event of Default or Material Adverse Change
has occurred and is continuing immediately prior to or immediately after
each such increase; and
|
|
|
|
|
|
|
(d)
|
the Borrower shall have provided a certificate to the
Agent, supported by such financial projections as may be reasonably
required by the Agent, confirming that the Borrower will be in compliance
with all financial covenants in section 7.03 herein throughout the twelve
(12) month period immediately following each such
increase.
|
|
|
(b)
|
At the request of the Borrower, subject to obtaining the
written consent of the Agent and the Issuing Bank not to be unreasonably
withheld or delayed, a financial institution which is not a Lender at the
date of this Agreement may establish a new Commitment, provided that all
conditions in paragraph (a) are satisfied. Such financial institution
shall thereby become a Lender for all purposes of this
Agreement.
|
|
|
|
|
|
|
(c)
|
The establishment of any such increased or new Commitment
shall be subject to the execution and delivery of an amendment to this
Agreement made among the Borrower, the Agent, the Issuing Bank and those
Lenders which have agreed to increase their Commitments or establish new
Commitments, as the case may be, together with security confirmations,
guarantee confirmations, additional security, officers’ certificates,
legal opinions and other documents as the Agent may consider necessary or
desirable, including the allocation of such increased or new Commitment
among the Facilities. Any such amendment shall be binding upon all
Lenders, without the necessity of any notice to such other Lenders by the
Borrower or the Agent.
|
|
|
|
|
|
|
(d)
|
For greater certainty, no Lender shall be required to
increase its Commitment unless it expressly agrees to do so in its
discretion.
|
ARTICLE IV -
ANCILLARY CREDIT
PRODUCTS
|
(a)
|
The Agent shall act as lead arranger for all Hedge
Transactions to be entered into between the Borrower and the Lenders
hereunder, and shall offer each Lender an opportunity to participate in a
pro-rata portion of such Hedge Transactions pursuant to such arrangements
as may be agreed between the Agent and the respective Lenders. Each Hedge
Transaction entered into between the Borrower and a Lender shall be upon
such terms as may be offered by such Lender in its discretion, subject to
the terms of this Agreement.
|
|
|
|
|
(b)
|
Hedge Transactions may not be entered into for
speculative purposes.
|
- 38 -
|
(c)
|
Currency Hedge Transactions may only be entered into in
respect of Qualified Currencies. The term of each Currency Hedge
Transaction shall expire not later than the earlier of (a) twelve (12)
months from the date of such Currency Hedge Transaction, and (b) the
Maturity Date.
|
|
|
|
|
(d)
|
The term of each Interest Rate Hedge Transaction shall
expire not later than the Maturity Date.
|
|
|
|
|
(e)
|
The aggregate of the notional amounts of all Interest
Rate Hedge Transactions outstanding at any time shall not exceed the
Outstanding Principal Amount under Facility B at such time.
|
|
|
|
|
(f)
|
In respect of each Hedge Transaction entered into between
the Borrower and a Lender, the Borrower agrees to execute and deliver to
such Lender all agreements as it may reasonably require (for greater
certainty, specifically including an ISDA master agreement).
|
|
|
|
|
(g)
|
The Security shall secure all obligations owing under or
in respect of each Hedge Transaction; and the priority of such obligations
shall rank on a pari passu basis with all other Obligations as provided in
section 8.01.
|
|
|
|
|
(h)
|
The Borrower will not enter into or be a party to any
Hedge Transactions with any Persons other than the Lenders.
|
|
|
|
|
(i)
|
Each Hedge Transaction made with a Lender shall include
such Lender's standard early termination events. Without limiting the
generality of the foregoing, each Hedge Transaction shall also stipulate
that the termination of all or any of the Facilities shall constitute an
Early Termination Event (as defined in the applicable ISDA Master
Agreement) and the Affected Party (as defined in such ISDA Agreement)
shall be the counter-party to the Lender in such contract. The Lender
shall have the right to choose the payment measure and the payment method
(as such terms are understood in the ISDA Master Agreement) in respect of
such Early Termination Event.
|
Subject
to the terms and conditions of this Agreement, BMO may in its discretion
establish a line of credit for the Borrower in the maximum principal amount of
Six Million Dollars ($6,000,000), or any other principal amount as may be agreed
between BMO and the Borrower from time to time, in respect of corporate
MasterCards in Qualified Currencies issued by BMO to the Borrower`s employees to
be used for corporate purposes only in Qualified Jurisdictions, including
purchasing supplies and funding miscellaneous business expenses (the
"
MasterCard Line
"). BMO shall issue MasterCards upon request by the
Borrower from time to time upon the completion of, and in accordance with, the
credit card agreements and other documents customarily required by BMO in
connection with the issuance of corporate MasterCards. The Borrower shall pay
interest and fees in connection with loans and advances made under the
MasterCard Line at the rates and at the times set out in such credit card
agreements and other documents, and the Borrower`s indebtedness thereunder,
including accrued and unpaid interest thereon, shall mature and become due and
payable in full by the Borrower on the earlier of (i) the date specified in the
such agreements, and (ii) the Maturity Date.
BMO may
in its discretion from time to time enter into agreements with the Borrower or
any other Company in respect of cash management, payroll or other banking
services (collectively, "
Service Agreements
"). The Borrower hereby agrees to
indemnify and save harmless BMO in respect of all losses which it may suffer in
respect of the failure of any Company to observe and perform its obligations
under any Service Agreement, and for all purposes of this Agreement such Service
Agreement shall be deemed to have been entered into between BMO and the
Borrower. The Borrower agrees to pay to BMO (for its own account) fees in
respect of Service Agreements as they may agree in writing from time to time.
- 39 -
ARTICLE V -
GENERAL CONDITIONS
|
5.01
|
Matters relating to
Interest
|
|
(a)
|
Unless otherwise indicated, interest on any outstanding
principal amount and all other amounts payable hereunder (including unpaid
interest) shall be calculated daily and shall be payable monthly in
arrears on the last day of each and every month; and if the maturity date
of a Facility is not the end of a month, all accrued and unpaid interest
in respect of such Facility shall be paid on such maturity date. If the
last day of a month is not a Business Day, the interest payment due on
such day shall be made on the next Business Day, and interest shall
continue to accrue on the said principal amount and shall also be paid on
such next Business Day. Interest shall accrue from and including the day
upon which an Advance is made or is deemed to have been made, and ending
on but excluding the day on which such Advance is repaid or satisfied. Any
change in the Prime Rate shall cause an immediate adjustment of the
interest rate applicable to Prime Rate Loans without the necessity of any
notice to the Borrower.
|
|
|
|
|
(b)
|
Unless otherwise stated, in this Agreement if reference
is made to a rate of interest, fee or other amount “per annum” or a
similar expression is used, such interest, fee or other amount shall be
calculated on the basis of a year of three hundred and sixty-five (365) or
three hundred and sixty-six (366) days, as the case may be. If the amount
of any interest, fee or other amount is determined or expressed on the
basis of a period of less than one year of three hundred and sixty-five
(365) or three hundred and sixty-six (366) days, as the case may be, the
equivalent yearly rate is equal to the rate so determined or expressed,
divided by the number of days in the said period, and multiplied by the
actual number of days in that calendar year. The Agent agrees that
promptly upon request by the Borrower from time to time it will advise the
Borrower of the Prime Rate and CDOR in effect at such time (or during any
other period prior to such time), and will assist the Borrower in
calculating the effective annual rate of interest required to be disclosed
pursuant to section 4 of the
Interest Act
(Canada). The Borrower
hereby irrevocably agrees not to plead or assert, whether by way of
defence or otherwise, in any proceeding relating to this Agreement or any
other Loan Documents, that the interest payable thereunder and the
calculation thereof has not been adequately disclosed to the Borrower,
whether pursuant to section 4 of the
Interest Act
(Canada) or any
other Law.
|
|
|
|
|
(c)
|
Notwithstanding any other provisions of this Agreement,
if the amount of any interest, premium, fees or other monies or any rate
of interest stipulated for, taken, reserved or extracted under the Loan
Documents would otherwise contravene the provisions of section 347 of the
Criminal Code
(Canada), section 4 or section 8 of the
Interest
Act
(Canada) or any successor or similar legislation, or would exceed
the amounts which the Bank is legally entitled to charge and receive under
any Law to which such compensation is subject, then such amount or rate of
interest shall be reduced to such maximum amount as would not contravene
such provision; and to the extent that any
excess has been charged or received the Bank shall apply such excess against the
Outstanding Principal Amount and refund any further excess amount.
|
- 40 -
|
(d)
|
Any change in the Applicable Margin in respect of any
Availment Option under a Facility shall be determined quarterly by the
Agent based upon the information contained in the Quarterly Compliance
Certificate received by the Agent in respect of the most recently
completed Fiscal Quarter, and shall take effect commencing on the fifth
(5
th
) Business Day following receipt of such Quarterly
Compliance Certificate by the Agent (in this paragraph called the
"effective date"). For greater certainty:
|
|
|
(i)
|
the interest rates and fees applicable to all Advances
made on or after the effective date shall be based upon the said revised
Applicable Margin;
|
|
|
|
|
|
|
(ii)
|
from and after the effective date, the interest rates and
fees applicable to all Loans outstanding on the effective date shall be
based upon the said revised Applicable Margin;
|
|
|
|
|
|
|
(iii)
|
no readjustment shall be made in respect of any Bankers’
Acceptance or BA Equivalent Loan which is outstanding on the effective
date, and the said revised Applicable Margin all apply to all Bankers’
Acceptances and BA Equivalent Loans issued or made on or after the
effective date; and
|
|
|
|
|
|
|
(iv)
|
in respect of each Letter of Credit which is outstanding
on the effective date there shall be a readjustment to the fee initially
paid upon the issuance thereof, as follows: the fee relating to the period
from the date of issuance to but excluding the effective date shall be
based upon the Applicable Margin in effect during such period; and the fee
relating to the period from and including the effective date to but
excluding the date of expiry of such Letter of Credit shall be based upon
the Applicable Margin in effect from after the effective date; and the
Agent and the Borrower agree to promptly make all such payments as the
Agent may advise are required in order to effect such
adjustments.
|
The determination of such adjustments
by the Agent shall be deemed to be correct absent manifest error. If the Agent
does not receive a Quarterly Compliance Certificate on a date required pursuant
to section 7.04(c), then from and after the date such Quarterly Compliance
Certificate was required to have been delivered, the Applicable Margin in
respect of each Availment Option shall be the highest Applicable Margin relating
thereto, until the fifth Business Day following receipt by the Agent of the
required Quarterly Compliance Certificate.
|
(a)
|
The Borrower shall provide written notice to the Agent in
respect of Advances, Rollovers, Substitutions and Repayments as set out
below:
|
|
|
(i)
|
no notice is required for Advances and Repayments under
the Swingline;
|
|
|
|
|
|
|
(ii)
|
two (2) Business Days' notice is required before 10:00
a.m. Toronto time in respect of an Advance, Rollover, Substitution or
voluntary Repayment relating to a Bankers’ Acceptance or a BA Equivalent
Note;
|
- 41 -
|
|
(iii)
|
three (3) Business Days' notice is required before 10:00
a.m. Toronto time in respect of the issuance of a Letter of
Credit;
|
|
|
|
|
|
|
(iv)
|
notice is required for each voluntary Repayment under
Facility B in accordance with section 3.08, as applicable; and
|
|
|
|
|
|
|
(v)
|
except as provided in clauses (i), (ii), (iii) and (iv)
above:
|
|
|
•
|
two (2) Business Days' notice is required
before 10:00 a.m. Toronto time in respect of any Advance, Rollover,
Substitution or voluntary Repayment if the amount is equal to or less than
$25,000,000; and
|
|
|
|
|
|
|
•
|
three (3) Business Days' notice is required
before 10:00 a.m. Toronto time in respect of any Advance, Rollover,
Substitution or voluntary Repayment if the amount is greater than
$25,000,000;
|
|
(b)
|
Notice of any Advance, Rollover or Substitution referred
to in paragraph (a) above shall be given in the form of a Draw Request,
Rollover Notice or Substitution Notice, as the case may be, attached
hereto as Exhibits, and shall be given to the Agent at its address in
section 13.09.
|
|
|
|
|
(c)
|
If notice is not provided as contemplated herein with
respect to the maturity of any Bankers' Acceptance or BA Equivalent Loan,
the Agent may in its discretion convert such Bankers' Acceptance or BA
Equivalent Loan upon its maturity into a Prime Rate Loan.
|
|
|
|
|
(d)
|
Any conversion from one form of Availment Option to
another shall be subject to satisfaction of all of terms and conditions
applicable to the form of the new Availment Option.
|
|
|
|
|
5.03
|
Minimum Amounts, Multiples and Procedures re Draws,
Substitutions and Repayments
|
|
|
|
|
(a)
|
Advances under the Swingline shall be on a dollar for
dollar basis and not subject to a minimum amount or a required
multiple.
|
|
|
|
|
(b)
|
Subject to paragraph (a), each request by the Borrower
for an Advance or Substitution in the form of a Prime Rate Loan shall be
in a minimum amount of $1,000,000 and a multiple of $100,000.
|
|
|
|
|
(c)
|
Each request by the Borrower for an Advance by way of
Bankers' Acceptances and BA Equivalent Notes shall be for an aggregate
face amount of Bankers' Acceptances and BA Equivalent Notes of not less
than $5,000,000 and in a multiple of $100,000, and in such amount as will
result in the face amount of each Bankers' Acceptance or BA Equivalent
Note issued by a Lender being in a multiple of $1,000.
|
|
|
|
|
(d)
|
Upon receipt of a Draw Request under any Facility, the
Agent shall promptly notify each Lender under such Facility of the
contents thereof and such Lender's Proportionate Share of the Advance.
Such Draw Request shall not thereafter be revocable.
|
|
|
|
|
(e)
|
Each Advance shall be made by the applicable Lenders to
the Agent at its address referred to in section 13.09 or such other
address as the Agent may designate by notice in writing to the Lenders
from time to time. Each Lender shall make available its Proportionate
Share of each said Advance to the Agent. Unless the Agent
determines that any condition of the Advance has not been satisfied or waived,
the Agent shall make the funds so received from the Lenders available to the
Borrower by 2:00 p.m. (Toronto time) on the requested date of the Advance. No
Lender shall be responsible for any other Lender's obligation to make available
its Proportionate Share of the said Advance.
|
- 42 -
|
(f)
|
The Borrower agrees to deliver in favour of each Lender
such other agreements and documentation as such Lender may reasonably
require (not inconsistent with this Agreement) in respect of such Lender's
requirements for the acceptance of Bankers' Acceptances or the issuance of
BA Equivalent Notes.
|
|
|
|
|
(g)
|
All payments of principal, interest and other amounts
made by the Borrower to the Agent in respect of the Outstanding Principal
Amount under a Facility shall be paid by the Agent to the respective
Lenders, each in accordance with its Proportionate Share. For greater
certainty, however, stamping fees in respect of Bankers' Acceptances and
BA Equivalent Notes shall be received and retained by the respective
Lenders which issued or accepted such Bankers' Acceptances and BA
Equivalent Notes.
|
|
(a)
|
All payments of principal, interest and other amounts to
be made by the Borrower to the Agent pursuant to this Agreement shall be
made at its address noted in section 13.09 or to such other address as the
Agent may direct in writing from time to time. All such payments received
by the Agent on a Business Day before 2:00 p.m. (Toronto time) shall be
treated as having been received by the Agent on that day; payments made
after such time on a Business Day shall be treated as having been received
by the Agent on the next Business Day.
|
|
|
|
|
(b)
|
Whenever any payment shall be due on a day which is not a
Business Day, the date for payment thereof shall be extended to the next
succeeding Business Day. Interest shall continue to accrue and be payable
thereon as provided herein, until the date on which such payment is
received by the Agent.
|
|
|
|
|
(c)
|
The Borrower hereby authorizes and directs the Agent to
debit automatically, by mechanical, electronic or manual means, any bank
account maintained by it with the Agent for all amounts due and payable by
it under this Agreement, including the repayment of principal and the
payment of interest, fees and all charges relating to the operation of
such bank account. The Agent shall notify the Borrower as to the
particulars of such debits in accordance with its usual
practice.
|
|
5.05
|
Evidence of Obligations (Noteless
Advances)
|
The Agent shall open and maintain, in accordance with its usual
practice, accounts evidencing the Obligations; and the information entered in
such accounts shall constitute
prima facie
evidence of the Obligations.
The Agent may, but shall not be obliged to, request the Borrower to execute and
deliver promissory notes from time to time as additional evidence of the
Obligations, in form and substance satisfactory to the Agent acting reasonably.
- 43 -
|
5.06
|
Determination of Equivalent
Amounts
|
Whenever it is necessary or desirable at any time to determine
the Equivalent Amount in Canadian Dollars of an amount expressed in any other
Qualified Currency, or vice-versa (specifically including for greater certainty
the determination of whether the Outstanding Principal Amount under any Facility
exceeds the maximum amount of such Facility), the Equivalent Amount shall be
determined by reference to the Exchange Rate on the date of such determination.
Notwithstanding the foregoing, however, for the purposes of determining fees
applicable to Letters of Credit issued under Facility A and the standby fee
applicable to Facility A, the Agent shall make such determination based upon the
Exchange Rate in effect on the first Business Day of the month in which such
determination is made.
|
5.07
|
Commitment to Purchase Bankers' Acceptances and BA
Equivalent Notes
|
|
(a)
|
In connection with the issuance of each Bankers'
Acceptance or BA Equivalent Note, the amount payable by the purchaser
thereof to the Borrower shall be determined in accordance with the
following formula:
|
where:
|
|
F
|
means the face amount of such Bankers’ Acceptance or BA
Equivalent Note,
|
|
|
|
|
|
|
D
|
means the discount rate, and
|
|
|
|
|
|
|
T
|
means the number of days to maturity of such Bankers’
Acceptance or BA Equivalent
|
Note,
with the amount as so calculated being
rounded up or down to the fifth decimal place and with 0.000005 being rounded
up.
|
(b)
|
Each BA Lender which is a bank listed in Schedule I of
the
Bank Act
(Canada) agrees to purchase those Bankers' Acceptances
which it has accepted at a discount from the face amount thereof equal to
the CDOR Rate for the relevant period in effect on the issuance date
thereof; provided however that if BMO is the only BA Lender under a
Facility, the discount rate shall be the applicable discount rate
established by BMO on the issuance date thereof.
|
|
|
|
|
(c)
|
Each BA Lender which is a bank listed in Schedule II or
Schedule III of the
Bank Act
(Canada) agrees to purchase those
Bankers' Acceptances which it has accepted at a discount from the face
amount thereof equal to the CDOR Rate for the relevant period in effect on
the issuance date thereof plus a premium determined by such BA Lender not
in excess of one-tenth of one percent (0.10%) per annum.
|
|
|
|
|
(d)
|
Each Non-BA Lender agrees to purchase BA Equivalent Notes
issued by it hereunder at a discount from the face amount thereof equal to
the CDOR Rate for the relevant period in effect on the issuance date
thereof.
|
- 44 -
|
(e)
|
The discount applicable to each Bankers' Acceptances and
BA Equivalent Note shall be determined on the basis of a year of 365
days.
|
|
5.08
|
Provisions Regarding Bankers'
Acceptances
|
The following provisions are applicable to Bankers' Acceptances
issued by the Borrower and accepted by any BA Lender hereunder:
Payment of Bankers' Acceptances
|
|
(a)
|
The Borrower agrees to provide for each Bankers'
Acceptance by payment of the face amount thereof to the Agent on behalf of
the BA Lender on the maturity of the Bankers' Acceptance or, prior to such
maturity, on the Acceleration Date; and the Agent shall remit the said
amount to such BA Lender and such BA Lender shall in turn remit such
amount to the holder of the Bankers' Acceptance. If the Borrower fails to
provide for the payment of the Bankers' Acceptance accordingly, any amount
not so paid shall be immediately payable by the Borrower to the Agent on
behalf of the BA Lender together with interest on such amount calculated
daily and payable monthly at the rate and in the manner applicable to
Prime Rate Loans under the Facility under which such Bankers' Acceptance
was issued. The Borrower agrees not to claim any days of grace for the
payment at maturity of any Bankers' Acceptance and agrees to indemnify and
save harmless the BA Lender in connection with all payments made by the BA
Lender (or by the Agent on its behalf) pursuant to Bankers' Acceptances
accepted by the BA Lender, together with all reasonable costs and expenses
incurred by the BA Lender in this regard. The Borrower hereby waives any
defences to payment which might otherwise exist if for any reason a
Bankers' Acceptance is held by the BA Lender for its own account at
maturity.
|
Availability of Bankers'
Acceptances
|
|
(b)
|
If at any time and from time to time the Agent
determines, acting reasonably, that there no longer exists a market for
Bankers' Acceptances for the term requested by the Borrower, or at all,
the Agent shall so advise the Borrower, and in such event the BA Lenders
shall not be obliged to accept and the Borrower shall not be entitled to
issue Bankers' Acceptances.
|
Power of Attorney
|
|
(c)
|
The Borrower hereby appoints each BA Lender as its true
and lawful attorney to complete and issue Bankers' Acceptances on behalf
of the Borrower in accordance with written (including facsimile)
transmitted instructions provided by the Borrower to the Agent on behalf
of such BA Lender, and the Borrower hereby ratifies all that its said
attorney may do by virtue thereof except anything done that constitutes
negligence or wilful misconduct by the BA Lender. The Borrower agrees to
indemnify and hold harmless the Agent and the BA Lenders and their
respective directors, officers and employees from and against any charges,
complaints, costs, damages, expenses, losses or liabilities of any kind or
nature which they may incur, sustain or suffer, arising from or by reason
of acting, or failing to act, as the case may be, in reliance upon this
power of attorney, except to the extent caused by the negligence or wilful
misconduct of the Agent or the BA Lender or their
respective directors, officers and employees. The Borrower hereby agrees that
each Bankers' Acceptance completed and issued and accepted in accordance with
this section by a BA Lender on behalf of the Borrower is a valid, binding and
negotiable instrument of the Borrower as drawer and endorser. The Borrower
agrees that each BA Lender's accounts and records will constitute prima facie
evidence of the execution and delivery by the Borrower of Bankers' Acceptances.
This power of attorney shall continue in force until the earlier of (i) delivery
of written notice of revocation by the Borrower to the Agent on behalf of the BA
Lender at the Agent's address provided in section 13.09, and (ii) the
termination of this Agreement.
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- 45 -
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5.09
|
Provisions regarding BA Equivalent
Notes
|
Each Non-BA Lender will not accept Bankers' Acceptances
hereunder, and shall instead from time to time make BA Equivalent Loans to the
Borrower. Each BA Equivalent Loan shall be evidenced by a non-interest bearing
promissory note payable by the Borrower to the Non-BA Lender substantially in
the form of Exhibit "J" attached hereto, which will be purchased by the Non-BA
Lender. Each BA Equivalent Note shall be negotiable by the Non-BA Lender without
notice to or the consent of the Borrower, and the holder thereof shall be
entitled to enforce such BA Equivalent Note against the Borrower free of any
equities, defences or rights of set-off that may exist between the Borrower and
the Non-BA Lender. In this Agreement, all references to a BA Equivalent Note
shall mean the loan evidenced thereby if required by the context; and all
references to the "issuance" of a BA Equivalent Note by a Non-BA Lender and
similar expressions shall mean the making of a BA Equivalent Loan by the Non-BA
Lender which is evidenced by a BA Equivalent Note. The following provisions are
applicable to each BA Equivalent Loan made by a Non-BA Lender to the Borrower
hereunder:
Payment of BA Equivalent Notes
|
|
(a)
|
The Borrower agrees to provide for each BA Equivalent
Note by payment of the face amount thereof to the Agent on behalf of the
Non-BA Lender on the maturity of the BA Equivalent Note or, prior to such
maturity, on the Acceleration Date; and the Agent shall remit the said
amount to such Non-BA Lender and such Non-BA Lender shall in turn remit
such amount to the holder of the BA Equivalent Note. If the Borrower fails
to provide for the payment of the BA Equivalent Note accordingly, any
amount not so paid shall be immediately payable by the Borrower to the
Agent on behalf of the Non-BA Lender together with interest on such amount
calculated daily and payable monthly at the rate and in the manner
applicable to Prime Rate Loans under the Facility under which such BA
Equivalent Note was issued. The Borrower agrees not to claim any days of
grace for the payment at maturity of any BA Equivalent Note and agrees to
indemnify and save harmless the Non-BA Lender in connection with all
payments made by the Non-BA Lender (or by the Agent on its behalf)
pursuant to BA Equivalent Notes accepted by the Non-BA Lender, together
with all reasonable costs and expenses incurred by the Non-BA Lender in
this regard. The Borrower hereby waives any defences to payment which
might otherwise exist if for any reason a BA Equivalent Note is held by
the Non- BA Lender for its own account at
maturity.
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- 46 -
Availability of BA Equivalent
Loans
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(b)
|
The Non-BA Lender shall have no obligation to make BA
Equivalent Loans during any period in which the BA Lenders' obligation to
issue Bankers' Acceptances is suspended pursuant to section 3.5 of the CBA
Model Provisions.
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Power of Attorney
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(c)
|
The Borrower hereby appoints the Non-BA Lender as its
true and lawful attorney to complete BA Equivalent Notes on behalf of the
Borrower in accordance with written (including facsimile) transmitted
instructions delivered by the Borrower to the Agent, and the Borrower
hereby ratifies all that its said attorney may do by virtue thereof except
anything done that constitutes negligence or wilful misconduct by the
Non-BA Lender. The Borrower agrees to indemnify and hold harmless the
Agent and the Non- BA Lender and their respective directors, officers and
employees from and against any charges, complaints, costs, damages,
expenses, losses or liabilities of any kind or nature which they may
incur, sustain or suffer, arising from or by reason of acting, or failing
to act, as the case may be, in reliance upon this power of attorney except
to the extent caused by the negligence or wilful misconduct of the Agent
or the Non-BA Lender or their respective directors, officers and
employees. The Borrower hereby agrees that each BA Equivalent Note
completed by the Non-BA Lender on behalf of the Borrower is a valid,
binding and negotiable instrument of the Borrower as drawer and endorser.
The Borrower agrees that the Non-BA Lender's accounts and records will
constitute prima facie evidence of the execution and delivery by the
Borrower of BA Equivalent Notes. This power of attorney shall continue in
force until the earlier of (i) delivery of written notice of revocation by
the Borrower to the Agent on behalf of the Non-BA Lender at the Agent's
address provided in section 13.09, and (ii) the termination of this
Agreement.
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5.10
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No Repayment of Certain Availment
Options
|
The Borrower acknowledges that Bankers’ Acceptances and BA
Equivalent Loans may not be repaid prior to the maturity thereof. If prior to
the maturity of such Availment Option the Agent receives any funds from the
Borrower or any other Person which are intended to be applied as a Repayment
thereof, the Agent may retain such funds without any obligation to invest such
funds or pay interest thereon, and shall apply such funds against such Availment
Option on the scheduled maturity date thereof.
The obligation of any Lender to make Advances under any
Facility shall be suspended if and for so long as it is unlawful or impossible
for such Lender to maintain such Facility or make Advances thereunder as a
result of the adoption of any Applicable Law or any change in any Applicable
Law, or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Lender with any
request or directive (whether or not having the force of law) of any such
Governmental Authority, central bank or comparable agency.
- 47 -
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5.12
|
Anti-Money Laundering
|
The Borrower acknowledges that pursuant to AML Legislation the
Agent and the Lenders may be required to obtain, verify and record information
regarding the Companies and their respective directors, authorized signing
officers, direct or indirect shareholders, partners or other persons in control
of the Companies and the transactions contemplated hereby. The Borrower shall
promptly provide all such information, including any supporting documentation
and other evidence, as may be requested by the Agent or any Lender, or any
prospective assignee or participant of a Lender or the Agent, in order to comply
with any applicable AML Legislation, whether now or hereafter in existence. If
the Agent has ascertained the identity of any Company, or any authorized
signatories of any Company, for the purposes of applicable AML Legislation, then
the Agent shall:
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(a)
|
be deemed to have done so as an agent for each Lender,
and this Agreement shall constitute a "written agreement" in such regard
between each Lender and the Agent within the meaning of applicable AML
Legislation; and
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(b)
|
provide each Lender with copies of all information
obtained in such regard without any representation or warranty as to its
accuracy or completeness.
|
Notwithstanding the foregoing each Lender acknowledges and
agrees that the Agent has no obligation to ascertain the identity of any
Company, or any authorized signatories of any Company, on behalf of such Lender
or to confirm the completeness or accuracy of any information that the Agent
obtains from any Company, or any such authorized signatory, in doing so.
Each Company is and will remain in compliance in all material
respects with all Canadian economic sanctions laws and implementing regulations
under the
Proceeds of Crime (Money Laundering) and Terrorist Financing
Act
(Canada), the
Criminal Code
(Canada), the
United Nations
Act
(Canada) and all similar applicable anti-money laundering and
counter-terrorism financing provisions and regulations issued pursuant to any of
the foregoing. No Company (i) is a Person designated by the Canadian government
on any list set out in the United Nations Al-Qaida and Taliban Regulations, the
Regulations Implementing the United Nations Resolutions on the Suppression of
Terrorism or the
Criminal Code
(collectively, the "
Terrorist
Lists
") with which a Canadian Person cannot deal with or otherwise engage in
business transactions, (iii) is a Person who is otherwise the target of Canadian
economic sanctions laws or (iv) is controlled by (including without limitation
by virtue of such Person being a director or owning voting shares or interests),
or acts, directly or indirectly, for or on behalf of, any Person or entity on a
Terrorist List or a foreign government that is the target of Canadian economic
sanctions prohibitions such that the entry into, or performance under, this
Agreement or any other Loan Document would be prohibited under Canadian Law.
- 48 -
ARTICLE VI -
REPRESENTATIONS AND
WARRANTIES
|
6.01
|
Representations and
Warranties
|
The Borrower hereby represents and warrants to the Agent and
the Lenders as follows:
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(a)
|
Status
- Each Company has been duly incorporated
(or amalgamated) and organized and is validly subsisting under the Laws of
its jurisdiction of incorporation and is up-to-date in respect of all
material corporate filings.
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(b)
|
Corporate Information
- Schedule 6.01(b) attached
hereto contains a list of the Companies and the following information in
respect of each Company: prior names and corporate predecessors, governing
jurisdiction and all prior governing jurisdictions, registered office and
principal place of business, all Medical Cannabis Qualified Jurisdictions,
Non-Medical Cannabis Qualified Jurisdictions and other jurisdictions in
which it has places of business or owns assets and all locations therein,
the number and classes of its issued and outstanding shares, and (except
in the case of the Borrower) a list of its shareholders including the
number and class of shares held by each. Schedule 6.01(b) also contains a
list of all Secured Subsidiaries and a list of all Unsecured
Subsidiaries.
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(c)
|
Solvency
– Each Company is Solvent.
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(d)
|
No Pending Changes
– No Person has any agreement
or option or any right or privilege (whether by Law, pre-emptive or
contractual) capable of becoming an agreement, including convertible
securities, warrants or convertible obligations of any nature, for the
purchase of any properties or assets of any Company out of the ordinary
course of business or for the purchase, subscription, allotment or
issuance of any debt or equity securities of any Company.
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(e)
|
No Conflicting Agreements
- Neither the execution
and delivery of the Security, nor compliance with the terms, provisions
and conditions of this Agreement or the Security will conflict with,
result in a breach of, or constitute a default under the charter documents
or by-laws of any Company or any agreement or instrument to which it is a
party or is otherwise bound, and does not require the consent or approval
of any Person, other than those which have been obtained.
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(f)
|
No Conflict with Charter Documents
- There are no
provisions in the charter documents, constitution or by-laws of any
Company of or in any unanimous shareholder agreement affecting it which
restrict or limit its powers to borrow money, issue debt obligations,
guarantee the payment or performance of the obligations of others, or
otherwise encumber all or any of its property, now owned or subsequently
acquired.
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(g)
|
Loan Documents
- The Borrower has the corporate
capacity, power, legal right and authority to borrow from the Lenders,
perform its obligations under this Agreement and provide the Security
required to be provided by it hereunder; and each Secured Subsidiary has
the corporate capacity, power, legal right and authority to guarantee
payment to the Agent and the Lenders of the Borrower’s Obligations and
provide the Security required to be provided by it hereunder. The
execution and delivery of the Loan Documents by the Secured Companies and
the performance of their respective obligations therein have been duly
authorized by all necessary corporate action. This Agreement and the other
Loan Documents constitute legal, valid and binding obligations of the
Secured Companies party thereto, enforceable against them
in accordance with the terms and
provisions thereof, subject to Laws of general application affecting creditors'
rights (including Insolvency Legislation) and the discretion of the court in
awarding equitable remedies.
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- 49 -
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(h)
|
Conduct of Business; Material Permits
- Each
Company is in compliance in all material respects with all Applicable Laws
of each jurisdiction in which it owns assets or carries on business and is
duly licensed, registered and qualified to do business and is in good
standing in each such jurisdiction; and all such licences, registrations
and qualifications are valid and subsisting and in good standing. Without
limiting the generality of the foregoing, each Company does not carry on
any Medical Cannabis-Related Activities in any jurisdiction which is not a
Medical Cannabis Qualified Jurisdiction, and each Company does not carry
on any Non-Medical Cannabis-Related Activities in any jurisdiction which
is not a Non-Medical Cannabis Qualified Jurisdiction. Attached hereto as
Schedule 6.01(h) is a true and complete list of all Material Permits as at
the Closing Date. Each Company is in compliance with the Code of
Conduct.
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(i)
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Ownership of Assets; Specific Permitted Liens
-
The Companies own all assets required in order to carry on their
businesses as presently conducted. Each Company owns, and possesses its
assets free and clear of any and all Liens except for Permitted Liens. No
Company has any commitment or obligation (contingent or otherwise) to
grant any Liens except for Permitted Liens. No event has occurred which
constitutes, or which with the giving of notice, lapse of time or both
would constitute, a material default under any Lien which has been granted
by any of the Companies. Schedule 6.01(i) attached hereto contains a true
and complete list of all Specific Permitted Liens as at the Closing
Date.
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(j)
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Owned Properties
- There are no Owned Properties
other than: (i) as at the Closing Date, those listed in Schedule 6.01(j)
attached hereto; and (ii) after the Closing Date, additional Owned
Properties (if any) in respect of which all Security has been provided in
favour of the Agent as required pursuant to section 8.01 herein.
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(k)
|
Material Leased Properties
- There are no Material
Leased Properties other than: (i) as at the Closing Date, those listed in
Schedule 6.01(k) attached hereto; and (ii) after the Closing Date,
additional Material Leased Properties (if any) in respect of which all
Security has been provided in favour of the Agent as required pursuant to
section 8.01 herein. Schedule 6.01(k) attached hereto contains a true and
complete list of all Material Leased Properties as at the Closing Date
including in respect of each applicable lease the names of the parties,
the municipal address and legal description of the Material Leased
Property, the rent payable under the lease, the term of the lease and all
renewal options, and the existence of any purchase option or right of
first refusal in respect of the purchase of the Material Leased
Property.
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(l)
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Intellectual Property
- Each Company possesses or
has the right to use all Intellectual Property material to the conduct of
its business, each of which is in good standing in all material respects;
and has the right to use such Intellectual Property without violation of
any material rights of others with respect thereto. Attached hereto as
Schedule 6.01(l) is a list of all such material Intellectual Property held
by the Companies as at the Closing Date, including a description of the
nature of such rights. No Person has asserted any claim in respect of the
validity of such Intellectual Property or the Companies’ rights therein,
and the Borrower is not aware of any basis for the assertion of any such
claims. The Borrower is not aware of any material infringement of the
Companies’ rights under such Intellectual Property by other Persons.
The conduct and operations of the
businesses of each Company do not infringe, misappropriate, dilute or violate
any Intellectual Property rights held by any other Person.
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- 50 -
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(m)
|
Insurance
- The Companies have obtained insurance
which satisfies all requirements in section 7.01(h) herein.
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(n)
|
Material Agreements
- Each Material Agreement to
which any Company is a party is in good standing and in full force and
effect; and none of the Companies, or, to the best of the Borrower's
knowledge, any of the other parties thereto, is in material breach of any
of the terms or conditions contained therein. Attached hereto as Schedule
6.01(n) is a true and complete list of all Material Agreements to which
the Companies are party as at the Closing Date.
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(o)
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Labour Agreements
- Schedule 6.01(o) attached
hereto contains a true and complete list of all contracts with labour
unions and employee associations to which the Companies are a party as at
the Closing Date, and the Borrower is not aware of any attempts to
organize or establish any other labour union or employee
association.
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(p)
|
Environmental Laws
- Except to the extent
disclosed in Schedule 6.01(p) attached hereto:
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(i)
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each Company and its business, operations, assets,
equipment, property, leaseholds and other facilities is in compliance in
all material respects with all Requirements of Environmental Law,
specifically including all Requirements of Environmental Law concerning
the storage and handling of Hazardous Materials;
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(ii)
|
each Company holds all material permits, licenses,
certificates and approvals from Governmental Authorities which are
required in connection with air emissions, discharges to surface or
groundwater, noise emissions, solid or liquid waste disposal, the use,
generation, storage, transportation or disposal of Hazardous Materials and
all other Requirements of Environmental Law;
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(iii)
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there has been no material emission, spill, release, or
discharge into or upon the air, soils (or any improvements located
thereon), surface water or groundwater or the sewer, septic system or
waste treatment, storage or disposal system servicing the premises, of any
Hazardous Materials at or from any of the Properties;
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(iv)
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no written complaint, order, directive, claim, citation,
or notice from any Governmental Authority or any other Person has been
received by any Company with respect to any of the Properties in respect
of air emissions, spills, releases, or discharges to soils or improvements
located thereon, surface water, groundwater or the sewer, septic system or
waste treatment, storage or disposal systems servicing any of the
Properties, noise emissions, solid or liquid waste disposal, the use,
generation, storage, transportation, or disposal of Hazardous Materials or
other Requirements of Environmental Law affecting the
Properties;
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(v)
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there are no legal or administrative proceedings,
investigations or claims now pending, or to the Borrower's knowledge,
threatened in writing, with respect to the presence on or under, or the
discharge, emission, spill, radiation or disposal into or upon any of the
Properties, the atmosphere, or any watercourse or body of water, of any
Hazardous Material; nor are there any material matters under discussion
between any Company and any Governmental Authority
relating thereto; and there is no factual basis for any such proceedings,
investigations or claims; and
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- 51 -
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|
(vi)
|
the Companies have no material indebtedness, obligation
or liability, absolute or contingent, matured or not matured, with respect
to the storage, treatment, cleanup or disposal of any Hazardous Materials,
including without limitation any such indebtedness, obligation, or
liability under any Requirements of Environmental Law regarding such
storage, treatment, cleanup or disposal.
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(q)
|
Litigation
- There are no actions, suits or
proceedings pending, or to the knowledge of the Borrower threatened,
against any Company in any court or before or by any federal, provincial,
municipal or other Governmental Authority except: (i) litigation disclosed
in Schedule 6.01(q) attached hereto; and (ii) other litigation in which
all amounts claimed against the Companies do not in the aggregate exceed
Five Hundred Thousand Dollars ($500,000).
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(r)
|
Pension Plans
- Schedule 6.01(r) attached hereto
contains a true and complete list of all Pension Plans established by the
Companies as at the Closing Date. The Companies are not party to any
Defined Benefit Pension Plans. No steps have been taken to terminate any
such Pension Plan (in whole or in part), no contribution failure has
occurred with respect to any such Pension Plan sufficient to give rise to
a Lien under any Applicable Laws of any jurisdiction, and no condition
exists and no event or transaction has occurred with respect to any such
Pension Plan which might result in the incurrence by any Company of any
material liability, fine or penalty. Each such Pension Plan is in
compliance in all material respects with all applicable pension benefits
and tax Laws, (i) all contributions (including employee contributions made
by authorized payroll deductions or other withholdings) required to be
made to the appropriate funding agency in accordance with all Applicable
Laws and the terms of such Pension Plan have been made in accordance with
all Applicable Laws and the terms of such Pension Plan, (ii) to the extent
applicable, all liabilities under such Pension Plan are funded, on a going
concern and solvency basis, in accordance with the terms of the respective
Pension Plans, the requirements of applicable pension benefits laws and of
applicable regulatory authorities and the most recent actuarial report
filed with respect to the Pension Plan, and (iii) no event has occurred
and no conditions exist with respect to any such Pension Plan that has
resulted or could reasonably be expected to result in such Pension Plan
having its registration revoked or refused for the purposes of any
applicable pension benefits or tax Laws or being placed under the
administration of any relevant pension benefits regulatory authority or
being required to pay any Taxes or penalties under any applicable pension
benefits or tax Laws.
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(s)
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Financial Statements
- The most recent Year-end
Financial Statements and Interim Financial Statements delivered to the
Agent and the Lenders have been prepared in accordance with GAAP (except
in the case of the Interim Financial Statements, subject to normal
adjustments and the absence of footnotes) on a basis which is consistent
with the previous fiscal period, and present
fairly:
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(i)
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the assets and liabilities (whether accrued, absolute,
contingent or otherwise) and financial condition of the Borrower on a
consolidated basis as at the dates therein
specified;
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- 52 -
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(ii)
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the sales, earnings and results of operations of the
Borrower on a consolidated basis during the periods covered thereby;
and
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(iii)
|
in the case of the Year-end Financial Statements, the
changes in financial position of the Borrower on a consolidated
basis;
|
and the Companies have no material
liabilities (whether accrued, absolute, contingent or otherwise) except as
disclosed therein and liabilities incurred in the ordinary course of business
which do not directly or indirectly pertain to financing activities; and since
the dates of the said Year-end Financial Statements and Interim Financial
Statements, as the case may be, no material liabilities have been incurred by
the Companies except in the ordinary course of business and no Material Adverse
Change has occurred.
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(t)
|
Financial and Other Information
- All financial
and other information provided by or in respect of the Companies to the
Agent and the Lenders was true, correct and complete in all material
respects when provided. No information, exhibit, or report furnished by
the Companies to the Agent or the Lenders contains any material
misstatement of fact or omits to state a material fact or any fact
necessary to make the statement contained therein not materially
misleading in the circumstances in which it was made.
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(u)
|
No Guarantees
– No Guarantees have been granted by
any Company except for (i) Guarantees which comprise part of the Security;
and (ii) Guarantees in respect of Permitted Funded Debt incurred by any
other Company.
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(v)
|
Tax Returns
- Each Company has duly and timely
filed all tax returns required to be filed by it, and has paid all Taxes
which are due and payable by it except for Taxes being contested in good
faith and in respect of which reserves have been established in accordance
with GAAP. Each Company has also paid all other Taxes, charges, penalties
and interest due and payable under or in respect of all assessments and
re-assessments of which it has received written notice except for Taxes
being contested in good faith and in respect of which reserves have been
established in accordance with GAAP. There are no actions, suits,
proceedings, investigations or claims pending, or to the knowledge of the
Borrower threatened in writing, against any Company in respect of Taxes,
governmental charges or assessments except for any such actions, suits,
proceedings, investigations or claims which are being contested in good
faith and in respect of which reserves have been established in accordance
with GAAP.
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(w)
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Statutory Liens
- Each Company has remitted on a
timely basis all amounts required to have been withheld and remitted
(including withholdings from employee wages and salaries relating to
income tax, employment insurance and Canada Pension Plan contributions),
goods and services tax and all other amounts which if not paid when due
could result in the creation of a Statutory Lien against any of its
property, except for Permitted Liens.
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(x)
|
Sanctions, etc.
– Each Company and each of its
Affiliates, and each of their respective directors, officers, employees
and agents (i) is not a Sanctioned Person; and (ii) is not located,
organized or resident in a country or territory that is or whose
government is a Sanctioned Entity, and (iii) does not own or control any
assets located in a country or territory that is or whose government is a
Sanctioned Entity except for products sold to customers in any such
country or territory in the ordinary course of business in compliance with
applicable Sanctions laws. Each Company and each of its Affiliates does
not knowingly derive any revenues from investments in,
or transactions with Sanctioned Persons or
Sanctioned Entities, except in compliance with applicable Sanctions laws. No
proceeds of any Advance will be used to fund any operations in, finance any
investments or activities in, or make any payments to, a Sanctioned Person or a
Sanctioned Entity, except in compliance with applicable Sanctions laws.
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- 53 -
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(y)
|
No Default, etc.
- No Default, Event of Default or
Material Adverse Change has occurred and is continuing.
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(z)
|
Transactions with Related Persons
– The Companies
are not party to any contract, commitment or transaction (including by way
of loan) with any Related Person, except Permitted Related Person
Transactions.
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(aa)
|
Full Disclosure
- There are no facts known to the
Borrower which could reasonably be expected to materially adversely affect
the Secured Companies' ability to observe and perform their respective
obligations under the Loan Documents.
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6.02
|
Survival of Representations and
Warranties
|
The Borrower acknowledges that the Agent and the Lenders shall
rely upon the representations and warranties contained in this Article in
connection with the establishment and continuation of the Facilities and also in
connection with the entering into by any Lender of any Hedge Transaction with
the Borrower. Notwithstanding any investigations which may be made by the Agent
or the Lenders, the said representations and warranties shall survive the
execution and delivery of this Agreement until full and final payment and
satisfaction of the Obligations.
ARTICLE VII -
COVENANTS
The Borrower hereby covenants and agrees with the Agent and the
Lenders that it will, and will cause each of its Subsidiaries to:
|
(a)
|
Prompt Payment
- in the case of the Borrower, pay
all principal, interest and other amounts due hereunder at the times and
in the manner specified herein;
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|
(b)
|
Preservation of Corporate Existence, Material Permits,
etc.
– maintain its corporate existence in good standing, continue to
carry on its business, preserve its rights, powers, licences, privileges,
franchises and goodwill, including all Material Permits in all applicable
jurisdictions, maintain all qualifications to carry on business in each
applicable jurisdiction, and conduct its business in a proper and
efficient manner so as to protect its property and income;
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(c)
|
Compliance with Laws
- comply in all material
respects with all Applicable Laws (specifically including, for greater
certainty, all applicable Requirements of Environmental Law) and use the
proceeds of all Advances hereunder for legal and proper purposes; and
without limiting the generality of the foregoing the Borrower shall cause
each Company to:
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(i)
|
manage and operate its business in accordance with all
Applicable Laws; and without limiting the generality of the foregoing,
until the Cannabis Act is in full force and
effect the Companies shall produce Cannabis
solely for medical purposes in compliance with all Applicable Laws and will not
use the proceeds of advances under the Facilities, directly or indirectly, for
any purpose which is not fully compliant with all Applicable Laws;
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- 54 -
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|
(ii)
|
engage in Medical Cannabis-Related Activities only in
Medical Cannabis Qualified Jurisdictions, and engage in Non-Medical
Cannabis Cannabis-Related Activities only in Non-Medical Cannabis
Qualified Jurisdictions, in each case in accordance with all Applicable
Laws therein; and
|
|
|
|
|
|
|
(iii)
|
ensure that all activities of the Companies relating to
the cultivation, production and processing of Cannabis and
Cannabis-related products occur solely in facilities licensed by
Governmental Authorities in Qualified
Jurisdictions;
|
|
(d)
|
Payment of Taxes, etc.
- pay when due all rents,
Taxes, rates, levies, assessments and governmental charges, fees and dues
lawfully levied, assessed or imposed in respect of its property which are
material to the conduct of its business, and deliver to the Agent upon
request receipts evidencing such payments; except for rents, Taxes, rates,
levies, assessments and governmental charges, fees or dues in respect of
which an appeal or review proceeding has been commenced, a stay of
execution pending such appeal or review proceeding has been obtained or
reserves have been established in accordance with GAAP; and the amounts in
question do not in the aggregate materially detract from the ability of
the Companies to carry on their businesses and to perform and satisfy all
of their respective obligations hereunder;
|
|
|
|
|
(e)
|
Maintain Records
- maintain adequate books,
accounts and records in accordance with GAAP;
|
|
|
|
|
(f)
|
Maintenance of Assets
- keep its property and
assets (except obsolete assets) in good repair and working
condition;
|
|
|
|
|
(g)
|
Inspection
- permit the Agent and its employees
and agents to enter upon and inspect its properties, assets, books and
records from time to time during normal business hours upon reasonable
prior notice and in a manner which does not materially interfere with its
business, and make copies of and abstracts from such books and records and
discuss its affairs, finances and accounts with any of its officers,
directors, accountants and auditors, and execute and deliver all consents
and further assurances as may be necessary or desirable in order for the
Agent and its agents to obtain information from Governmental Authorities
and other third parties with respect to environmental matters;
|
|
|
|
|
(h)
|
Insurance
- obtain and maintain, from insurance
companies acceptable to the Agent and the Lenders, liability insurance,
all-risks property insurance on a replacement cost basis (less a
reasonable deductible not to exceed amounts customary in the industry for
similar businesses and properties), business interruption insurance,
product recall and liability insurance coverage for at least Ten Million
Dollars ($10,000,000), and insurance in respect of such other risks as are
customary in the industry for similar businesses and properties; all of
which policies of insurance shall be in such amounts as are customary in
the industry for similar businesses and properties; and the Borrower shall
cause the interest of the Agent to be noted on property insurance policies
as first mortgagee and loss payee (which policies shall include the
standard mortgage clause approved by the Insurance Bureau of Canada (or an
equivalent clause in other applicable jurisdictions)) and as an additional
insured under liability insurance policies; and the
Borrower shall provide the Agent with
certificates of insurance and certified copies of such policies from time to
time upon request;
|
- 55 -
|
(i)
|
Perform Obligations
- fulfil all covenants and
obligations required to be performed by it under those Loan Documents to
which it is a party;
|
|
|
|
|
(j)
|
Notice of Certain Events
- provide written notice
to the Agent of each of the following promptly after the occurrence
thereof:
|
|
|
(i)
|
any Default, Event of Default or Material Adverse
Change;
|
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|
|
|
|
|
(ii)
|
a default by any Company under any agreement relating to
Funded Debt;
|
|
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|
(iii)
|
receipt by any Company of notice of the termination or
suspension of, or a material default under, any Material Agreement or
Material Permit;
|
|
|
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|
|
|
(iv)
|
all amendments to Material Permits;
|
|
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|
|
|
(v)
|
all material correspondence and notices received from any
Governmental Authority or stock exchange with respect to any Material
Permit or any regulatory or other investigations into the Companies’
business practices;
|
|
|
|
|
|
|
(vi)
|
any changes in the identity of Responsible Persons,
together with satisfactory evidence of security clearances for such
Responsible Persons under the Cannabis Act or the Cannabis Regulations;
and any rejection notice for new or renewal security clearance
applications for each Responsible Person.
|
|
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|
|
|
|
(vii)
|
the results of any facility audit by any Governmental
Authority to the extent such results are material and negative; and (ii)
any warning document, letter or notice from any Governmental Authority
that would have a material and negative impact on any Material Permit,
together with the Company's action plan with respect thereto;
|
|
|
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|
|
(viii)
|
the issuance of any management letter to the Borrower by
its auditor; and
|
|
|
|
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|
|
(ix)
|
the incorrectness of any representation or warranty
contained herein in any material respect;
|
|
(k)
|
Bank Accounts and Service Agreements
– maintain
all of its bank accounts and Service Agreements with BMO and its
Affiliates, except:
|
|
|
(i)
|
bank accounts having an aggregate principal balance less
than the greater of (i) Two Million Five Hundred Thousand Dollars
($2,500,000); and (ii) ten percent (10)% of the Companies' consolidated
cash at the time of determination; and
|
|
|
|
|
|
|
(ii)
|
bank accounts held by the Secured Companies in respect of
which deposit account control agreements have been provided in favour of
the Agent, to the extent requested by the Agent upon the instructions of
the Required Lenders;
|
- 56 -
|
(l)
|
Use of Advances
- utilize the proceeds of all
Advances for the Companies' own business purposes; and not permit such
proceeds to be used, directly or indirectly, by any other Person or for
any other purpose;
|
|
|
|
|
(m)
|
Environmental Information
- if requested by the
Agent from time to time upon the instructions of the Required Lenders: (i)
provide the Agent with an environmental questionnaire in the Agent's
standard form completed by a knowledgeable officer of the Borrower in
respect of any Property; and (ii) if the information contained therein is
inconsistent in any material respect with the representations in section
6.01(p) herein, provide the Agent with a phase I environmental report in
respect of such Property (and if recommended in such Phase I report, a
Phase II environmental report), and promptly take all such action as may
be required to comply with all reasonable recommendations contained in
such report(s); and
|
|
|
|
|
(n)
|
Further Assurances
- provide the Agent with such
further information, financial data, documentation and other assurances as
the Agent or the Lenders may reasonably require from time to
time.
|
The Borrower hereby covenants and agrees with the Agent and the
Lenders that it will not, and will ensure that each of its Subsidiaries does
not, without the prior written consent of the Agent on behalf of the Required
Lenders (or if required pursuant to section 11.01, all Lenders acting
unanimously), which consent may be withheld in their sole discretion unless
otherwise expressly provided herein:
|
(a)
|
Funded Debt
- create, incur or assume any Funded
Debt, except Permitted Funded Debt;
|
|
|
|
|
(b)
|
Guarantees
- become obligated under Guarantees,
except: (i) Guarantees which comprise part of the Security; and (ii)
Guarantees in respect of Permitted Funded Debt incurred by any other
Secured Company;
|
|
|
|
|
(c)
|
Liens
- grant or suffer to exist any Lien in
respect of any of its property, except Permitted Liens;
|
|
|
|
|
(d)
|
Disposition of Assets
- directly or indirectly
sell, transfer, assign, lease or otherwise dispose of any of its assets
(including, without limitation, Intellectual Property), except
that:
|
|
|
(i)
|
each Company may sell inventory in the ordinary course of
business;
|
|
|
|
|
|
|
(ii)
|
each Company may sell or transfer assets to any other
Secured Company, provided that the transferee has provided all Security
required to be provided by it hereunder and no Default, Event of Default
or Material Adverse Change has occurred and is continuing or would exist
immediately thereafter; and
|
|
|
|
|
|
|
(iii)
|
each Company may sell or otherwise dispose of other
assets from time to time in the ordinary course of business (but for
greater certainty a sale and leaseback transaction shall not be considered
to be in the ordinary course of business), provided that the fair market
value of the assets which are the subject of each such disposition (in one
or a series of related transactions) does not exceed Two Million Five
Hundred Thousand Dollars ($2,500,000) and no Default, Event of Default or
Material Adverse Change has occurred and is continuing or would exist
immediately thereafter; and for greater certainty the Borrower shall be
required to make a Repayment in connection with each such disposition to the
extent required pursuant to section 3.04(b);
|
- 57 -
|
(e)
|
Investments
- make or acquire any Investments,
except that the following Investments may be made or acquired if both
immediately before and immediately after each such Investment no Default,
Event of Default or Material Adverse Change has occurred and is
continuing:
|
|
|
(i)
|
Permitted Acquisitions;
|
|
|
|
|
|
|
(ii)
|
Investments by any Company in any Secured Company,
provided that such Secured Company has provided all Security required to
be provided by it hereunder;
|
|
|
|
|
|
|
(iii)
|
Investments by any Company in Unsecured Subsidiaries,
provided that the aggregate amount of all such Investments by the
Companies in Unsecured Subsidiaries shall not at any time exceed
[Redacted: Threshold]
;
|
|
|
|
|
|
|
(iv)
|
Investments in direct obligations of the Government of
Canada with maturities of one (1) year or less from the date of
acquisition of the investment, provided that if required by the Required
Lenders, the Company making such Investment shall provide such additional
items of Security as the Agent may require in order that such investments
shall be specifically pledged to the Agent;
|
|
|
|
|
|
|
(v)
|
Investments in certificates of deposit having maturities
of less than one (1) year, issued by BMO; and
|
|
|
|
|
|
|
(vi)
|
other Investments not in excess of the aggregate amount
of
[Redacted: Threshold]
;
|
|
(f)
|
Certain Activities
- directly or indirectly engage
or participate in any Medical Cannabis-Related Activities in any
jurisdiction other a Medical Cannabis Qualified Jurisdiction, or directly
or indirectly engage or participate in any Non-Medical Cannabis-Related
Activities in any jurisdiction other a Non-Medical Cannabis Qualified
Jurisdiction;
|
|
|
|
|
(g)
|
Distributions
- make any Distribution except as
follows:
|
|
|
(i)
|
each Company may make Distributions to a Secured Company,
provided that the Agent holds a First-Ranking Security Interest in all
property and assets of the Secured Company receiving such Distribution;
and
|
|
|
|
|
|
|
(ii)
|
after the Conversion Date the Borrower may make
Distributions provided that both before and immediately after each such
Distribution the Borrower is in compliance with all financial covenants in
section 7.03 herein and no Default, Event of Default or Material Adverse
Change has occurred and is continuing;
|
|
(h)
|
Certain Payments
- make any payment in respect of
principal, interest, fees or any other amounts in respect
of:
|
|
|
(i)
|
Subordinated Debt, except to the extent expressly
permitted herein or under the subordination, postponement and assignment
agreement relating thereto; or
|
- 58 -
|
|
(ii)
|
the Convertible Debentures, except with the prior written
consent of the Lenders pursuant to section
2.04(b);
|
|
(i)
|
Amendments to Convertible Debentures
– agree to
any amendments to the terms and conditions of the Convertible Debentures
or the trust indenture relating thereto;
|
|
|
|
|
(j)
|
Corporate Changes
– materially change its capital
structure or the nature of its business, or enter into any transaction
whereby all or a substantial portion of its property, assets and
undertaking would become the property of any other Person (other than a
Secured Company), whether by way of reconstruction, reorganization,
recapitalization, consolidation, amalgamation, merger, transfer, sale or
otherwise;
|
|
|
|
|
(k)
|
Defined Benefit Pension Plans
– establish, assume
or otherwise become a party to or liable under any Defined Benefit Pension
Plan;
|
|
|
|
|
(l)
|
New Subsidiaries
- create or acquire any
Subsidiary unless (i) all of the issued and outstanding shares in the
capital of such Subsidiary are owned directly or indirectly by the
Borrower; (ii) such new Subsidiary provides a Guarantee in respect of the
Obligations and all Security required to be provided by it hereunder,
unless the Lenders agreed that such Subsidiary shall be designated an
Unsecured Subsidiary; and (iii) all of the issued and outstanding shares
of such new Subsidiary are pledged to the Agent, and in each case
accompanied by legal opinions as contemplated herein;
|
|
|
|
|
(m)
|
Fiscal Year
- change its fiscal year;
|
|
|
|
|
(n)
|
Auditors
- change its auditors to a firm that is
not a nationally recognized auditing firm;
|
|
|
|
|
(o)
|
Dealing with Related Persons
- enter into any
contract, carry out any transaction or otherwise have any dealings with
Related Persons, except Permitted Related Person Transactions;
or
|
|
|
|
|
(p)
|
Use of Advances
- use the proceeds of any Advance
for any purposes other than those expressly contemplated in this
Agreement; and without limiting the generality of the foregoing, the
proceeds of any Advance will not be used, directly or indirectly, to lend,
contribute or otherwise make available such proceeds to any Subsidiary,
joint venture partner or other Person, to fund any operations in, finance
any investments, business or activities in, or make any payments to, a
Sanctioned Person or a Sanctioned Entity if such funding, financing or
paying would result in a violation of Sanctions by any Person (including
any Person participating in such Advance, whether as underwriter, advisor,
investor or otherwise), or in any other manner that would result in a
violation of Sanctions by any Person. The Agent and the Lenders in their
sole and unfettered discretion may refuse to make any Advance or delay,
block or refuse to process any transaction which they believe may result
in a contravention of the foregoing covenant.
|
|
(a)
|
Prior to the Conversion Date the Borrower shall maintain
cash deposits with the Agent at all times (for greater certainty, in
addition to the cash collateral required to be pledged pursuant to section
8.03 herein) in an aggregate amount at least equal to 125% of the
Outstanding Principal Amount under Facility A (the "
Minimum Cash
Ratio
"). If this covenant is not satisfied at any time or if any other
Event of Default has occurred, in addition to any other rights or
remedies the Agent may exercise, the Agent may
in its discretion (i) set-off and apply all or any portion of such cash deposits
against the Obligations; or (ii) restrict the Borrower's entitlement to use all
or any portion of such cash deposits (including placing such cash deposits in a
segregated blocked account) in order to facilitate any future enforcement of the
Agent's security interest therein.
|
- 59 -
|
(b)
|
Prior to the Conversion Date the Borrower shall comply
with the following financial ratios at all
times:
|
|
|
(i)
|
the Minimum Cash Ratio shall be not less than 1.25:1;
and
|
|
|
|
|
|
|
(ii)
|
the ratio of Total Funded Debt to Tangible Net Worth
shall not exceed 1.50:1.
|
|
(c)
|
On and after the Conversion Date the Borrower shall
comply with the following financial ratios at all
times:
|
|
|
(i)
|
the Fixed Charge Ratio shall be not less than 1.25:1;
and
|
|
|
|
|
|
|
(ii)
|
the Total Funded Debt to EBITDA Ratio shall not exceed
3.00:1.
|
|
(d)
|
For the purpose of determining compliance with each ratio
in paragraphs (b) and (c) above in respect of any twelve-month fiscal
period ending prior to the end of the fourth complete Fiscal Quarter
following the Closing Date, each component of such ratio shall be
comprised of the aggregate of (A) the actual amount of such component
during such fiscal period up to and including the date of determination
plus (B) the amount of such component for the remainder of such fiscal
period as estimated by the Borrower and approved by the Required Lenders
acting reasonably.
|
|
7.04
|
Reporting Requirements
|
The Borrower shall deliver, or cause to be delivered (by email
in accordance with section 13.09), the following financial and other information
to the Agent at the times indicated below:
|
(a)
|
a Borrowing Base Certificate as at the end of each month
in the form of Exhibit "F" attached hereto, certified by the President,
Chief Financial Officer or other senior officer of the Borrower acceptable
to the Agent, by no later than fifteen (15) days after the end of such
month, which shall include:
|
|
|
(i)
|
an aged summary of accounts receivable of the Companies
including the following information: country of domicile; intercompany
accounts; doubtful accounts; accounts in dispute; contra accounts;
holdbacks, and any deposits received from each account debtor which remain
outstanding at the report date; and
|
|
|
|
|
|
|
(ii)
|
a summary of all amounts which comprise the Potential
Statutory Priority Amount;
|
|
(b)
|
on the first Business Day of each month, a certificate in
the form of Exhibit "G" attached hereto, certified by the President, Chief
Financial Officer or other senior officer of the Borrower acceptable to
the Agent, which shall include:
|
|
|
(i)
|
a list of Medical Cannabis Qualified
Jurisdictions;
|
- 60 -
|
|
(ii)
|
a list of Non-Medical Cannabis Qualified
Jurisdictions;
|
|
|
|
|
|
|
(iii)
|
a list of jurisdictions in which the Companies own assets
or carry on business which are not Qualified Jurisdictions and a summary
of all activities of the Companies therein, and confirmation such
activities do not contravene any Applicable Laws in such jurisdictions and
that the Borrower has received legal advice from its counsel in such
jurisdictions to that effect;
|
|
|
|
|
|
|
(iv)
|
confirmation that the Companies are carrying on Medical
Cannabis-Related Activities only in Medical Cannabis Qualified
Jurisdictions and Non-Medical Cannabis-Related Activities only in
Non-Medical Cannabis Qualified Jurisdictions, in each case in compliance
with all Applicable Laws therein; and all Material Permits issued by
Governmental Authorities for the Companies’ facilities and operations
remain in full force and effect;
|
|
|
|
|
|
|
(v)
|
prior to the Conversion Date, confirmation that the
Borrower is in compliance with section 7.03(a), including all information
and calculations to enable the Lenders to verify such
compliance;
|
|
(c)
|
quarterly, within forty-five (45) days after the end of
each Fiscal Quarter other than the last Fiscal Quarter in each Fiscal
Year:
|
|
|
(i)
|
the Interim Financial Statements in respect of such
Fiscal Quarter accompanied by management's discussion and analysis;
and
|
|
|
|
|
|
|
(ii)
|
a Quarterly Compliance Certificate in respect of such
Fiscal Quarter certified by the President, Chief Financial Officer or
other senior officer of the Borrower acceptable to the Agent, in the form
of Exhibit "H" attached hereto;
|
|
(d)
|
annually, within ninety (90) days after the end of each
Fiscal Year:
|
|
|
(i)
|
the Year-End Financial Statements in respect of such
Fiscal Year, accompanied by management's discussion and analysis and a
copy of the Borrower's auditor's letter to management; and
|
|
|
|
|
|
|
(ii)
|
a Quarterly Compliance Certificate in respect of such
Fiscal Year certified by the President, Chief Financial Officer or other
senior officer of the Borrower acceptable to the Agent, in the form of
Exhibit "H" attached hereto;
|
|
(e)
|
annually, not later than one hundred twenty (120) days
after the commencement of each Fiscal Year, the consolidated annual
business plan of the Borrower for such Fiscal Year updated on a quarterly
basis, including projections in respect of profit and loss, balance sheet,
cash flow, Capital Expenditures and financial covenant calculations,
including disclosure of all material assumptions utilized (the "
Annual
Business Plan
");
|
|
|
|
|
(f)
|
not later than three (3) Business Days before the
completion of each Permitted Acquisition (for greater certainty,
regardless of whether the Required Lenders have provided their prior
written consent thereto), a certificate of an officer of the Borrower
containing details of such Acquisition and confirming that such
Acquisition will constitute a Permitted Acquisition;
and such additional information and documents as the Agent (upon
the instructions of the Required Lenders) may reasonably require from time to
time.
|
- 61 -
ARTICLE VIII -
SECURITY
|
8.01
|
Security to be Provided by the Secured
Companies
|
The Borrower agrees to provide (or cause the Secured
Subsidiaries to provide) the security listed below as continuing security for
the payment of the Obligations, specifically including for greater certainty the
Hedging Obligations and all other obligations of the Borrower arising under or
in respect of this Agreement and the other Loan Documents:
|
(a)
|
Guarantees from all present and future Secured
Subsidiaries in respect of the Obligations, each such Guarantee to be in
an unlimited amount;
|
|
|
|
|
(b)
|
general security agreements creating a First-Ranking
Security Interest in respect of all present and future property, assets
and undertaking of the Secured Companies (for greater certainty,
specifically including all shares and other equity interests held by each
Secured Company in any other Company, provided that the certificates
evidencing such shares and other equity interests shall not be required to
be delivered to the Agent unless and until requested in writing by the
Agent upon the instructions of the Required Lenders);
|
|
|
|
|
(c)
|
collateral mortgages or debentures creating a
First-Ranking Security Interest in respect of the Owned
Properties;
|
|
|
|
|
(d)
|
leasehold mortgages or debentures creating a
First-Ranking Security Interest in respect of all Material Leased
Properties;
|
|
|
|
|
(e)
|
to the extent requested by the Agent upon the
instructions of the Required Lenders acting reasonably, security
agreements creating a specific assignment and First-Ranking Security
Interest in all or any of the Material Agreements, together with
acknowledgements and consents from the other parties thereto; provided
however that if the assignment of any Material Agreement as security
requires the consent of the other contracting party thereto, the Borrower
shall use reasonable commercial efforts to obtain such consent shall not
be required to assign such Material Agreement as security if such consent
is not provided;
|
|
|
|
|
(f)
|
to the extent requested by the Agent upon the
instructions of the Required Lenders acting reasonably, security
agreements creating a specific assignment and First-Ranking Security
Interest in all or any of the Material Permits to the extent a security
interest may be obtained therein, together with acknowledgements and
consents from the issuers thereof to the extent available;
|
|
|
|
|
(g)
|
to the extent requested by the Agent upon the
instructions of the Required Lenders acting reasonably, security
agreements creating an assignment and First-Ranking Security Interest in
respect of Intellectual Property of the Secured Companies which the
Required Lenders consider to be material, together with any necessary
consents from other Persons which may be required in connection with the
granting of said assignments and security
interests;
|
- 62 -
|
(h)
|
to the extent requested by the Agent upon the
instructions of the Required Lenders acting reasonably, assignments of
bank accounts maintained by the Secured Companies with financial
institutions other than BMO, including deposit account control agreements
in favour of the Agent;
|
|
|
|
|
(i)
|
a specific pledge of monies referred to in section 8.03
herein;
|
|
|
|
|
(j)
|
assignments all policies of insurance in respect of the
Secured Companies (which requirement shall be satisfied if the Agent's
interest as first mortgagee and loss payee is recorded on such policies);
and
|
|
|
|
|
(k)
|
such other security and further assurances as the Agent
may reasonably require from time to time.
|
|
8.02
|
Security to be Provided by
Others
|
The Borrower agrees to obtain and provide to the Agent the
following (and it shall constitute an Event of Default if any item of listed
below is not provided to the Agent):
|
(a)
|
an acknowledgement provided by the trustee under the
trust indenture in respect of the Convertible Debentures confirming the
subordination and postponement provisions contained therein;
|
|
|
|
|
(b)
|
a subordination, postponement and standstill agreement
from any other holder of indebtedness which is intended to constitute
Subordinated Debt; and
|
|
|
|
|
(c)
|
Landlord Agreements in respect of each Material Leased
Property.
|
|
8.03
|
Specific Pledge of Cash
Collateral
|
The Borrower shall establish a bank account with the Agent and
shall deposit and maintain funds in such account (in this section called the
"
Cash Collateral
") in an amount estimated by the Required Lenders to be
equal to the aggregate of all scheduled principal and interest payments in
respect of Facility B during the two (2) year period immediately following the
Closing Date, which amount shall be adjusted immediately following each Advance
under Facility B and advised by the Agent to the Borrower in writing. By way of
example, if Facility B were to be fully advanced on the Closing Date the Cash
Collateral would be $39,765,234 based on an interest rate of 4.75% per annum. At
any time after the date which is two (2) years after the Closing Date the
Borrower may request the release of the Cash Collateral, provided that at such
time all representations and warranties contained herein continue to be true and
correct in all material respects and no Default, Event of Default or Material
Adverse Change has occurred and is continuing; and the Lenders agree to act
reasonably in considering any such request.
|
8.04
|
General Provisions re Security;
Registration
|
The Security shall be in form and substance satisfactory to the
Agent and the Required Lenders in their sole discretion. The Security shall be
held by the Agent for the benefit of the Lenders. The Agent may require that any
item of Security be governed by the Laws of the jurisdiction where the property
subject to such item of Security is located. The Security shall be registered by
the Borrower where necessary or desirable to record and perfect the charges
contained therein, as determined by the Agent in its sole discretion, specifically including registrations in the
Canadian Intellectual Property Office and fixture filings in respect of personal
property of the Secured Companies which is affixed to Land (other than the Owned
Properties). All share certificates evidencing issued and outstanding shares in
the capital of each Secured Company (other than the Borrower) shall be delivered
to the Agent together with a stock transfer power of attorney executed in
blank.
- 63 -
|
8.05
|
Opinions re Security
|
The Borrower shall cause to be delivered to the Agent the
opinions of the solicitors for the Secured Companies regarding their corporate
status, the due authorization, execution and delivery of the Security provided
by them, all registrations in respect of the Security, the results of all
applicable searches in respect of them, title to the Properties and the results
of all customary off-title enquiries relating thereto (such results to be
satisfactory to the Agent and the Lenders) and the enforceability of such
Security; all such opinions to be in form and substance satisfactory to the
Agent and its counsel. In lieu of title opinions, the Borrower may at its option
arrange for title insurance in respect of all of any of the Properties, the form
and substance of which shall be satisfactory to the Agent and the Lenders.
|
8.06
|
After-Acquired Property, Further
Assurances
|
The Borrower shall execute and deliver from time to time, and
cause each other Secured Company to execute and deliver from time to time, all
such further documents and assurances as may be reasonably required by the Agent
from time to time, not inconsistent with the terms of this Agreement, in order
to provide the Security contemplated hereunder, specifically including:
supplemental or additional security agreements, assignments and pledge
agreements which shall include lists of specific assets to be subject to the
security interests required hereunder.
|
8.07
|
Security for Hedge
Transactions
|
If a Lender continues to be a party to one or more Hedge
Transactions with the Borrower after all other indebtedness and obligations of
the Borrower to such Lender hereunder have been repaid and satisfied in full (or
assigned by such Lender to an assignee), for greater certainty such Lender shall
continue to be a Lender for all purposes of this Agreement and the obligations
under such Hedge Transactions shall continue to be secured by the Security as
provided herein, but such Lender shall not thereafter be a "Required Lender" as
such term is defined herein.
|
8.08
|
Agent May Obtain Insurance
|
If the Borrower does not provide the Agent with evidence of
continuing insurance coverage which satisfies the requirements of this
Agreement, the Agent may, but shall have no obligation to, purchase such
insurance in order to protect the interests of the Agent and the Lenders in the
Collateral. Such insurance may also, but need not, protect the Secured
Companies’ interests in the Collateral. The Borrower agrees to immediately
reimburse the Agent upon demand for all costs and expenses incurred by the Agent
in respect of the purchase of any such insurance, and until so paid such
expenses shall constitute part of the Obligations, shall bear interest as
provided in section 10.09 and shall be secured by the Security.
- 64 -
If insurance proceeds become payable in respect of loss of or
damage to any property owned by a Company:
|
(a)
|
if an Event of Default has occurred and is continuing at
such time, such proceeds shall be applied against the Obligations;
and
|
|
|
|
|
(b)
|
if no Event of Default has occurred and is continuing at
such time, and if such proceeds are less than Two Million Five Hundred
Thousand Dollars ($2,500,000), the Lenders shall consent to the payment of
such proceeds to such Company if:
|
|
|
(i)
|
such property has been repaired or replaced within one
hundred eighty (180) days after the event giving rise to the proceeds and
the proceeds will reimburse the Company for payments it has made for such
purpose; or
|
|
|
|
|
|
|
(ii)
|
the Company confirms in writing to the Agent that it will
forthwith use such proceeds to repair or replace such
property.
|
|
8.10
|
Unsecured Subsidiaries
|
|
(a)
|
The Borrower may by written notice to the Agent from time
to time advise of its intention to establish or acquire one or more
Subsidiaries which the Borrower proposes to be exempted from the
requirement to provide a Guarantee and Security pursuant to this Article
VIII (collectively the "
Unsecured Subsidiaries
"). Notwithstanding
the provisions of this Article VIII or any other provisions of this
Agreement, the Unsecured Subsidiaries shall not be required to provide
Guarantees and Security if all the following conditions are
satisfied:
|
|
|
(i)
|
no Default, Event of Default or Material Adverse Change
has occurred and is continuing;
|
|
|
|
|
|
|
(ii)
|
the aggregate value of the assets of all Unsecured
Subsidiaries is less than ten percent (10%) of the aggregate value of the
assets of all Companies; and
|
|
|
|
|
|
|
(iii)
|
the earnings before deduction of interest, taxes,
depreciation and amortization of the Unsecured Subsidiaries (determined in
the same manner as EBITDA is determined in respect of the Borrower and all
of its Subsidiaries on a consolidated basis) in each twelve (12) month
fiscal period is less than ten percent (10%) of the EBITDA of the Borrower
and all of its Subsidiaries on a consolidated basis in such fiscal
period.
|
|
(b)
|
The Borrower agrees to provide written notice to the
Agent immediately if any one or more of the conditions listed in paragraph
(a) are not satisfied at any time. If any one or more of the conditions
listed in paragraph (a) are not satisfied at any time (and regardless of
whether the Borrower has provided written notice in respect thereof), the
Agent may in its discretion by written notice to the Borrower require that
Guarantees and Security be provided by any or all of the Unsecured
Subsidiaries, but only to the extent necessary such that the conditions
listed in paragraph (a) are satisfied. Upon receipt of such written notice
the Borrower shall immediately take all such actions to cause the
Unsecured Subsidiaries designated therein to provide Guarantees and
Security in favour of the Agent, together with all ancillary documentation
and legal opinions, required pursuant to this Article
VIII.
|
- 65 -
|
(c)
|
The designation of any Company as an Unsecured Subsidiary
or an Immaterial Unsecured Subsidiary shall be reflected in Schedule
6.01(b) - Corporate Information.
|
|
8.11
|
Quebec Hypothecary
Representative
|
Without limiting the powers of the Agent (and as part of its
duties) hereunder or under the other Loan Documents and to the extent
applicable, the Borrower (on its own behalf and on behalf of each Secured
Subsidiary) and the Lenders hereby acknowledge that the Agent will, for the
purposes of holding any security granted under the Deeds of Hypothec be the
hypothecary representative (within the meaning of Article 2692 of the Civil Code
of Québec) for all present and future Lenders. Each of the Lenders and the other
Secured Parties hereby constitutes, to the extent necessary, the Agent as its
hypothecary representative in order to hold Liens granted under such hypothecs.
Each Person who becomes a Lender after the Closing Date will be deemed to have
confirmed and ratified the constitution of the Agent as its hypothecary
representative. Any Person who is not a Lender and who is entitled to benefit
from the Liens created by the Security Documents will be deemed to have accepted
the constitution of the Agent as its hypothecary representative. The execution,
if applicable, prior to the Closing Date by the Agent, in its capacity as
hypothecary representative for and on behalf of the Lenders of the hypothecs
comprised within the Security is hereby ratified and confirmed. For the
avoidance of doubt, the Agent, acting as hypothecary representative, shall have
the same rights, powers, immunities, indemnities and exclusions from liability
as are prescribed in favor of the Agent in this Agreement, which shall apply
mutatis mutandis
. In the event of the resignation of the Agent (which
shall include its resignation as hypothecary representative) and appointment of
a successor Agent, such successor Agent shall also act as hypothecary
representative, as contemplated above.
|
8.12
|
Temporary Exceptions re Prairie
Plant
|
The Borrower hereby advises that an exemption order has not
been issued under the Saskatchewan Farm Security Act in respect of the real
property owned by Prairie Plant Systems Inc. (“Prairie Plant”) in Saskatoon,
Saskatchewan described as Surface Parcel 131812714 (the “Saskatoon Property”),
which said disclosure constitutes an exception to the representation in section
6.01(h) herein. The Borrower confirms that it has submitted an application for
such exemption order in respect of the Saskatoon Property and reasonably
believes that such exemption order will be issued on or before September 15,
2018. Notwithstanding any other provisions of this Agreement (i) the Security,
opinions and related documentation required to be provided by or in respect of
Prairie Plant shall be provided on or before the date which is sixty (60) days
after the Closing Date, and (ii) during such period the indebtedness of Prairie
Plant to HSBC Bank Canada (“HSBC”) in the maximum aggregate principal amount of
$10,100,000 shall constitute Permitted Funded Debt and all Liens held by HSBC
against the assets of Prairie Plant shall constitute Specific Permitted Liens.
On or before the date which is sixty (60) days after the Closing Date the
Borrower shall (i) deliver or cause to be delivered all Security required to be
provided by or in respect of Prairie Plant and its assets, including for greater
certainty all opinions and related documentation required herein including
satisfactory evidence that an exemption order has been issued under the
Saskatchewan Farm Security Act in respect of the Saskatoon Property; and (ii)
repay all indebtedness of Prairie Plant to HSBC and obtain and register releases
and discharges of all Liens held by HSBC against Prairie Plant and its assets.
The Borrower shall not be entitled to use the proceeds of an Advance under
Facility A, directly or indirectly, to repay any portion of such indebtedness to
HSBC unless and until the said exemption order has been obtained.
- 66 -
ARTICLE IX -
CONDITIONS PRECEDENT
|
9.01
|
Conditions Precedent to First
Advance
|
The Lenders shall have no obligation to make the first Advance
under any Facility unless at the time of such Advance all of the following
conditions have been satisfied, in each case to the satisfaction of the Agent
and the Lenders in their sole discretion:
|
(a)
|
all conditions precedent in section 9.02 shall have been
satisfied;
|
|
|
|
|
(b)
|
the Lenders shall have completed and shall be satisfied
with their due diligence in respect of the Companies; and without limiting
the generality of the foregoing the Lenders shall be satisfied
with:
|
|
|
(i)
|
the Year-end Financial Statements in respect of the most
recent Fiscal Year and the Interim Financial Statements in respect of the
most recent Fiscal Quarter;
|
|
|
|
|
|
|
(ii)
|
financial projections in respect of the Borrower on a
consolidated basis for the current Fiscal Year and the immediately
following three (3) Fiscal Years;
|
|
|
|
|
|
|
(iii)
|
a Quarterly Compliance Certificate in respect of the most
recently completed Fiscal Quarter;
|
|
|
|
|
|
|
(iv)
|
a Borrowing Base Certificate in respect of the most
recently completed month;
|
|
|
|
|
|
|
(v)
|
the Borrower’s financial, operating and quality
management systems, including evidence that such systems satisfy all
applicable requirements of Governmental Authorities;
|
|
|
|
|
|
|
(vi)
|
the Code of Conduct;
|
|
|
|
|
|
|
(vii)
|
the terms and conditions of all leases in respect of the
Material Leased Properties, which shall permit reasonable alternative uses
(and for greater certainty, the permitted use of each Material Leased
Property shall not be restricted to the production of Cannabis and related
activities);
|
|
|
|
|
|
|
(viii)
|
the terms and conditions of all other Material
Agreements;
|
|
|
|
|
|
|
(ix)
|
the terms and conditions of all Material Permits,
including certified true copies of all licenses issued by Governmental
Authorities (including those in other Qualified Jurisdictions) for each
Company's facilities together with all amendments thereto and all material
correspondence received from Governmental Authorities including
communication on non-compliance items;
|
|
|
|
|
|
|
(x)
|
evidence that the Companies maintain insurance as
required herein, together with a satisfactory report of an insurance
consultant retained by the Agent (at the expense of the Borrower) with
respect to the terms and conditions of all insurance policies;
and
|
- 67 -
|
|
(xi)
|
a completed environmental questionnaire in respect of
each Property in the Agent’s standard form containing information which is
not inconsistent with the representations and warranties herein with
respect to environmental matters;
|
|
(c)
|
the Agent and the Lenders shall have conducted and be
satisfied with a site visit of the Material Leased Property in Edmonton,
Alberta known as Aurora Sky;
|
|
|
|
|
(d)
|
no litigation is pending or threatened in writing against
one or more of the Companies that, if decided adversely, could constitute
a Material Adverse Change;
|
|
|
|
|
(e)
|
all Security required to be provided prior to the Closing
Date shall have been executed and delivered, all registrations necessary
or desirable in connection therewith shall have been made, and all legal
opinions and other documentation required by the Lenders in connection
therewith shall have been executed and delivered, all in form and
substance satisfactory to the Agent and the Lenders in their sole
discretion;
|
|
|
|
|
(f)
|
the Companies shall have no Funded Debt except Permitted
Funded Debt;
|
|
|
|
|
(g)
|
the Agent shall have received satisfactory evidence that
there are no Liens affecting any of the Companies or their assets except
Permitted Liens; and the Agent shall have received particulars of all
Permitted Liens, specifically including the assets encumbered thereby, the
amounts due thereunder, and if requested by the Agent, confirmation from
the holders thereof that the terms thereof are being complied
with;
|
|
|
|
|
(h)
|
any necessary governmental, regulatory and third party
approvals necessary in connection with this Agreement and the transactions
contemplated therein shall have been given unconditionally and without
containing any onerous terms;
|
|
|
|
|
(i)
|
the Agent shall have received an officer's certificate
and certified copies of resolutions of the board of directors of each
Secured Company concerning the due authorization, execution and delivery
of the Loan Documents to which it is a party, and such related matters as
the Agent and the Lenders may reasonably require;
|
|
|
|
|
(j)
|
the Agent shall have received a certificate of status,
certificate of compliance or similar certificate for each Secured Company
issued by its governing jurisdiction and each other jurisdiction in which
it carries on business or holds any material assets;
|
|
|
|
|
(k)
|
the Agent and the Lenders shall have received opinions
from the solicitors for each Secured Company regarding its corporate
status, the due authorization, execution, delivery and enforceability of
the Loan Documents provided by it, and such other matters as the Agent and
the Lenders may reasonably require, in form and substance satisfactory to
the Agent and the Lenders;
|
|
|
|
|
(l)
|
if any Company carries on Cannabis-Related Activities in
a Qualified Jurisdiction other than Canada, the Agent and the Lenders
shall have received opinions from such Company's solicitors in such
Qualified Jurisdiction confirming that such Company is qualified to carry
on such activities in such jurisdictions and its activities will not
contravene any Applicable Laws therein;
|
- 68 -
|
(m)
|
the Companies shall have satisfied all requirements of
the Agent and the Lenders under AML Legislation;
|
|
|
|
|
(n)
|
the Borrower shall have paid to the Agent, or made
arrangements satisfactory to the Agent for the payment of, all fees and
expenses (including the Agent’s legal expenses) relating to the
establishment of the Facilities, specifically including all underwriting
fees, arrangement fees and similar fees as agreed in writing between the
Borrower and the Agent; and
|
|
|
|
|
(o)
|
the Agent and the Lenders shall have received such
additional evidence, documents or undertakings as they may require to
complete the transactions contemplated hereby in accordance with the terms
and conditions contained herein.
|
|
9.02
|
Conditions Precedent to all
Advances
|
The Lenders shall have no obligation to make the first Advance
or any subsequent Advance under any Facility unless at the time of each such
Advance all of the following conditions have been satisfied, in each case to the
satisfaction of the Agent and the Lenders in their sole discretion:
|
(a)
|
the representations and warranties in section 6.01 shall
be true and correct in all material respects as if made on the date of
such Advance;
|
|
|
|
|
(b)
|
all additional Security required to be provided at the
time of such Advance shall have been executed and delivered and all
registrations necessary or desirable in connection therewith shall have
been made, and any other documentation required by the Agent shall have
been executed and delivered, all in form and substance satisfactory to the
Agent;
|
|
|
|
|
(c)
|
the Borrower shall have given a Draw Request to the Agent
in accordance with the notice requirements provided herein;
|
|
|
|
|
(d)
|
in respect of an Advance under Facility A the Borrower
shall have provided a satisfactory Borrowing Base Certificate and Monthly
Compliance Certificate in respect of the most recent month;
|
|
|
|
|
(e)
|
no Default, Event of Default or Material Adverse Change
shall have occurred and be continuing, nor shall the making of the Advance
result in the occurrence of a Default, Event of Default or Material
Adverse Change; and
|
|
|
|
|
(f)
|
no third party demand or garnishment order for payment to
any Government Authority shall have been received by the Agent or any
Lender with respect to any Company.
|
|
9.03
|
Conditions Precedent to Advances under Facility
B
|
|
(a)
|
Advances under Facility B in respect of each Material
Property shall be conditional upon satisfaction of all conditions
precedent relating to such Material Property as set out in Exhibit "I"
attached hereto. In addition, until the Cannabis Act is in full force and
effect Advances under Facility B will only be made in respect of those
Properties which are producing Cannabis solely for medical purposes; and
such Advances may not be used, directly or indirectly, for the purpose of
producing Cannabis for recreational use or any other use which is not
fully compliant with all Applicable Laws. Each Draw Request
under Facility B shall include written certification by the Borrower regarding
its compliance with the foregoing.
|
- 69 -
ARTICLE X -
DEFAULT AND REMEDIES
The occurrence of any one or more of the following events,
after the expiry of any applicable cure period set out below, shall constitute
an event of default under this Agreement (an "
Event of Default
"):
|
(a)
|
the Borrower or any other Company fails to pay any amount
payable under this Agreement or any other Loan Document when
due;
|
|
|
|
|
(b)
|
any representation or warranty provided by a Company to
the Agent or the Lenders herein or in any other Loan Document was
incorrect in any material respects on the date on which such
representation or warranty was made;
|
|
|
|
|
(c)
|
the Borrower fails to perform or comply with any of the
covenants in section 7.03;
|
|
|
|
|
(d)
|
any Company fails to perform or comply with any of its
covenants or obligations contained in this Agreement, the Security or any
other agreement made between it and any Lenders (other than those in
paragraphs (a), (b), and (c) above) after receipt of notice of such
non-compliance from the Agent; provided that if such non-compliance is
capable of remedy within fifteen (15) days and such Company diligently
attempts to remedy such non-compliance and informs the Agent of its
efforts in this regard, and such non-compliance is remedied within such
period, then such non-compliance shall be deemed not to constitute an
Event of Default;
|
|
|
|
|
(e)
|
any Material Company is in default in the payment or
performance of any of its indebtedness or obligations under any agreement
relating to Funded Debt (other than the Outstanding Principal Amount)
after the expiry of any grace or cure periods relating thereto;
|
|
|
|
|
(f)
|
an Insolvency Event occurs in respect of any Material
Company;
|
|
|
|
|
(g)
|
any Material Company is in default under any Material
Agreement (after the expiry of any grace or cure periods relating
thereto), or agrees to the surrender or termination of any Material
Agreement prior to the expiry date expressly set out therein, in either
case unless such Material Agreement is immediately replaced by a
substantially similar Material Agreement containing terms satisfactory to
the Lenders;
|
|
|
|
|
(h)
|
any Material Company is in default under any Material
Permit (after the expiry of any grace or cure periods relating thereto),
or agrees to the surrender or termination of any Material Permit prior to
the expiry date expressly set out therein, in either case unless such
Material Permit is immediately replaced by a substantially similar
Material Permit containing terms satisfactory to the Lenders;
|
|
|
|
|
(i)
|
any document constituting part of the Security shall for
any reason (other than the fault of the Agent or any Lender) cease to be
in full force and effect or shall be declared in a final judgment of a
court of competent jurisdiction to be null and void; or any Company
contests the validity or enforceability thereof or denies it has
any further liability or obligation thereunder; or any document (other than a
Guarantee) constituting part of the Security shall for any reason fail to create
a valid and perfected First-Ranking Security Interest in and to the property
purported to be subject thereto;
|
- 70 -
|
(j)
|
any Person which has provided a Guarantee in respect of
the Obligations terminates or purports to terminate its liability under
such Guarantee or its liability thereunder in respect of any future
Advances, or disputes the validity or enforceability of such Guarantee or
any Security provided by it;
|
|
|
|
|
(k)
|
any Person takes possession of any property of a Material
Company with a value in excess of
[Redacted: Threshold]
by way of
or in contemplation of enforcement of security, or a distress or execution
or similar process is levied or enforced against any such property, and
such possession continues in effect and is not released, satisfied,
vacated, stayed, or discharged within ten (10) days or such longer period
during which entitlement to the use of such property continues with the
applicable Material Company, and such Material Company is contesting the
same in good faith and by appropriate proceedings, provided that such
grace period will cease to apply if the property is removed from the use
of the Material Company;
|
|
|
|
|
(l)
|
one or more final judgments or decrees for the payment of
money shall have been obtained or entered against any one or more of the
Companies in excess of
[Redacted: Threshold]
in the aggregate and
shall remain unpaid for a period in excess of thirty (30) days; unless
such judgement is fully covered by insurance (subject to a reasonable
deductible amount) and the insurer thereof has confirmed such coverage in
writing;
|
|
|
|
|
(m)
|
any Governmental Authority shall take any action to
condemn, seize or appropriate any property of any Material Company with a
value in excess of
[Redacted: Threshold]
unless such Governmental
Authority has paid a fair and reasonable expropriation amount; and such
expropriation or seizure continues in effect and is not terminated or
stayed or within ten (10) days or such longer period during which
entitlement to the use of such property continues with the applicable
Material Company, and such Material Company is contesting the same in good
faith and by appropriate proceedings, provided that such grace period will
cease to apply if the property is removed from the use of the Material
Company;
|
|
|
|
|
(n)
|
any Person or group of Persons acting in concert has
Control of any Company at any time;
|
|
|
|
|
(o)
|
the Borrower's auditors include any adverse qualification
in their audit opinion relating to the Year-end Financial
Statements;
|
|
|
|
|
(p)
|
the Conversion Date does not occur on or before June 30,
2019;
|
|
|
|
|
(q)
|
the Cannabis Act is repealed; or
|
|
|
|
|
(r)
|
a Material Adverse Change occurs and is
continuing.
|
- 71 -
|
(a)
|
Upon the occurrence of an Event of Default which is
continuing the Agent shall, upon the instructions of the Required Lenders,
issue a written notice to the Borrower (an "
Acceleration Notice
")
declaring all of the Obligations to be immediately due and
payable.
|
|
|
|
|
(b)
|
Upon receipt of an Acceleration Notice the Borrower shall
immediately pay and satisfy the Obligations, including payment to the
Agent of the following amounts (without duplication): (i) the Outstanding
Principal Amount and all accrued and unpaid interest, fees and other
amounts relating thereto; (ii) the Aggregate Actual Hedge Liability; (iii)
an amount equal to the face amount of all Bankers' Acceptances and BA
Equivalent Loans then outstanding; and (iv) the maximum amount payable
under all outstanding Letters of Credit. The Agent shall hold all such
amounts paid by the Borrower in respect of such Hedge Transactions,
Bankers' Acceptances, BA Equivalent Loans and Letters of Credit as
security for the Borrower's obligations thereunder.
|
|
|
|
|
(c)
|
At any time on or after the Acceleration Date the Agent
may exercise any and all rights and remedies hereunder and under any other
Loan Documents, including the enforcement of all or any portion of the
Security.
|
|
|
|
|
(d)
|
From and after the date of the occurrence of an Event of
Default and for so long as such Event of Default continues, both before
and after the Acceleration Date, the Outstanding Principal Amount shall
bear interest or fees at the rates otherwise applicable plus two percent
(2%) per annum in order to compensate the Lenders for the additional
risk.
|
|
10.03
|
Acceleration of Certain Contingent
Obligations
|
Upon the occurrence of an Event of Default which is continuing,
any Lender which has issued a Bankers' Acceptance, BA Equivalent Note or Letter
of Credit or entered into a Hedge Transaction with the Borrower may make a Prime
Rate Loan to the Borrower in an amount equal to the face amount of such Bankers'
Acceptance, BA Equivalent Note or Letter of Credit, or the amount required to
unwind such Hedge Transaction (such amount to be determined in accordance with
the terms thereof), as the case may be; and the proceeds of any such Loan shall
be held by such Lender and used to satisfy the Lender's obligations under the
said Bankers' Acceptance, BA Equivalent Note or Letter of Credit as such becomes
due, or to effect the unwinding of such Hedge Transaction. Any such Loan shall
bear interest at the rate and in the manner applicable to Prime Rate Loans under
the Facilities.
|
10.04
|
Combining Accounts,
Set-Off
|
Upon the occurrence and during the continuation of an Event of
Default, in addition to and not in limitation of any rights now or hereafter
granted under Applicable Law, each Lender may at any time and from time to
time:
|
(a)
|
combine, consolidate or merge any or all of the deposits
or other accounts maintained with such Lender by a Secured Company
(whether term, notice, demand or otherwise and whether matured or
unmatured) and such Company's obligations to such Lender hereunder;
and
|
|
|
|
|
(b)
|
set off, apply or transfer any or all sums standing to
the credit of any such deposits or accounts in or towards the satisfaction
of such obligations.
|
- 72 -
Each Lender may exercise any rights pursuant to this section
10.04 without prior notice to the Borrower or such Company, but agrees to
provide written notice to the Agent and the Borrower promptly after exercising
any such rights.
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10.05
|
Appropriation of Monies
|
After the occurrence and during the continuation of an Event of
Default the Agent may from time to time, but subject to section 11.03, apply any
Proceeds of Realization against any portion or portions of the Obligations, and
the Borrower may not require any different application. The taking of a judgment
or any other action or dealing whatsoever by the Agent or the Lenders in respect
of the Security shall not operate as a merger of any of the Obligations
hereunder or in any way affect or prejudice the rights, remedies and powers
which the Agent or the Lenders may have, and the foreclosure, surrender,
cancellation or any other dealing with any Security or the said obligations
shall not release or affect the liability of the Borrower or any other Person in
respect of the remaining portion of the Obligations.
|
10.06
|
No Further Advances
|
The Lenders shall not be obliged to make any further Advances
(including honouring any cheques drawn by the Borrower which are presented for
payment) from and after the earliest to occur of the following: (i) delivery by
the Agent to the Borrower of a written notice that a Default or Event of Default
has occurred and is continuing and that as a result thereof no further Advances
will be made (regardless of whether an Acceleration Notice is issued); (ii) the
occurrence of an Insolvency Event; and (iii) receipt by the Agent or any Lender
of any garnishment notice, notice of a Statutory Lien or other notice of similar
effect in respect of any Company pursuant to the
Income Tax Act
(Canada),
the
Excise Tax Act
(Canada) or any similar notice under any other statute
in effect in any jurisdiction.
If for the purposes of obtaining judgment against the Borrower
in any court in any jurisdiction with respect to this Agreement it becomes
necessary for a Lender to convert into the currency of such jurisdiction (in
this section called the "Judgment Currency") any amount due to the Lender by the
Borrower hereunder in any currency other than the Judgment Currency, the
conversion shall be made at the Exchange Rate prevailing on the Business Day
before the day on which judgment is given. In the event that there is a change
in the Exchange Rate prevailing between the Business Day before the day on which
the judgment is given and the date of payment of the amount due, the Borrower
will, on the date of payment, pay such additional amounts (if any) or be
entitled to receive reimbursement of such amount, if any, as may be necessary to
ensure that the amount paid on such date is the amount in the Judgment Currency
which when converted at the Exchange Rate prevailing on the date of payment is
the amount then due under this Agreement in such other currency. Any additional
amount due by the Borrower under this section will be due as a separate debt and
shall not be affected by judgment being obtained for any other sums due under or
in respect of this Agreement.
|
10.08
|
Remedies Cumulative
|
All rights and remedies granted to the Agent and the Lenders in
this Agreement, and any other documents or instruments in existence between the
parties or contemplated hereby, and any other rights and remedies available to
the Agent and the Lenders at Law or in equity, shall be cumulative. The exercise
or failure to exercise any of the said remedies shall not constitute a waiver or
release thereof or of any other right or remedy, and shall be non-exclusive.
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|
10.09
|
Performance of Covenants by
Agent
|
If the Borrower fails to perform any covenant or obligation to
be performed by it pursuant to this Agreement, the Agent may in its sole
discretion perform any of the said obligations but shall be under no obligation
to do so; and any amounts expended or advanced by the Agent for such purpose
shall be payable by the Borrower upon demand together with interest at the
highest rate then applicable to the Facilities.
ARTICLE XI -
THE AGENT AND THE
LENDERS
|
(a)
|
Any amendment to this Agreement relating to the following
matters, and the granting of any waiver or consent by the Lenders in
respect of such matters, shall require the unanimous agreement of the
Lenders:
|
|
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(i)
|
changes to the interest rates and fees payable in respect
of any Facility;
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(ii)
|
increases in the maximum amount of credit available under
any Facility;
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(iii)
|
extensions of the Conversion Date or the Maturity
Date;
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(iv)
|
changes to the scheduled dates or the scheduled amounts
for Repayments hereunder;
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(v)
|
releases of all or any portion of the Security, except to
the extent provided in paragraph (c) below;
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(vi)
|
the definitions of "Required Lenders" and "Proportionate
Share" in section 1.01;
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(vii)
|
any provision of this Agreement which expressly states
that the unanimous consent of the Lenders is required in connection with
any action to be taken or consent to be provided by the Lenders;
and
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(viii)
|
this section 11.01.
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(b)
|
Except for the matters described in paragraph (a) above,
any amendment to this Agreement shall be effective if made among the
Borrower, the Agent and the Required Lenders, and for greater certainty
any such amendment which is agreed to by the Required Lenders shall be
final and binding upon all Lenders.
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(c)
|
The Agent may from time to time without notice to or the
consent of the Lenders execute and deliver partial releases of the
Security in respect of any item of Collateral (whether or not the proceeds
of sale thereof are received by the Agent) which the Companies are
permitted to dispose of pursuant to this Agreement without obtaining the
prior written consent of the Lenders; and in releasing any such security
the Agent may rely upon and assume the correctness of all information
contained in any certificate or document provided by the Borrower, without
further enquiry. Otherwise, any release or discharge in respect of the
Security or any portion thereof shall require the written consent of the
Lenders acting unanimously.
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|
(d)
|
Except for the matters which require the unanimous
consent of the Lenders as set out in the foregoing paragraphs of this
section 11.01, and except as otherwise specifically provided in this
Agreement, any action to be taken or decision to be made by the Lenders
pursuant to this Agreement (specifically including for greater certainty
the issuance of written notice to the Borrower of the occurrence of a
Default or Event of Default, the issuance of a demand for payment of the
Obligations, a decision to make an Advance despite any condition precedent
relating thereto not being satisfied, the provision of any waiver in
respect of a breach of any covenant or the granting of any consent) shall
be effective if approved by the Required Lenders; and any such decision or
action shall be final and binding upon all the Lenders.
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(e)
|
Any action to be taken or decision to be made by the
Lenders pursuant to this Agreement which is required to be unanimous shall
be made at a meeting of the Lenders called by the Agent pursuant to
section 11.06(k) or by a written instrument executed by all of the
Lenders. Any action to be taken or decision to be made by the Lenders
pursuant to this Agreement which is required to be made by the Required
Lenders shall be made at a meeting of the Lenders called by the Agent
pursuant to section 11.06(k) or by a written instrument executed by the
Required Lenders. Any such instrument may be executed by fax or pdf and in
counterparts.
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(a)
|
Except to the extent provided in paragraph (b), the
Security shall be granted in favour of and held by the Agent for and on
behalf of the Lenders in accordance with the provisions of this Agreement.
The Agent shall, in accordance with its usual practices in effect from
time to time, take all steps required to perfect and maintain the
Security, including: taking possession of the certificates representing
the securities required to be pledged hereunder; filing renewals and
change notices in respect of such Security; and ensuring that the name of
the Agent is noted as loss payee or mortgagee on all property insurance
policies covering the Collateral. If the Agent becomes aware of any matter
concerning the Security which it considers to be material, it shall
promptly inform the Lenders. The Agent shall comply with all instructions
provided by the Lenders in connection with the enforcement or release of
the Security which it holds. The Agent agrees to permit each Lender to
review and make photocopies of the original documents comprising the
Security from time to time upon reasonable notice.
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(b)
|
If any Company has provided security in favour of any
Lender directly, such Lender agrees to pay to the Agent all amounts
received by it in connection with the enforcement of such security, and
all such amounts shall be deemed to constitute Proceeds of Realization and
shall be dealt with as provided in section 11.03. Each Lender which holds
any such Security agrees that it shall not enforce such security unless
and until the Required Lenders have made a determination to enforce the
Security pursuant to section 11.01(d).
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11.03
|
Application of Proceeds of
Realization
|
Notwithstanding any other provision of this Agreement, the
Proceeds of Realization of the Security or any portion thereof shall be
distributed in the following order:
|
(a)
|
first, in payment of all costs and expenses incurred by
the Agent and the Lenders in connection with such realization, including
legal, accounting and receivers' fees and
disbursements;
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(b)
|
second, against the remaining Obligations (except those
referred to in paragraph (c) below), on a pari passu basis among the
Lenders to whom such Obligations are payable;
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(c)
|
third, to pay any Obligations owed to Non-Funding
Lenders, on a pari passu basis among the Non-Funding Lenders to whom such
Obligations are payable; and
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(d)
|
fourth, if all obligations of the Borrower listed above
have been paid and satisfied in full, any surplus Proceeds of Realization
shall be paid in accordance with Applicable
Law.
|
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(a)
|
The following provisions shall apply to all payments made
by the Agent to the Lenders hereunder:
|
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(i)
|
the Agent shall be under no obligation to make any
payment (whether in respect of principal, interest, fees or otherwise) to
any Lender until an amount in respect of such payment has been received by
the Agent from the Borrower;
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(ii)
|
if the Agent receives a payment of principal, interest,
fees or other amount owing by the Borrower under any Facility which is
less than the full amount of any such payment due, the Agent shall
distribute such amount received among the Lenders under such Facility in
each Lender’s Proportionate Share of such Facility;
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(iii)
|
if any Lender has advanced more or less than its
Proportionate Share of its Commitment under any Facility, such Lender’s
entitlement to such payment shall be increased or reduced, as the case may
be, in proportion to the amount actually advanced by such
Lender;
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(iv)
|
if a Lender’s Proportionate Share of an Advance under any
Facility thereof has been advanced for less than the full period to which
any payment by the Borrower relates, such Lender’s entitlement to receive
a portion of any payment of interest or fees shall be reduced in
proportion to the length of time such Lender’s Proportionate Share has
actually been outstanding (unless such Lender has paid all interest
required to have been paid by it to the Agent pursuant to the CBA Model
Provisions);
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(v)
|
the Agent acting reasonably and in good faith shall,
after consultation with the Lenders in the case of any dispute, determine
in all cases the amount of all payments to which each Lender is entitled
and such determination shall be deemed to be
prima facie
correct;
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(vi)
|
upon request, the Agent shall deliver a statement
detailing any of the payments to the Lenders referred to herein;
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(vii)
|
all payments by the Agent to a Lender hereunder shall be
made to such Lender at its address set out herein unless notice to the
contrary is received by the Agent from such Lender; and
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(viii)
|
if the Agent has received a payment from the Borrower on
a Business Day (not later than the time required for the receipt of such
payment as set out in this Agreement) and fails to remit such payment to any
Lender entitled to receive its Proportionate Share of such payment on such
Business Day, the Agent agrees to pay interest on such late payment at a rate
determined by the Agent in accordance with prevailing banking industry practice
on interbank compensation.
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- 76 -
|
(b)
|
The Agent may in its sole discretion from time to time
make adjustments in respect of any Lender’s share of a Drawdown,
Substitution, Rollover or Repayment under any Facility in order that the
Advances made by such Lender under such Facility shall be approximately in
accordance with such Lender’s Proportionate Share of such
Facility.
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11.05
|
Protection of Agent
|
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(a)
|
Unless the Agent has actual knowledge or actual notice to
the contrary, it may assume that each Lender's address set out in Exhibit
"A" attached hereto is correct, unless and until it has received from such
Lender a notice designating a different address.
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(b)
|
The Agent may engage and pay for the advice or services
of any lawyers, accountants or other experts whose advice or services may
to it seem necessary, expedient or desirable and rely upon any advice so
obtained (and to the extent that such costs are not recovered from the
Borrower pursuant to this Agreement, each Lender agrees to reimburse the
Agent in such Lender's Proportionate Share of such costs).
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(c)
|
Unless the Agent has actual knowledge or actual notice to
the contrary, it may rely as to matters of fact which might reasonably be
expected to be within the knowledge of any Company upon a statement
contained in any Loan Document.
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(d)
|
Unless the Agent has actual knowledge or actual notice to
the contrary, it may rely upon any communication or document believed by
it to be genuine.
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(e)
|
The Agent may refrain from exercising any right, power or
discretion vested in it under this Agreement unless and until instructed
by the Required Lenders as to whether or not such right, power or
discretion is to be exercised and, if it is to be exercised, as to the
manner in which it should be exercised (provided that such instructions
shall be required to be provided by all of the Lenders in respect of any
matter for which the unanimous consent of the Lenders is required as set
out herein).
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(f)
|
The Agent may refrain from exercising any right, power or
discretion vested in it which would or might in its sole and unfettered
opinion be contrary to any Law of any jurisdiction or any directive or
otherwise render it liable to any Person, and may do anything which is in
its opinion in its sole discretion necessary to comply with any such Law
or directive.
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(g)
|
The Agent may refrain from acting in accordance with any
instructions of the Required Lenders to begin any legal action or
proceeding arising out of or in connection with this Agreement or take any
steps to enforce or realize upon any Security, until it shall have
received such security as it may reasonably require (whether by way of
payment in advance or otherwise) against all costs, claims, expenses
(including legal fees) and liabilities which it will or may expend or
incur in complying with such instructions.
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- 77 -
|
(h)
|
The Agent shall not be bound to disclose to any Person
any information relating to the Companies or any Related Person if such
disclosure would or might in its opinion in its sole discretion constitute
a breach of any Law or regulation or be otherwise actionable at the suit
of any Person.
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|
(i)
|
The Agent shall not accept any responsibility for the
accuracy and/or completeness of any information supplied in connection
herewith or for the legality, validity, effectiveness, adequacy or
enforceability of any Loan Document and shall not be under any liability
to any Lender as a result of taking or omitting to take any action in
relation to any Loan Document except in the case of the Agent's gross
negligence or wilful misconduct.
|
The Agent shall:
|
(a)
|
as a non-fiduciary agent for the Borrower, maintain a
record of the Outstanding Principal Amount owing to each Lender (including
the interest of each Lender in all outstanding Syndicated Letters of
Credit), which record shall conclusively be presumed to be correct and
accurate, absent manifest error;
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(b)
|
hold and maintain the Security to the extent provided in
section 11.02;
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(c)
|
provide to each Lender copies of all financial
information received from the Borrower promptly after receipt thereof, and
copies of any Draw Requests, Substitution Notices, Rollover Notices,
Repayment Notices and other notices received by the Agent from the
Borrower upon request by any Lender;
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(d)
|
promptly advise each Lender of Advances required to be
made by it hereunder and disburse all Repayments to the Lenders hereunder
in accordance with the terms of this Agreement;
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(e)
|
promptly notify each Lender of the occurrence of any
Default of which the Agent has actual knowledge or actual
notice;
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|
(f)
|
at the time of engaging any agent, receiver,
receiver-manager, consultant, monitor or other party in connection with
the Security or the enforcement thereof, obtain the agreement of such
party to comply with the applicable terms of this Agreement in carrying
out any such enforcement activities and dealing with any Proceeds of
Realization;
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(g)
|
account for any monies received by it in connection with
this Agreement, the Security and any other agreement delivered in
connection herewith or therewith;
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(h)
|
each time the Borrower requests the written consent of
the Lenders in connection with any matter, use its best efforts to obtain
and communicate to the Borrower the response of the Lenders in a
reasonably prompt and timely manner having due regard to the nature and
circumstances of the request;
|
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|
(i)
|
give written notice to the Borrower in respect of any
other matter in respect of which notice is required in accordance with or
pursuant to this Agreement, promptly or promptly after receiving the
consent of the Lenders, if required under the terms of this
Agreement;
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- 78 -
|
(j)
|
except as otherwise provided in this Agreement, act in
accordance with any instructions given to it by the Required
Lenders;
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(k)
|
refrain from exercising any right, power or discretion
vested in it under this Agreement or any document incidental thereto if so
instructed by the Required Lenders (in respect of any matter which
requires the consent of the Required Lenders), or by all of the Lenders
(in respect of any matter which requires the unanimous consent of the
Lenders); and
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(l)
|
call a meeting of the Lenders at any time not earlier
than five (5) days and not later than thirty (30) days after receipt of a
written request for a meeting provided by any
Lender.
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|
11.07
|
Lenders' Obligations Several; No
Partnership
|
The obligations of each Lender under this Agreement are
several. The failure of any Lender to carry out its obligations hereunder shall
not relieve the other Lenders of any of their respective obligations hereunder.
No Lender shall be responsible for the obligations of any other Lender
hereunder. Neither the entering into of this Agreement nor the completion of any
transactions contemplated herein shall constitute the Lenders a partnership.
|
11.08
|
Sharing of Information
|
The Agent and the Lenders may share among themselves any
information they may have from time to time concerning the Companies whether or
not such information is confidential; but shall have no obligation to do so
(except for any obligations of the Agent to provide information to the extent
required in this Agreement).
|
11.09
|
Acknowledgement by
Borrower
|
The Borrower hereby acknowledges notice of the terms of the
provisions of this Article VIIIV and agrees to be bound hereby to the extent of
its obligations hereunder.
|
11.10
|
Amendments to Article XI
|
The Agent and the Lenders may amend any provision in this
Article XI, except section 11.01, without prior notice to or the consent of the
Borrower, and the Agent shall provide a copy of any such amendment to the
Borrower reasonably promptly thereafter; provided however if any such amendment
would materially adversely affect any rights, entitlements, obligations or
liabilities of the Borrower, such amendment shall not be effective until the
Borrower provides its written consent thereto, such consent not to be
unreasonably withheld or arbitrarily delayed.
As between the Companies on the one hand, and the Agent and the
Lenders on the other hand:
|
(a)
|
all statements, certificates, consents and other
documents which the Agent purports to deliver to a Company on behalf of
the Lenders shall be binding on each of the Lenders, and none of the
Companies shall be required to ascertain or confirm the authority of the
Agent in delivering such documents;
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- 79 -
|
(b)
|
all certificates, statements, notices and other documents
which are delivered by a Company to the Agent in accordance with this
Agreement shall be deemed to have been duly delivered to each of the
Lenders; and
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|
(c)
|
all payments which are delivered by the Borrower to the
Agent in accordance with this Agreement shall be deemed to have been duly
delivered to each of the Lenders.
|
The Borrower agrees to pay to the Agent an annual agency fee in
such amount as may be agreed in writing from time to time between the Borrower
and the Agent, payable in advance on the date of this Agreement and annually on
each anniversary date thereafter during the term of this Agreement.
|
(a)
|
Each Non-Funding Lender shall be required to provide to
the Agent, immediately upon receipt of a written request from the Agent,
(A) cash in an amount equal to 105% of such Non-Funding Lender's
Proportionate Share of the face amount of outstanding Letters of Credit,
and (B) cash in an amount, as shall be determined from time to time by the
Agent in its discretion, equal to all other obligations of such
Non-Funding Lender to the Agent that are owing or may become owing
pursuant to this Agreement, including, without limitation, such
Non-Funding Lender's obligation to pay its Proportionate Share of any
indemnification or expense reimbursement amounts not paid by the Borrower.
Such cash shall be held by the Agent in one or more accounts in the name
of the Agent and shall not be required to be interest-bearing. The Agent
shall be entitled to apply such cash from time to time in satisfaction of
all or any portion of such obligations of such Non-Funding Lender, as
determined by the Agent in its discretion.
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(b)
|
The Agent shall be entitled to set off any Non-Funding
Lender's Proportionate Share of all payments received from the Borrower
against such Non-Funding Lender's obligations to fund payments and
Advances required to be made by it and to purchase participations required
to be purchased by it in each case under this Agreement and the other Loan
Documents. The Agent shall be entitled to withhold and deposit in one or
more non-interest bearing accounts in the name of the Agent all amounts
(whether principal, interest, fees or otherwise) received by the Agent
from the Borrower and due to such Non-Funding Lender pursuant to this
Agreement, which amounts shall be used by the Agent (A) first, to
reimburse the Agent for any amounts owing to it by such Non-Funding Lender
pursuant to this Agreement or any other Loan Document, (B) second, to
reimburse the other Lenders in respect of any Advances which may have been
made by them in their discretion in order to fund, in whole or in part,
any shortfall in Advances which were required to have been made by such
Non-Funding Lender (and to the extent that any said Advance made by a
Lender is so reimbursed, such Advance shall be deemed to have been
assigned by such Lender to the Non-Funding Lender), (C) third, to be held
in such account and applied by the Agent from time to time against all
other obligations of such Non- Funding Lender to the Agent owing pursuant
to this Agreement in such amount as shall be determined from time to time
by the Agent in its discretion including, without limitation, such
Non-Funding Lender's obligation to pay its Proportionate Share of any
indemnification or expense reimbursement amounts not paid by the Borrower,
and (D) fourth, at the Agent's discretion, to fund from time to time such
Non-Funding Lender's Proportionate Share of Advances under any
Facility.
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(c)
|
A Non-Funding Lender shall have no voting or consent
rights with respect to matters under this Agreement or the other Loan
Documents, unless and until it is no longer a Non-Funding Lender.
Accordingly, the Commitments and the aggregate unpaid principal amount of
the Advances owing to any Non-Funding Lender shall be disregarded in the
determination of the Required Lenders.
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(d)
|
Neither the Agent nor any of its Affiliates nor any of
their respective officers, directors, employees, agents or representatives
shall be liable to any Lender (including, without limitation, a
Non-Funding Lender) for any action taken or omitted to be taken by them in
connection with amounts payable by the Borrower to a Non-Funding Lender
and received by the Agent and applied in accordance with the provisions of
this Agreement, save and except for the negligence or wilful misconduct of
the Agent as determined by a final non-appealable judgment of a court of
competent jurisdiction.
|
ARTICLE XII -
CBA MODEL
PROVISIONS
|
12.01
|
CBA Model Provisions Incorporated by
Reference
|
The CBA Model Provisions (except for the footnotes contained
therein) form part of this Agreement and are incorporated herein by reference,
subject to the following variations:
|
(a)
|
Each term set out below which is used as a defined term
in the CBA Model Provisions shall be deemed to have been replaced as set
out below; and for greater certainty the said replacement term shall have
the meaning ascribed thereto in section 1.01 of this
Agreement:
|
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•
|
"Administrative Agent" shall be replaced by
"Agent";
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•
|
"Applicable Percentage" shall be replaced by
"Proportionate Share";
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•
|
"Loans" shall be replaced by "Advances";
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•
|
"Obligors" shall be replaced by "Secured
Companies" (and all necessary changes required by the context shall be
deemed to have been made); and
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|
•
|
"Provisions" shall be replaced by "CBA Model
Provisions".
|
|
(b)
|
"Pro rata share", "rateably" and similar terms in the CBA
Model Provisions shall have the meaning ascribed to the term
"Proportionate Share" as defined in section 1.01 of this Agreement, if the
context requires.
|
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|
(c)
|
The terms "Related Parties" and "Related Party" in the
CBA Model Provisions shall be deemed to have the meanings ascribed to the
defined terms "Related Persons" and "Related Person" in this Agreement,
respectively.
|
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|
(d)
|
In the third line of subsection 7.7(1) of the CBA Model
Provisions, the phrase
"…in consultation with the Borrower…
" is
hereby amended to read
"…upon notice to the
Borrower…
".
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|
(e)
|
The parties hereby acknowledge and agree that the
indemnity contained in clause 9(b)(iii) of the CBA Model Provisions is in
addition to and not in substitution for the indemnity contained in section
13.05 of this Agreement.
|
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|
(f)
|
In addition to the restrictions contained in paragraph
10(b) of the CBA Model Provisions relating to the ability of Lenders to
assign their Commitments in whole or in part, if a Lender proposes to
assign less than its entire Commitment under any Facility, it may do so
only if it retains a Commitment under such Facility in a principal amount
of at least Five Million Dollars ($5,000,000).
|
|
12.02
|
Inconsistencies with CBA Model
Provisions
|
To the extent that there is any inconsistency between a
provision of this Agreement and a provision of the CBA Model Provisions, the
provision of this Agreement shall govern. For greater certainty, a provision of
this Agreement and a provision of the CBA Model Provisions shall be considered
to be inconsistent if both relate to the same subject-matter and the provision
in the CBA Model Provisions imposes more onerous obligations or restrictions
than the corresponding provision in this Agreement.
ARTICLE XIII -
GENERAL
The failure or delay by the Agent or any Lender in exercising
any right or privilege with respect to the non-compliance with any provisions of
this Agreement by the Borrower and any course of action on the part of the Agent
or any Lender, shall not operate as a waiver of any rights of the Agent or such
Lender unless made in writing by the Agent or such Lender. Any such waiver shall
be effective only in the specific instance and for the purpose for which it is
given and shall not constitute a waiver of any other rights and remedies of the
Agent or such Lender with respect to any other or future non-compliance.
|
13.02
|
Expenses of Agent and
Lenders
|
Whether or not the transactions contemplated by this Agreement
are completed or any Advance has been made, the Borrower agrees to pay on demand
by the Agent from time to time all reasonable expenses incurred by the Agent or
any Lender in connection with this Agreement, the Security and all documents
contemplated hereby, specifically including: reasonable expenses incurred by the
Agent and the Lenders in respect of due diligence, appraisals, insurance
consultations, credit reporting and responding to demands of any Governmental
Authority; reasonable legal expenses incurred by the Agent and the Lenders in
connection with the preparation and interpretation of this Agreement and the
Security and the administration of the Facilities generally, including the
preparation of waivers and partial discharges of Security; and all reasonable
legal expenses incurred by the Agent and the Lenders in connection with the
protection and enforcement of the Security.
|
13.03
|
Debit Authorization
|
The Borrower hereby authorizes the Agent to debit any account
maintained by the Borrower with the Agent, and to set off and compensate against
any and all accounts, credits and balances maintained by the Borrower with the
Agent, in order to pay (i) any interest or other amounts payable by the Borrower
from time to time pursuant to this Agreement when due; and (ii) any expenses
referred to in section 11.02 which are not paid by the Borrower within thirty (30)
days after receipt by the Borrower of a written request from the Agent for
payment of such expenses. The Agent agrees to give written notice to the
Borrower of any such debit promptly thereafter.
- 82 -
In addition to any other liability of the Borrower hereunder,
the Borrower hereby agrees to indemnify and save harmless the Indemnitees from
and against all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements (including reasonable legal
fees) of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against the Indemnitees (except to the extent arising from the
negligence or wilful misconduct of such Indemnitees) which relate or arise out
of or result from:
|
(a)
|
any failure by the Borrower to pay and satisfy its
obligations hereunder including, without limitation, any costs or expenses
incurred by reason of the liquidation or re-employment in whole or in part
of deposits or other funds required by the Lenders to fund or maintain the
Facilities or as a result of the Borrower's failure to take any action on
the date required hereunder or specified by it in any notice given
hereunder;
|
|
|
|
|
(b)
|
any investigation by Governmental Authorities or any
litigation or other similar proceeding related to any use made or proposed
to be made by the Borrower of the proceeds of any Advance; and
|
|
|
|
|
(c)
|
any instructions given to any Lender to stop payment on
any cheque issued by the Borrower or to reverse any wire transfer or other
transaction initiated by such Lender at the request of the
Borrower.
|
|
13.05
|
Environmental Indemnity
|
In addition to any other liability of the Borrower hereunder,
the Borrower hereby agrees to indemnify and save harmless the Indemnitees from
and against:
|
(a)
|
any losses suffered by the Indemnitees for, in connection
with, or as a direct or indirect result of, the failure of any Company to
comply with all Requirements of Environmental Law;
|
|
|
|
|
(b)
|
any losses suffered by the Indemnitees for, in connection
with, or as a direct or indirect result of, the presence of any Hazardous
Material situated in, on or under any property owned by any of the
Companies or upon which any of them carries on business; and
|
|
|
|
|
(c)
|
any and all liabilities, losses, damages, penalties,
expenses (including reasonable legal fees) and claims which may be paid,
incurred or asserted against the Indemnitees for, in connection with, or
as a direct or indirect result of, any legal or administrative proceedings
with respect to the presence of any Hazardous Material on or under any
property owned by any of the Companies or upon which any of them carries
on business, or the discharge, emission, spill, radiation or disposal by
any of them of any Hazardous Material into or upon any Land, the
atmosphere, or any watercourse or body of water; including the costs of
defending and/or counterclaiming or claiming over against third parties in
respect of any action or matter and any cost, liability or damage arising
out of a settlement entered into by the Indemnitees of any such action or
matter; except to the extent arising from the negligence or wilful
misconduct of such Indemnitees.
|
- 83 -
|
13.06
|
Survival of Certain Obligations despite Termination of
Agreement
|
The termination of this Agreement shall not relieve the
Borrower from its obligations to the Agent and the Lenders arising prior to such
termination, such as obligations arising as a result of or in connection with
any breach of this Agreement, any failure to comply with this Agreement or the
inaccuracy of any representations and warranties made or deemed to have been
made prior to such termination, and obligations arising pursuant to all
indemnity obligations contained herein. Without limiting the generality of the
foregoing, the obligations of the Borrower to the Agent and the Lenders arising
under or in connection with sections 13.04 and 13.05 of this Agreement and
section 3.2 of the CBA Model Provisions shall continue in full force and effect
despite any termination of this Agreement.
|
13.07
|
Interest on Unpaid Costs and
Expenses
|
If the Borrower fails to pay when due any amount in respect of
costs or expenses incurred by the Agent or any other amount incurred by the
Agent and required to be paid by it hereunder (other than principal or interest
on any Advance), it shall pay interest on such unpaid amount from the time such
amount is due until paid at the rate equal to the highest rate of interest then
applicable under the Facilities.
The Borrower may not assign any of its rights and obligations
hereunder. A Lender may from time to time assign all or any portion of its
rights and obligations under this Agreement in minimum amounts of Five Million
Dollars ($5,000,000) to other Persons, provided that any such assignment shall
be subject to the prior written consent of the Borrower if at the time of such
assignment the Borrower is in compliance with all terms and conditions of the
Loan Documents and the Acceleration Date has not occurred; otherwise such
assignment may be made by a Lender without notice to and without obtaining the
consent of the Borrower. Any consent of the Borrower which may be necessary
shall not be unreasonably withheld or delayed, it being understood that it shall
be reasonable for the Borrower to withhold such consent based solely on the
desire to avoid the payment of additional costs or taxes. Upon any assignment
permitted hereunder, such Lender shall be relieved of its obligations hereunder
to the extent that the assignee agrees in writing to assume such obligations.
The Borrower agrees to execute and deliver, and cause its Subsidiaries to
execute and deliver, such documents and assurances in favour of any such
assignees or new parties as may be reasonably required to evidence their consent
to and carry out the foregoing.
Without prejudice to any other method of giving notice, all
communications provided for or permitted hereunder shall be in writing and
delivered to the addressee by prepaid private courier or sent by facsimile to
the applicable address and to the attention of the officer of the addressee as
follows:
|
|
Aurora Cannabis Inc.
|
|
|
Suite 500, 10355 Jasper Avenue
|
|
|
Edmonton, AB
|
|
|
T5J 1Y6
|
- 84 -
|
|
Attention:
|
[Redacted: Personal Information]
|
|
|
Fax:
|
[Redacted: Personal Information]
|
|
|
|
|
|
|
with a courtesy copy to
|
|
|
|
|
|
|
Brownlee LLP
|
|
|
|
10155 – 102 Street
|
|
|
Edmonton, AB
|
|
|
|
T5J 4G8
|
|
|
|
Attention:
|
[Redacted: Personal Information]
|
|
|
Fax:
|
[Redacted: Personal Information]
|
|
(b)
|
to the Agent at the following
address:
|
|
|
Bank of Montreal
|
|
|
Agent Bank Services
|
|
|
250 Yonge St., 11
th
Floor
|
|
|
Toronto, Ontario
|
|
|
M5B 2L7
|
|
|
|
|
|
|
|
Attention:
|
[Redacted: Personal Information]
|
|
|
Fax No:
|
[Redacted: Personal Information]
|
|
(c)
|
to any Lender, at its address noted on Exhibit "A"
attached hereto.
|
Any communication transmitted by prepaid private courier shall
be deemed to have been validly and effectively given or delivered on the
Business Day after which it is submitted for delivery. Any communication
transmitted by facsimile shall be deemed to have been validly and effectively
given or delivered on the day on which it is transmitted, if transmitted on a
Business Day on or before 5:00 p.m. (local time of the intended recipient), and
otherwise on the next following Business Day. Any party may change its address
for service by notice given in the foregoing manner.
Any provision of this Agreement which is illegal, prohibited or
unenforceable in any jurisdiction, in whole or in part, shall not invalidate the
remaining provisions hereof; and any such illegality, prohibition or
unenforceability in any such jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
The Borrower shall, at its expense, promptly execute and
deliver or cause to be executed and delivered to the Agent upon request, acting
reasonably, from time to time all such other and further documents, agreements,
opinions, certificates and instruments in compliance with this Agreement, or if
necessary or desirable to more fully record or evidence the obligations intended
to be entered into herein.
|
13.12
|
Time of the Essence
|
Time shall be of the essence of this Agreement.
- 85 -
|
13.13
|
Promotion and Marketing
|
For the purpose of promotion and marketing, the Borrower hereby
authorizes and consents to the reproduction, disclosure and use by the Lenders
and the Agent of its name, identifying logo and the Facilities, provided that
the amount of the Facilities shall not be disclosed. The Borrower acknowledges
and agrees that the Lenders shall be entitled to determine, in their sole
discretion, whether to use such information; that no compensation will be
payable by the Lenders or the Agent in connection therewith; and that the
Lenders and the Agent shall have no liability whatsoever to it or any of its
employees, officers, directors, affiliates or shareholders in obtaining and
using such information as contemplated herein.
|
13.14
|
Entire Agreement; Waivers and Amendments to be in
Writing
|
|
(a)
|
This Agreement supersedes all discussion papers, term
sheets and other writings which may have been issued by the Agent or the
Lenders prior to the date hereof relating to the Facilities, which shall
have no further force or effect. This Agreement and any other documents or
instruments contemplated herein or therein shall constitute the entire
agreement and understanding among the Borrower, the Lenders and the Agent
relating to the subject-matter hereof.
|
|
|
|
|
(b)
|
Subject to section 11.01(b) and section 11.10, no
provision of this Agreement, or any other document or instrument in
existence among the parties may be modified, waived or terminated except
by an instrument in writing executed by the party against whom such
modification, waiver or termination is sought to be
enforced.
|
|
13.15
|
Inconsistencies with
Security
|
To the extent that there is any inconsistency between a
provision of this Agreement and a provision of any document constituting part of
the Security, the provision of this Agreement shall govern. For greater
certainty, a provision of this Agreement and a provision of the Security shall
be considered to be inconsistent if both relate to the same subject-matter and
the provision in the Security imposes more onerous obligations or restrictions
than the corresponding provision in this Agreement.
The Agent and the Lenders agree that all documentation and
other information made available by the Borrower to them under or in connection
with this Agreement shall (except to the extent such documentation or other
information is publicly available or hereafter becomes publicly available other
than by their actions, or was theretofore known or hereinafter becomes known to
them independently of any disclosure by the Companies) be held in confidence by
them and used solely in the evaluation, administration and enforcement of the
Advances and all matters related to this Agreement and the Security and the
transactions contemplated hereby and thereby, and in the prosecution of defence
of legal proceedings arising in connection herewith and therewith.
Notwithstanding the foregoing, nothing contained herein shall be construed to
prevent the Agent or the Lenders from (a) making disclosure of any information
(i) if required to do so by Applicable Law, (ii) to any Governmental Authority
having or claiming to have authority to regulate or oversee any aspect of the
business of the Agent, the Lenders or the Companies in connection with the
exercise of such authority or claimed authority and that compels or requires the
disclosure of such information, (iii) pursuant to any subpoena or if otherwise
compelled in connection with any litigation or administrative proceeding, (iv)
to any prospective participant or assignee of all or any portion of the rights and obligations or
the Agent or any Lender hereunder provided that such prospective assignee
executes and delivers to the Borrower a confidentiality agreement in form and
substance acceptable to it, acting reasonably, or (v) to the extent that the
Agent or its counsel deems necessary or appropriate, acting reasonably, to
effect or preserve its Security or to enforce any remedy provided in this
Agreement or the Security or otherwise available by Law; or (b) making, on a
confidential basis, such disclosures as the Agent and the Lenders reasonably
deem necessary or appropriate to their legal counsel, accountants or other
advisers, agents or representatives (including outside auditors).
- 86 -
This Agreement shall be interpreted in accordance with the Laws
of the Province of Ontario. Without prejudice to the right of the Agent and the
Lenders to commence any proceedings with respect to this Agreement in any other
proper jurisdiction, the parties hereby attorn and submit to the jurisdiction of
the courts of the Province of Ontario.
|
13.18
|
Execution by Fax and
Counterparts
|
This Agreement may be executed in several counterparts, each of
which, when so executed, shall be deemed to be an original and which
counterparts together shall constitute one and the same Agreement. This
Agreement may be executed by facsimile or pdf, and any signature contained
hereon by facsimile or pdf shall be deemed to be equivalent to an original
signature for all purposes.
This Agreement shall be binding upon and shall enure to the
benefit of the parties and their respective successors and permitted assigns;
"successors" includes any corporation resulting from the amalgamation of any
party with any other corporation.
[The remainder of this page is intentionally blank. Signature
page follows.]
IN WITNESS WHEREOF
the parties hereto have executed this
Agreement.
|
AURORA CANNABIS INC.
|
|
BANK OF MONTREAL,
|
|
|
|
|
as Administrative Agent
|
|
|
|
|
|
|
|
By:
|
“
Steve Dobler
”
|
|
By:
|
“
Allen Benjamin
”
|
|
|
Name: Steve Dobler
|
|
|
Name: Allen Benjamin
|
|
|
Title: Director/President
|
|
|
Title: Director, Loan Syndications
|
|
|
|
|
|
|
|
By:
|
|
|
By:
|
“Francois Wentzel”
|
|
|
Name:
|
|
|
Name: Francois Wentzel
|
|
|
Title:
|
|
|
Title: Managing Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BANK OF MONTREAL
, as a Lender
|
|
ALBERTA TREASURY BRANCHES
, as
a Lender
|
|
|
|
|
|
|
|
By:
|
“Cameron Kozlowski”
|
|
By:
|
“Andre Chan”
|
|
|
Name: Cameron Kozlowski
|
|
|
Name: Andre Chan
|
|
|
Title: Managing Director
|
|
|
Title: Director
|
|
|
|
|
|
|
|
By:
|
“Roy Dias”
|
|
By:
|
“Gine Guirguis”
|
|
|
Name: Roy Dias
|
|
|
Name: Gine Guirguis
|
|
|
Title: Vice President, Regional had, Corporate Finance
|
|
|
Title: Managing Director
|
|
|
|
|
|
|
|
CANADIAN WESTERN BANK
, as a Lender
|
|
FARM CREDIT CANADA
, as a
Lender
|
|
|
|
|
|
|
|
By:
|
“John Cherian”
|
|
By:
|
“Blair Miciak”
|
|
|
Name: John Cherian
|
|
|
Name: Blair Miciak
|
|
|
Title: AVP, Corporate Lending
|
|
|
Title: Senior Relationship Manager
|
|
|
|
|
|
|
|
By:
|
”Mykhaylo Hotsaliuk”
|
|
By:
|
|
|
|
Name: Mykhaylo Hotsaliuk
|
|
|
Name:
|
|
|
Title: AVP, Corporate Lending
|
|
|
Title:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONCENTRA BANK
, as a Lender
|
|
ALTERNA SAVINGS AND CREDIT UNION
LIMITED
, as a Lender
|
|
|
|
|
|
|
By:
|
“Casey Fox”
|
|
|
|
|
|
Name: Casey Fox, MBA, P. Ag.
|
|
By:
|
“Umair Saleem”
|
|
|
Title: AVP, Agriculture Concentra
|
|
|
Name: Umair Saleem
|
|
|
|
|
|
Title: Account Manager
|
|
By:
|
“Greg Hornung”
|
|
|
|
|
|
Name: Greg Hornung, B. Admin
|
|
By:
|
“Nikos Patiniotis”
|
|
|
Title: AVP, Commercial Markets
|
|
|
Name: Nikos Patiniotis
|
|
|
|
|
|
Title: Head, Commercial Services
|
EXHIBIT A - LENDERS AND LENDERS' COMMITMENTS
LENDERS' COMMITMENTS ARE SET OUT IN
THE ATTACHED WORKSHEET ENTITLED “AURORA CANNABIS INC. - COMMITMENTS AND
ALLOCATIONS”
BA Lenders
Bank of Montreal
Alberta Treasury
Branches
Non-BA Lenders
Canadian Western Bank
Farm Credit
Canada
Concentra Bank
Alterna Savings and Credit Union Limited
Lenders’ Addresses
Bank of Montreal
Corporate Finance
18th Floor, First Canadian Place
Toronto, Ontario
M5X 1A1
Attention:
[Redacted: Personal Information]
facsimile no.
[Redacted: Personal Information]
Alberta Treasury Branches
Suite
600, 585 8
th
Ave S.W.
Calgary, AB
T2P 1G1
Attention:
[Redacted: Personal Information]
Fax:
[Redacted: Personal
Information]
Canadian Western Bank
Suite 3000,
10303 Jasper Avenue
Edmonton, AB
T5J 3X6
Attention:
[Redacted:
Personal Information]
Fax:
[Redacted: Personal Information]
- 2 -
Farm Credit Canada
110-2618
Hopewell Place NE
Calgary, AB
T1Y 7J7
Attention:
[Redacted:
Personal Information]
Fax:
[Redacted: Personal Information]
Concentra Bank
2055 Albert Street
Regina, Saskatchewan
S4P 3G8
Attention:
[Redacted: Personal
Information]
Fax:
[Redacted: Personal Information]
Alterna Savings and Credit Union
Limited
165 Attwell Drive
Toronto, ON
M9W 5Y5
Attention:
[Redacted: Personal Information]
Fax:
[Redacted: Personal
Information]
EXHIBIT B – DRAW REQUEST
|
|
To:
|
Bank of Montreal, as Administrative Agent (the
"
Agent
")
|
This Draw
Request is delivered pursuant to the credit agreement made among Aurora Cannabis
Inc. as borrower, Bank of Montreal and certain other lenders as lenders and Bank
of Montreal as administrative agent for the lenders from time to time
thereunder, dated as of August 29, 2018 (as amended, restated, supplemented,
replaced or otherwise modified from time to time, the "
Credit
Agreement
"). Terms used herein as defined terms shall have the respective
meanings ascribed in the Credit Agreement, unless otherwise defined in herein.
|
|
1.
|
The Borrower hereby requests an Advance as
follows:
|
|
|
(a)
|
Facility:
|
|
|
|
|
|
|
|
|
(b)
|
Date of Advance:
|
|
|
|
|
|
|
|
|
(c)
|
Amount of Advance:
|
|
|
|
|
|
|
|
|
(d)
|
Availment Option:
|
|
|
|
|
|
|
|
|
(e)
|
If Availment Option is a Bankers'
Acceptance or BA Equivalent Loan, indicated period requested:
|
|
|
|
|
|
|
|
|
(f)
|
If Letter of Credit requested,
attach schedule setting out requested terms:
|
|
|
|
2.
|
The Borrower hereby certifies that as at the date
hereof:
|
|
|
(a)
|
the representations and warranties in the Credit
Agreement are true and correct in all material respects as if made on the
date hereof, except for any such representations and warranties which are
expressly stated therein to have been made only as at the date of the
Credit Agreement; and
|
|
|
|
|
|
|
(b)
|
no Default, Event of Default or Material Adverse Change
has occurred and is continuing, nor shall the making of the Advance
pursuant to this Draw Request result in the occurrence of a Default, Event
of Default or Material Adverse Change.
|
- 2 -
Dated this_______________ day of
_______________ , _______________ .
|
|
AURORA CANNABIS INC.
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
EXHIBIT C – ROLLOVER NOTICE
|
|
To:
|
Bank of Montreal, as Administrative Agent (the
"
Agent
")
|
This
Rollover Notice is delivered pursuant to the credit agreement made among Aurora
Cannabis Inc., as borrower, Bank of Montreal and certain other lenders as
lenders and Bank of Montreal as administrative agent for the lenders from time
to time thereunder, dated as of August 29, 2018 (as amended, restated,
supplemented, replaced or otherwise modified from time to time, the "
Credit
Agreement
"). Terms used herein as defined terms shall have the respective
meanings ascribed in the Credit Agreement, unless otherwise defined herein.
|
|
1.
|
The Borrower hereby requests a Rollover as
follows:
|
|
|
(a)
|
Facility:
|
|
|
|
|
|
|
|
|
(b)
|
Availment Option to be rolled over:
|
|
|
|
|
|
|
|
|
(c)
|
amount of maturing Advance:
|
|
|
|
|
|
|
|
|
(d)
|
date of maturing Advance:
|
|
|
|
|
|
|
|
|
(e)
|
period requested:
|
|
|
|
2.
|
The Borrower hereby certifies that as at the date
hereof:
|
|
|
(a)
|
the representations and warranties in the Credit
Agreement are true and correct in all material respects as if made on the
date hereof, except for any such representations and warranties which are
expressly stated therein to have been made only as at the date of the
Credit Agreement; and
|
|
|
|
|
|
|
(b)
|
no Default, Event of Default or Material Adverse Change
has occurred and is continuing, nor shall the making of the Rollover
pursuant to this Rollover Notice result in the occurrence of a Default,
Event of Default or Material Adverse Change.
|
- 2 -
Dated this _______________day of
_______________, _______________.
|
|
AURORA CANNABIS INC.
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
EXHIBIT D – SUBSTITUTION NOTICE
|
|
To:
|
Bank of Montreal, as Administrative Agent (the
"
Agent
")
|
This
Substitution Notice is delivered pursuant to the credit agreement made among
Aurora Cannabis Inc., as borrower, Bank of Montreal and certain other lenders as
lenders and Bank of Montreal as administrative agent for the lenders from time
to time thereunder, dated as of August 29, 2018 (as amended, restated,
supplemented, replaced or otherwise modified from time to time, the "
Credit
Agreement
"). Terms used herein as defined terms shall have the respective
meanings ascribed in the Credit Agreement, unless otherwise defined herein.
|
|
1.
|
The Borrower hereby requests a Substitution as
follows:
|
|
|
(a)
|
Facility:
|
|
|
|
|
|
|
|
|
(b)
|
Availment Option to be converted:
|
|
|
|
|
|
|
|
|
(c)
|
amount of maturing Advance:
|
|
|
|
|
|
|
|
|
(d)
|
date of maturing Advance:
|
|
|
|
|
|
|
|
|
(e)
|
Availment Option requested:
|
|
|
|
|
|
|
|
|
(f)
|
period requested:
|
|
|
|
2.
|
The Borrower hereby certifies that as at the date
hereof:
|
|
|
(a)
|
the representations and warranties in the Credit
Agreement are true and correct in all material respects as if made on the
date hereof, except for any such representations and warranties which are
expressly stated therein to have been made only as at the date of the
Credit Agreement; and
|
|
|
|
|
|
|
(b)
|
no Default, Event of Default or Material Adverse Change
has occurred and is continuing, nor shall the making of the Substitution
pursuant to this Substitution Notice result in the occurrence of a
Default, Event of Default or Material Adverse
Change.
|
Dated this _______________day of
_______________, _______________.
- 2 -
|
|
AURORA CANNABIS INC.
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
EXHIBIT E –REPAYMENT NOTICE
|
|
To:
|
Bank of Montreal, as Administrative Agent (the
"
Agent
")
|
This
Repayment Notice is delivered pursuant to the credit agreement made among Aurora
Cannabis Inc., as borrower, Bank of Montreal and certain other lenders as
lenders and Bank of Montreal as administrative agent for the lenders from time
to time thereunder, dated as of August 29, 2018 (as amended, restated,
supplemented, replaced or otherwise modified from time to time, the "
Credit
Agreement
"). Terms used herein as defined terms shall have the respective
meanings ascribed in the Credit Agreement, unless otherwise defined herein.
The
Borrower hereby advises that a Repayment will be made as follows:
|
|
1.
|
Availment Option of Advance to be repaid:
|
|
|
|
|
|
|
2.
|
date of Repayment:
|
|
|
|
|
|
|
3.
|
amount of Repayment:
|
Dated this __________________day of
__________________, __________________.
|
|
AURORA CANNABIS INC.
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
EXHIBIT F – BORROWING BASE CERTIFICATE
|
|
To:
|
Bank of Montreal, as Administrative Agent (the
"
Agent
")
|
This
Borrowing Base Certificate is delivered pursuant to the credit agreement made
among Aurora Cannabis Inc., as borrower, Bank of Montreal and certain other
lenders as lenders and Bank of Montreal as administrative agent for the lenders
from time to time thereunder, dated as of August 29, 2018 (as amended and as it
may be further amended, restated, supplemented, replaced or otherwise modified
from time to time, the "
Credit Agreement
"). Terms used herein as defined
terms shall have the respective meanings ascribed in the Credit Agreement,
unless otherwise defined herein.
|
|
1.
|
As of the close of business on
_________________________(being the last day of the immediately preceding
calendar month, hereafter the “
Applicable Date
”), the Facility A
Margin Limit was $ _________________________, determined as
follows:
|
|
|
(a)
|
cash in Qualified Currencies held on deposit in bank
accounts maintained by the Secured Companies with the
Agent:_________________________x 100% = _____________; plus
|
|
|
|
|
|
|
(b)
|
Eligible Receivables owing by Governmental Authorities
domiciled in Canada: _________________________x 85% =
_________________________; plus
|
|
|
|
|
|
|
(c)
|
Eligible Receivables owing by other account debtors
domiciled in Canada: _________________________x 75% =
_________________________; plus
|
|
|
|
|
|
|
(d)
|
Eligible Receivables owing by account debtors domiciled
in other Qualified Jurisdictions, as follows:
|
|
|
(i)
|
[jurisdiction] :_______________ x *% = ______________;
plus
|
|
|
|
|
|
|
(ii)
|
[jurisdiction] : ______________x *% = ______________;
plus
|
|
|
|
|
|
|
(iii)
|
[jurisdiction] : ______________x *% = ______________;
less
|
|
|
(e)
|
Potential Statutory Priority Amount:
_______________________
;
equals
|
|
|
|
|
|
|
(f)
|
Facility A Margin Limit:
_______________________.
|
Borrowing Base (Excess/Deficiency): $
_______________________
|
|
2.
|
Attached to this certificate
are:
|
|
|
(a)
|
an aged summary of accounts receivable of the Companies
including the following information: country of domicile; intercompany
accounts; doubtful accounts; accounts in dispute; contra accounts;
holdbacks, and any deposits received from each account debtor
which remain outstanding at the report date; and
|
- 2 -
|
|
(b)
|
a summary of all amounts which comprise the Potential
Statutory Priority Amount.
|
|
|
3.
|
The Borrower hereby certifies that as at the date
hereof:
|
|
|
(a)
|
the representations and warranties in the Credit
Agreement are true and correct in all material respects as if made on the
date hereof, except for any such representations and warranties which are
expressly stated therein to have been made only as at the date of the
Credit Agreement; and
|
|
|
|
|
|
|
(b)
|
no Default, Event of Default or Material Adverse Change
has occurred and is continuing.
|
Dated this______________ day
of______________ , ______________.
|
|
AURORA CANNABIS INC.
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
EXHIBIT G – MONTHLY COMPLIANCE CERTIFICATE
|
|
To:
|
Bank of Montreal, as Administrative Agent (the
"
Agent
")
|
This
Compliance Certificate is delivered pursuant to the credit agreement made among
Aurora Cannabis Inc., as borrower (the "
Borrower
"), Bank of Montreal and
certain other lenders as lenders and Bank of Montreal as administrative agent
for the lenders from time to time thereunder, dated as of August 29, 2018 (as
amended, restated, supplemented, replaced or otherwise modified from time to
time, the "
Credit Agreement
"). Terms used herein as defined terms shall
have the respective meanings ascribed in the Credit Agreement, unless otherwise
defined herein. The
undersigned officer of the Borrower hereby certifies on behalf of the Borrower
and without personal liability as follows:
|
|
(a)
|
a list of Medical Cannabis Qualified
Jurisdictions;
|
|
|
|
|
|
|
(b)
|
a list of Non-Medical Cannabis Qualified Jurisdictions;
and
|
|
|
|
|
|
|
(c)
|
a list of jurisdictions in which the Companies own assets
or carry on business which are not Qualified Jurisdictions and a summary
of all activities of the Companies therein.
|
|
|
2.
|
The activities referred to in paragraph 1(c) above do not
contravene any Applicable Laws in the respective jurisdictions referred to
therein, and the Borrower has received legal advice from its counsel in
such jurisdictions to that effect.
|
|
|
|
|
|
|
3.
|
The Companies are carrying on Medical Cannabis-Related
Activities only in Medical Cannabis Qualified Jurisdictions and
Non-Medical Cannabis-Related Activities only in Non-Medical Cannabis
Qualified Jurisdictions, in each case in compliance with all Applicable
Laws therein; and all Material Permits issued by Governmental Authorities
for the Companies’ facilities and operations remain in full force and
effect.
|
|
|
|
|
|
|
4.
|
As of the date hereof:
|
|
|
(a)
|
the Borrower has cash deposits with the Agent, in
addition to any cash collateral required to be pledged pursuant to section
8.03 of the Credit Agreement, in the aggregate amount of $
_________________;
|
|
|
|
|
|
|
(b)
|
the Outstanding Principal Amount under Facility A is
$_________________ ; and
|
|
|
|
|
|
|
(c)
|
the Minimum Cash Ratio (being amount (a) above divided by
amount (b) above) is _________________%, which is equal to or greater than
125% in compliance with section 7.03(a) of the Credit
Agreement.
|
[Note – paragraph 4 may be deleted
after the Conversion Date]
- 2 -
Dated this ______________day of
______________,______________ .
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
|
|
|
See attachments.
|
EXHIBIT H – QUARTERLY COMPLIANCE CERTIFICATE
|
|
To:
|
Bank of Montreal, as Administrative Agent (the
"
Agent
")
|
This
Compliance Certificate is delivered pursuant to the credit agreement made among
Aurora Cannabis Inc., as borrower (the "
Borrower
"), Bank of Montreal and
certain other lenders as lenders and Bank of Montreal as administrative agent
for the lenders from time to time thereunder, dated as of August 29, 2018 (as
amended, restated, supplemented, replaced or otherwise modified from time to
time, the "
Credit Agreement
"). Terms used herein as defined terms shall
have the respective meanings ascribed in the Credit Agreement, unless otherwise
defined herein.
The
undersigned officer of the Borrower hereby certifies on behalf of the Borrower
and without personal liability as follows:
|
|
1.
|
This Compliance Certificate is
provided in respect of the twelve-month fiscal period of the Borrower
ended __________________(the “
Fiscal Period
”).
|
|
|
|
|
|
|
|
2.
|
Delivered herewith are the [Interim
Financial Statements / Year-end Financial Statements] in respect of the
Fiscal Period, accompanied by management's discussion and analysis.
|
|
|
|
|
|
|
|
3.
|
Delivered herewith is a copy of the
Borrower's auditor's letter to management.
[note –
delete if not
Fiscal Year]
|
|
|
|
|
|
|
|
4.
|
EBITDA for the Fiscal Period
is__________________ . Attached hereto are details of all adjustments to
EBITDA in respect of the Fiscal Period.
[Note – see definition of
EBITDA
for permitted adjustments]
|
|
|
|
|
|
|
|
5.
|
The Total Funded Debt to EBITDA Ratio
is _________________, determined as follows:
|
Total Funded Debt: __________________;
divided by
EBITDA: __________________;
equals: __________________
[Note – the Total Funded Debt to
EBITDA Ratio is relevant for the determination of the Applicable Margin.
Financial Covenants prior to
Conversion Date
[Note – paragraphs 6 and 7 apply
prior to the Conversion Date; otherwise to be deleted]
|
|
6.
|
The Minimum Cash Ratio is __________________.
[note -
must be not less than 125%]
|
|
|
|
|
|
|
7.
|
The ratio of Total Funded Debt to Tangible Net Worth is
__________________, determined as follows:
[note – may not exceed
1.50:1]
|
- 2 -
Total Funded Debt: __________________;
divided by
Tangible Net Worth:
__________________;
equals: __________________
Financial Covenants after
Conversion Date
[Note – paragraphs 8 and 9 apply
after the Conversion Date; otherwise to be deleted]
|
|
8.
|
The Fixed Charge Ratio is __________________, determined
as follows:
(note: may not be less than 1.25 to
1)
:
|
EBITDA: __________________; less
Cash Taxes: __________________; less
Distributions paid in cash
__________________; less
Investments in Unsecured Subsidiaries:
__________________; less
Capital Expenditures not financed by
Permitted Funded Debt: __________________
equals:__________________; divided by
Funded Debt Service:
_________________
equals:__________________
.
|
|
9.
|
The Total Funded Debt to EBITDA Ratio (as per paragraph 5
above) is _________________.
[note - must be not less than
3:00:1]
|
|
|
|
|
|
|
10.
|
The Borrower hereby certifies that as at the date
hereof:
|
|
|
(a)
|
the representations and warranties in the Credit
Agreement are true and correct in all material respects as if made on the
date hereof, except for any such representations and warranties which are
expressly stated therein to have been made only as at the date of the
Credit Agreement; and
|
|
|
|
|
|
|
(b)
|
no Default, Event of Default or Material Adverse Change
has occurred and is continuing.
|
- 3 -
Dated this__________________ day
of__________________ , __________________.
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
|
|
|
See attachments.
|
EXHIBIT I – CONDITIONS PRECEDENT FOR ADVANCES UNDER
FACILITY B
See attached.
EXHIBIT J – FORM OF BA EQUIVALENT NOTE
[insert date]
FOR VALUE RECEIVED, the undersigned hereby promises to pay to the order of
[name of Non-BA Lender]
at its office at
[insert address from Credit
Agreement]
, the sum of _________________________________Dollars
($__________________ ) in lawful money of Canada on
[insert date of
maturity]
.
Dated this__________________ day of
__________________, __________________.
|
|
AURORA CANNABIS INC.
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
EXHIBIT K – CBA MODEL PROVISIONS
See attached.
SCHEDULE 6.01(b) – Corporate Information
|
1.
|
Subsidiaries of the
Borrower
|
|
A.
|
List of Secured
Companies
|
|
i.
|
|
Aurora Cannabis Inc. (“Borrower”)
|
|
ii.
|
|
Aurora Marijuana Inc. (“Marijuana”)
|
|
iii.
|
|
Aurora Larssen Projects Inc. (“Larssen
Projects”)
|
|
iv.
|
|
Larssen Ltd. (“Larssen”)
|
|
v.
|
|
BC Northern Lights Enterprises Ltd. (“BC
Lights”)
|
|
vi.
|
|
2105657 Alberta Ltd. (“210 Alberta”)
|
|
vii.
|
|
2095173 Alberta Ltd. (“209 Alberta”)
|
|
viii.
|
|
Aurora Cannabis Enterprises Inc. (“Cannabis”)
|
|
ix.
|
|
Urban Cultivator Inc. (“Cultivator”)
|
|
x.
|
|
1769474 Alberta Ltd. (“176 Alberta”)
|
|
xi.
|
|
CanvasRX Inc. (“CanvasRX”)
|
|
xii.
|
|
CanniMed Therapeutics Inc. (“CM Therapeutics”)
|
|
xiii.
|
|
CanniMed International Ltd. (“CM
International”)
|
|
xiv.
|
|
Prairie Plant Systems Inc. (“Prairie”)
|
|
xv.
|
|
CanniMed Ltd. (“Cannimed”)
|
|
xvi.
|
|
Production Médicale Marinature Inc.
(“Marinature”)
|
|
xvii.
|
|
H2 Biopharma Inc. (“H2”)
|
|
xviii.
|
|
10094595 Canada Inc. (“100 Canada”)
|
|
xix.
|
|
Peloton Pharmaceuticals Inc. (“Peloton”)
|
|
xx.
|
|
Aurora Deutschland GmbH
(“Deutschland”)
|
|
B.
|
List of Unsecured
Subsidiaries
|
|
i.
|
|
Hempco Food and Fiber Inc. (“Hempco”)
|
|
ii.
|
|
Hempco Canada Superfoods Inc. (“Superfoods”)
|
|
iii.
|
|
Pedanios Nederland B.V. (“Nederland”)
|
|
iv.
|
|
Aurora Produktions GmbH (“Produktions”)
|
|
v.
|
|
Aurora Cannabis Germany GmbH (“Germany”)
|
|
vi.
|
|
Aurora Nordic Cannabis A/S (“Nordic”)
|
|
vii.
|
|
Aurora Italia S.R.L.
(“Italia”)
|
|
2.
|
Company Information
[Redacted]
|
2.
SCHEDULE 6.01(h) – Material Permits [Redacted]
3.
SCHEDULE 6.01(i) – Specific Permitted Liens [Redacted]
4.
SCHEDULE 6.01(j) – Owned Properties [Redacted]
5.
SCHEDULE 6.01(k) – Material Leased Properties [Redacted]
6.
SCHEDULE 6.01(l) – Intellectual Property [Redacted]
7.
SCHEDULE 6.01(n) – Material Agreements
Nil.
8.
SCHEDULE 6.01(o) – Labour Agreements
Nil.
9.
SCHEDULE 6.01(p) – Environmental Matters
Nil.
10.
SCHEDULE 6.01(q) – Material Litigation [Redacted]
11.
SCHEDULE 6.01(r) – Pension Plans
Nil.
Form 51–102F3
MATERIAL CHANGE REPORT
|
Item 1.
|
Name and Address of Company
|
Aurora Cannabis Inc. (“
Aurora
”
or the “
Company
”)
Suite 900 - 510 Seymour Street
Vancouver,
British Columbia V6B 1V5
|
Item 2.
|
Date of Material Change
|
August 29, 2018.
News Release dated September 4, 2018 was disseminated via
Canada Newswire and filed on SEDAR on September 4, 2018.
|
Item 4.
|
Summary of Material Change
|
On August 29, 2018, the Company, as borrower, entered into a
secured credit agreement (the “
Credit Agreement
”) with Bank of Montreal,
as administrative agent, lead arranger and sole bookrunner (“
BMO
”) and
certain lenders party thereto from time to time (collectively, the
“
Lenders
”) to establish a credit facility (the “
Credit Facility
”)
under which the Company has access to an aggregate of up to $200 million in
funds that are available as a $50 million revolving credit facility and a $150
million non-revolving facility, all in accordance with the terms and conditions
set out in the Credit Agreement as described below.
|
Item 5.
|
Full Description of Material Change
|
|
5.1
|
Full Description of Material
Change
|
On August 29, 2018, the Company entered into the Credit
Agreement with BMO and the Lenders to establish the Credit Facility. The
obligations of the Company under the Credit Facility will be secured by a first
priority lien on substantially all of the personal property and assets of the
Company.
The Credit Facility has a three year term. Under the Credit
Facility, the Company has access to an aggregate of up to $200 million in funds
that are available as follows: (i) a $50 million revolving credit facility
(“
Facility A
”); and (ii) a $150 million non-revolving facility
(“
Facility B
”).
Facility A accrues interest and standby fees at variable rates
based on borrowing elections by the Company and the Company’s Total Funded Debt
to EBITDA as described below. Advances under Facility A are required to be used
by the Company for working capital and general corporate requirements. Facility
A requires interest only monthly payments and a final principal payment due upon
maturity of the Credit Facility.
Facility B accrues interest and standby fees at variable rates
based on borrowing elections by the Company and the Company’s Total Funded Debt
to EBITDA ratio as described below. Under the payment terms for Facility B, each
draw will amortize quarterly beginning the first full quarter post initial draw.
Advances under Facility B are also required to be used by the Company for
working capital and general corporate requirements.
- 2 -
Borrowings under the Credit Facility will accrue interest and
standby fees based on the Company’s Total Funded Debt to EBITDA ratio and the
availment type as follows:
|
|
•
|
If Total Funded Debt to EBITDA is less than 1.00, then:
(i) borrowings based on Bankers’ Acceptance (“
Bankers’ Acceptance
Borrowings
”) will be at 2.25% margin; (ii) borrowings based on Prime
Rate (“
Prime Rate Borrowings
”) will be at 1.00% margin; and (iii)
Standby fees will be at 0.45%;
|
|
|
|
|
|
|
•
|
If Total Funded Debt to EBITDA is greater than or equal
to 1.00 and less than 1.50, then: (i) Bankers’ Acceptance Borrowings will
be at 2.50% margin; (ii) Prime Rate Borrowings will be at 1.25% margin;
and (iii) Standby fees will be at 0.50%;
|
|
|
|
|
|
|
•
|
If Total Funded Debt to EBITDA is greater than or equal
to 1.50 and less than 2.00, then: (i) Bankers’ Acceptance Borrowings will
be at 2.75% margin; (ii) Prime Rate Borrowings will be at 1.50% margin;
and (iii) Standby fees will be at 0.55%;
|
|
|
|
|
|
|
•
|
If Total Funded Debt to EBITDA is greater than or equal
to 2.00 and less than 2.50, then: (i) Bankers’ Acceptance Borrowings will
be at 3.00% margin; (ii) Prime Rate Borrowings will be at 1.75% margin;
and (iii) Standby fees will be at 0.60%; and
|
|
|
|
|
|
|
•
|
If Total Funded Debt to EBITDA is greater than or equal
to 2.50, then (i) Bankers’ Acceptance Borrowings will be at 3.25% margin;
(ii) Prime Rate Borrowings will be at 2.00% margin; and (iii) Standby fees
will be at 0.65%.
|
The Credit Agreement contains customary representations and
warranties, affirmative and negative covenants, and events of default. In
addition, the Credit Agreement contains a negative covenant which restricts the
Company from making or acquiring any Investments (as defined in the Credit
Agreement) that, among other things, do not satisfy the definition of a
Permitted Acquisition, as that term is defined in the Credit Agreement. The
Credit Agreement also requires that the Company comply with certain customary
non-financial covenants and restrictions. In addition, the Company has agreed to
comply with the following financial covenants at all times, which are to be
calculated on a rolling four quarter basis: (i) maximum Total Funded Debt (as
defined in the Credit Agreement) to EBITDA of 3.00:1; and (ii) minimum Fixed
Charge Coverage Debt (as defined in the Credit Agreement) of 1.25:1.
The foregoing description of the Credit Facility and the Credit
Agreement is qualified in its entirety by reference to the full text of the
Credit Agreement, a copy of which is available under the Company profile on
SEDAR at www.sedar.com.
|
5.2
|
Disclosure for Restructuring
Transactions
|
Not applicable.
|
Item 6.
|
Reliance on subsection 7.1(2) of National
Instrument 51–102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None.
- 3 -
|
Item 8.
|
Executive Officers
|
The following senior officer of the Company is knowledgeable
about the material change and this Material Change Report and may be contacted:
Terry Booth, Chief Executive Officer
Telephone: (604) 362-5207
DATED at Vancouver, BC, this 10
th
day of September,
2018.
NICHE Canada and Aurora Cannabis Launch Guide for Municipal
Candidates on Cannabis Legalization and Implementation
TSX: ACB
VANCOUVER, Sept. 11, 2018 /CNW/ - The National Institute for
Health and Education (NICHE) and Aurora Cannabis Inc. ("Aurora" or the
"Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) are pleased
to launch a new guide to cannabis legalization for municipal candidates, with a
view to raising awareness of the new cannabis laws that will come into effect
next month.
Local BC government leaders are gathering this week for the
annual Union of BC Municipalities (UBCM) convention in Whistler, BC, in advance
of this year's municipal elections that are taking place next month. Several
other provinces and territories will also head to the polls this year to elect
new local government representatives, including Ontario, Manitoba, PEI, Yukon,
and the Northwest Territories.
"Legalization is complicated and sifting through the multitude
of regulations can be a daunting process," says Barinder Rasode, CEO of NICHE
Canada. "Municipalities are on the front lines of legalization and we want to
help prepare them for the changes that are about to take place. We want elected
officials to have robust and meaningful conversations about what the new
regulations entail and how they will impact communities."
The Guide provides a synopsis for some of the key topics
related to legalization, including a breakdown of who is responsible for
regulating what, youth protection, workplace policies, cannabis promotion and
the retail landscape.
"In partnering with NICHE, our shared goal is to support
informed discussions and decision-making among candidates and elected officials,
by providing factual information in an easy to use format," said Cam Battley,
Aurora's Chief Corporate Officer. "Legalizing cannabis for adult consumer use is
intelligent public policy designed to achieve a number of specific beneficial
objectives, but it is critical that municipalities have the information they
need to ensure that implementation of this new nationwide policy is successful
from coast to coast."
More than a dozen resolutions going to the UBCM conference this
week are about cannabis, including a Special Resolution that seeks to advance a
short- and long-term cannabis excise tax revenue sharing strategy with the
provincial government.
"There is no doubt that cannabis will be a hot topic this week
and in local government election campaigns across the country this year. We want
the debates around legalization to focus on facts and solutions, and we want to
arm our elected officials with practical information to help inform those
conversations," says Rasode.
For more information and to download a copy of the Guide,
please visit:
https://www.nichecanada.com/guide-to-cannabis-legalization
About NICHE Canada
The National Institute for Cannabis Health and Education
(NICHE) is a not-for-profit corporation that was created to support the development of policies and
regulations that have the health and safety of Canadians as the fundamental
priority. The goal of NICHE is to bring together academic research, government
law makers, industry partners and public safety and public health partners to
create a collaborative, transparent and fact-based approach to cannabis
legalization in Canada.
About Aurora
Headquartered in Edmonton, Alberta, Canada with funded capacity
in excess of 5000,000 kg per year and sales and operations in 14 countries
across five continents, Aurora is one of the world's largest and leading
cannabis companies. Aurora is vertically integrated and horizontally diversified
across every key segment of the value chain, from facility engineering and
design to cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and its first production
facility, the recently acquired MedReleaf Markham facility, and its wholly owned
European medical cannabis distributor Aurora Europe GmbH, have achieved this
level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes 10 companies acquired –
MedReleaf, CanvasRx, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban
Cultivator, BC Northern Lights, Larssen Greenhouses, CanniMed Therapeutics, and
Anandia – Aurora is distinguished by its reputation as a partner of choice and
employer of choice in the global cannabis sector, having invested in and
established strategic partnerships with a range of leading innovators,
including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient
Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann
Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings
Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), Evio Beauty Group
(private), Wagner Dimas (private), CTT Pharmaceuticals (OTCC: CTTH), Capcium
Inc. (private), and Alcanna Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB"
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website, investor.auroramj.com, Twitter, Facebook or Instagram.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Terry Booth, CEO
Aurora Cannabis Inc.
Aurora Cannabis (CNW Group/Aurora Cannabis Inc.)
SOURCE Aurora Cannabis Inc.
View original content to download multimedia:
http://www.newswire.ca/en/releases/archive/September2018/11/c7438.html
%SEDAR: 00025675E
For further information:
MEDIA CONTACT (AURORA): Heather
MacGregor, Director of Communications, Aurora Cannabis, M: (416) 509-5416, E:
heather.macgregor@auroramj.com, www.auroramj.com; MEDIA CONTACT (NICHE Canada):
Barinder Rasode, CEO, NICHE Canada, M: (604) 805-3272, E:
brasode@nichecanada.com, www.nichecanada.com
CO: Aurora Cannabis Inc.
CNW 13:14e 11-SEP-18
Aurora Cannabis Acquires Europe's Largest Organic Hemp
Company
Significant Supply to Fuel Global CBD Wellness and Organic
Hemp-Based Supplements Expansion
TSX: ACB
EDMONTON, Sept. 12, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today
announced that it has acquired Europe's largest producer, processor and supplier
of certified organic hemp and hemp products, Agropro UAB ("Agropro"), as well as
hemp processor and distributor Borela UAB ("Borela").
Agropro, a hemp seed contracting and processing company, and
its sister company Borela UAB ("Borela"), a processor and distributor of organic
hulled hemp seeds, hemp seed protein, hemp flour and hemp seed oil, currently
has 1,600 hectares (4,000 acres) under contract, potentially yielding more than
1,000,000 kg of organic hemp with additional contracts available to expand to
more than 3,000 hectares across Lithuania, Latvia, Estonia, and Poland.
Previously, the companies were focused exclusively on the
production and sale of hemp seed-based products to markets across Europe, North
America and Asia. Each year, very substantial quantities of CBD containing hemp
biomass were left on the field unutilized.
Post-acquisition, Aurora intends to extract, refine and
productize the organic hemp biomass into a wide range of organic CBD-based
wellness products to generate new and significant revenue streams in this
burgeoning market. With increasing recognition of the medical and general health
benefits of CBD-based products, Aurora continues executing on a CBD-focused
strategy that covers the entire value chain, from supply, through genetics
research and clinical trials, to product development and distribution to various
domestic and international markets across five continents.
In addition to the CBD-related market potential, hemp is an
increasingly sought-after food supplement and meat substitute for the large and
rapidly growing health food, vegetarian and vegan markets, due to its high
protein content. Through its majority owned subsidiary Hempco, Aurora is already
executing on a number of hemp food market opportunities, and intends to
integrate Agropro's organic supply and distribution with Hempco's to enhance
market access and accelerate growth of high margin, premium hemp-based product
offerings.
On February 1, 2018, Borela's hemp grain processing facility
became the only European hemp company to receive a BRC quality certificate,
enabling Borela to supply supermarkets with its product. Borela's operations
have also received USDA Organic, Eco-Cert, as well as other certifications,
enabling the company to market premium products across large markets.
The organic certification achieved by both Agropro and Borela
will enable the launch of new premium products, positively impacting the
Company's margin profile for hemp-based products.
Management Commentary
"Agropro's position as Europe's leading producer of premium
organic hemp along with the significant and previously unutilized CBD production
from the large quantities of currently discarded biomass, makes this an
accretive acquisition and one that positions Aurora well to become a global
leader in organic CBD-based wellness products, said Terry Booth, CEO"
Neil Belot, Chief Global Business Development Officer, added,
"With our industry-leading team of crop and plant scientists, extraction and
product formulation expertise, and wide-reaching global distribution networks and partnerships, we anticipate
increasing production, extraction, refinement and supply of CBD, as well as
other hemp-based food products. With a broad European footprint, extensive
contracted land agreements and solid existing revenue streams, Agropro and
Borela provide further expansion of our international footprint, while playing
an important role in the execution of our CBD wellness and hemp-based food
products strategy."
Skirmantas Nikstele Co-Founder & Chief Executive Officer of
Agropro, added, "As the largest producer, processor, and supplier of organic
hemp products in Europe, we have developed a strong reputation for quality and
consistency with our customers across the globe. Through Aurora, we gain access
to a wider distribution network, as well as an access to industry-leading
science to help ramp up production, while enhancing margins through the
introduction of new products, proven production techniques, and robust
genetics."
Hemp – Super Food with High Market Growth
The hemp plant is made up of three components. Seeds, which are
used in food and personal care products, leaves and flowers, which produce
cannabidiol (CBD), used in medical products, supplements and beauty products,
and stalk, which produces fiber and hurd, used in paper products, building
materials, clothing and other textiles.
Hemp seed oil offers the richest and most balanced source found
in nature of essential fatty acids ("EFAs"), such as Omega 3 and Omega 6 oils.
EFAs play a very important role in critically important processes, such as
detoxification and the formation of brain cells, hormones and neurotransmitters.
Hemp seed is not only rich in essential fatty acids, it also represents an
important source for amino acids, which are the building blocks of protein.
Essential amino acids are not produced by our bodies, and therefore must come
from food. Hemp seeds contain all 9 essential amino acids, as well as other
nutritionally important vitamins and minerals, such as iron, zinc, carotene,
vitamin B1, vitamin B2, vitamin B6, vitamin D, vitamin E, calcium, magnesium,
potassium, and enzymes.
These characteristics have resulted in strong continued market
growth of hemp-based products. Grand View Research (Industrial Hemp Market Size,
Share & Trends Analysis, 2018) anticipates the industrial hemp market to
grow at a CAGR of 14.0% to US$10.6 billion by 2025. The hemp seed market, as a
sub category, is anticipated to show even stronger growth.
With Agropro and Borela, Aurora has acquired a very substantial
supply of organic hemp seed products, as well as the capacity to process the raw
material into products, and the international distribution channels to sell
these. Market reach will be further strengthened through integration with
Hempco, while Aurora's science teams will be spearheading research into
cultivation yield enhancements, as well as further medical and wellness
applications.
Terms of the Transaction
Aurora purchased 100% of the issued and outstanding shares of
Agropro UAB and Borela UAB for total cash consideration of €5,364,000
(approximately C$8.1 million) and common shares of Aurora equivalent to €960,000
(approximately C$1.4 million), based on the 5-day VWAP as of September 10, 2018.
In addition, Aurora will also refinance existing debt totaling €2,076,000
(approximately C$3.1 million) and provide a finder's fee totaling €1,517,400
(approximately C$2.3 million).
About Aurora
Headquartered in Edmonton, Alberta, Canada with funded capacity
in excess of 570,000 kg per year and sales and operations in 14 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and its first production
facility, the recently acquired MedReleaf Markham facility, and its wholly owned
European medical cannabis distributor Pedanios, have achieved this level of
certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes 10 companies acquired –
MedReleaf, CanvasRx, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban
Cultivator, BC Northern Lights, Larssen Greenhouses, CanniMed Therapeutics, and
Anandia – Aurora is distinguished by its reputation as a partner of choice and
employer of choice in the global cannabis sector, having invested in and
established strategic partnerships with a range of leading innovators,
including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient
Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann
Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings
Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), Evio Beauty Group
(private), Wagner Dimas (private), CTT Pharmaceuticals (OTCC: CTTH), Capcium
Inc. (private), and Alcanna Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website, investor.auroramj.com, Twitter, Facebook or Instagram
Terry Booth, CEO
Aurora Cannabis Inc.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. Forward-looking information used in this press
release includes statements relating to expected production levels of organic
hemp, potential expansion of the Company's cultivation capabilities, uses for
hemp and CBD-based products and their related medical effects, the generation of
additional revenue, corporate strategy and the Company's ability to execute such
strategy, including the launch of new products and the successful integration of
Agropro and Borela into the Company's operations. Statements containing
forward-looking information should not be read as guarantees of future events,
performance or results, and will not necessarily be accurate indications as to
whether, or the times at which, such events, performance or results will occur
or be achieved. Various assumptions that the Company believes are reasonable in
the circumstances were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of known and
unknown risks and uncertainties and other factors that could cause actual events
or results to differ materially from those projected in the forward-looking
statements. Any forward-looking information contained herein speaks only as of
the date on which it is given and the Company is under no obligation, and
expressly disclaims any intention or obligation, to update or revise any
forward-looking statements, whether as a result of new information, future events or
otherwise, except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that
term is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/September2018/12/c1569.html
%SEDAR: 00025675E
For further information:
For Media: Heather MacGregor,
+1.416.509.5416, heather.macgregor@auroramj.com, www.auroramj.com; For
Investors: Marc Lakmaaker, +1.647.269.5523, marc.lakmaaker@auroramj.com,
https://investor.auroramj.com; Rob Kelly, +1.647.331.7228,
rob.kelly@auroramj.com, https://investor.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com / >ebarker@kcsa.com/P>
CO: Aurora Cannabis Inc.
CNW 07:30e 12-SEP-18
Aurora Cannabis Provides Update on Australis Capital Public
Listing
Australis Expected to Commence Trading and Distribution of
Units to Aurora Shareholders on September 19, 2018
TSX: ACB
EDMONTON, Sept. 14, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) and
Australis Capital Inc. ("Australis") today announced the common shares and
warrants (together the "Units") of Australis are expected to commence trading on
the Canadian Securities Exchange (the "CSE") under the trading symbol "AUSA" at
the opening of trading on September 19, 2018 immediately following the
completion of the distribution of Units by Aurora to its shareholders.
The U.S. Cannabis Market
To date, the medical use of cannabis is legal in 31 states, the
District of Columbia and the territories of Guam and Puerto Rico. Nine states
plus the District of Columbia have proceeded with consumer legalization. While
momentum continues to build at the state level, cannabis remains a Schedule 1
controlled substance at the under the federally governed Controlled Substances
Act. Consequently, the U.S. cannabis market is fragmented in nature and includes
many high-quality operations and technology innovators with limited access to
capital. This has created a compelling opportunity for well capitalized Canadian
companies to invest in U.S. assets, especially considering anticipated market
growth, with over 50% of the U.S. population currently living in states with
legal access.
Recent changes in U.S. federal positioning with respect to
cannabis have positively impacted the perception of risk to invest in U.S.
cannabis assets. This has further incentivized capital market participants to
seek opportunities to fund U.S. based operations.
Australis Capital
Australis synthesizes decades of relevant expertise, its strong
historical relationship with Aurora Cannabs and other strategic relationships,
and capital investment execution to build value in the cannabis value chain in
the United States. Targeting investments in cannabis and associated real estate
opportunities, Australis is well positioned for early-stage access to
attractively priced opportunities. Following an oversubscribed, non-brokered
private placement, raising gross proceeds of $17 million, Australis is
aggressively identifying high quality investment opportunities with strong
growth potential. Australis has assembled a management team with significant
U.S. capital markets, operating and regulatory compliance experience governed by
an industry best board of directors and deeply rooted cannabis investment
advisory committee.
Through aggressive and disciplined investment, access to
capital markets, Australis will leverage strategic relationships with Aurora
Cannabis and others to maximize deal flow and discounted investments.
Management Commentary
"
With Australis we've brought together an impressive
management team and Board with vast capital markets and cannabis industry
backgrounds to evaluate and pursue investments in the highly fragmented and
opportunity-rich U.S. cannabis market," said Terry Booth, CEO of Aurora. "Upon
completion of the distribution, Australis' independent opportunity team will
leverage their combined experience while applying the Aurora Standard to
assessing and executing on accretive opportunities that will drive long term
shareholder value."
"Our team has wasted no time evaluating a number of potential
investment opportunities across the US cannabis industry and excited to initiate
our investment strategy upon completion of the distribution" stated Scott Dowty,
CEO of Australis. We're entering the market at the right time to capitalize on
these transactions and generate shareholder value. I look forward to providing
regular updates as we complete these investments and further define growth
vectors to what will be a disciplined, reflective and aggressive mandate."
Update on Distribution of Australis Units to Aurora
Shareholders
Following completion of Australis' public listing, Aurora and
Australis expect the previously announced distribution of shares and warrants
(the "Distribution") will be completed and the Australis shares and warrants
will commence trading on the CSE on September 19, 2018 under the symbol "AUSA".
In accordance with the terms of the Distribution, eligible Aurora shareholder
will be paid one Unit of Australis for every 34 Aurora shares outstanding as at
August 24, 2018 (the "Record Date). Each Unit will consist of one common share
and one share purchase warrant of Australis. Each warrant will entitle the
holder thereof to acquire one share at an exercise price of $0.25 per Australis
share, on or prior to 4:00 p.m. (Eastern Time) on the date that is one year
after the Distribution.
In accordance with applicable securities laws, only Canadian
beneficial shareholders can participate in the Distribution.
Canadian beneficial shareholders or their broker
representatives are required to confirm Canadian residency by no later than
September 14, 2018, otherwise they will be deemed to be non-resident
shareholders and will receive the net cash proceeds from the sale of their
units. Canadian shareholders who hold their shares in Aurora through a brokerage
or other account are therefore urged to contact their brokers to ensure that
their brokers have confirmed Canadian residency in the manner to be provided by
CDS or DTCC, as applicable.
About Aurora
Headquartered in Edmonton, Alberta, Canada with funded capacity
in excess of 500,000 kg per year and sales and operations in 18 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and both its first production
facility and its wholly owned European medical cannabis distributor Pedanios
have achieved this level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes 15 companies – MedReleaf,
CanvasRX, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban Cultivator, BC
Northern Lights, Larssen Greenhouses, CanniMed Therapeutics, Anandia Labs,
HotHouse Consulting, Agropro, Borela, and the pending acquisition of ICC Labs –
Aurora is distinguished by its reputation as a partner of choice and employer of
choice in the global cannabis sector, having invested in and established
strategic partnerships with a range of leading innovators, including: The Green
Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient Technologies Inc. (TSXV:
RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann Group Ltd. (ASX: CAN),
Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO),
Namaste Technologies Inc. (TSXV: N), Evio Beauty Group (private), Wagner Dimas
(private), CTT Pharmaceuticals (OTCC: CTTH), and Alcanna Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index. For more information
about Aurora, please visit our investor website, investor.auroramj.com, Twitter,
Facebook or Instagram
Terry Booth, CEO
Aurora Cannabis Inc.
About Australis
Australis Capital identifies and invests in the cannabis
industry predominately in the United States, a highly regulated, fragmented,
fast growing and evolving industry. Investments may include and are not limited
to equity, debt or other securities of both public and private companies,
financings in exchange for royalties or other distribution streams, and control
stake acquisitions. Australis Capital adheres to stringent investment criteria
and will focus on significant near and mid-term high-quality opportunities with
strong return potentials while maintaining a steadfast commitment to governance
and community. Australis Capital's Board, Management and Advisory Committee
members have material experience with, and knowledge of, the cannabis space in
the U.S., extensive backgrounds in highly regulated industries, adherence to
stringent regulatory compliance, public company and operational expertise. For
more information, please visit us at www.ausacap.com
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur and include, but are not limited to: statements
in respect of the timing and details of the Distribution, the financial
prospects of Australis, the listing of Australis Shares and Warrants on the CSE
and the terms of the Restricted Back-in Right. These statements are only
predictions. Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking statements throughout this news
release. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. Investors should refer to the final prospectus filed by Australis in
connection with the Distribution for more information, in particular the risk
factors described therein under the heading "Risk Factors". The Company is under
no obligation, and expressly disclaims any intention or obligation, to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release.
Australis Capital Inc. (CNW Group/Aurora Cannabis Inc.)
View original content to download multimedia:
http://www.prnewswire.com/news-releases/aurora-cannabis-provides-update-on-australis-capital-public-listing-300712706.html
SOURCE Aurora Cannabis Inc.
View original content to download multimedia: http://www.newswire.ca/en/releases/archive/September2018/14/c6017.html
%SEDAR: 00025675E
For further information:
For Media: Heather MacGregor,
+1.416.509.5416, heather.macgregor@auroramj.com, www.auroramj.com; For
Investors: Marc Lakmaaker, +1.647.269.5523, marc.lakmaaker@auroramj.com,
https://investor.auroramj.com; Rob Kelly, +1.647.331.7228,
rob.kelly@auroramj.com, https://investor.auroramj.com; U.S. Investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com / ebarker@kcsa.com; Australis
Contact: Scott Dowty, Chief Executive Officer, IR@ausacap.com
CO: Aurora Cannabis Inc.
CNW 07:30e 14-SEP-18
Form 51-102F4
Business Acquisition Report
|
Item 1
|
Identity of Company
|
|
1.1
|
Name and Address of the
Company
|
Aurora Cannabis Inc. (“
Aurora
”
or the “
Company
”)
Suite 900 – 510 Seymour Street
Vancouver, BC
V6B 1V5
The following individual is
knowledgeable about the particulars described in this business acquisition
report:
Glen Ibbott
,
Chief Executive
Officer
Phone: 604-202-4958
|
Item 2
|
Details of Acquisition
|
|
2.1
|
Nature of the Business
Acquired
|
On July 25, 2018, Aurora acquired all
of the issued and outstanding common shares (the “
MedReleaf Shares
”) of
MedReleaf Corp. (“
MedReleaf
”) pursuant to a statutory Plan of Arrangement
under section 182 of the
Business Corporations Act
(Ontario) (the
“
Arrangement
”) for consideration consisting of 3.575 Aurora common shares
(each an “
Aurora Share
”) and $0.000001 in cash for each MedReleaf Share.
Existing Aurora and MedReleaf shareholders now own approximately 61% and 39% of
the combined company, respectively, on a fully diluted basis. MedReleaf is now a
wholly owned subsidiary of Aurora.
The Plan of Arrangement was executed
pursuant to an arrangement agreement between Aurora and MedReleaf dated May 14,
2018 (the “
Original Agreement
”), as amended by an amending agreement
dated May 24, 2018 (the “
Amending Agreement
”, and together with the
Original Agreement, hereinafter defined as the “
Agreement
”). Aurora and
MedReleaf each held a meeting of shareholders on July 18, 2018 (the
“
Meetings
”) at which the Aurora shareholders approved the issuance of
Aurora shares pursuant to the Arrangement on July 18, 2018 and the shareholders
of MedReleaf also approved the Arrangement, respectively.
Further information pertaining to the
Arrangement is set forth in the management information circulars prepared by
each of Aurora (the “
Aurora Circular
”) and MedReleaf, each dated June 18,
2018, in respect of the Meetings which were mailed to Aurora and MedReleaf
shareholders and filed under Aurora’s and MedReleaf’s SEDAR profiles,
respectively. Additionally, the Original Agreement and the Amending
Agreement have been filed on the SEDAR
profiles of Aurora and MedReleaf. Appendix E of the Aurora Circular, which is
titled “Appendix E - Information Concerning MedReleaf”, including the documents
incorporated therein by reference, is incorporated in this business acquisition
report by reference. The following is a summary of the business of MedReleaf.
MedReleaf is a Licensed Producer of
medical cannabis products pursuant to the ACMPR (such products referred to as,
“
cannabis-based pharmaceutical products
”). MedReleaf produces and sells
its cannabis-based pharmaceutical products to persons across Canada who are
registered with MedReleaf as “clients” under the ACMPR (“
patients
”).
MedReleaf is a research and development-driven company dedicated to patient
care, scientific innovation, research and advancing the understanding of the
therapeutic benefits of cannabis.
MedReleaf has three wholly-owned
non-operating subsidiaries, namely: (a) MedReleaf Holdings (Australia) Ltd.,
incorporated under the laws of the Province of Ontario (“
MedReleaf Australia
Holdings
”); (b) MedReleaf Germany GmbH, incorporated under the laws of
Germany (“
MedReleaf Germany
”); and (c) 2582394 Ontario Inc., incorporated
under the laws of the Province of Ontario.
MedReleaf primarily derives its
revenues from the sale to its patients of dried cannabis, cannabis oils,
cannabis oil capsules and, recently, a topical cream (designed to work with
MedReleaf’s cannabis oils). MedReleaf’s sales are supported by a variety of
initiatives, including health conference sponsorships, as well as through its
cannabis education and outreach team of employees. MedReleaf expects both its
portfolio of products and the jurisdictions in which it operates to expand as
local laws allow, resources permit, and where market research indicates
opportunity. MedReleaf’s products are cultivated and manufactured in its two
production facilities, namely its 55,000 square foot indoor production facility
located in Markham, Ontario (the “
Markham Facility
”) as well as its
210,596 square foot production facility located in Bradford, Ontario (the
“
Bradford Facility
” and, together with the Markham Facility, the
“
MedReleaf Facilities
”).
MedReleaf produces and sells
cannabis-based pharmaceutical products from the Markham Facility pursuant to a
licence issued by Health Canada pursuant to the ACMPR in respect of such
facility (the “
Markham Licence
”). The Markham Licence is specific to the
Markham Facility and permits MedReleaf to, among other things, produce, sell,
possess, ship, transport, deliver and destroy dried cannabis, bottled cannabis
oil, cannabis oil capsules, cannabis plants and seeds at such facility. The
Markham Licence provides that the substances inventory at the Markham Facility
cannot exceed at any given time a maximum storage capacity value of $31,250,000
for its security level 9 vault. MedReleaf also produces and sells cannabis-based
pharmaceutical products from the Bradford Facility pursuant to a “second site”
licence issued by Health Canada pursuant to the ACMPR, in respect of such
facility (the “
Bradford Licence
” and, together with the Markham Licence,
the “
MedReleaf Licences
” and individually, a “
MedReleaf Licence
”).
The Bradford Licence is specific to
the Bradford Facility and presently permits MedReleaf to, among other things,
produce, sell, possess, ship, transport, deliver and destroy dried cannabis at such facility. The Bradford Licence provides that
the substances inventory at the Bradford Facility cannot exceed at any given
time a maximum storage capacity value of $150,000,000 for its security level 10
vault. As the MedReleaf Licences are specific to the respective MedReleaf
Facilities, adverse changes or developments affecting such facilities could have
a material and adverse effect on MedReleaf’s ability to continue producing
and/or selling its cannabis-based pharmaceutical products, its business,
financial condition and prospects. Unless renewed, the MedReleaf Licences will
expire at the end of their respective terms, with the Markham Licence expiring
February 14, 2020 and the Bradford Licence expiring April 10, 2020.
July 25, 2018.
On July 25, 2018, Aurora acquired all
of the issued and outstanding common shares of MedReleaf pursuant to the
Arrangement. Existing Aurora and MedReleaf shareholders now own approximately
61% and 39% of the combined company, respectively, on a fully diluted basis.
MedReleaf is now a wholly owned subsidiary of Aurora.
Pursuant to the Arrangement, holders
of MedReleaf Shares have received consideration consisting of 3.575 Aurora
Shares (the “
Share Consideration
”) and $0.000001 in cash (the “
Cash
Consideration
”) for each MedReleaf Share held immediately prior to
completion of the Arrangement. The Arrangement implied a price of $29.44 per
MedReleaf Share and a premium of approximately 34%, based on the 20-day volume
weighted average prices of Aurora Shares and MedReleaf Shares on the Toronto
Stock Exchange (the “
TSX
”) as of May 11, 2018.
Taxable Canadian resident MedReleaf
shareholders were entitled to elect to receive tax-deferred roll-over treatment
in connection with the acquisition by Aurora of their MedReleaf Shares under the
transaction. Taxable Canadian resident MedReleaf shareholders were also entitled
to elect to solely receive the Share Consideration (and, not receive the Cash
Consideration).
Additionally, each outstanding stock
option under the MedReleaf stock option plan was exchanged for a replacement
option to purchase Aurora Shares and each outstanding MedReleaf deferred share
unit (whether vested or unvested) will be deemed to have fully vested and be
settled in exchange for the Share Consideration and the Cash Consideration and
each such MedReleaf deferred share unit shall be immediately cancelled.
In connection with the Arrangement,
pursuant to the terms of the Arrangement and the supplemental common share
purchase warrant indenture dated July 25, 2018 between MedReleaf, Aurora and TSX
Trust Company (the "
Supplemental Indenture
"), which governs the common
share purchase warrants of MedReleaf (the “
MedReleaf Warrants
”) and
supplements the base common share purchase warrant indenture dated January 31,
2018 between MedReleaf and TSX Trust Company, each holder of a MedReleaf Warrant became entitled to receive (and such holder
shall accept) upon the exercise of such holder's MedReleaf Warrant, in lieu of
MedReleaf Shares to which such holder was theretofore entitled upon such
exercise and for the same aggregate consideration payable theretofore, the
number of Aurora Shares and the amount of cash which the holder would have been
entitled to receive as a result of the transactions contemplated by the
Arrangement if, immediately prior to the closing of the Arrangement, such holder
had been the registered holder of the number of MedReleaf Shares to which such
holder would have been entitled if such holder had exercised such holder's
MedReleaf Warrants immediately prior to the closing of the Arrangement.
In connection with the Arrangement,
additional Aurora Shares were authorized for issuance upon exercise of the
MedReleaf Warrants.
|
2.4
|
Effect on Financial
Position
|
Aurora is not aware of any plans or
proposals for material changes in MedReleaf. MedReleaf will continue to operate
as a wholly-owned subsidiary of Aurora.
Aurora is not aware of any prior
valuations of MedReleaf required by securities legislation or any stock
exchange.
|
2.6
|
Parties to Transaction
|
The parties to the transaction are
Aurora Cannabis Inc. and MedReleaf Corp. Aurora acted at arm’s length to
MedReleaf Corp.
September 5, 2018
|
Item 3
|
Financial Statements
|
The following financial statements,
which are included in, or incorporated by reference in, the Aurora Circular,
filed under Aurora’s profile on SEDAR at www.sedar.com, are incorporated by
reference in this business acquisition report:
|
|
a.
|
MedReleaf’s annual audited financial statements for the
years ended March 31, 2018 and 2017, with the report of the auditor
thereon;
|
|
|
|
|
|
|
b.
|
Aurora’s pro forma consolidated financial statements that
give effect to the acquisition of MedReleaf,
including:
|
|
|
(i)
|
pro forma interim consolidated statement of financial
position as at March 31, 2018;
|
|
|
(ii)
|
pro forma consolidated statement of comprehensive income
(loss) for the twelve months ended June 30, 2017;
|
|
|
|
|
|
|
(iii)
|
pro forma interim consolidated statement of comprehensive
income (loss) for the nine months ended March 31, 2018; and
|
|
|
|
|
|
|
(iv)
|
Notes thereon.
|
Aurora is relying on Section
8.4(c)(ii) of NI 51-102 in connection with the provision of the financial
disclosure required pursuant to NI 51-102.
Aurora Cannabis Responds to Media Reports Concerning
Rumoured Partnership with Beverage Companies
TSX: ACB
EDMONTON, Sept. 18, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM), today
is responding to a request from the Investment Industry Regulatory Organization
of Canada ("IIROC") regarding media reports with respect to potential
partnerships with multiple beverage companies. The Company's policy is not to
comment on speculative media reports. The Company does confirm that it engages
in exploratory discussions with industry participants from time to time. At this
time the Company confirms there is no agreement, understanding or arrangement
with respect to any partnership with a beverage company.
In accordance with applicable disclosure requirements, Aurora
will advise the market of material changes when they occur.
About Aurora
Headquartered in Edmonton, Alberta, Canada with funded capacity
in excess of 500,000 kg per year and sales and operations in 18 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and both its first production
facility and its wholly owned European medical cannabis distributor Pedanios
have achieved this level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes 15 companies – MedReleaf,
CanvasRX, Peloton Pharmaceutical, Pedanios, H2 Biopharma, Urban Cultivator, BC
Northern Lights, Larssen Greenhouses, CanniMed Therapeutics, Anandia Labs,
HotHouse Consulting, Agropro, Borela, and the pending acquisition of ICC Labs
–Aurora is distinguished by its reputation as a partner of choice and employer
of choice in the global cannabis sector, having invested in and established
strategic partnerships with a range of leading innovators, including: The Green
Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient Technologies Inc. (TSXV:
RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann Group Ltd. (ASX: CAN),
Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO),
Namaste Technologies Inc. (TSXV: N), Evio Beauty Group (private), Wagner Dimas
(private), CTT Pharmaceuticals (OTCC: CTTH), and Alcanna Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website, investor.auroramj.com, Twitter, Facebook or Instagram
Terry Booth, CEO
Aurora Cannabis Inc.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur and include, but are not limited to: statements
in respect of the timing and details of the Distribution, the financial
prospects of Australis, the listing of Australis Shares and Warrants on the CSE
and the terms of the Restricted Back-in Right. These statements are only
predictions. Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking statements throughout this news
release. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. Investors should refer to the final prospectus filed by Australis in
connection with the Distribution for more information, in particular the risk
factors described therein under the heading "Risk Factors". The Company is under
no obligation, and expressly disclaims any intention or obligation, to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/September2018/18/c1910.html
%SEDAR: 00025675E
For further information:
For Media: Heather MacGregor,
+1.416.509.5416, heather.macgregor@auroramj.com, www.auroramj.com; For
Investors: Marc Lakmaaker, +1.647.269.5523, marc.lakmaaker@auroramj.com,
https://investor.auroramj.com; Rob Kelly, +1.647.331.7228,
rob.kelly@auroramj.com, https://investor.auroramj.com; U.S. investors: Phil
Carlson / Elizabeth Barker, KCSA Strategic Communications, Phone: (212) 896-1233
/ (212) 896-1203, Email: pcarlson@kcsa.com / ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 10:12e 18-SEP-18
Aurora Cannabis Positioned Coast to Coast with Provincial
Supply Arrangements Appoints Darren Karasiuk as Executive Vice President of
Adult Usage, Global
TSX: ACB
EDMONTON, Sept. 18, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM) today
announced it, and its wholly-owned subsidiary MedReleaf, have entered into
additional supply arrangements with a number of provinces across Canada to
supply a broad range of dried flower and higher margin products, such as
pre-rolls, oils and capsules. In addition to supplying adult-consumer use
markets in British Columbia, Alberta, Ontario, Quebec and Nova Scotia, the
Company is pleased to advise of arrangements with Yukon, Manitoba, Prince Edward
Island and Newfoundland and Labrador. The Aurora and MedReleaf brands are
expected to have a strong presence across Canada, positioning the Company well
for rapid growth in the upcoming adult use market.
Appointment Darren Karasiuk, EVP of Adult Usage,
Global
The Company also announces the appointment of Darren Karasiuk
as its new Executive Vice President of Adult Usage, Global. Mr. Karasiuk will be
responsible for the execution of Aurora's commercial adult use strategy, which
includes oversight of adult use retail, marketing, sales, business intelligence
and analytics, partnerships and customer service.
Mr. Karasiuk joins Aurora through the acquisition of MedReleaf
where he was Senior Vice-President and GM, recreational where he was responsible
for MedReleaf's adult use cannabis business which included the development and
introduction of the AltaVie and San Rafael '71 brands into the marketplace, as
well as the stewardship of the partnership with the Woodstock Cannabis Company.
Mr. Karasiuk has deep experience in highly regulated
industries, including private and public healthcare, pharma, tobacco, consumer
packaged goods, and energy. Prior to joining MedReleaf, Mr. Karasiuk was
Vice-President, Insights and Advisory at Deloitte where he was a leader in the
firm's cannabis practice, co-authoring the firm's seminal study,
"Recreational Marijuana: Insights and Opportunities."
Previously, Mr.
Karasiuk was Vice-President, Strategy, Corporate and Public Affairs at
Environics Research, where he conducted many of Canada's earliest engagements on
the cannabis sector. He has also been the Canadian associate for the Marijuana
Policy Group, a leading Denver-based economic and policy consulting firm which
helped shape the regulated medical and recreational cannabis markets. Mr.
Karasiuk holds an MA from Western University and an MBA from
Kellogg-Schulich.
Management Commentary
"We have now secured important supply arrangements from coast
to coast, covering approximately 98% of the Canadian population, reflecting the
scale and quality of our operations," said Terry Booth, CEO. "We will supply a
large number of products to the adult use market, including dried flower, and
higher margin form factors, such as capsules, oils, and pre-rolls. We are also
exceptionally pleased that Darren has agreed to join our team and take on the
leadership of Aurora's adult usage business. His expertise in market development
within heavily regulated environments, his track record in bringing adult usage
brands to market, and his connections and credibility throughout the industry are invaluable assets for us. We welcome Darren
and look forward to working closely with him as Aurora rises to new heights."
Mr. Karasiuk added, "Aurora is an exceptional company,
innovating and executing at the most rapid pace in the industry. The strengths
of both companies – high-volume, low-cost cultivation capacity, product quality,
brands and people - position us well to grow rapidly in these new and exciting
markets. I look forward to being part of the team."
Granting of Stock Options and Restricted Share Units to
Officers
The Company also announced today that it has granted an
aggregate of 205,000 stock options and 55,000 restricted share units to officers
of the Company. The stock options are exercisable at a price of $8.54 per share
for a period of five years from the date of grant. Both options and RSUs vest
annually over 36 months.
About Aurora
Headquartered in Edmonton, Alberta, Canada with funded capacity
in excess of 500,000 kg per year and sales and operations in 18 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and its first production
facility, the recently acquired MedReleaf Markham facility, and its wholly owned
European medical cannabis distributor Aurora Deutschland (formerly Pedanios),
have achieved this level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes 15 companies – MedReleaf,
CanvasRX, Peloton Pharmaceutical, Aurora Deutschland (formerly Pedanios), H2
Biopharma, Urban Cultivator, BC Northern Lights, Larssen Greenhouses, CanniMed
Therapeutics, Anandia Labs, HotHouse Consulting, Agropro, Borela, and the
pending acquisition of ICC Labs – Aurora is distinguished by its reputation as a
partner of choice and employer of choice in the global cannabis sector, having
invested in and established strategic partnerships with a range of leading
innovators, including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD),
Radient Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP),
Cann Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom
Holdings Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), Evio Beauty
Group (private), Wagner Dimas (private), CTT Pharmaceuticals (OTCC: CTTH), and
Alcanna Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website, investor.auroramj.com, Twitter, Facebook or Instagram
Terry Booth, CEO
Aurora Cannabis Inc.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur and include, but are not limited to the variety
of cannabis products that Aurora will supply to the adult use market.. These
statements are only predictions. Various assumptions were used in drawing the
conclusions or making the projections contained in the forward-looking
statements throughout this news release. Forward-looking statements are based on
the opinions and estimates of management at the date the statements are made,
and are subject to a variety of risks and uncertainties and other factors that
could cause actual events or results to differ materially from those projected
in the forward-looking statements. The Company is under no obligation, and
expressly disclaims any intention or obligation, to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content to download multimedia:
http://www.newswire.ca/en/releases/archive/September2018/18/c6649.html
%SEDAR: 00025675E
For further information:
For Media: Heather MacGregor,
+1.416.509.5416, heather.macgregor@auroramj.com, www.auroramj.com; For
Investors: Marc Lakmaaker, +1.647.269.5523, ir@auroramj.com,
https://investor.auroramj.com; Rob Kelly, +1.647.331.7228,
rob.kelly@auroramj.com, https://investor.auroramj.com
CO: Aurora Cannabis Inc.
CNW 13:07e 18-SEP-18
VOTING AND SUPPORT AGREEMENT
September 8, 2018
Dear Securityholder:
Re: Acquisition of ICC Labs Inc. by Aurora
Cannabis Inc.
Aurora Cannabis Inc. (“
Aurora
”) is concurrently herewith
entering into an arrangement agreement (the “
Arrangement Agreement
”) with
ICC Labs Inc. (“
ICC
”) which provides for, among other things, the
acquisition by Aurora of all of the issued and outstanding common shares (the
“
Shares
”) of ICC by way of a plan of arrangement (the “
Plan of
Arrangement
”) under Section 288 of the
Business Corporations Act
(British Columbia) (the “
BCBCA
”) (the “
Transaction
”). Under the
terms of the Arrangement Agreement, Aurora will acquire all of the issued and
outstanding Shares at a price per Share of $1.95 payable in such number of
common shares in the capital of Aurora (“
Aurora Shares
”) as is equal to
the quotient of $1.95 divided by the volume-weighted average trading price of
the Aurora Shares on the Toronto Stock Exchange in the twenty (20) Business Days
(as such term is defined in the Arrangement Agreement) preceding the effective
date of the Transaction (the last day of such period being the second to last
trading day on the TSX immediately prior to the effective date of the
Transaction) (the “
Consideration
”).
The undersigned securityholder (the “
Securityholder
” and
together with Aurora, each, a “
Party
” and collectively, the
“
Parties
”) acknowledges that Aurora would not proceed with the
Transaction but for the execution and delivery of this Agreement by the
Securityholder.
In consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Securityholder and Aurora
(each, a “
Party
” and collectively, the
Parties
”) agree as
follows:
Aurora understands that the
Securityholder is the beneficial owner, directly or indirectly, of, or has
direction or control over (i) the number of Shares, if any, and (ii) the number
of ICC Options exercisable to purchase Shares (the “
Options
”), if any,
each as set forth in the Securityholder’s acceptance (the “
Acceptance
”)
at the end of this voting and support agreement (this “
Agreement
”).
Under the Plan of Arrangement, Aurora
will acquire, subject to the terms and conditions of the Arrangement Agreement,
all of the issued and outstanding Shares.
Capitalized terms used in this
Agreement but not otherwise defined herein shall have the respective meanings
ascribed thereto in the Arrangement Agreement.
|
3.
|
COVENANTS OF THE
SECURITYHOLDER
|
The Securityholder covenants and agrees
that, until the earlier of: (i) the closing of the Transaction and (ii) the date
this Agreement is terminated in accordance with its terms, the Securityholder
shall:
|
|
(a)
|
attend (either in person or by proxy) any meeting of the
shareholders of ICC held to consider the Transaction (including any
adjournments and postponements thereof) (the “
ICC Arrangement
Meeting
”), and at the ICC Arrangement Meeting, vote or cause to be
voted all of:
|
|
|
(i)
|
the Shares; and
|
|
|
|
|
|
|
(ii)
|
any Shares acquired by or issued to the Securityholder on
or following the date hereof,
|
that are beneficially owned by, or
over which control or direction is exercised by, the Securityholder and which
are entitled to be voted at the ICC Arrangement Meeting (the “
Subject
Securities
”) in favour of the Transaction and all matters related thereto;
|
|
(b)
|
vote or cause to be voted (in person or by proxy) at any
meeting of the securityholders of ICC any Subject Securities against, or
not tender or cause to be tendered any Subject Securities
to:
|
|
|
(i)
|
any corporate transaction, such as a merger,
amalgamation, arrangement, rights offering, reorganization,
recapitalization, or liquidation or take-over bid, sale or transfer of a
material amount of assets of ICC or similar transaction involving ICC or
the Shares other than the Transaction and any transaction related
thereto;
|
|
|
|
|
|
|
(ii)
|
the issuance of any securities of ICC (other than
pursuant to the exercise of ICC Options) other than the Transaction and
any transaction related thereto;
|
|
|
|
|
|
|
(iii)
|
any action that is reasonably likely to impede, interfere
with, delay, postpone, hinder, prevent, or adversely affect in any
material respect the Transaction including, without limitation, any ICC
Acquisition Proposal; or
|
|
|
|
|
|
|
(iv)
|
any action or agreement that would result in a breach of
any representation, warranty, or covenant or other obligation of ICC in
the Arrangement Agreement;
|
|
|
(c)
|
upon the request or direction of Aurora, have all of its
Subject Securities counted or not counted (as directed by Aurora) as part
of a quorum in connection with any meeting of securityholders of ICC
relating to matters set forth in Section 3(b);
|
|
|
|
|
|
|
(d)
|
not, without the prior written consent of Aurora, option,
sell, transfer, assign, pledge, encumber or otherwise dispose of, or enter
into any agreement or understanding relating to the option, sale,
transfer, assignment, pledge, encumbrances or other disposition of, the
Subject Securities or any interest therein, other than pursuant to any
exercise of ICC Warrants or ICC Options for Shares in accordance with
their terms; except that from and after the date of the Final Order, the
Securityholder shall be entitled to, without the consent of Aurora, sell,
transfer, assign, pledge, encumber or otherwise dispose of, the Subject
Securities, provided that any sales of Subject Securities permitted to be
made during the term of this Agreement shall be made in an orderly fashion
as market conditions permit;
|
|
|
|
|
|
|
(e)
|
not, except as required pursuant to this Agreement, grant
or agree to grant any proxy or other right to vote the Subject Securities
or enter into any voting trust or pooling agreement or arrangement or
enter into or subject any of the Subject Securities to
any other agreement, arrangement, understanding or commitment,
formal or informal, with respect to or relating to the voting or tendering
thereof or revoke any proxy granted pursuant to this Agreement;
|
|
|
(f)
|
not exercise or permit any other person to exercise any
rights of the Securityholder any rights of dissent or appraisal in respect
of any resolution approving the Transaction or any aspect thereof or
matter related thereto, and not exercise any other securityholder rights
or remedies available at common law or pursuant to applicable corporate or
securities law or other legislation;
|
|
|
|
|
|
|
(g)
|
not, directly or indirectly:
|
|
|
(i)
|
solicit, assist, initiate, knowingly encourage or
otherwise facilitate (including by way of furnishing information,
permitting any visit to any facilities or entering into any form of
agreement, arrangement or understanding) any inquiries or proposals,
whether publicly or otherwise, regarding a ICC Acquisition Proposal or
potential ICC Acquisition Proposal;
|
|
|
|
|
|
|
(ii)
|
enter into, engage, continue or participate in any
negotiations or discussions regarding, or provide any non-public
information with respect to ICC or any of its subsidiaries, or offer or
provide access to the business, properties, assets, books or records of
ICC or any of its subsidiaries or otherwise cooperate in any way with, any
ICC Acquisition Proposal or potential ICC Acquisition Proposal;
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(iii)
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requisition or join in the requisition of any meeting of
the securityholders of ICC for the purpose of considering any
resolution;
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(iv)
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solicit proxies or become a participant in the
solicitation in opposition to or in competition with Aurora’s purchase of
the Shares as contemplated by the Arrangement Agreement or act jointly or
in concert with others with respect to voting securities of ICC for the
purpose of opposing or competing with Aurora’s purchase of the Shares as
contemplated by the Arrangement Agreement; or
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(v)
|
take any other action of any kind which might reasonably
be regarded as likely to reduce the success or delay or interfere with the
completion of the Transaction;
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(h)
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promptly notify Aurora upon any of undersigned’s
representations or warranties contained in this Agreement becoming untrue
or incorrect in any material respect prior to the termination of this
Agreement, which notification shall include a description of the ways in
which such representations or warranties have become incorrect or untrue;
and
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(i)
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from time to time, execute and deliver, or cause to be
executed and delivered, such additional or further consents, documents and
other instruments and shall take all other actions reasonably necessary or
as Aurora may reasonably request for the purposes of effectively carrying
out this Agreement.
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The Securityholder acknowledges and
agrees that any ICC Options held by him, her or it, to the extent not exercised
or settled, shall be treated in accordance with the Arrangement and he, she or
it shall take all steps required of him, her or it to give effect to such
treatment.
Aurora agrees and confirms to the
Securityholder that it shall take all steps required of it under the Arrangement
Agreement to cause the Transaction to occur in accordance with the terms of and
subject to the conditions set forth in the Arrangement Agreement.
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5.
|
ALTERNATIVE TRANSACTION
|
In the event that, in lieu of the
Transaction, Aurora seeks to complete the acquisition of the Shares other than
as contemplated by the Arrangement Agreement on a basis that is (a) on economic
terms and conditions (including, without limitation, tax treatment) having
consequences to the Securityholder that are in the Securityholders’s reasonable
opinion equivalent to or superior to those contemplated by the Arrangement
Agreement, (b) would not likely result in a delay or time to completion beyond
the Completion Deadline (as defined in the Arrangement Agreement), and (c) is
otherwise on terms and conditions no more onerous on the Securityholder than the
Transaction (including any take-over bid) (any such transaction, an
“
Alternative Transaction
”), then during the term of this Agreement the
Securityholder shall support the completion of such Alternative Transaction in
the same manner as the Transaction in accordance with the terms and conditions
of this Agreement
mutatis mutandis
, including by (A) depositing or
causing the deposit of its Subject Securities into an Alternative Transaction
conducted by way of a take-over bid made by Aurora or an affiliate of Aurora and
not withdrawing them; and/or (B) voting or causing to be voted all of the
Subject Securities (to the extent that they carry the right to vote) in favour
of, and not dissenting from, such Alternative Transaction proposed by Aurora.
The Securityholder hereby covenants and
agrees in favour of Aurora that:
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(a)
|
no later than 10 days prior to the date of the ICC
Arrangement Meeting, the Securityholder shall deposit duly completed forms
of proxy or voting instruction forms, as applicable, in respect of all the
Subject Securities (as directed on such forms) to cause the Subject
Securities to be voted in favour of the Transaction, and
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(b)
|
such forms of proxy or voting instruction forms, as
applicable, shall not be revoked or withdrawn, unless prior written
consent from Aurora has been obtained or this Agreement is terminated
pursuant to Section 9.
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7.
|
REPRESENTATIONS AND WARRANTIES OF THE
SECURITYHOLDER
|
The Securityholder hereby represents
and warrants to Aurora as follows and acknowledges that Aurora is relying on
such representations and warranties in connection with entering into this
Agreement and the Transaction:
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(a)
|
the Securityholder is the sole beneficial owner of the
Shares and ICC Options with valid and marketable title thereto, free and
clear of all claims, liens, charges, encumbrances and security interests
other than those arising by operation of statute and no person has any
agreement, option, or any right or privilege capable of becoming an
agreement or option, for the purchase, acquisition or transfer of the
Shares and the ICC Options from the Securityholder or any interest therein
or right thereto, except pursuant to the
Transaction;
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(b)
|
(i) the only securities of ICC beneficially owned,
directly or indirectly, or over which control or direction is exercised by
the Securityholder are those listed on the Acceptance, and (ii) the
Securityholder has no other agreement, options, warrants or securities
convertible into, or exchangeable or exercisable for, or otherwise
evidencing a right to acquire, securities of ICC or any rights or
privilege capable of becoming an agreement or option, for the purchase or
acquisition by the Securityholder or transfer to the Securityholder of
additional securities of ICC or any interest therein;
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(c)
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the Securityholder has the sole right to dispose of or
transfer (or cause to be disposed of or transferred) all of its Shares and
ICC Options now held, and will have the right to dispose of or transfer
(or cause to be disposed of or transferred) all Shares and ICC Options
hereafter acquired by it;
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(d)
|
the Securityholder has the sole right to vote (or cause
to be voted) all of its Subject Securities now held and will have the sole
right to vote (or cause to be voted) all Subject Securities hereafter
acquired by it;
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(e)
|
this Agreement has been duly executed and delivered by
the Securityholder, and, assuming the due authorization, execution and
delivery by Aurora, this Agreement constitutes a legal, valid and binding
obligation of the Securityholder, enforceable in accordance with its
terms, subject to laws of general application and bankruptcy, insolvency
and other similar laws affecting creditors’ rights generally and general
principles of equity;
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(f)
|
if the Securityholder is a corporation or other entity,
it is validly subsisting under the laws of the jurisdiction governing its
incorporation or formation and has all necessary corporate or other power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder;
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(g)
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neither the execution and delivery of this Agreement by
the Securityholder, the consummation by the Securityholder of the
transactions contemplated hereby nor the compliance by the Securityholder
with any of the provisions hereof will:
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(i)
|
result in any breach of, or constitute a default (or an
event which with notice or lapse of time or both would become a default),
or give rise to any third party right of termination, cancellation,
material modification, acceleration, purchase or right of first refusal,
under any provision of any of the constating documents of the
Securityholder (if the Securityholder is a corporation or other entity) or
under any of the terms, conditions or provisions of any note, loan
agreement, bond, mortgage, indenture, contract, licence, agreement, lease,
permit or other instrument or obligation to which such Securityholder is a
party or by which such Securityholder or any of its properties or assets
(including Shares and ICC Options) may be bound, or constitute a violation
or breach of or default under or conflict with any contract, commitment,
agreement, understanding or arrangement of any kind to which the
Securityholder will be a party and by which the Securityholder will be
bound at the time of such consummation, in each case, which breach or
default could reasonably be expected to prevent, materially delay or
materially impair the Securityholder’s ability to consummate the
transactions contemplated by this Agreement;
or
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(ii)
|
require the Securityholder to make any filing with (other
than pursuant to the requirements of applicable securities legislation
which the Securityholder will undertake), or to obtain any permit, waiver,
authorization, exemption, registration, licence, consent or approval of,
any Governmental Entity or any other person;
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(h)
|
the Securityholder has not previously granted or agreed
to grant any power of attorney or attorney in fact, proxy or other right
to vote in respect of the Subject Securities or entered into any voting
trust, vote pooling or other agreement with respect to the right to vote,
call meetings of shareholders or give consents or approvals of any kind as
to the Securities except those which are no longer of any force or effect;
and
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(i)
|
the Securityholder acknowledges and agrees that the
Securityholder has had the opportunity to seek independent legal advice
with respect to this Agreement, the Arrangement Agreement and the
transactions contemplated hereby and thereby, and that any failure on the
Securityholder’s part to seek independent legal advice shall not affect
(and the Securityholder shall not assert that it affects) the validity,
enforceability or effect of this Agreement or the Arrangement
Agreement.
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8.
|
REPRESENTATIONS AND WARRANTIES OF
AURORA
|
Aurora hereby represents and warrants
to the Securityholder as follows and acknowledges that the Securityholder is
relying on such representations and warranties in connection with entering into
this Agreement and the Transaction:
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(a)
|
the execution and delivery of this Agreement by Aurora
and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Aurora
and is a valid and binding agreement, enforceable against Aurora in
accordance with its terms, and and the performance by Aurora of its
obligations hereunder will not constitute a violation or breach of or
default under, or conflict with (i) any contract, commitment, agreement,
understanding or arrangement of any kind to which Aurora will be a party
and by which Aurora will be bound at the time of such consummation, and
(ii) to its knowledge, any applicable Laws;
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(b)
|
neither the execution and delivery of this Agreement by
Aurora, the consummation by Aurora of the transactions contemplated hereby
nor the compliance by Aurora with any of the provisions hereof will result
in any breach of, or constitute a default (or an event which with notice
or lapse of time or both would become a default), or give rise to any
third party right of termination, cancellation, material modification,
acceleration, purchase or right of first refusal, under any provision of
any of the constating documents of Aurora or under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage,
indenture, contract, licence, agreement, lease, permit or other instrument
or obligation to which Aurora is a party or by which Aurora or any of its
properties or assets may be bound, or constitute a violation or breach of
or default under or conflict with any contract, commitment, agreement,
understanding or arrangement of any kind to which Aurora will be a party
and by which Aurora will be bound at the time of such consummation, in
each case, which breach or default could reasonably be expected to
prevent, materially delay or materially impair Aurora’s ability to
consummate the transactions contemplated by this
Agreement;
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(c)
|
that no material consent, approval, order or
authorization of, or declaration or filing with, any Governmental Entity
is required to be obtained by Aurora in connection with the execution and
delivery of this Agreement, the performance by it of its obligations under
this Agreement and the consummation by Aurora of the Transaction, other
than those which are contemplated by the Arrangement Agreement;
and
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(d)
|
that there are no claims, actions, suits, audits,
proceedings, investigations or other actions pending against, or, to the
knowledge of Aurora, threated against or affecting Aurora or any of its
respective properties that, individually or in the aggregate, could
reasonably be expected to have a material and adverse effect on Aurora’s
ability to execute and deliver this Agreement and to perform its
obligations contemplated by this Agreement or the Arrangement
Agreement.
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9.1
|
This Agreement may be terminated by Aurora by notice to
the Securityholder if:
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(a)
|
the Securityholder or any other person who is a party to
a support agreement with Aurora in respect of the Arrangement has not
complied in all material respects with its covenants to Aurora contained
herein or therein;
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(b)
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ICC has not complied in all material respects with its
covenants to Aurora under the Arrangement Agreement;
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(c)
|
any representation or warranty of any of the
Securityholders contained herein or in another support agreement is at the
date hereof or becomes at any time prior to the Effective Time untrue or
inaccurate in any material respect; or
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(d)
|
the Arrangement Agreement is terminated in accordance
with its terms.
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9.2
|
This Agreement may be terminated by the Securityholder by
notice to Aurora if the Arrangement Agreement is terminated in accordance
with its terms
.
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9.3
|
This Agreement may be terminated at any time prior to the
Effective Time by the mutual agreement of Aurora and the
Securityholder.
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9.4
|
If this Agreement is terminated as provided in Section 9,
this Agreement shall forthwith become void and of no further force or
effect and there shall be no liability on the part of any Party except
that the provisions of Section 12, 17, 19, and 20 will survive any
termination hereof pursuant to Section 9, provided that the foregoing
shall not relieve any Party from any liability for any breach of this
Agreement arising prior to such termination.
|
Notwithstanding anything to the
contrary herein, nothing herein shall restrict or limit any director or officer
of ICC from taking any action required to be taken in the discharge of his or
her fiduciary duty as a director or officer of ICC that is otherwise permitted
by, and done in compliance with, the terms of the Arrangement Agreement. Aurora
further hereby agrees that the Securityholder is not making any agreement or
understanding herein in any capacity other than in the capacity as beneficial
owner of the Subject Securities.
Except as expressly set forth herein,
this Agreement shall not be modified, amended, altered or supplemented except
upon the execution and delivery of a written agreement executed by each of the
Parties.
This Agreement constitutes the entire
agreement between the Parties pertaining to the subject matter of this
Agreement.
No Party may assign any of its rights
or obligations under this Agreement without the prior written consent of the
other Party.
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14.
|
SUCCESSORS; NO THIRD PARTY
BENEFICIARIES
|
This Agreement shall be binding upon,
enure to the benefit of and be enforceable by, the Parties and their respective
executors, administrators, successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer on any person other than
the Parties or the Parties’ respective successors or permits assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
Time is of the essence of this
Agreement.
If any provision of this Agreement or
the application thereof to any Party or circumstance is invalid or unenforceable
to any extent then the remainder of this Agreement or application of such
provision to a Party or circumstance (other than those to which it is held
invalid or unenforceable) is not affected thereby and each remaining provision
of this Agreement is valid and is enforceable to the fullest extent permitted by
Law.
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(a)
|
This Agreement is to be governed by and construed in
accordance with the laws of the Province of British Columbia and the
federal laws of Canada applicable therein without regard to any conflicts
of law provisions, and each of the Parties irrevocably attorns to the
jurisdiction of the courts of the Province of British Columbia.
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(b)
|
The Parties waive the application of any rule of Law
which otherwise would be applicable in connection with the construction of
this Agreement that ambiguous or conflicting terms or provisions should be
construed against the Party that (or counsel of which) prepared the
executed agreement or any earlier draft of the
same.
|
Any notice or other communication
required or permitted to be given hereunder shall be sufficiently given if
delivered:
|
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(a)
|
in the case of the Securityholder, to the address
appearing on the Acceptance; and
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(b)
|
in the case of Aurora:
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Aurora Cannabis Inc.
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1500 - 1199 West Hastings Street
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Vancouver, British Columbia
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V6E 3T5
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Attention
|
[REDACTED]
|
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Email:
|
[REDACTED]
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with a copy (which shall not constitute notice)
to:
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Attention:
|
[REDACTED]
|
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Email:
|
[REDACTED]
|
or to such other address as the Party
to which such notice or other communication is to be given has last notified the
Party giving the same in the manner provided in this Section 18. Any notice or
other communication given or made is deemed to have been duly given or made as
at the date delivered or sent if delivered personally or sent by fax or email
transmission at the address for service provided herein during normal business
hours on a business day, or otherwise on the next business day.
The Parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the Parties are entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof, on a non-exclusive basis, in any
court of the Province of British Columbia having jurisdiction, this being in
addition to any other remedy to which such Party is entitled at law or in
equity.
The Parties agree to pay their own
respective expenses incurred in connection with this Agreement.
Each of the Securityholder and Aurora
will, from time to time, execute and deliver all such further documents and
instruments and do all such acts and things as the other party may reasonably
require (at the requesting Party’s cost) to effectively carry out or better
evidence or perfect the full intent and meaning of this Agreement.
The Parties consent to the disclosure
of the substance of this Agreement in any press release required by applicable
Laws or any circular relating to the ICC Arrangement Meeting and to the filing
of this Agreement as may be required pursuant to applicable Laws. A copy of this
Agreement may be provided to the directors of ICC.
|
23.
|
COUNTERPART EXECUTION
|
This letter may be signed by fax or
other electronic means and in counterparts, which, together, are deemed to
constitute one valid and binding agreement and delivery of such counterparts may
be effected by means of fax or other electronic means.
[
Remainder of page intentionally left blank; signature page
follows.
]
AURORA CANNABIS INC.
|
By:
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(signed “Terry Booth”)
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Name: Terry Booth
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Title: Chief Executive Officer
|
Acceptance by Securityholder
The foregoing is hereby accepted as of and with effect from the
8
th
day of September, 2018 and the undersigned hereby confirms that
the undersigned beneficially owns, directly or indirectly, or has control or
direction over the Shares indicated below:
|
Securities of ICC
|
Number of Securities
|
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[REDACTED]
|
[REDACTED]
|
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[REDACTED]
|
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[REDACTED]
|
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Signature of Witness
|
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Signature of Securityholder or, if a corporation,
authorized signing officer of the Securityholder
|
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[REDACTED]
|
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Michael Young
|
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Name of Witness (Please print)
|
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Name of Securityholder (Please print)
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Address:
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[REDACTED]
|
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[REDACTED]
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Facsimile: [REDACTED]
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Email:
[REDACTED]
|
VOTING AND SUPPORT AGREEMENT
September 8, 2018
Dear Securityholder:
Re: Acquisition of ICC Labs Inc. by Aurora
Cannabis Inc.
Aurora Cannabis Inc. (“
Aurora
”) is concurrently herewith
entering into an arrangement agreement (the “
Arrangement Agreement
”) with
ICC Labs Inc. (“
ICC
”) which provides for, among other things, the
acquisition by Aurora of all of the issued and outstanding common shares (the
“
Shares
”) of ICC by way of a plan of arrangement (the “
Plan of
Arrangement
”) under Section 288 of the
Business Corporations Act
(British Columbia) (the “
BCBCA
”) (the “
Transaction
”). Under the
terms of the Arrangement Agreement, Aurora will acquire all of the issued and
outstanding Shares at a price per Share of $1.95 payable in such number of
common shares in the capital of Aurora (“
Aurora Shares
”) as is equal to
the quotient of $1.95 divided by the volume-weighted average trading price of
the Aurora Shares on the Toronto Stock Exchange in the twenty (20) Business Days
(as such term is defined in the Arrangement Agreement) preceding the effective
date of the Transaction (the last day of such period being the second to last
trading day on the TSX immediately prior to the effective date of the
Transaction) (the “
Consideration
”).
The undersigned securityholder (the “
Securityholder
” and
together with Aurora, each, a “
Party
” and collectively, the
“
Parties
”) acknowledges that Aurora would not proceed with the
Transaction but for the execution and delivery of this Agreement by the
Securityholder.
In consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Securityholder and Aurora
(each, a “
Party
” and collectively, the
Parties
”) agree as
follows:
Aurora understands that the
Securityholder is the beneficial owner, directly or indirectly, of, or has
direction or control over (i) the number of Shares, if any, and (ii) the number
of ICC Options exercisable to purchase Shares (the “
Options
”), if any,
each as set forth in the Securityholder’s acceptance (the “
Acceptance
”)
at the end of this voting and support agreement (this “
Agreement
”).
Under the Plan of Arrangement, Aurora
will acquire, subject to the terms and conditions of the Arrangement Agreement,
all of the issued and outstanding Shares.
Capitalized terms used in this
Agreement but not otherwise defined herein shall have the respective meanings
ascribed thereto in the Arrangement Agreement.
|
3.
|
COVENANTS OF THE
SECURITYHOLDER
|
The Securityholder covenants and agrees
that, until the earlier of: (i) the closing of the Transaction and (ii) the date
this Agreement is terminated in accordance with its terms, the Securityholder
shall:
|
|
(a)
|
attend (either in person or by proxy) any meeting of the
shareholders of ICC held to consider the Transaction (including any
adjournments and postponements thereof) (the “
ICC Arrangement
Meeting
”), and at the ICC Arrangement Meeting, vote or cause to be
voted all of:
|
|
|
(i)
|
the Shares; and
|
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|
(ii)
|
any Shares acquired by or issued to the Securityholder on
or following the date hereof,
|
that are beneficially owned by, or
over which control or direction is exercised by, the Securityholder and which
are entitled to be voted at the ICC Arrangement Meeting (the “
Subject
Securities
”) in favour of the Transaction and all matters related thereto;
|
|
(b)
|
vote or cause to be voted (in person or by proxy) at any
meeting of the securityholders of ICC any Subject Securities against, or
not tender or cause to be tendered any Subject Securities
to:
|
|
|
(i)
|
any corporate transaction, such as a merger,
amalgamation, arrangement, rights offering, reorganization,
recapitalization, or liquidation or take-over bid, sale or transfer of a
material amount of assets of ICC or similar transaction involving ICC or
the Shares other than the Transaction and any transaction related
thereto;
|
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(ii)
|
the issuance of any securities of ICC (other than
pursuant to the exercise of ICC Options) other than the Transaction and
any transaction related thereto;
|
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(iii)
|
any action that is reasonably likely to impede, interfere
with, delay, postpone, hinder, prevent, or adversely affect in any
material respect the Transaction including, without limitation, any ICC
Acquisition Proposal; or
|
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(iv)
|
any action or agreement that would result in a breach of
any representation, warranty, or covenant or other obligation of ICC in
the Arrangement Agreement;
|
|
|
(c)
|
upon the request or direction of Aurora, have all of its
Subject Securities counted or not counted (as directed by Aurora) as part
of a quorum in connection with any meeting of securityholders of ICC
relating to matters set forth in Section 3(b);
|
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(d)
|
not, without the prior written consent of Aurora, option,
sell, transfer, assign, pledge, encumber or otherwise dispose of, or enter
into any agreement or understanding relating to the option, sale,
transfer, assignment, pledge, encumbrances or other disposition of, the
Subject Securities or any interest therein, other than pursuant to any
exercise of ICC Warrants or ICC Options for Shares in accordance with
their terms; except that from and after the date of the Final Order, the
Securityholder shall be entitled to, without the consent of Aurora, sell,
transfer, assign, pledge, encumber or otherwise dispose of, the Subject
Securities, provided that any sales of Subject Securities permitted to be
made during the term of this Agreement shall be made in an orderly fashion
as market conditions permit;
|
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|
(e)
|
not, except as required pursuant to this Agreement, grant
or agree to grant any proxy or other right to vote the Subject Securities
or enter into any voting trust or pooling agreement or arrangement or
enter into or subject any of the Subject Securities to
any other agreement, arrangement, understanding or commitment,
formal or informal, with respect to or relating to the voting or tendering
thereof or revoke any proxy granted pursuant to this Agreement;
|
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|
(f)
|
not exercise or permit any other person to exercise any
rights of the Securityholder any rights of dissent or appraisal in respect
of any resolution approving the Transaction or any aspect thereof or
matter related thereto, and not exercise any other securityholder rights
or remedies available at common law or pursuant to applicable corporate or
securities law or other legislation;
|
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(g)
|
not, directly or indirectly:
|
|
|
(i)
|
solicit, assist, initiate, knowingly encourage or
otherwise facilitate (including by way of furnishing information,
permitting any visit to any facilities or entering into any form of
agreement, arrangement or understanding) any inquiries or proposals,
whether publicly or otherwise, regarding a ICC Acquisition Proposal or
potential ICC Acquisition Proposal;
|
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|
(ii)
|
enter into, engage, continue or participate in any
negotiations or discussions regarding, or provide any non-public
information with respect to ICC or any of its subsidiaries, or offer or
provide access to the business, properties, assets, books or records of
ICC or any of its subsidiaries or otherwise cooperate in any way with, any
ICC Acquisition Proposal or potential ICC Acquisition Proposal;
|
|
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|
|
|
|
(iii)
|
requisition or join in the requisition of any meeting of
the securityholders of ICC for the purpose of considering any
resolution;
|
|
|
|
|
|
|
(iv)
|
solicit proxies or become a participant in the
solicitation in opposition to or in competition with Aurora’s purchase of
the Shares as contemplated by the Arrangement Agreement or act jointly or
in concert with others with respect to voting securities of ICC for the
purpose of opposing or competing with Aurora’s purchase of the Shares as
contemplated by the Arrangement Agreement; or
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(v)
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take any other action of any kind which might reasonably
be regarded as likely to reduce the success or delay or interfere with the
completion of the Transaction;
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(h)
|
promptly notify Aurora upon any of undersigned’s
representations or warranties contained in this Agreement becoming untrue
or incorrect in any material respect prior to the termination of this
Agreement, which notification shall include a description of the ways in
which such representations or warranties have become incorrect or untrue;
and
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(i)
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from time to time, execute and deliver, or cause to be
executed and delivered, such additional or further consents, documents and
other instruments and shall take all other actions reasonably necessary or
as Aurora may reasonably request for the purposes of effectively carrying
out this Agreement.
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The Securityholder acknowledges and
agrees that any ICC Options held by him, her or it, to the extent not exercised
or settled, shall be treated in accordance with the Arrangement and he, she or
it shall take all steps required of him, her or it to give effect to such
treatment.
Aurora agrees and confirms to the
Securityholder that it shall take all steps required of it under the Arrangement
Agreement to cause the Transaction to occur in accordance with the terms of and
subject to the conditions set forth in the Arrangement Agreement.
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5.
|
ALTERNATIVE TRANSACTION
|
In the event that, in lieu of the
Transaction, Aurora seeks to complete the acquisition of the Shares other than
as contemplated by the Arrangement Agreement on a basis that is (a) on economic
terms and conditions (including, without limitation, tax treatment) having
consequences to the Securityholder that are in the Securityholders’s reasonable
opinion equivalent to or superior to those contemplated by the Arrangement
Agreement, (b) would not likely result in a delay or time to completion beyond
the Completion Deadline (as defined in the Arrangement Agreement), and (c) is
otherwise on terms and conditions no more onerous on the Securityholder than the
Transaction (including any take-over bid) (any such transaction, an
“
Alternative Transaction
”), then during the term of this Agreement the
Securityholder shall support the completion of such Alternative Transaction in
the same manner as the Transaction in accordance with the terms and conditions
of this Agreement
mutatis mutandis
, including by (A) depositing or
causing the deposit of its Subject Securities into an Alternative Transaction
conducted by way of a take-over bid made by Aurora or an affiliate of Aurora and
not withdrawing them; and/or (B) voting or causing to be voted all of the
Subject Securities (to the extent that they carry the right to vote) in favour
of, and not dissenting from, such Alternative Transaction proposed by Aurora.
The Securityholder hereby covenants and
agrees in favour of Aurora that:
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(a)
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no later than 10 days prior to the date of the ICC
Arrangement Meeting, the Securityholder shall deposit duly completed forms
of proxy or voting instruction forms, as applicable, in respect of all the
Subject Securities (as directed on such forms) to cause the Subject
Securities to be voted in favour of the Transaction, and
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(b)
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such forms of proxy or voting instruction forms, as
applicable, shall not be revoked or withdrawn, unless prior written
consent from Aurora has been obtained or this Agreement is terminated
pursuant to Section 9.
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7.
|
REPRESENTATIONS AND WARRANTIES OF THE
SECURITYHOLDER
|
The Securityholder hereby represents
and warrants to Aurora as follows and acknowledges that Aurora is relying on
such representations and warranties in connection with entering into this
Agreement and the Transaction:
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(a)
|
the Securityholder is the sole beneficial owner of the
Shares and ICC Options with valid and marketable title thereto, free and
clear of all claims, liens, charges, encumbrances and security interests
other than those arising by operation of statute and no person has any
agreement, option, or any right or privilege capable of becoming an
agreement or option, for the purchase, acquisition or transfer of the
Shares and the ICC Options from the Securityholder or any interest therein
or right thereto, except pursuant to the
Transaction;
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(b)
|
(i) the only securities of ICC beneficially owned,
directly or indirectly, or over which control or direction is exercised by
the Securityholder are those listed on the Acceptance, and (ii) the
Securityholder has no other agreement, options, warrants or securities
convertible into, or exchangeable or exercisable for, or otherwise
evidencing a right to acquire, securities of ICC or any rights or
privilege capable of becoming an agreement or option, for the purchase or
acquisition by the Securityholder or transfer to the Securityholder of
additional securities of ICC or any interest therein;
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(c)
|
the Securityholder has the sole right to dispose of or
transfer (or cause to be disposed of or transferred) all of its Shares and
ICC Options now held, and will have the right to dispose of or transfer
(or cause to be disposed of or transferred) all Shares and ICC Options
hereafter acquired by it;
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(d)
|
the Securityholder has the sole right to vote (or cause
to be voted) all of its Subject Securities now held and will have the sole
right to vote (or cause to be voted) all Subject Securities hereafter
acquired by it;
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(e)
|
this Agreement has been duly executed and delivered by
the Securityholder, and, assuming the due authorization, execution and
delivery by Aurora, this Agreement constitutes a legal, valid and binding
obligation of the Securityholder, enforceable in accordance with its
terms, subject to laws of general application and bankruptcy, insolvency
and other similar laws affecting creditors’ rights generally and general
principles of equity;
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(f)
|
if the Securityholder is a corporation or other entity,
it is validly subsisting under the laws of the jurisdiction governing its
incorporation or formation and has all necessary corporate or other power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder;
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(g)
|
neither the execution and delivery of this Agreement by
the Securityholder, the consummation by the Securityholder of the
transactions contemplated hereby nor the compliance by the Securityholder
with any of the provisions hereof will:
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(i)
|
result in any breach of, or constitute a default (or an
event which with notice or lapse of time or both would become a default),
or give rise to any third party right of termination, cancellation,
material modification, acceleration, purchase or right of first refusal,
under any provision of any of the constating documents of the
Securityholder (if the Securityholder is a corporation or other entity) or
under any of the terms, conditions or provisions of any note, loan
agreement, bond, mortgage, indenture, contract, licence, agreement, lease,
permit or other instrument or obligation to which such Securityholder is a
party or by which such Securityholder or any of its properties or assets
(including Shares and ICC Options) may be bound, or constitute a violation
or breach of or default under or conflict with any contract, commitment,
agreement, understanding or arrangement of any kind to which the
Securityholder will be a party and by which the Securityholder will be
bound at the time of such consummation, in each case, which breach or
default could reasonably be expected to prevent, materially delay or
materially impair the Securityholder’s ability to consummate the
transactions contemplated by this Agreement;
or
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(ii)
|
require the Securityholder to make any filing with (other
than pursuant to the requirements of applicable securities legislation
which the Securityholder will undertake), or to obtain any permit, waiver,
authorization, exemption, registration, licence, consent or approval of,
any Governmental Entity or any other person;
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(h)
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the Securityholder has not previously granted or agreed
to grant any power of attorney or attorney in fact, proxy or other right
to vote in respect of the Subject Securities or entered into any voting
trust, vote pooling or other agreement with respect to the right to vote,
call meetings of shareholders or give consents or approvals of any kind as
to the Securities except those which are no longer of any force or effect;
and
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(i)
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the Securityholder acknowledges and agrees that the
Securityholder has had the opportunity to seek independent legal advice
with respect to this Agreement, the Arrangement Agreement and the
transactions contemplated hereby and thereby, and that any failure on the
Securityholder’s part to seek independent legal advice shall not affect
(and the Securityholder shall not assert that it affects) the validity,
enforceability or effect of this Agreement or the Arrangement
Agreement.
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8.
|
REPRESENTATIONS AND WARRANTIES OF
AURORA
|
Aurora hereby represents and warrants
to the Securityholder as follows and acknowledges that the Securityholder is
relying on such representations and warranties in connection with entering into
this Agreement and the Transaction:
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(a)
|
the execution and delivery of this Agreement by Aurora
and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Aurora
and is a valid and binding agreement, enforceable against Aurora in
accordance with its terms, and and the performance by Aurora of its
obligations hereunder will not constitute a violation or breach of or
default under, or conflict with (i) any contract, commitment, agreement,
understanding or arrangement of any kind to which Aurora will be a party
and by which Aurora will be bound at the time of such consummation, and
(ii) to its knowledge, any applicable Laws;
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(b)
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neither the execution and delivery of this Agreement by
Aurora, the consummation by Aurora of the transactions contemplated hereby
nor the compliance by Aurora with any of the provisions hereof will result
in any breach of, or constitute a default (or an event which with notice
or lapse of time or both would become a default), or give rise to any
third party right of termination, cancellation, material modification,
acceleration, purchase or right of first refusal, under any provision of
any of the constating documents of Aurora or under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage,
indenture, contract, licence, agreement, lease, permit or other instrument
or obligation to which Aurora is a party or by which Aurora or any of its
properties or assets may be bound, or constitute a violation or breach of
or default under or conflict with any contract, commitment, agreement,
understanding or arrangement of any kind to which Aurora will be a party
and by which Aurora will be bound at the time of such consummation, in
each case, which breach or default could reasonably be expected to
prevent, materially delay or materially impair Aurora’s ability to
consummate the transactions contemplated by this
Agreement;
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(c)
|
that no material consent, approval, order or
authorization of, or declaration or filing with, any Governmental Entity
is required to be obtained by Aurora in connection with the execution and
delivery of this Agreement, the performance by it of its obligations under
this Agreement and the consummation by Aurora of the Transaction, other
than those which are contemplated by the Arrangement Agreement;
and
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(d)
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that there are no claims, actions, suits, audits,
proceedings, investigations or other actions pending against, or, to the
knowledge of Aurora, threated against or affecting Aurora or any of its
respective properties that, individually or in the aggregate, could
reasonably be expected to have a material and adverse effect on Aurora’s
ability to execute and deliver this Agreement and to perform its
obligations contemplated by this Agreement or the Arrangement
Agreement.
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9.
|
TERMINATION
|
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9.1
|
This Agreement may be terminated by Aurora by notice to
the Securityholder if:
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(a)
|
the Securityholder or any other person who is a party to
a support agreement with Aurora in respect of the Arrangement has not
complied in all material respects with its covenants to Aurora contained
herein or therein;
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(b)
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ICC has not complied in all material respects with its
covenants to Aurora under the Arrangement Agreement;
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(c)
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any representation or warranty of any of the
Securityholders contained herein or in another support agreement is at the
date hereof or becomes at any time prior to the Effective Time untrue or
inaccurate in any material respect; or
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(d)
|
the Arrangement Agreement is terminated in accordance
with its terms.
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9.2
|
This Agreement may be terminated by the Securityholder by
notice to Aurora if the Arrangement Agreement is terminated in accordance
with its terms
.
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9.3
|
This Agreement may be terminated at any time prior to the
Effective Time by the mutual agreement of Aurora and the
Securityholder.
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9.4
|
If this Agreement is terminated as provided in Section 9,
this Agreement shall forthwith become void and of no further force or
effect and there shall be no liability on the part of any Party except
that the provisions of Section 12, 17, 19, and 20 will survive any
termination hereof pursuant to Section 9, provided that the foregoing
shall not relieve any Party from any liability for any breach of this
Agreement arising prior to such termination.
|
Notwithstanding anything to the
contrary herein, nothing herein shall restrict or limit any director or officer
of ICC from taking any action required to be taken in the discharge of his or
her fiduciary duty as a director or officer of ICC that is otherwise permitted
by, and done in compliance with, the terms of the Arrangement Agreement. Aurora
further hereby agrees that the Securityholder is not making any agreement or
understanding herein in any capacity other than in the capacity as beneficial
owner of the Subject Securities.
Except as expressly set forth herein,
this Agreement shall not be modified, amended, altered or supplemented except
upon the execution and delivery of a written agreement executed by each of the
Parties.
This Agreement constitutes the entire
agreement between the Parties pertaining to the subject matter of this
Agreement.
No Party may assign any of its rights
or obligations under this Agreement without the prior written consent of the
other Party.
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14.
|
SUCCESSORS; NO THIRD PARTY
BENEFICIARIES
|
This Agreement shall be binding upon,
enure to the benefit of and be enforceable by, the Parties and their respective
executors, administrators, successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer on any person other than
the Parties or the Parties’ respective successors or permits assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
Time is of the essence of this
Agreement.
If any provision of this Agreement or
the application thereof to any Party or circumstance is invalid or unenforceable
to any extent then the remainder of this Agreement or application of such
provision to a Party or circumstance (other than those to which it is held
invalid or unenforceable) is not affected thereby and each remaining provision
of this Agreement is valid and is enforceable to the fullest extent permitted by
Law.
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(a)
|
This Agreement is to be governed by and construed in
accordance with the laws of the Province of British Columbia and the
federal laws of Canada applicable therein without regard to any conflicts
of law provisions, and each of the Parties irrevocably attorns to the
jurisdiction of the courts of the Province of British Columbia.
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(b)
|
The Parties waive the application of any rule of Law
which otherwise would be applicable in connection with the construction of
this Agreement that ambiguous or conflicting terms or provisions should be
construed against the Party that (or counsel of which) prepared the
executed agreement or any earlier draft of the
same.
|
Any notice or other communication
required or permitted to be given hereunder shall be sufficiently given if
delivered:
|
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(a)
|
in the case of the Securityholder, to the address
appearing on the Acceptance; and
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(b)
|
in the case of Aurora:
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Aurora Cannabis Inc.
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1500 - 1199 West Hastings Street
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Vancouver, British Columbia
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V6E 3T5
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Attention
|
[REDACTED]
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Email:
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[REDACTED]
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with a copy (which shall not constitute notice)
to:
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Attention:
|
[REDACTED]
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Email:
|
[REDACTED]
|
or to such other address as the Party
to which such notice or other communication is to be given has last notified the
Party giving the same in the manner provided in this Section 18. Any notice or
other communication given or made is deemed to have been duly given or made as
at the date delivered or sent if delivered personally or sent by fax or email
transmission at the address for service provided herein during normal business
hours on a business day, or otherwise on the next business day.
The Parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the Parties are entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof, on a non-exclusive basis, in any
court of the Province of British Columbia having jurisdiction, this being in
addition to any other remedy to which such Party is entitled at law or in
equity.
The Parties agree to pay their own
respective expenses incurred in connection with this Agreement.
Each of the Securityholder and Aurora
will, from time to time, execute and deliver all such further documents and
instruments and do all such acts and things as the other party may reasonably
require (at the requesting Party’s cost) to effectively carry out or better
evidence or perfect the full intent and meaning of this Agreement.
The Parties consent to the disclosure
of the substance of this Agreement in any press release required by applicable
Laws or any circular relating to the ICC Arrangement Meeting and to the filing
of this Agreement as may be required pursuant to applicable Laws. A copy of this
Agreement may be provided to the directors of ICC.
|
23.
|
COUNTERPART EXECUTION
|
This letter may be signed by fax or
other electronic means and in counterparts, which, together, are deemed to
constitute one valid and binding agreement and delivery of such counterparts may
be effected by means of fax or other electronic means.
[
Remainder of page intentionally left blank; signature page
follows.
]
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AURORA CANNABIS INC.
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By:
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(signed “Terry Booth”)
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Name: Terry Booth
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Title: Chief Executive Officer
|
Acceptance by Securityholder
The foregoing is hereby accepted as of and with effect from the
8
th
day of September, 2018 and the undersigned hereby confirms that
the undersigned beneficially owns, directly or indirectly, or has control or
direction over the Shares indicated below:
|
Securities of ICC
|
Number of Securities
|
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[REDACTED]
|
[REDACTED]
|
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[REDACTED]
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[REDACTED]
|
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Signature of Witness
|
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Signature of Securityholder or, if a
corporation, authorized signing officer of the Securityholder
|
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[REDACTED]
|
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Union
Group International Holdings
|
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Name of Witness (Please print)
|
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Name of Securityholder (Please print)
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Address:
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[REDACTED]
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[REDACTED]
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Facsimile: [REDACTED]
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Email:
[REDACTED]
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VOTING AND SUPPORT AGREEMENT
September 8, 2018
Dear Securityholder:
Re: Acquisition of ICC Labs Inc. by Aurora
Cannabis Inc.
Aurora Cannabis Inc. (“
Aurora
”) is concurrently herewith
entering into an arrangement agreement (the “
Arrangement Agreement
”) with
ICC Labs Inc. (“
ICC
”) which provides for, among other things, the
acquisition by Aurora of all of the issued and outstanding common shares (the
“
Shares
”) of ICC by way of a plan of arrangement (the “
Plan of
Arrangement
”) under Section 288 of the
Business Corporations Act
(British Columbia) (the “
BCBCA
”) (the “
Transaction
”). Under the
terms of the Arrangement Agreement, Aurora will acquire all of the issued and
outstanding Shares at a price per Share of $1.95 payable in such number of
common shares in the capital of Aurora (“
Aurora Shares
”) as is equal to
the quotient of $1.95 divided by the volume-weighted average trading price of
the Aurora Shares on the Toronto Stock Exchange in the twenty (20) Business Days
(as such term is defined in the Arrangement Agreement) preceding the effective
date of the Transaction (the last day of such period being the second to last
trading day on the TSX immediately prior to the effective date of the
Transaction) (the “
Consideration
”).
The undersigned securityholder (the “
Securityholder
” and
together with Aurora, each, a “
Party
” and collectively, the
“
Parties
”) acknowledges that Aurora would not proceed with the
Transaction but for the execution and delivery of this Agreement by the
Securityholder.
In consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Securityholder and Aurora
(each, a “
Party
” and collectively, the
Parties
”) agree as
follows:
Aurora understands that the
Securityholder is the beneficial owner, directly or indirectly, of, or has
direction or control over (i) the number of Shares, if any, and (ii) the number
of ICC Options exercisable to purchase Shares (the “
Options
”), if any,
each as set forth in the Securityholder’s acceptance (the “
Acceptance
”)
at the end of this voting and support agreement (this “
Agreement
”).
Under the Plan of Arrangement, Aurora
will acquire, subject to the terms and conditions of the Arrangement Agreement,
all of the issued and outstanding Shares.
Capitalized terms used in this
Agreement but not otherwise defined herein shall have the respective meanings
ascribed thereto in the Arrangement Agreement.
|
3.
|
COVENANTS OF THE
SECURITYHOLDER
|
The Securityholder covenants and agrees
that, until the earlier of: (i) the closing of the Transaction and (ii) the date
this Agreement is terminated in accordance with its terms, the Securityholder
shall:
|
|
(a)
|
attend (either in person or by proxy) any meeting of the
shareholders of ICC held to consider the Transaction (including any
adjournments and postponements thereof) (the “
ICC Arrangement
Meeting
”), and at the ICC Arrangement Meeting, vote or cause to be
voted all of:
|
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|
(i)
|
the Shares; and
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(ii)
|
any Shares acquired by or issued to the Securityholder on
or following the date hereof,
|
that are beneficially owned by, or
over which control or direction is exercised by, the Securityholder and which
are entitled to be voted at the ICC Arrangement Meeting (the “
Subject
Securities
”) in favour of the Transaction and all matters related thereto;
|
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(b)
|
vote or cause to be voted (in person or by proxy) at any
meeting of the securityholders of ICC any Subject Securities against, or
not tender or cause to be tendered any Subject Securities
to:
|
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|
(i)
|
any corporate transaction, such as a merger,
amalgamation, arrangement, rights offering, reorganization,
recapitalization, or liquidation or take-over bid, sale or transfer of a
material amount of assets of ICC or similar transaction involving ICC or
the Shares other than the Transaction and any transaction related
thereto;
|
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(ii)
|
the issuance of any securities of ICC (other than
pursuant to the exercise of ICC Options) other than the Transaction and
any transaction related thereto;
|
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(iii)
|
any action that is reasonably likely to impede, interfere
with, delay, postpone, hinder, prevent, or adversely affect in any
material respect the Transaction including, without limitation, any ICC
Acquisition Proposal; or
|
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(iv)
|
any action or agreement that would result in a breach of
any representation, warranty, or covenant or other obligation of ICC in
the Arrangement Agreement;
|
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(c)
|
upon the request or direction of Aurora, have all of its
Subject Securities counted or not counted (as directed by Aurora) as part
of a quorum in connection with any meeting of securityholders of ICC
relating to matters set forth in Section 3(b);
|
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(d)
|
not, without the prior written consent of Aurora, option,
sell, transfer, assign, pledge, encumber or otherwise dispose of, or enter
into any agreement or understanding relating to the option, sale,
transfer, assignment, pledge, encumbrances or other disposition of, the
Subject Securities or any interest therein, other than pursuant to any
exercise of ICC Warrants or ICC Options for Shares in accordance with
their terms; except that from and after the date of the Final Order, the
Securityholder shall be entitled to, without the consent of Aurora, sell,
transfer, assign, pledge, encumber or otherwise dispose of, the Subject
Securities, provided that any sales of Subject Securities permitted to be
made during the term of this Agreement shall be made in an orderly fashion
as market conditions permit;
|
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(e)
|
not, except as required pursuant to this Agreement, grant
or agree to grant any proxy or other right to vote the Subject Securities
or enter into any voting trust or pooling agreement or arrangement or
enter into or subject any of the Subject Securities to
any other agreement, arrangement, understanding or commitment,
formal or informal, with respect to or relating to the voting or tendering
thereof or revoke any proxy granted pursuant to this Agreement;
|
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(f)
|
not exercise or permit any other person to exercise any
rights of the Securityholder any rights of dissent or appraisal in respect
of any resolution approving the Transaction or any aspect thereof or
matter related thereto, and not exercise any other securityholder rights
or remedies available at common law or pursuant to applicable corporate or
securities law or other legislation;
|
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(g)
|
not, directly or indirectly:
|
|
|
(i)
|
solicit, assist, initiate, knowingly encourage or
otherwise facilitate (including by way of furnishing information,
permitting any visit to any facilities or entering into any form of
agreement, arrangement or understanding) any inquiries or proposals,
whether publicly or otherwise, regarding a ICC Acquisition Proposal or
potential ICC Acquisition Proposal;
|
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(ii)
|
enter into, engage, continue or participate in any
negotiations or discussions regarding, or provide any non-public
information with respect to ICC or any of its subsidiaries, or offer or
provide access to the business, properties, assets, books or records of
ICC or any of its subsidiaries or otherwise cooperate in any way with, any
ICC Acquisition Proposal or potential ICC Acquisition Proposal;
|
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|
(iii)
|
requisition or join in the requisition of any meeting of
the securityholders of ICC for the purpose of considering any
resolution;
|
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|
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(iv)
|
solicit proxies or become a participant in the
solicitation in opposition to or in competition with Aurora’s purchase of
the Shares as contemplated by the Arrangement Agreement or act jointly or
in concert with others with respect to voting securities of ICC for the
purpose of opposing or competing with Aurora’s purchase of the Shares as
contemplated by the Arrangement Agreement; or
|
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(v)
|
take any other action of any kind which might reasonably
be regarded as likely to reduce the success or delay or interfere with the
completion of the Transaction;
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(h)
|
promptly notify Aurora upon any of undersigned’s
representations or warranties contained in this Agreement becoming untrue
or incorrect in any material respect prior to the termination of this
Agreement, which notification shall include a description of the ways in
which such representations or warranties have become incorrect or untrue;
and
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(i)
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from time to time, execute and deliver, or cause to be
executed and delivered, such additional or further consents, documents and
other instruments and shall take all other actions reasonably necessary or
as Aurora may reasonably request for the purposes of effectively carrying
out this Agreement.
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The Securityholder acknowledges and
agrees that any ICC Options held by him, her or it, to the extent not exercised
or settled, shall be treated in accordance with the Arrangement and he, she or
it shall take all steps required of him, her or it to give effect to such
treatment.
Aurora agrees and confirms to the
Securityholder that it shall take all steps required of it under the Arrangement
Agreement to cause the Transaction to occur in accordance with the terms of and
subject to the conditions set forth in the Arrangement Agreement.
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5.
|
ALTERNATIVE TRANSACTION
|
In the event that, in lieu of the
Transaction, Aurora seeks to complete the acquisition of the Shares other than
as contemplated by the Arrangement Agreement on a basis that is (a) on economic
terms and conditions (including, without limitation, tax treatment) having
consequences to the Securityholder that are in the Securityholders’s reasonable
opinion equivalent to or superior to those contemplated by the Arrangement
Agreement, (b) would not likely result in a delay or time to completion beyond
the Completion Deadline (as defined in the Arrangement Agreement), and (c) is
otherwise on terms and conditions no more onerous on the Securityholder than the
Transaction (including any take-over bid) (any such transaction, an
“
Alternative Transaction
”), then during the term of this Agreement the
Securityholder shall support the completion of such Alternative Transaction in
the same manner as the Transaction in accordance with the terms and conditions
of this Agreement
mutatis mutandis
, including by (A) depositing or
causing the deposit of its Subject Securities into an Alternative Transaction
conducted by way of a take-over bid made by Aurora or an affiliate of Aurora and
not withdrawing them; and/or (B) voting or causing to be voted all of the
Subject Securities (to the extent that they carry the right to vote) in favour
of, and not dissenting from, such Alternative Transaction proposed by Aurora.
The Securityholder hereby covenants and
agrees in favour of Aurora that:
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(a)
|
no later than 10 days prior to the date of the ICC
Arrangement Meeting, the Securityholder shall deposit duly completed forms
of proxy or voting instruction forms, as applicable, in respect of all the
Subject Securities (as directed on such forms) to cause the Subject
Securities to be voted in favour of the Transaction, and
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(b)
|
such forms of proxy or voting instruction forms, as
applicable, shall not be revoked or withdrawn, unless prior written
consent from Aurora has been obtained or this Agreement is terminated
pursuant to Section 9.
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7.
|
REPRESENTATIONS AND WARRANTIES OF THE
SECURITYHOLDER
|
The Securityholder hereby represents
and warrants to Aurora as follows and acknowledges that Aurora is relying on
such representations and warranties in connection with entering into this
Agreement and the Transaction:
|
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(a)
|
the Securityholder is the sole beneficial owner of the
Shares and ICC Options with valid and marketable title thereto, free and
clear of all claims, liens, charges, encumbrances and security interests
other than those arising by operation of statute and no person has any
agreement, option, or any right or privilege capable of becoming an
agreement or option, for the purchase, acquisition or transfer of the
Shares and the ICC Options from the Securityholder or any interest therein
or right thereto, except pursuant to the
Transaction;
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(b)
|
(i) the only securities of ICC beneficially owned,
directly or indirectly, or over which control or direction is exercised by
the Securityholder are those listed on the Acceptance, and (ii) the
Securityholder has no other agreement, options, warrants or securities
convertible into, or exchangeable or exercisable for, or otherwise
evidencing a right to acquire, securities of ICC or any rights or
privilege capable of becoming an agreement or option, for the purchase or
acquisition by the Securityholder or transfer to the Securityholder of
additional securities of ICC or any interest therein;
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(c)
|
the Securityholder has the sole right to dispose of or
transfer (or cause to be disposed of or transferred) all of its Shares and
ICC Options now held, and will have the right to dispose of or transfer
(or cause to be disposed of or transferred) all Shares and ICC Options
hereafter acquired by it;
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(d)
|
the Securityholder has the sole right to vote (or cause
to be voted) all of its Subject Securities now held and will have the sole
right to vote (or cause to be voted) all Subject Securities hereafter
acquired by it;
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(e)
|
this Agreement has been duly executed and delivered by
the Securityholder, and, assuming the due authorization, execution and
delivery by Aurora, this Agreement constitutes a legal, valid and binding
obligation of the Securityholder, enforceable in accordance with its
terms, subject to laws of general application and bankruptcy, insolvency
and other similar laws affecting creditors’ rights generally and general
principles of equity;
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(f)
|
if the Securityholder is a corporation or other entity,
it is validly subsisting under the laws of the jurisdiction governing its
incorporation or formation and has all necessary corporate or other power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder;
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(g)
|
neither the execution and delivery of this Agreement by
the Securityholder, the consummation by the Securityholder of the
transactions contemplated hereby nor the compliance by the Securityholder
with any of the provisions hereof will:
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(i)
|
result in any breach of, or constitute a default (or an
event which with notice or lapse of time or both would become a default),
or give rise to any third party right of termination, cancellation,
material modification, acceleration, purchase or right of first refusal,
under any provision of any of the constating documents of the
Securityholder (if the Securityholder is a corporation or other entity) or
under any of the terms, conditions or provisions of any note, loan
agreement, bond, mortgage, indenture, contract, licence, agreement, lease,
permit or other instrument or obligation to which such Securityholder is a
party or by which such Securityholder or any of its properties or assets
(including Shares and ICC Options) may be bound, or constitute a violation
or breach of or default under or conflict with any contract, commitment,
agreement, understanding or arrangement of any kind to which the
Securityholder will be a party and by which the Securityholder will be
bound at the time of such consummation, in each case, which breach or
default could reasonably be expected to prevent, materially delay or
materially impair the Securityholder’s ability to consummate the
transactions contemplated by this Agreement;
or
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(ii)
|
require the Securityholder to make any filing with (other
than pursuant to the requirements of applicable securities legislation
which the Securityholder will undertake), or to obtain any permit, waiver,
authorization, exemption, registration, licence, consent or approval of,
any Governmental Entity or any other person;
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(h)
|
the Securityholder has not previously granted or agreed
to grant any power of attorney or attorney in fact, proxy or other right
to vote in respect of the Subject Securities or entered into any voting
trust, vote pooling or other agreement with respect to the right to vote,
call meetings of shareholders or give consents or approvals of any kind as
to the Securities except those which are no longer of any force or effect;
and
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(i)
|
the Securityholder acknowledges and agrees that the
Securityholder has had the opportunity to seek independent legal advice
with respect to this Agreement, the Arrangement Agreement and the
transactions contemplated hereby and thereby, and that any failure on the
Securityholder’s part to seek independent legal advice shall not affect
(and the Securityholder shall not assert that it affects) the validity,
enforceability or effect of this Agreement or the Arrangement
Agreement.
|
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8.
|
REPRESENTATIONS AND WARRANTIES OF
AURORA
|
Aurora hereby represents and warrants
to the Securityholder as follows and acknowledges that the Securityholder is
relying on such representations and warranties in connection with entering into
this Agreement and the Transaction:
|
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(a)
|
the execution and delivery of this Agreement by Aurora
and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Aurora
and is a valid and binding agreement, enforceable against Aurora in
accordance with its terms, and and the performance by Aurora of its
obligations hereunder will not constitute a violation or breach of or
default under, or conflict with (i) any contract, commitment, agreement,
understanding or arrangement of any kind to which Aurora will be a party
and by which Aurora will be bound at the time of such consummation, and
(ii) to its knowledge, any applicable Laws;
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(b)
|
neither the execution and delivery of this Agreement by
Aurora, the consummation by Aurora of the transactions contemplated hereby
nor the compliance by Aurora with any of the provisions hereof will result
in any breach of, or constitute a default (or an event which with notice
or lapse of time or both would become a default), or give rise to any
third party right of termination, cancellation, material modification,
acceleration, purchase or right of first refusal, under any provision of
any of the constating documents of Aurora or under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage,
indenture, contract, licence, agreement, lease, permit or other instrument
or obligation to which Aurora is a party or by which Aurora or any of its
properties or assets may be bound, or constitute a violation or breach of
or default under or conflict with any contract, commitment, agreement,
understanding or arrangement of any kind to which Aurora will be a party
and by which Aurora will be bound at the time of such consummation, in
each case, which breach or default could reasonably be expected to
prevent, materially delay or materially impair Aurora’s ability to
consummate the transactions contemplated by this
Agreement;
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(c)
|
that no material consent, approval, order or
authorization of, or declaration or filing with, any Governmental Entity
is required to be obtained by Aurora in connection with the execution and
delivery of this Agreement, the performance by it of its obligations under
this Agreement and the consummation by Aurora of the Transaction, other
than those which are contemplated by the Arrangement Agreement;
and
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(d)
|
that there are no claims, actions, suits, audits,
proceedings, investigations or other actions pending against, or, to the
knowledge of Aurora, threated against or affecting Aurora or any of its
respective properties that, individually or in the aggregate, could
reasonably be expected to have a material and adverse effect on Aurora’s
ability to execute and deliver this Agreement and to perform its
obligations contemplated by this Agreement or the Arrangement
Agreement.
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9.1
|
This Agreement may be terminated by Aurora by notice to
the Securityholder if:
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|
(a)
|
the Securityholder or any other person who is a party to
a support agreement with Aurora in respect of the Arrangement has not
complied in all material respects with its covenants to Aurora contained
herein or therein;
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(b)
|
ICC has not complied in all material respects with its
covenants to Aurora under the Arrangement Agreement;
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(c)
|
any representation or warranty of any of the
Securityholders contained herein or in another support agreement is at the
date hereof or becomes at any time prior to the Effective Time untrue or
inaccurate in any material respect; or
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(d)
|
the Arrangement Agreement is terminated in accordance
with its terms.
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9.2
|
This Agreement may be terminated by the Securityholder by
notice to Aurora if the Arrangement Agreement is terminated in accordance
with its terms
.
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9.3
|
This Agreement may be terminated at any time prior to the
Effective Time by the mutual agreement of Aurora and the
Securityholder.
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9.4
|
If this Agreement is terminated as provided in Section 9,
this Agreement shall forthwith become void and of no further force or
effect and there shall be no liability on the part of any Party except
that the provisions of Section 12, 17, 19, and 20 will survive any
termination hereof pursuant to Section 9, provided that the foregoing
shall not relieve any Party from any liability for any breach of this
Agreement arising prior to such termination.
|
Notwithstanding anything to the
contrary herein, nothing herein shall restrict or limit any director or officer
of ICC from taking any action required to be taken in the discharge of his or
her fiduciary duty as a director or officer of ICC that is otherwise permitted
by, and done in compliance with, the terms of the Arrangement Agreement. Aurora
further hereby agrees that the Securityholder is not making any agreement or
understanding herein in any capacity other than in the capacity as beneficial
owner of the Subject Securities.
Except as expressly set forth herein,
this Agreement shall not be modified, amended, altered or supplemented except
upon the execution and delivery of a written agreement executed by each of the
Parties.
This Agreement constitutes the entire
agreement between the Parties pertaining to the subject matter of this
Agreement.
No Party may assign any of its rights
or obligations under this Agreement without the prior written consent of the
other Party.
|
14.
|
SUCCESSORS; NO THIRD PARTY
BENEFICIARIES
|
This Agreement shall be binding upon,
enure to the benefit of and be enforceable by, the Parties and their respective
executors, administrators, successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer on any person other than
the Parties or the Parties’ respective successors or permits assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
Time is of the essence of this
Agreement.
If any provision of this Agreement or
the application thereof to any Party or circumstance is invalid or unenforceable
to any extent then the remainder of this Agreement or application of such
provision to a Party or circumstance (other than those to which it is held
invalid or unenforceable) is not affected thereby and each remaining provision
of this Agreement is valid and is enforceable to the fullest extent permitted by
Law.
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(a)
|
This Agreement is to be governed by and construed in
accordance with the laws of the Province of British Columbia and the
federal laws of Canada applicable therein without regard to any conflicts
of law provisions, and each of the Parties irrevocably attorns to the
jurisdiction of the courts of the Province of British Columbia.
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(b)
|
The Parties waive the application of any rule of Law
which otherwise would be applicable in connection with the construction of
this Agreement that ambiguous or conflicting terms or provisions should be
construed against the Party that (or counsel of which) prepared the
executed agreement or any earlier draft of the
same.
|
Any notice or other communication
required or permitted to be given hereunder shall be sufficiently given if
delivered:
|
|
(a)
|
in the case of the Securityholder, to the address
appearing on the Acceptance; and
|
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(b)
|
in the case of Aurora:
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Aurora Cannabis Inc.
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1500 - 1199 West Hastings Street
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Vancouver, British Columbia
|
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V6E 3T5
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Attention
|
[REDACTED]
|
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Email:
|
[REDACTED]
|
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with a copy (which shall not constitute notice)
to:
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Attention:
|
[REDACTED]
|
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Email:
|
[REDACTED]
|
or to such other address as the Party
to which such notice or other communication is to be given has last notified the
Party giving the same in the manner provided in this Section 18. Any notice or
other communication given or made is deemed to have been duly given or made as
at the date delivered or sent if delivered personally or sent by fax or email
transmission at the address for service provided herein during normal business
hours on a business day, or otherwise on the next business day.
The Parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the Parties are entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof, on a non-exclusive basis, in any
court of the Province of British Columbia having jurisdiction, this being in
addition to any other remedy to which such Party is entitled at law or in
equity.
The Parties agree to pay their own
respective expenses incurred in connection with this Agreement.
Each of the Securityholder and Aurora
will, from time to time, execute and deliver all such further documents and
instruments and do all such acts and things as the other party may reasonably
require (at the requesting Party’s cost) to effectively carry out or better
evidence or perfect the full intent and meaning of this Agreement.
The Parties consent to the disclosure
of the substance of this Agreement in any press release required by applicable
Laws or any circular relating to the ICC Arrangement Meeting and to the filing
of this Agreement as may be required pursuant to applicable Laws. A copy of this
Agreement may be provided to the directors of ICC.
|
23.
|
COUNTERPART EXECUTION
|
This letter may be signed by fax or
other electronic means and in counterparts, which, together, are deemed to
constitute one valid and binding agreement and delivery of such counterparts may
be effected by means of fax or other electronic means.
[
Remainder of page intentionally left blank; signature page
follows.
]
|
AURORA CANNABIS INC.
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By:
|
(signed “Terry Booth”)
|
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Name: Terry Booth
|
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Title: Chief Executive Officer
|
.
Acceptance by Securityholder
The foregoing is hereby accepted as of and with effect from the
8
th
day of September, 2018 and the undersigned hereby confirms that
the undersigned beneficially owns, directly or indirectly, or has control or
direction over the Shares indicated below:
|
Securities of ICC
|
Number of Securities
|
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[REDACTED]
|
[REDACTED]
|
|
[REDACTED]
|
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[REDACTED]
|
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Signature of Witness
|
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Signature of Securityholder or, if a
corporation, authorized signing officer of the Securityholder
|
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[REDACTED]
|
|
Ravi
Sood
|
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Name of Witness (Please print)
|
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Name of Securityholder (Please print)
|
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Address:
|
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[REDACTED]
|
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[REDACTED]
|
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Facsimile: [REDACTED]
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Email:
[REDACTED]
|
VOTING AND SUPPORT AGREEMENT
September 8, 2018
Dear Securityholder:
Re: Acquisition of ICC Labs Inc. by Aurora Cannabis
Inc.
Aurora Cannabis Inc. (“
Aurora
”) is concurrently herewith
entering into an arrangement agreement (the “
Arrangement Agreement
”) with
ICC Labs Inc. (“
ICC
”) which provides for, among other things, the
acquisition by Aurora of all of the issued and outstanding common shares (the
“
Shares
”) of ICC by way of a plan of arrangement (the “
Plan of
Arrangement
”) under Section 288 of the
Business Corporations Act
(British Columbia) (the “
BCBCA
”) (the “
Transaction
”). Under the
terms of the Arrangement Agreement, Aurora will acquire all of the issued and
outstanding Shares at a price per Share of $1.95 payable in such number of
common shares in the capital of Aurora (“
Aurora Shares
”) as is equal to
the quotient of $1.95 divided by the volume-weighted average trading price of
the Aurora Shares on the Toronto Stock Exchange in the twenty (20) Business Days
(as such term is defined in the Arrangement Agreement) preceding the effective
date of the Transaction (the last day of such period being the second to last
trading day on the TSX immediately prior to the effective date of the
Transaction) (the “
Consideration
”).
The undersigned securityholder (the “
Securityholder
” and
together with Aurora, each, a “
Party
” and collectively, the
“
Parties
”) acknowledges that Aurora would not proceed with the
Transaction but for the execution and delivery of this Agreement by the
Securityholder.
In consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Securityholder and Aurora
(each, a “
Party
” and collectively, the
Parties
”) agree as
follows:
Aurora understands that the
Securityholder is the beneficial owner, directly or indirectly, of, or has
direction or control over (i) the number of Shares, if any, and (ii) the number
of ICC Options exercisable to purchase Shares (the “
Options
”), if any,
each as set forth in the Securityholder’s acceptance (the “
Acceptance
”)
at the end of this voting and support agreement (this “
Agreement
”).
Under the Plan of Arrangement, Aurora
will acquire, subject to the terms and conditions of the Arrangement Agreement,
all of the issued and outstanding Shares.
Capitalized terms used in this
Agreement but not otherwise defined herein shall have the respective meanings
ascribed thereto in the Arrangement Agreement.
|
3.
|
COVENANTS OF THE
SECURITYHOLDER
|
The Securityholder covenants and agrees
that, until the earlier of: (i) the closing of the Transaction and (ii) the date
this Agreement is terminated in accordance with its terms, the Securityholder
shall:
|
|
(a)
|
attend (either in person or by proxy) any meeting of the
shareholders of ICC held to consider the Transaction (including any
adjournments and postponements thereof) (the “
ICC Arrangement
Meeting
”), and at the ICC Arrangement Meeting, vote or cause to be
voted all of:
|
|
|
(i)
|
the Shares; and
|
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|
(ii)
|
any Shares acquired by or issued to the Securityholder on
or following the date hereof,
|
that are beneficially owned by, or
over which control or direction is exercised by, the Securityholder and which
are entitled to be voted at the ICC Arrangement Meeting (the “
Subject
Securities
”) in favour of the Transaction and all matters related thereto;
|
|
(b)
|
vote or cause to be voted (in person or by proxy) at any
meeting of the securityholders of ICC any Subject Securities against, or
not tender or cause to be tendered any Subject Securities
to:
|
|
|
(i)
|
any corporate transaction, such as a merger,
amalgamation, arrangement, rights offering, reorganization,
recapitalization, or liquidation or take-over bid, sale or transfer of a
material amount of assets of ICC or similar transaction involving ICC or
the Shares other than the Transaction and any transaction related
thereto;
|
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|
(ii)
|
the issuance of any securities of ICC (other than
pursuant to the exercise of ICC Options) other than the Transaction and
any transaction related thereto;
|
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|
(iii)
|
any action that is reasonably likely to impede, interfere
with, delay, postpone, hinder, prevent, or adversely affect in any
material respect the Transaction including, without limitation, any ICC
Acquisition Proposal; or
|
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|
(iv)
|
any action or agreement that would result in a breach of
any representation, warranty, or covenant or other obligation of ICC in
the Arrangement Agreement;
|
|
|
(c)
|
upon the request or direction of Aurora, have all of its
Subject Securities counted or not counted (as directed by Aurora) as part
of a quorum in connection with any meeting of securityholders of ICC
relating to matters set forth in Section 3(b);
|
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(d)
|
not, without the prior written consent of Aurora, option,
sell, transfer, assign, pledge, encumber or otherwise dispose of, or enter
into any agreement or understanding relating to the option, sale,
transfer, assignment, pledge, encumbrances or other disposition of, the
Subject Securities or any interest therein, other than pursuant to any
exercise of ICC Warrants or ICC Options for Shares in accordance with
their terms; except that from and after the date of the Final Order, the
Securityholder shall be entitled to, without the consent of Aurora, sell,
transfer, assign, pledge, encumber or otherwise dispose of, the Subject
Securities, provided that any sales of Subject Securities permitted to be
made during the term of this Agreement shall be made in an orderly fashion
as market conditions permit;
|
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|
(e)
|
not, except as required pursuant to this Agreement, grant
or agree to grant any proxy or other right to vote the Subject Securities
or enter into any voting trust or pooling agreement or arrangement or
enter into or subject any of the Subject Securities to
any other agreement, arrangement, understanding or commitment,
formal or informal, with respect to or relating to the voting or tendering
thereof or revoke any proxy granted pursuant to this Agreement;
|
|
|
(f)
|
not exercise or permit any other person to exercise any
rights of the Securityholder any rights of dissent or appraisal in respect
of any resolution approving the Transaction or any aspect thereof or
matter related thereto, and not exercise any other securityholder rights
or remedies available at common law or pursuant to applicable corporate or
securities law or other legislation;
|
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|
(g)
|
not, directly or indirectly:
|
|
|
(i)
|
solicit, assist, initiate, knowingly encourage or
otherwise facilitate (including by way of furnishing information,
permitting any visit to any facilities or entering into any form of
agreement, arrangement or understanding) any inquiries or proposals,
whether publicly or otherwise, regarding a ICC Acquisition Proposal or
potential ICC Acquisition Proposal;
|
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|
|
(ii)
|
enter into, engage, continue or participate in any
negotiations or discussions regarding, or provide any non-public
information with respect to ICC or any of its subsidiaries, or offer or
provide access to the business, properties, assets, books or records of
ICC or any of its subsidiaries or otherwise cooperate in any way with, any
ICC Acquisition Proposal or potential ICC Acquisition Proposal;
|
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|
|
(iii)
|
requisition or join in the requisition of any meeting of
the securityholders of ICC for the purpose of considering any
resolution;
|
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|
|
(iv)
|
solicit proxies or become a participant in the
solicitation in opposition to or in competition with Aurora’s purchase of
the Shares as contemplated by the Arrangement Agreement or act jointly or
in concert with others with respect to voting securities of ICC for the
purpose of opposing or competing with Aurora’s purchase of the Shares as
contemplated by the Arrangement Agreement; or
|
|
|
|
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|
|
(v)
|
take any other action of any kind which might reasonably
be regarded as likely to reduce the success or delay or interfere with the
completion of the Transaction;
|
|
|
(h)
|
promptly notify Aurora upon any of undersigned’s
representations or warranties contained in this Agreement becoming untrue
or incorrect in any material respect prior to the termination of this
Agreement, which notification shall include a description of the ways in
which such representations or warranties have become incorrect or untrue;
and
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(i)
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from time to time, execute and deliver, or cause to be
executed and delivered, such additional or further consents, documents and
other instruments and shall take all other actions reasonably necessary or
as Aurora may reasonably request for the purposes of effectively carrying
out this Agreement.
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The Securityholder acknowledges and
agrees that any ICC Options held by him, her or it, to the extent not exercised
or settled, shall be treated in accordance with the Arrangement and he, she or
it shall take all steps required of him, her or it to give effect to such
treatment.
Aurora agrees and confirms to the
Securityholder that it shall take all steps required of it under the Arrangement
Agreement to cause the Transaction to occur in accordance with the terms of and
subject to the conditions set forth in the Arrangement Agreement.
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5.
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ALTERNATIVE TRANSACTION
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In the event that, in lieu of the
Transaction, Aurora seeks to complete the acquisition of the Shares other than
as contemplated by the Arrangement Agreement on a basis that is (a) on economic
terms and conditions (including, without limitation, tax treatment) having
consequences to the Securityholder that are in the Securityholders’s reasonable
opinion equivalent to or superior to those contemplated by the Arrangement
Agreement, (b) would not likely result in a delay or time to completion beyond
the Completion Deadline (as defined in the Arrangement Agreement), and (c) is
otherwise on terms and conditions no more onerous on the Securityholder than the
Transaction (including any take-over bid) (any such transaction, an
“
Alternative Transaction
”), then during the term of this Agreement the
Securityholder shall support the completion of such Alternative Transaction in
the same manner as the Transaction in accordance with the terms and conditions
of this Agreement
mutatis mutandis
, including by (A) depositing or
causing the deposit of its Subject Securities into an Alternative Transaction
conducted by way of a take-over bid made by Aurora or an affiliate of Aurora and
not withdrawing them; and/or (B) voting or causing to be voted all of the
Subject Securities (to the extent that they carry the right to vote) in favour
of, and not dissenting from, such Alternative Transaction proposed by Aurora.
The Securityholder hereby covenants and
agrees in favour of Aurora that:
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(a)
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no later than 10 days prior to the date of the ICC
Arrangement Meeting, the Securityholder shall deposit duly completed forms
of proxy or voting instruction forms, as applicable, in respect of all the
Subject Securities (as directed on such forms) to cause the Subject
Securities to be voted in favour of the Transaction, and
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(b)
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such forms of proxy or voting instruction forms, as
applicable, shall not be revoked or withdrawn, unless prior written
consent from Aurora has been obtained or this Agreement is terminated
pursuant to Section 9.
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7.
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REPRESENTATIONS AND WARRANTIES OF THE
SECURITYHOLDER
|
The Securityholder hereby represents
and warrants to Aurora as follows and acknowledges that Aurora is relying on
such representations and warranties in connection with entering into this
Agreement and the Transaction:
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(a)
|
the Securityholder is the sole beneficial owner of the
Shares and ICC Options with valid and marketable title thereto, free and
clear of all claims, liens, charges, encumbrances and security interests
other than those arising by operation of statute and no person has any
agreement, option, or any right or privilege capable of becoming an
agreement or option, for the purchase, acquisition or transfer of the
Shares and the ICC Options from the Securityholder or any interest therein
or right thereto, except pursuant to the
Transaction;
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(b)
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(i) the only securities of ICC beneficially owned,
directly or indirectly, or over which control or direction is exercised by
the Securityholder are those listed on the Acceptance, and (ii) the
Securityholder has no other agreement, options, warrants or securities
convertible into, or exchangeable or exercisable for, or otherwise
evidencing a right to acquire, securities of ICC or any rights or
privilege capable of becoming an agreement or option, for the purchase or
acquisition by the Securityholder or transfer to the Securityholder of
additional securities of ICC or any interest therein;
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(c)
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the Securityholder has the sole right to dispose of or
transfer (or cause to be disposed of or transferred) all of its Shares and
ICC Options now held, and will have the right to dispose of or transfer
(or cause to be disposed of or transferred) all Shares and ICC Options
hereafter acquired by it;
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(d)
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the Securityholder has the sole right to vote (or cause
to be voted) all of its Subject Securities now held and will have the sole
right to vote (or cause to be voted) all Subject Securities hereafter
acquired by it;
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(e)
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this Agreement has been duly executed and delivered by
the Securityholder, and, assuming the due authorization, execution and
delivery by Aurora, this Agreement constitutes a legal, valid and binding
obligation of the Securityholder, enforceable in accordance with its
terms, subject to laws of general application and bankruptcy, insolvency
and other similar laws affecting creditors’ rights generally and general
principles of equity;
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(f)
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if the Securityholder is a corporation or other entity,
it is validly subsisting under the laws of the jurisdiction governing its
incorporation or formation and has all necessary corporate or other power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder;
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(g)
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neither the execution and delivery of this Agreement by
the Securityholder, the consummation by the Securityholder of the
transactions contemplated hereby nor the compliance by the Securityholder
with any of the provisions hereof will:
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(i)
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result in any breach of, or constitute a default (or an
event which with notice or lapse of time or both would become a default),
or give rise to any third party right of termination, cancellation,
material modification, acceleration, purchase or right of first refusal,
under any provision of any of the constating documents of the
Securityholder (if the Securityholder is a corporation or other entity) or
under any of the terms, conditions or provisions of any note, loan
agreement, bond, mortgage, indenture, contract, licence, agreement, lease,
permit or other instrument or obligation to which such Securityholder is a
party or by which such Securityholder or any of its properties or assets
(including Shares and ICC Options) may be bound, or constitute a violation
or breach of or default under or conflict with any contract, commitment,
agreement, understanding or arrangement of any kind to which the
Securityholder will be a party and by which the Securityholder will be
bound at the time of such consummation, in each case, which breach or
default could reasonably be expected to prevent, materially delay or
materially impair the Securityholder’s ability to consummate the
transactions contemplated by this Agreement;
or
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(ii)
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require the Securityholder to make any filing with (other
than pursuant to the requirements of applicable securities legislation
which the Securityholder will undertake), or to obtain any permit, waiver,
authorization, exemption, registration, licence, consent or approval of,
any Governmental Entity or any other person;
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(h)
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the Securityholder has not previously granted or agreed
to grant any power of attorney or attorney in fact, proxy or other right
to vote in respect of the Subject Securities or entered into any voting
trust, vote pooling or other agreement with respect to the right to vote,
call meetings of shareholders or give consents or approvals of any kind as
to the Securities except those which are no longer of any force or effect;
and
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(i)
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the Securityholder acknowledges and agrees that the
Securityholder has had the opportunity to seek independent legal advice
with respect to this Agreement, the Arrangement Agreement and the
transactions contemplated hereby and thereby, and that any failure on the
Securityholder’s part to seek independent legal advice shall not affect
(and the Securityholder shall not assert that it affects) the validity,
enforceability or effect of this Agreement or the Arrangement
Agreement.
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8.
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REPRESENTATIONS AND WARRANTIES OF
AURORA
|
Aurora hereby represents and warrants
to the Securityholder as follows and acknowledges that the Securityholder is
relying on such representations and warranties in connection with entering into
this Agreement and the Transaction:
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(a)
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the execution and delivery of this Agreement by Aurora
and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Aurora
and is a valid and binding agreement, enforceable against Aurora in
accordance with its terms, and and the performance by Aurora of its
obligations hereunder will not constitute a violation or breach of or
default under, or conflict with (i) any contract, commitment, agreement,
understanding or arrangement of any kind to which Aurora will be a party
and by which Aurora will be bound at the time of such consummation, and
(ii) to its knowledge, any applicable Laws;
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(b)
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neither the execution and delivery of this Agreement by
Aurora, the consummation by Aurora of the transactions contemplated hereby
nor the compliance by Aurora with any of the provisions hereof will result
in any breach of, or constitute a default (or an event which with notice
or lapse of time or both would become a default), or give rise to any
third party right of termination, cancellation, material modification,
acceleration, purchase or right of first refusal, under any provision of
any of the constating documents of Aurora or under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage,
indenture, contract, licence, agreement, lease, permit or other instrument
or obligation to which Aurora is a party or by which Aurora or any of its
properties or assets may be bound, or constitute a violation or breach of
or default under or conflict with any contract, commitment, agreement,
understanding or arrangement of any kind to which Aurora will be a party
and by which Aurora will be bound at the time of such consummation, in
each case, which breach or default could reasonably be expected to
prevent, materially delay or materially impair Aurora’s ability to
consummate the transactions contemplated by this
Agreement;
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(c)
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that no material consent, approval, order or
authorization of, or declaration or filing with, any Governmental Entity
is required to be obtained by Aurora in connection with the execution and
delivery of this Agreement, the performance by it of its obligations under
this Agreement and the consummation by Aurora of the Transaction, other
than those which are contemplated by the Arrangement Agreement;
and
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(d)
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that there are no claims, actions, suits, audits,
proceedings, investigations or other actions pending against, or, to the
knowledge of Aurora, threated against or affecting Aurora or any of its
respective properties that, individually or in the aggregate, could
reasonably be expected to have a material and adverse effect on Aurora’s
ability to execute and deliver this Agreement and to perform its
obligations contemplated by this Agreement or the Arrangement
Agreement.
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9.
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TERMINATION
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9.1
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This Agreement may be terminated by Aurora by notice to
the Securityholder if:
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(a)
|
the Securityholder or any other person who is a party to
a support agreement with Aurora in respect of the Arrangement has not
complied in all material respects with its covenants to Aurora contained
herein or therein;
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(b)
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ICC has not complied in all material respects with its
covenants to Aurora under the Arrangement Agreement;
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(c)
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any representation or warranty of any of the
Securityholders contained herein or in another support agreement is at the
date hereof or becomes at any time prior to the Effective Time untrue or
inaccurate in any material respect; or
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(d)
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the Arrangement Agreement is terminated in accordance
with its terms.
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9.2
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This Agreement may be terminated by the Securityholder by
notice to Aurora if the Arrangement Agreement is terminated in accordance
with its terms
.
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9.3
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This Agreement may be terminated at any time prior to the
Effective Time by the mutual agreement of Aurora and the
Securityholder.
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9.4
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If this Agreement is terminated as provided in Section 9,
this Agreement shall forthwith become void and of no further force or
effect and there shall be no liability on the part of any Party except
that the provisions of Section 12, 17, 19, and 20 will survive any
termination hereof pursuant to Section 9, provided that the foregoing
shall not relieve any Party from any liability for any breach of this
Agreement arising prior to such termination.
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Notwithstanding anything to the
contrary herein, nothing herein shall restrict or limit any director or officer
of ICC from taking any action required to be taken in the discharge of his or
her fiduciary duty as a director or officer of ICC that is otherwise permitted
by, and done in compliance with, the terms of the Arrangement Agreement. Aurora
further hereby agrees that the Securityholder is not making any agreement or
understanding herein in any capacity other than in the capacity as beneficial
owner of the Subject Securities.
Except as expressly set forth herein,
this Agreement shall not be modified, amended, altered or supplemented except
upon the execution and delivery of a written agreement executed by each of the
Parties.
This Agreement constitutes the entire
agreement between the Parties pertaining to the subject matter of this
Agreement.
No Party may assign any of its rights
or obligations under this Agreement without the prior written consent of the
other Party.
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14.
|
SUCCESSORS; NO THIRD PARTY
BENEFICIARIES
|
This Agreement shall be binding upon,
enure to the benefit of and be enforceable by, the Parties and their respective
executors, administrators, successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer on any person other than
the Parties or the Parties’ respective successors or permits assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
Time is of the essence of this
Agreement.
If any provision of this Agreement or
the application thereof to any Party or circumstance is invalid or unenforceable
to any extent then the remainder of this Agreement or application of such
provision to a Party or circumstance (other than those to which it is held
invalid or unenforceable) is not affected thereby and each remaining provision
of this Agreement is valid and is enforceable to the fullest extent permitted by
Law.
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(a)
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This Agreement is to be governed by and construed in
accordance with the laws of the Province of British Columbia and the
federal laws of Canada applicable therein without regard to any conflicts
of law provisions, and each of the Parties irrevocably attorns to the
jurisdiction of the courts of the Province of British Columbia.
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(b)
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The Parties waive the application of any rule of Law
which otherwise would be applicable in connection with the construction of
this Agreement that ambiguous or conflicting terms or provisions should be
construed against the Party that (or counsel of which) prepared the
executed agreement or any earlier draft of the
same.
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Any notice or other communication
required or permitted to be given hereunder shall be sufficiently given if
delivered:
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(a)
|
in the case of the Securityholder, to the address
appearing on the Acceptance; and
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(b)
|
in the case of Aurora:
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Aurora Cannabis Inc.
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1500 - 1199 West Hastings Street
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Vancouver, British Columbia
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V6E 3T5
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Attention
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[REDACTED]
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Email:
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[REDACTED]
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with a copy (which shall not constitute notice)
to:
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Attention:
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[REDACTED]
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Email:
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[REDACTED]
|
or to such other address as the Party
to which such notice or other communication is to be given has last notified the
Party giving the same in the manner provided in this Section 18. Any notice or
other communication given or made is deemed to have been duly given or made as
at the date delivered or sent if delivered personally or sent by fax or email
transmission at the address for service provided herein during normal business
hours on a business day, or otherwise on the next business day.
The Parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the Parties are entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof, on a non-exclusive basis, in any
court of the Province of British Columbia having jurisdiction, this being in
addition to any other remedy to which such Party is entitled at law or in
equity.
The Parties agree to pay their own
respective expenses incurred in connection with this Agreement.
Each of the Securityholder and Aurora
will, from time to time, execute and deliver all such further documents and
instruments and do all such acts and things as the other party may reasonably
require (at the requesting Party’s cost) to effectively carry out or better
evidence or perfect the full intent and meaning of this Agreement.
The Parties consent to the disclosure
of the substance of this Agreement in any press release required by applicable
Laws or any circular relating to the ICC Arrangement Meeting and to the filing
of this Agreement as may be required pursuant to applicable Laws. A copy of this
Agreement may be provided to the directors of ICC.
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23.
|
COUNTERPART EXECUTION
|
This letter may be signed by fax or
other electronic means and in counterparts, which, together, are deemed to
constitute one valid and binding agreement and delivery of such counterparts may
be effected by means of fax or other electronic means.
[
Remainder of page intentionally left blank; signature page
follows.
]
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AURORA CANNABIS INC.
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By:
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(signed “Terry Booth”)
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Name: Terry Booth
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Title: Chief Executive Officer
|
Acceptance by Securityholder
The foregoing is hereby accepted as of and with effect from the
8
th
day of September, 2018 and the undersigned hereby confirms that
the undersigned beneficially owns, directly or indirectly, or has control or
direction over the Shares indicated below:
|
Securities of ICC
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Number of Securities
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[REDACTED]
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[REDACTED]
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[REDACTED]
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[REDACTED]
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Signature of Witness
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Signature of Securityholder or, if a
corporation, authorized signing officer of the Securityholder
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[REDACTED]
|
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Oscar
Leon
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Name of Witness (Please print)
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Name of Securityholder (Please print)
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Address:
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[REDACTED]
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[REDACTED]
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Facsimile: [REDACTED]
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Email:
[REDACTED]
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VOTING AND SUPPORT AGREEMENT
September 8, 2018
Dear Securityholder:
Re: Acquisition of ICC Labs Inc. by Aurora
Cannabis Inc.
Aurora Cannabis Inc. (“
Aurora
”) is concurrently herewith
entering into an arrangement agreement (the “
Arrangement Agreement
”) with
ICC Labs Inc. (“
ICC
”) which provides for, among other things, the
acquisition by Aurora of all of the issued and outstanding common shares (the
“
Shares
”) of ICC by way of a plan of arrangement (the “
Plan of
Arrangement
”) under Section 288 of the
Business Corporations Act
(British Columbia) (the “
BCBCA
”) (the “
Transaction
”). Under the
terms of the Arrangement Agreement, Aurora will acquire all of the issued and
outstanding Shares at a price per Share of $1.95 payable in such number of
common shares in the capital of Aurora (“
Aurora Shares
”) as is equal to
the quotient of $1.95 divided by the volume-weighted average trading price of
the Aurora Shares on the Toronto Stock Exchange in the twenty (20) Business Days
(as such term is defined in the Arrangement Agreement) preceding the effective
date of the Transaction (the last day of such period being the second to last
trading day on the TSX immediately prior to the effective date of the
Transaction) (the “
Consideration
”).
The undersigned securityholder (the “
Securityholder
” and
together with Aurora, each, a “
Party
” and collectively, the
“
Parties
”) acknowledges that Aurora would not proceed with the
Transaction but for the execution and delivery of this Agreement by the
Securityholder.
In consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Securityholder and Aurora
(each, a “
Party
” and collectively, the
Parties
”) agree as
follows:
Aurora understands that the
Securityholder is the beneficial owner, directly or indirectly, of, or has
direction or control over (i) the number of Shares, if any, and (ii) the number
of ICC Options exercisable to purchase Shares (the “
Options
”), if any,
each as set forth in the Securityholder’s acceptance (the “
Acceptance
”)
at the end of this voting and support agreement (this “
Agreement
”).
Under the Plan of Arrangement, Aurora
will acquire, subject to the terms and conditions of the Arrangement Agreement,
all of the issued and outstanding Shares.
Capitalized terms used in this
Agreement but not otherwise defined herein shall have the respective meanings
ascribed thereto in the Arrangement Agreement.
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3.
|
COVENANTS OF THE
SECURITYHOLDER
|
The Securityholder covenants and agrees
that, until the earlier of: (i) the closing of the Transaction and (ii) the date
this Agreement is terminated in accordance with its terms, the Securityholder
shall:
|
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(a)
|
attend (either in person or by proxy) any meeting of the
shareholders of ICC held to consider the Transaction (including any
adjournments and postponements thereof) (the “
ICC Arrangement
Meeting
”), and at the ICC Arrangement Meeting, vote or cause to be
voted all of:
|
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(i)
|
the Shares; and
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(ii)
|
any Shares acquired by or issued to the Securityholder on
or following the date hereof,
|
that are beneficially owned by, or
over which control or direction is exercised by, the Securityholder and which
are entitled to be voted at the ICC Arrangement Meeting (the “
Subject
Securities
”) in favour of the Transaction and all matters related thereto;
|
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(b)
|
vote or cause to be voted (in person or by proxy) at any
meeting of the securityholders of ICC any Subject Securities against, or
not tender or cause to be tendered any Subject Securities
to:
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(i)
|
any corporate transaction, such as a merger,
amalgamation, arrangement, rights offering, reorganization,
recapitalization, or liquidation or take-over bid, sale or transfer of a
material amount of assets of ICC or similar transaction involving ICC or
the Shares other than the Transaction and any transaction related
thereto;
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(ii)
|
the issuance of any securities of ICC (other than
pursuant to the exercise of ICC Options) other than the Transaction and
any transaction related thereto;
|
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(iii)
|
any action that is reasonably likely to impede, interfere
with, delay, postpone, hinder, prevent, or adversely affect in any
material respect the Transaction including, without limitation, any ICC
Acquisition Proposal; or
|
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(iv)
|
any action or agreement that would result in a breach of
any representation, warranty, or covenant or other obligation of ICC in
the Arrangement Agreement;
|
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(c)
|
upon the request or direction of Aurora, have all of its
Subject Securities counted or not counted (as directed by Aurora) as part
of a quorum in connection with any meeting of securityholders of ICC
relating to matters set forth in Section 3(b);
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(d)
|
not, without the prior written consent of Aurora, option,
sell, transfer, assign, pledge, encumber or otherwise dispose of, or enter
into any agreement or understanding relating to the option, sale,
transfer, assignment, pledge, encumbrances or other disposition of, the
Subject Securities or any interest therein, other than pursuant to any
exercise of ICC Warrants or ICC Options for Shares in accordance with
their terms; except that from and after the date of the Final Order, the
Securityholder shall be entitled to, without the consent of Aurora, sell,
transfer, assign, pledge, encumber or otherwise dispose of, the Subject
Securities, provided that any sales of Subject Securities permitted to be
made during the term of this Agreement shall be made in an orderly fashion
as market conditions permit;
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(e)
|
not, except as required pursuant to this Agreement, grant
or agree to grant any proxy or other right to vote the Subject Securities
or enter into any voting trust or pooling agreement or arrangement or
enter into or subject any of the Subject Securities to
any other agreement, arrangement, understanding or commitment,
formal or informal, with respect to or relating to the voting or tendering
thereof or revoke any proxy granted pursuant to this Agreement;
|
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(f)
|
not exercise or permit any other person to exercise any
rights of the Securityholder any rights of dissent or appraisal in respect
of any resolution approving the Transaction or any aspect thereof or
matter related thereto, and not exercise any other securityholder rights
or remedies available at common law or pursuant to applicable corporate or
securities law or other legislation;
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(g)
|
not, directly or indirectly:
|
|
|
(i)
|
solicit, assist, initiate, knowingly encourage or
otherwise facilitate (including by way of furnishing information,
permitting any visit to any facilities or entering into any form of
agreement, arrangement or understanding) any inquiries or proposals,
whether publicly or otherwise, regarding a ICC Acquisition Proposal or
potential ICC Acquisition Proposal;
|
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(ii)
|
enter into, engage, continue or participate in any
negotiations or discussions regarding, or provide any non-public
information with respect to ICC or any of its subsidiaries, or offer or
provide access to the business, properties, assets, books or records of
ICC or any of its subsidiaries or otherwise cooperate in any way with, any
ICC Acquisition Proposal or potential ICC Acquisition Proposal;
|
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(iii)
|
requisition or join in the requisition of any meeting of
the securityholders of ICC for the purpose of considering any
resolution;
|
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(iv)
|
solicit proxies or become a participant in the
solicitation in opposition to or in competition with Aurora’s purchase of
the Shares as contemplated by the Arrangement Agreement or act jointly or
in concert with others with respect to voting securities of ICC for the
purpose of opposing or competing with Aurora’s purchase of the Shares as
contemplated by the Arrangement Agreement; or
|
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(v)
|
take any other action of any kind which might reasonably
be regarded as likely to reduce the success or delay or interfere with the
completion of the Transaction;
|
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(h)
|
promptly notify Aurora upon any of undersigned’s
representations or warranties contained in this Agreement becoming untrue
or incorrect in any material respect prior to the termination of this
Agreement, which notification shall include a description of the ways in
which such representations or warranties have become incorrect or untrue;
and
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(i)
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from time to time, execute and deliver, or cause to be
executed and delivered, such additional or further consents, documents and
other instruments and shall take all other actions reasonably necessary or
as Aurora may reasonably request for the purposes of effectively carrying
out this Agreement.
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The Securityholder acknowledges and
agrees that any ICC Options held by him, her or it, to the extent not exercised
or settled, shall be treated in accordance with the Arrangement and he, she or
it shall take all steps required of him, her or it to give effect to such
treatment.
Aurora agrees and confirms to the
Securityholder that it shall take all steps required of it under the Arrangement
Agreement to cause the Transaction to occur in accordance with the terms of and
subject to the conditions set forth in the Arrangement Agreement.
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5.
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ALTERNATIVE TRANSACTION
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In the event that, in lieu of the
Transaction, Aurora seeks to complete the acquisition of the Shares other than
as contemplated by the Arrangement Agreement on a basis that is (a) on economic
terms and conditions (including, without limitation, tax treatment) having
consequences to the Securityholder that are in the Securityholders’s reasonable
opinion equivalent to or superior to those contemplated by the Arrangement
Agreement, (b) would not likely result in a delay or time to completion beyond
the Completion Deadline (as defined in the Arrangement Agreement), and (c) is
otherwise on terms and conditions no more onerous on the Securityholder than the
Transaction (including any take-over bid) (any such transaction, an
“
Alternative Transaction
”), then during the term of this Agreement the
Securityholder shall support the completion of such Alternative Transaction in
the same manner as the Transaction in accordance with the terms and conditions
of this Agreement
mutatis mutandis
, including by (A) depositing or
causing the deposit of its Subject Securities into an Alternative Transaction
conducted by way of a take-over bid made by Aurora or an affiliate of Aurora and
not withdrawing them; and/or (B) voting or causing to be voted all of the
Subject Securities (to the extent that they carry the right to vote) in favour
of, and not dissenting from, such Alternative Transaction proposed by Aurora.
The Securityholder hereby covenants and
agrees in favour of Aurora that:
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(a)
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no later than 10 days prior to the date of the ICC
Arrangement Meeting, the Securityholder shall deposit duly completed forms
of proxy or voting instruction forms, as applicable, in respect of all the
Subject Securities (as directed on such forms) to cause the Subject
Securities to be voted in favour of the Transaction, and
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(b)
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such forms of proxy or voting instruction forms, as
applicable, shall not be revoked or withdrawn, unless prior written
consent from Aurora has been obtained or this Agreement is terminated
pursuant to Section 9.
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7.
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REPRESENTATIONS AND WARRANTIES OF THE
SECURITYHOLDER
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The Securityholder hereby represents
and warrants to Aurora as follows and acknowledges that Aurora is relying on
such representations and warranties in connection with entering into this
Agreement and the Transaction:
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(a)
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the Securityholder is the sole beneficial owner of the
Shares and ICC Options with valid and marketable title thereto, free and
clear of all claims, liens, charges, encumbrances and security interests
other than those arising by operation of statute and no person has any
agreement, option, or any right or privilege capable of becoming an
agreement or option, for the purchase, acquisition or transfer of the
Shares and the ICC Options from the Securityholder or any interest therein
or right thereto, except pursuant to the
Transaction;
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(b)
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(i) the only securities of ICC beneficially owned,
directly or indirectly, or over which control or direction is exercised by
the Securityholder are those listed on the Acceptance, and (ii) the
Securityholder has no other agreement, options, warrants or securities
convertible into, or exchangeable or exercisable for, or otherwise
evidencing a right to acquire, securities of ICC or any rights or
privilege capable of becoming an agreement or option, for the purchase or
acquisition by the Securityholder or transfer to the Securityholder of
additional securities of ICC or any interest therein;
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(c)
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the Securityholder has the sole right to dispose of or
transfer (or cause to be disposed of or transferred) all of its Shares and
ICC Options now held, and will have the right to dispose of or transfer
(or cause to be disposed of or transferred) all Shares and ICC Options
hereafter acquired by it;
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(d)
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the Securityholder has the sole right to vote (or cause
to be voted) all of its Subject Securities now held and will have the sole
right to vote (or cause to be voted) all Subject Securities hereafter
acquired by it;
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(e)
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this Agreement has been duly executed and delivered by
the Securityholder, and, assuming the due authorization, execution and
delivery by Aurora, this Agreement constitutes a legal, valid and binding
obligation of the Securityholder, enforceable in accordance with its
terms, subject to laws of general application and bankruptcy, insolvency
and other similar laws affecting creditors’ rights generally and general
principles of equity;
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(f)
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if the Securityholder is a corporation or other entity,
it is validly subsisting under the laws of the jurisdiction governing its
incorporation or formation and has all necessary corporate or other power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder;
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(g)
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neither the execution and delivery of this Agreement by
the Securityholder, the consummation by the Securityholder of the
transactions contemplated hereby nor the compliance by the Securityholder
with any of the provisions hereof will:
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(i)
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result in any breach of, or constitute a default (or an
event which with notice or lapse of time or both would become a default),
or give rise to any third party right of termination, cancellation,
material modification, acceleration, purchase or right of first refusal,
under any provision of any of the constating documents of the
Securityholder (if the Securityholder is a corporation or other entity) or
under any of the terms, conditions or provisions of any note, loan
agreement, bond, mortgage, indenture, contract, licence, agreement, lease,
permit or other instrument or obligation to which such Securityholder is a
party or by which such Securityholder or any of its properties or assets
(including Shares and ICC Options) may be bound, or constitute a violation
or breach of or default under or conflict with any contract, commitment,
agreement, understanding or arrangement of any kind to which the
Securityholder will be a party and by which the Securityholder will be
bound at the time of such consummation, in each case, which breach or
default could reasonably be expected to prevent, materially delay or
materially impair the Securityholder’s ability to consummate the
transactions contemplated by this Agreement;
or
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(ii)
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require the Securityholder to make any filing with (other
than pursuant to the requirements of applicable securities legislation
which the Securityholder will undertake), or to obtain any permit, waiver,
authorization, exemption, registration, licence, consent or approval of,
any Governmental Entity or any other person;
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(h)
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the Securityholder has not previously granted or agreed
to grant any power of attorney or attorney in fact, proxy or other right
to vote in respect of the Subject Securities or entered into any voting
trust, vote pooling or other agreement with respect to the right to vote,
call meetings of shareholders or give consents or approvals of any kind as
to the Securities except those which are no longer of any force or effect;
and
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(i)
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the Securityholder acknowledges and agrees that the
Securityholder has had the opportunity to seek independent legal advice
with respect to this Agreement, the Arrangement Agreement and the
transactions contemplated hereby and thereby, and that any failure on the
Securityholder’s part to seek independent legal advice shall not affect
(and the Securityholder shall not assert that it affects) the validity,
enforceability or effect of this Agreement or the Arrangement
Agreement.
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8.
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REPRESENTATIONS AND WARRANTIES OF
AURORA
|
Aurora hereby represents and warrants
to the Securityholder as follows and acknowledges that the Securityholder is
relying on such representations and warranties in connection with entering into
this Agreement and the Transaction:
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(a)
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the execution and delivery of this Agreement by Aurora
and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Aurora
and is a valid and binding agreement, enforceable against Aurora in
accordance with its terms, and and the performance by Aurora of its
obligations hereunder will not constitute a violation or breach of or
default under, or conflict with (i) any contract, commitment, agreement,
understanding or arrangement of any kind to which Aurora will be a party
and by which Aurora will be bound at the time of such consummation, and
(ii) to its knowledge, any applicable Laws;
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(b)
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neither the execution and delivery of this Agreement by
Aurora, the consummation by Aurora of the transactions contemplated hereby
nor the compliance by Aurora with any of the provisions hereof will result
in any breach of, or constitute a default (or an event which with notice
or lapse of time or both would become a default), or give rise to any
third party right of termination, cancellation, material modification,
acceleration, purchase or right of first refusal, under any provision of
any of the constating documents of Aurora or under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage,
indenture, contract, licence, agreement, lease, permit or other instrument
or obligation to which Aurora is a party or by which Aurora or any of its
properties or assets may be bound, or constitute a violation or breach of
or default under or conflict with any contract, commitment, agreement,
understanding or arrangement of any kind to which Aurora will be a party
and by which Aurora will be bound at the time of such consummation, in
each case, which breach or default could reasonably be expected to
prevent, materially delay or materially impair Aurora’s ability to
consummate the transactions contemplated by this
Agreement;
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(c)
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that no material consent, approval, order or
authorization of, or declaration or filing with, any Governmental Entity
is required to be obtained by Aurora in connection with the execution and
delivery of this Agreement, the performance by it of its obligations under
this Agreement and the consummation by Aurora of the Transaction, other
than those which are contemplated by the Arrangement Agreement;
and
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(d)
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that there are no claims, actions, suits, audits,
proceedings, investigations or other actions pending against, or, to the
knowledge of Aurora, threated against or affecting Aurora or any of its
respective properties that, individually or in the aggregate, could
reasonably be expected to have a material and adverse effect on Aurora’s
ability to execute and deliver this Agreement and to perform its
obligations contemplated by this Agreement or the Arrangement
Agreement.
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9.
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TERMINATION
|
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9.1
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This Agreement may be terminated by Aurora by notice to
the Securityholder if:
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(a)
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the Securityholder or any other person who is a party to
a support agreement with Aurora in respect of the Arrangement has not
complied in all material respects with its covenants to Aurora contained
herein or therein;
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(b)
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ICC has not complied in all material respects with its
covenants to Aurora under the Arrangement Agreement;
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(c)
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any representation or warranty of any of the
Securityholders contained herein or in another support agreement is at the
date hereof or becomes at any time prior to the Effective Time untrue or
inaccurate in any material respect; or
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(d)
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the Arrangement Agreement is terminated in accordance
with its terms.
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9.2
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This Agreement may be terminated by the Securityholder by
notice to Aurora if the Arrangement Agreement is terminated in accordance
with its terms
.
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9.3
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This Agreement may be terminated at any time prior to the
Effective Time by the mutual agreement of Aurora and the
Securityholder.
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9.4
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If this Agreement is terminated as provided in Section 9,
this Agreement shall forthwith become void and of no further force or
effect and there shall be no liability on the part of any Party except
that the provisions of Section 12, 17, 19, and 20 will survive any
termination hereof pursuant to Section 9, provided that the foregoing
shall not relieve any Party from any liability for any breach of this
Agreement arising prior to such termination.
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Notwithstanding anything to the
contrary herein, nothing herein shall restrict or limit any director or officer
of ICC from taking any action required to be taken in the discharge of his or
her fiduciary duty as a director or officer of ICC that is otherwise permitted
by, and done in compliance with, the terms of the Arrangement Agreement. Aurora
further hereby agrees that the Securityholder is not making any agreement or
understanding herein in any capacity other than in the capacity as beneficial
owner of the Subject Securities.
Except as expressly set forth herein,
this Agreement shall not be modified, amended, altered or supplemented except
upon the execution and delivery of a written agreement executed by each of the
Parties.
This Agreement constitutes the entire
agreement between the Parties pertaining to the subject matter of this
Agreement.
No Party may assign any of its rights
or obligations under this Agreement without the prior written consent of the
other Party.
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14.
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SUCCESSORS; NO THIRD PARTY
BENEFICIARIES
|
This Agreement shall be binding upon,
enure to the benefit of and be enforceable by, the Parties and their respective
executors, administrators, successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer on any person other than
the Parties or the Parties’ respective successors or permits assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
Time is of the essence of this
Agreement.
If any provision of this Agreement or
the application thereof to any Party or circumstance is invalid or unenforceable
to any extent then the remainder of this Agreement or application of such
provision to a Party or circumstance (other than those to which it is held
invalid or unenforceable) is not affected thereby and each remaining provision
of this Agreement is valid and is enforceable to the fullest extent permitted by
Law.
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(a)
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This Agreement is to be governed by and construed in
accordance with the laws of the Province of British Columbia and the
federal laws of Canada applicable therein without regard to any conflicts
of law provisions, and each of the Parties irrevocably attorns to the
jurisdiction of the courts of the Province of British Columbia.
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(b)
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The Parties waive the application of any rule of Law
which otherwise would be applicable in connection with the construction of
this Agreement that ambiguous or conflicting terms or provisions should be
construed against the Party that (or counsel of which) prepared the
executed agreement or any earlier draft of the
same.
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Any notice or other communication
required or permitted to be given hereunder shall be sufficiently given if
delivered:
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(a)
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in the case of the Securityholder, to the address
appearing on the Acceptance; and
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(b)
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in the case of Aurora:
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Aurora Cannabis Inc.
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1500 - 1199 West Hastings Street
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Vancouver, British Columbia
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V6E 3T5
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Attention
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[REDACTED]
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Email:
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[REDACTED]
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with a copy (which shall not constitute notice)
to:
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Attention:
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[REDACTED]
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Email:
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[REDACTED]
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or to such other address as the Party
to which such notice or other communication is to be given has last notified the
Party giving the same in the manner provided in this Section 18. Any notice or
other communication given or made is deemed to have been duly given or made as
at the date delivered or sent if delivered personally or sent by fax or email
transmission at the address for service provided herein during normal business
hours on a business day, or otherwise on the next business day.
The Parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the Parties are entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof, on a non-exclusive basis, in any
court of the Province of British Columbia having jurisdiction, this being in
addition to any other remedy to which such Party is entitled at law or in
equity.
The Parties agree to pay their own
respective expenses incurred in connection with this Agreement.
Each of the Securityholder and Aurora
will, from time to time, execute and deliver all such further documents and
instruments and do all such acts and things as the other party may reasonably
require (at the requesting Party’s cost) to effectively carry out or better
evidence or perfect the full intent and meaning of this Agreement.
The Parties consent to the disclosure
of the substance of this Agreement in any press release required by applicable
Laws or any circular relating to the ICC Arrangement Meeting and to the filing
of this Agreement as may be required pursuant to applicable Laws. A copy of this
Agreement may be provided to the directors of ICC.
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23.
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COUNTERPART EXECUTION
|
This letter may be signed by fax or
other electronic means and in counterparts, which, together, are deemed to
constitute one valid and binding agreement and delivery of such counterparts may
be effected by means of fax or other electronic means.
[
Remainder of page intentionally left blank; signature page
follows.
]
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AURORA CANNABIS INC.
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By:
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(signed “Terry Booth”)
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Name: Terry Booth
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Title: Chief Executive Officer
|
Acceptance by Securityholder
The foregoing is hereby accepted as of and with effect from the
8
th
day of September, 2018 and the undersigned hereby confirms that
the undersigned beneficially owns, directly or indirectly, or has control or
direction over the Shares indicated below:
|
Securities of ICC
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Number of Securities
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[REDACTED]
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[REDACTED]
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[REDACTED]
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[REDACTED]
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Signature of Witness
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Signature of Securityholder or, if a
corporation, authorized signing officer of the Securityholder
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[REDACTED]
|
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Michael Galego
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Name of Witness (Please print)
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Name of Securityholder (Please print)
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Address:
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[REDACTED]
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[REDACTED]
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Facsimile: [REDACTED]
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Email:
[REDACTED]
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VOTING AND SUPPORT AGREEMENT
September 8, 2018
Dear Securityholder:
Re: Acquisition of ICC Labs Inc. by Aurora Cannabis
Inc.
Aurora Cannabis Inc. (“
Aurora
”) is concurrently herewith
entering into an arrangement agreement (the “
Arrangement Agreement
”) with
ICC Labs Inc. (“
ICC
”) which provides for, among other things, the
acquisition by Aurora of all of the issued and outstanding common shares (the
“
Shares
”) of ICC by way of a plan of arrangement (the “
Plan of
Arrangement
”) under Section 288 of the
Business Corporations Act
(British Columbia) (the “
BCBCA
”) (the “
Transaction
”). Under the
terms of the Arrangement Agreement, Aurora will acquire all of the issued and
outstanding Shares at a price per Share of $1.95 payable in such number of
common shares in the capital of Aurora (“
Aurora Shares
”) as is equal to
the quotient of $1.95 divided by the volume-weighted average trading price of
the Aurora Shares on the Toronto Stock Exchange in the twenty (20) Business Days
(as such term is defined in the Arrangement Agreement) preceding the effective
date of the Transaction (the last day of such period being the second to last
trading day on the TSX immediately prior to the effective date of the
Transaction) (the “
Consideration
”).
The undersigned securityholder (the “
Securityholder
” and
together with Aurora, each, a “
Party
” and collectively, the
“
Parties
”) acknowledges that Aurora would not proceed with the
Transaction but for the execution and delivery of this Agreement by the
Securityholder.
In consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Securityholder and Aurora
(each, a “
Party
” and collectively, the
Parties
”) agree as
follows:
Aurora understands that the
Securityholder is the beneficial owner, directly or indirectly, of, or has
direction or control over (i) the number of Shares, if any, and (ii) the number
of ICC Options exercisable to purchase Shares (the “
Options
”), if any,
each as set forth in the Securityholder’s acceptance (the “
Acceptance
”)
at the end of this voting and support agreement (this “
Agreement
”).
Under the Plan of Arrangement, Aurora
will acquire, subject to the terms and conditions of the Arrangement Agreement,
all of the issued and outstanding Shares.
Capitalized terms used in this
Agreement but not otherwise defined herein shall have the respective meanings
ascribed thereto in the Arrangement Agreement.
|
3.
|
COVENANTS OF THE
SECURITYHOLDER
|
The Securityholder covenants and agrees
that, until the earlier of: (i) the closing of the Transaction and (ii) the date
this Agreement is terminated in accordance with its terms, the Securityholder
shall:
|
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(a)
|
attend (either in person or by proxy) any meeting of the
shareholders of ICC held to consider the Transaction (including any
adjournments and postponements thereof) (the “
ICC Arrangement
Meeting
”), and at the ICC Arrangement Meeting, vote or cause to be
voted all of:
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(i)
|
the Shares; and
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(ii)
|
any Shares acquired by or issued to the Securityholder on
or following the date hereof,
|
that are beneficially owned by, or
over which control or direction is exercised by, the Securityholder and which
are entitled to be voted at the ICC Arrangement Meeting (the “
Subject
Securities
”) in favour of the Transaction and all matters related thereto;
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(b)
|
vote or cause to be voted (in person or by proxy) at any
meeting of the securityholders of ICC any Subject Securities against, or
not tender or cause to be tendered any Subject Securities
to:
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(i)
|
any corporate transaction, such as a merger,
amalgamation, arrangement, rights offering, reorganization,
recapitalization, or liquidation or take-over bid, sale or transfer of a
material amount of assets of ICC or similar transaction involving ICC or
the Shares other than the Transaction and any transaction related
thereto;
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(ii)
|
the issuance of any securities of ICC (other than
pursuant to the exercise of ICC Options) other than the Transaction and
any transaction related thereto;
|
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(iii)
|
any action that is reasonably likely to impede, interfere
with, delay, postpone, hinder, prevent, or adversely affect in any
material respect the Transaction including, without limitation, any ICC
Acquisition Proposal; or
|
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(iv)
|
any action or agreement that would result in a breach of
any representation, warranty, or covenant or other obligation of ICC in
the Arrangement Agreement;
|
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(c)
|
upon the request or direction of Aurora, have all of its
Subject Securities counted or not counted (as directed by Aurora) as part
of a quorum in connection with any meeting of securityholders of ICC
relating to matters set forth in Section 3(b);
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(d)
|
not, without the prior written consent of Aurora, option,
sell, transfer, assign, pledge, encumber or otherwise dispose of, or enter
into any agreement or understanding relating to the option, sale,
transfer, assignment, pledge, encumbrances or other disposition of, the
Subject Securities or any interest therein, other than pursuant to any
exercise of ICC Warrants or ICC Options for Shares in accordance with
their terms; except that from and after the date of the Final Order, the
Securityholder shall be entitled to, without the consent of Aurora, sell,
transfer, assign, pledge, encumber or otherwise dispose of, the Subject
Securities, provided that any sales of Subject Securities permitted to be
made during the term of this Agreement shall be made in an orderly fashion
as market conditions permit;
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(e)
|
not, except as required pursuant to this Agreement, grant
or agree to grant any proxy or other right to vote the Subject Securities
or enter into any voting trust or pooling agreement or arrangement or
enter into or subject any of the Subject Securities to
any other agreement, arrangement, understanding or commitment,
formal or informal, with respect to or relating to the voting or tendering
thereof or revoke any proxy granted pursuant to this Agreement;
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(f)
|
not exercise or permit any other person to exercise any
rights of the Securityholder any rights of dissent or appraisal in respect
of any resolution approving the Transaction or any aspect thereof or
matter related thereto, and not exercise any other securityholder rights
or remedies available at common law or pursuant to applicable corporate or
securities law or other legislation;
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(g)
|
not, directly or indirectly:
|
|
|
(i)
|
solicit, assist, initiate, knowingly encourage or
otherwise facilitate (including by way of furnishing information,
permitting any visit to any facilities or entering into any form of
agreement, arrangement or understanding) any inquiries or proposals,
whether publicly or otherwise, regarding a ICC Acquisition Proposal or
potential ICC Acquisition Proposal;
|
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(ii)
|
enter into, engage, continue or participate in any
negotiations or discussions regarding, or provide any non-public
information with respect to ICC or any of its subsidiaries, or offer or
provide access to the business, properties, assets, books or records of
ICC or any of its subsidiaries or otherwise cooperate in any way with, any
ICC Acquisition Proposal or potential ICC Acquisition Proposal;
|
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(iii)
|
requisition or join in the requisition of any meeting of
the securityholders of ICC for the purpose of considering any
resolution;
|
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(iv)
|
solicit proxies or become a participant in the
solicitation in opposition to or in competition with Aurora’s purchase of
the Shares as contemplated by the Arrangement Agreement or act jointly or
in concert with others with respect to voting securities of ICC for the
purpose of opposing or competing with Aurora’s purchase of the Shares as
contemplated by the Arrangement Agreement; or
|
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(v)
|
take any other action of any kind which might reasonably
be regarded as likely to reduce the success or delay or interfere with the
completion of the Transaction;
|
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(h)
|
promptly notify Aurora upon any of undersigned’s
representations or warranties contained in this Agreement becoming untrue
or incorrect in any material respect prior to the termination of this
Agreement, which notification shall include a description of the ways in
which such representations or warranties have become incorrect or untrue;
and
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|
(i)
|
from time to time, execute and deliver, or cause to be
executed and delivered, such additional or further consents, documents and
other instruments and shall take all other actions reasonably necessary or
as Aurora may reasonably request for the purposes of effectively carrying
out this Agreement.
|
The Securityholder acknowledges and
agrees that any ICC Options held by him, her or it, to the extent not exercised
or settled, shall be treated in accordance with the Arrangement and he, she or
it shall take all steps required of him, her or it to give effect to such
treatment.
Aurora agrees and confirms to the
Securityholder that it shall take all steps required of it under the Arrangement
Agreement to cause the Transaction to occur in accordance with the terms of and
subject to the conditions set forth in the Arrangement Agreement.
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5.
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ALTERNATIVE TRANSACTION
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In the event that, in lieu of the
Transaction, Aurora seeks to complete the acquisition of the Shares other than
as contemplated by the Arrangement Agreement on a basis that is (a) on economic
terms and conditions (including, without limitation, tax treatment) having
consequences to the Securityholder that are in the Securityholders’s reasonable
opinion equivalent to or superior to those contemplated by the Arrangement
Agreement, (b) would not likely result in a delay or time to completion beyond
the Completion Deadline (as defined in the Arrangement Agreement), and (c) is
otherwise on terms and conditions no more onerous on the Securityholder than the
Transaction (including any take-over bid) (any such transaction, an
“
Alternative Transaction
”), then during the term of this Agreement the
Securityholder shall support the completion of such Alternative Transaction in
the same manner as the Transaction in accordance with the terms and conditions
of this Agreement
mutatis mutandis
, including by (A) depositing or
causing the deposit of its Subject Securities into an Alternative Transaction
conducted by way of a take-over bid made by Aurora or an affiliate of Aurora and
not withdrawing them; and/or (B) voting or causing to be voted all of the
Subject Securities (to the extent that they carry the right to vote) in favour
of, and not dissenting from, such Alternative Transaction proposed by Aurora.
The Securityholder hereby covenants and
agrees in favour of Aurora that:
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(a)
|
no later than 10 days prior to the date of the ICC
Arrangement Meeting, the Securityholder shall deposit duly completed forms
of proxy or voting instruction forms, as applicable, in respect of all the
Subject Securities (as directed on such forms) to cause the Subject
Securities to be voted in favour of the Transaction, and
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(b)
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such forms of proxy or voting instruction forms, as
applicable, shall not be revoked or withdrawn, unless prior written
consent from Aurora has been obtained or this Agreement is terminated
pursuant to Section 9.
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7.
|
REPRESENTATIONS AND WARRANTIES OF THE
SECURITYHOLDER
|
The Securityholder hereby represents
and warrants to Aurora as follows and acknowledges that Aurora is relying on
such representations and warranties in connection with entering into this
Agreement and the Transaction:
|
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(a)
|
the Securityholder is the sole beneficial owner of the
Shares and ICC Options with valid and marketable title thereto, free and
clear of all claims, liens, charges, encumbrances and security interests
other than those arising by operation of statute and no person has any
agreement, option, or any right or privilege capable of becoming an
agreement or option, for the purchase, acquisition or transfer of the
Shares and the ICC Options from the Securityholder or any interest therein
or right thereto, except pursuant to the
Transaction;
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(b)
|
(i) the only securities of ICC beneficially owned,
directly or indirectly, or over which control or direction is exercised by
the Securityholder are those listed on the Acceptance, and (ii) the
Securityholder has no other agreement, options, warrants or securities
convertible into, or exchangeable or exercisable for, or otherwise
evidencing a right to acquire, securities of ICC or any rights or
privilege capable of becoming an agreement or option, for the purchase or
acquisition by the Securityholder or transfer to the Securityholder of
additional securities of ICC or any interest therein;
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(c)
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the Securityholder has the sole right to dispose of or
transfer (or cause to be disposed of or transferred) all of its Shares and
ICC Options now held, and will have the right to dispose of or transfer
(or cause to be disposed of or transferred) all Shares and ICC Options
hereafter acquired by it;
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(d)
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the Securityholder has the sole right to vote (or cause
to be voted) all of its Subject Securities now held and will have the sole
right to vote (or cause to be voted) all Subject Securities hereafter
acquired by it;
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(e)
|
this Agreement has been duly executed and delivered by
the Securityholder, and, assuming the due authorization, execution and
delivery by Aurora, this Agreement constitutes a legal, valid and binding
obligation of the Securityholder, enforceable in accordance with its
terms, subject to laws of general application and bankruptcy, insolvency
and other similar laws affecting creditors’ rights generally and general
principles of equity;
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(f)
|
if the Securityholder is a corporation or other entity,
it is validly subsisting under the laws of the jurisdiction governing its
incorporation or formation and has all necessary corporate or other power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder;
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(g)
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neither the execution and delivery of this Agreement by
the Securityholder, the consummation by the Securityholder of the
transactions contemplated hereby nor the compliance by the Securityholder
with any of the provisions hereof will:
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(i)
|
result in any breach of, or constitute a default (or an
event which with notice or lapse of time or both would become a default),
or give rise to any third party right of termination, cancellation,
material modification, acceleration, purchase or right of first refusal,
under any provision of any of the constating documents of the
Securityholder (if the Securityholder is a corporation or other entity) or
under any of the terms, conditions or provisions of any note, loan
agreement, bond, mortgage, indenture, contract, licence, agreement, lease,
permit or other instrument or obligation to which such Securityholder is a
party or by which such Securityholder or any of its properties or assets
(including Shares and ICC Options) may be bound, or constitute a violation
or breach of or default under or conflict with any contract, commitment,
agreement, understanding or arrangement of any kind to which the
Securityholder will be a party and by which the Securityholder will be
bound at the time of such consummation, in each case, which breach or
default could reasonably be expected to prevent, materially delay or
materially impair the Securityholder’s ability to consummate the
transactions contemplated by this Agreement;
or
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(ii)
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require the Securityholder to make any filing with (other
than pursuant to the requirements of applicable securities legislation
which the Securityholder will undertake), or to obtain any permit, waiver,
authorization, exemption, registration, licence, consent or approval of,
any Governmental Entity or any other person;
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(h)
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the Securityholder has not previously granted or agreed
to grant any power of attorney or attorney in fact, proxy or other right
to vote in respect of the Subject Securities or entered into any voting
trust, vote pooling or other agreement with respect to the right to vote,
call meetings of shareholders or give consents or approvals of any kind as
to the Securities except those which are no longer of any force or effect;
and
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(i)
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the Securityholder acknowledges and agrees that the
Securityholder has had the opportunity to seek independent legal advice
with respect to this Agreement, the Arrangement Agreement and the
transactions contemplated hereby and thereby, and that any failure on the
Securityholder’s part to seek independent legal advice shall not affect
(and the Securityholder shall not assert that it affects) the validity,
enforceability or effect of this Agreement or the Arrangement
Agreement.
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8.
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REPRESENTATIONS AND WARRANTIES OF
AURORA
|
Aurora hereby represents and warrants
to the Securityholder as follows and acknowledges that the Securityholder is
relying on such representations and warranties in connection with entering into
this Agreement and the Transaction:
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(a)
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the execution and delivery of this Agreement by Aurora
and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Aurora
and is a valid and binding agreement, enforceable against Aurora in
accordance with its terms, and and the performance by Aurora of its
obligations hereunder will not constitute a violation or breach of or
default under, or conflict with (i) any contract, commitment, agreement,
understanding or arrangement of any kind to which Aurora will be a party
and by which Aurora will be bound at the time of such consummation, and
(ii) to its knowledge, any applicable Laws;
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(b)
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neither the execution and delivery of this Agreement by
Aurora, the consummation by Aurora of the transactions contemplated hereby
nor the compliance by Aurora with any of the provisions hereof will result
in any breach of, or constitute a default (or an event which with notice
or lapse of time or both would become a default), or give rise to any
third party right of termination, cancellation, material modification,
acceleration, purchase or right of first refusal, under any provision of
any of the constating documents of Aurora or under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage,
indenture, contract, licence, agreement, lease, permit or other instrument
or obligation to which Aurora is a party or by which Aurora or any of its
properties or assets may be bound, or constitute a violation or breach of
or default under or conflict with any contract, commitment, agreement,
understanding or arrangement of any kind to which Aurora will be a party
and by which Aurora will be bound at the time of such consummation, in
each case, which breach or default could reasonably be expected to
prevent, materially delay or materially impair Aurora’s ability to
consummate the transactions contemplated by this
Agreement;
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(c)
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that no material consent, approval, order or
authorization of, or declaration or filing with, any Governmental Entity
is required to be obtained by Aurora in connection with the execution and
delivery of this Agreement, the performance by it of its obligations under
this Agreement and the consummation by Aurora of the Transaction, other
than those which are contemplated by the Arrangement Agreement;
and
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(d)
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that there are no claims, actions, suits, audits,
proceedings, investigations or other actions pending against, or, to the
knowledge of Aurora, threated against or affecting Aurora or any of its
respective properties that, individually or in the aggregate, could
reasonably be expected to have a material and adverse effect on Aurora’s
ability to execute and deliver this Agreement and to perform its
obligations contemplated by this Agreement or the Arrangement
Agreement.
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9.
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TERMINATION
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9.1
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This Agreement may be terminated by Aurora by notice to
the Securityholder if:
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(a)
|
the Securityholder or any other person who is a party to
a support agreement with Aurora in respect of the Arrangement has not
complied in all material respects with its covenants to Aurora contained
herein or therein;
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(b)
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ICC has not complied in all material respects with its
covenants to Aurora under the Arrangement Agreement;
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(c)
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any representation or warranty of any of the
Securityholders contained herein or in another support agreement is at the
date hereof or becomes at any time prior to the Effective Time untrue or
inaccurate in any material respect; or
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(d)
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the Arrangement Agreement is terminated in accordance
with its terms.
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9.2
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This Agreement may be terminated by the Securityholder by
notice to Aurora if the Arrangement Agreement is terminated in accordance
with its terms
.
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9.3
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This Agreement may be terminated at any time prior to the
Effective Time by the mutual agreement of Aurora and the
Securityholder.
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9.4
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If this Agreement is terminated as provided in Section 9,
this Agreement shall forthwith become void and of no further force or
effect and there shall be no liability on the part of any Party except
that the provisions of Section 12, 17, 19, and 20 will survive any
termination hereof pursuant to Section 9, provided that the foregoing
shall not relieve any Party from any liability for any breach of this
Agreement arising prior to such termination.
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Notwithstanding anything to the
contrary herein, nothing herein shall restrict or limit any director or officer
of ICC from taking any action required to be taken in the discharge of his or
her fiduciary duty as a director or officer of ICC that is otherwise permitted
by, and done in compliance with, the terms of the Arrangement Agreement. Aurora
further hereby agrees that the Securityholder is not making any agreement or
understanding herein in any capacity other than in the capacity as beneficial
owner of the Subject Securities.
Except as expressly set forth herein,
this Agreement shall not be modified, amended, altered or supplemented except
upon the execution and delivery of a written agreement executed by each of the
Parties.
This Agreement constitutes the entire
agreement between the Parties pertaining to the subject matter of this
Agreement.
No Party may assign any of its rights
or obligations under this Agreement without the prior written consent of the
other Party.
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14.
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SUCCESSORS; NO THIRD PARTY
BENEFICIARIES
|
This Agreement shall be binding upon,
enure to the benefit of and be enforceable by, the Parties and their respective
executors, administrators, successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer on any person other than
the Parties or the Parties’ respective successors or permits assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
Time is of the essence of this
Agreement.
If any provision of this Agreement or
the application thereof to any Party or circumstance is invalid or unenforceable
to any extent then the remainder of this Agreement or application of such
provision to a Party or circumstance (other than those to which it is held
invalid or unenforceable) is not affected thereby and each remaining provision
of this Agreement is valid and is enforceable to the fullest extent permitted by
Law.
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(a)
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This Agreement is to be governed by and construed in
accordance with the laws of the Province of British Columbia and the
federal laws of Canada applicable therein without regard to any conflicts
of law provisions, and each of the Parties irrevocably attorns to the
jurisdiction of the courts of the Province of British Columbia.
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(b)
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The Parties waive the application of any rule of Law
which otherwise would be applicable in connection with the construction of
this Agreement that ambiguous or conflicting terms or provisions should be
construed against the Party that (or counsel of which) prepared the
executed agreement or any earlier draft of the
same.
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Any notice or other communication
required or permitted to be given hereunder shall be sufficiently given if
delivered:
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(a)
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in the case of the Securityholder, to the address
appearing on the Acceptance; and
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(b)
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in the case of Aurora:
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Aurora Cannabis Inc.
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1500 - 1199 West Hastings Street
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Vancouver, British Columbia
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V6E 3T5
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Attention
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[REDACTED]
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Email:
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[REDACTED]
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with a copy (which shall not constitute notice)
to:
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Attention:
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[REDACTED]
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Email:
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[REDACTED]
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or to such other address as the Party
to which such notice or other communication is to be given has last notified the
Party giving the same in the manner provided in this Section 18. Any notice or
other communication given or made is deemed to have been duly given or made as
at the date delivered or sent if delivered personally or sent by fax or email
transmission at the address for service provided herein during normal business
hours on a business day, or otherwise on the next business day.
The Parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the Parties are entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof, on a non-exclusive basis, in any
court of the Province of British Columbia having jurisdiction, this being in
addition to any other remedy to which such Party is entitled at law or in
equity.
The Parties agree to pay their own
respective expenses incurred in connection with this Agreement.
Each of the Securityholder and Aurora
will, from time to time, execute and deliver all such further documents and
instruments and do all such acts and things as the other party may reasonably
require (at the requesting Party’s cost) to effectively carry out or better
evidence or perfect the full intent and meaning of this Agreement.
The Parties consent to the disclosure
of the substance of this Agreement in any press release required by applicable
Laws or any circular relating to the ICC Arrangement Meeting and to the filing
of this Agreement as may be required pursuant to applicable Laws. A copy of this
Agreement may be provided to the directors of ICC.
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23.
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COUNTERPART EXECUTION
|
This letter may be signed by fax or
other electronic means and in counterparts, which, together, are deemed to
constitute one valid and binding agreement and delivery of such counterparts may
be effected by means of fax or other electronic means.
[
Remainder of page intentionally left blank; signature page
follows.
]
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AURORA CANNABIS INC.
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By:
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(signed “Terry Booth”)
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Name: Terry Booth
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Title: Chief Executive Officer
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Acceptance by Securityholder
The foregoing is hereby accepted as of and with effect from the
8
th
day of September, 2018 and the undersigned hereby confirms that
the undersigned beneficially owns, directly or indirectly, or has control or
direction over the Shares indicated below:
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Securities of ICC
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Number of Securities
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[REDACTED]
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[REDACTED]
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[REDACTED]
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[REDACTED]
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Signature of Witness
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Signature of Securityholder or, if a
corporation, authorized signing officer of the Securityholder
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[REDACTED]
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Alejandro Antalich
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Name of Witness (Please print)
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Name of Securityholder (Please print)
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Address:
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[REDACTED]
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[REDACTED]
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Facsimile: [REDACTED]
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Email:
[REDACTED]
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SEDAR Filing Version
AURORA CANNABIS INC.
and
ICC LABS INC.
Dated as of September 8, 2018
TABLE OF CONTENTS
1
2
3
ARRANGEMENT AGREEMENT
THIS ARRANGEMENT AGREEMENT
(this “
Agreement
”)
made as of the 8th day of September, 2018.
BETWEEN:
AURORA CANNABIS INC.
, a company
incorporated under the laws of British Columbia,
(hereinafter referred to as
“
Aurora
”)
AND:
ICC LABS INC.
, a company
incorporated under the laws of British Columbia,
(hereinafter referred to as
“
ICC
” and together with Aurora, the “
Parties
” and each, a
“
Party
”)
WHEREAS:
(A) Aurora and ICC wish to enter into a
business combination transaction providing for, among other things, the
acquisition of all of the common shares of ICC by Aurora;
(B) Aurora and ICC propose to effect
the transaction by way of a plan of arrangement of ICC under the arrangement
provisions of Part 9, Division 5 of the
Business Corporations Act
(British Columbia);
(C) Aurora and ICC negotiated in good
faith the terms of a definitive arrangement agreement and elements of a plan of
arrangement which terms and elements are set forth in this Agreement and the
Plan of Arrangement;
(D) The board of directors of each of
Aurora and ICC have unanimously determined that it would be in the best interest
of each corporation to enter into this Agreement and complete the transactions
contemplated by this Agreement;
(E) Aurora has entered into voting and
support agreements dated the date hereof (collectively, the “
ICC Lock-Up
Agreements
”) with the ICC Locked-Up Shareholders (as defined herein)
pursuant to which, among other things, each such ICC Locked-Up Shareholders has
agreed to vote in favour of the Arrangement Resolution (as defined herein), all
securities of ICC now held or hereafter acquired by them that are entitled to
vote on the matter, on the terms and subject to the conditions set forth in such
ICC Lock-Up Agreements; and
(F) The Parties intend that the
issuance of the Consideration Shares (as defined herein) shall be exempt from
the registration requirements of the 1933 Act (as defined herein) pursuant to
Section 3(a)(10) thereof and applicable U.S. state securities laws in reliance
upon such exemptions as may be available therefrom;
1
NOW THEREFORE
in consideration of the mutual covenants
and agreements herein contained and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by each of the
Parties, the Parties hereto hereby covenant and agree as follows:
ARTICLE 1
DEFINITIONS, INTERPRETATION AND
SCHEDULES
In this
Agreement, unless the context otherwise requires, the following words and terms
shall have the meanings ascribed to them below:
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(a)
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“
1933 Act
” means the United States
Securities
Act of 1933
, as amended, and the rules and regulations promulgated
from time to time thereunder;
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(b)
|
“
1934 Act
” means
the
United States
Securities Exchange Act of 1934
, as amended, and the rules and
regulations promulgated from time to time thereunder;
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(c)
|
“
ACMPR
” means the
Access to Cannabis for
Medical Purposes Regulations
(Canada) issued pursuant to the
Controlled Drugs and Substances Act
(Canada);
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(d)
|
“
Action
” means, with respect to any Person, any
litigation, legal action, lawsuit, claim, audit, arbitration or other
proceeding (whether civil, administrative, quasi- criminal or criminal)
before any Governmental Entity against such Person or its business or
affecting any of its assets;
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(e)
|
“
affiliate
” has the meaning ascribed thereto in
the Canadian Securities Administrators’ National Instrument 45-106 –
Prospectus Exemptions
, unless stated otherwise;
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(f)
|
“
Agreement
” means this arrangement agreement,
together with the schedules attached hereto, as amended, amended and
restated or supplemented from time to time in accordance with the terms
hereof;
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(g)
|
“
Arrangement
” means an arrangement pursuant to
provisions of Division 5 of Part 9 of the BCBCA on the terms and
conditions set forth in the Plan of Arrangement, subject to any amendment
or supplement thereto made in accordance therewith, herewith or made at
the direction of the Court either in the Interim Order or the Final Order
with the consent of Aurora and ICC, each acting reasonably;
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(h)
|
“
Authorization
” means, with respect to any Person,
any authorization, order, permit, approval, grant, licence, registration,
consent, right, notification, condition, franchise, privilege,
certificate, judgment, writ, injunction, award, determination, direction,
decision, decree, by-law, rule or regulation, that is binding upon or
applicable to such Person or its business, assets or securities, and
includes any Environmental Approval;
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(i)
|
“
Aurora
” means Aurora Cannabis Inc., a company
existing under the BCBCA;
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2
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(j)
|
“
Aurora Board
” means the board of directors of
Aurora;
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(k)
|
“
Aurora Credit Agreement
” means the credit
agreement dated August 29, 2018 among Aurora, as borrower, the Bank of
Montreal, as administrative agent, lead arranger and sole bookrunner, and
the certain lenders party thereto;
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(l)
|
“
Aurora Filings
” has the meaning ascribed thereto
in Section (i) of Schedule D;
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(m)
|
“
Aurora Financial Statements
” has the meaning
ascribed thereto in Section (j) of Schedule D;
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(n)
|
“
Aurora Group
” means Aurora and the Aurora
Subsidiaries or any combination of such Persons;
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(o)
|
“
Aurora Shares
” means the common shares in the
capital of Aurora;
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(p)
|
“
Aurora Subsidiaries
” means, collectively, the
Subsidiaries of Aurora;
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(q)
|
“
Aurora Termination Payment Event
” has the meaning
ascribed thereto in Section 6.5;
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(r)
|
“
BCBCA
” means the
Business Corporations Act
(British Columbia);
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(s)
|
“
Books and Records
” of a Party, means books and
records of the Party and its Subsidiaries, including books of account, tax
records, sales and purchase records, customer and supplier lists,
technical documents including specifications, bills of materials and
engineering notebooks and business reports, whether in written or
electronic form;
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(t)
|
“
Business Day
” means any day, other than a
Saturday, a Sunday or a statutory holiday in Toronto, Ontario; Edmonton,
Alberta; Vancouver, British Columbia; or Montevideo, Uruguay;
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(u)
|
“
Claims
” means any and all debts, costs, expenses,
liabilities, obligations, losses and damages, penalties, proceedings,
actions, suits, assessments, reassessments or claims of whatsoever nature
or kind including regulatory or administrative (whether or not under
common law, on the basis of contract, negligence, strict or absolute
liability or liability in tort, or arising out of requirements of
applicable Laws), imposed on, incurred by, suffered by, or asserted
against any Person or any property, absolute or contingent, and, except as
otherwise expressly provided herein, includes all reasonable out-of-pocket
costs, disbursements and expenses paid or incurred by such Person in
defending any action;
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(v)
|
“
Closing
” means the completion of the transactions
contemplated by the Arrangement;
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(w)
|
“
Code
” means the United States Internal Revenue
Code of 1986, as amended;
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(x)
|
“
Competition Act
” means the
Competition Act
(Canada);
|
3
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(y)
|
“
Completion Deadline
” means December 31, 2018, or
such later date as may be agreed to in writing by the Parties;
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(z)
|
“
Confidentiality Agreement
” means the
confidentiality agreement dated June 12, 2018 entered into between ICC and
Aurora;
|
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(aa)
|
“
Consideration Shares
” means the Aurora Shares to
be issued to the ICC Shareholders in exchange for their ICC Shares
pursuant to the Plan of Arrangement, consisting of, for each one (1) ICC
Share, such number of Aurora Shares as is equal to the quotient of $1.95
divided by the volume-weighted average trading price of the Aurora Shares
on the TSX in the twenty (20) trading days preceding the Effective Date
(the last day of such period being the second to last trading day on the
TSX immediately prior to the Effective Date) (such exchange ratio being,
the “
Exchange Ratio
”);
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(bb)
|
“
Contract
” means, with respect to any Party, any
legally binding agreement, commitment, engagement, contract, franchise or
undertaking (written or oral): (a) to which such Party or its Subsidiaries
is a party, (b) by which such Party or its Subsidiaries is bound or
affected or to which any of their respective assets is subject, or (c)
under which such Party or its Subsidiaries has or may acquire any right or
interest.
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(cc)
|
“
Court
” means the Supreme Court of British
Columbia;
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(dd)
|
“
Depositary
” means such Person as ICC may appoint
to act as depositary in relation to the Arrangement, with the approval of
Aurora, acting reasonably;
|
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(ee)
|
“
DGI
” means Dirección General Impositiva, the
General Taxation Directorate of Uruguay;
|
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(ff)
|
“
Dissent Rights
” means the rights of dissent in
respect of the Arrangement granted pursuant to the Interim
Order;
|
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(gg)
|
“
Effective Date
” means the date upon which the
Arrangement becomes effective pursuant to the Plan of
Arrangement;
|
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(hh)
|
“
Effective Time
” means 12:01 a.m. (Vancouver time)
on the Effective Date;
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(ii)
|
“
Employees
” has the meaning set out in Section
(gg)(i) of Schedule C;
|
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(jj)
|
“
Encumbrance
” means any mortgage, pledge,
assignment, charge, lien, claim, security interest, adverse interest,
other third Person interest or encumbrance of any kind, whether contingent
or absolute, and any agreement, option, right or privilege (whether by
law, contract or otherwise) capable of becoming any of the
foregoing;
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(kk)
|
“
Environmental Approvals
” means , with respect to
any Person, all permits, certificates, licences, authorizations, consents,
instructions, registrations, directions, approvals, decisions, decrees,
conditions, notifications, orders, demands or Claims issued or required by
any Governmental Entity pursuant to any Environmental Laws, which are binding upon or applicable to
such Person or its business, assets or securities;
|
4
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|
(ll)
|
“
Environmental Laws
” means all applicable Laws
whether foreign or domestic, including applicable common law and civil
law, for the protection of the natural environment and human health and
safety and for the regulation of contaminants, pollutants, waste, toxic
and hazardous substances, and includes Environmental Approvals;
|
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(mm)
|
“
Exchange Ratio
” has the meaning ascribed thereto
in the definition of “Consideration Shares” in Section 1.1(aa);
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(nn)
|
“
Final Order
” means the order made after
application to the Court approving the Arrangement, as such order may be
amended by the Court (with the consent of the Parties, each acting
reasonably) at any time prior to the Effective Date or, if appealed, then
unless such appeal is withdrawn or denied, as affirmed or as amended on
appeal;
|
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(oo)
|
“
Governmental Entity
” means any: (i)
supranational, international, multinational, national, federal,
provincial, territorial, state, regional, municipal, local or other
government, governmental or public department, central bank, court,
tribunal, arbitral body, commission, board, bureau, stock exchange or
agency, whether domestic or foreign; (ii) any subdivision, agency,
commission, board or authority of any of the foregoing; or (iii) any
quasi-governmental or private body exercising any regulatory,
expropriation, land use or occupation, or taxing authority under or for
the account of any of the foregoing;
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(pp)
|
“
ICC
” means ICC Labs Inc., a company existing
under the BCBCA;
|
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(qq)
|
“
ICC Acquisition Proposal
” means, other than the
Transaction and other than any transaction involving only ICC and/or one
or more of the wholly-owned ICC Subsidiaries, any offer, proposal,
expression of interest, or inquiry (written or oral) from any Person or
group of Persons acting “jointly or in concert” other than Aurora (or any
of its affiliates or joint actors) after the date of this Agreement
relating to:
|
|
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(i)
|
any sale (or any lease, long-term supply agreement or
other arrangement having the same economic effect as a sale) or other
disposition (including any assignment, option, joint venture, or earn in,
royalty interest, streaming arrangement or similar transaction), direct or
indirect, in a single transaction or a series of related transactions, of
assets representing 20% or more of the consolidated assets, or
contributing 20% or more of the consolidated revenue of ICC and the ICC
Subsidiaries, in each case taken as a whole, or of 20% or more of any
class of voting, equity or other securities or any securities exchangeable
for or convertible into voting, equity or other securities of ICC and the
ICC Subsidiaries (or rights or interests therein or thereto);
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(ii)
|
any direct or indirect take-over bid, tender offer,
exchange offer, treasury issuance or other transaction that, if
consummated, would result in a Person or group of Persons beneficially
owning 20% or more of any class of voting, equity or other securities (including
securities convertible into or exercisable or exchangeable for voting, equity or
other securities) of ICC or the ICC Subsidiaries;
|
5
|
|
(iii)
|
any plan of arrangement, merger, amalgamation,
consolidation, share exchange, business combination, reorganization,
recapitalization, liquidation, dissolution, winding up or exclusive
license or other similar transaction involving ICC or the ICC Subsidiaries
pursuant to which any Person or group of Persons would acquire, directly
or indirectly, 20% or more of the voting or equity securities of ICC or
the surviving entity or the resulting direct or indirect parent of ICC or
the surviving entity;
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(iv)
|
any arrangement whereby effective operating control of
ICC is granted to another party; or
|
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(v)
|
any other similar transaction or series of related
transactions involving ICC or the ICC
Subsidiaries;
|
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(rr)
|
“
ICC Arrangement Resolution
” means the special
resolution of the ICC Shareholders approving the Plan of Arrangement
substantially in the form attached as Schedule B;
|
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(ss)
|
“
ICC Benefit Plans
” means all plans with respect
to any ICC or ICC Subsidiary employees or other service providers or
former employees or former service providers to which ICC or any ICC
Subsidiary is a party to or bound by or to which ICC or any ICC Subsidiary
has an obligation to contribute or with respect to which ICC or any ICC
Subsidiary may have any direct or indirect liability relating to
retirement savings, pensions, bonuses, equity awards, profit sharing,
deferred compensation, incentive compensation, life or accident insurance,
hospitalization, health, medical or dental treatment or expenses,
disability, unemployment insurance benefits, employee loans, vacation pay,
severance or termination pay or other benefits, other than those benefits
provided solely under a Statutory Plan;
|
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(tt)
|
“
ICC Board
” means the board of directors of
ICC;
|
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(uu)
|
“
ICC Board Recommendation
” means the unanimous
determination of the ICC Board, after consultation with its legal and
financial advisors, that the Arrangement is in the best interests of ICC
and is fair to ICC Shareholders and the unanimous recommendation of the
ICC Board to ICC Shareholders that they vote in favour of the ICC
Arrangement Resolution;
|
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(vv)
|
“
ICC Change in Recommendation
” means the ICC Board
fails to recommend or withdraws, amends, modifies or qualifies (or
proposes publicly to withdraw, amend, modify or qualify), in a manner
adverse to Aurora, the ICC Board Recommendation, or the ICC Board accepts,
approves, endorses or recommends or publicly proposes to accept, approve,
endorse or recommend an ICC Acquisition Proposal, or takes no position or
remains neutral with respect to, any publicly announced ICC Acquisition
Proposal (it being understood that publicly taking no position or a
neutral position with respect to a publicly announced, or otherwise
publicly disclosed, ICC Acquisition Proposal for a period of no
more than five Business Days following such public announcement or
public disclosure shall not be considered to be an ICC Change in Recommendation
provided the ICC Board has rejected such ICC Acquisition Proposal and affirmed
the ICC Board Recommendation before the end of such five Business Day period (or
in the event that the ICC Meeting is scheduled to occur within such five
Business Day period, no later than the later of one Business Day following the
public announcement or public disclosure of such ICC Acquisition Proposal or the
third Business Day prior to the date of the ICC Meeting));
|
6
|
|
(ww)
|
“
ICC Circular
” means the notice of the ICC Meeting
and the accompanying management information circular, including all
schedules, appendices and exhibits to, and information incorporated by
reference in, such management information circular, to be sent to ICC
Shareholders in connection with the ICC Meeting, as amended, supplemented
or otherwise modified from time to time in accordance with the terms of
this Agreement;
|
|
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(xx)
|
“
ICC Compensation Options
” means the outstanding
compensation warrants to purchase (i) at any time prior to the Relevant
Time, ICC Shares and ICC Warrants, and (ii), subject to and in accordance
with the terms of the certificates evidencing the ICC Compensation Options
and this Agreement, at and at any time following the Relevant Time, Aurora
Shares and warrants to acquire Aurora Shares, issued by ICC in connection
with the Underwriting Agreement dated November 7, 2017 among ICC, GMP
Securities L.P., Haywood Securities Inc. and PI Financial Corp.;
|
|
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(yy)
|
“
ICC Data Room
” means the electronic data room
made accessible by ICC to Aurora in connection with the conduct by Aurora
of its due diligence on ICC, as such electronic data room existed as of
5:00pm (Vancouver time) on September 7, 2018;
|
|
|
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(zz)
|
“
ICC Disclosure Letter
” means the letter dated as
of the date of this Agreement, delivered by ICC to Aurora pursuant to
Section 3.3 with respect to certain matters in this Agreement;
|
|
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|
(aaa)
|
“
ICC Fairness Opinions
” has the meaning ascribed
thereto in Section (c) of Schedule C;
|
|
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(bbb)
|
“
ICC Filings
” means all documents publicly filed
under the profile of ICC on SEDAR since January 1, 2017;
|
|
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(ccc)
|
“
ICC Financial Advisors
” means Canaccord Genuity
Corp. and INFOR Financial Inc., as the financial advisors to the ICC
Board;
|
|
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|
|
|
(ddd)
|
“
ICC Financial Statements
” has the meaning
ascribed thereto in Section (p) of Schedule C;
|
|
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|
(eee)
|
“
ICC Group
” means ICC and the ICC Subsidiaries or
any combination of such Persons;
|
|
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|
|
(fff)
|
“
ICC Licenses
” means the Licenses set forth in
Section 3.3(v)(i) of the ICC Disclosure Letter;
|
7
|
|
(ggg)
|
“
ICC Lock-Up Agreements
” has the meaning ascribed
thereto in the Recitals;
|
|
|
|
|
|
|
(hhh)
|
“
ICC Locked-Up Shareholders
” means the officers,
directors and certain other significant shareholders of ICC that own, or
exercise control or direction over, ICC Shares or securities convertible
into, or exchangeable for, ICC Shares, as set forth in Schedule
E;
|
|
|
|
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|
|
(iii)
|
“
ICC Meeting
” means the special meeting, including
any adjournments or postponements thereof in accordance with the terms of
this Agreement, of the ICC Shareholders to be held to consider, among
other things, and, if deemed advisable, to approve, the ICC Arrangement
Resolution and for any other purpose as may be set out in the ICC Circular
and agreed to in writing by the Parties;
|
|
|
|
|
|
|
(jjj)
|
“
ICC Plan Options
” means outstanding options to
acquire ICC Shares issued by ICC pursuant to or governed by the ICC Stock
Option Plan;
|
|
|
|
|
|
|
(kkk)
|
“
ICC Properties
” has the meaning ascribed thereto
in Schedule C;
|
|
|
|
|
|
|
(lll)
|
“
ICC Securityholders
” means at any time, any
holder of ICC Shares, ICC Plan Options, ICC Compensation Options or ICC
Warrants;
|
|
|
|
|
|
|
(mmm)
|
“
ICC Shareholders
” means, at any time, the holders
of ICC Shares;
|
|
|
|
|
|
|
(nnn)
|
“
ICC Shares
” means the common shares in the
capital of ICC;
|
|
|
|
|
|
|
(ooo)
|
“
ICC Stock Option Plan
” means the incentive stock
option plan of ICC approved by ICC Shareholders on June 5, 2018;
|
|
|
|
|
|
|
(ppp)
|
“
ICC Subsidiaries
” means, collectively, the
Subsidiaries of ICC;
|
|
|
|
|
|
|
(qqq)
|
“
ICC Superior Proposal
” means any
bona fide
unsolicited written ICC Acquisition Proposal that is made after the
date of this Agreement, that relates to the acquisition of all or
substantially all of the assets of ICC (on a consolidated basis) or 100%
of the issued and outstanding ICC Shares not beneficially owned by the
party making such ICC Acquisition Proposal and any joint actor or any of
their respective affiliates, whether by way of a single or multistep
transaction or a series of related transactions,
that:
|
|
|
(i)
|
complies with Securities Laws in all material
respects;
|
|
|
|
|
|
|
(ii)
|
did not result from or involve a breach of Section 6.1 of
this Agreement, the Confidentiality Agreement or any other agreement
between the Person making the ICC Acquisition Proposal and ICC or any of
its Subsidiaries;
|
|
|
|
|
|
|
(iii)
|
is reasonably capable of being completed in accordance
with its terms without undue delay, taking into account all legal,
financial, regulatory and other aspects of such proposal (including,
required shareholder approvals and minimum tender requirements) and the
Person making such proposal;
|
8
|
|
(iv)
|
is not subject to any financing condition or contingency
and in respect of which adequate arrangements have been made and have been
demonstrated to be available to ensure that the required funds or other
consideration shall be available to effect payment in full for all of the
ICC Shares or the assets of ICC to be acquired, as the case may
be;
|
|
|
|
|
|
|
(v)
|
is not subject to a due diligence or access to
information condition;
|
|
|
|
|
|
|
(vi)
|
the ICC Board determines, in its good faith judgment,
after receiving the advice of its outside legal and financial advisors and
after taking into account all the terms and conditions of the ICC
Acquisition Proposal, including all legal, financial, regulatory and other
aspects of such ICC Acquisition Proposal and the Person making such ICC
Acquisition Proposal, that such ICC Acquisition Proposal would, if
consummated in accordance with its terms, but not assuming away any risk
of non- completion, result in a transaction which is more favourable to
ICC Shareholders from a financial point of view than the terms of the
Arrangement (including any amendments to the terms and conditions proposed
by Aurora as contemplated by Section 6.2(b)); and
|
|
|
|
|
|
|
(vii)
|
in the event that ICC does not have the financial
resources to pay the ICC Termination Payment, the terms of such ICC
Acquisition Proposal provide that the Person making such ICC Acquisition
Proposal shall advance or otherwise provide ICC with the cash for ICC to
make the ICC Termination Payment, and such amount shall be advanced or
provided on or before the date such ICC Termination Payment becomes
payable;
|
|
|
(rrr)
|
“
ICC Superior Proposal Notice
” has the meaning
ascribed thereto in Section 6.2(a)(iii);
|
|
|
|
|
|
|
(sss)
|
“
ICC Termination Payment
” has the meaning ascribed
thereto in Section 6.3;
|
|
|
|
|
|
|
(ttt)
|
“
ICC Termination Payment Event
” has the meaning
ascribed thereto in Section 6.3;
|
|
|
|
|
|
|
(uuu)
|
“
ICC Warrants
” means the outstanding warrants to
purchase: (i) at any time prior to the Relevant Time, ICC Shares, and
(ii), subject to and in accordance with the terms of the ICC Warrant
Indenture and this Agreement, at and at any time following the Relevant
Time, Aurora Shares;
|
|
|
|
|
|
|
(vvv)
|
“
ICC Warrant Indenture
” means the common share
purchase warrant indenture dated November 22, 2017 between ICC and TSX
Trust Company;
|
|
|
|
|
|
|
(www)
|
“
IFRS
” means International Financial Reporting
Standards as issued by the International Accounting Standards Board that
are applicable to public issuers in Canada;
|
|
|
|
|
|
|
(xxx)
|
“
including
” means including, without
limitation;
|
|
|
|
|
|
|
(yyy)
|
“
Indemnified Persons
” has the meaning ascribed
thereto in Section 8.10(a);
|
9
|
|
(zzz)
|
“
Intellectual Property
” means domestic and
foreign: (i) patents, applications for patents and reissues, divisions,
continuations, renewals, extensions and continuations-in-part of patents
or patent applications; (ii) proprietary and nonpublic business
information, including inventions (whether patentable or not), invention
disclosures, improvements, discoveries, trade secrets, confidential
information, know-how, methods, processes, designs, technology, technical
data, schematics, formulae and customer lists, and documentation relating
to any of the foregoing; (iii) copyrights, copyright registrations and
applications for copyright registration; (iv) mask works, mask work
registrations and applications for mask work registrations; (v) designs,
design registrations, design registration applications and integrated
circuit topographies; (vi) trade names, business names, corporate names,
domain names, website names and world wide web addresses, common law
trade-marks, trade-mark registrations, trade mark applications, trade
dress and logos, and the goodwill associated with any of the foregoing;
(vii) software; and (viii) any other intellectual property and industrial
property;
|
|
|
|
|
|
|
(aaaa)
|
“
Interim Order
” means the order made after
application to the Court, containing declarations and directions in
respect of the notice to be given and the conduct of the ICC Meeting and
the Arrangement, as such order may be amended, supplemented or varied by
the Court (with the consent of the Parties, each acting
reasonably);
|
|
|
|
|
|
|
(bbbb)
|
“
In-the-Money Amount
” means, in respect of ICC
Plan Options, the positive amount, if any, by which (i) the product
obtained by multiplying (A) the number of ICC Shares underlying such ICC
Plan Options, by (B) $1.95, exceeds (ii) the aggregate exercise price
payable under such ICC Plan Options to acquire the ICC Shares underlying
such ICC Plan Options;
|
|
|
|
|
|
|
(cccc)
|
“
In-the-Money Option
” means a ICC Plan Option in
respect of which the In- the-Money Amount is a positive amount;
|
|
|
|
|
|
|
(dddd)
|
“
Investment Canada Act
” means the
Investment
Canada Act
(Canada);
|
|
|
|
|
|
|
(eeee)
|
“
IRCCA
” means
Instituto de Regulacion y Control
del Cannabis
, the Institute for the Regulation and Control of
Cannabis of the Republic of Uruguay;
|
|
|
|
|
|
|
(ffff)
|
“
Key Employee
” means any of [REDACTED] and “
Key
Employees
” means all of them;
|
|
|
|
|
|
|
(gggg)
|
“
Laws
” means all laws, by-laws, statutes, rules,
regulations, orders, ordinances, protocols, codes, guidelines,
instruments, policies, notices, directions and judgments or other
requirements of any Governmental Entity, including Securities Laws and
U.S. Securities Laws, and the term “
applicable
” with respect to
such Laws and in a context that refers to one or more Persons, means such
Laws as are applicable to such Person or its business, undertaking,
assets, property or securities and emanate from a Person having
jurisdiction over the Person or Persons or its or their business,
undertaking, assets, property or securities;
|
10
|
|
(hhhh)
|
“
License
” means any license, permit, approval,
certificate or consent issued by Health Canada or any other Governmental
Entity related to the production, sale or provision, possession, shipment,
transportation, delivery, destruction or storage of marijuana or marijuana
products;
|
|
|
|
|
|
|
(iiii)
|
“
Lease
” as it relates to a Party, means any
Contract pursuant to which that Party or any of its Subsidiaries is a
tenant, licensee or a sub-tenant of any leasehold or sub-leasehold estate
and other right to use or occupy any land, buildings, structures,
improvements, fixtures or other interest in real property and includes
right of use or occupancy under a bailment arrangement;
|
|
|
|
|
|
|
(jjjj)
|
“
marijuana
” has the meaning given to the term
“marihuana” in the ACMPR;
|
|
|
|
|
|
|
(kkkk)
|
“
Material Adverse Effect
” means, in respect of any
Party, as applicable, any one or more changes, events, occurrences or
states of fact, which, either individually or in the aggregate, are, or
would reasonably be expected to be, material and adverse to the business,
operations, results of operations, properties, assets, liabilities, or
condition (financial or otherwise) of that Party and its Subsidiaries, on
a consolidated basis, other than any change, effect, event, occurrence or
state of facts:
|
|
|
(i)
|
relating to any change in global, national or regional
political conditions (including the outbreak or escalation of war, acts of
terrorism, strikes, lockouts, riots or outbreaks of illness) or the global
economy or securities markets in general;
|
|
|
|
|
|
|
(ii)
|
affecting the cannabis industry or the price of cannabis
in general;
|
|
|
|
|
|
|
(iii)
|
relating to any natural disaster;
|
|
|
|
|
|
|
(iv)
|
relating to any adoption, proposal, implementation or
change in Law or any interpretation of Law by any Governmental
Entity;
|
|
|
|
|
|
|
(v)
|
relating to any generally applicable change in applicable
accounting principles, including IFRS;
|
|
|
|
|
|
|
(vi)
|
relating to a change in the market trading price of
publicly traded securities of that Party, it being understood that the
causes underlying such change may be taken into account in determining
whether a Material Adverse Effect has occurred;
|
|
|
|
|
|
|
(vii)
|
relating to the failure in and of itself to meet any
internal, third party or public projections, forecasts or guidance or
estimates of revenues, earnings or cash flows, it being understood that
the causes underlying such failure may be taken into account in
determining whether a Material Adverse Effect has occurred;
|
|
|
|
|
|
|
(viii)
|
relating to any action taken (or omitted to be taken) by
ICC that is consented to, or requested, in writing by
Aurora;
|
11
|
|
(ix)
|
relating to any matter which has been disclosed by ICC in
the ICC Disclosure Letter; or
|
|
|
|
|
|
|
(x)
|
resulting from the announcement of this Agreement, the
pendency of the transactions contemplated herein or compliance with the
covenants herein or the satisfaction of the conditions
herein;
|
provided, however, that if a change,
effect, event, occurrence or state of facts referred to in clauses (i) through
to and including (v) has a materially disproportionate effect on that Party and
its Subsidiaries, on a consolidated basis, relative to other comparable
companies and entities operating in the Canadian cannabis industry, such effect
may be taken into account in determining whether a Material Adverse Effect has
occurred; and provided that references in this Agreement to dollar amounts are
not intended to be, and shall not be deemed to be, interpretive of the amount
used for the purpose of determining whether a Material Adverse Effect has
occurred or whether a state of facts exists that has or could have a Material
Adverse Effect;
|
|
(llll)
|
“
Material Contract
” means, in respect of a Party,
any Contract to which such Party or any of its Subsidiaries is a party or
its or their respective assets are bound
which:
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(i)
|
if terminated, breached or not renewed would or would
reasonably be expected to have a Material Adverse Effect with respect to
such Party;
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(ii)
|
relates to the purchase of materials, supplies, equipment
or services involving payments, individually or in the aggregate, in
excess of $250,000 over the life of such Contract;
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(iii)
|
relates directly or indirectly (including any guarantees
or similar obligations) to indebtedness (currently outstanding or which
may become outstanding) for borrowed money in excess of $250,000 in the
aggregate;
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(iv)
|
under which such Party or any of its Subsidiaries is
obligated to make or expects to receive payments on an annual basis in
excess of $250,000 or in excess of $250,000 over the remaining
term;
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(v)
|
limits or restricts in any material respect (A) the
ability of such Party or any of its Subsidiaries to engage in any line of
business or carry on business in any geographic area, (B) the ability of
such Party or any of its Subsidiaries to solicit or hire any Person, or
(C) the scope of Persons to whom such Party or any of its Subsidiaries may
sell products or deliver services;
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(vi)
|
contemplates an exclusive business relationship between a
Party and any other Person;
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(vii)
|
gives another Person the right to purchase or license an
unlimited quantity or volume of, or enterprise-wide scope of use of, that
Party’s products or services (or licenses to that Party’s products or
services) for a fixed aggregate price at no additional charge, or under
which that Party grants most-favored customer pricing, rights of first refusal
or similar rights or terms to any Person;
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12
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(viii)
|
relates to any joint venture, strategic alliance,
partnership or sharing of profits, revenue or proprietary information or
similar arrangement that is material to such Party and its Subsidiaries,
on a consolidated basis; or
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(ix)
|
remains in full force and effect and has been filed with
the Securities Authorities as a Material Contract in accordance with
applicable Securities Laws;
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(mmmm)
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“
Misrepresentation
” means an untrue statement of a
material fact or an omission to state a material fact that is required to
be stated or that is necessary to make the statements contained therein
not misleading in light of the circumstances in which they are
made;
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(nnnn)
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“
MI 61-101
” means Multilateral Instrument 61-101 –
Protection of Minority Security Holders in Special
Transactions
;
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(oooo)
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“
Non-Arm’s Length Agreement
” means any Contract
between a Party or any of its Subsidiaries and any Person with whom such
Party or any of its Subsidiaries is not dealing, at the applicable time,
at arm’s length (within the meaning of the Tax Act), excluding, for
greater certainty, any employment or similar service agreements entered
into in the ordinary course;
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(pppp)
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“
Parties
” has the meaning ascribed thereto on the
first page of this Agreement;
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(qqqq)
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“
Pending ICC Acquisition Proposal
” has the meaning
ascribed thereto in Section 6.3(d)(i);
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(rrrr)
|
“
Person
” means an individual, partnership,
association, body corporate, a partnership or limited partnership, a
trust, a trustee, executor, administrator or other legal personal
representative, a syndicate, a joint venture, government (including any
Governmental Entity) or any other entity, whether or not having legal
status;
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(ssss)
|
“
Plan of Arrangement
” means the plan of
arrangement of ICC under the BCBCA substantially in the form and content
of Schedule A attached hereto and any amendment or variation thereto made
in accordance with Section 6.1 of the Plan of Arrangement or Section 7.1
hereof or made at the direction of the Court in the Final Order with the
prior written consent of the Parties, each acting reasonably;
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(tttt)
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“
Relevant Time
” has the meaning ascribed thereto
in the Plan of Arrangement;
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(uuuu)
|
“
Representatives
” has the meaning ascribed thereto
in Sections 6.1;
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(vvvv)
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“
Section 3(a)(10) Exemption
” has the meaning
ascribed thereto in Section 2.7;
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13
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(wwww)
|
“
Securities Authorities
” means collectively, the
British Columbia Securities Commission and the other applicable securities
regulatory authorities in the provinces and territories of
Canada;
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(xxxx)
|
“
Securities Laws
” means the
Securities Act
(British Columbia) and any other applicable securities Laws of a
province or territory of Canada;
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(yyyy)
|
“
Statutory Plan
” means a statutory benefit plan
which Aurora, Aurora Subsidiaries, ICC or ICC Subsidiaries are required to
participate in or comply with, including the Canada Pension Plan and
Quebec Pension Plan and plans administered pursuant to applicable health
tax, workplace safety insurance and employment insurance
legislation;
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(zzzz)
|
“
Subsidiary
” means, with respect to a Person, any
entity, whether incorporated or unincorporated: (i) of which such Person
or any other subsidiary of such Person is a general partner; or (ii) at
least a majority of the securities or other interests of which having by
their terms ordinary voting power to elect a majority of the board of
directors or other Persons performing similar functions with respect to
such corporation or other organization is directly or indirectly owned or
controlled by such Person and/or by any one or more of its subsidiaries;
and shall include any body corporate, partnership, joint venture or other
entity over which it exercises direction or control. For purposes of this
definition, “control” when used with respect to any Person means the power
to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by
contract or otherwise;
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(aaaaa)
|
“
Tax
” and “
Taxes
” means all taxes,
assessments, charges, dues, duties, rates, fees, imposts, levies and
similar charges of any kind lawfully levied, assessed or imposed by any
Governmental Entity, including all income taxes (including any tax on or
based upon net income, gross income, income as specially defined,
earnings, profits or selected items of income, earnings or profits) and
all capital taxes, gross receipts taxes, environmental taxes, sales taxes,
use taxes, ad valorem taxes, value added taxes, transfer taxes (including,
without limitation, taxes relating to the transfer of interests in real
property or entities holding interests therein), franchise taxes, licence
taxes, withholding taxes, payroll taxes, employment taxes, Canada Pension
Plan or Quebec Pension Plan premiums, excise, severance, social security,
workers’ compensation, employment insurance or compensation taxes or
premiums, stamp taxes, occupation taxes, premium taxes, property taxes,
windfall profits taxes, alternative or add-on minimum taxes, goods and
services tax, harmonized sales tax, customs duties or other taxes, fees,
imports, assessments or charges of any kind whatsoever, together with any
interest, fines, penalties or additional amounts imposed with respect
thereto, or in respect of any failure to comply with any requirement
regarding any Tax Returns, by any Governmental Entity, and any interest,
penalties, additional taxes and additions to tax imposed with respect to
the foregoing;
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(bbbbb)
|
“
Tax Act
” means the
Income Tax Act
(Canada), as amended;
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(ccccc)
|
“
Tax Returns
” means all returns, schedules,
elections, declarations, reports, information returns, notices, forms,
statements and other documents made,prepared or filed with any Governmental Entity or required to
be made, prepared or filed with any Governmental Entity relating to Taxes;
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14
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|
(ddddd)
|
“
Transaction
” means the transaction resulting from
the completion of the Arrangement, including the acquisition of all of the
ICC Shares by Aurora and the completion of the other transactions
contemplated by the Plan of Arrangement;
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(eeeee)
|
“
TSX
” means the Toronto Stock Exchange;
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(fffff)
|
“
TSXV
” means the TSX Venture Exchange;
|
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(ggggg)
|
“
Uruguayan Regulatory Approval
” means the issuance
of an authorization by IRCCA to Aurora to consummate the transactions
contemplated hereby; and
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(hhhhh)
|
“
U.S. Securities Laws
” means the 1933 Act, the
1934 Act and any applicable U.S. state securities
Laws.
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Section 1.2
|
Interpretation Not Affected by Headings
|
The
division of this Agreement into articles, sections, subsections, paragraphs and
subparagraphs and the insertion of headings herein are for convenience of
reference only and shall not affect in any way the meaning or interpretation of
this Agreement. The terms “this Agreement”, “hereof”, “herein”, “hereto”,
“hereunder” and similar expressions refer to this Agreement and the schedules
attached hereto and not to any particular article, section or other portion
hereof and include any agreement, schedule or instrument supplementary or
ancillary hereto or thereto.
|
Section 1.3
|
Number and Gender
|
In this
Agreement, unless the context otherwise requires, words importing the singular
only shall include the plural and vice versa, words importing the use of either
gender shall include both genders and neuter.
|
Section 1.4
|
Date for Any Action
|
If the
date on which any action is required to be taken hereunder by any party hereto
is not a Business Day, such action shall be required to be taken on the next
succeeding day that is a Business Day.
|
Section 1.5
|
Statutory References
|
Any
reference in this Agreement to a statute includes all regulations and rules made
thereunder, all amendments to such statute or regulation in force from time to
time and any statute or regulation that supplements or supersedes such statute
or regulation.
Unless
otherwise stated, all references in this Agreement to amounts of money are
expressed in lawful money of Canada.
15
|
Section 1.7
|
Invalidity of Provisions
|
Each of
the provisions contained in this Agreement is distinct and severable and a
declaration of invalidity or unenforceability of any such provision or part
thereof by a court of competent jurisdiction shall not affect the validity or
enforceability of any other provision hereof. To the extent permitted by
applicable Laws, the Parties hereto waive any provision of Law that renders any
provision of this Agreement or any part thereof invalid or unenforceable in any
respect. The Parties hereto shall engage in good faith negotiations to replace
any provision hereof or any part thereof that is declared invalid or
unenforceable with a valid and enforceable provision or part thereof, the
economic effect of which approximates as much as possible the invalid or
unenforceable provision or part thereof that it replaces.
|
Section 1.8
|
Certain References and Phrases
|
References to any contract, license, lease, agreement, indenture, arrangement or
commitment shall be a reference to such contract, license, lease, agreement,
indenture, arrangement or commitment, as amended, modified or supplemented from
time to time in accordance with the terms thereof. The words “the aggregate of”,
“the total of”, “the sum of”, or a phrase of similar meaning means “the
aggregate (or total or sum), without duplication, of.” The term “made available”
means (i) copies of the subject materials were included in the ICC Data Room,
(ii) copies of the subject materials were provided to ICC or Aurora, as
applicable, or (iii) the subject material was listed in the ICC Disclosure
Letter or referred to in the ICC Data Room and copies were provided to Aurora.
|
Section 1.9
|
Accounting Matters
|
Unless
otherwise stated, all accounting terms used in this Agreement shall have the
meanings attributable thereto under IFRS and all determinations of an accounting
nature required to be made hereunder shall be made in a manner consistent with
IFRS.
Where
the phrases “to the knowledge of Aurora” or “to Aurora’s knowledge” or “to the
knowledge of ICC” or “to ICC’s knowledge” are used in respect of Aurora, the
Aurora Subsidiaries, ICC or the ICC Subsidiaries, as applicable, such phrase
shall mean, in respect of each representation and warranty or other statement
which is qualified by such phrase, that such representation and warranty or
other statement is being made based upon: (a) in the case of Aurora and the
Aurora Subsidiaries, the actual collective knowledge, after reasonable inquiry,
of Terry Booth, Neil Belot and Igor Gimelshtein; and (b) in the case of ICC and
the ICC Subsidiaries, the actual collective knowledge, after reasonable inquiry,
of the officers and directors of ICC and the ICC Subsidiaries.
|
Section 1.11
|
Meaning of Certain Phrase
|
In this
Agreement the phrase “in the ordinary course of business” or “ordinary course”
and similar expressions shall, as applicable, mean and refer to the ordinary
course of business conduct of a Party (or its Subsidiaries) in a commercially
reasonable and business-like manner consistent with the past practices of such
Party.
|
Section 1.12
|
Subsidiaries
|
To the
extent any covenants or agreements contained herein relate, directly or
indirectly, to a Subsidiary of Aurora or ICC, each such provision shall be
construed as a covenant by Aurora or ICC, respectively, to cause (to the fullest extent to which it is
legally capable) such Subsidiary to perform the required action.
16
The
following schedules are attached to, and are deemed to be incorporated into and
form part of, this Agreement:
|
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Schedule
|
Matter
|
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Schedule A
|
Plan Of Arrangement
|
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Schedule B
|
Form of ICC Arrangement Resolution
|
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Schedule C
|
Representations and Warranties of ICC
|
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Schedule D
|
Representations and Warranties of Aurora
|
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Schedule E
|
List of ICC Locked-Up Shareholders
|
ARTICLE 2
THE ARRANGEMENT
ICC and
Aurora agree that the Arrangement shall be implemented in accordance with and
subject to the terms and conditions contained in this Agreement and the Plan of
Arrangement.
|
Section 2.2
|
Court Proceedings
|
ICC
shall apply to the Court for the Interim Order and Final Order as follows:
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|
(a)
|
As soon as is reasonably practicable after the date
hereof, and in any case in sufficient time to permit the ICC Meeting to be
held by the date specified in Section 4.2(a)(v), ICC shall make and
diligently prosecute an application to the Court for the Interim Order
which application shall be in form and substance satisfactory to Aurora,
acting reasonably, and shall request that the Interim Order shall provide,
among other things:
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(i)
|
for the calling and holding of the ICC Meeting for the
purpose of considering and, if deemed advisable, approving the
Arrangement;
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(ii)
|
for the class of Persons to whom notice is to be provided
in respect of the Arrangement and the ICC Meeting and for the manner in
which such notice is to be provided;
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(iii)
|
that the requisite approval for the ICC Arrangement
Resolution shall be (i) 66•% of the votes cast on the ICC Arrangement
Resolution by ICC Shareholders present in person or represented by proxy
and entitled to vote at the ICC Meeting, voting together as a single class
and, (ii) if applicable, a majority of the votes cast on the ICC
Arrangement Resolution by ICC Shareholders present in person or
represented by proxy and entitled to vote at the ICC Meeting, excluding
for purposes of (ii) votes attached to ICC Shares held by Persons
described in items (a) through (d) of section 8.1(2) of MI
61-101;
|
17
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|
(iv)
|
that, except as modified by the Interim Order, in all
other respects, the terms, conditions and restrictions of ICC’s constating
documents, including quorum requirements and other matters, shall apply in
respect of the ICC Meeting;
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(v)
|
for the grant of the Dissent Rights as set forth in the
Plan of Arrangement;
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(vi)
|
that the ICC Meeting may be adjourned or postponed from
time to time by management of ICC, subject to the terms of this Agreement,
without the need for additional approval of the Court;
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(vii)
|
confirmation of the record date for the purposes of
determining the ICC Shareholders entitled to receive notice of and vote at
the ICC Meeting in accordance with the Interim Order;
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(viii)
|
that the record date for ICC Shareholders entitled to
notice of and to vote at the ICC Meeting shall not change in respect of
any adjournment(s) or postponement(s) of the ICC Meeting or any other
change except as required by applicable Laws;
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(ix)
|
for the notice requirements with respect to the
presentation of the application to the Court for the Final Order;
and
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(x)
|
for such other matters as Aurora or ICC may reasonably
require, subject to obtaining the prior consent of the other Party, such
consent not to be unreasonably withheld, delayed or
conditioned.
|
|
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(b)
|
Upon approval of the ICC Arrangement Resolution at the
ICC Meeting, in accordance with the terms of the Interim Order, subject to
the terms of this Agreement, ICC shall forthwith make and diligently
prosecute an application to the Court for the Final Order, which
application shall be in form and substance satisfactory to ICC and Aurora,
each acting reasonably, and ICC shall diligently take steps to ensure that
the Final Order hearing is held as soon as reasonably practicable
following the approval of the ICC Arrangement Resolution at the ICC
Meeting.
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|
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(c)
|
In such notice of hearing in connection with the
application for the Interim Order, ICC shall inform the Court that the
Parties intend to rely on the Section 3(a)(10) Exemption for the issuance
of the Consideration Shares pursuant to the Arrangement, based and
conditioned upon the Court’s approval of the Arrangement and its
determination that the Arrangement is fair and reasonable to each Person
to whom Consideration Shares shall be issued, following a hearing and
after consideration of the substantive and procedural terms and conditions
thereof. Each Person to whom Consideration Shares shall be issued on
completion of the Arrangement shall be given adequate notice advising them
of their rights to attend the hearing of the Court for the Final Order and
providing them with adequate information to enable such Person to exercise
such right. The Consideration Shares issued under the Arrangement shall
not be registered pursuant to the 1933 Act or any state “blue sky” or
securities laws, and shall be issued in reliance Section 3(a)(10)
Exemption and available registration exemptions under applicable state
“blue sky” or securities laws.
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(d)
|
ICC shall provide legal counsel for Aurora with a
reasonable opportunity to review and comment upon drafts of all material
to be filed with the Court in connection with the Arrangement, and shall give reasonable consideration to all
such comments. ICC shall ensure that all material filed with the Court in
connection with the Arrangement is consistent in all material respects with the
terms of this Agreement and the Plan of Arrangement.
|
18
|
Section 2.3
|
Plan of Arrangement and Effective Time
|
|
|
(a)
|
Unless another time or date is agreed to in writing by
the Parties, on the third Business Day following satisfaction or, where
not prohibited, the waiver of the conditions (excluding conditions that,
by their terms, cannot be satisfied until the Effective Date, but subject
to the satisfaction or, where not prohibited, the waiver of those
conditions as of the Effective Date) set forth in Article 5, each of the
Parties shall execute and deliver such closing documents and instruments
and such other documents as may be required to give effect to the
Arrangement and ICC shall proceed to file any documents as required
pursuant to Section 292 of the BCBCA, and such other documents as may be
required to give effect to the Arrangement pursuant to Division 5 of Part
9 of the BCBCA. Without limiting the foregoing, Aurora shall, following
receipt of the Final Order and satisfaction or, where not prohibited, the
waiver of the conditions (excluding conditions that, by their terms,
cannot be satisfied until the Effective Date, but subject to the
satisfaction or, where not prohibited, the waiver of those conditions as
of the Effective Date) set forth in Article 5 but prior to the filing by
ICC of the documents referred to above, deliver or cause to be delivered
sufficient Consideration Shares to satisfy the consideration issuable to
ICC Shareholders pursuant to the Plan of Arrangement (other than
registered ICC Shareholders validly exercising Dissent Rights and who have
not withdrawn their notice of objection).
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(b)
|
The Arrangement shall become effective at the Effective
Time on the Effective Date, whereupon, the transactions comprising the
Arrangement shall be deemed to occur in the order set out in the Plan of
Arrangement without any further act or formality.
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(c)
|
From and after the Effective Time, the Plan of
Arrangement shall have all of the effects provided by applicable Law,
including the BCBCA. ICC agrees to negotiate in good faith with the Aurora
to amend the Plan of Arrangement at any time prior to the Effective Time
in accordance with Section 7.1 of this Agreement to include such other
terms determined to be necessary or desirable by Aurora, acting
reasonably, provided that the Plan of Arrangement shall not be amended in
any manner which is inconsistent with the provisions of this Agreement,
which would reasonably be expected to delay, impair or impede the
satisfaction of any condition set forth in Article 5 or which has the
effect of reducing the Consideration Shares or which is otherwise
prejudicial to the ICC Shareholders or other parties to be bound by the
Plan of Arrangement.
|
The
Closing of the Arrangement shall take place at the offices of McMillan LLP,
Royal Centre, 1055 West Georgia Street, Suite 1500, Vancouver, British Columbia
at 9:01 a.m. (Vancouver time) on the Effective Date or at such other place or
time as the Parties may agree.
|
|
(a)
|
Aurora and ICC shall each publicly announce the
transactions contemplated hereby promptly following the execution of this
Agreement by the Parties and in any event prior to the next opening of trading on the TSX or TSXV, by way of a
joint press release to be approved by the Parties in advance, acting reasonably.
Aurora and ICC agree to cooperate in the preparation of presentations, if any,
to the ICC Shareholders regarding the transactions contemplated by this
Agreement; provided, however, that the foregoing shall be subject to each
Party’s overriding obligation to make any disclosure or filing required under
applicable Laws, and the Party making such disclosure shall use all commercially
reasonable efforts to give prior oral or written notice to the other Party and
reasonable opportunity to review or comment on the disclosure or filing, and if
such prior notice is not possible, to give such notice immediately following the
making of such disclosure or filing.
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19
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|
(b)
|
Aurora and ICC shall consult with the other in respect to
issuing any press release or otherwise making any public statement with
respect to this Agreement or the Arrangement, its business or operations
and in making any filing with any Governmental Entity with respect to this
Agreement or the Arrangement, including any Securities Authority, or stock
exchange; provided, however, that the foregoing shall be subject to each
Party’s overriding obligation to make any press releases, public
statements or filing required under applicable Laws or the rules and
policies of any applicable stock exchange. The Party making such press
releases, public statements or filings shall use all commercially
reasonable efforts to give prior oral or written notice to the other Party
and provide the other Party a reasonable opportunity to review and comment
on such press releases, public statements or filings (except where such
material is confidential or competitively or commercially sensitive, in
which case it shall be provided (subject to applicable Laws) to the other
Party’s outside counsel on an “external counsel” basis), and if such prior
notice is not permitted by applicable Laws or the rules and policies of
any applicable stock exchange, to give such notice immediately following
the making of such press releases , public statements or filings.
Reasonable consideration shall be given to any comments made by the other
Party and its counsel on such press releases, public statements or
filings.
|
|
Section 2.6
|
Tax Treatment
|
The
Arrangement is intended to qualify as a reorganization within the meaning of
Section 368(a) of the Code and the Treasury Regulations promulgated thereunder,
and this Agreement is intended to be a “plan of reorganization” within the
meaning of the Treasury Regulations promulgated under Section 368 of the Code.
Each Party agrees to treat the Arrangement as a reorganization within the
meaning of Section 368(a) of the Code for all United States federal income tax
purposes, and agrees to treat this Agreement as a “plan of reorganization”
within the meaning of the Treasury Regulations promulgated under Section 368 of
the Code, and to not take any position on any Tax return or otherwise take any
Tax reporting position inconsistent with such treatment, unless otherwise
required by applicable Law. Except as otherwise provided in this Agreement and
in the Plan of Arrangement, each Party agrees to act in good faith, consistent
with the intent of the Parties and the intended treatment of the Arrangement as
set forth herein. The Arrangement is intended to allow the ICC Shares held by
ICC Shareholders to be converted to Aurora Shares on a tax-deferred basis for
United States federal income tax purposes. Notwithstanding the foregoing,
neither Aurora or ICC makes any representation, warranty or covenant to any
other Party or to any ICC securityholder or other holder of ICC securities
(including, without limitation, stock options, warrants, debt instruments or
other similar rights or instruments) regarding the U.S. tax treatment of the
Arrangement, including, but not limited to, whether the Arrangement shall
qualify as a reorganization within the meaning of Section 368(a) of the Code or
as a tax-deferred reorganization for purposes of any United States state or
local income tax law.
20
|
Section 2.7
|
U.S. Securities Matters
|
The
Parties agree that the Arrangement will be carried out with the intention that
the issuance of the Consideration Shares under the Arrangement shall be exempt
from the registration requirements of the 1933 Act pursuant to Section 3(a)(10)
thereof (the “
Section 3(a)(10) Exemption
”) and shall not be subject to
registration or qualification under state “blue sky” or securities laws. Each
Party agrees to act in good faith, consistent with the intent of the Parties and
the intended treatment of the Arrangement set forth in this Section 2.7. In
connection therewith, the Parties agree that:
|
|
(a)
|
the Arrangement shall be subject to the approval of the
Court;
|
|
|
|
|
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(b)
|
the Court shall be advised as to the intention of the
Parties to rely on the Section 3(a)(10) Exemption prior to the hearing
required to approve the Arrangement;
|
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|
|
(c)
|
the Parties shall ensure that each Person entitled to
receive Consideration Shares on completion of the Arrangement shall be
given adequate notice advising them of their right to attend the hearing
of the Court to give approval of the Arrangement and providing them with
sufficient information necessary for them to exercise that
right;
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(d)
|
the Interim Order approving the ICC Meeting shall specify
that each Person to whom Consideration Shares shall be issued pursuant to
the Arrangement shall have the right to appear before the Court at the
hearing of the Court to give approval of the Arrangement so long as such
securityholder enters an appearance within a reasonable time;
and
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(e)
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each Person to whom Consideration Shares shall be issued
pursuant to the Arrangement shall be advised that the Consideration Shares
issued pursuant the Arrangement have not been registered under the 1933
Act and shall be issued by Aurora in reliance upon the Section 3(a)(10)
Exemption and shall, in certain circumstances, be subject to certain
restrictions on resale under the securities laws of the United States,
including, with respect to securities issued to affiliates (as such term
is defined under Rule 144) of Aurora or ICC, Rule 144 under the 1933
Act.
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Section 2.8
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ICC Plan Options
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(a)
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Subject to the terms and conditions of this Agreement and
the Plan of Arrangement, pursuant to the
Arrangement:
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(i)
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the vesting of all outstanding ICC Plan Options shall be
accelerated;
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(ii)
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all ICC Plan Options that are In-the-Money Options shall
be exchanged for ICC Shares as set out in the Plan of Arrangement, and the
former holders of such ICC Plan Options shall, following such exchange,
participate in the Arrangement as ICC Shareholders; and
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(iii)
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all ICC Plan Options that are Out-of-the-Money Options
shall be cancelled without any payment thereof
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all in accordance with and subject to
the provisions of the Plan of Arrangement, and ICC shall take all such actions
as may be necessary or desirable to give effect to the foregoing.
21
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(b)
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Neither Aurora, ICC or any other corporation will claim a
deduction for purposes of the Tax Act in respect of the consideration
delivered to holders of ICC Plan Options under the Plan of Arrangement,
and Aurora will ensure that a timely election in appropriate form under
subsection 110(1.1) of the Tax Act is filed, with copy to former holders
of such ICC Plan Options.
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Section 2.9
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Adjustment of
Consideration
|
Notwithstanding anything to the contrary contained in this Agreement, if,
between the date of this Agreement and the Effective Time, the issued and
outstanding Aurora Shares shall have been changed into a different number of
shares or a different class by reason of any stock split, reverse stock split,
stock dividend, reclassification, redenomination or the like, then the Exchange
Ratio and any other dependent items shall be appropriately adjusted to provide
to ICC and its securityholders the same economic effect as contemplated by this
Agreement and the Arrangement prior to such action and as so adjusted shall,
from and after the date of such event, be the consideration to be paid per ICC
Share, the Exchange Ratio or other dependent item, subject to further adjustment
in accordance with this sentence.
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Section 2.10
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ICC Warrants and ICC Compensation
Options
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(a)
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Aurora covenants that, to the extent that the ICC
Warrants are outstanding following the Effective Time, it shall comply
with, or cause ICC (or any successor thereto) to comply with, as
applicable, the terms and provisions of the ICC Warrant Indenture
including the assumption by Aurora, or such other party as required by the
terms of the ICC Warrant Indenture, of the obligations of ICC as a
successor following the Effective Time pursuant to the ICC Warrant
Indenture.
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(b)
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Aurora covenants that, to the extent that the ICC
Compensation Options are outstanding following the Effective Time, it
shall comply with, or cause ICC (or any successor thereto) to comply with,
as applicable, the terms and provisions of the ICC Compensation Options,
including the assumption by Aurora, of the obligations of ICC pursuant to
the certificates evidencing the ICC Compensation Options.
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(c)
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ICC covenants to cooperate with Aurora in connection with
the assumption by Aurora, or such other party as required by the terms of
the ICC Warrant Indenture or certificates evidencing the ICC Compensation
Options, as applicable, of the obligations of ICC as a successor following
the Effective Time under the ICC Warrant Indenture and ICC Compensation
Options, as applicable.
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Aurora,
ICC and the Depositary, as applicable, shall be entitled to deduct and withhold
from any amount payable or any Consideration Shares payable or otherwise
deliverable to any ICC Securityholders such amounts as Aurora or ICC may be
required to deduct and withhold therefrom under any provision of applicable Laws
in respect of Taxes. To the extent that any amounts are so deducted and
withheld, such amounts shall be treated for all purposes hereof as having been
paid to the person to whom such amounts would otherwise have been paid, provided
that such withheld amounts are remitted to the appropriate Governmental Entity.
To satisfy the amount required to be deducted or withheld from any payment to
any such ICC Securityholder , Aurora, ICC or the Depositary, as applicable, may
sell or otherwise dispose of any portion of the consideration payable to such
holder in the form of Consideration Shares as is necessary to provide sufficient
funds to enable Aurora, ICC or the Depositary, as applicable, to comply with
such deduction and/or withholding requirements.
22
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
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Section 3.1
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Representations and Warranties of ICC
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Except
as disclosed in the ICC Disclosure Letter (with the disclosure of any event,
item or occurrence set forth in the ICC Disclosure Letter qualifying or
modifying the applicable section to which it corresponds and any other section
to the extent that its relevance to such other section is reasonably apparent on
its face), ICC represents and warrants to and in favour of Aurora as set forth
in Schedule C and acknowledges that Aurora is relying upon such representations
and warranties in entering into this Agreement.
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Section 3.2
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Representations and Warranties of Aurora
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Except
as disclosed in the Aurora Filings prior to the date hereof (excluding any
disclosures set forth in any section of a document in the Aurora Filings
entitled "Risk Factors" or "Forward-Looking Statements" or any other disclosures
included in such filings to the extent that they are forward-looking in nature),
Aurora represents and warrants to and in favour of ICC as set forth in Schedule
D and acknowledges that ICC is relying upon such representations and warranties
in entering into this Agreement.
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Section 3.3
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ICC Disclosure Letter
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The
Parties acknowledge and agree that ICC has delivered to Aurora the ICC
Disclosure Letter, which has been accepted by Aurora and which sets forth
modifications to those representations and warranties made by ICC in Section 3.1
hereof.
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Section 3.4
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Survival of Representations and
Warranties
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The
representations and warranties contained in this Agreement shall survive the
execution and delivery of this Arrangement and shall expire and be terminated
and extinguished on the earlier of the Effective Date and the date on which this
Agreement is terminated.
ARTICLE 4
COVENANTS
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Section 4.1
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Covenants of Aurora
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Subject
to the other terms and conditions of this Agreement, Aurora hereby covenants and
agrees with ICC as follows:
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(a)
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Information for ICC Circular
. In a timely and
expeditious manner, Aurora shall provide to ICC all information as may be
reasonably requested by ICC or as required by the Interim Order or
applicable Laws with respect to Aurora and the Aurora Subsidiaries and
their respective businesses and properties for inclusion in the ICC
Circular or in any amendment or supplement to the ICC Circular required to
be disclosed in the ICC Circular (including any pro forma financial
statements) and not containing any Misrepresentation with respect thereto.
Aurora shall use commercially reasonable efforts to obtain, if necessary,
consents of auditors and other advisors to use financial, technical or
expert information in the ICC Circular and fully cooperate with ICC in the
preparation of the ICC Circular. Aurora hereby indemnifies and saves
harmless ICC and its directors,officers, employees, agents and representatives from and
against any and all liabilities, claims, demands, losses, costs, damages and
reasonable expenses to which ICC or any of its directors, officers, employees,
agents or representatives may be subject or may suffer as a result of, or
arising from, any Misrepresentation contained in any information included in the
ICC Circular that was provided by Aurora or any of its directors, officers,
employees, agents or representatives specifically for inclusion therein,
including as a result of any order made, or any inquiry, investigation or
proceeding instituted by any Securities Authorities or other Governmental Entity
based on such a Misrepresentation.
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(b)
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Notification of Misrepresentation
. Aurora shall
promptly notify ICC if it becomes aware that the ICC Circular contains a
Misrepresentation, or otherwise requires an amendment or
supplement.
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(c)
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Copy of Documents
. Except as otherwise provided
herein, Aurora shall furnish promptly to ICC a copy of any filings made
under any applicable Laws and any dealings or communications with any
Governmental Entity, Securities Authority or stock exchange in connection
with, or in any way affecting, the Transaction (except where such material
is confidential or competitively or commercially sensitive, in which case
it shall be provided (subject to applicable Laws) to the other Party’s
outside counsel on an “external counsel” basis).
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(d)
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Usual Business
. Other than in contemplation of, or
as required to give effect to the Transaction, Aurora shall, and shall
cause the Aurora Subsidiaries to, until the earlier of the Effective Time
and the time that this Agreement is terminated in accordance with its
terms, use commercially reasonable efforts to maintain and preserve
Aurora’s and its Aurora Subsidiaries’ business organization, and, except
for the distribution of securities of Aurora under a prospectus or private
placement from time to time, Aurora shall not, directly or indirectly, do
or permit to occur any of the following without the prior consent of ICC,
such consent not to be unreasonably withheld or delayed:
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(i)
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amend its articles or by laws or the terms of its shares
in a manner that could have a material adverse effect on the market price
or value of the Aurora Shares to be issued pursuant to the
Arrangement;
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(ii)
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split, consolidate or reclassify any of its shares nor
undertake any other capital reorganization; or
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(iii)
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reduce capital in respect of its
shares.
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(e)
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Certain Actions.
Notwithstanding any other
provision of Section 4.1(d), Aurora shall not take any action, or refrain
from taking any commercially reasonable action, or permit any action to be
taken or not taken, that would reasonably be expected to materially impede
the completion of the Transaction.
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(f)
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Material Adverse Effect
. Aurora will promptly
notify ICC of: (i) any Material Adverse Effect with respect to Aurora;
(ii) any notice or other written communication from any Person alleging
that the consent of such Person (or another Person) is required in
connection with the Transaction, or (iii) any material filings, actions,
suits, claims, investigations or proceedings commenced or, to its
knowledge, threatened against, relating to or involving Aurora or any of
its Subsidiaries that relate to this Agreement or the
Transaction.
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(g)
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Satisfaction of Conditions
. Except as expressly
contemplated in this Agreement and subject to the specific obligations
contained in Section 4.3, Aurora shall use commercially reasonable efforts
to satisfy, or cause to be satisfied, all of the conditions precedent to
its obligations to the extent that the same is within its control and to
take, or cause to be taken, all other actions and to do, or cause to be
done, all other things necessary, proper or advisable under all applicable
Laws to complete the Transaction, including using commercially reasonable
efforts to:
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(i)
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obtain all consents, approvals and authorizations as are
required to be obtained by Aurora or any of the Aurora Subsidiaries under
any applicable Laws or from any Governmental Entity that would, if not
obtained, materially impede the completion of the Transaction or have a
Material Adverse Effect with respect to Aurora;
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(ii)
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obtain all consents and approvals as are required to be
obtained from Aurora’s lenders under the Aurora Credit Agreement in
compliance with the terms thereof in order to complete the
Arrangement;
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(iii)
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effect all necessary registrations, filings and
submissions of information required by Governmental Entities to be
effected by it in connection with the Transaction and participate, and
appear in any proceedings of, any Party hereto before any Governmental
Entity;
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(iv)
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oppose, lift or rescind any injunction or restraining
order or other order or action challenging or affecting this Agreement or
the Transaction or seeking to stop, or otherwise adversely affecting the
ability of the Parties hereto to consummate, the transactions contemplated
hereby;
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(v)
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cause the Aurora Shares to be issued pursuant to the
Arrangement to be listed on the TSX and the Aurora Shares issuable
pursuant to exercise or conversion of any of the ICC Compensation Options
or the ICC Warrants to be approved for listing on the TSX upon
issuance;
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(vi)
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at or prior to the Effective Time, allot and reserve for
issuance a sufficient number of Aurora Shares to meet the obligations of
Aurora under the Plan of Arrangement;
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(vii)
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fulfill all conditions and satisfy all provisions of this
Agreement and the Plan of Arrangement required to be fulfilled or
satisfied by Aurora;
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(viii)
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acting reasonably and in good faith, negotiate and
document final versions of all agreements, certificates or instruments
contemplated by this Agreement on the terms and conditions set forth in
this Agreement; and
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(ix)
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cooperate with ICC in connection with the performance by
it of its obligations hereunder, provided however that the foregoing shall
not be construed to obligate Aurora to pay or cause to be paid any monies
to cause such performance to occur.
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(h)
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Cooperation
. Subject to the specific obligations
contained in Section 4.3, Aurora shall make, or cooperate as necessary in
the making of, all necessary filings and
applications under all applicable Laws required in connection with the
Transaction and take all reasonable action necessary to be in compliance with
such Laws.
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Section 4.2
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Covenants of ICC
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Subject
to the other terms and conditions of this Agreement, ICC hereby covenants and
agrees with Aurora as follows:
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(a)
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ICC Meeting
. In a timely and expeditious manner,
ICC shall:
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(i)
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set the record date for ICC Shareholders entitled to vote
at the ICC Meeting as promptly as practicable and consult with Aurora to
set such record date;
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(ii)
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subject to compliance by Aurora with its obligations
under Section 4.1(a) and subject to Section 4.2(e), prepare the ICC
Circular in the form and containing the information required by all
applicable Laws, including all applicable corporate and securities Laws
and requirements, and not containing any Misrepresentation with respect
thereto, other than with respect to any information relating to and
provided by Aurora, provide Aurora with a reasonable opportunity to
comment thereon, reasonably consider all comments provided thereon by
Aurora, and subsequently file the ICC Circular, together with any other
documents required by applicable Laws, in all jurisdictions where the ICC
Circular is required to be filed and mail the ICC Circular so as to permit
the ICC Meeting to be held by the date specified in Section 4.2(a)(v) to
all ICC Shareholders to whom the ICC Circular is required to be
mailed;
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(iii)
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include in the ICC Circular information in sufficient
detail to permit the ICC Shareholders to form a reasoned judgment
concerning the matters to be placed before them at the ICC Meeting,
including without limiting the generality of the foregoing: (A) a copy of
the ICC Fairness Opinions; and (B) the ICC Board Recommendation;
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(iv)
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take all commercially reasonable lawful action to solicit
proxies in favour of the ICC Arrangement Resolution, including, at ICC’s
discretion or if so requested by Aurora, retaining a proxy solicitation
agent to solicit in favour of the ICC Arrangement Resolution (and provide
Aurora with copies of or access to information regarding the ICC Meeting
generated by any such proxy solicitation agent, as reasonably requested
from time to time by Aurora);
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(v)
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subject to compliance by Aurora with its obligations
under Section 4.1(a), convene and conduct the ICC Meeting in accordance
with ICC’s constating documents, applicable Laws and the Interim Order as
soon as reasonably practicable and in any event no later than by November
30, 2018;
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(vi)
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coordinate with Aurora to set the date of the ICC
Meeting;
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(vii)
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provide notice to Aurora of the ICC Meeting and allow
representatives of Aurora to attend the ICC Meeting;
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(viii)
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at the reasonable request of Aurora from time to time,
provide Aurora with a list (in both written and electronic form) of the
registered ICC Shareholders, together with their addresses and respective holdings of ICC Shares,
with a list of the names and addresses and holdings of all Persons having rights
issued by ICC to acquire ICC Shares (including holders of ICC Plan Options, ICC
Warrants and ICC Compensation Options) and a list of non-objecting beneficial
owners of ICC Shares, together with their addresses and respective holdings of
ICC Shares, as well as updates thereto as Aurora may reasonably request from
time to time;
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26
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(ix)
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provide Aurora with information on the proxies received
and the ICC Shareholders votes on the ICC Arrangement Resolution on a
daily basis commencing at least ten Business Days before the date of the
ICC Meeting to the extent that such information is available to
ICC;
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(x)
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promptly advise Aurora of any material communication
(written or oral) from or claims brought by (or threatened to be brought
by) any Person in opposition to the Arrangement or the ICC Arrangement
Resolution; and
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(xi)
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except as required by applicable Law, or with the prior
written consent of the Aurora, which shall not be unreasonably withheld or
delayed, not consider any other matter of business at the ICC Meeting;
provided that, if ICC is required by applicable Law, or permitted by
Aurora in writing, to transact any other item of business at the ICC
Meeting, ICC shall cause the ICC Arrangement Resolution to be considered
and voted upon before any other item of business to be transacted at the
ICC Meeting.
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(b)
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Amendments to ICC Circular
. In a timely and
expeditious manner, subject to compliance by Aurora with its obligations
under Section 4.1(a) and subject to providing Aurora with a reasonable
opportunity to comment thereon, ICC shall prepare and file any mutually
agreed (or as otherwise required by applicable Laws) amendments or
supplements to the ICC Circular (which amendments or supplements shall be
in a form satisfactory to the Parties, acting reasonably), complying in
all material respects with all applicable Laws on the date of the filing
thereof.
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(c)
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Uruguayan Filings.
In a timely and expeditious
manner, ICC shall file, or cause to be filed, all notifications,
applications or filings required under applicable Laws or take any other
actions as may be necessary, proper or advisable to (i) register and
record the change of name and the change of representative of the
Uruguayan branch of ICC International Company with the Public Registry of
Commerce of Uruguay and (ii) obtain reasonably satisfactory evidence of
the good standing of Tersum S.A. with DGI prior to the Effective
Date.
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(d)
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Notification of Misrepresentation
. ICC shall
promptly notify Aurora if it becomes aware that the ICC Circular contains
a Misrepresentation, or otherwise requires an amendment or
supplement.
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(e)
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Adjournment
. Subject to Section 6.2(f) and Section
5.4, ICC shall not adjourn, postpone or cancel the ICC Meeting (or propose
to do so), except: (i) as required if there is an insufficient number of
ICC Shares present or represented by proxy at the ICC Meeting to
constitute a quorum (in which case, the ICC Meeting shall be adjourned and
not cancelled); (ii) if otherwise agreed with Aurora; or (iii) if required
by the Court. For greater certainty, no ICC Change in Recommendation shall
relieve ICC from its obligation to proceed to call and hold the ICC
Meeting and to hold the vote on the ICC Arrangement Resolution (provided that, except as required under
applicable Laws, ICC shall be relieved from its obligations to actively solicit
proxies in favour of the Arrangement in such circumstances), except in
circumstances where this Agreement is terminated in accordance with the terms
hereof.
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(f)
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Opportunity to Review ICC Circular
. Aurora and its
legal counsel shall be given a reasonable opportunity to review and
comment on the ICC Circular and related documents, prior to the ICC
Circular being printed and mailed to ICC Shareholders and filed with the
Securities Authorities, and reasonable consideration shall be given to any
comments made by Aurora and its counsel, provided that all information
relating to Aurora and the Aurora Subsidiaries included in the ICC
Circular shall be in form and content satisfactory to Aurora, acting
reasonably.
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(g)
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Dissent Rights
. ICC shall promptly provide Aurora
with a copy of any purported exercise of the Dissent Rights in respect of
the ICC Arrangement Resolution, and written communications with any ICC
Shareholder purportedly exercising such Dissent Rights, and shall not
settle or compromise any Dissent Rights or any action brought by any
present, former or purported holder of any of its securities in connection
with the Transaction, including the Arrangement, without the prior written
consent of Aurora, which consent shall not be unreasonably withheld,
conditioned or delayed.
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(h)
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Copy of Documents
. Except as otherwise provided
herein, ICC shall furnish promptly to Aurora a copy of any filing made
under any applicable Laws and any dealings or communications with any
Governmental Entity, Securities Authority or stock exchange in connection
with, or in any way affecting, the Transaction (except where such material
is confidential or competitively or commercially sensitive, in which case
it shall be provided (subject to applicable Laws) to the other Party’s
outside counsel on an “external counsel” basis). ICC shall, and shall
cause the ICC Subsidiaries to, give Aurora and its representatives during
normal business hours reasonable access to their premises, assets, books,
records, contracts and personnel and furnish Aurora with all such other
information as Aurora may reasonably request. No environmental assessment
or other intrusive analysis shall be conducted by Aurora without the prior
written consent of ICC.
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(i)
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Usual Business
. Other than in contemplation of, or
as required to give effect to the Transaction, ICC shall, and shall cause
the ICC Subsidiaries to, until the earlier of the Effective Time and the
time that this Agreement is terminated in accordance with its terms, use
commercially reasonable efforts to maintain and preserve ICC’s and ICC
Subsidiaries’ business organization, properties, employees, goodwill and
business relationships with customers, suppliers, partners and other
Persons with which ICC or any of ICC Subsidiaries have material business
relations, and shall not, and shall cause its Subsidiaries not to, except:
(A) with the prior written consent of Aurora, such consent not to be
unreasonably withheld, delayed or conditioned; (B) as required or
permitted by this Agreement; (C) as required by Law; or (D) as
contemplated by the ICC Disclosure Letter, directly or
indirectly:
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(i)
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split, combine, reclassify or amend the terms of the ICC
Shares;
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(ii)
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amend or propose to amend the articles, notice of
articles, by-laws or other constating documents or their equivalent of ICC
or any of the ICC Subsidiaries;
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(iii)
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reduce its stated capital or declare, set aside or pay
any dividend (whether in cash, securities or property or any combination
thereof) in respect of any ICC Shares;
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(iv)
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redeem, purchase or otherwise acquire or offer to redeem,
purchase or otherwise acquire any ICC Shares, other than redemptions or
repurchases of ICC Shares in connection with the administration of equity
or employee incentive plans;
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(v)
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issue, sell, grant, pledge, lease, dispose of, encumber
or create any Encumbrance on or agree to do so, or permit any of the ICC
Subsidiaries to issue, sell, grant, pledge, lease, dispose of, encumber or
create any Encumbrance on or agree to do so, any shares or other
securities of, or any options, warrants, calls, conversion privileges or
rights of any kind to acquire any shares of, ICC or any of the ICC
Subsidiaries, other than the issue of ICC Shares in accordance with the
ICC Plan Options, ICC Warrants and ICC Compensation Options issued and
outstanding in accordance with their terms;
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(vi)
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other than pursuant to obligations or rights under
existing contracts, agreements and commitments (to the extent such rights
have been exercised or initiated by other Persons) or sales of goods in
the ordinary course of business, sell, lease, encumber or otherwise
dispose of, or permit any of the ICC Subsidiaries to sell, lease, encumber
or otherwise dispose of, any property or assets having a cost, on a per
transaction or series of related transactions basis, in excess of $125,000
and subject to a maximum of $250,000 for all such transactions;
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(vii)
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adopt, or permit any of the ICC Subsidiaries to adopt,
any resolutions or enter into any agreement providing for the
amalgamation, merger, consolidation, reorganization, liquidation,
dissolution or any other extraordinary transaction in respect of itself,
or adopt any plan of liquidation;
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(viii)
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acquire (by merger, consolidation, acquisition of stock
or assets or otherwise), or extend or exercise any option to acquire,
directly or indirectly, in one transaction or in a series of related
transactions, assets, securities, properties, interests or businesses
having a cost, on a per transaction or series of related transactions
basis, in excess of $125,000 and subject to a maximum of $250,000 for all
such transactions;
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(ix)
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incur any indebtedness for borrowed money or any other
material liability or obligation or issue any debt securities or assume,
guarantee, endorse or otherwise as an accommodation become responsible
for, the obligations of any other Person, or make any loans or advances,
in each case in excess of $250,000 on a per transaction or a series of
transaction related basis, except intercompany guarantees and
inter-company loans and advances;
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(x)
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enter into, or cause any ICC Subsidiaries to enter into,
new material commitments of a capital expenditure nature or incur any new
material contingent liabilities that has not been approved by the ICC
Board as of the date of this Agreement;
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(xi)
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commence, waive, release, assign, settle or compromise
any litigation, proceedings or governmental investigations in excess of an
amount of $250,000 in the aggregate or which would reasonably be expected to
impede, prevent or delay the consummation of the Transaction;
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(xii)
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cancel, waive, release, assign, settle or compromise any
material claims or rights;
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(xiii)
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abandon or fail to diligently pursue any application for
any material licenses, permits, authorizations or registrations;
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(xiv)
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enter into any interest rate, currency or commodity
swaps, hedges, caps, collars, forward sales or other similar financial
instruments other than in the ordinary course of business and not for
speculative purposes;
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(xv)
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enter into or amend any financial or other material
agreements with its principal shareholders or their respective
affiliates;
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(xvi)
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except in accordance with the terms of the Employee Plans
or Contracts of ICC in effect on the date of this Agreement, (i) create,
enter into or increase any severance, change of control or termination pay
to (or amend any existing arrangement in respect thereof with) any
employee, director or officer of ICC or any of its Subsidiaries; (ii)
change the benefits payable under any employment agreements with any
employee, director or executive officer of ICC or any of its Subsidiaries;
(iii) enter into any employment, deferred compensation or other similar
agreement (or amend any such existing agreement) with any director or
officer of ICC or any of its Subsidiaries; or (iv) change compensation,
bonus levels or other benefits payable to any employee, director or
officer of ICC or any of its Subsidiaries;
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(xvii)
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adopt or amend or make any material contribution to the
ICC Stock Option Plan or any other bonus, profit sharing, retention,
option, deferred compensation, incentive compensation, other compensation
or other similar plan, agreement, trust, fund or arrangements for the
benefit of employees, except as is necessary to comply with applicable
Laws or the terms of such plans, programs, arrangements or agreements
where the failure to so comply would result in a material breach of such
plans, programs, arrangements or agreements;
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(xviii)
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except as required by IFRS or any other generally
accepted accounting principle to which any of the ICC Subsidiaries may be
subject, or any applicable Laws, make any changes to the existing
accounting policies of ICC or any of the ICC Subsidiaries; or
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(xix)
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announce an intention, enter into any agreement or
otherwise make a commitment to do any of the things prohibited by any of
the foregoing subsections.
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(j)
|
Insurance
. ICC shall use commercially reasonable
efforts, and shall cause the ICC Subsidiaries to use commercially
reasonable efforts, to cause their respective current insurance (and
reinsurance) policies not to be cancelled or terminated or any of the
coverage thereunder to lapse, unless simultaneously with such termination,
cancellation or lapse, replacement policies underwritten by insurance and
reinsurance companies of internationally recognized standing providing
coverage equal to or greater than the coverage under the cancelled, terminated or lapsed policies for
substantially similar premiums are in full force and effect.
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(k)
|
Certain Actions
. Notwithstanding any other
provision of Section 4.2(i), ICC shall not take any action, or refrain
from taking any commercially reasonable action, or permit any action to be
taken or not taken, that would reasonably be expected to materially impede
the completion of the Arrangement.
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(l)
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Material Adverse Effect
. ICC shall promptly notify
Aurora of: (i) any Material Adverse Effect with respect to ICC; (ii) any
notice or other written communication from any Person alleging that the
consent of such Person (or another Person) is required in connection with
the Transaction, or (iii) any material filings, actions, suits, claims,
investigations or proceedings commenced or, to its knowledge, threatened
against, relating to or involving ICC or any of its Subsidiaries that
relate to this Agreement or the Arrangement.
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(m)
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No Compromise
. ICC shall not, and shall cause the
ICC Subsidiaries not to, settle or compromise any claim brought by any
present, former or purported holder of any securities of ICC in connection
with the Transaction prior to the Effective Time without the prior written
consent of ICC, which consent shall not be unreasonably withheld,
conditioned or delayed.
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(n)
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Satisfaction of Conditions
. Except as expressly
contemplated in this Agreement and subject to the specific obligations
contained in Section 4.3, ICC shall use commercially reasonable efforts to
satisfy, or cause to be satisfied, all of the conditions precedent to its
obligations to the extent that the same is within its control and to take,
or cause to be taken, all other actions and to do, or cause to be done,
all other things necessary, proper or advisable under all applicable Laws
to complete the Transaction, including using commercially reasonable
efforts to:
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(i)
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obtain the approval of the ICC Shareholders with respect
to the ICC Arrangement Resolution in accordance with the provisions of the
BCBCA, the Interim Order and the requirements of any applicable regulatory
authority;
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(ii)
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obtain all consents, approvals and authorizations as are
required to be obtained by ICC or any of the ICC Subsidiaries under any
applicable Laws or from any Governmental Entity that would, if not
obtained, materially impede the completion of the Transaction or have a
Material Adverse Effect with respect to ICC;
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(iii)
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effect all necessary registrations, filings and
submissions of information required by Governmental Entities to be
effected by it in connection with the Transaction and participate, and
appear in any proceedings of, any Party hereto before any Governmental
Entity;
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(iv)
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oppose, lift or rescind any injunction or restraining
order or other order or action challenging or affecting this Agreement or
the Transaction or seeking to stop, or otherwise adversely affecting the
ability of the Parties hereto to consummate, the transactions contemplated
hereby;
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31
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(v)
|
cause the issuance of the Consideration Shares pursuant
to the Arrangement to be exempt from the registration requirements of the
1933 Act under the Section 3(a)(10) Exemption;
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(vi)
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obtain all third party consents, waivers and approvals
and give any notices required under any of the Material Contracts to which
ICC or any of the ICC Subsidiaries is a party or its or their respective
assets are bound;
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(vii)
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assist Aurora as reasonably required to enable Aurora to
cause the Aurora Shares to be issued pursuant to the Arrangement and the
Aurora Shares issuable pursuant to exercise or conversion of any of the
ICC Compensation Options or the ICC Warrants to be listed on the
TSX;
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(viii)
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fulfill all conditions and satisfy all provisions of this
Agreement and the Plan of Arrangement required to be fulfilled or
satisfied by ICC;
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(ix)
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acting reasonably and in good faith, negotiate and
document final versions of all agreements, certificates or instruments
contemplated by this Agreement on the terms and conditions set forth in
this Agreement; and
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(x)
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cooperate with Aurora in connection with the performance
by Aurora of its obligations hereunder, provided however that the
foregoing shall not be construed to obligate ICC to pay or cause to be
paid any monies to cause such performance to
occur.
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(o)
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Keep Reasonably Informed
. Subject to applicable
Laws, ICC shall use commercially reasonable efforts to conduct itself so
as to keep Aurora reasonably informed as to the material decisions or
actions required or required to be made with respect to the operation of
its business.
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(p)
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Cooperation
. Subject to the specific obligations
contained in Section 4.3, ICC shall make, or cooperate as necessary in the
making of, all necessary filings and applications under all applicable
Laws required in connection with the Transaction and take all reasonable
action necessary to be in compliance with such Laws.
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(q)
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Taxes
. ICC shall, and shall cause ICC Subsidiaries
to:
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(i)
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duly and timely file all Tax Returns required to be filed
by it on or after the date hereof and all such Tax Returns shall be true,
complete and correct in all material respects;
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(ii)
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in a timely manner deduct, withhold, collect and remit to
the appropriate Governmental Entity and pay all Taxes which are required
by applicable Laws to be deducted, withheld, collected, remitted or paid
by it to the extent due and payable;
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(iii)
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not make, amend or rescind any material express or deemed
election relating to Taxes, except: (a) as contemplated in this Agreement,
or (b) with the consent of Aurora, such consent not to be unreasonably
withheld, conditioned or delayed;
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(iv)
|
not make a request for a Tax ruling or enter into any
agreement with any Governmental Entity or consent to any extension or
waiver of any limitation period with respect to Taxes, except with the
consent of Aurora, such consent not to be unreasonably withheld,
conditioned or delayed;
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(v)
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not amend any Tax Return, settle or compromise any claim,
action, suit, litigation, proceeding, arbitration, investigation, audit or
controversy relating to Taxes, except with the consent of Aurora, such
consent not to be unreasonably withheld, conditioned or delayed;
and
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(vi)
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not change any of its methods of accounting for income
Tax purposes from those employed in the preparation of its income Tax
Returns for the taxation year ended December 31, 2017, except as may be
required by applicable Laws or IFRS.
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(r)
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Employment Agreements
. In a timely and expeditious
manner, ICC shall use commercially reasonable efforts to assist Aurora in
finalizing employment agreements with the Key Employees, in form and
substance reasonably satisfactory to Aurora, prior to the Effective
Date.
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(s)
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Uruguayan Title Opinion
: Prior to the Effective
Date, ICC shall deliver to Aurora a title opinion of ICC’s Uruguayan legal
counsel addressed to Aurora, in form and substance reasonably satisfactory
to Aurora, covering each of the ICC Owned Properties in
Uruguay.
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Section 4.3
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Regulatory Approvals
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(a)
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As soon as practicable, Aurora shall apply to list the
Aurora Shares issuable or to be made issuable pursuant to the Arrangement
(including all Aurora Shares issuable upon the exercise or conversion of
the ICC Compensation Options or the ICC Warrants) on the TSX, and shall
use its commercially reasonable efforts to obtain approval, subject to
customary conditions, for the listing of such Aurora Shares on the
TSX.
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(b)
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Aurora and ICC each shall
promptly:
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(i)
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supply the other with any information which may be
required in order to effectuate the filings, notifications or submissions
(except where such material is confidential or competitively or
commercially sensitive, in which case it shall be provided (subject to
applicable Laws) to the other Party’s outside counsel on an “external
counsel” basis) required by Section 4.3(a);
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(ii)
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supply any additional information which reasonably may be
required by any other Governmental Entity of any applicable
jurisdiction;
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(iii)
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subject to applicable Law, permit the other to review in
advance and provide comments on any drafts of any proposed filing,
application, submission or other written communication to any Governmental
Entity and provide the other with a copy of any such filing, application,
submission or written communication, or written summary of any oral
communication to any Governmental Entity (except where such material is
confidential or competitively or commercially sensitive,
in which case it shall be provided (subject to applicable Laws) to
the other Party’s outside counsel on an “external counsel” basis); and
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(iv)
|
promptly notify the other Party of any written or oral
communication received from any Governmental Entity and subject to
applicable Law, provide the other Party with a copy of any written
communication or a written summary of any oral
communication.
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(c)
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Neither Party shall attend any meetings, whether in
Person or by telephone, with any Governmental Entity in connection with
the Transaction, unless it provides the other Party with a reasonable
opportunity to attend such meetings (provided that (subject to applicable
laws) where confidential or competitively or commercially sensitive
information is discussed, only the other Party’s outside counsel shall be
permitted to attend the relevant portion of the meeting on an “external
counsel” basis).
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Section 4.4
|
Uruguayan Regulatory
Approval
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(a)
|
Aurora and ICC shall cooperate to obtain Uruguayan
Regulatory Approval as soon as possible.
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(b)
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Aurora shall file an application for Uruguayan Regulatory
Approval as soon as practicable after the date of this Agreement. ICC
shall provide Aurora with all information and other assistance required to
prepare and file this application.
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(c)
|
Aurora and ICC shall use commercially reasonable efforts
to obtain Uruguayan Regulatory Approval as soon as practicable. If IRCCA
asserts objections to the transactions contemplated herein, Aurora and ICC
shall work diligently in good faith to resolve such objections so as to
permit the consummation of the transactions contemplated herein as soon as
practicable.
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(d)
|
Aurora shall pay all government fees in connection with
the filings, applications and submissions referred to in this Section
4.4.
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(e)
|
In connection with the foregoing, each Party: (i) shall
provide such additional information and make or cause to be made such
additional filings or submissions reasonably required by IRCCA to obtain
Uruguayan Regulatory Approval; (ii) subject to applicable Law, shall
permit the other Party to review in advance and provide comments on any
drafts of any proposed filing, application, submission or other written
communication to IRCCA and provide the other Party with a copy of any such
filing, application, submission or written communication, or written
summary of any oral communication to IRCCA; and (iii) shall promptly
notify the other Party of any written or oral communication received from
IRCCA and, subject to applicable Law, provide the other Party with a copy
of any written communication or written summary of oral
communication.
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(f)
|
The Parties understand and agree that Aurora and its
legal counsel shall have the right to generally direct and control the
overall strategy, methods and terms in connection with responding to any
review of, or any litigation by, or negotiations with, IRCCA relating to
the transactions contemplated hereby but shall consult with ICC in
advance. Aurora shall lead in all meetings, discussions and communications
with IRCCA relating to obtaining Uruguayan Regulatory Approval (unless the
communications are in response to a request by IRCCA directed to ICC, in which case ICC or their legal
counsel may respond to such request after consulting, to the extent permitted by
applicable Law, with Aurora or their legal counsel first). Unless otherwise
required by applicable Law, neither Party shall participate in any substantive
meeting or discussion with IRCCA concerning the transactions contemplated hereby
unless it consults with the other Party in advance and, to the extent permitted
by IRCCA, allows a representative of the other Party the opportunity to
participate. No Party shall enter into any discussions with IRCCA regarding a
proposed remedy that would change the terms of the transactions contemplated
hereby without the express prior written consent and participation in those
discussions of the other Party.
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34
|
Section 4.5
|
Indemnification and Insurance
|
|
|
(a)
|
Prior to the Effective Date, ICC shall purchase customary
“tail” policies of directors’ and officers’ liability insurance providing
protection no less favourable in the aggregate than the protection
provided by the policies maintained by ICC which are in effect immediately
prior to the Effective Date and providing protection in respect of claims
arising from facts or events which occurred on or prior to the Effective
Date and Aurora shall, or shall cause ICC to maintain such tail policies
in effect without any reduction in scope or coverage for six years from
the Effective Date; provided that Aurora shall not be required to pay any
amounts in respect of such coverage prior to the Effective Time and
provided further that the cost of such policies shall not exceed 250% of
ICC’s current annual aggregate premium for policies currently maintained
by ICC. It is understood and agreed that in the event such coverage cannot
be obtained for such amount or less, then ICC shall obtain the maximum
amount of coverage as may be obtained for such amount.
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(b)
|
Aurora and ICC agree that all rights to indemnification
or exculpation now existing in favour of current and former directors or
officers of Aurora and the Aurora Subsidiaries and of ICC and the ICC
Subsidiaries as provided in the articles, notice of articles and by- laws
thereof, or in any agreement, shall survive the completion of the
Arrangement and shall continue in full force and effect for a period of
not less than six years from the Effective Date.
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(c)
|
Aurora shall, from and after the Effective Time, honour
all rights to indemnification or exculpation now existing in favour of
present and former employees, officers and directors of ICC and its
Subsidiaries to the extent that they are contained in ICC’s or the
applicable ICC Subsidiary’s current articles and/or by-laws, which
provisions shall not, except to the extent required by applicable Laws, be
amended, repealed or otherwise modified for a period of six years from the
Effective Date in any manner that would adversely affect any rights of
indemnification of individuals who, immediately prior to the Effective
Date, were employees, directors or officers of ICC or any of the ICC
Subsidiaries.
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(d)
|
If ICC or any of its Subsidiaries or any of their
respective successors or assigns (i) consolidates with or merges into any
other Person and is not a continuing or surviving corporation or entity of
such consolidation or merger, or (ii) transfers all or substantially all
of its properties and assets to any Person, Aurora shall ensure that any
such successor or assign (including, as applicable, any acquirer of
substantially all of the properties and assets of ICC of the ICC
Subsidiaries) assumes all of the obligations set forth in this Section
4.5.
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35
|
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(e)
|
Aurora and ICC shall act as agent and trustee of the
benefits of the foregoing for such directors and officers for the purpose
of this Section 4.5 shall survive the execution and delivery of this
Agreement and the completion of the Arrangement and shall be enforceable
against Aurora and ICC by the Persons described in Section 4.5(a) and
Section 4.5(b) hereof.
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Section 4.6
|
Employment Matters
|
From and
after the Effective Time, Aurora shall honour and comply with, or cause ICC or
any successor to ICC to honour and comply with, all of the obligations to the
employees of ICC and its Subsidiaries under the employment and other Contracts
and benefit plans with current and former employees of ICC, including, without
limitation, by paying to the individuals party to such agreements, in each case,
any applicable amount owing; provided that no provision in this Section 4.6
shall give any employee any right to continued employment or impair in any way
the right of ICC to terminate the employment of any employee in accordance with
any Contract as may be applicable.
|
Section 4.7
|
Confidentiality Agreement
|
Each of
the Parties acknowledges that the Confidentiality Agreement continues to apply
and that any information provided under this Agreement by one Party to the other
Party that is non-public and/or proprietary in nature shall be subject to the
terms of the Confidentiality Agreement; provided that to the extent any
provision of the Confidentiality Agreement conflicts with the terms of this
Agreement, the terms of this Agreement shall prevail. If this Agreement is
terminated in accordance with its terms, the obligations under the
Confidentiality Agreement shall survive the termination of this Agreement.
ARTICLE 5
CONDITIONS
|
Section 5.1
|
Mutual Conditions
|
The
respective obligations of ICC and Aurora to complete the Arrangement are subject
to the fulfillment of the following conditions at or before the Completion
Deadline or such other time as is specified below:
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|
(a)
|
the Interim Order shall have been granted on terms
consistent with this Agreement and in form and substance satisfactory to
ICC and Aurora, each acting reasonably, and shall not have been set aside
or modified in a manner unacceptable to ICC or Aurora, each acting
reasonably, on appeal or otherwise;
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(b)
|
the ICC Arrangement Resolution shall have been passed by
the ICC Shareholders in accordance with the Interim Order;
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(c)
|
the Final Order shall have been granted in form and
substance satisfactory to ICC and Aurora, each acting reasonably, and
shall not have been set aside or modified in a manner unacceptable to ICC
or Aurora, each acting reasonably, on appeal or otherwise.
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(d)
|
there shall not be in force any Laws, ruling, order or
decree, and there shall not have been any action taken under any Laws or
by any Governmental Entity or other regulatory authority, that makes it
illegal or otherwise directly or indirectly restrains, enjoins or
prohibits the consummation of the Arrangement in accordance with the terms
hereof;
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36
|
|
(e)
|
the consent and approval of Aurora’s lenders under the
Aurora Credit Agreement to the completion of the Arrangement (to the
extent required thereunder in compliance with the terms thereof in order
to complete the Arrangement) shall have been obtained on terms and
conditions satisfactory to Aurora and ICC, each acting
reasonably;
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(f)
|
the issuance of Aurora Shares issuable pursuant to the
Arrangement shall be exempt from registration requirements under the
Section 3(a)(10) Exemption; and
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(g)
|
the TSX shall have conditionally approved the listing
thereon of the Aurora Shares to be issued pursuant to the Arrangement
(including any Aurora Shares issuable upon the exercise or conversion of
ICC Compensation Options or ICC Warrants), subject in each case only to
compliance with the usual requirements of the TSX, including customary
post-closing deliveries.
|
The
foregoing conditions are for the mutual benefit of Aurora and ICC and may be
waived by mutual consent of Aurora and ICC in writing at any time.
|
Section 5.2
|
Aurora Conditions
|
The
obligation of Aurora to complete the Arrangement is subject to the fulfillment
of the following additional conditions at or before the Completion Deadline or
such other time as is specified below:
|
|
(a)
|
(i) the representations and warranties made by ICC in
Schedule C of this Agreement that are qualified by Material Adverse Effect
shall be true and correct in all respects as of the Effective Date as if
made on and as of the Effective Date (except for those representations and
warranties made as of a specific date, which shall be true and correct in
all respects on and as of such date), and (ii) all other representations
and warranties made by ICC in this Agreement shall be true and correct in
all material respects as of the Effective Date as if made on and as of the
Effective Date (except for those representations and warranties made as of
a specific date, which shall be true and correct in all material respects
on and as of such date), except where any failure or failures of any such
other representations and warranties to be so true and correct in all
respects would not, individually or in the aggregate, have a Material
Adverse Effect with respect to ICC (and, for this purpose, any reference
to “material”, “Material Adverse Effect” or any other concept of
materiality in such representations and warranties shall be ignored); and
(iii) ICC shall have provided to Aurora a certificate of two officers
thereof, certifying the foregoing;
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(b)
|
from the date of this Agreement, there shall not have
occurred a Material Adverse Effect with respect to ICC;
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(c)
|
ICC shall have complied in all material respects with
each of the covenants of ICC contained herein to be complied with by it on
or prior to the Effective Date, and ICC shall have provided to Aurora a
certificate of two officers of ICC certifying the foregoing;
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(d)
|
Dissent Rights have not been validly exercised with
respect to greater than 5.0% of the issued and outstanding ICC
Shares;
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(e)
|
the ICC Lock-Up Agreements shall not have been terminated
in accordance with their terms;
|
37
|
|
(f)
|
each of the directors and officers of ICCshall have
resigned as of the Effective Time and have executed and delivered, in
favour of ICC and Aurora, a mutual release in form and substance
satisfactory to the Parties, acting reasonably, which shall include the
“tail” insurance contemplated in Section 4.5;
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(g)
|
the ICC Board shall have adopted all necessary
resolutions, and all other necessary corporate action shall have been
taken by ICC, to permit the consummation of the Arrangement;
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(h)
|
there shall not be threatened in writing or pending any
suit, action or proceeding by any Governmental Entity challenging this
Agreement or the transactions contemplated hereby, that would reasonably
be expected to result in a judgment, order or decree materially delaying,
restraining or prohibiting the Arrangement (or Aurora’s direct or indirect
ownership of ICC on or following the Effective Date) or compelling Aurora
to dispose of or hold separate any material portion of the business or
assets of ICC (or any equity interest in ICC); and
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(i)
|
the Uruguayan Regulatory Approval has been obtained and
is in force and has not been modified.
|
The
foregoing conditions are for the benefit of Aurora and may be waived, in whole
or in part, by Aurora in writing at any time.
|
Section 5.3
|
ICC Conditions
|
The
obligation of ICC to complete the Arrangement is subject to the fulfillment of
the following additional conditions at or before the Completion Deadline or such
other time as is specified below:
|
|
(a)
|
(i) the representations and warranties made by Aurora in
Sections (a), (b), (e) and (f) of Schedule D shall be true and correct in
all material respects as of the Effective Date as if made on and as of the
Effective Date (except for those representations and warranties made as of
a specific date, which shall be true and correct in all material respects
on and as of such date), and (ii) all other representations and warranties
made by Aurora in this Agreement shall be true and correct in all respects
as of the Effective Date as if made on and as of the Effective Date
(except for those representations and warranties made as of a specific
date, which shall be true and correct in all respects on and as of such
date), except where any failure or failures of any such other
representations and warranties to be so true and correct in all respects
would not, individually or in the aggregate, have a Material Adverse
Effect with respect to Aurora (and, for this purpose, any reference to
“material”, “Material Adverse Effect” or any other concept of materiality
in such representations and warranties shall be ignored); and (iii) Aurora
shall have provided to ICC a certificate of two officers thereof,
certifying the foregoing;
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(b)
|
from the date of this Agreement, there shall not have
occurred a Material Adverse Effect with respect to Aurora; and
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|
|
(c)
|
Aurora shall have complied in all material respects with
each of the covenants of Aurora contained herein to be complied with by it
on or prior to the Effective Date, and Aurora shall have provided to ICC a
certificate of two officers thereof, certifying the
foregoing.
|
38
The
foregoing conditions are for the benefit of ICC and may be waived, in whole or
in part, by ICC in writing at any time.
|
Section 5.4
|
Notice and Cure Provisions
|
Each
Party hereto shall give prompt notice to the other Party of the occurrence, or
failure to occur, at any time from the date hereof until the Effective Date, of
any event or state of facts which occurrence or failure would, would be likely
to or could:
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(a)
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cause any of the representations or warranties of such
Party hereto contained herein to be untrue or inaccurate in any respect on
the date hereof or on the Effective Date;
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(b)
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result in the failure to comply with or satisfy any
covenant or agreement to be complied with or satisfied by such Party
hereto prior to the Effective Date; or
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(c)
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result in the failure to satisfy any of the conditions
precedent in favour of the other Parties hereto contained in Section 5.1,
Section 5.2 or Section 5.3 hereof, as the case may
be.
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Aurora
may not exercise its right to terminate this Agreement pursuant to Section
7.2(h) and ICC may not exercise its right to terminate this Agreement pursuant
to Section 7.2(i) unless the Party intending to rely thereon has delivered a
written notice to the other Party hereto specifying in reasonable detail the
breaches of covenants or untruthfulness or inaccuracy of representations and
warranties or other matters that the Party hereto delivering such notice is
asserting as the basis for the exercise of the termination right, as the case
may be, and if any such notice is delivered, and a Party hereto is proceeding
diligently, at its own expense, to cure such matter, if such matter is
susceptible to being cured, the Party hereto that has delivered such notice may
not terminate this Agreement until the earlier of the Completion Deadline and
the expiration of a period of ten (10) days from date of delivery of such
notice. If such notice has been delivered prior to the date of the ICC Meeting,
the ICC Meeting shall be adjourned or postponed until the earlier of (A) the
expiry of such period and (B) five Business Days prior to the Completion
Deadline.
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Section 5.5
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Merger of Conditions
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The
conditions set out in Section 5.1, Section 5.2 or Section 5.3 hereof shall be
conclusively deemed to have been satisfied, fulfilled or waived at the Effective
Time.
ARTICLE 6
NON-SOLICITATION AND TERMINATION
PAYMENT
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Section 6.1
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ICC Covenant Regarding Non-Solicitation
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(a)
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Except as expressly provided in Section 6.1(e), Section
6.1(g) and Section 6.2 below, ICC shall not, directly or indirectly,
through any officer, director, employee, representative, advisor or agent
of ICC or any of the ICC Subsidiaries (collectively, for the purpose of
Sections 6.1 and 6.2, the “
Representatives
”, which, for further
clarity, does not include the ICC Shareholders), or otherwise and shall
not permit or authorize any such Person to do so on its
behalf:
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(i)
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solicit, initiate, knowingly facilitate, encourage or
promote (including by way of furnishing information, knowingly permitting
any visit to facilities or properties of ICC or any of the ICC
Subsidiaries or entering into any form of
agreement,arrangement or understanding (other than a confidentiality
agreement permitted by and in accordance with Section 6.1(e)(ii)) any inquiries,
proposals, expressions of interest or offers regarding, constituting or that may
reasonably be expected to constitute or lead to an ICC Acquisition Proposal;
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(ii)
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participate, directly or indirectly, in any discussions
or negotiations regarding, or furnish to any Person any information in
connection with or otherwise cooperate with, assist or participate in, any
effort or attempt to make any ICC Acquisition Proposal or inquiries,
proposals, expressions of interest or offers that may reasonably be
expected to constitute or lead to an ICC Acquisition Proposal;
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(iii)
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make, or propose publicly to make an ICC Change in
Recommendation; or
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(iv)
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accept, enter into, or propose publicly to accept or
enter into, any letter of intent, agreement, understanding or arrangement
related to any ICC Acquisition Proposal or that may reasonably be expected
to constitute or lead to an ICC Acquisition Proposal (other than a
confidentiality agreement permitted by and in accordance with Section
6.1(e)(ii)).
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(b)
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ICC shall, and shall cause the ICC Subsidiaries and the
Representatives to, immediately terminate and cease any discussions or
negotiations with any parties (other than Aurora and its Representatives)
with respect to any proposal that constitutes, or may reasonably be
expected to constitute, or lead to an ICC Acquisition Proposal and, in
connection therewith, ICC shall and shall cause the ICC Subsidiaries and
the Representatives to:
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(i)
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discontinue or not allow access to any of ICC’s or the
ICC Subsidiaries’ confidential information to any third party in
connection with any inquiries, proposals, expressions of interest or
offers constituting or that may reasonably be expected to constitute or
lead to an ICC Acquisition Proposal; and
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(ii)
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within two Business Days of the date hereof, to the
extent it is permitted to do so under applicable Laws, promptly request
the return or destruction of all information provided to any third party
that has entered into a confidentiality agreement with ICC or any ICC
Subsidiary relating to an ICC Acquisition Proposal, or that may reasonably
be expected to constitute or lead to an ICC Acquisition Proposal, to the
extent that such information has not previously been returned or
destroyed, and shall use all commercially reasonable efforts to ensure
that such requests are honoured.
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(c)
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ICC represents and warrants that ICC has not, in the year
prior to the date hereof, waived any confidentiality, standstill,
non-disclosure, non-solicitation, use, business purpose or similar
agreement, restriction or covenant to which ICC or any ICC Subsidiary is a
party. ICC covenants and agrees that ICC shall take all necessary action
to enforce each such confidentiality, standstill, non-disclosure,
non-solicitation, use, business purpose or similar agreement, restriction
or covenant. ICC further covenants and agrees not to and shall cause the
ICC Subsidiaries and the Representatives not to release any Person from,
or waive, amend, suspend or otherwise modify any Person’s obligations
under any confidentiality, standstill, non-disclosure, non-solicitation,
use, business purpose or similar agreement, restriction or covenant to
which ICC or any ICC Subsidiary is a party without the prior written
consent of Aurora (which may be withheld or delayed in Aurora’s sole and
absolute discretion); provided, however, that the Parties
acknowledge and agree that the automatic termination or release of any such
agreement, restriction or covenant in accordance with its terms shall not be a
violation of this Section 6.1(c) .
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(d)
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If ICC or any of the ICC Subsidiaries or any of its
Representatives, receives or otherwise becomes aware of any inquiry,
proposal or offer that constitutes or may reasonably be expected to
constitute or lead to an ICC Acquisition Proposal, or any request for
copies of, access to, or disclosure of, confidential information relating
to ICC or any of the ICC Subsidiaries in connection with an ICC
Acquisition Proposal, including but not limited to information, access, or
disclosure relating to the properties, facilities, books or records of ICC
or any of the ICC Subsidiaries, ICC shall:
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(i)
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promptly notify Aurora, at first orally, and then as soon
as practicable and in any event within 24 hours in writing, of such ICC
Acquisition Proposal, inquiry, proposal, offer or request, including a
description of its material terms and conditions, and the identity of all
Persons making the ICC Acquisition Proposal, inquiry, proposal, offer or
request;
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(ii)
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provide Aurora with copies of all written documents,
material or substantive correspondence or other material received in
respect of, from or on behalf of any such Persons;
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(iii)
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keep Aurora fully informed on a current basis of the
status of developments and, to the extent permitted by Section 6.1(e),
negotiations with respect to such ICC Acquisition Proposal, inquiry,
proposal, offer or request, including any changes, modifications or other
amendments to any such ICC Acquisition Proposal, inquiry, proposal, offer
or request; and
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(iv)
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provide to Aurora copies of all material or substantive
correspondence if in writing or electronic form, and if not in writing or
electronic form, a description of the material terms of such
correspondence communicated to ICC by or on behalf of any Person making
any such ICC Acquisition Proposal, inquiry, proposal, offer or
request.
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(e)
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Notwithstanding Section 6.1(a), if at any time prior to
obtaining the approval by the ICC Shareholders of the ICC Arrangement
Resolution, ICC receives an unsolicited
bona fide
ICC Acquisition
Proposal, ICC may:
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(i)
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contact the Person making such ICC Acquisition Proposal
and its representatives solely for the purpose of clarifying the terms and
conditions of such ICC Acquisition Proposal; and
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(ii)
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engage in or participate in discussions or negotiations
with such Person regarding such ICC Acquisition Proposal, and subject to
entering into a confidentiality and standstill agreement with such Person
(unless such Person is already a party to a confidentiality and standstill
agreement with ICC) that contains terms that are no less favourable to ICC
than those found in the Confidentiality Agreement, and any such copies,
access or disclosure provided to such Person already having been (or
simultaneously being) provided to Aurora, may provide copies of, access to
or disclosure of information, properties, facilities, books or records of
ICC or the ICC Subsidiaries for a maximum of ten Business Days after the
day on which access or disclosure is first afforded to the Person
making the ICC Acquisition Proposal, if and only if, in the case of this Section
6.1(e)(ii):
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(A)
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the ICC Board first determines in good faith, after
consultation with its financial advisors and its outside legal counsel,
that such ICC Acquisition Proposal constitutes or could reasonably be
expected to constitute or lead to an ICC Superior Proposal, and, after
consultation with its outside legal counsel, that the failure to engage in
such discussions or negotiations or to provide such access or disclosure
would be inconsistent with its fiduciary duties;
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(B)
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such Person was not restricted from making such ICC
Acquisition Proposal pursuant to an existing confidentiality, standstill,
non- disclosure, use, business purpose or similar agreement, restriction
or covenant with ICC or any of the ICC Subsidiaries;
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(C)
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ICC has been, and continues to be, in compliance with its
obligations under Section 6.1 and Section 6.2; and
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(D)
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ICC promptly provides Aurora
with:
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(I)
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written notice stating ICC’s intention to participate in
such discussions or negotiations and to provide such copies, access or
disclosure and that ICC Board has determined that failure to take such
action would be inconsistent with its fiduciary duties; and
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(II)
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prior to providing any such copies, access or disclosure
to such Person, ICC provides Aurora with a true, complete and final
executed copy of the confidentiality and standstill agreement referred to
in Section 6.1(e)(ii).
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(f)
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ICC shall ensure that the ICC Subsidiaries and the
Representatives are aware of the provisions of this Section 6.1, and ICC
shall be responsible for any breach of this Section 6.1 by the ICC
Subsidiaries or the Representatives.
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(g)
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Notwithstanding any of the provisions of this
Agreement:
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(i)
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the ICC Board has the right to respond, within the time
and in the manner required by applicable Securities Laws, to any take-over
bid made for the ICC Shares, that it determines is not an ICC Superior
Proposal, provided that Aurora and its outside legal counsel have been
provided with a reasonable opportunity to review and comment on any such
response and the ICC Board shall give reasonable consideration to such
comments;
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(ii)
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prior to the ICC Meeting, ICC and the ICC Board shall not
be prohibited from making any disclosure to ICC Shareholders,
if:
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(A)
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a Material Adverse Effect with respect to Aurora has
occurred; and
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(B)
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the ICC Board has reasonably determined in good faith
after consultation with its outside legal counsel that the failure to do
so would be inconsistent with its fiduciary duties;
and
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(iii)
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prior to the ICC Meeting, ICC and the ICC Board shall not
be prohibited from making an ICC Change in Recommendation
if:
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(A)
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a Material Adverse Effect with respect to Aurora has
occurred; and
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(B)
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the ICC Board has reasonably determined in good faith
after consultation with its outside legal counsel that the failure to do
so would be inconsistent with its fiduciary
duties.
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Section 6.2
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Notice of ICC Superior Proposal
Determination
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(a)
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If ICC receives an ICC Acquisition Proposal and the ICC
Board makes a determination that such ICC Acquisition Proposal constitutes
an ICC Superior Proposal prior to the approval by the ICC Shareholders of
the ICC Arrangement Resolution, ICC may make an ICC Change in
Recommendation and enter into a definitive agreement with respect to such
ICC Acquisition Proposal (other than a confidentiality and standstill
agreement contemplated by Section 6.1(e)(ii)), if and only
if:
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(i)
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the Person making the ICC Superior Proposal was not
restricted from making such ICC Superior Proposal pursuant to any existing
confidentiality, non- disclosure, standstill, business purpose or other
similar agreement, restriction or covenant with ICC or any of the ICC
Subsidiaries;
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(ii)
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ICC has complied with its obligations under Section
6.1;
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(iii)
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ICC has provided Aurora with written notice (a “
ICC
Superior Proposal Notice
”) promptly following the ICC Board’s
determination that the ICC Acquisition Proposal constitutes an ICC
Superior Proposal that:
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(A)
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the ICC Acquisition Proposal constitutes an ICC Superior
Proposal; and
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(B)
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ICC intends to enter into an agreement with respect to
such ICC Superior Proposal;
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The ICC Superior Proposal Notice shall set forth the
determinations of the ICC Board regarding the value and financial terms
that the ICC Board, in consultation with its financial advisors and
outside legal counsel, has determined should be ascribed to any non-cash
consideration offered under such ICC Superior Proposal;
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(iv)
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ICC has delivered to Aurora a copy of the proposed
definitive agreement for the ICC Superior Proposal and all supporting
materials, including any financing documents supplied to ICC in connection
therewith;
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(v)
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a period of five Business Days (the “
Aurora Match
Period
”) has elapsed from the date that is the later of the date on
which Aurora received the ICC Superior Proposal Notice and the date on which Aurora received the
materials set forth in Section 6.2(a)(iv);
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(vi)
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during the Aurora Match Period, Aurora has had the
opportunity, but not the obligation, in accordance with Section 6.2(b), to
offer to amend this Agreement and the Arrangement in order for such ICC
Acquisition Proposal to cease to be an ICC Superior Proposal;
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(vii)
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after the Aurora Match Period, the ICC
Board:
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(A)
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has determined in good faith, after consultation with its
outside legal counsel and financial advisors, that such ICC Acquisition
Proposal continues to constitute an ICC Superior Proposal, which
determination shall consider the terms of the Arrangement as proposed to
be amended by Aurora if Aurora proposes any amendment in accordance with
Section 6.2(b); and
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(B)
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has determined in good faith, after consultation with its
outside legal counsel and financial advisors, that the failure of the ICC
Board to recommend that ICC enter into a definitive agreement with respect
to such ICC Superior Proposal would be inconsistent with its fiduciary
duties; and
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(viii)
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prior to or concurrently with entering into such
definitive agreement this Agreement is terminated by ICC under Section
7.2(g) and ICC pays the ICC Termination Payment to Aurora in accordance
with Section 6.3.
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(b)
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During the Aurora Match Period, Aurora shall have the
right, but not the obligation, to propose in writing to amend the terms of
this Agreement and the Arrangement. During the Aurora Match Period, ICC
shall (i) review any proposal by Aurora to amend the terms of this
Agreement and the Arrangement in order to determine, in good faith and in
a manner consistent with the fiduciary duties of the ICC Board, whether
the proposed amendment by Aurora upon acceptance by ICC would result in
the ICC Acquisition Proposal not being an ICC Superior Proposal; and (ii)
negotiate with Aurora in good faith, and in a manner consistent with the
fiduciary duties of the ICC Board, to make such amendments to the terms of
this Agreement and the Arrangement as would enable Aurora to proceed with
the Transaction on such amended terms. If the ICC Board determines that
the proposed amendment by Aurora upon acceptance by ICC would result in
the ICC Acquisition Proposal not being an ICC Superior Proposal, ICC shall
promptly so advise Aurora and enter into an amendment to this Agreement
with Aurora reflecting the amended proposal of Aurora and shall promptly
reaffirm its recommendation of the Arrangement as amended.
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(c)
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ICC acknowledges and agrees that each successive
modification of any ICC Acquisition Proposal that results in an increase
in, or modification of, the consideration (or value of such consideration)
to be received by the ICC Shareholders or other material terms or
conditions thereof shall constitute a new ICC Acquisition Proposal for the
purposes of this Section 6.2 and Aurora shall be afforded a new Aurora
Match Period and the rights afforded in this Section 6.2 shall apply in
respect of each such ICC Acquisition Proposal.
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(d)
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The ICC Board shall promptly reaffirm its unanimous
recommendation of the Arrangement by press release after: (i) the ICC
Board determines any ICC Acquisition Proposal that has been publicly
announced or publicly disclosed is not an ICC Superior Proposal; or (ii)
the ICC Board determines that a proposed amendment to the terms of the
Arrangement would result in any ICC Acquisition Proposal which has been
publicly announced or made not being an ICC Superior Proposal, and Aurora
has so amended the terms of the Arrangement. Aurora and its counsel shall
be given a reasonable opportunity to review and comment on the form and
content of any such press release. ICC shall make all reasonable
amendments to such press release as requested by Aurora and its
counsel.
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(e)
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Nothing contained in this Section 6.2 shall limit in any
way the obligation of the ICC to convene and hold the ICC Meeting in
accordance with Section 4.2(a)(v) of this Agreement while this Agreement
remains in force.
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(f)
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Where ICC has provided Aurora with a notice under Section
6.2(a)(iii) and the ICC Meeting is scheduled to be held during or within
two Business Days following the expiration of the Aurora Match Period,
then, subject to applicable Laws, ICC shall be entitled to, and shall if
so requested by Aurora, postpone or adjourn the ICC Meeting to a date that
shall not be less than three Business Days and not more than 10 Business
Days after the scheduled date of the ICC Meeting, provided that in no
event shall such adjourned or postponed meeting be held on a date that is
less than five Business Days prior to the Completion Deadline, and shall,
in the event that Aurora and ICC amend the terms of this Agreement
pursuant to Section 6.2(b), ensure that the details of such amended
Agreement are communicated to the ICC Shareholders prior to the resumption
of the adjourned or postponed ICC Meeting.
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Section 6.3
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ICC Termination Payment Event
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Termination of this Agreement in each of
the following circumstances
shall constitute a “
ICC Termination Payment Event
”:
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(a)
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this Agreement is terminated by Aurora pursuant to
Section 7.2(b) (but not including a termination by Aurora pursuant to
Section 7.2(b)(i) in circumstances where the ICC Change in Recommendation
resulted from the occurrence of a Material Adverse Effect with respect to
Aurora and ICC has complied with Section 6.1(g)(iii));
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(b)
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this Agreement is terminated by either Aurora or ICC
pursuant to Section 7.2(c) if at such time Aurora was permitted to
terminate this Agreement pursuant to Section 7.2(b) (but not including a
termination by Aurora pursuant to Section 7.2(b)(i) in circumstances where
the ICC Change in Recommendation resulted from the occurrence of a
Material Adverse Effect with respect to Aurora and ICC has complied with
Section 6.1(g)(iii));
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(c)
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this Agreement is terminated by ICC pursuant to Section
7.2(g); or
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(d)
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this Agreement is terminated by either Aurora or ICC
pursuant to either Section 7.2(c) or Section 7.2(e) (but not including a
termination pursuant to Section 7.2(e) in circumstances where, at the time
of such termination pursuant to Section 7.2(e), ICC is also entitled to
terminate this Agreement pursuant to Section 7.2(d)) hereof
and:
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(i)
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following the date hereof and prior to such termination,
an ICC Acquisition Proposal shall have been made to ICC and made known to
ICC Shareholders generally or shall have been made directly to ICC
Shareholders generally or any Person shall have publicly announced an
intention to make an ICC Acquisition Proposal (a “
Pending ICC
Acquisition Proposal
”); and
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(ii)
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within twelve months following the date of such
termination:
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(A)
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an ICC Acquisition Proposal is consummated or effected
(whether or not such ICC Acquisition Proposal is the same as the Pending
ICC Acquisition Proposal); or
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(B)
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ICC or one or more of the ICC Subsidiaries, directly or
indirectly, in one or more transactions, enters into a contract in respect
to an ICC Acquisition Proposal (whether or not such ICC Acquisition
Proposal is the same as the Pending ICC Acquisition Proposal) and such ICC
Acquisition Proposal is later consummated or effected (whether or not such
ICC Acquisition Proposal is later consummated or effected within twelve
months of such termination).
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For the purposes of this Section
6.3(d), all references to “20%” in the definition of “ICC Acquisition Proposal”
shall be deemed to be references to “50%”.
Upon the
occurrence of an ICC Termination Payment Event, ICC shall pay to Aurora an
amount in cash equal to $9,500,000 (the “
ICC Termination Payment
”) in
immediately available funds in consideration for the disposition of Aurora’s
rights under this Agreement. In the circumstances set forth in Sections 6.3(a)
or 6.3(b) above, the ICC Termination Payment shall be paid within three Business
Days of the termination of this Agreement; in the circumstances set forth in
Section 6.3(c) above, the ICC Termination Payment shall be paid at the time of
the termination of this Agreement; and, in the circumstances set forth in
Section 6.3(d) above, the ICC Termination Payment shall be paid within three
Business Days following the completion of such ICC Acquisition Proposal. ICC
shall not be obligated to make more than one payment pursuant to this Section
6.3. ICC hereby acknowledges that the agreements contained in this Section 6.3
are an integral part of the transactions contemplated in this Agreement and
that, without those agreements, Aurora would not enter into this Agreement, and
that the ICC Termination Payment is a payment in consideration for the
disposition of Aurora’s rights under this Agreement and is a genuine
pre-estimate of the damages that Aurora shall suffer or incur as a result of the
non-completion of the Arrangement in the circumstances in which the ICC
Termination Payment is payable, that such payment is not for lost profits or a
penalty, and that ICC shall not take any position inconsistent with the
foregoing.
ICC
hereby irrevocably waives any right it may have to raise as a defence that any
such ICC Termination Payment is excessive or punitive. Upon termination of this
Agreement as permitted under Section 7.2 under circumstances where Aurora is
entitled to the ICC Termination Payment and the ICC Termination Payment is paid
in full, Aurora shall have no further claim against ICC at law or in equity or
otherwise and in any such case it shall not seek to obtain any recovery,
judgment, or damages of any kind, including consequential, indirect, or punitive
damages, against ICC or the ICC Subsidiaries or any of their respective
directors, officers, employees, partners, managers, members, shareholders or
affiliates in connection with this Agreement or the transactions contemplated
hereby; provided however, that nothing herein shall preclude ICC from seeking
injunctive relief to restrain any breach or threatened breach by Aurora of any
of its obligations hereunder or otherwise to obtain specific performance without
the necessity of posting bond or security in connection therewith.
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Section 6.4
|
Reimbursement of Expenses by ICC
|
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(a)
|
Subject to Section 6.4(b), in the event of termination of
this Agreement by either ICC or Aurora in accordance with Section 7.2(c),
ICC shall pay, within three Business Days of the termination of this
Agreement, an amount in cash of up to $750,000 to Aurora as reimbursement
for the reasonable costs and reasonable expenses actually incurred by
Aurora with respect to the Arrangement.
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(b)
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No amount shall be paid or payable by ICC under Section
6.4(a) if ICC has paid the ICC Termination Payment payable pursuant to
Section 6.3, as the case may be.
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In the
event ICC makes any payment under Section 6.4(a) and is then required to pay an
ICC Termination Payment, the amount paid under Section 6.4(a) shall be credited
towards payment of the ICC Termination Payment.
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Section 6.5
|
Aurora Termination Payment and Reimbursement
of Expenses by Aurora
|
Termination of this Agreement in each of
the following circumstances
shall constitute a “
Aurora Termination Payment Event
”:
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(a)
|
this Agreement is terminated by Aurora or ICC pursuant to
Section 7.2(d); or
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(b)
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this Agreement is terminated by Aurora pursuant to
Section 7.2(e) if, at the time of such termination pursuant to Section
7.2(e), ICC would be entitled to terminate this Agreement pursuant to
7.2(d).
|
Upon the
occurrence of an Aurora Termination Payment Event, Aurora shall pay to ICC,
within three Business Days of the termination of this Agreement: (a) an amount
in cash equal to $1,250,000; and (b) an amount in cash of up to $750,000 as
reimbursement for the reasonable costs and reasonable expenses actually incurred
by ICC with respect to the Arrangement.
ARTICLE 7
AMENDMENT AND TERMINATION
This
Agreement and the Plan of Arrangement may, at any time and from time to time
before or after the holding of each of the ICC Meeting but not later than the
Effective Time, and in the case of the Plan of Arrangement subject to the
provisions of Section 6.1 thereof, be amended by mutual written agreement of the
Parties hereto without, subject to applicable Laws, further notice to or
authorization on the part of the ICC Shareholders and any such amendment may,
without limitation:
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(a)
|
change the time for the performance of any of the
obligations or acts of either of the Parties;
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(b)
|
waive any inaccuracies in or modify any representation or
warranty contained herein or in any document delivered pursuant
hereto;
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(c)
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waive compliance with or modify any of the covenants
herein contained and waive or modify the performance of any of the
obligations of any of the Parties; and
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47
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(d)
|
waive compliance with or modify any condition herein
contained; provided, however, that notwithstanding the foregoing,
following the ICC Meeting, the Exchange Ratio shall not be amended without
the approval of the ICC Shareholders.
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This
Agreement may be terminated at any time prior to the Effective Date:
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(a)
|
by the mutual written consent of ICC and Aurora, duly
authorized by the board of directors of each;
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(b)
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by Aurora if:
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(i)
|
prior to the approval by the ICC Shareholders of the ICC
Arrangement Resolution, (A) the ICC Board shall make an ICC Change in
Recommendation or (B) ICC enters into an agreement (other than a
confidentiality and standstill agreement that complies with Section
6.1(e)(ii)) with respect to any ICC Acquisition Proposal; or
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(ii)
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ICC breaches its obligations under Section 6.1 or Section
6.2 in any material respect;
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(c)
|
by either Aurora or ICC if the ICC Meeting shall have
been held and completed and the ICC Arrangement Resolution shall not have
been approved by the ICC Shareholders in accordance with the Interim
Order, provided that ICC shall not be entitled to terminate this Agreement
pursuant to this Section 7.2(c) if the failure to obtain the approval of
the ICC Shareholders to the ICC Arrangement Resolution has been caused by,
or is the result of, a breach by ICC of any of its representations or
warranties or the failure of ICC to perform any of its covenants or
agreements under this Agreement;
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(d)
|
by either Aurora or ICC if the condition in Section
5.1(e) has not been satisfied at or before the Completion Deadline,
provided that Aurora shall not be entitled to terminate this Agreement
pursuant to this Section 7.2(d) if the failure to satisfy the condition in
Section 5.1(e) has been caused by, or is the result of, a breach by Aurora
of any of its representations or warranties or the failure of Aurora to
perform any of its covenants or agreements under this Agreement;
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(e)
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by either Aurora or ICC if the Effective Date shall not
have occurred by the Completion Deadline, provided
however:
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(i)
|
if the failure of the Effective Date to occur by such
date has been caused by, or is the result of, a breach by ICC of any of
its representations or warranties or the failure of ICC to perform any of
its covenants or agreements under this Agreement, then ICC shall not be
entitled to terminate this Agreement pursuant to this Section 7.2(e);
or
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(ii)
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if the failure of the Effective Date to occur by such
date has been caused by, or is the result of, a breach by Aurora of any of
its representations or warranties, the failure of Aurora to perform any of
its covenants or agreements under this Agreement then Aurora shall not be
entitled to terminate this Agreement pursuant to this Section
7.2(e);
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48
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(f)
|
by Aurora or ICC if after the date of this Agreement, any
applicable Law is enacted, made, enforced or amended, as applicable, that
makes the consummation of the Arrangement illegal or otherwise prohibits
or enjoins the ICC or Aurora from consummating the Arrangement, and such
applicable Law has, if applicable, become final and non-appealable,
provided that the Party seeking to terminate this Agreement pursuant to
this Section 7.2(f) has used its commercially reasonable efforts to, as
applicable, appeal or overturn such Law or otherwise have it lifted or
rendered non- applicable in respect of the Arrangement;
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(g)
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by ICC if ICC proposes to enter into any agreement,
arrangement or understanding in respect of an ICC Superior Proposal in
compliance with Section 6.1 and Section 6.2, provided that ICC pays the
ICC Termination Payment to Aurora contemporaneously with such
termination;
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(h)
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by Aurora, if ICC breaches any representation or warranty
of ICC set forth in this Agreement which breach would cause the condition
in Section 5.2(a) not to be satisfied or ICC fails to comply with any of
its covenants set forth in this Agreement (other than the covenants in
Section 6.1 and Section 6.2) that would cause the condition in Section
5.2(c) not to be satisfied, and such breach or failure is incapable of
being cured or is not cured in accordance with the terms of Section 5.4;
provided that any wilful breach shall be deemed incapable of being cured
and Aurora is not then in breach of this Agreement so as to cause any
condition in Section 5.3(a) or Section 5.3(c) not to be
satisfied;
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(i)
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by ICC, if Aurora breaches any representation or warranty
of Aurora set forth in this Agreement which breach would cause the
condition in Section 5.3(a) not to be satisfied or Aurora fails to comply
with any of its covenants set forth in this Agreement that would cause the
condition in Section 5.3(c) not to be satisfied, and such breach or
failure is incapable of being cured or is not cured in accordance with the
terms of Section 5.4; provided that any wilful breach shall be deemed
incapable of being cured and ICC is not then in breach of this Agreement
so as to cause any condition in Section 5.2(a) or Section 5.2(c) not to be
satisfied;
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(j)
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by Aurora, if there has occurred a Material Adverse
Effect with respect to ICC after the date of this Agreement; or
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(k)
|
by ICC, if there has occurred a Material Adverse Effect
with respect to Aurora after the date of this
Agreement;
|
provided that any termination by a Party hereto in accordance
with paragraphs (b) to (k) above shall be made by such Party delivering written
notice thereof to the other Party hereto prior to the Effective Date and
specifying therein in reasonable detail the matter or matters giving rise to
such termination right.
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Section 7.3
|
Effect of Termination
|
In the event of termination of this Agreement as provided in
Section 7.2, this Agreement shall forthwith become void and have no further
effect, and there shall be no liability or further obligation on the part of ICC
or Aurora hereunder, except that:
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(a)
|
the provisions of Section 4.1(a), Section 4.7, Section
6.3, Section 6.4, Section 6.5, Section 8.1, Section 8.2, Section 8.3,
Section 8.5, Section 8.7, Section 8.10, Section
8.11,Section 8.12 and this Section 7.3 shall remain in full force
and effect and shall survive any such termination; and
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49
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(b)
|
neither ICC nor Aurora shall be released or relieved from
any liability arising from their breach of any of their representations,
warranties, covenants, or agreements hereunder save and except as provided
herein.
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ARTICLE 8
GENERAL
Any
notice, consent, waiver, direction or other communication required or permitted
to be given under this Agreement by a Party hereto shall be in writing and shall
be delivered by hand to the Party hereto to which the notice is to be given,
sent by electronic mail to the following address or to such other address as
shall be specified by a party hereto by like notice. Any notice, consent,
waiver, direction or other communication aforesaid shall, if delivered, be
deemed to have been given and received on the date on which it was delivered to
the address provided herein (if a Business Day or, if not, then the next
succeeding Business Day) and if sent by electronic mail be deemed to have been
given and received at the time of receipt (if a Business Day or, if not, then
the next succeeding Business Day) unless actually received after 5:00 p.m.
(Vancouver time) at the point of delivery in which case it shall be deemed to
have been given and received on the next Business Day.
The
addresses and numbers for service of each of the parties hereto shall be as
follows:
|
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Aurora Cannabis Inc.
|
|
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1500 – 1199 West Hastings Street
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Vancouver, BC V6E 3T5
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Attention:
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[REDACTED]
|
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Email:
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[REDACTED]
|
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with a copy (which shall not constitute notice)
to:
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Attention:
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[REDACTED]
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Email:
|
[REDACTED]
|
and
McMillan LLP
1500 – 1055 West
Georgia Street
Vancouver, BC V6E 4N7
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Attention:
|
Desmond Balakrishnan / Arman Farahani
|
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Email:
|
desmond.balakrishnan@mcmillan.ca /
arman.farahani@mcmillan.ca
|
ICC Labs Inc.
Plaza Independencia
737
52
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4th Floor
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Montevideo, Uruguay
|
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11000
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Attention:
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[REDACTED]
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Email:
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[REDACTED]
|
with a copy (which shall not
constitute notice) to:
Norton Rose Fulbright Canada LLP
Royal Bank Plaza, South Tower, Suite 3800
200 Bay Street, P.O. Box 84,
Toronto, ON M5J 2Z4 Canada
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Attention:
|
Terence Dobbin / Andrew Grossman
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|
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Email:
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terence.dobbin@nortonrosefulbright.com /
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|
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andrew.grossman@nortonrosefulbright.com
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The
Parties hereto acknowledge and agree that an award of money damages may be
inadequate for any breach of this Agreement by any Party and that such breach
may cause the non-breaching Party hereto irreparable harm. Accordingly, the
Parties hereto agree that, in the event of any such breach or threatened breach
of this Agreement by one of the Parties hereto, ICC (if Aurora is the breaching
party) or Aurora (if ICC is the breaching party) shall be entitled, without the
requirement of posting a bond or other security, to equitable relief, including
injunctive relief and specific performance. Subject to the last sentence of
Section 6.3, such remedies shall not be the exclusive remedies for any breach of
this Agreement but shall be in addition to all other remedies available
hereunder or at law or in equity to each of the Parties hereto.
Other
than as set out in Section 6.4 and Section 6.5, the Parties hereto agree that
all out-of-pocket expenses incurred in connection with this Agreement and the
Transaction, the ICC Meeting and the preparation and mailing of the ICC
Circular, including legal and accounting fees, printing costs, financial advisor
fees and all disbursements by advisors, shall be paid by the Party hereto
incurring such expense and that nothing in this Agreement shall be construed so
as to prevent the payment of such expenses.
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Section 8.4
|
Time of the Essence
|
Time
shall be of the essence in this Agreement.
|
Section 8.5
|
Entire Agreement
|
This
Agreement, together with the agreements and other documents herein or therein
referred to, and the Confidentiality Agreement constitute the entire agreement
between the Parties hereto pertaining to the subject matter hereof and supersede
all prior agreements, understandings, negotiations and discussions, whether oral
or written, between the Parties with respect to the subject matter hereof. There
are no representations, warranties, covenants or conditions with respect to the
subject matter hereof except as contained herein.
51
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Section 8.6
|
Further Assurances
|
Each
Party hereto shall, from time to time, and at all times hereafter, at the
request of the other of them, but without further consideration, do, or cause to
be done, all such other acts and execute and deliver, or cause to be executed
and delivered, all such further agreements, transfers, assurances, instruments
or documents as shall be reasonably required in order to fully perform and carry
out the terms and intent hereof including the Plan of Arrangement.
|
Section 8.7
|
Governing Law
|
This
Agreement shall be governed by, and be construed in accordance with, the laws of
the Province of British Columbia and the laws of Canada applicable therein but
the reference to such laws shall not, by conflict of laws rules or otherwise,
require the application of the law of any jurisdiction other than the Province
of British Columbia.
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Section 8.8
|
Execution in Counterparts
|
This
Agreement may be executed in one or more counterparts, each of which shall
conclusively be deemed to be an original and all such counterparts collectively
shall be conclusively deemed to be one and the same. Delivery of an executed
counterpart of the signature page to this Agreement by electronic mail or
facsimile shall be effective as delivery of a manually executed counterpart of
this Agreement, and any Party delivering an executed counterpart of the
signature page to this Agreement by electronic mail or facsimile to any other
Party shall thereafter also promptly deliver a manually executed original
counterpart of this Agreement to such other Party, but the failure to deliver
such manually executed original counterpart shall not affect the validity,
enforceability or binding effect of this Agreement.
No
waiver or release by any Party hereto shall be effective unless in writing and
executed by the Party granting such waiver or release and any waiver or release
shall affect only the matter, and the occurrence thereof, specifically
identified and shall not extend to any other matter or occurrence. A Party’s
failure or delay in exercising any right under this Agreement shall not operate
as a waiver of that right. A single or partial exercise of any right shall not
preclude a Party from any other or further exercise of that right or the
exercise of any other right.
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Section 8.10
|
Third Party Beneficiaries
|
|
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(a)
|
Except as provided in Section 4.1(a), Section 4.5 and
Section 4.6, which, without limiting their terms, are intended as
stipulations for the benefit of the third Persons mentioned in such
provisions (such third Persons referred to in this Section 8.10 as the
“
Indemnified Persons
”), and except for the rights of the ICC
Shareholders to receive the consideration under the Arrangement following
the Effective Time pursuant to the Agreement (for which purpose ICC hereby
confirms that it is acting as agent on behalf of the ICC Shareholders),
the Parties intend that this Agreement shall not benefit or create any
right or cause of action in favour of any Person, other than the Parties
and that no Person, other than the Parties, shall be entitled to rely on
the provisions of this Agreement in any action, suit, proceeding, hearing
or other forum.
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(b)
|
Despite the foregoing, each Party acknowledges to each of
the Indemnified Persons their direct rights against it under Section
4.1(a), Section 4.5, and Section 4.6, respectively
of this Agreement, which are intended for the benefit of, and
shall be enforceable by, each Indemnified Person, his or her heirs and his or
her legal representatives, and for such purpose, ICC confirms that it is acting
as trustee on their behalf, and agrees to enforce such provisions on their
behalf.
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52
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(c)
|
In no circumstance shall the consent of any Indemnified
Person be required for the termination or amendment of this
Agreement.
|
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Section 8.11
|
No Personal Liability
|
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(a)
|
No director or officer of ICC shall have any personal
liability whatsoever (other than in the case of fraud or willful
misconduct) to Aurora under this Agreement or any other document delivered
in connection with this Agreement or the Arrangement by or on behalf of
ICC.
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(b)
|
No director or officer of Aurora shall have any personal
liability whatsoever (other than in the case of fraud or willful
misconduct) to ICC under this Agreement or any other document delivered in
connection with this Agreement or the Arrangement by or on behalf of
Aurora.
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Section 8.12
|
Enurement and Assignment
|
This
Agreement shall not be assigned by any Party hereto without the prior written
consent of the other Party hereto. This Agreement shall enure to the benefit of
the Parties and their respective successors and permitted assigns and shall be
binding upon the Parties and their respective successors.
[
Remainder of this page intentionally left blank;
signature page follows
.
]
53
IN WITNESS WHEREOF
the Parties hereto have executed this
Agreement as of the date first above written.
ICC LABS INC.
|
By:
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(signed “Michael Galego”)
|
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Name: Michael
Galego
|
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Title: Director
|
AURORA CANNABIS INC.
|
By:
|
(signed “Terry Booth”)
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Name: Terry
Booth
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Title: CEO
|
54
SCHEDULE A
PLAN OF ARRANGEMENT
PLAN OF ARRANGEMENT
respecting
AURORA CANNABIS INC. AND ICC LABS INC.
made pursuant to
Section 288 of the
Business Corporations
Act
(British Columbia)
ARTICLE 1
INTERPRETATION
In this Plan of Arrangement, the
following terms shall have the respective meanings set out below and grammatical
variations of such terms shall have corresponding meanings:
“
Arrangement
” means the
arrangement pursuant to the provisions of Division 5 of Part 9 of the BCBCA on
the terms and conditions set forth in this Plan of Arrangement, subject to any
amendment or supplement thereto made in accordance with the Arrangement
Agreement or Article 6 hereof or made at the direction of the Court either in
the Interim Order or Final Order with the consent of Aurora and ICC, each acting
reasonably;
“
Arrangement Agreement
” means
the agreement dated as of September 8, 2018 between Aurora and ICC, together
with the schedules attached thereto, as amended, amended and restated or
supplemented from time to time in accordance with the terms thereof;
“
Aurora
” means Aurora Cannabis
Inc., a company existing under the BCBCA;
“
Aurora Shares
” means the common
shares in the capital of Aurora;
“
Award Agreement
” means an
agreement between ICC and a participant in, or pursuant to, the ICC Stock Option
Plan setting out the participant’s entitlement to receive any ICC Plan
Options;
“
BCBCA
” means the
Business
Corporations Act
(British Columbia);
“
Business Day
” means any day,
other than a Saturday, a Sunday or a statutory holiday in Toronto, Ontario,
Edmonton, Alberta, Vancouver, British Columbia or Montevideo, Uruguay;
“
Closing Certificate
” means a
certificate in the form attached hereto as Appendix A which, when signed by an
authorized representative of each of the Parties, will constitute
acknowledgement by the Parties that this Plan of Arrangement has been
implemented to their respective satisfaction.
“
Court
” means the Supreme Court
of British Columbia;
A-1
“
Depositary
” means such Person
as ICC may appoint to act as depositary in relation to the Arrangement, with the
approval of Aurora, acting reasonably;
“
Dissenting ICC Shareholder
”
means a registered holder of ICC Shares who has validly exercised its dissent
rights in respect of the Arrangement pursuant to Section 3.1;
“
Effective Date
” means the date
upon which the Arrangement becomes effective as set out in Section 2.3 of the
Arrangement Agreement, or such other date as may be agreed to by Aurora and ICC,
and Aurora and ICC will execute the Closing Certificate confirming the Effective
Date;
“
Effective Time
” means 12:01
a.m. (Vancouver time) on the Effective Date;
“
Encumbrance
” means any
mortgage, pledge, assignment, charge, lien, claim, security interest, adverse
interest, other third Person interest or encumbrance of any kind, whether
contingent or absolute, and any agreement, option, right or privilege (whether
by law, contract or otherwise) capable of becoming any of the foregoing;
“
Exchange Ratio
” has the meaning
ascribed thereto in the definition of “Share Consideration”;
“
Final Order
” means the order
made after application to the Court approving the Arrangement, as such order may
be amended by the Court (with the consent of the Parties, each acting
reasonably) at any time prior to the Effective Date or, if appealed, then unless
such appeal is withdrawn or denied, as affirmed or as amended on appeal;
“
Governmental Entity
” means any:
(i) supranational, international, multinational, national, federal, provincial,
territorial, state, regional, municipal, local or other government, governmental
or public department, central bank, court, tribunal, arbitral body, commission,
board, bureau, stock exchange or agency, whether domestic or foreign; (ii) any
subdivision, agency, commission, board or authority of any of the foregoing; or
(iii) any quasi-governmental or private body exercising any regulatory,
expropriation, land use or occupation, or taxing authority under or for the
account of any of the foregoing;
“
ICC
” means ICC Labs Inc., a
company existing under the BCBCA;
“
ICC Arrangement Resolution
”
means the special resolution of the ICC Shareholders approving the Plan of
Arrangement substantially in the form attached as Schedule B to the Arrangement
Agreement;
“
ICC Circular
” means the notice
of the ICC Meeting and the accompanying management information circular,
including all schedules, appendices and exhibits to, and information
incorporated by reference in, such management information circular, to be sent
to ICC Shareholders in connection with the ICC Meeting, as amended, supplemented
or otherwise modified from time to time in accordance with the terms of the
Arrangement Agreement;
“
ICC Compensation Options
” means
the outstanding compensation warrants to purchase (i) at any time prior to the
Relevant Time, ICC Shares and ICC Warrants, and (ii), subject to and in
accordance with the terms of the certificates evidencing the ICC Compensation
Options and this Plan of Arrangement, at and at any time following the Relevant
Time, Aurora Shares and warrants to acquire Aurora Shares, issued by ICC in
connection with the Underwriting Agreement dated November 7, 2017 among ICC, GMP
Securities L.P., Haywood Securities Inc. and PI Financial Corp.;
A-2
“
ICC Meeting
” means the special
meeting, including any adjournments or postponements thereof in accordance with
the terms of the Arrangement Agreement, of the ICC Shareholders to be held to
consider, among other things, and, if deemed advisable, to approve, the ICC
Arrangement Resolution and for any other purpose as may be set out in the ICC
Circular and agreed to in writing by the Parties;
“
ICC Plan Options
” means
outstanding options to acquire ICC Shares issued pursuant to or governed by the
ICC Stock Option Plan;
“
ICC Securityholders
” means at
any time, any holder of ICC Shares, ICC Plan Options, ICC Compensation Options
or ICC Warrants;
“
ICC Shareholders
” means, at any
time, the holders of ICC Shares;
“
ICC Shares
” means the common
shares in the capital of ICC;
“
ICC Stock Option Plan
” means
the incentive stock option plan of ICC approved by ICC Shareholders on June 5,
2018;
“
ICC Warrants
” means the
outstanding warrants to purchase: (i) at any time prior to the Relevant Time,
ICC Shares, and (ii), subject to and in accordance with the terms of the ICC
Warrant Indenture and this Plan of Arrangement, at and at any time following the
Relevant Time, Aurora Shares;
“
ICC Warrant Indenture
” means
the common share purchase warrant indenture dated November 22, 2017 between ICC
and TSX Trust Company;
“
Interim Order
” means the order
made after application to the Court, containing declarations and directions in
respect of the notice to be given and the conduct of the ICC Meeting and the
Arrangement, as such order may be amended, supplemented or varied by the Court
(with the consent of the Parties, each acting reasonably);
“
In-the-Money Amount
” means, in
respect of ICC Plan Options , the positive amount, if any, by which (i) the
product obtained by multiplying (A) the number of ICC Shares underlying such ICC
Plan Options, by (B) $1.95, exceeds (ii) the aggregate exercise price payable
under such ICC Plan Options to acquire the ICC Shares underlying such ICC Plan
Options;
“
In-the-Money Option
” means a
ICC Plan Option in respect of which the In-the-Money Amount is a positive
amount;
“
Letter of Transmittal
” means
the Letter of Transmittal for use by the ICC Shareholders, in the form
accompanying the ICC Circular;
“
Option Consideration
” means, in
respect of an In-the-Money Option, that number of ICC Shares obtained by
dividing: (i) the In-the-Money Amount in respect of such In-the-Money Option, by
(ii) $1.95;
“
Out-of-the-Money Option
” means
each ICC Plan Option other than an In-the-Money Option;
“
Person
” means an individual,
partnership, association, body corporate, a partnership or limited partnership,
a trust, a trustee, executor, administrator or other legal personal
representative, a syndicate, a joint venture, government (including any
Governmental Entity) or any other entity, whether or not having legal
status;
A-3
Plan of Arrangement
" means this
plan of arrangement and any amendments or variations hereto made in accordance
herewith with the Arrangement Agreement and Article 6 hereof or made at the
direction of the Court in either the Interim Order or Final Order with the
consent of the Parties, each acting reasonably;
“
Relevant Time
” has the meaning
set forth in Section 4.1;
“
Share Consideration
” means the
Aurora Shares to be issued to the ICC Shareholders in exchange for their ICC
Shares pursuant to the Plan of Arrangement, consisting of, for each one (1) ICC
Share, such number of Aurora Shares as is equal to the quotient of $1.95 divided
by the volume-weighted average trading price of the Aurora Shares on the TSX in
the twenty (20) trading days immediately preceding the Effective Date (the last
day of such period being the second to last trading day on the TSX immediately
prior to the Effective Date) (such exchange ratio being, the “
Exchange
Ratio
”);
“
Tax Act
” means the
Income
Tax Act
(Canada);
“
TSX
” means the Toronto Stock
Exchange; and
“
TSXV
” means the TSX Venture
Exchange.
Any capitalized terms used but not
defined herein shall have the meaning ascribed to such terms in the Arrangement
Agreement.
|
1.2
|
Sections and Headings
|
The division of this Plan of
Arrangement into sections and the insertion of headings are for reference
purposes only and shall not affect the interpretation of this Plan of
Arrangement. Unless otherwise indicated, any reference in this Plan of
Arrangement to a section or a schedule refers to the specified section of or
schedule to this Plan of Arrangement.
In this Plan of Arrangement, unless the
context otherwise requires, words importing the singular only shall include the
plural and vice versa, words importing the use of either gender shall include
both genders and neuter.
If the date on which any action is
required to be taken hereunder by any party hereto is not a Business Day, such
action shall be required to be taken on the next succeeding day that is a
Business Day.
Time shall be of the essence in every
matter or action contemplated hereunder. All times expressed herein or in any
letter of transmittal contemplated herein are local time (Vancouver, British
Columbia) unless otherwise stipulated herein or therein. A period of time is to
be computed as beginning on the day following the event that began
the period and ending at 4:30 p.m. on the last day of the period, if the last
day of the period is a Business Day, or at 4:30 p.m. on the next Business Day if
the last day of the period is not a Business Day.
A-4
Any reference in this Plan of
Arrangement to a statute includes all regulations and rules made thereunder, all
amendments to such statute or regulation in force from time to time and any
statute or regulation that supplements or supersedes such statute or regulation.
|
1.7
|
Certain Phrases, etc.
|
The words (i) “including”, “includes”
and “include” mean “including (or includes or include) without limitation,” (ii)
“the aggregate of”, “the total of”, “the sum of”, or a phrase of similar meaning
means “the aggregate (or total or sum), without duplication, of,” and (iii)
unless stated otherwise, “Article”, “Section”, and “Schedule”
followed by
a number or letter mean and refer to the specified Article or Section of or
Schedule to this Plan of Arrangement.
Unless otherwise stated, all references
in this Plan of Arrangement to amounts of money are expressed in lawful money of
Canada, and any amounts to be paid will be paid in lawful money of Canada.
ARTICLE 2
ARRANGEMENT
This Plan of Arrangement is made
pursuant to the provisions of the Arrangement Agreement and constitutes an
arrangement as referred to in Section 288 of the BCBCA.
|
2.2
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Effect of the Arrangement
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The Arrangement will become effective
at, and be binding at and after, the Effective Time on:
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(a)
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ICC;
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(b)
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Aurora;
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(c)
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all ICC Shareholders;
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(d)
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all holders of ICC Plan Options, ICC Warrants and ICC
Compensation Options and any securities into which they may be exchanged
or otherwise converted pursuant to Section 2.3 of this Plan of
Arrangement; and
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(e)
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the Depositary.
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A-5
Commencing at the Effective Time, the
following shall occur and shall be deemed to occur, except to the extent
otherwise indicated, in the following order without any further act or
formality:
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(a)
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Notwithstanding any vesting or exercise provisions to
which an ICC Plan Option might otherwise be subject (whether by contract,
the terms and conditions of any Award Agreement or grant, the terms and
conditions of the ICC Stock Option Plan or applicable
law):
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(i)
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each In-the-Money Option issued and outstanding
immediately prior to the Effective Time shall, without any further action
by or on behalf of any holder of such In-the-Money Option, be deemed to be
fully vested and shall be transferred and disposed by the holder thereof
to ICC (free and clear of all Encumbrances) and cancelled in exchange for
the Option Consideration, and the holder of such In-the-Money Option shall
become the holder of the ICC Shares comprising such Option Consideration
and the central securities register of ICC shall be revised accordingly,
but the holder of such Option Consideration shall not be entitled to
receive a share certificate or other document representing the Option
Consideration;
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(ii)
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each Out-of-the-Money Option issued and outstanding
immediately prior to the Effective Time shall, without any further action
by or on behalf of any holder of such Out-of-the-Money Option, be
cancelled without any payment therefor;
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(iii)
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with respect to each ICC Plan
Option:
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(A)
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the holder thereof shall cease to be the holder of such
ICC Plan Option, and shall cease to have any rights as a holder in respect
of such ICC Plan Option under the ICC Stock Option Plan;
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(B)
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such holder’s name shall be removed from the register of
ICC Plan Options, and
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(C)
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all option agreements, Award Agreements, grants and
similar instruments relating thereto shall be
cancelled;
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(b)
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Each ICC Share held by a Dissenting ICC Shareholder
shall, without any further action or formality by or on behalf of such
Dissenting ICC Shareholder, be deemed to have been irrevocably transferred
and assigned to Aurora (free and clear of all Encumbrances)
and;
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(i)
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such Dissenting ICC Shareholder shall cease to be the
holder of such ICC Shares so transferred and to have any rights as holder
of such ICC Shares other than the right to be paid fair value for such ICC
Shares by Aurora as set out in Section 3.1;
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(ii)
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such Dissenting ICC Shareholder's name shall be removed
as the holder of such ICC Shares from the central securities register of
holders of ICC Shares maintained by or on behalf of ICC;
and
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A-6
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(iii)
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Aurora shall become the sole legal and beneficial holder
of such ICC Shares so transferred (free and clear of all Encumbrances) and
shall be entered in the central securities register of holders of ICC
Shares maintained by or on behalf of ICC; and
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(c)
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Concurrently with the step described in Section 2.3(b),
each ICC Share (other than those ICC Shares held by Dissenting ICC
Shareholders but including ICC Shares issued to former holders of
In-the-Money Options pursuant to Section 2.3(a)) shall, without any
further action by or on behalf of the holder, be deemed to be assigned and
irrevocably transferred by the holder thereof to Aurora (free and clear of
all Encumbrances) and the holder thereof shall be entitled to receive from
Aurora the Share Consideration for such ICC Share and upon the transfer of
each such ICC Share from such holder to Aurora pursuant to this Section
2.3(c);
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(i)
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each holder of such ICC Shares shall cease to be the
holder of the ICC Shares so transferred and cease to have any rights as a
ICC Shareholder other than the right to be paid the Share Consideration
for such ICC Shares in accordance with this Plan of Arrangement;
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(ii)
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the name of each such holder of ICC Shares shall be
removed from the register of the ICC Shares maintained by or on behalf of
ICC; and
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(iii)
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Aurora shall be deemed the sole legal and beneficial
holder of such ICC Shares so transferred (free and clear of all
Encumbrances) and shall be entered in the register of the ICC Shares
maintained by or on behalf of ICC.
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Each holder of each ICC Share, with
respect to each step set out above applicable to such holder, shall be deemed,
at the time such step occurs, to have executed and delivered all consents,
releases, assignments and waivers, statutory or otherwise, required to transfer
such ICC Share in accordance with such step.
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2.4
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Transfers Free and Clear
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Any transfer of securities pursuant to
this Plan of Arrangement shall be free and clear of any Encumbrances or other
claims of third parties of any kind.
All Aurora Shares issued pursuant to
this Plan of Arrangement shall be fully paid and non-assessable, and Aurora
shall be deemed to have received the full consideration therefor and as such
consideration shall not be cash consideration, any such non-cash consideration
shall have a value that is not less in value than the fair equivalent of the
money that Aurora would have received had the applicable shares been issued for
cash consideration.
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2.6
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Adjustment to
Consideration
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Notwithstanding anything to the
contrary contained in this Plan of Arrangement, if between the date of the
Arrangement Agreement and the Effective Time, the issued and outstanding ICC
Shares or the issued and outstanding Aurora Shares shall have been changed into
a different number of shares or a different class by reason of any stock split,
reverse stock split, dividend of Aurora or ICC Shares, reclassification,
redenomination or the like, then the Share Consideration and any other dependent items, including the Exchange Ratio,
shall be appropriately adjusted to provide to ICC and Aurora and their
respective shareholders the same economic effect as contemplated by the
Arrangement Agreement and this Plan of Arrangement prior to such action and as
so adjusted shall, from and after the date of such event, be the Share
Consideration to be paid per ICC Share, the Exchange Ratio or other dependent
item, subject to further adjustment in accordance with this sentence.
A-7
ARTICLE 3
RIGHTS OF DISSENT
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3.1
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Rights of Dissent for ICC
Shareholders
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Registered holders of ICC Shares may
exercise rights of dissent (“
Dissent Rights
”) with respect to such shares
pursuant to and in the manner set forth in under Division 2 of Part 8 of the
BCBCA as modified and supplemented by the Interim Order, the Final Order and
this Section 3.1 in connection with the Arrangement; provided that,
notwithstanding (a) Section 242 of the BCBCA, the written objection to the ICC
Arrangement Resolution contemplated by Section 242of the BCBCA must be sent to
and received by ICC not later than 5:00 p.m. (Vancouver time) two Business Days
immediately preceding the date of the ICC Meeting (as it may be adjourned or
postponed from time to time) and (b) Section 245 of the BCBCA, Aurora and not
ICC shall be required to pay the fair value of such ICC Shares.
Registered holders of ICC Shares who
duly exercise such rights of dissent and who:
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(a)
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are ultimately determined to be entitled to be paid fair
value for their ICC Shares shall be entitled to be paid by Aurora for the
ICC Shares in respect of which they have validly exercised Dissent Rights
will be deemed to have irrevocably transferred such ICC Shares to Aurora
(free and clear of all Encumbrance) pursuant to Section 2.3(b);
or
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(b)
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are ultimately not entitled, for any reason, to be paid
fair value for their ICC Shares by Aurora for the ICC Shares in respect of
which they have exercised Dissent Rights, will be deemed to have
participated in the Arrangement on the same basis as a holder of ICC
Shares to which Section 2.3(c) applies;
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but in no case shall ICC, Aurora or any
other Person, including the Depositary, be required to recognize any Dissenting
ICC Shareholder as a holder of ICC Shares after the Effective Time, and each
Dissenting ICC Shareholder will cease to be entitled to the rights of a ICC
Shareholder in respect of the ICC Shares in relation to which such Dissenting
ICC Shareholder has exercised Dissent Rights and the names of each Dissenting
ICC Shareholder will be removed from the registers of holders of ICC Shares at
the Effective Time.
For greater certainty, and in addition
to any other restriction under Division 2 of Part 8 of the BCBCA, holders of
(i) ICC Plan Options;
(ii) ICC
Warrants;
(iii) ICC Compensation Options;
and
(iv) ICC Shares who vote, or who have
instructed a proxyholder to vote, in favour of the ICC Arrangement
Resolution,will not be entitled to any Dissent Rights.
A-8
ARTICLE 4
ICC WARRANTS AND COMPENSATION
OPTIONS
In accordance with the terms of the ICC
Warrant Indenture, at and following the time at which the transactions
contemplated in Section 2.3(c) of this Plan of Arrangement occur (“
Relevant
Time
”), each holder of an ICC Warrant (including ICC Warrants issued
pursuant to the exercise of ICC Compensation Options after the Relevant Time)
shall be entitled to receive (and such holder shall accept) upon the exercise of
such holder’s ICC Warrant, for the same aggregate consideration payable
thereupon, the Share Consideration which the holder would have been entitled to
receive as a result of the transactions contemplated by this Plan of Arrangement
if, immediately prior to the Relevant Time, such holder had been the registered
holder of the number of ICC Shares to which such holder would have been entitled
if such holder had exercised such ICC Warrant immediately prior to the Relevant
Time. Each ICC Warrant shall continue to be governed by and be subject to the
terms of the ICC Warrant Indenture.
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4.2
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ICC Compensation Options
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In accordance with the terms set out on
the certificates representing the ICC Compensation Options, at and following the
Relevant Time, each holder of an ICC Compensation Option shall be entitled to
receive (and such holder shall accept) upon the exercise of such holder’s ICC
Compensation Option, for the same aggregate consideration payable thereupon: (i)
the Share Consideration which the holder would have been entitled to receive as
a result of the transactions contemplated by this Plan of Arrangement if,
immediately prior to the Relevant Time, such holder had been the registered
holder of the number of ICC Shares to which such holder would have been entitled
if such holder had exercised such ICC Compensation Option immediately prior to
the Relevant Time; and (ii) one half of one ICC Warrant for each ICC
Compensation Option exercised by such holder, provided that for greater
certainty, each holder of an ICC Warrant issued pursuant to the exercise of the
ICC Compensation Options after the Relevant Time shall be entitled to receive
(and such holder shall accept) upon the exercise of such holder’s ICC Warrant,
the consideration set forth in Section 4.1. Each ICC Compensation Option shall
continue to be governed by and be subject to the terms of the certificate
representing each ICC Compensation Option.
ARTICLE 5
CERTIFICATES AND FRACTIONAL
SHARES
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5.1
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Delivery of Share
Consideration
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(a)
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Following receipt of the Final Order and prior to the
Effective Date in accordance with the terms of the Arrangement Agreement,
Aurora shall deposit with the Depositary, for the benefit of ICC
Shareholders such number of Aurora Shares as is necessary to be delivered
to the ICC Shareholders in order to effect the exchange or settlement
under Section 2.3 of this Plan of Arrangement.
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(b)
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Subject to surrender to the Depositary of a certificate
which immediately prior to the Effective Time represented outstanding ICC
Shares, together with a duly completed and executed Letter of Transmittal
and such additional documents and instruments as
the Depositary may reasonably require, following the Effective Time
the holder of such surrendered certificate shall be entitled to receive in
exchange therefor, and the Depositary shall deliver to such holder, the Aurora
Shares which such holder has the right to receive under Section 2.3 of this Plan
of Arrangement, less any amounts withheld pursuant to Section 5.5 and any
certificate so surrendered shall forthwith be cancelled.
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A-9
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(c)
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Until surrendered as contemplated by this Section 5.1,
each certificate that immediately prior to the Effective Time represented
ICC Shares shall be deemed after the Effective Time to represent only the
right to receive, upon such surrender, the Aurora Shares to which the
holder thereof is entitled in lieu of such certificate as contemplated by
Section 2.3 and this Section 5.1, less any amounts withheld pursuant to
Section 5.5. Any such certificate formerly representing ICC Shares not
duly surrendered on or before the sixth anniversary of the Effective Date
shall:
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(i)
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cease to represent a claim by, or interest of, any former
holder of ICC Shares of any kind or nature against or in ICC or Aurora (or
any successor to any of the foregoing); and
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(ii)
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be deemed to have been surrendered to Aurora and shall be
cancelled.
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(d)
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No ICC Shareholder or holder of ICC Plan Options, ICC
Warrants or ICC Compensation Options shall be entitled to receive any
consideration with respect to such ICC Shares, ICC Plan Options, ICC
Warrants or ICC Compensation Options other than the consideration to which
such holder is entitled in accordance with Section 2.3 and, for greater
certainty, no such holder will be entitled to receive any interest,
dividends, premium or other payment in connection
therewith.
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5.2
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Distributions with Respect to Unsurrendered
Certificates
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No dividend or other distribution
declared or paid after the Effective Time with respect to Aurora Shares shall be
delivered to the holder of any certificate formerly representing ICC Shares
unless and until the holder of such certificate shall have complied with the
provisions of Section 5.1. Subject to applicable law and to Section 5.5 at the
time of such compliance, there shall, in addition to the delivery of the Aurora
Shares to which such holder is thereby entitled, be delivered to such holder,
without interest, the amount of any dividend or other distribution declared or
made after the Effective Time with respect to the Aurora Shares to which such
holder is entitled in respect of such holder’s Aurora Shares.
No fractional Aurora Shares shall be
issued to any person pursuant to this Plan of Arrangement. The number of Aurora
Shares, to be issued to any person pursuant to this Plan of Arrangement shall,
without additional compensation, be rounded down to the nearest whole Aurora
Share.
In the event any certificate which
immediately prior to the Effective Time represented one or more outstanding ICC
Shares that are ultimately entitled to Aurora Shares pursuant to Section 2.3
shall have been lost, stolen or destroyed, upon the making of an affidavit or
statutory declaration of that fact by the person claiming such certificate to be
lost, stolen or destroyed and who was listed immediately prior to the Effective
Time as the registered holder thereof on the securities registers maintained by or on behalf of ICC, the Depositary
will deliver in exchange for such lost, stolen or destroyed certificate a
certificate representing the Aurora Shares that such holder is entitled to
receive in exchange for such lost, stolen or destroyed certificate, provided the
holder to whom the Aurora Shares is to be delivered shall, as a condition
precedent to the delivery, give a bond satisfactory to Aurora and the Depositary
(each acting reasonably) in such sum as Aurora and the Depositary may direct, or
otherwise indemnify Aurora and the Depositary in a manner satisfactory to Aurora
and the Depositary, each acting reasonably, against any claim that may be made
against Aurora or the Depositary with respect to the certificate alleged to have
been lost, stolen or destroyed.
A-10
Each of Aurora, ICC and the Depositary,
as the case may be, shall be entitled to deduct or withhold from Aurora Shares
or any amount or other consideration otherwise payable or deliverable to any
former ICC Securityholder under the Plan of Arrangement, such amounts as are
required to be deducted or withheld with respect to such payment under the Tax
Act, the United States Internal Revenue Code of 1986 or any provision of
provincial, state, local or foreign tax law, in each case as amended. To the
extent that amounts are so deducted or withheld, such deducted or withheld
amounts shall be treated for all purposes as having been paid to the recipient
of the securities or included as part of the payment in respect of which such
deduction or withholding was made, provided that such deducted or withheld
amounts are remitted in accordance with the applicable law to the appropriate
taxing authority. Each of Aurora, ICC and the Depositary shall also have the
right to: (a) deduct, withhold and sell or direct Aurora, ICC or the Depository,
as applicable, to deduct, withhold and sell on their behalf, on their own
account or through a broker, and on behalf of any ICC Securityholder; or (b)
require any ICC Securityholder to irrevocably direct the sale through a broker
and irrevocably direct the broker to pay the proceeds of such sale to Aurora,
ICC or the Depositary as appropriate (and, in the absence of such irrevocable
direction, the ICC Securityholder shall be deemed to have provided such
irrevocable direction), such number of Aurora Shares delivered or deliverable to
such ICC Securityholder pursuant to this Plan of Arrangement as is necessary to
produce sale proceeds (after deducting commissions payable to the broker and
other costs and expenses) sufficient to fund any obligations to withhold or
deduct any amounts required to be deducted or withheld. Any such sale of Aurora
Shares shall be effected on a public market and as soon as practicable following
the Effective Date. None of Aurora, ICC, the Depositary or any broker will be
liable for any loss arising out of any sale of such Aurora Shares, including any
loss relating to the manner or timing of such sales, the prices at which the ICC
Shares are sold or otherwise.
All calculations and determinations
made by Aurora, ICC or the Depositary, as applicable, for the purposes of this
Plan of Arrangement shall be conclusive, final, and binding.
ARTICLE 6
AMENDMENTS
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6.1
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Amendments to Plan of
Arrangement
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(a)
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Aurora and ICC may amend, modify and/or supplement this
Plan of Arrangement at any time and from time to time prior to the
Effective Time, provided that each such amendment, modification and/or
supplement must (i) be set out in writing; (ii) be approved by Aurora and
ICC in writing; (iii) filed with the Court and, if made
following the ICC Meeting, approved by the Court; and (iv) communicated
to ICC Shareholders if and as required by the Court.
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A-11
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(b)
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Any amendment, modification or supplement to this Plan of
Arrangement may be proposed by Aurora or ICC at any time prior to the ICC
Meeting (provided that the other Party shall have consented thereto in
writing) with or without any other prior notice or communication, and if
so proposed and accepted by the Persons voting at the ICC Meeting (other
than as may be required under the Interim Order), shall become part of
this Plan of Arrangement for all purposes.
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(c)
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Any amendment, modification or supplement to this Plan of
Arrangement that is approved or directed by the Court following the ICC
Meeting shall be effective only if (i) it is consented to in writing by
each of Aurora and ICC (in each case, acting reasonably), and (ii) if
required by the Court, it is consented to by ICC Shareholders voting in
the manner directed by the Court.
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(d)
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Any amendment, modification or supplement to this Plan of
Arrangement may be made following the Effective Date unilaterally by
Aurora, provided that it concerns a matter which, in the reasonable
opinion of Aurora, is of an administrative nature required to better give
effect to the implementation of this Plan of Arrangement and is not
adverse to the economic interest of any holder or former holder of ICC
Shares, ICC Plan Options, ICC Warrants and ICC Compensation
Options.
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(e)
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This Plan of Arrangement may be withdrawn prior to the
Effective Time in accordance with the terms of the Arrangement
Agreement.
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ARTICLE 7
MISCELLANEOUS
Notwithstanding that the transactions
and events set out herein shall occur and shall be deemed to occur in the order
set out in this Plan of Arrangement without any further act or formality, each
of the Parties to the Arrangement Agreement shall make, do and execute, or cause
to be made, done and executed, all such further acts, deeds, agreements,
transfers, assurances, instruments or documents as may reasonably be required by
either of them in order further to document or evidence any of the transactions
or events set out herein.
From and after the Effective Time:
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(a)
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this Plan of Arrangement shall take precedence and
priority over any and all rights related to ICC Shares, ICC Plan Options,
ICC Warrants and ICC Compensation Options issued and outstanding prior to
the Effective Time;
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(b)
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the rights and obligations of the holders of ICC Shares,
ICC Plan Options, ICC Warrants and ICC Compensation Options, the
Depositary and any trustee and transfer agent therefor, shall be solely as
provided for in this Plan of Arrangement; and
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A-12
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(c)
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all actions, causes of action, claims or proceedings
(actual or contingent, and whether or not previously asserted) based on or
in any away relating to ICC Shares, ICC Plan Options, ICC Warrants and ICC
Compensation Options shall be deemed to have been
settled.
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A-13
Appendix “A” to the Plan of Arrangement
CLOSING CERTIFICATE
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Re:
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Arrangement Agreement dated September 8,
2018 between Aurora Cannabis Inc. and ICC
Labs Inc. (the
“Arrangement Agreement”)
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Defined terms used but not defined in this certificate shall
have the meaning ascribed thereto in the Arrangement Agreement.
Each of the undersigned hereby confirms that the undersigned is
satisfied that the conditions precedent to its respective obligations to
complete the Arrangement have been satisfied and that the Arrangement is
completed as of __________(am/pm Vancouver local time) (the “
Effective
Time
”) on _____________, 2018 (the “
Effective Date
”).
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AURORA CANNABIS INC.
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Name:
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Title:
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ICC LABS INC.
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Name:
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Title:
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A-14
SCHEDULE B
FORM OF ICC ARRANGEMENT RESOLUTION
BE IT RESOLVED, AS A SPECIAL RESOLUTION, THAT:
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1.
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The arrangement (the “
Arrangement
”) under Division
5 of Part 9 of the
Business Corporations Act
(British Columbia)
(the “
BCBCA
”) involving ICC Labs Inc. (the “
Company
”), as
more particularly described and set forth in the management information
circular dated , 2018 (the “
Circular
”) of the Company accompanying
the notice of this meeting, as the Arrangement may be modified,
supplemented or amended in accordance with its terms, is hereby
authorized, approved and adopted.
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2.
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The plan of arrangement (the “
Plan of
Arrangement
”) involving the Company and implementing the Arrangement,
the full text of which is set out as Schedule A to the Circular, as the
Plan of Arrangement may be modified, supplemented or amended in accordance
with its terms, is hereby authorized, approved and adopted.
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3.
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The Arrangement Agreement made as of September 8, 2018
between Aurora Cannabis Inc. and the Company (the “
Arrangement
Agreement
”) and related transactions, the actions of the directors of
the Company in approving the Arrangement and the Arrangement Agreement and
the actions of the directors and officers of the Company in executing and
delivering the Arrangement Agreement and any amendments thereto in
accordance with its terms are hereby ratified and approved.
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4.
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Notwithstanding that this resolution has been passed (and
the Arrangement adopted) by the shareholders of the Company or that the
Arrangement has been approved by the Supreme Court of British Columbia,
the directors of the Company are hereby authorized and empowered without
further notice to or approval of the shareholders of the Company (i) to
amend the Arrangement Agreement or the Plan of Arrangement, to the extent
permitted by the Arrangement Agreement or the Plan of Arrangement, and
(ii) subject to the terms of the Arrangement Agreement, not to proceed
with the Arrangement and related transactions.
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5.
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Any one director or officer of the Company be and is
hereby authorized and directed for and on behalf of the Company to execute
or cause to be executed, under the corporate seal of the Company or
otherwise, and to deliver or cause to be delivered, all such other
documents and instruments and to perform or cause to be performed all such
other acts and things as in such person’s opinion may be necessary or
desirable to give full effect to the foregoing resolutions and the matters
authorized thereby, such determination to be conclusively evidenced by the
execution and delivery of such document, agreement or instrument or the
doing of any such act or thing.
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B 1
SCHEDULE C
REPRESENTATIONS AND WARRANTIES OF ICC
|
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(a)
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Organization and Qualification
. ICC is a
corporation duly incorporated and validly existing under the laws of the
Province of British Columbia and has the corporate power and authority to
own its assets and conduct its business as now owned and conducted and no
steps or proceedings have been taken by any Person, voluntary or
otherwise, requiring or authorizing the dissolution or winding up of ICC.
ICC is duly qualified, licensed or registered to conduct business and is
in good standing in each jurisdiction in which its assets are located or
it conducts business, and has all necessary governmental licenses,
authorizations, permits, consents and approvals required to own, lease and
operate its properties and assets and to carry on its business as now
conducted, except for those licenses, authorizations, permits, consents
and approvals the absence of which do not have and would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse
Effect with respect to ICC.
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(b)
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Corporate Authorization
. Subject to the (i) ICC
Arrangement Resolution being approved and adopted by the ICC Shareholders
at the ICC Meeting in accordance with the Interim Order, (ii) approval of
the ICC Circular by the ICC Board, (iii) filings with the Court in respect
of the Arrangement and receipt of the Final Order, and (iv) the execution,
delivery and performance by ICC of this Agreement and the consummation by
ICC of the Arrangement are within ICC’s corporate powers, have been duly
authorized by all necessary corporate action on the part of the ICC Board
and no other corporate proceedings on the part of ICC are necessary to
authorize this Agreement or the Arrangement.
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(c)
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Directors’ Approvals
. The ICC Board has received
opinions from each of the ICC Financial Advisors to the effect that the
consideration to be received under the Arrangement is fair from a
financial point of view to the ICC Shareholders (collectively, the “
ICC
Fairness Opinions
”). The ICC Board (i) has unanimously determined that
the Arrangement is in the best interests of ICC; and (ii) has approved the
entering into of this Agreement and the making of a recommendation that
ICC Shareholders vote in favour of the ICC Arrangement
Resolution.
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(d)
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No Conflict
. The execution, delivery and
performance by ICC of this Agreement and the consummation of the
Arrangement, all in accordance with the terms and conditions hereof, do
not and shall not (or would not with the giving of notice, the lapse of
time or the happening of any other event or condition), violate, conflict
with or result in a breach of, or permit the termination, cancellation,
acceleration or other change of any right or obligation
under:
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(i)
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any of the articles, by-laws or other constating
documents of ICC or ICC’s Subsidiaries;
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(ii)
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subject to the receipt of the consents set forth in the
ICC Disclosure Letter, any Material Contract of ICC Group or any ICC
License;
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(iii)
|
except for compliance with applicable Securities Laws and
stock exchange rules and policies, any statute, rule, regulation or Law
applicable to the ICC Group; or
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C 1
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(iv)
|
assuming compliance with the matters, or obtaining the
approvals, referred to in clauses (c)(ii) and (c)(iii) above, any
provision of any applicable Law or any license, approval, consent or
authorization issued by a Governmental Entity held by ICC and each of
ICC’s Subsidiaries,
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with such exceptions, in the case of
each of clauses (c)(ii) through (c)(iv), as would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect with respect
to the ICC Group.
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(e)
|
Execution and Binding Obligation
. This Agreement
has been duly executed and delivered by ICC, and constitutes a legal,
valid and binding agreement enforceable against it in accordance with its
terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization or other Laws of general
application relating to or affecting the enforcement of creditors’ rights
generally, and (ii) the discretion that a Court may exercise in the
granting of extraordinary remedies such as specific performance and
injunction.
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(f)
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Residence of ICC
. ICC is not a non-resident of
Canada within the meaning of the
Tax Act.
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(g)
|
Third Party Consents
. Except as disclosed in the
ICC Disclosure Letter or contemplated in this Agreement, no consent,
waiver or approval from other parties to the Material Contracts of ICC
Group is (i) required to be obtained by ICC in connection with the
execution, delivery and performance by ICC of this Agreement or the
consummation of the Arrangement, or (ii) required in order to maintain the
Material Contracts of ICC Group in full force and effect immediately upon
the consummation of the Arrangement, except for such consents, the absence
of which would not be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect with respect to the ICC
Group.
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(h)
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Governmental Approvals
. Except as disclosed in the
ICC Disclosure Letter, the execution, delivery and performance by ICC of
this Agreement and the consummation by ICC of the Arrangement require no
consent, waiver or approval or any action by or in respect of, or filing
with, or notification to, any Governmental Entity by ICC other than: (i)
the Interim Order and any approvals required by the Interim Order; (ii)
the Final Order; (iii) filings with the Director under the BCBCA; (v) the
approvals of the TSX as set forth in this Agreement; and (vi) any
consents, waivers, approvals, actions or filings or notifications, the
absence of which would not be reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect with respect to the ICC
Group.
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(i)
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Authorized and Issued
Capital
.
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(i)
|
The authorized capital of ICC consists of an unlimited
number of ICC Shares. The ICC Disclosure Letter sets forth, as at the date
of this Agreement, the number of issued and outstanding ICC Shares; the
number of outstanding ICC Plan Options, ICC Compensation Option and ICC
Warrants providing for the issuance of ICC Shares upon exercise
thereof.
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(ii)
|
There are no bonds, debentures or other evidences of
indebtedness of ICC Group outstanding having the right to vote (or that
are convertible or exercisable for securities having the right to vote)
with ICC Shareholders on any matter.
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C-2
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(iii)
|
Except for outstanding ICC Plan Options under the ICC
Stock Option Plan, stock options proposed to be granted under the ICC
Stock Option Plan, the ICC Warrants or as otherwise disclosed in the ICC
Disclosure Letter, there are no options, warrants, conversion privileges
or other rights, agreements, arrangements or commitments (pre-emptive,
contingent or otherwise) of any kind that obligate ICC to issue or sell
any shares of capital stock or other securities of ICC or any of its
Subsidiaries or any securities or obligations convertible or exchangeable
into or exercisable for, or giving any Person a right to subscribe for or
acquire, any securities of ICC or any of its Subsidiaries.
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(iv)
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All outstanding ICC Shares have been duly authorized and
validly issued as fully paid and non- assessable, and all ICC Shares
issuable upon the exercise of rights under the ICC Plan Options, ICC
Warrants and ICC Compensation Options in accordance with their respective
terms have been duly authorized and, upon issuance, shall be validly
issued as fully paid and non-assessable.
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(v)
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All outstanding securities of ICC have been issued in
material compliance with all applicable Laws, including Securities
Laws.
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(vi)
|
The ICC Disclosure Letter sets forth with respect to each
ICC Plan Option outstanding as of the date of this Agreement: (i) the
number of ICC Shares issuable therefor; (ii) the purchase price payable
therefor upon the exercise thereof, as applicable; (iii) the date on which
such security was granted or issued and the date on which such security
expires; and (iv) other than as provided in this Agreement, the extent to
which such ICC Plan Option is vested and exercisable as of the date of
this Agreement. All grants of ICC Plan Options were validly issued and
properly approved by the ICC Board (or a duly authorized committee or
subcommittee thereof) in compliance in all material respects with all Laws
and the ICC Stock Option Plan and recorded on ICC’s financial statements
in accordance with IFRS.
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(vii)
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The ICC Disclosure Letter sets forth with respect to each
ICC Warrant outstanding as of the date of this Agreement: (i) the number
of ICC Shares issuable therefor; (ii) the exercise price payable therefor
upon the exercise thereof; and (iii) the date on which such security was
granted or issued and the date on which such security expires. All grants
of ICC Warrants were validly issued and properly approved by the ICC Board
(or a duly authorized committee or subcommittee thereof) in compliance in
all material respects with all Laws and the ICC Warrant Indenture and
recorded on ICC’s financial statements in accordance with IFRS.
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(viii)
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The ICC Disclosure Letter sets forth with respect to each
ICC Compensation Options outstanding as of the date of this Agreement: (i)
the number of ICC Shares and ICC Warrants issuable therefor; (ii) the
exercise price payable therefor upon the exercise thereof; and (iii) the
date on which such security was granted or issued and the date on which
such security expires. All grants of ICC Compensation Options were validly
issued and properly approved by the ICC Board (or a duly authorized
committee or subcommittee thereof) in compliance in all material respects
with all Laws and certificates evidencing ICC Compensation Options and
recorded on ICC’s financial statements in accordance with
IFRS.
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C-3
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(ix)
|
The ICC Data Room contains a true and complete copy of
the ICC Stock Option Plan.
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(j)
|
Significant Shareholders
. To the knowledge of ICC,
no Person, other than Union Group International Holdings Inc.,
beneficially owns, directly or indirectly, or exercises control or
direction over, more than 10% of the votes attached to the ICC
Shares.
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(k)
|
Shareholders’ and Similar Agreements
. Neither ICC
nor any of ICC’s Subsidiaries is subject to any unanimous shareholders
agreement and is not a party to any shareholder, pooling, voting, voting
trust or other similar arrangement or agreement relating to the ownership
or voting of any of the securities of ICC or of any of its Subsidiaries or
pursuant to which any Person may have any right or claim in connection
with any existing or past equity interest in ICC or in any of its
Subsidiaries and ICC has not adopted a shareholders’ rights plan or any
similar plan or agreement.
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(l)
|
Subsidiaries
.
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(i)
|
The ICC Disclosure Letter sets forth a complete and
accurate list as of the date of this Agreement of all Persons in which ICC
owns or controls, directly or indirectly, any material equity or
proprietary interest indicating (A) the jurisdiction of incorporation,
organization or formation of such Person, (B) its name and (C) the
percentage owned directly or indirectly by ICC and the percentage owned,
and the identity of, each other registered holder of capital stock or
other equity interests if other than ICC and its Subsidiaries.
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(ii)
|
Each Subsidiary of ICC: (A) is a corporation, trust or
partnership, as the case may be, duly organized and validly existing under
the Laws of the jurisdiction of its incorporation, organization or
formation, as the case may be, and no steps or proceedings have been taken
by any Person, voluntary or otherwise, requiring or authorizing the
dissolution or winding up of the Subsidiaries of ICC, (B) has all
requisite corporate, trust or partnership power and authority, as the case
may be, to own, lease and operate its properties assets and to conduct its
business as now owned and conducted in each jurisdiction in which the
conduct of its business or the ownership, leasing or operation of its
property and assets requires such qualification, and (C) is duly
qualified, licensed or registered to conduct business and is in good
standing in each jurisdiction in which its assets are located or it
conducts business, except where the failure to be so organized, validly
existing, qualified, licensed, registered or in good standing, or to have
such power or authority, would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect with respect
to the ICC Group.
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(iii)
|
ICC owns, directly or indirectly, all of the issued and
outstanding shares or other equity interests of each of the Subsidiaries,
free and clear of any Encumbrances and all such shares and other equity
interests so owned directly or indirectly by ICC have been duly authorized
and validly issued, as fully paid and non- assessable and have been issued
in material compliance with all applicable Laws and no Person has any
agreement, option, right or privilege (whether pre-emptive or contractual)
capable of becoming an agreement, for the purchase from ICC or any of the
Subsidiaries of ICC of any interest in any of the shares in the capital of
the Subsidiaries of ICC. Except as disclosed in the ICC Disclosure Letter,
neither ICC nor ICC’s Subsidiaries, beneficially or of record, owns any
equity interest of any kind in any other Person.
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C-4
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(m)
|
Securities Laws
Matters
.
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(i)
|
ICC is a “reporting issuer” under Securities Laws of all
provinces of Canada other than Quebec (collectively, the “
Qualifying
Provinces
”), is not on the list of reporting issuers in default under
the Securities Laws of such provinces and is in compliance, in all
material respects, with such Securities Laws.
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(ii)
|
ICC Shares are listed and posted for trading on the
TSXV.
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(iii)
|
ICC has not taken any action to cease to be a reporting
issuer in any province nor has ICC received notification from any
Securities Authority seeking to revoke the reporting issuer status of
ICC.
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(iv)
|
ICC has filed with the Securities Authorities all
material forms, reports, schedules, statements and other documents
required to be filed by ICC with the Securities Authorities since December
31, 2017. The documents comprising ICC Filings did not, as of the date
filed (or, if amended or superseded by a subsequent filing prior to the
date of this Agreement, on the date of such subsequent filing) contain any
Misrepresentation and complied in all material respects with the
requirements of applicable Securities Laws in Canada. ICC has not filed
any confidential material change report which at the date of this
Agreement remains confidential. As of the date hereof, to the knowledge of
ICC, none of the ICC Filings is the subject of an ongoing review by the
Securities Authorities in Canada, outstanding comment by the Securities
Authorities or outstanding investigation by the Securities Authorities in
Canada.
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(n)
|
Auditors
. To the knowledge of ICC, ICC’s auditors,
who audited ICC’s financial statements and provided their audit report,
were, at the relevant time, independent public accountants as required
under the Securities Laws of the Qualifying Provinces and there has never
been a reportable event (within the meaning of National Instrument 51-102
–
Continuous Disclosure Obligations
) between ICC and such auditors
or, to the knowledge of ICC, any former auditors of ICC or the
Subsidiaries.
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(o)
|
Disclosure Controls and Internal Control over
Financial Reporting
.
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(i)
|
ICC and its Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (A)
transactions are executed in accordance with management’s general or
specific authorization and (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with IFRS and to
maintain accountability for assets.
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(ii)
|
To the knowledge of ICC, as of the date of this
Agreement, there is no fraud that involves management or any other
employees who have a significant role in the internal control over
financial reporting of ICC.
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(p)
|
Financial Statements
. ICC’s audited consolidated
financial statements as at and for the fiscal years ended December 31,
2017 and 2016 (the “
ICC Financial Statements
”) have been prepared
in accordance with IFRS (subject to year-end adjustments,
where applicable) applied on a basis consistent with prior periods
and present fairly, in all material respects, the consolidated financial
position of ICC and the ICC Subsidiaries (as applicable) as of the respective
dates thereof and for the respective periods covered thereby (except as may be
otherwise indicated in ICC Financial Statements and/or the financial statements
of any Subsidiary of ICC as at such dates, and the notes thereto or the related
report of ICC’s auditors).
|
C-5
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(q)
|
Absence of Certain Changes or Events
. Since the
date of the last ICC Filing, other than the transactions contemplated by
this Agreement, there has not been any event, occurrence, fact, effect or
circumstance that has had or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect with respect
to ICC.
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(r)
|
No Undisclosed Liabilities
. ICC Group has no
material outstanding liabilities of the type required to be reflected as
liabilities on a balance sheet prepared in accordance with IFRS, or
obligations of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, other than (i) liabilities or
obligations disclosed in the ICC Financial Statements, (ii) liabilities or
obligations incurred in connection with the Arrangement, (iii) liabilities
or obligations incurred in the ordinary course since December 31, 2017 and
(iv) liabilities or obligations that would not be reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect with
respect to the ICC Group.
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(s)
|
Stock Exchange Compliance
. ICC is in compliance in
all material respects with the applicable listing and corporate governance
rules and regulations of the TSXV.
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(t)
|
Books and Records
. All accounting and financial
Books and Records of ICC Group have been maintained in accordance with
sound business practices.
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(u)
|
Compliance with Laws and Licenses
. ICC Group and
the operation of its business are in compliance with, has not received
written notice, correspondence or warning of any alleged violation,
offence or breach of, and to the knowledge of ICC, is not under
investigation or subject to any Action or complaint with respect to and
has not been threatened to be charged with or notified of any alleged
violation, offence or breach of, any Law applicable to it, including the
ACMPR, all of its licenses and permits issued by Health Canada or any
other Governmental Entity, any Laws relating in whole or in part to
medical records, medical information privacy, personal information,
employment, employment practices, labour (including pay equity and wages,
termination and severance, and unfair labour practice), health and safety
and/or Environmental Laws, in each case except as would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect with respect to ICC Group.
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(v)
|
Regulatory Compliance
. In each case except as
would not be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect with respect to the ICC
Group:
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(i)
|
ICC and ICC Subsidiaries have obtained and are in
compliance with the ICC Licenses, all of which are in full force and
effect and no application or proceeding is pending or threatened with
respect to termination, revocation, adverse modification, non-renewal,
suspension, or cancellation of any ICC Licenses and no Governmental Entity
has provided ICC, or any of ICC Subsidiaries with notice of any of the
foregoing. The ICC Disclosure Letter provides a complete and accurate description of each ICC
License held by ICC or any ICC Subsidiary as of the date hereof, which includes
the date, type, capacity, expiry date and production/distribution authorizations
and limitations.
|
C-6
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|
(ii)
|
ICC Group’s production calculation, manufacturing,
labelling and other business activities are, in all material respects,
being conducted (A) in compliance with the ICC Licenses and (B) in
accordance with applicable Laws.
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(iii)
|
ICC and its Subsidiaries have not received any written
notice, correspondence or warning from a Governmental Entity, including
Health Canada or any other governmental agency, requiring the termination
or suspension of any study, test or trial conducted by, or on behalf of,
ICC or its Subsidiaries or in which ICC or its Subsidiaries have
participated and have not received any written notice or correspondence
from other third parties requiring the termination or suspension of any
study, test or trial conducted by others on the existing products of ICC
Group or the products of ICC Group under
development.
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(w)
|
Healthcare Data Privacy and
Security
.
|
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|
(i)
|
ICC and its Subsidiaries (A) have operated their
businesses in compliance, in all material respects, with all applicable
Laws relating to personal information, including medical records and
medical information privacy, that regulate or limit the collection,
maintenance, use, disclosure, processing or transmission of medical
records, patient information or other personal information made available
to or collected by ICC or its Subsidiaries in connection with the
operation of its business (the “
Healthcare Data Requirements
”) and
(B) have taken all reasonable steps to implement all confidentiality,
security and other protective measures required by the Healthcare Data
Requirements, in each case, in all material respects. Without limiting the
foregoing, ICC and its Subsidiaries are and have at all times been in
material compliance with the privacy and security requirements of the
Personal Information Protection and Electronic Documents Act
(Canada) and other applicable privacy Laws of any jurisdiction
(collectively, “
Privacy Laws
”).
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(ii)
|
Neither ICC nor any of its Subsidiaries has experienced
any breach, misappropriation, or unauthorized collection, use or
disclosure of any personal information and all protected health
information for which written notification was given or required to be
given under applicable Privacy Laws.
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(iii)
|
ICC has not been notified in writing of and, to the
knowledge of ICC, is not the subject of, any complaint, regulatory
investigation or proceeding related to data security or
privacy.
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(x)
|
Litigation
. There is no Action now pending or, to
the knowledge of ICC, threatened against ICC Group, which (i) if adversely
determined, would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect with respect to ICC Group, or (ii)
would restrain, enjoin or otherwise prohibit or materially delay or
otherwise materially and adversely affect the consummation of the
Arrangement.
|
C-7
|
|
(i)
|
ICC and each of its Subsidiaries has duly and timely
filed all Tax Returns required by Law to be filed by them prior to the
date hereof and all such Tax Returns are complete and correct in all
material respects.
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(ii)
|
ICC and each of its Subsidiaries has paid as required by
Law on a timely basis all Taxes which are due and payable, all assessments
and reassessments, and all other Taxes due and payable by them on or
before the date hereof, other than those which are being or have been
contested in good faith and in respect of which reserves have been
provided in the most recently published consolidated financial statements
of ICC. ICC and its Subsidiaries have provided adequate accruals in
accordance with applicable accounting standards in its Books and Records
and in the most recently published consolidated financial statements of
ICC for any Taxes of ICC and each of its Subsidiaries for the period
covered by such financial statements that have not been paid whether or
not shown as being due on any Tax Returns. Since such publication date, no
material liability in respect of Taxes not reflected in such statements or
otherwise provided for has been assessed, proposed to be assessed,
incurred or accrued, other than in the ordinary course.
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(iii)
|
No material claims, audits, deficiencies, litigation or
proposed adjustments are ongoing or have been asserted in writing with
respect to Taxes of ICC or any of its Subsidiaries, and neither ICC nor
any of its Subsidiaries is a party to any material action or proceeding
for assessment or collection of Taxes and no such event has been asserted
or, to the knowledge of ICC, threatened in writing against ICC or any of
its Subsidiaries or any of their respective assets.
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(iv)
|
No written claim to ICC or any of its Subsidiaries has
been made by any Governmental Entity in a jurisdiction where ICC and any
of its Subsidiaries does not file Tax Returns that ICC or any of its
Subsidiaries is or may be subject to Tax by that jurisdiction.
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(v)
|
ICC and each of its Subsidiaries has deducted, withheld
or collected all material amounts required by Law to be deducted, withheld
or collected by it on account of Taxes and has remitted all such amounts
to the appropriate Governmental Entity when required by Law to do so. ICC
and each of its Subsidiaries have remitted all Taxes payable by it in
respect of its employees to the appropriate Governmental Entity within the
time required under applicable Law.
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(vi)
|
Other than waivers that were filed solely for the purpose
of permitting ICC or any of its Subsidiaries to claim deductions in order
to reduce Taxes arising from adjustments to income arising from
assessments or reassessments of Tax for prior taxation years and for which
ICC or any of its Subsidiaries has filed objections or appeals in respect
of such amendments or reassessments (the “
ICC Protective Waivers
”),
there are no outstanding agreements extending or waiving the statutory
period of limitations applicable to any claim for, or the period for the
collection or assessment or reassessment of Taxes due from ICC or any of
its Subsidiaries for any taxable period and no request for any such waiver
or extension is currently pending. For greater certainty, no ICC
Protective Waiver allows the relevant Governmental Entity to assess or reassess
additional Tax in respect of the taxation year to which the ICC Protective
Waiver relates.
|
C-8
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(vii)
|
ICC has not been a party to any transaction or other
arrangement which could be subject to adjustment under section 247 of the
Tax Act (or any provincial equivalent).
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(viii)
|
There are no circumstances existing which could result in
the application of Section 17, Section 67, Section 78 or Sections 80 to
80.04 of the Tax Act, or any equivalent provision under applicable
provincial or territorial Law, to ICC or any of its Subsidiaries. Other
than in the ordinary course, ICC and its Subsidiaries have not claimed nor
shall they claim any reserve under any provision of the Tax Act or any
equivalent provision under applicable provincial or territorial Law, if
any amount could be included in the income of ICC or its Subsidiaries for
any period ending after the Effective Time.
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(ix)
|
ICC is a “taxable Canadian corporation” for the purposes
of the Tax Act.
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(i)
|
ICC Group has a good and marketable title to the owned
real property set out in Section 3.3(z)(i) of the ICC Disclosure Letter
(the “
ICC Owned Properties
”) and a valid leasehold interest in the
leased real property set out in Section 3.3(z)(i) of the ICC Disclosure
Letter (the “
ICC Leased Properties
” and together with the ICC Owned
Property, the “
ICC Properties
”), free and clear of any Encumbrances
(other than as would not have a Material Adverse Effect with respect to
ICC Group).
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(ii)
|
ICC Group has good and valid title to, or a valid and
enforceable leasehold interest in, as applicable, all material personal
property owned or leased by it, free and clear of any Encumbrances, except
as would not have a Material Adverse Effect with respect to
ICC.
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(i)
|
Section 3.3(z)(i) of the ICC Disclosure Letter lists all
ICC Owned Properties and sets forth the legal descriptions thereto. There
are no existing contracts, options, rights of first refusal, leases or
otherwise, to sell, transfer, lease or otherwise dispose of any ICC Owned
Properties, or to purchase or acquire any ICC Owned Properties, and ICC
Group is not aware of any circumstances which would result in any sale or
disposal, whether by sale, lease or otherwise, of any of the ICC Owned
Properties including power of sale, foreclosure, expropriation or judicial
proceedings.
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(ii)
|
To the knowledge of ICC:
|
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(A)
|
neither ICC Group nor the landlords of the ICC Leased
Properties are in material breach of any applicable Laws, including any
material building, zoning or other statutes or any official plan, or any
covenants, restrictions, rights or easements affecting such ICC Leased
Properties;
|
C-9
|
|
(B)
|
all buildings, structures, additions and/or improvements
situated on any of the ICC Owned Properties are located wholly within the
boundaries of such ICC Owned Properties, are free of any structural or
material defect and comply with all Laws, covenants, restrictions, rights,
easements, liens and charges affecting the same and their use, in each
case in all material respects; and
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(C)
|
there are no outstanding work orders, non-compliance
orders, deficiency notices or other such notices relative to any of the
ICC Properties.
|
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(iii)
|
The ICC Owned Properties are adequately serviced by
utilities (or well water with adequate septic systems, if any) having
adequate capacities for the normal operations of ICC’s facilities that are
currently growing marijuana in accordance with the ICC Licenses and the
business of ICC Group. The ICC Owned Properties have enforceable rights of
access to and from public streets or highways satisfactory, sufficient and
adequate for the normal operations of the business of ICC Group and, to
the knowledge of ICC, there is no fact or circumstance which exists which
could result in the termination or restriction of such access.
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(iv)
|
No amounts are owing by ICC Group in respect of any of
the ICC Properties to public utility, other than current accounts which
are not in arrears. All amounts that are due for labour or materials
supplied to or on behalf of ICC Group relating to the construction,
alteration or repair of or on any of the ICC Properties have been paid in
full and, to the knowledge of ICC, no one has filed any construction,
builders’, mechanics’ or similar liens relating to the supply of work or
materials to or on any of the ICC Properties with respect to amounts that
are not in arrears.
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(v)
|
No part of the ICC Properties has been taken, condemned
or expropriated by any Governmental Entity nor has any written notice or
proceeding in respect thereof been given to ICC or, to the knowledge of
ICC, commenced nor, to the knowledge of ICC, does any Person have any
intent or proposal to give such notice or commence any such
proceedings.
|
|
|
|
|
|
|
(vi)
|
To the knowledge of ICC, ICC Group’s Leases are currently
in good standing in all material respects, ICC Group as tenant or bailee
and the landlord or bailor have, as of the date hereof, complied in all
material respects with their respective obligations under the Leases and
to the knowledge of ICC, there exists no claim of any kind or right of
set-off against ICC Group as tenant by the landlord or against the
landlord by ICC Group as tenant as of the date hereof.
|
|
|
|
|
|
|
(vii)
|
ICC Group as tenant is in actual possession of the ICC
Leased Properties. ICC Group is not in arrears of rent required to be paid
pursuant to the applicable Lease with respect to the ICC Leased
Properties.
|
|
|
|
|
|
|
(viii)
|
ICC Group as tenant has no right to extend, right of
termination, option to purchase, or right of first refusal with respect to
the ICC Leased Properties except as set out in the ICC Group’s
Leases.
|
C-10
|
|
(bb)
|
Material Contracts
. In each case, except as would
not be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect with respect to ICC
Group:
|
|
|
(i)
|
(A) ICC Group has performed the obligations required to
be performed by it to date under its Material Contracts, (B) ICC Group is
not in breach of or default under any of its Material Contracts, (C) each
Material Contract of ICC Group is a legal, valid and binding obligation of
ICC Group, is in good standing in all material respects, is in full force
and effect, and is enforceable by ICC Group in accordance with its terms,
except as such enforceability may be limited by (x) applicable bankruptcy,
insolvency, reorganization or other Laws of general application relating
to or affecting the enforcement of creditors’ rights generally, and (y)
the discretion that a Court may exercise in the granting of extraordinary
remedies such as specific performance or injunction, and (D) ICC Group has
not received written, or to the knowledge of ICC, other notice of, any
alleged breach of or alleged default under or dispute in connection with
any Material Contract of ICC Group or of any intention of any party to any
Material Contract of ICC Group to cancel, terminate or otherwise modify or
not renew its relationship with ICC Group.
|
|
|
|
|
|
|
(ii)
|
As of the date hereof, no Material Contract that has been
disclosed in the ICC Data Room has, since such disclosure, been modified,
rescinded or terminated, except in the ordinary
course.
|
|
|
(cc)
|
Environmental Matters
.
|
|
|
(i)
|
ICC Group, the operation of its business on the ICC
Properties and the assets of ICC Group have been and are in material
compliance with all Environmental Laws.
|
|
|
|
|
|
|
(ii)
|
ICC Group has not been charged with or convicted of any
offence, violation and/or breach of or non-compliance with Environmental
Laws, or been fined or otherwise sentenced or settled any prosecution
short of conviction under Environmental Laws with respect to the ICC
Properties. There are no notices of judgment or commencement of
proceedings of any nature relating to any breach or alleged breach of
Environmental Laws with respect to the ICC Properties.
|
|
|
|
|
|
|
(iii)
|
there are no hazardous substances located on, in or under
any of the ICC Properties and no release of any hazardous substances has
occurred on, in or from the ICC Properties from the operation of the
business of ICC Group or the conduct of activities related to the business
of ICC Group thereon.
|
|
|
(dd)
|
Restrictions on Business Activities
. Except as
prescribed by the terms and conditions applicable to the ICC Licenses,
there is no agreement, judgment, injunction, order or decree binding upon
ICC or any of its Subsidiaries that has or would reasonably be expected to
have the effect of prohibiting, restricting or materially impairing any
business practice of ICC or any of its Subsidiaries or the conduct of
business by ICC or any of its Subsidiaries as currently conducted other
than such agreements, judgments, injunctions, orders or decrees which
would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect with respect to ICC
Group.
|
C-11
|
|
(ee)
|
Health Canada
. As of the date hereof, all Material
Contracts of ICC Group and written correspondence or written notice
received from Health Canada in relation to the ICC Licenses have been
provided to or made available to Aurora and its Representatives.
|
|
|
|
|
|
|
(ff)
|
Intellectual Property
. In each case except as
would not be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect with respect to ICC
Group:
|
|
|
(i)
|
ICC Group owns or possesses, or has a license to or
otherwise has the right to use, all Intellectual Property which are
material and necessary for the conduct of its business as presently
conducted, including ICC Marks (as defined below). ICC Group owns the
trade marks referred to in the ICC Disclosure Letter (the “
ICC
Marks
”). All applications for ICC Marks are valid and in good
standing, and do not contain any errors or omit any information which
would jeopardise the validity or registrability of any such application in
respect of all of the goods and services listed therein. All such
Intellectual Property owned by ICC Group which have been registered are
valid and enforceable except as such enforceability may be limited by (A)
applicable bankruptcy, insolvency, reorganization or other Laws of general
application relating to or affecting the enforcement of creditors’ rights
generally, and (B) discretion that a Court may exercise in the granting of
extraordinary remedies such as specific performance or injunction. To the
knowledge of ICC, no third party is infringing upon or diluting such
Intellectual Property owned by ICC Group in a manner that would reasonably
be expected to materially and adversely affect such material Intellectual
Property.
|
|
|
|
|
|
|
(ii)
|
All Canadian registrations, if any, and filings
(including applications) that ICC Group has considered necessary to
preserve the rights of ICC Group in its material and necessary
Intellectual Property have been made, are in good standing and are not
invalid. ICC Group has not received a communication from a Governmental
Entity indicating that an application for any of ICC Marks is
unregistrable due to another person’s rights. ICC Group has no pending
action or proceeding, nor any threatened action or proceeding, against any
Person with respect to its Intellectual Property, and to the knowledge of
ICC, there are no circumstances which cast doubt on the validity or
enforceability of the registered Intellectual Property owned or used by
ICC Group. (A) ICC has not received a notice that the prior and continuing
operation of the business of ICC Group interferes with, infringes upon,
misappropriates, or otherwise comes into conflict with, any material
Intellectual Property of third parties, (B) there is no claim or demand of
any person pertaining to, or any proceeding which is pending or, to the
knowledge of ICC, threatened, that challenges the rights of ICC Group in
respect of any such Intellectual Property, or claims that any activities
of the business of ICC Group (including use of ICC Marks) infringes,
violates, or misappropriates any material Intellectual Property of any
person, and (C) no facts exist which would reasonably ground an
infringement or passing off claim against ICC Group by any third party in
relation to the business of ICC Group or ICC
Marks.
|
|
|
(i)
|
Section 3.3(gg)(i) of the ICC Disclosure Letter sets out
a complete and accurate list of the names of all individuals who are
full-time or part-time employees or individuals engaged on contract to provide employment services
or sales or other agents or representatives of ICC Group (“
Employees
”)
and the position, length of service, location of employment and compensation and
benefits of each Employee. Such list includes all Employees as at the date
hereof including any on lay-off or leave of absence, who have been absent
continually from work for a period in excess of one month.
|
C-12
|
|
(ii)
|
ICC is in compliance with all Laws respecting employment
and employment practices, including but not limited to, terms and
conditions of employment, pay equity and wages and has not and is not
engaged in any unfair labour practice.
|
|
|
|
|
|
|
(iii)
|
Section 3.3(gg)(iii) of the ICC Disclosure Letter sets
out a complete and accurate list of all independent contractors or
consulting Contracts. Each independent contractor of ICC Group has been
properly classified as an independent contractor and neither ICC nor any
of ICC’s Subsidiaries has received any notice from any Governmental Entity
disputing such classification.
|
|
|
|
|
|
|
(iv)
|
Neither ICC nor any of its Subsidiaries has entered into
any written or oral agreement or understanding providing for severance,
termination or other similar payments to any director, officer, employee
or consultant in connection with the termination of their position or
their employment as a result of the transaction contemplated by this
Agreement.
|
|
|
|
|
|
|
(v)
|
As of the date of this Agreement, none of ICC or any of
its Subsidiaries is subject to any claim for wrongful dismissal,
constructive dismissal or any other tort claim, actual or, to the
knowledge of ICC, threatened, or any litigation actual, or to the
knowledge of ICC, threatened, relating to employment or termination of
employment of employees or independent
contractors.
|
|
|
(i)
|
In each case in all material respects, all of ICC Benefit
Plans are and have been established, registered, qualified and
administered in accordance with all applicable Laws, and in accordance
with their terms, the terms of the material documents that support such
ICC Benefit Plans and the terms of agreements between ICC Group and ICC’s
employees (present and former) who are members of, or beneficiaries under,
ICC Benefit Plans.
|
|
|
|
|
|
|
(ii)
|
In each case in all material respects, (A) all current
obligations of ICC Group regarding ICC Benefit Plans have been satisfied,
and (B) all contributions, premiums or Taxes required to be made or paid
by ICC Group by applicable Laws or under the terms of each of the ICC
Benefit Plans have been made in a timely fashion in accordance with
applicable Laws and the terms of such ICC Benefit Plans.
|
|
|
|
|
|
|
(iii)
|
No ICC Benefit Plan is subject to any Action initiated by
any Governmental Entity, or by any other party (other than routine claims
for benefits) which, if adversely determined, would reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect with
respect to ICC Group.
|
C-13
|
|
(iv)
|
There are no material unfunded liabilities in respect of
any ICC Benefit Plan, including going concern unfunded liabilities,
solvency deficiencies or wind-up deficiencies where applicable.
|
|
|
|
|
|
|
(v)
|
No ICC Benefit Plan is a “registered pension plan” as
such term is defined in the Tax Act.
|
|
|
|
|
|
|
(vi)
|
The execution, delivery and performance of this Agreement
and the consummation of the Arrangement shall not (A) result in any
material payment (including bonus, golden parachute, retirement,
severance, unemployment compensation, or other benefit or enhanced
benefit) becoming due or payable to any of ICC’s employees, (B) materially
increase the compensation or benefits otherwise payable to any ICC
employee, or (C) result in the acceleration of the time of payment or
vesting of any material benefits or entitlement otherwise available
pursuant to any ICC Benefit Plan (except for outstanding ICC Plan
Options).
|
|
|
(ii)
|
Labour Matters
. Except as disclosed in the
Disclosure Letter, ICC Group is not party to any collective bargaining
agreements, enterprise agreements or analogous agreements. To the
knowledge of ICC, (i) ICC Group is not subject to any application for
certification or threatened or apparent union-organizing campaigns for
employees not covered under a collective bargaining agreement, enterprise
agreement or analogous agreement, (ii) there are no current or threatened
strikes or lockouts affecting ICC Group or any complaint of unfair labour
practice (other than routine individual grievances), (iii) there are no
successor or related employer applications; and (iv) there are no employee
associations, retiree associations, voluntary recognized or certified
unions or analogous organizations authorized to represent any of the
employees of ICC Group.
|
|
|
|
|
|
|
(jj)
|
Insurance
. ICC Group maintains the insurance
policies with recognized insurers as are appropriate to its business in
such amounts and against such risks as are customarily carried and insured
against by prudent owners of comparable business. All such policies are
included in the ICC Data Room and are in all material respects in full
force and effect in accordance with their terms. ICC Group has no reason
to believe that it shall not be able to renew the existing insurance
coverage of ICC and its Subsidiaries as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a Material Adverse
Effect with respect to ICC Group.
|
|
|
|
|
|
|
(kk)
|
Brokers
. Except as disclosed in the Disclosure
Letter, there is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf
of ICC Group who might be entitled to any fee or commission from ICC Group
or Aurora in connection with the Arrangement.
|
|
|
|
|
|
|
(ll)
|
United States Securities
Laws
.
|
|
|
(i.)
|
ICC is not registered or required to be registered as an
“investment company” pursuant to the United States Investment Company Act
of 1940, as amended.
|
|
|
|
|
|
|
(ii.)
|
No class of securities of ICC is, or has ever been,
registered or required to be registered under Section 12 of the 1934 Act
and ICC is not required to file reports with the United States Securities and Exchange
Commission under Section 13 or Section 15(d) of the 1934 Act.
|
C-14
|
|
(iii.)
|
None of ICC nor any of its predecessors or affiliates has
had the registration of a class of securities under the 1934 Act revoked
by the United States Securities and Exchange Commission pursuant to
Section 12(j) of the 1934 Act and any rules or regulations promulgated
thereunder.
|
|
|
(mm)
|
Non-Arm’s Length Agreements
. Except for Contracts
made solely among ICC Group or as disclosed in the ICC Disclosure Letter,
ICC Group does not have any Non-Arm’s Length Agreements and no
non-scheduled payments (including payments in connection with the
termination of a Non-Arm’s Length Agreement) have been made under any
Non-Arm’s Length Agreement since December 31, 2017.
|
|
|
|
|
|
|
(nn)
|
Foreign Corrupt Practices Act
. Neither ICC nor any
of its Subsidiaries nor any director, officer, agent, employee, affiliate
or other Person acting on behalf of ICC or any of its Subsidiaries (i) is
aware of or has taken any action, directly or indirectly, that has
resulted or would result in a violation by any such Person of the
Corruption of Foreign Public Officials Act
(Canada)
(“
CFPOA
”) or the United States
Foreign Corrupt Practices Act of
1977
, as amended (“
FCPA
”) or similar legislation of any other
country in which ICC or its Subsidiaries carry on or have carried on
business, including any offer, payment, promise to pay or authorization of
the payment of any money, or other property, gift, promise to give, or
authorization of the giving of anything of value to any “foreign official”
or “foreign public official” (as such terms are defined in the FCPA and
the CFPOA, respectively) or any foreign political party or official
thereof or any candidate for foreign political office, in contravention of
the FCPA and the CFPOA, (ii) has made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment, and (iii) has used any
corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expense relating to political activity. ICC and its
Subsidiaries have conducted their businesses in compliance with the CFPOA
and the FCPA and have instituted and maintain and shall continue to
maintain policies and procedures designed to ensure, and which are
reasonably expected to ensure, continued compliance with the CFPOA, the
FCPA and with the representations and warranties contained
herein.
|
|
|
|
|
|
|
(oo)
|
Money Laundering Laws
. The operations of ICC and
its Subsidiaries are and have been conducted at all times in material
compliance with applicable financial recordkeeping and reporting
requirements of the
Canadian Proceeds of Crime (Money Laundering) and
Terrorist Financing Act
, as amended and the money laundering statutes
of all other applicable jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines,
issued, administered or enforced by any applicable Governmental Entity
(collectively, “
Money Laundering Laws
”) and no action, suit or
proceeding by or before any regulatory authority involving ICC or any of
its Subsidiaries with respect to the Money Laundering Laws is pending or,
to the knowledge of ICC, threatened.
|
|
|
|
|
|
|
(pp)
|
OFAC
. Neither ICC nor any of its Subsidiaries nor,
to the knowledge of ICC, any director, officer, agent, employee, affiliate
or other Person acting on behalf of ICC or any of its Subsidiaries, is
currently the subject or target of any United States sanctions
administered or enforced by the Office of Foreign Assets Control of the
U.S. Treasury Department (“
OFAC
”); and ICC has not lent,
contributed or otherwise made available, directly or indirectly, any funds
to any subsidiary, joint venture partner or other Person
or entity, for the purpose of financing the activities of any
Person which, to the knowledge of ICC, is currently subject to any United States
sanctions administered by OFAC.
|
C-15
|
|
(qq)
|
No “Collateral Benefit”
. No person shall receive a
“collateral benefit” (within the meaning of MI 61-101) from ICC or its
affiliates as a consequence of the Arrangement.
|
|
|
|
|
|
|
(rr)
|
Assets and Sales.
|
|
|
(i)
|
The aggregate value of ICC’s assets in Canada and the
annual gross revenues from sales in or from Canada generated by those
assets, all as determined as of the time and in the manner that are
prescribed in Part IX of the Competition Act and the Notifiable
Transactions Regulations thereunder, do not exceed the amount determined
under Subsection 110(8) of the Competition Act.
|
|
|
|
|
|
|
(ii)
|
The principal offices of ICC are not located in the
United States. ICC, including all entities “controlled” by the Company for
purposes of the United States Hart Scott Rodino Antitrust Improvements Act
of 1976, as amended, does not hold assets located in the United States
with a fair market value in excess of U.S. $84.4 million in the aggregate
and, during the 12 month period ended December 31, 2017, did not make
sales in or into the United States in excess of U.S. $84.4 million in the
aggregate.
|
C-16
SCHEDULE D
REPRESENTATIONS AND WARRANTIES OF AURORA
|
|
(a)
|
Organization and Qualification
. Aurora is a
corporation duly incorporated and validly existing under the laws of
British Columbia and has the corporate power and authority to own its
assets and conduct its business as now owned and conducted and no steps or
proceedings have been taken by any Person, voluntary or otherwise,
requiring or authorizing the dissolution or winding up of Aurora. Aurora
is duly qualified, licensed or registered to conduct business and is in
good standing in each jurisdiction in which its assets are located or it
conducts business, and has all necessary governmental licenses,
authorizations, permits, consents and approvals required to own, lease and
operate its properties and assets and to carry on its business as now
conducted, except for those licenses, authorizations, permits, consents
and approvals the absence of which do not have and would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse
Effect with respect to Aurora Group.
|
|
|
|
|
|
|
(b)
|
Corporate Authorization
. The execution, delivery
and performance by Aurora of this Agreement and the consummation by Aurora
of the Arrangement are within Aurora’s corporate powers and have been duly
authorized by all necessary corporate action on the part of Aurora and no
other corporate proceedings on the part of Aurora are necessary to
authorize this Agreement or the Arrangement.
|
|
|
|
|
|
|
(c)
|
No Conflict
. Except for the Aurora Credit
Agreement (which requires the consent of Aurora’s lenders thereunder for
completion of the Arrangement), the execution, delivery and performance by
Aurora of this Agreement and the consummation of the Arrangement, all in
accordance with the terms and conditions hereof, do not and shall not (or
would not with the giving of notice, the lapse of time or the happening of
any other event or condition), violate, conflict with or result in a
breach of, or permit the termination, cancellation, acceleration or other
change of any right or obligation under:
|
|
|
(i)
|
any of the articles, by-laws or other constating
documents of Aurora and Aurora’s Subsidiaries;
|
|
|
|
|
|
|
(ii)
|
any contract that if terminated, breached or not renewed
would or would reasonably be expected to have a Material Adverse Effect
with respect to Aurora Group or any licenses, supplemental licenses,
import and export permits issued by Health Canada to Aurora
Group;
|
|
|
|
|
|
|
(iii)
|
except for compliance with applicable Securities Laws and
stock exchange rules and policies, any statute, rule, regulation or Law
applicable to Aurora; and
|
|
|
|
|
|
|
(iv)
|
assuming compliance with the matters, or obtaining the
approvals, referred to in clauses (c)(ii) and (c)(iii) above, any
provision of any applicable Law or any license, approval, consent or
authorization issued by a Governmental Entity held by Aurora and each of
Aurora’s Subsidiaries,
|
with such exceptions, in the case of
each of clauses (ii) through (iv), as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect with respect to
Aurora Group.
D 1
|
|
(d)
|
Investment Canada Act
. Aurora is not a
“non-Canadian” within the meaning of the Investment Canada Act.
|
|
|
|
|
|
|
(e)
|
Execution and Binding Obligation
. This Agreement
has been duly executed and delivered by Aurora, and constitutes a legal,
valid and binding agreement enforceable against it in accordance with its
terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization or other Laws of general
application relating to or affecting the enforcement of creditors’ rights
generally, and (ii) the discretion that a Court may exercise in the
granting of extraordinary remedies such as specific performance and
injunction.
|
|
|
|
|
|
|
(f)
|
Authorized and Issued Capital
. The authorized
capital of Aurora consists of an unlimited number of Aurora Shares. As of
the close of business on September 7, 2018 there are: (i) 958,605,672
Aurora Shares issued and outstanding; and (ii) an aggregate of not more
than 75,133,953 Aurora Shares reserved for issuance pursuant to
outstanding options, warrants, convertible securities and other rights to
acquire Aurora Shares. All outstanding Aurora Shares have been authorized
and are validly issued and outstanding as fully paid and non-assessable
shares, free of pre-emptive rights.
|
|
|
|
|
|
|
(g)
|
Securities Laws
Matters
.
|
|
|
(i)
|
Aurora is a “reporting issuer” under Securities Laws in
each of the Qualifying Provinces, is not on the list of reporting issuers
in default under the Securities Laws of such provinces and is in
compliance, in all material respects, with such Securities Laws.
|
|
|
|
|
|
|
(ii)
|
Aurora Shares are listed and posted for trading on the
TSX.
|
|
|
|
|
|
|
(iii)
|
Aurora has not taken any action to cease to be a
reporting issuer in any province nor has Aurora received notification from
any Securities Authority seeking to revoke the reporting issuer status of
Aurora.
|
|
|
|
|
|
|
(iv)
|
Aurora has filed with the Securities Authorities all
material forms, reports, schedules, statements and other documents
required to be filed pursuant to applicable Securities Laws by Aurora with
the Securities Authorities since June 30,
2017.
|
|
|
(h)
|
Security Ownership
. Other than as has been
previously disclosed to ICC in writing, none of Aurora Group, any of their
affiliates, any such Person’s Representatives or any other Person acting
jointly or in concert with any of them, beneficially owns or controls
(directly or indirectly, economically, or through derivatives or
otherwise) any securities of ICC or any of its affiliates.
|
|
|
|
|
|
|
(i)
|
Filings
. Documents or information filed by Aurora
under applicable Law since June 30, 2017 and including Aurora's (a) annual
information form dated September 25, 2017, (b) audited consolidated
financial statements as at and for the year ended June 30, 2017 and
related management discussion and analysis, (c) management information
circular dated December 8, 2017 in respect of Aurora’ special meeting of
shareholders held January 15, 2018 and management information circular
dated October 2, 2017 in respect of Aurora’ annual general and special
meeting of shareholders held November 13, 2017 , and (d) any material
change reports that have been filed by Aurora between June 30, 2018 and
the date hereof are, and any such documents or information filed by
Aurora after the date hereof and before the Arrangement is completed
(collectively, the “
Aurora Filings
”) shall be, as of their respective
dates, in compliance in all material respects with applicable Law and do not
contain any Misrepresentation as of their respective dates. Aurora has not filed
any confidential material change reports that remain confidential.
|
D-2
|
|
(j)
|
Financial Statements
. Aurora’s audited
consolidated financial statements as at and for the fiscal year ended June
30, 2017 and for the respective 3 and 9 month periods ended March 31, 2018
and 2017 (the “
Aurora Financial Statements
”) have been prepared in
accordance with IFRS (subject to year-end adjustments, where applicable)
applied on a basis consistent with prior periods and present fairly, in
all material respects, the consolidated financial position of Aurora and
its Subsidiaries as of the respective dates thereof and for the respective
periods covered thereby (except as may be otherwise indicated in Aurora
Financial Statements and the notes thereto or the related report of
Aurora’s auditors).
|
|
|
|
|
|
|
(k)
|
Litigation
. Except as disclosed in the Aurora
Filings, there is no Action now pending or, to the knowledge of Aurora,
threatened against Aurora, which (i) if adversely determined, would
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect with respect to the Aurora Group, or (ii) would
restrain, enjoin or otherwise prohibit or materially delay or otherwise
materially and adversely affect the consummation of the
Arrangement.
|
|
|
|
|
|
|
(l)
|
No Insolvency
. Aurora is not insolvent within the
meaning of applicable bankruptcy, insolvency or fraudulent conveyance
laws. No act or proceeding has been taken by or against Aurora in
connection with the dissolution, liquidation, winding-up, bankruptcy or
reorganization of Aurora or the appointment of a trustee, receiver,
manager or other administrator of Aurora or any of its properties or
assets.
|
|
|
|
|
|
|
(m)
|
Compliance with Law
. Aurora has complied with all
applicable Law other than any non- compliance which would, individually or
in the aggregate, not have a Material Adverse Effect in respect of
Aurora.
|
|
|
|
|
|
|
(n)
|
Shareholder Approval
. No vote or approval of the
holders of Aurora Shares or the holder of any other securities of Aurora
is necessary to approve this Agreement, the Arrangement or the other
transactions contemplated herein.
|
|
|
|
|
|
|
(o)
|
Issuance of Aurora Shares under the Arrangement
.
All of Aurora Shares to be issued pursuant to the Arrangement, upon
issuance, shall be validly issued as fully paid and non- assessable, shall
be listed for trading on the TSX, and shall not be subject to any
contractual or other restrictions on transferability or voting, provided
that Aurora Shares issuable to certain “affiliates” (as such term is
defined in Rule 405 under the 1933 Act) of Aurora may have certain
restrictions on transfer imposed upon them in Rule 144 under the 1933 Act.
Additionally, state securities laws of the states where any US persons
reside may impose additional restrictions.
|
|
|
|
|
|
|
(p)
|
Certain United States
Matters
.
|
|
|
(i)
|
No class of securities of Aurora is, or has ever been,
registered or required to be registered under Section 12 of the 1934 Act,
and Aurora is not required to file reports with the United States Securities and Exchange
Commission under Section 13 or Section 15(d) of the 1934 Act.
|
D-3
|
|
(ii)
|
Aurora is not registered or required to be registered as
an “investment company”, as defined in the United States Investment
Company Act of 1940, as amended.
|
|
|
|
|
|
|
(iv.)
|
None of Aurora nor any of its predecessors or affiliates
has had the registration of a class of securities under the 1934 Act
revoked by the United States Securities and Exchange Commission pursuant
to Section 12(j) of the 1934 Act and any rules or regulations promulgated
thereunder.
|
|
|
|
|
|
|
(v.)
|
Aurora is a "foreign private issuer" within the meaning
of Rule 3b-4 under the 1934 Act.
|
|
|
|
|
|
|
(vi.)
|
The principal offices of Aurora are not located in the
United States. Aurora, including all entities “controlled” by Aurora for
purposes of the HSR Act, does not hold assets located in the United States
with a fair market value in excess of U.S. $84.4 million in the aggregate
and, during the 12 month period ended December 31, 2017, did not make
sales in or into the United States in excess of U.S. $84.4 million in the
aggregate.
|
D-4
SCHEDULE E
LIST OF ICC LOCKED-UP SHAREHOLDERS
[REDACTED]
E 1
Form 51–102F3
MATERIAL CHANGE REPORT
|
Item 1.
|
Name and Address of Company
|
Aurora Cannabis Inc. (“
Aurora
”
or the “
Company
”)
Suite 900 - 510 Seymour Street
Vancouver,
British Columbia V6B 1V5
|
Item 2.
|
Date of Material Change
|
September 8, 2018.
A news release announcing the material
change referred to in this report was disseminated by Aurora on September 10,
2018 via Canada Newswire and filed on SEDAR under Aurora’s profile on the same
date.
|
Item 4.
|
Summary of Material Change
|
On September 8, 2018, Aurora and ICC
Labs Inc. (“
ICC
”) entered into a definitive arrangement agreement (the
“
Arrangement Agreement
”) pursuant to which Aurora intends to acquire all
of the issued and outstanding common shares of ICC (the “
ICC Shares
”) for
$1.95 per ICC Share (payable in common shares of Aurora (the “
Aurora
Shares
”), reflecting an aggregate purchase price of approximately $290
million (the “
Transaction
”). The Transaction has been unanimously
approved by the Board of Directors of ICC (the “
ICC Board
”) and by the
Board of Directors of Aurora.
The Transaction will be effected by
way of a plan of arrangement under the
Business Corporations Act
(British
Columbia) (the “
Arrangement
”). Under the terms of the Transaction, each
shareholder of ICC (an “
ICC Shareholder
”) will receive $1.95 per ICC
Share, payable in Aurora Shares valued at the volume-weighted average trading
price of Aurora Shares on the Toronto Stock Exchange (the “
TSX
”) during
the 20 trading day period ending the second to last trading day on the TSX
immediately prior to the Effective Date (as defined in the Arrangement
Agreement), being the date the Transaction is completed (the “
Aurora Share
Price
”).
|
Item 5.
|
Full Description of Material Change
|
|
5.1
|
Full Description of Material
Change
|
On September 8, 2018, ICC and Aurora
entered into the Arrangement Agreement pursuant to which Aurora intends to
acquire all of the issued and outstanding ICC Shares for $1.95 per ICC Share
(payable in Aurora Shares), reflecting an aggregate purchase price of
approximately $290 million. The Transaction has been unanimously approved by the
Board of Directors of each of ICC and Aurora.
The Transaction will be effected by
way of the Arrangement. Under the terms of the Transaction, each ICC Shareholder
will receive $1.95 per ICC Share, payable in Aurora Shares valued at the Aurora
Share Price.
Pursuant to the terms of the
Transaction, based on the volume-weighted average trading price of Aurora Shares
on the TSX during the 20 trading day period ending September 7, 2018, an ICC
Shareholder would receive 0.2448 Aurora Shares for each ICC Share held,
resulting in Aurora issuing approximately 36.2 million Aurora Shares (fully
diluted, treasury method) in connection with the Transaction, representing
approximately 3.6% of outstanding Aurora Shares after giving effect to the
Transaction. The foregoing is for illustrative purposes only: the actual number
of Aurora Shares to be received by ICC Shareholders will be determined based on
the Aurora Share Price, being the volume-weighted average trading price of
Aurora Shares on the TSX during the 20
trading days preceding the date the Transaction is completed (with such 20 day
period ending on the second to last TSX trading day immediately preceding the
date the Transaction is completed).
- 2 -
The Transaction is subject to the
approval of the Supreme Court of British Columbia and the approval of two-thirds
of the votes cast by ICC Shareholders at a special meeting to be called of ICC
Shareholders to approve the Transaction (the “
ICC Special Meeting
”).
Union Group International Holdings
Limited (“
Union Group
”) has entered into a support agreement with Aurora
to, among other things, vote the ICC Shares owned by it in favour of the
Transaction and to otherwise support its completion, subject to the terms and
conditions of such support agreement. Union Group holds approximately 29% of the
issued and outstanding ICC Shares. All of the directors and senior officers of
ICC (who hold in the aggregate approximately 0.4% of the issued and outstanding
ICC Shares on a non-diluted basis) have entered into similar support agreements
with Aurora pursuant to which they have agreed, among other things, to support
the Transaction and vote their ICC Shares in favour of the Transaction.
The Transaction remains subject to
certain other closing conditions including the receipt of certain approvals
(including certain Uruguayan regulatory approvals and the consent of Aurora’s
lenders), and the satisfaction of certain customary closing conditions. Approval
by shareholders of Aurora is not required.
The ICC Board has unanimously
recommended that ICC Shareholders vote in favour of the resolution to approve
the Arrangement, which will be the subject of the ICC Special Meeting expected
to be held in the fourth quarter of 2018. The recommendation of the ICC Board is
supported by a fairness opinion from each of Canaccord Genuity Corp. and INFOR
Financial Inc. to the effect that, as of the date of each opinion, and subject
to the assumptions, limitations and qualifications on which each such opinion is
based, the consideration to be received by ICC Shareholders pursuant to the
Transaction is fair, from a financial point of view, to such shareholders.
The Arrangement Agreement provides
for, among other things, the ICC Board being able to consider a superior
proposal in certain circumstances and a right in favour of Aurora to match any
superior proposal. The Arrangement Agreement also provides for the payment by
ICC of a termination fee of $9,500,000
in favour of Aurora in certain
circumstances and reimbursement of Aurora’s expenses up to $750,000 in certain
circumstances. In addition, the Arrangement Agreement provides that, under
certain circumstances, where the Transaction is not completed because of the
failure of Aurora to obtain certain consents, Aurora would be required to (i)
reimburse ICC’s expenses up to $750,000, and (ii) pay a reverse break fee to ICC
in the amount of $1,250,000.
It is currently expected that, subject
to receipt of all regulatory, court, shareholder and other approvals, and the
satisfaction or waiver of all conditions, the Transaction will be completed in
the fourth quarter of 2018.
|
5.2
|
Disclosure for Restructuring
Transactions
|
Not applicable.
|
Item 6.
|
Reliance on subsection 7.1(2) of National
Instrument 51–102
|
Not applicable.
|
Item 7.
|
Omitted Information
|
None.
- 3 -
|
Item 8.
|
Executive Officers
|
The following senior officer of the
Company is knowledgeable about the material change and this Material Change
Report and may be contacted:
Terry Booth, Chief Executive Officer
Telephone: (604) 362-5207
September 18, 2018
Caution Concerning Forward-Looking Statements
This material change report includes
statements containing certain “forward-looking information” within the meaning
of applicable securities law (forward-looking statements). Forward-looking
statements are frequently characterized by words such as “plan”, “continue”,
“expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “may”,
“will”, “potential”, “proposed” and other similar words, or statements that
certain events or conditions “may” or “will” occur. Forward-looking statements
in this material change report include, but are not limited to statements with
respect to the anticipated timing of the ICC Special Meeting and the closing of
the Transaction, the anticipated consideration to be received by ICC
Shareholders and the satisfaction of closing conditions including: (i) required
ICC Shareholder approval; (ii) necessary court approval in connection with the
Arrangement; (iii) certain termination rights available to the parties under the
Arrangement Agreement; (iv) the parties obtaining all requisite Uruguayan
regulatory approvals; (v) Aurora obtaining the necessary consent from its
lenders; and (v) other customary closing conditions.
Implicit in the forward-looking
statements referred to above are assumptions regarding, among other things: the
expected time required to prepare and mail shareholder meeting materials; the
ability of the parties to receive, in a timely manner and on satisfactory terms,
the necessary ICC Shareholder approval and regulatory, court, stock exchange and
other third party approvals; the ability of the parties to satisfy, in a timely
manner, the conditions to the closing of the Arrangement; and other expectations
and assumptions concerning the Arrangement. The anticipated timing provided
herein in connection with the Arrangement may change for a number of reasons,
including unforeseen delays in preparing materials for the ICC Special Meeting;
the inability to secure necessary ICC Shareholder approval and regulatory,
court, stock exchange or other third party approvals in the time assumed or the
need for additional time to satisfy the other conditions necessary to complete
the Arrangement.
Forward-looking statements are based
on the opinions and estimates of management of Aurora at the date the statements
are made, and are subject to a variety of risks and uncertainties and other
factors that could cause actual events or results to differ materially from
those projected in the forward-looking statements, including, without
limitation, a change in the volume-weighted average trading price of the Aurora
Shares from the date hereof to the Effective Date; the potential risk that the
Transaction will not be approved by the ICC Shareholders; failure to, in a
timely manner, or at all, obtain the required regulatory approvals, stock
exchange and court approvals for the Arrangement or any transaction ancillary
thereto; failure of the parties to otherwise satisfy the conditions to complete
the Arrangement; the possibility that the ICC Board could receive an acquisition
proposal and approve a superior proposal; the effect of the announcement of the
Arrangement on ICC’s and Aurora’s respective strategic relationships, operating
results and business generally; significant transaction costs or unknown
liabilities; the risk of litigation or adverse actions or awards that would
prevent or hinder the completion of the Arrangement; failure to realize the
expected benefits of the Arrangement; compliance with all applicable laws and
other customary risks associated with transactions of this nature; and general
economic conditions. Readers are cautioned that the foregoing list is not
exhaustive. Forward-looking statements should be considered carefully and undue
reliance should not be placed on them.
- 4 -
Management of Aurora provides
forward-looking statements because it believes they provide useful information
to readers when considering their investment objectives and cautions readers
that the information may not be appropriate for other purposes. Consequently,
all of the forward-looking statements made in this material change report are
qualified by these cautionary statements and other cautionary statements or
factors contained herein, and there can be no assurance that the actual results
or developments will be realized or, even if substantially realized, that they
will have the expected consequences to, or effects on, Aurora. In particular,
there can be no assurance that the Transaction will be completed. Readers are
further cautioned not to place undue reliance on forward-looking statements as
there can be no assurance that the plans, intentions or expectations upon which
they are placed will occur. Such information, although considered reasonable by
management at the time of preparation, may prove to be incorrect and actual
results may differ materially from those anticipated.
These forward-looking statements are
made as of the date of this material change report and Aurora assumes no
obligation to update or revise them to reflect subsequent information, events or
circumstances or otherwise, except as expressly required by applicable law.
Aurora Cannabis Completes Distribution of Australis
Capital
TSX: ACB
EDMONTON, Sept. 19, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM), today
announced that it has completed its previously announced distribution of
Australis shares and warrants (the "Distribution"). The distribution was
completed on September 19, 2018, and the Australis shares and warrants will
commence trading on the CSE under the symbol "AUSA" effective at the market open
today.
In accordance with the terms of the Distribution, eligible
Aurora shareholders were paid one unit of Australis for every 34 Aurora shares
outstanding as at August 24, 2018 (the "Record Date). Each unit consists of one
common share and one share purchase warrant of Australis. Each warrant entitles
the holder thereof to acquire one share at an exercise price of $0.25 per
Australis share, on or prior to 4:00 p.m. (Eastern Time) on the date that is one
year after the Distribution.
As described in further detail in the Final Prospectus, no
units were issued to shareholders who are (or were deemed to be) non-residents
of Canada. Rather, such units have been delivered to a custodian for sale in the
open market following the Distribution, and the net cash proceeds will be
delivered to non-resident shareholders, net of any withholding taxes.
Following the distribution, Aurora has no direct ownership
interest in Australis, and the company is an independently operating entity.
Aurora, however, does hold two warrants, allowing the Company to acquire an
ownership interest at such time in the future (within 10 years) when holding
investments in U.S. cannabis assets will become permissible.
"
With the completion of this distribution we have
delivered an immediate return of capital to Aurora shareholders while enabling
the Australis team to proceed with their mandate to invest in U.S. cannabis
assets with high growth potential," said Terry Booth, CEO of Aurora. "Australis'
management, board of directors and investment committee are well positioned to
leverage their collective knowledge and extensive experiences to rapidly execute
on the tremendous opportunity ahead to generate substantial long-term
shareholder value."
Scott Dowty, CEO of Australis, added, "We will leverage the
opportunities created by a fragmented U.S. cannabis market with limited access
to growth capital. We have not wasted time and have already identified a number
of strong assets within this market that we believe have high growth potential.
With the completion of our over-subscribed private placement, we have the funds
to start executing on these opportunities immediately and deliver growth."
About Aurora
Headquartered in Edmonton, Alberta, Canada with funded capacity
in excess of 500,000 kg per year and sales and operations in 18 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and its first production
facility, the recently acquired MedReleaf Markham facility, and its wholly owned
European medical cannabis distributor Aurora Deutschland (formerly Pedanios),
have achieved this level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes 15 companies – MedReleaf,
CanvasRX, Peloton Pharmaceutical, Aurora Deutschland (formerly Pedanios), H2
Biopharma, Urban Cultivator, BC Northern Lights, Larssen Greenhouses, CanniMed
Therapeutics, Anandia Labs, HotHouse Consulting, Agropro, Borela, and the
pending acquisition of ICC Labs – Aurora is distinguished by its reputation as a
partner of choice and employer of choice in the global cannabis sector, having
invested in and established strategic partnerships with a range of leading
innovators, including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD),
Radient Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP),
Cann Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom
Holdings Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), Evio Beauty
Group (private), Wagner Dimas (private), CTT Pharmaceuticals (OTCC: CTTH), and
Alcanna Inc. (TSX: CLIQ). Aurora's Common Shares trade on the TSX under the
symbol "ACB", and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website, investor.auroramj.com, Twitter, Facebook or Instagram
Terry Booth, CEO
Aurora Cannabis Inc.
About Australis
Australis Capital identifies and invests in the cannabis
industry predominately in the United States, a highly regulated, fragmented,
fast growing and evolving industry. Investments may include and are not limited
to equity, debt or other securities of both public and private companies,
financings in exchange for royalties or other distribution streams, and control
stake acquisitions. Australis Capital adheres to stringent investment criteria
and will focus on significant near and mid-term high-quality opportunities with
strong return potentials while maintaining a steadfast commitment to governance
and community. Australis Capital's Board, Management and Advisory Committee
members have material experience with, and knowledge of, the cannabis space in
the U.S., extensive backgrounds in highly regulated industries, adherence to
stringent regulatory compliance, public company and operational expertise. For
more information, please visit us at www.ausacap.com.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur and include, but are not limited to: statements
in respect of the timing and details of the Distribution, the financial
prospects of Australis, the listing of Australis Shares and Warrants on the CSE
and the terms of the Restricted Back-in Right. These statements are only
predictions. Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking statements throughout this news
release. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. Investors should refer to the final prospectus filed by Australis in
connection with the Distribution for more information, in particular the risk
factors described therein under the heading "Risk Factors". The Company is under
no obligation, and expressly disclaims any intention or obligation, to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/September2018/19/c6481.html
%SEDAR: 00025675E
For further information:
For Media: Heather MacGregor,
+1.416.509.5416, heather.macgregor@auroramj.com; For Investors: Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com; Rob Kelly, +1.647.331.7228,
rob.kelly@auroramj.com; U.S. Investors, Phil Carlson / Elizabeth Barker, KCSA
Strategic Communications, Phone: (212) 896-1233 / (212) 896-1203, Email:
pcarlson@kcsa.com / ebarker@kcsa.com; Australis Contact, Scott Dowty, Chief
Executive Officer, IR@ausacap.com
CO: Aurora Cannabis Inc.
CNW 07:30e 19-SEP-18
Aurora Cannabis to Host Fourth Quarter 2018 Investor
Conference Call on September 25, 2018
TSX: ACB
EDMONTON, Sept. 21, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM), today
announced that it has scheduled its conference call to discuss the results for
its fourth quarter ended June 30, 2018. The call will be hosted on Tuesday,
September 25
th
, 2018 at 11:00 a.m. Eastern Time by Terry Booth, Chief
Executive Officer, Glen Ibbott, Chief Financial Officer, and Cam Battley, Chief
Corporate Officer followed by a question and answer period.
CONFERENCE CALL DETAILS
|
DATE:
|
Tuesday, September 25
th
, 2018
|
|
TIME:
|
11:00 a.m. Eastern Time (9:00 a.m. Mountain
Time)
|
|
WEBCAST:
|
https://bit.ly/2pnnKkA
|
|
DIAL IN NUMBER:
|
(647) 427-7450 or (888) 231-8191
|
|
REPLAY:
|
(416) 849-0833 or (855) 859-2056
|
|
|
Available until 12:00 midnight Eastern Time
Tuesday, October 2, 2018
|
|
REFERENCENUMBER:
|
2977713
|
About Aurora
Headquartered in Edmonton, Alberta, Canada with funded capacity
in excess of 500,000 kg per year and sales and operations in 18 countries across
five continents, Aurora is one of the world's largest and leading cannabis
companies. Aurora is vertically integrated and horizontally diversified across
every key segment of the value chain, from facility engineering and design to
cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet European Union (EU) GMP standards, and its first production
facility, the recently acquired MedReleaf Markham facility, and its wholly owned
European medical cannabis distributor Aurora Deutschland (formerly Pedanios),
have achieved this level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes 15 companies – MedReleaf,
CanvasRX, Peloton Pharmaceutical, Aurora Deutschland (formerly Pedanios), H2
Biopharma, Urban Cultivator, BC Northern Lights, Larssen Greenhouses, CanniMed
Therapeutics, Anandia Labs, HotHouse Consulting, Agropro, Borela, and the
pending acquisition of ICC Labs – Aurora is distinguished by its reputation as a
partner of choice and employer of choice in the global cannabis sector, having
invested in and established strategic partnerships with a range of leading
innovators, including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD),
Radient Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP),
Cann Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom
Holdings Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), Evio Beauty
Group (private), Wagner Dimas (private), CTT Pharmaceuticals (OTCC: CTTH), and
Alcanna Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website, investor.auroramj.com, Twitter, Facebook or Instagram
Terry Booth, CEO
Aurora Cannabis Inc.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
Forward-looking statements are based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. The
Company is under no obligation, and expressly disclaims any intention or
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as expressly
required by applicable law.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content: http://www.newswire.ca/en/releases/archive/September2018/21/c5809.html
%SEDAR: 00025675E
For further information:
For Media: Heather MacGregor,
+1.416.509.5416, heather.macgregor@auroramj.com; For Investors: Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com; Rob Kelly, +1.647.331.7228,
rob.kelly@auroramj.com; U.S. Investors: Phil Carlson / Elizabeth Barker, KCSA
Strategic Communications, Phone: (212) 896-1233 / (212) 896-1203, Email:
pcarlson@kcsa.com / ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 16:00e 21-SEP-18
Aurora Cannabis Inc. Announces Results for the Fourth
Quarter and 2018 Fiscal Year
223% Top Line Annual Revenue Growth – Well Positioned for
Canadian Adult Consumer Use
Market - Process Commenced to List Securities on
Senior U.S. Exchange
TSX: ACB
EDMONTON, Sept. 24, 2018 /CNW/ - Aurora Cannabis Inc. ("Aurora"
or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM),
announced today its financial and operational results for the fourth quarter and
fiscal year ended June 30, 2018.
Q4 2018 Financial and Operational Highlights
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
Change
|
|
|
In thousands ('000s) unless otherwise noted
|
|
Q4 2018
|
|
|
Q3 2018
|
|
|
(%)
|
|
|
Q4 2017
|
|
|
(%)
|
|
|
Financial Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
19,147
|
|
$
|
16,100
|
|
|
19%
|
|
$
|
5,936
|
|
|
223%
|
|
|
Gross margin on medical
cannabis
(1)
|
|
74%
|
|
|
59%
|
|
|
25%
|
|
|
58%
|
|
|
28%
|
|
|
Earnings (loss)
|
|
79,268
|
|
|
(20,795
|
)
|
|
nm
|
|
|
($4,816
|
)
|
|
nm
|
|
|
Earnings (loss) attributable to common shares
|
|
79,870
|
|
|
(19,215
|
)
|
|
nm
|
|
|
($4,816
|
)
|
|
nm
|
|
|
Operational Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash costs of sales per gramof dried cannabis
sold
(2)
|
$
|
1.87
|
|
$
|
1.80
|
|
|
4%
|
|
$
|
2.09
|
|
|
(11%
|
)
|
|
Cash costs to produce per
gramof dried cannabis sold
(2)
|
$
|
1.70
|
|
$
|
1.53
|
|
|
11%
|
|
$
|
1.91
|
|
|
(11%
|
)
|
|
Active registered patients
|
|
43,308
|
|
|
45,776
|
|
|
(5%
|
)
|
|
16,400
|
|
|
164%
|
|
|
Average net selling price of
dried cannabis
(3)
|
$
|
8.02
|
|
$
|
7.30
|
|
|
10%
|
|
$
|
6.79
|
|
|
18%
|
|
|
Average net selling price of cannabis
oil
(3)
|
$
|
13.52
|
|
$
|
12.83
|
|
|
5%
|
|
$
|
17.91
|
|
|
(25%
|
)
|
|
Kilograms produced
|
|
2,212
|
|
|
1,206
|
|
|
83%
|
|
|
1,165
|
|
|
90%
|
|
|
Kilograms sold
|
|
1,617
|
|
|
1,353
|
|
|
20%
|
|
|
755
|
|
|
114%
|
|
|
(1)
|
Represents the gross margin on medical cannabis before
fair value adjustments
|
|
(2)
|
Represents the cash cost of sales and cost to produce per
gramsold of dried cannabis produced by Aurora
|
|
(3)
|
Represents the average net selling price per gramof dried
cannabis equivalent
|
Q4 2018 Highlights:
|
|
•
|
Revenue of $19,147, up 223% compared to the
same period in 2017.
|
|
|
°
|
Pro-forma Q4 2018 revenue of $33,117, including
MedReleaf
|
|
|
•
|
Gross margin on medical cannabis of 74%, up 28% compared
to the fourth quarter of 2017. This increase was primarily due to a higher
average selling price per gram of dried cannabis, coupled with a higher
proportion of cannabis oil sales in the Company's sales ratio.
|
|
|
•
|
Cash cost of sales and cash cost to produce per gram of
dried cannabis sold both decreased 11% compared to the same period in
2017. This decrease was primarily due to efficiencies from automation and
yield expertise.
|
|
|
•
|
Active registered patients of 43,308, up 164% compared to
the fourth quarter of 2017.
|
|
|
•
|
Kilograms produced and kilograms sold of 2,212 and 1,617,
up 90% and 114% respectively compared to the same period in 2017.
|
|
|
•
|
7 facilities with production licenses, 5 facilities with
sales licenses
|
|
In thousands ('000s) unless otherwise
noted
|
|
FY2018
|
|
|
FY2017
|
|
|
Change (%)
|
|
|
Financial Results
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
55,196
|
|
$
|
18,067
|
|
|
206%
|
|
|
Gross margin on medical
cannabis
(1)
|
|
65%
|
|
|
56%
|
|
|
16%
|
|
|
Earnings (loss)
|
$
|
69,227
|
|
|
($12,968
|
)
|
|
nm
|
|
|
Earnings (loss) attributable to common shares
|
$
|
71,936
|
|
|
($12,968
|
)
|
|
nm
|
|
|
Operational Results
|
|
|
|
|
|
|
|
|
|
|
Average net selling price of dried
cannabis
(2)
|
$
|
7.65
|
|
$
|
6.47
|
|
|
18%
|
|
|
Average net selling price of
cannabis oil
(2)
|
$
|
13.68
|
|
$
|
17.91
|
|
|
(24%
|
)
|
|
Kilograms produced
|
|
5,632
|
|
|
3,037
|
|
|
85%
|
|
|
Kilograms sold
|
|
5,022
|
|
|
2,382
|
|
|
111%
|
|
|
(1)
|
Represents the gross margin on medical cannabis before
fair value adjustments
|
|
(2)
|
Represents the cash cost of sales and cost to produce per
gramsold of dried cannabis produced by Aurora
|
Fiscal 2018 Highlights:
|
|
•
|
Revenue of $55,196, up 206% compared to the prior year.
|
|
|
•
|
Gross margin on medical cannabis of 65%, up 16% compared
to FY 2017. This increase was primarily due to a higher average selling
price per gram of dried cannabis, coupled with a higher proportion of
cannabis oil sales in the Company's sales ratio.
|
|
|
•
|
Kilograms produced and kilograms sold of 5,632 and 5,022,
up 85% and 111% respectively compared to FY 2017.
|
|
|
•
|
11 strategic acquisitions completed and 1 in progress.
|
|
|
•
|
Total headcount grew to 1,400 from approximately 300 at
the end of FY 2017.
|
|
|
•
|
Pro-forma cannabis inventory and biological assets,
including MedReleaf, of $88.8 million.
|
A comprehensive discussion of Aurora's financials and
operations are provided in the Company's Management's Discussion & Analysis
("MD&A") and Financial Statements which will be filed on SEDAR at www.sedar.com and on
the Aurora website.
Management Commentary
"Aurora made substantial progress toward our strategic goal of
becoming the global scale and margin leader in the cannabis industry,
establishing a vertically integrated company with a broadly diversified product
offering with a large global footprint," said Terry Booth, CEO of Aurora. "Our
high-pace, consistent execution has enabled us to complete a number of
transformative acquisitions, bringing together industry-leading companies in
terms of scale, quality, efficiencies, plant and medical science, product
development and innovation, brands, and international distribution."
Mr. Booth added, "With coast-to-coast supply arrangements, and
our strategic investment in Alcanna, we are very well positioned to capitalize
on the significant adult consumer use opportunity in Canada. With reported Q4
revenues of $19.1 million, pro-forma Q4 revenues of over $33.1 million, and
production capacity scaling up rapidly, we anticipate accelerated revenue growth
during fiscal 2019. We have invested heavily in our organizational capabilities,
including sales, marketing, and corporate talent and capacity, to ensure we will
continue to drive strong and sustainable long-term growth."
Mr. Booth concluded, "Today, Aurora ticks all the boxes for
sustainable success and leadership in the cannabis industry. Aurora is
capitalizing on a once in a lifetime opportunity, and establishing new industry
standards in terms of execution, science, cultivation, international expansion
and product development that position us exceptionally well to do so. We are
very proud of our achievements over the past year, and we look forward to fiscal
2019 as we continue to execute."
U.S. Listing
Aurora intends to list its securities on a senior U.S stock
exchange. In advance of a listing on a senior U.S. exchange, Aurora will file a
Form 40-F Registration Statement with the United States Securities and Exchange
Commission. The listing of the Company's securities remains subject to exchange
approval and the satisfaction of all applicable listing and regulatory
requirements. A trading date will be made public once all regulatory formalities
are satisfied.
Terry Booth, Aurora's CEO added: "Listing our shares on a
senior U.S. exchange reflects the level of corporate and business maturity and
our high-paced execution. This listing provides access to a broader investor audience who gain the opportunity to
participate in our continued success."
Operational Highlights Subsequent to June 30, 2018
Facilities and Production update
During and subsequent to the quarter, the Company made
significant progress towards increasing its production capacity. As at September
2018, the annualized run rate of Aurora's in-service production rooms is 45,000
kgs. Management anticipates that around calendar year end 2018, the Company will
have a production run rate in excess of 150,000 kg per annum, with subsequent
scale up to over 500,000 kg per annum.
Aurora Sky
Aurora has completed full cycles in its first two licensed grow
rooms and its mother room, and has submitted for final inspection towards
obtaining its sales permit for Aurora Sky. The Company is pleased to announce
that Health Canada has licensed two further production bays, each with more
canopy space than the entire Aurora Mountain facility. Aurora has commenced
populating these additional bays, bringing the total number of bays now in
production (including mother room) to 5 of 17. The Company is in an ongoing
process of obtaining production licenses as new bays come online, and
anticipates submitting the license applications for the final rooms in November.
Minor construction and commissioning items remain, which will be completed in
advance of new bays coming online. Consequently, the Company continues on
schedule towards reaching full 100,000 kg per annum production capacity around
the end of calendar 2018.
Aurora Mountain
Continuous process improvement programs have resulted in an
increase in production at Aurora Mountain, one of the Company's EU GMP certified
facilities. Management anticipates production at Mountain to reach 6,000 kg per
annum, up by 25% from the facility's previously disclosed capacity. The increase
in production capacity at Mountain ensures the Company will be able to allocate
more product to the supply restrained international markets.
Aurora Vie
The Company received its sales license for Aurora Vie in July
2018. The facility is now at full capacity, producing at a run rate of 4,000 kg
per annum.
In Q4 2018, the Company completed the installation of Capcium
softgel manufacturing equipment at Aurora Vie. The production line has been
commissioned successfully, and the facility is currently producing high volumes
of softgels for the adult consumer-use market to fulfill with orders received
from provincial buyers.
Aurora Eau
Aurora's newest facility received its production license in
September 2018 and is now ramping up to full capacity at 4,500 kg per annum.
Aurora Eau was purpose-built to EU GMP standards and represents the next
evolution of Aurora's indoor-grow facilities, where novel and exotic strains
will be grown for both the medical and adult consumer-use markets.
Aurora Nordic, Phase I
Phase I of Aurora Nordic, the Company's Danish facility, has
been populated with genetics propagated from Aurora Mountain. The facility will
ramp up to its full 8,000 kg per annum capacity in the coming months, increasing
product availability for the EU markets.
MedReleaf Bradford
The MedReleaf Bradford facility is ramping up to full
production capacity of 28,000 kg per annum. Currently, the facility is producing
at a rate of approximately 10,000 kg per annum. The Bradford facility has
large-scale oil production capacity, which will fuel the Company's ability to
produce higher margin products.
Aurora Sun
On April 16, 2018, the Company acquired approximately 71 acres
of land in Medicine Hat, Alberta, for the construction of "Aurora Sun", a highly
automated cannabis production facility with ultra-low operating costs. The new
facility will be 1.2 million square feet, 50% larger than Aurora's Sky, a
100,000+ kg per annum Health Canada licensed facility at the Edmonton
International Airport. Construction of Aurora Sun is on schedule with site
preparation works completed and foundation work commenced.
Product Licensing
In addition to the licensing developments described above,
Aurora reports it has received the following product and development licenses,
broadening the Company's higher-margin product offering, while facilitating
research and exports:
|
|
•
|
Capsule Licenses Granted:
On July 3, 2018,
Aurora's wholly owned subsidiary, CanniMed, received Health Canada
approval to commence sales of CanniMed Capsules, a line of vegan capsules
which became available to patients on August 22, 2018.
|
|
|
•
|
Aurora Mountain Dealer's License:
On July 30,
2018, Aurora obtained a Health Canada Dealer's License under the
Controlled Drugs and Substances Act for its EU GMP certified Aurora
Mountain facility in Alberta. The new license provides Aurora additional
opportunities to produce, assemble, and sell cannabis oils and future
novel, derivative products from Aurora Mountain as well as import and
export cannabis products to and from international markets, subject to
applicable regulations.
|
|
|
•
|
Softgel Capsules:
On August 22, 2018, Aurora
received Health Canada authorization to produce cannabis softgel capsules
at its state-of-the-art Aurora Vie facility in Pointe-Claire, Québec.
Immediately following the approval, Aurora started production of softgel
capsules in partnership with Capcium Inc.
|
Canadian Adult Consumer-Use Market
In preparation for the commencement of legalized adult consumer
use sales in Canada, from October 17, 2018 onwards, the Company has entered into
supply arrangements with provinces and territories accounting for over 98% of
the Canadian population. Consumer brands sold by Aurora, its subsidiaries and
strategic partners will be available in Ontario, Québec, Alberta, British
Columbia, Saskatchewan, Manitoba, Nova Scotia, the Yukon, North West
Territories, Prince Edward Island, and Newfoundland and Labrador. During and
subsequent to the quarter, the Company has been able to significantly increase
its inventory. With production from the Company's licensed facilities ramping up
to full capacity, Aurora anticipates producing at a rate in excess of 150,000 kg
per annum by the end of Q2 2019.
Alcanna Inc. ("Alcanna")
In accordance with our strategic investment in Alcanna, the
largest private sector liquor retailer in Canada, Alcanna intends to open 37
retail cannabis stores in Alberta (the maximum number permissible under AB
regulations for year one), and is targeting additional locations across the
country where private retail of cannabis is permissible. Alcanna, in preparation
for the onset of private retail in Ontario from April 1, 2019 onwards, is in the
process of securing a large number of locations for potential stores in the
Ontario, if permitted under the regulatory framework, which is yet to be announced.
Acquisitions
The Company continued to execute on its strategy to build a
global scale, science and margin leader. To this end, a number of acquisitions
were completed, further increasing production capacity, geographic reach,
science-driven product and technology development, and brand strength.
Subsequent to the end of Q4 2018, Aurora acquired:
|
|
•
|
MedReleaf Corp. ("MedReleaf"):
Aurora completed
the world's largest cannabis industry transaction whereby Aurora acquired
MedReleaf. The transaction has created a unified cannabis industry leader
with a combined funded capacity of more than 500,000 kg per annum, broad
domestic and international distribution channels, industry-leading product
development capabilities and strong medical and consumer brands.
|
|
|
•
|
HotHouse Consulting Inc. ("HotHouse"):
On August
7, 2018, the Company entered into a Letter of Intent to acquire HotHouse,
a greenhouse consulting business with an emphasis on large scale cannabis
production.
|
|
|
•
|
Anandia Laboratories Inc. ("Anandia"):
On August
8, 2018, the Company acquired Anandia, a global leader in cannabis science
(genetics, breeding) and analytical product testing. The transaction
enables the Company to develop new strains with specific
terpene/cannabinoid profiles for targeted product applications, as well as
strains with improved cultivation characteristics. Management believes
these activities will lead both to the development of new, higher-margin
products and a further increase in efficiency of its cultivation
processes.
|
|
|
•
|
ICC Labs Inc. ("ICC"):
On September 10, 2018,
Aurora entered into an agreement to acquire ICC for an aggregate purchase
price of $290 million. ICC, the leading cannabis company in South America,
adds significant low-cost production and processing capacity of both THC
and CBD based products in both Uruguay and Colombia. In Uruguay, the
world's first country to legalize adult consumer use of cannabis, ICC
maintains 70% market share and a broad and well-diversified product
portfolio, as well as extensive distribution channels throughout South
America and internationally.
|
|
|
•
|
Agropro UAB ("Agropro") and Borela UAB ("Borela"):
On September 12, 2018, Aurora acquired Europe's largest producer,
processor and supplier of certified organic hemp and hemp products,
Agropro, as well as hemp processor and distributor Borela. This
acquisition is anticipated to yield significant quantities of CBD for
extraction, and is expected to create further synergies through the
Company's CBD and hemp product value chain, which includes majority
ownership of Hempco Food and Fiber.
|
Integration
The Company has developed the integration of acquisitions into
a core competency. Under the leadership of Andre Jerome, SVP, Business
Integrations, who formerly implemented global business integrations for
Vodafone, a $65 billion telecommunications company, the Company has developed a
methodology that ensures rapid integration of acquired companies into the Aurora
organization. Integration of CanniMed was fully completed within the targeted
90-day timeline, and has resulted in an acceleration of its development,
including a significant improvement in production rates of dried cannabis and
cannabis oils.
Integration of MedReleaf into the Aurora organization has
commenced and is progressing according to schedule. Mutual learning and
implementation of best practices is a core aspect of the MedReleaf integration,
and teams at both companies have identified key performance indicators, based on
which the integration program is being executed.
Strategic Investments & Agreements
During and subsequent to the quarter, the Company made a number
of strategic investments in both public and private companies. As at June 30, 2018, the
unrealized gains on its public investments made to date stood at $372.0 million.
Significant strategic investments made subsequent to June 30, 2018 consist
of:
|
|
•
|
Evio Beauty Group Ltd. ("Evio"):
On July 10, 2018,
Aurora entered into a Product Development and Distribution Agreement with
Evio to develop and manufacture a line of co- branded topical cosmetic
products formulated with a cannabinoid or cannabinoids.
|
|
|
•
|
CannaRoyalty Corp. ("CannaRoyalty"):
On August 1,
2018, the Company entered into an agreement with CannaRoyalty whereby
CannaRoyalty assigned to Aurora all of its right, title, and interest in
an exclusive license for a technology for creating machine-rolled cannabis
developed by Wagner Dimas Inc. ("Wagner"). The Wagner technology has now
been installed at Aurora, and the large-scale production of pre-rolled
product has commenced in preparation to filling orders received from
provincial buyers who will be supplying the adult consumer user market.
|
International Developments
Aurora continues to expand its international footprint and
capitalize on its early mover advantage in key growth markets:
|
|
•
|
Malta:
Aurora entered into a Letter of Intent with
Malta Enterprises concerning the establishment of the first seed-to-pharma
cannabis facility in Malta, subject to certain conditions. The Company
anticipates the facility, to be designed by Aurora Larssen Projects, to be
focused on the production of higher margin derivative products, aimed at
the Maltese and Southern European markets.
|
|
|
•
|
EU GMP Certification:
• EU GMP Certification:
Aurora's wholly-owned subsidiary MedReleaf received full EU GMP
certification for its Markham facility. The certification of the Markham
facility will increase product availability for the rapidly growing,
higher-margin and heavily regulated EU market. All of the Company's
facilities are being designed and built to EU GMP standards, including
Aurora Nordic Phase I, which currently is in production and ramping up to
full capacity.
|
|
|
•
|
Establishing Aurora Europe:
Aurora established a
pan-European company, Aurora Europe GmbH, headquartered in Berlin,
Germany. Pedanios GmbH, Europe's largest distributor of cannabis, now
operates as Aurora Deutschland GmbH, while the Company has also formed
Aurora Italia, Aurora Nordic (Denmark) and a number of other local
companies.
|
|
|
•
|
Australis Capital Inc. ("ACI"):
On September 19,
2018, the Company completed the spin-out of ACI, an independent company,
and distributed to Aurora shareholders, as a return of capital, units of
ACI on the basis of one unit for every 34 Aurora shares. The units
commenced trading on the CSE on September 19, 2018. ACI is an investment
company with a focus on the U.S. cannabis market, which is characterized
by large fragmentation and limited access to capital. ACI's management,
board and advisory teams have deep experience and relationships within the
cannabis industry, and believe they will be able to secure investments to
build significant shareholder value.
|
|
|
•
|
Cayman Islands:
sales of CanniMed oils to the
Cayman Islands continue to grow in line with patient demand. The Company
signed a supply agreement
|
|
|
•
|
International hemp:
Through the acquisitions of
Agropro and Borela, as well as the planned acquisition of ICC, the Company
is well positioned to capitalize on the rapidly growing hemp- based food
product markets. Agropro and Borela products are currently available in 27
countries. Going forward, the Company intends to create further
integration with its majority owned Hempco Food and Fiber, further
increasing market reach and product development capabilities.
|
|
|
•
|
MED Colombia:
through the acquisition of
MedReleaf, the Company now owns MED Colombia, a licensed cannabis company
in Colombia with substantial grow potential and a strong portfolio of
genetics. Upon successful completion of the ICC acquisition, MED Colombia
will become part of Aurora's South American platform.
|
|
|
•
|
Australia:
Aurora recently exported oil products
to Australia, which were supplied to patients through its partially-owned
strategic partner Cann Group. Cann Group has announced it will be
constructing an ALPS (Aurora Larssen Projects) designed high-technology,
hybrid cultivation facility at the Melbourne International Airport. Aurora
and its wholly-owned subsidiary Anandia have also successfully exported
plant tissue culture derived genetics for Cann Group to enhance its
cultivation program.
|
Financing
|
|
•
|
Bank of Montreal ("BMO") Debt Facility:
the
Company finalized a $200,000 Debt Facility (the "Facility") with BMO
consisting of a $150,000 term loan and a $50,000 revolving credit
facility, both of which will mature in 2021. The Company also has the
option to upsize the Facility to a total of $250,000, subject to certain
conditions. The Facility will be primarily secured by Aurora's production
facilities and can be repaid without penalty at Aurora's discretion. The
Facility with BMO is the largest of its kind in the cannabis industry with
a tier one bank and a validation, management believes, of the quality and
economic value of Aurora's facilities and of the Company's prospects.
|
Q4 2018 Operational Highlights
Strategic Investments
|
|
•
|
Hempco Food and Fiber Inc
.
(Hempco):
The
Company purchased an additional 10.8 million shares to increase its
ownership interest to 52.3%. Hempco plays an important role in the
Company's strategy to secure access to low-cost material for the potential
production of CBD extracts.
|
|
|
•
|
CTT Pharmaceuticals Inc. ("CTT"):
The Company
acquired a 9.41% interest in CTT, who have developed fast-dissolving oral
thin wafers that provide dose-specific, smoke-free delivery of medical
cannabis with a rapid onset of action. The companies are jointly working
towards approval by Health Canada for market introduction.
|
|
|
•
|
Choom Holdings Inc. ("Choom")
: The Company
subscribed to an investment representing an 8% ownership interest in
Choom, extending the Company exposure to the emerging craft cultivation
market, and expanding its reach into the cannabis retail market.
|
|
|
•
|
Capcium Inc. ("Capcium"):
The Company acquired a
19.99% ownership interest in Capcium, a leading softgel manufacturer in
the cannabis industry. The Capcium technology has been installed at Aurora
Vie and the Company has commenced the large-scale production of softgels
in response to orders from provincial buyers to service the Canadian adult
consumer-use market.
|
|
|
•
|
Green Organic Dutchman Holdings Ltd. ("TGOD"):
The
Company holds approximately 17% of TGOD. In addition to securing 20% of
the output of TGOD's Ancaster and Valleyfield facilities, the latter of
which is constructed with the assistance from Aurora Larssen Projects, the
value of the Company's investment has appreciated significantly. The
Company has options to increase its ownership in TGOD to over 50%.
|
Supply Agreements and Partnerships
|
|
•
|
Pharmasave:
On April 4, 2018, CanniMed,
a wholly-owned subsidiary of Aurora, entered into a Letter of Intent with
Pharmasave, a network of over 650 independently-owned pharmacies, to
become a preferred supplier of medical cannabis.
|
|
|
•
|
Société des Alcools du Québec ("SAQ")":
On April 11, 2018, the company completed a final agreement with SAQ to
supply cannabis for the Quebec consumer market, once legalized.
|
Acquisitions
|
|
•
|
CanniMed Therapeutics Inc. ("CanniMed"):
On May 1, 2018, the Company completed the acquisition of CanniMed. The
transaction creates strong strategic synergies, in particular for the
domestic and international medical cannabis markets, in terms of
distribution, product development, and branding. Integration of CanniMed
into Aurora is complete and acceleration of CanniMed's production and
other operations has commenced.
|
International Developments
|
|
•
|
Italy:
Aurora completed the successful delivery of
the first ever batch of privately exported medical cannabis from Canada to
the Italian government through its wholly-owned German subsidiary Aurora
Deutschland GmbH ("Aurora Deutschland", formerly Pedanios GmbH)
|
|
|
•
|
Germany:
Aurora, through Aurora Deutschland,
signed a collaboration agreement with Heinrich Klenk GmbH & Co. KG
("Klenk"), one of Europe's largest medicinal plant companies. Klenk's
products are carried in over 25,000 pharmacies throughout Germany and
Europe. Under the terms of the agreement, Aurora launched a new cannabis
brand in Germany called "Cannabis Klenk" which is produced in Canada,
imported by Aurora Deutschland, and sold to German pharmacies through
Klenk's existing and wide-reaching pharmaceutical wholesale distribution
network.
|
|
|
•
|
Malta:
Aurora, through its wholly-owned European
subsidiary Aurora Deutschland, became the first licensed supplier of
medical cannabis to patients in Malta, the third country in the European
Union where Aurora Deutschland currently sells medical cannabis.
|
Outlook
Aurora is exceptionally well positioned in all of its markets,
including adult consumer-use market, Canadian medical and the international
medical markets, with compelling brands and strong patient and consumer
recognition.
In fiscal 2019, the Company will continue to focus on expanding
capacity and sales growth in all its markets, in addition to further product
development, continued international expansion and realization of acquisition
synergies.
Aurora is rapidly accelerating production out of its newly
licensed facilities, starting with Aurora Sky, which is expected to ramp to full
100,000 kg per annum capacity around calendar year end 2018. The Company
anticipates to reach a production run rate of approximately 150,000 kg per annum
around year end, scaling up subsequently to over 500,000 kg per annum through
further "Sky Class" facilities, Aurora Sun and Aurora Nordic. The high degree of
automation, and customized and fully controlled growing conditions at the Sky
Class facilities are anticipated to result in production costs well below one
dollar per gram. Management believes these factors together will deliver high
growth and continuously improving margins.
While the historic milestone of Canada becoming the first G7
nation to legalize the adult consumer-use market creates a very significant
growth opportunity, the Company maintains its position that the international
medical has the most significant growth prospects, and is expected to grow to 10
million kilograms per annum. The Company has established significant early mover
advantage, has a presence on five continents, and is Europe's largest
distributor of medical cannabis. Aurora also owns two of only six facilities in
the world that are EU GMP certified, ensuring continued access to restrictive
markets. This early mover advantage, management believes, will enable the
Company to establish significant market share in the global medical market.
Financial review Q4 2018
Revenue
In the fourth quarter of 2018 ("Q4 2018") cannabis revenue grew
to $14.9 million, a 38% increase compared to the third quarter of 2018 ("Q3 2018") and a 113%
increase compared to the fourth quarter of 2017 ("Q4 2017"). Total revenue grew
to $19.1 million, representing a 19% increase compared to Q3 2018 and a 223%
increase compared to Q4 2017. Revenue growth compared to the same quarter in the
prior year was attributable mainly to higher patient numbers following the
acquisition of CanniMed, increased product availability through scale up of
operations and the CanniMed acquisition, an increase in the average net selling
price of dried cannabis, development of international markets, and product
diversification.
Average price of product sold was $9.20 per gram in Q4 2018, an
increase of 15% compared to Q3 2018 and 23% compared to Q4 2017 as a result of
an increase in cannabis oils sold. Total product sold was 1,617 kilograms of
dried cannabis and cannabis oils in Q4 2018, an increase of 19% as compared to
Q3 2018, and 114% compared to Q4 2017.
Total cannabis inventory and biological assets increased 248%
to $41.0 million in Q4 2018 compared to Q4 2017 as Aurora chose to constrain
international sales in order to continue servicing the Canadian medical market,
while building inventory in preparation for the Canadian adult consumer-use
market. This onetime constraint on international sales has been alleviated by
the rapid completion of Aurora's Canadian production facilities (including Sky,
Vie & Eau), as well as the EU GMP certification of MedReleaf's Markham
facility, and ongoing yield improvements at CanniMed.
Operating Expenses
Throughout 2018, Aurora continued to make significant
investments in its infrastructure and talent, scaling the organization to better
realize the tremendous opportunity ahead in the domestic and international
medical cannabis markets, and the upcoming Canadian adult consumer-use market.
As a result, general and administration costs ("G&A")
increased to $22.6 million in Q4 2018, compared to $9.8 million in Q3 2018.
Sales and marketing costs (S&M) in Q4 2018 increased to $14.8 million
dollars, from $5.9 million in Q3 2018, as a result of investments in our overall
brand strategy which included certain one-time activities in preparation for the
impending adult consumer-use recreational market in Canada. The integration of
CanniMed accounted for 25% of the increase to G&A and 19% of the increase to
S&M.
Cost of sales
Cash cost of sales per gram of dried cannabis sold and cash
cost to produce per gram of dried cannabis sold increased by $0.07 and $0.17
respectively from the prior quarter, mainly due to the inclusion of CanniMed's
higher per unit production costs, partially offset by lower utility costs in the
summer months. Aurora continues to drive yield and efficiency improvements at
CanniMed in line with Aurora's other operating facilities, and anticipates
production costs to come down further.
Gross Profit
Q4 2018 gross profit was $20.6 million, compared to a $5.8
million in Q4 2017. The increase in gross profit during the period was partially
attributable to the net effect of changes in fair value of biological assets and
a decrease in the cost of sales for medical cannabis on a per gram basis.
Net Income
Q4 2018 net income increased to $79.3 million, compared to a
net loss of $20.8 million in Q3 2018 and $4.8 million in Q4 2017. The increase
was primarily attributable to the unrealized non-cash gain on derivatives and
marketable securities, which was partially offset by increased finance costs,
share-based payments, acquisition and project evaluation costs.
Cash Position, Cash Flows, and Working
Capital
Net cash and cash equivalents on hand decreased from $159.7
million at the end of Q4 2017 to $89.2 million as at Q4 2018. Non-cash working
capital at the end of Q4 2018 was $56.4 million, as compared to $10.4 million at
the end of Q4 2017. The change in working capital was largely attributable to an
increase in marketable securities and the planned buildup of inventory,
partially offset by accounts payable and accrued liabilities related to
construction of our production facilities. Additionally, as at September 21,
2018, the market value of the Company's investments in public companies exceeded
$700 million.
The Company anticipates that it has sufficient liquidity and
capital resources to meet all of its currently planned expenditures for the next
twelve months.
Pro-Forma Reconciliation
For the three months ended June 30, 2018, pro-forma revenue,
including the results of MedReleaf, would have been $33.1 million. As at June
30, 2018, cash and cash equivalents would have been $255.2 million and cannabis
inventory and biological assets would have been $88.8 million.
About Aurora
Headquartered in Edmonton, Alberta, Canada with funded capacity
in excess of 500,000 kg per annum and sales and operations in 18 countries
across five continents, Aurora is one of the world's largest and leading
cannabis companies. Aurora is vertically integrated and horizontally diversified
across every key segment of the value chain, from facility engineering and
design to cannabis breeding and genetics research, cannabis and hemp production,
derivatives, high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy, based on
purpose-built facilities that integrate leading-edge technologies across all
processes, defined by extensive automation and customization, resulting in the
massive scale production of high quality product at ultra-low costs. Intended to
be replicable and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality, industry-leading
yields, and ultra-low per gram production costs. Each of Aurora's facilities is
built to meet EU GMP standards, and its first production facility, the recently
acquired MedReleaf Markham facility, and its wholly owned European medical
cannabis distributor Aurora Deutschland (formerly Pedanios), have achieved this
level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes 15 companies – MedReleaf,
CanvasRX, Peloton Pharmaceutical, Aurora Deutschland (formerly Pedanios), H2
Biopharma, Urban Cultivator, BC Northern Lights, Larssen Greenhouses, CanniMed
Therapeutics, Anandia Labs, HotHouse Consulting, Agropro, Borela, and the
pending acquisition of ICC Labs – Aurora is distinguished by its reputation as a
partner and employer of choice in the global cannabis sector, having invested in
and established strategic partnerships with a range of leading innovators,
including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient
Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann
Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings
Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), Evio Beauty Group
(private), Wagner Dimas (private), CTT Pharmaceuticals (OTCC: CTTH), and Alcanna
Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website, investor.auroramj.com, Twitter, Facebook or Instagram
Terry Booth, CEO
Aurora Cannabis Inc.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law
("forward-looking statements"). Forward-looking statements are frequently
characterized by words such as "plan", "continue", "expect", "project",
"intend", "believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or statements that certain events or
conditions "may" or "will" occur and include, but are not limited to the variety
of cannabis products that Aurora will supply to the adult use market.. These
statements are only predictions. Various assumptions were used in drawing the
conclusions or making the projections contained in the forward-looking
statements throughout this news release. Forward-looking statements are based on
the opinions and estimates of management at the date the statements are made,
and are subject to a variety of risks and uncertainties and other factors that
could cause actual events or results to differ materially from those projected
in the forward-looking statements. The Company is under no obligation, and
expressly disclaims any intention or obligation, to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.
View original content to download multimedia:
http://www.newswire.ca/en/releases/archive/September2018/24/c7698.html
%SEDAR: 00025675E
For further information:
For Media: Heather MacGregor,
+1.416.509.5416, heather.macgregor@auroramj.com; For Investors: Marc Lakmaaker,
+1.647.269.5523, marc.lakmaaker@auroramj.com; Rob Kelly, +1.647.331.7228,
rob.kelly@auroramj.com; U.S. Investors, Phil Carlson / Elizabeth Barker, KCSA
Strategic Communications, Phone: (212) 896-1233 / (212) 896-1203, Email:
pcarlson@kcsa.com / ebarker@kcsa.com
CO: Aurora Cannabis Inc.
CNW 17:32e 24-SEP-18
AURORA CANNABIS INC.
Consolidated Financial Statements
For the years ended June 30, 2018 and 2017
(In
Canadian Dollars)
|
Management's
Responsibility
|
To the Shareholders of Aurora Cannabis Inc.:
Management is responsible for the preparation and presentation
of the accompanying consolidated financial statements, including responsibility
for significant accounting judgements and estimates in accordance with
International Financial Reporting Standards and ensuring that all information in
the annual report is consistent with the statements. This responsibility
includes selecting appropriate accounting principles and methods, and making
decisions affecting the measurement of transactions in which objective judgement
is required.
In discharging its responsibilities for the integrity and
fairness of the consolidated financial statements, management designs and
maintains the necessary accounting systems and related internal controls to
provide reasonable assurance that transactions are authorized, assets are
safeguarded, and financial records are properly maintained to provide reliable
information for the preparation of consolidated financial statements.
The Board of Directors and Audit Committee are composed
primarily of Directors who are neither management nor employees of the Company.
The Board is responsible for overseeing management in the performance of its
financial reporting responsibilities, and for approving the financial
information included in the annual report. The Board fulfils these
responsibilities by reviewing the financial information prepared by management
and discussing relevant matters with management and external auditors. The
Committee is also responsible for recommending the appointment of the Company's
external auditors.
MNP LLP, an independent firm of Chartered Professional
Accountants, is appointed by the shareholders to audit the consolidated
financial statements and report directly to them; their report follows. The
external auditors have full and free access to, and meet periodically and
separately with, both the Committee and management to discuss their audit
findings.
September 24, 2018
|
“Terry
Booth”
|
|
“Glen Ibbott”
|
|
Terry Booth
|
|
Glen Ibbott
|
|
Chief Executive Officer
|
|
Chief Financial Officer
|
1
Independent Auditors’ Report
To the Shareholders of Aurora Cannabis Inc.:
We have audited the accompanying consolidated financial
statements of Aurora Cannabis Inc., which comprise the consolidated statements
of financial position as at June 30, 2018 and June 30, 2017, and the
consolidated statements of income and other comprehensive income, changes in
equity and cash flows for the years then ended, and a summary of significant
accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial
Statements
Management is responsible for the preparation and fair
presentation of these consolidated financial statements in accordance with
International Financial Reporting Standards, and for such internal control as
management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or
error.
Auditors' Responsibility
Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits. We conducted our audits in accordance with Canadian generally accepted
auditing standards. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditors’ judgment, including
the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the consolidated financial statements in
order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made
by management, as well as evaluating the overall presentation of the
consolidated financial statements.
We believe that the audit evidence we have obtained in our
audits is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of
Aurora Cannabis Inc. as at June 30, 2018, June 30, 2017 and its financial
performance and its cash flows for the years then ended in accordance with
International Financial Reporting Standards.
|
Vancouver, British Columbia
|
|
|
|
|
|
September 24, 2018
|
Chartered Professional
Accountants
|
|
AURORA CANNABIS INC.
|
|
Consolidated Statements of Financial Position
|
|
June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars)
|
|
|
|
Notes
|
|
|
June 30, 2018
|
|
|
June 30, 2017
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
Assets
|
|
|
|
|
|
|
|
Note 3
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
4
|
|
|
89,193
|
|
|
159,715
|
|
|
Short term investments
|
|
5
|
|
|
990
|
|
|
81
|
|
|
Accounts
receivable
|
|
6, 24(c), 29(a)
|
|
|
15,096
|
|
|
2,312
|
|
|
Marketable securities
|
|
8
|
|
|
59,188
|
|
|
14,845
|
|
|
Biological
assets
|
|
9
|
|
|
13,620
|
|
|
4,088
|
|
|
Inventory
|
|
10
|
|
|
29,595
|
|
|
7,703
|
|
|
Prepaids and other current assets
|
|
|
|
|
7,594
|
|
|
3,126
|
|
|
|
|
|
|
|
215,276
|
|
|
191,870
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets held for distribution to owners
|
|
15, 24(c)
|
|
|
4,422
|
|
|
1,736
|
|
|
|
|
|
|
|
219,698
|
|
|
193,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
11
|
|
|
246,352
|
|
|
45,523
|
|
|
Convertible debenture investment
|
|
7
|
|
|
-
|
|
|
11,071
|
|
|
Derivatives
|
|
8
|
|
|
124,942
|
|
|
292
|
|
|
Investment in associates and joint venture
|
|
12
|
|
|
334,442
|
|
|
-
|
|
|
Intangible assets
|
|
16
|
|
|
256,232
|
|
|
31,087
|
|
|
Goodwill
|
|
16
|
|
|
729,050
|
|
|
41,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
1,910,716
|
|
|
322,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities
|
|
24(c), 29(b)
|
|
|
47,456
|
|
|
8,753
|
|
|
Income taxes
payable
|
|
|
|
|
1,659
|
|
|
-
|
|
|
Deferred revenue
|
|
|
|
|
2,266
|
|
|
1,421
|
|
|
Loans and
borrowings
|
|
18
|
|
|
2,451
|
|
|
69
|
|
|
Contingent consideration payable
|
|
28(e)
|
|
|
21,333
|
|
|
13,221
|
|
|
|
|
|
|
|
75,165
|
|
|
23,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible notes
|
|
17
|
|
|
191,528
|
|
|
63,536
|
|
|
Loans and borrowings
|
|
18
|
|
|
9,232
|
|
|
282
|
|
|
Deferred gain on convertible
debenture
|
|
7, 28(d)
|
|
|
-
|
|
|
10,206
|
|
|
Deferred gain on derivatives
|
|
8, 28(d)
|
|
|
2,254
|
|
|
321
|
|
|
Deferred tax liability
|
|
23
|
|
|
69,406
|
|
|
5,937
|
|
|
Total liabilities
|
|
|
|
|
347,585
|
|
|
103,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
19
|
|
|
1,466,433
|
|
|
221,447
|
|
|
Reserves
|
|
|
|
|
4,920
|
|
|
20,745
|
|
|
Accumulated other
comprehensive income
|
|
|
|
|
(533
|
)
|
|
5,167
|
|
|
Retained earnings (deficit)
|
|
|
|
|
87,749
|
|
|
(28,426
|
)
|
|
Total equity attributable to
shareholders of Aurora
|
|
|
|
|
1,558,569
|
|
|
218,933
|
|
|
Non-controlling interest
|
|
13(a)(ii)(iv), 14
|
|
|
4,562
|
|
|
-
|
|
|
Total equity
|
|
|
|
|
1,563,131
|
|
|
218,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
|
|
|
1,910,716
|
|
|
322,679
|
|
Nature of Operations (Note 1)
Commitments and Contingencies
(Note 25)
Subsequent Events (Notes 12(a), 15, 18(a) and 31)
The accompanying notes are an integral part of these
Consolidated Financial Statements.
3
|
AURORA CANNABIS INC.
|
|
Consolidated Statements of Comprehensive Income
(Loss)
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except per share amounts)
|
|
|
|
Notes
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
Revenue from sale of goods
|
|
|
|
|
46,975
|
|
|
15,922
|
|
|
Revenue from provision of services
|
|
|
|
|
8,221
|
|
|
2,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
|
|
55,196
|
|
|
18,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of sales
|
|
|
|
|
19,603
|
|
|
7,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit before fair value adjustments
|
|
|
|
|
35,593
|
|
|
10,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in fair value of inventory sold
|
|
|
|
|
17,624
|
|
|
16,908
|
|
|
Unrealized gain on changes in fair value of biological
assets
|
|
9
|
|
|
(25,550
|
)
|
|
(22,772
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
43,519
|
|
|
16,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expense
|
|
|
|
|
|
|
|
|
|
|
General and administration
|
|
24(a)
|
|
|
42,965
|
|
|
6,813
|
|
|
Sales and marketing
|
|
|
|
|
29,445
|
|
|
10,270
|
|
|
Acquisition costs
|
|
|
|
|
15,664
|
|
|
1,551
|
|
|
Depreciation and
amortization
|
|
11, 16
|
|
|
12,088
|
|
|
716
|
|
|
Research and development
|
|
|
|
|
1,679
|
|
|
314
|
|
|
Share-based payments
|
|
20(a)(b), 24(b)
|
|
|
37,450
|
|
|
7,584
|
|
|
|
|
|
|
|
139,291
|
|
|
27,248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
|
|
(95,772
|
)
|
|
(11,192
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
Interest and other
income
|
|
|
|
|
2,514
|
|
|
861
|
|
|
Finance and other costs
|
|
22
|
|
|
(13,162
|
)
|
|
(6,582
|
)
|
|
Foreign exchange
|
|
|
|
|
(1,038
|
)
|
|
(215
|
)
|
|
Recovery of receivables
|
|
12(d)
|
|
|
1,400
|
|
|
-
|
|
|
Share of loss from
investment in associate
|
|
12
|
|
|
(2,242
|
)
|
|
-
|
|
|
Unrealized loss on changes in
contingent consideration fair value
|
|
28(e)
|
|
|
(7,844
|
)
|
|
-
|
|
|
Unrealized gain (loss)
on convertible debenture investment
|
|
7, 28(c)
|
|
|
6,937
|
|
|
(1,135
|
)
|
|
Unrealized gain on marketable
securities
|
|
8
|
|
|
20,083
|
|
|
1,334
|
|
|
Unrealized gain (loss) on derivatives
|
|
8
|
|
|
166,450
|
|
|
(335
|
)
|
|
|
|
|
|
|
173,098
|
|
|
(6,072
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
|
|
77,326
|
|
|
(17,264
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax recovery (expense)
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
23
|
|
|
(1,659
|
)
|
|
19
|
|
|
Deferred, net
|
|
23
|
|
|
(6,441
|
)
|
|
4,277
|
|
|
|
|
|
|
|
(8,100
|
)
|
|
4,296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
|
|
69,227
|
|
|
(12,968
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
(loss)
|
|
|
|
|
|
|
|
|
|
|
Deferred tax
|
|
|
|
|
(55
|
)
|
|
(885
|
)
|
|
Unrealized gain (loss)
on marketable securities
|
|
8
|
|
|
(6,616
|
)
|
|
6,077
|
|
|
Foreign currency translation gain (loss)
|
|
|
|
|
86
|
|
|
(25
|
)
|
|
|
|
|
|
|
(6,585
|
)
|
|
5,167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
|
|
|
62,642
|
|
|
(7,801
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to:
|
|
|
|
|
|
|
|
|
|
|
Aurora Cannabis Inc.
|
|
|
|
|
71,936
|
|
|
(12,968
|
)
|
|
Non-controlling interests
|
|
|
|
|
(2,709
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
attributable to:
|
|
|
|
|
|
|
|
|
|
|
Aurora Cannabis Inc.
|
|
|
|
|
65,351
|
|
|
(7,801
|
)
|
|
Non-controlling interests
|
|
|
|
|
(2,709
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
21
|
|
|
$ 0.16
|
|
|
$ (0.05
|
)
|
|
Diluted
|
|
21
|
|
|
$ 0.15
|
|
|
$ (0.05
|
)
|
The accompanying notes are an integral part of these
Consolidated Financial Statements.
4
|
AURORA CANNABIS INC.
|
|
Consolidated Statements of Changes in Equity
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share amounts)
|
|
|
|
|
|
|
Share Capital
|
|
|
Reserves
|
|
|
AOCI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
|
|
|
Share-Based
|
|
|
Options/
|
|
|
Convertible
|
|
|
Ownership
|
|
|
Total
|
|
|
Fair
|
|
|
Deferred
|
|
|
Currency
|
|
|
Total
|
|
|
|
|
|
Controlling
|
|
|
|
|
|
|
|
Note
|
|
|
Shares
|
|
|
Amount
|
|
|
Compensation
|
|
|
Warrants
|
|
|
Notes
|
|
|
Interest
|
|
|
Reserves
|
|
|
Value
|
|
|
Tax
|
|
|
Translation
|
|
|
AOCI
|
|
|
Deficit
|
|
|
Interests
|
|
|
Total
|
|
|
|
|
|
|
|
#
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Balance, June 30, 2017
|
|
|
|
|
366,549,244
|
|
|
221,447
|
|
|
7,591
|
|
|
3,420
|
|
|
9,734
|
|
|
-
|
|
|
20,745
|
|
|
6,077
|
|
|
(885
|
)
|
|
(25
|
)
|
|
5,167
|
|
|
(28,426
|
)
|
|
-
|
|
|
218,933
|
|
Shares issued for acquisitions and
investment in associates
|
|
19(b)(i)
|
|
|
78,769,707
|
|
|
825,085
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
825,085
|
|
|
Warrants issued for
acquisition
|
|
13(a)(i)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
136
|
|
|
-
|
|
|
-
|
|
|
136
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
136
|
|
|
Shares issued for contingent consideration
|
|
19(b)(ii)
|
|
|
5,318,044
|
|
|
16,321
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
16,321
|
|
|
Private placements
|
|
19(b)(iii)
|
|
|
25,000,000
|
|
|
75,000
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
75,000
|
|
|
Share issue costs
|
|
19(b)(iii)
|
|
|
-
|
|
|
(6,646
|
)
|
|
-
|
|
|
2,285
|
|
|
-
|
|
|
-
|
|
|
2,285
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(4,361
|
)
|
|
Conversion of notes
|
|
19(b)(iv)
|
|
|
42,473,435
|
|
|
177,127
|
|
|
-
|
|
|
-
|
|
|
(37,061
|
)
|
|
-
|
|
|
(37,061
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
140,066
|
|
|
Equity component of convertible notes
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
76,201
|
|
|
-
|
|
|
76,201
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
76,201
|
|
|
Deferred tax on convertible
notes
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(7,082
|
)
|
|
-
|
|
|
(7,082
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(7,082
|
)
|
Deferred tax on share issuance and
convertible debenture costs
|
|
|
|
|
-
|
|
|
2,540
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,540
|
|
|
Exercise of stock options
|
|
19(b)(iv),
13(a)(ii)
|
|
|
4,809,443
|
|
|
12,006
|
|
|
(6,175
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(6,175
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,027
|
|
|
7,858
|
|
|
Exercise of warrants
|
|
19(b)(iv)
|
|
|
43,200,881
|
|
|
136,293
|
|
|
-
|
|
|
(3,680
|
)
|
|
-
|
|
|
-
|
|
|
(3,680
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,669
|
|
|
134,282
|
|
Exercise of
compensation
options/warrants
|
|
19(b)(iv)
|
|
|
1,865,249
|
|
|
6,051
|
|
|
-
|
|
|
(1,854
|
)
|
|
-
|
|
|
-
|
|
|
(1,854
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4,197
|
|
|
Exercise of restricted share units
|
|
19(b)(iv)
|
|
|
127,128
|
|
|
1,209
|
|
|
(351
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(351
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
858
|
|
|
Forfeited options
|
|
|
|
|
-
|
|
|
-
|
|
|
(531
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(531
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
531
|
|
|
-
|
|
|
-
|
|
|
Share-based payments
|
|
20
|
|
|
-
|
|
|
-
|
|
|
37,801
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
37,801
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
37,801
|
|
|
Non-controlling interest from
acquisitions
|
|
13(a)(ii)(iv),
14
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
38,577
|
|
|
38,577
|
|
|
Change in ownership interests in subsidiaries
|
|
13(a)(ii)(iv)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(75,514
|
)
|
|
(75,514
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(35,002
|
)
|
|
(110,516
|
)
|
|
Unrealized gain on Cann Group
marketable securities
|
|
8(a)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
43,442
|
|
|
-
|
|
|
-
|
|
|
43,442
|
|
|
-
|
|
|
-
|
|
|
43,442
|
|
Cann Group marketable securities
transferred to investments in associates
|
|
8(a), 12(b)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(50,463
|
)
|
|
-
|
|
|
-
|
|
|
(50,463
|
)
|
|
50,463
|
|
|
-
|
|
|
-
|
|
Deferred tax for marketable
securities
transferred to investment in associates
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
830
|
|
|
-
|
|
|
830
|
|
|
(6,755
|
)
|
|
-
|
|
|
(5,925
|
)
|
Unrealized gain on CanniMed
marketable
securities
|
|
8(b)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
10,423
|
|
|
-
|
|
|
-
|
|
|
10,423
|
|
|
-
|
|
|
-
|
|
|
10,423
|
|
CanniMed marketable
securities
derecognized upon acquisition of control
|
|
8(b)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(10,423
|
)
|
|
-
|
|
|
-
|
|
|
(10,423
|
)
|
|
10,423
|
|
|
-
|
|
|
-
|
|
|
Comprehensive income (loss) for the year
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
405
|
|
|
-
|
|
|
86
|
|
|
491
|
|
|
61,513
|
|
|
(2,709
|
)
|
|
59,295
|
|
|
Balance, June 30, 2018
|
|
|
|
|
568,113,131
|
|
|
1,466,433
|
|
|
38,335
|
|
|
307
|
|
|
41,792
|
|
|
(75,514
|
)
|
|
4,920
|
|
|
(539
|
)
|
|
(55
|
)
|
|
61
|
|
|
(533
|
)
|
|
87,749
|
|
|
4,562
|
|
|
1,563,131
|
|
The accompanying notes are an integral part of these
Consolidated Financial Statements.
|
AURORA CANNABIS INC.
|
|
Consolidated Statements of Changes in Equity
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of Canadian dollars, except share amounts)
|
|
|
|
(Continued)
|
|
|
|
|
|
|
Share Capital
|
|
|
Reserves
|
|
|
AOCI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligation
|
|
|
|
|
|
Compensation
|
|
|
Related
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
|
|
|
to Issue
|
|
|
Share-based
|
|
|
Options/
|
|
|
Party
|
|
|
Convertible
|
|
|
Total
|
|
|
Fair
|
|
|
Deferred
|
|
|
Currency
|
|
|
Total
|
|
|
|
|
|
Controlling
|
|
|
|
|
|
|
|
Note
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Compensation
|
|
|
Warrants
|
|
|
Loans
|
|
|
Notes
|
|
|
Reserves
|
|
|
Value
|
|
|
Tax
|
|
|
Translation
|
|
|
AOCI
|
|
|
Deficit
|
|
|
Interests
|
|
|
Total
|
|
|
|
|
|
|
|
#
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Balance, June 30, 2016
|
|
|
|
|
135,576,365
|
|
|
17,148
|
|
|
2,335
|
|
|
608
|
|
|
1,184
|
|
|
1,403
|
|
|
200
|
|
|
5,730
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(16,916
|
)
|
|
-
|
|
|
5,962
|
|
Shares issued for
acquisitions
|
|
19(b)(i)
|
|
|
27,091,007
|
|
|
34,540
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
34,540
|
|
Shares issued for
contingent consideration
|
|
19(b)(ii)
|
|
|
2,926,103
|
|
|
7,408
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,408
|
|
|
Private placements
|
|
19(b)(iii)
|
|
|
90,837,500
|
|
|
98,009
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
98,009
|
|
|
Share issue costs
|
|
19(b)(iii)
|
|
|
-
|
|
|
(10,913
|
)
|
|
-
|
|
|
-
|
|
|
4,630
|
|
|
-
|
|
|
-
|
|
|
4,630
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(6,283
|
)
|
|
Deferred tax on share issue costs
|
|
|
|
|
-
|
|
|
1,846
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,846
|
|
|
Conversion of notes
|
|
19(b)(iv)
|
|
|
29,020,319
|
|
|
38,037
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(4,800
|
)
|
|
(4,800
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
33,237
|
|
Equity component of
convertible notes
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
20,587
|
|
|
20,587
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
20,587
|
|
Equity component of
convertible
note transaction costs
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(900
|
)
|
|
(900
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(900
|
)
|
|
Deferred tax on convertible notes
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(5,353
|
)
|
|
(5,353
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(5,353
|
)
|
Warrants issued on amendment
of convertible notes
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
877
|
|
|
-
|
|
|
-
|
|
|
877
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
877
|
|
|
Exercise of stock options
|
|
19(b)(iv)
|
|
|
2,001,700
|
|
|
1,399
|
|
|
-
|
|
|
(578
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(578
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
821
|
|
|
Exercise of warrants
|
|
19(b)(iv)
|
|
|
54,936,306
|
|
|
28,648
|
|
|
-
|
|
|
-
|
|
|
(2,046
|
)
|
|
-
|
|
|
-
|
|
|
(2,046
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
26,602
|
|
Exercise of compensation
option/warrants
|
|
19(b)(iv)
|
|
|
4,084,434
|
|
|
2,966
|
|
|
-
|
|
|
-
|
|
|
(1,292
|
)
|
|
-
|
|
|
-
|
|
|
(1,292
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,674
|
|
|
Forfeited options &
warrants
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(23
|
)
|
|
(32
|
)
|
|
-
|
|
|
-
|
|
|
(55
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
55
|
|
|
-
|
|
|
-
|
|
|
Shares issued for compensation
|
|
19(b)(v)
|
|
|
25,510
|
|
|
13
|
|
|
(13
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(13
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Performance shares
|
|
19(b)(v)
|
|
|
20,000,000
|
|
|
2,322
|
|
|
(2,322
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2,322
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Shares issued for loan
|
|
19(b)(v)
|
|
|
50,000
|
|
|
24
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
24
|
|
|
Transfer from
derivative liabilities
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
99
|
|
|
-
|
|
|
-
|
|
|
99
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
99
|
|
Reclassification upon repayment
of
related party loans
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,403
|
)
|
|
-
|
|
|
(1,403
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,403
|
|
|
-
|
|
|
-
|
|
|
Share-based payments
|
|
20(a)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,584
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,584
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,584
|
|
|
Comprehensive income (loss) for the year
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
6,077
|
|
|
(885
|
)
|
|
(25
|
)
|
|
5,167
|
|
|
(12,968
|
)
|
|
-
|
|
|
(7,801
|
)
|
|
Balance, June 30, 2017
|
|
|
|
|
366,549,244
|
|
|
221,447
|
|
|
-
|
|
|
7,591
|
|
|
3,420
|
|
|
-
|
|
|
9,734
|
|
|
20,745
|
|
|
6,077
|
|
|
(885
|
)
|
|
(25
|
)
|
|
5,167
|
|
|
(28,426
|
)
|
|
-
|
|
|
218,933
|
|
6
|
AURORA CANNABIS INC.
|
|
Consolidated Statements of Cash Flows
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars)
|
|
|
|
Notes
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
Cash provided by (used in)
Operating activities
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) for the year
|
|
|
|
|
69,227
|
|
|
(12,968
|
)
|
|
Adjustments for
non-cash items
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on
changes in fair value of biological assets
|
|
9
|
|
|
(25,550
|
)
|
|
(22,772
|
)
|
|
Changes in fair value included in inventory sold
|
|
|
|
|
17,624
|
|
|
16,908
|
|
|
Depreciation of
property, plant and equipment
|
|
11
|
|
|
8,004
|
|
|
1,087
|
|
|
Amortization of intangible assets
|
|
16
|
|
|
4,256
|
|
|
|
|
|
Share-based
payments
|
|
20
|
|
|
37,450
|
|
|
7,584
|
|
|
Share of loss from investment in associate
|
|
12
|
|
|
2,242
|
|
|
-
|
|
|
Unrealized (gain)
loss on debentures
|
|
7, 28(c)
|
|
|
(6,937
|
)
|
|
1,135
|
|
|
Unrealized (gain) loss on derivatives
|
|
8
|
|
|
(166,450
|
)
|
|
335
|
|
|
Unrealized gain on
marketable securities
|
|
8
|
|
|
(20,083
|
)
|
|
(1,334
|
)
|
|
Loss on changes in fair value of contingent consideration
|
|
28(e)
|
|
|
7,844
|
|
|
-
|
|
|
Recovery of
receivables
|
|
12(d)
|
|
|
(1,400
|
)
|
|
-
|
|
|
Accrued interest and accretion expense
|
|
|
|
|
11,135
|
|
|
3,459
|
|
|
Interest and other
income
|
|
|
|
|
(78
|
)
|
|
(78
|
)
|
|
Deferred tax expense (recovery)
|
|
|
|
|
6,441
|
|
|
(4,277
|
)
|
|
Changes in non-cash working capital
|
|
|
|
|
|
|
|
|
|
|
GST
recoverable
|
|
|
|
|
(6,470
|
)
|
|
(963
|
)
|
|
Accounts receivable
|
|
|
|
|
(5,887
|
)
|
|
(654
|
)
|
|
Biological assets
|
|
|
|
|
1,447
|
|
|
-
|
|
|
Inventory
|
|
|
|
|
(10,437
|
)
|
|
(1,679
|
)
|
|
Prepaid
and other current assets
|
|
|
|
|
(8,236
|
)
|
|
(2,224
|
)
|
|
Accounts payable and
accrued liabilities
|
|
|
|
|
3,105
|
|
|
2,610
|
|
|
Income
taxes payable
|
|
|
|
|
1,659
|
|
|
-
|
|
|
Deferred revenue
|
|
|
|
|
(573
|
)
|
|
453
|
|
|
Net cash used in operating activities
|
|
|
|
|
(81,667
|
)
|
|
(13,378
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
Short-term investments
|
|
5
|
|
|
(399
|
)
|
|
(81
|
)
|
|
Marketable securities
and derivatives
|
|
8
|
|
|
(63,437
|
)
|
|
(7,877
|
)
|
|
Convertible debenture
|
|
7
|
|
|
-
|
|
|
(2,000
|
)
|
|
Purchase of property,
plant and equipment
|
|
11
|
|
|
(136,945
|
)
|
|
(25,718
|
)
|
|
Acquisition of businesses, net of cash
acquired
|
|
13
|
|
|
30,393
|
|
|
(6,917
|
)
|
|
Acquisition of assets
|
|
13
|
|
|
(138,722
|
)
|
|
(6,748
|
)
|
|
Acquisition of non-controlling interest
|
|
|
|
|
(10,158
|
)
|
|
-
|
|
|
Loans assumed on
acquisition
|
|
|
|
|
(308
|
)
|
|
-
|
|
|
Additions in investment in associates
|
|
12
|
|
|
(218,183
|
)
|
|
-
|
|
|
Net cash used in investing activities
|
|
|
|
|
(537,759
|
)
|
|
(49,341
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
Loans and borrowings
|
|
|
|
|
97
|
|
|
(193
|
)
|
|
Proceeds of convertible
notes
|
|
17
|
|
|
345,000
|
|
|
115,000
|
|
|
Repayment of short term loans
|
|
|
|
|
(281
|
)
|
|
(6,215
|
)
|
|
Repayment of long term
loans
|
|
|
|
|
-
|
|
|
(4,000
|
)
|
|
Financing fees
|
|
|
|
|
(11,873
|
)
|
|
(3,430
|
)
|
|
Shares issued for cash, net of share issue costs
|
|
|
|
|
215,606
|
|
|
120,823
|
|
|
Net
cash provided by financing activities
|
|
|
|
|
548,549
|
|
|
221,985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange on cash and cash equivalents
|
|
|
|
|
355
|
|
|
190
|
|
|
Increase (decrease) in cash
and cash equivalents
|
|
|
|
|
(70,522
|
)
|
|
159,456
|
|
|
Cash
and cash equivalents, beginning of year
|
|
|
|
|
159,715
|
|
|
259
|
|
|
Cash and cash equivalents, end of year
|
|
|
|
|
89,193
|
|
|
159,715
|
|
7
|
AURORA CANNABIS INC.
|
|
Consolidated Statements of Cash Flows
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of Canadian dollars)
|
|
|
|
(Continued)
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
Cash and cash equivalents consist of:
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
75,795
|
|
|
159,715
|
|
|
Restricted cash
|
|
|
|
|
13,398
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary information:
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment in accounts payable
|
|
|
|
|
16,294
|
|
|
4,383
|
|
|
Capitalized borrowing costs
|
|
|
|
|
5,710
|
|
|
1,370
|
|
|
Interest paid
|
|
|
|
|
7,066
|
|
|
471
|
|
|
Interest received
|
|
|
|
|
2,295
|
|
|
485
|
|
The accompanying notes are an integral part of these
Consolidated Financial Statements.
8
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
1.
|
Nature of Operations
|
|
|
|
|
|
Aurora Cannabis Inc. (the “Company” or “Aurora”) was
incorporated under the
Business Corporations Act
(British Columbia)
on December 21, 2006. The Company’s shares are listed on the Toronto Stock
Exchange (the “Exchange”) under the symbol “ACB” and on the OTCQX under
the symbol “ACBFF”.
|
|
|
|
|
|
The head office and principal address of the Company is
Suite 500 – 10355 Jasper Avenue, Edmonton, Alberta, Canada, T5J 1Y6. The
Company’s registered and records office address is Suite 1500 - 1055 West
Georgia Street, Vancouver, BC V6E 4N7.
|
|
|
|
|
|
The Company’s principal business is the production and
distribution of medical cannabis in Canada pursuant to the
Access to
Cannabis for Medical Purposes Regulations
(“ACMPR”) and the
distribution of wholesale medical cannabis in the European Union pursuant
to the
German Medicinal Products Act and German Narcotic Drugs Act
.
During the year ended June 30, 2018, the Company expanded its business to
include the production and sale of indoor cultivation systems and hemp
related food products through its recent acquisitions (Note 13).
|
|
|
|
|
|
Aurora does not engage in any U.S. cannabis-related
activities as defined in Canadian Securities Administrators Staff Notice
51-352. While the Company has held an interest in Australis Holdings LLP
(“Australis Holdings” or “AHL”)(Note 12(a)), a U.S. based company, as at
June 30, 2018, AHL has not engaged in any cannabis-related activities for
the periods ended. Additionally, AHL was spun-out to Aurora shareholders
as part of the Australis Capital Inc. spin-out completed subsequent to
June 30, 2018 (Note 15 and 31).
|
|
|
|
|
2.
|
Significant Accounting Policies and Significant
Judgments
|
|
|
|
|
|
Certain of the Company’s accounting policies that relate
to the consolidated financial statements as a whole, as well as estimates
and judgements it has made and how they affect the amounts reported in the
consolidated financial statements, are incorporated in this section. This
note also describes new standards, amendments or interpretations that are
effective and applied by the Company during 2018 or are not yet effective.
Where an accounting policy, estimate, or judgement is applicable to a
specific note to the accounts, it is described within that
note.
|
|
|
(a)
|
Basis of presentation
|
|
|
|
|
|
|
|
The consolidated financial statements of the Company have
been prepared in accordance with International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting Standards
Board (“IASB”) and interpretations of the IFRS Interpretations Committee
(“IFRIC”) in effect for the year ended June 30, 2018.
|
|
|
|
|
|
|
|
The Company has reclassified certain immaterial items on
the comparative consolidated statement of financial position and statement
of comprehensive income (loss) to conform with current period’s
presentation.
|
|
|
|
|
|
|
|
These consolidated financial statements were approved and
authorized for issue by the Board of Directors of the Company on September
24, 2018.
|
|
|
|
|
|
|
(b)
|
Basis of consolidation
|
|
|
|
|
|
|
|
These consolidated financial statements include the
accounts of the Company and its subsidiaries with intercompany balances
and transactions eliminated on consolidation. Subsidiaries are those
entities over which Aurora has the power over the investee, is exposed, or
has rights, to variable returns from its involvement with the investee,
and has the ability to use its power to affect its returns. As of June 30,
2018, major subsidiaries over which the Company has control
include:
|
|
|
Major subsidiaries
|
|
Percentage ownership
|
|
|
|
Aurora Cannabis Enterprises
Inc. (“ACE”)
|
|
100%
|
|
|
|
Aurora Deutschland GmbH (“Aurora
Deutschland”, formerly Pedanios GmbH)
|
|
100%
|
|
|
|
CanniMed Therapeutics Inc.
(“CanniMed”)
|
|
100%
|
|
|
|
Aurora Nordic Cannabis A/S (“Aurora Nordic”)
|
|
100%
|
|
|
|
Aurora Larssen Projects Ltd.
(“ALPS”)
|
|
100%
|
|
|
|
CanvasRx Inc. (“CanvasRx”)
|
|
100%
|
|
|
|
Peloton Pharmaceuticals Inc.
(“Peloton” or “Aurora Vie”)
|
|
100%
|
|
|
|
H2 Biopharma Inc. (“H2” or “Aurora Eau”)
|
|
100%
|
|
|
|
B.C. Northern Lights
Enterprises Ltd. (“BCNL”)
|
|
100%
|
|
|
|
Urban Cultivator Inc. (“UCI”)
|
|
100%
|
|
|
|
Hempco Food and Fiber Inc. (“Hempco”)
|
|
52.33%
|
|
9
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
2.
|
Significant Accounting Policies and Significant
Judgements (Continued)
|
|
|
(c)
|
Basis of measurement
|
|
|
|
|
|
|
|
The consolidated financial statements have been prepared
on a historical cost basis except for certain financial instruments,
biological assets and acquisition related contingent consideration which
are measured at fair value.
|
|
|
|
|
|
|
(d)
|
Functional and presentation of foreign currency
|
|
|
|
|
|
|
|
The consolidated financial statements are presented in
Canadian dollars unless otherwise noted. The functional currencies of the
Company, its subsidiaries and associates are as
follows:
|
Aurora Deutschland GmbH and CanniMed
Germany are the European Euro;
Aurora Nordic Cannabis A/S is the Danish
Krone;
Australis Holdings LLP, SubTerra LLC and CTT Pharmaceutical Holdings
Ltd. are the US dollar;
Cann Group Limited is the Australian dollar; and
Aurora and its remaining subsidiaries and associates are the Canadian
dollar.
|
|
(e)
|
Foreign currency translation
|
|
|
|
|
|
|
|
Foreign currency transactions are translated into
Canadian dollars at exchange rates in effect on the date of the
transactions. Monetary assets and liabilities denominated in foreign
currencies at the consolidated statement of financial position date are
translated to Canadian dollars at the foreign exchange rate applicable at
that date. Realized and unrealized exchange gains and losses are
recognized in the consolidated statements of comprehensive income (loss).
Non-monetary assets and liabilities that are measured in terms of
historical cost in a foreign currency are translated using the exchange
rate at the date of the transaction.
|
|
|
|
|
|
|
|
The assets and liabilities of foreign operations are
translated into Canadian dollars at period end exchange rates. Income and
expenses, and cash flows of foreign operations are translated into
Canadian dollars using average exchange rates. Exchange differences
resulting from the translation of foreign operations are recognized in
other comprehensive income (loss) and accumulated in equity.
|
|
|
|
|
|
|
(f)
|
Revenue Recognition
|
|
|
|
|
|
|
|
Revenue is recognized at the fair value of consideration
received or receivable. Revenue from the sale of goods is recognized when
the Company has transferred the significant risks and rewards of ownership
to the buyer and it is probable that the Company will receive the
previously agreed upon payment. Significant risks and rewards are
generally considered to be transferred when the Company has delivered the
product to customers.
|
|
|
|
|
|
|
|
Referral revenue from Licensed Producers through CanvasRx
are recognized when the amount of revenue can be measured reliably, it is
probable that the economic benefits associated with the transaction will
flow to the entity, the stage of completion of the transaction at the end
of the period can be measured reliably, and the costs incurred for the
transaction and the costs to complete the transaction can be measured
reliably. The stage of completion is generally determined based on the
passage of time as services are rendered over time. See Note 26 for the
accounting policy for revenue generated from design, engineering and
construction consulting services.
|
|
|
|
|
|
|
(g)
|
Significant Accounting Judgements, Estimates and
Assumptions
|
|
|
|
|
|
|
|
The preparation of the Company’s consolidated financial
statements in conformity with IFRS requires management to make judgements,
estimates, and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience
and other factors that are considered to be relevant. Actual results may
differ from these estimates.
|
|
|
|
|
|
|
|
The estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are recognized in the
period in which the estimate is revised, if the revision affects only that
period, or in the period of the revision and future periods, if the
revision affects both current and future periods.
|
|
|
|
|
|
|
|
Significant judgements, estimates and assumptions that
have the most significant effect on the amounts recognized in the
financial statements include accounts receivable (Note 6), biological
assets (Note 9), inventory (Note 10), estimated useful lives and
depreciation of property, plant and equipment (Note 11) and intangible
assets (Note 16), investment in associates and joint ventures (Note 12),
business combinations and assets acquisitions (Note 13), disposal group
held for distribution (Note 15), goodwill and intangible asset impairment
(Note 16), convertible instruments (Note 17), fair value of share purchase
warrants (Note 19), share-based payments (Note 20), deferred tax assets
(Note 23), segmented information (Note 27) and the fair value of financial
instruments (Note 28).
|
10
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
2.
|
Significant Accounting Policies and Significant
Judgements (Continued)
|
|
|
(h)
|
Recent accounting pronouncements
|
|
|
|
|
|
|
|
There were no new standards effective July 1, 2017 that
had an impact on the Company’s consolidated financial statements. The
following IFRS standards have been recently issued by the IASB.
Pronouncements that are not applicable or where it has been determined do
not have a significant impact to the Company have been excluded
herein.
|
|
|
(i)
|
IFRS 7 Financial Instruments: Disclosure
|
|
|
|
|
|
|
|
IFRS 7
Financial Instruments: Disclosure,
was
amended to require additional disclosures on transition from IAS 39 to
IFRS 9. IFRS 7 is effective on adoption of IFRS 9, which is effective for
annual periods commencing on or after January 1, 2018. The Company intends
to adopt the amendments to IFRS 7 on July 1, 2018 and does not expect the
implementation will result in a significant effect to the financial
statements.
|
|
|
|
|
|
|
(ii)
|
IFRS 9 Financial Instruments
|
|
|
|
|
|
|
|
In July 2014, the IASB issued the final version of IFRS 9
Financial Instruments
, which reflects all phases of the financial
instruments project and replaces IAS 39
Financial Instruments:
Recognition and Measurement
and all previous versions of IFRS 9. The
standard introduces new requirements for classification and measurement,
impairment, and hedge accounting. IFRS 9 is effective for annual periods
beginning on or after 1 January 2018, with early application permitted.
The Company intends to adopt IFRS 9 on July 1, 2018 retrospectively where
the cumulative impact of adoption will be recognized in retained earnings
as of July 1, 2018 and comparatives will not be restated.
|
|
|
|
|
|
|
|
The Company has completed its assessment of the impact
from this new standard. IFRS 9 introduces new requirements to determine
the measurement basis of financial assets, involving the cash flow
characteristics of assets and the business models under which they are
managed. Accordingly, the basis of measurement for the Company’s financial
assets may change. IFRS 9 affects the accounting for available-for-sale
equity securities, requiring a designation, on an instrument by instrument
basis, between recording both unrealized and realized gains and losses
either through (i) other comprehensive income (“OCI”) with no recycling to
profit and loss or (ii) profit and loss. The Company will be electing to
classify its available-for-sale equity investments at Fair Value through
OCI (“FVOCI”) as these equity investments are for strategic purposes. The
FVOCI election is made upon initial recognition, on an
instrument-by-instrument basis and once made is irrevocable. Gains and
losses on these instruments including when derecognized or sold are
recorded in equity and are not subsequently reclassified to the
consolidated statement of comprehensive income (loss).
|
|
|
|
|
|
|
|
For other financial instruments, there are no significant
changes in the classification and measurement of the Company’s financial
assets.
|
|
|
|
|
|
|
(iii)
|
IFRS 15 Revenue from Contracts with Customers
|
|
|
|
|
|
|
|
The IASB replaced IAS 18
Revenue
, in its entirety
with IFRS 15
Revenue from Contracts with Customers
. The standard
contains a single model that applies to contracts with customers and two
approaches to recognizing revenue: at a point in time or over time. The
model features a contract-based five-step analysis of transactions to
determine whether, how much and when revenue is recognized. IFRS 15 is
effective for annual periods beginning on or after January 1, 2018, with
early application permitted.
|
|
|
|
|
|
|
|
The Company intends to adopt IFRS 15 on July 1, 2018
using the modified retrospective approach where the cumulative impact of
adoption will be recognized in retained earnings as of July 1, 2018 and
comparatives will not be restated.
|
11
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
2.
|
Significant Accounting Policies and Significant
Judgements (Continued)
|
|
|
(h)
|
Recent accounting pronouncements
(continued)
|
|
|
(iii)
|
IFRS 15 Revenue from Contracts with Customers
(continued)
|
|
|
|
|
|
|
|
The Company has completed its assessment of the impact
from this new standard. Under IFRS 15, revenue from the sale of medicinal
cannabis would be recognized at a point in time when control over the
goods have been transferred to the customer. The Company transfers control
and satisfies its performance obligation upon delivery and acceptance by
the customer, which is consistent with the Company’s current revenue
recognition policy under IAS 18.
|
|
|
|
|
|
|
|
Referral revenues earned from Licensed Producers through
CanvasRx Inc. are recognized over a period of time as the referred
patients remain active with the Licensed Producers. This is consistent
with the Company’s current revenue recognition policy under IAS 18 where
revenue is recognized on a monthly basis over a specified period of time
that the referred patient remains an active purchaser of medical cannabis
with the Licensed Producer.
|
|
|
|
|
|
|
|
Construction contract revenues earned through Aurora
Larssen Projects Ltd. are recognized over a period of time as the
performance obligations for design, engineering and construction
consulting services are completed. This is consistent with the Company’s
current revenue recognition policy under IAS 11 where revenue is
recognized based on the stage of completion.
|
|
|
|
|
|
|
|
Based on the Company’s assessment, the adoption of this
new standard does not have a material impact on its consolidated financial
statements.
|
|
|
|
|
|
|
(iv)
|
IFRS 16 Leases
|
|
|
|
|
|
|
|
In January 2016, the IASB issued IFRS 16
Leases
,
which will replace IAS 17
Leases
. This standard introduces a single
lessee accounting model and requires a lessee to recognize assets and
liabilities for all leases with a term of more than twelve months, unless
the underlying asset is of low value. A lessee is required to recognize a
right-of-use asset representing its right to use the underlying asset and
a lease liability representing its obligation to make lease payments. The
standard will be effective for annual periods beginning on or after
January 1, 2019, with earlier application permitted for entities that
apply IFRS 15
Revenue from Contracts with Customers
at or before
the date of initial adoption of IFRS 16. The Company intends to adopt IFRS
16 on July 1, 2019 and is assessing the impact of this new standard on its
consolidated financial statements.
|
|
3.
|
Change in Accounting Policy
|
|
|
|
|
|
Effective July 1, 2017, the Company elected to change its
accounting policy for step acquisitions of significant influence
investments, where the investment classification changes from
available-for-sale marketable securities to investment in associates.
Previously, the Company had transferred the cost of the equity securities
into investments in associates in accordance with IAS 28. IAS 28 allows
entities to make an accounting policy choice to transfer in the equity
securities at either cost or at fair value. Management determined that the
transfer of equity securities at fair value into investment in associates
would provide more relevant information as it better reflects the fair
value of the investment at the time of the transaction. As such,
management changed the accounting policy to transfer equity securities
from marketable securities to investment in associates at fair
value.
|
|
|
|
|
|
See Note 12 for the Company’s revised accounting policy
on step acquisitions of significant influence investments, from
available-for-sale marketable securities to investments in
associates.
|
|
|
|
|
|
There was no impact of this voluntary change in
accounting policy on prior period amounts.
|
12
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
4.
|
Cash and Cash Equivalents
|
|
|
|
|
|
Accounting Policy
|
|
|
|
|
|
Cash and cash equivalents are classified as loans and
receivable financial assets and are measured initially at fair value and
subsequently on an amortized cost basis. Cash and cash equivalents include
restricted cash, cash deposits in financial institutions and other
deposits that are readily convertible into cash.
|
|
|
|
|
|
As of June 30, 2018, the Company held $13,398 (2017 -
$nil) restricted cash in a legal trust relating to an investment in a
private company (Note 31).
|
|
|
|
|
5.
|
Short-term Investments
|
|
|
|
|
|
Accounting Policy
|
|
|
|
|
|
Short-term investments are classified as loans and
receivable financial assets and are recognized initially at fair value and
subsequently on an amortized cost basis using the effective interest
method, less any impairment losses
|
|
|
|
|
|
Short-term investments held at June 30, 2018 consist of
an aggregate of $990 (2017 - $81) in guaranteed investment certificates
(“GIC”) with maturity dates between October 3, 2018 and July 9, 2019,
bearing annual interest rates ranging from prime less 2.10% to prime less
2.60%. The GICs are restricted and held as security against the Company’s
corporate credit cards.
|
|
|
|
|
6.
|
Accounts Receivable
|
|
|
|
|
|
Accounting Policy
|
|
|
|
|
|
Accounts receivables are classified as loans and receivable
financial assets. Accounts receivables are recognized initially at fair
value and subsequently measured at amortized cost, less any provisions for
impairment. When an accounts receivable is uncollectible, it is written
off against the provision. Subsequent recoveries of amounts previously
written off are credited to the consolidated statements of comprehensive
income (loss).
|
|
|
|
|
|
Significant Judgment
|
|
|
|
|
|
The determination of when amounts are deemed
uncollectible requires judgment.
|
|
|
|
|
June 30, 2018
|
|
|
June 30, 2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Trade receivables
|
|
6,665
|
|
|
1,346
|
|
|
|
Construction contract receivables
|
|
1,969
|
|
|
-
|
|
|
|
Dividends receivable (Note 12(c))
|
|
828
|
|
|
-
|
|
|
|
GST recoverable
|
|
5,634
|
|
|
966
|
|
|
|
|
|
15,096
|
|
|
2,312
|
|
|
7.
|
Convertible Debenture Investment
|
|
|
|
|
|
Accounting Policy
|
|
|
|
|
|
Convertible debenture investments are hybrid instruments
which were elected to be classified as financial assets at fair value
through profit or loss. Upon initial recognition, the investment is
recognized at fair value with directly attributable transaction costs
expensed as incurred. If the transaction price does not equal fair value,
management measures the fair value of each component of the investment and
any unrealized gains or losses at inception is either recognized in profit
or loss or deferred and recognized over the term of the financial
instrument, depending on whether the valuation inputs are based on
observable market data. Subsequent changes in fair value are recognized in
profit or loss. Refer to Note 28 for significant judgements in determining
the fair value of the convertible debenture
instruments.
|
13
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
7.
|
Convertible Debenture Investment
(Continued)
|
|
|
|
|
|
The Company held the following convertible debenture at
June 30, 2018:
|
|
|
Financial asset hierarchy level
3
|
|
Radient
|
|
|
|
|
|
$
|
|
|
|
Balance, June 30, 2016
|
|
-
|
|
|
|
Additions at cost
|
|
2,000
|
|
|
|
Unrealized gain recognized at
inception
|
|
12,564
|
|
|
|
Unrealized loss on changes in fair value
|
|
(3,493
|
)
|
|
|
Balance, June 30, 2017
|
|
11,071
|
|
|
|
Unrealized gain on changes in fair value
|
|
830
|
|
|
|
Conversion of debenture
|
|
(11,901
|
)
|
|
|
Balance, June 30, 2018
|
|
-
|
|
On February 13, 2017, the Company
purchased a $2,000 unsecured 10% convertible debenture of Radient Technologies
Inc. (“Radient”), convertible into units at $0.14 per unit. Each unit consisted
of one common share and one warrant exercisable at a price of $0.33 per share
expiring February 13, 2019. During the year ended June 30, 2017, the Company
recognized an aggregate $1,135 unrealized loss on the debenture comprised of
$3,493 unrealized loss on changes in fair value and $2,358 unrealized gain on
the amortization of deferred inception gains
On July 28, 2017, the Company received
14,285,714 units of Radient pursuant to the mandatory conversion of the
debenture. The Company also received an aggregate of 181,707 units of Radient
for its interest payments of $91. On conversion, the Company recognized an
unrealized gain of $830 on the debentures and fully amortized the remaining
deferred inception gain balance of $6,107 on the share portion of the debenture
(Note 28(c)). The convertible debenture was classified as a level 3 financial
asset and the $11,901 fair value on conversion was estimated by measuring the
fair value of the shares at a quoted market price of $0.53 and the warrants
using the Binomial model with the following assumptions: risk-free interest rate
of 1.57%; dividend yield of 0%; stock price volatility of 91.53%; and an
expected life of 1.57 years (Note 8(d)).
|
8.
|
Marketable Securities and Derivatives
|
|
|
|
|
|
Accounting Policy
|
|
|
|
|
|
Available-for-sale
|
|
|
|
|
|
The Company classifies investments in common shares as
available-for-sale financial assets. Available-for-sale financial assets
are non-derivative financial assets that are designated as
available-for-sale or are not classified in any other financial asset
categories. They are initially and subsequently measured at fair value and
the changes in fair value, other than impairment losses, are recognized in
other comprehensive income (loss) and presented in the fair value reserve
in shareholders’ equity. When the financial assets are sold or an
impairment write-down is required, losses accumulated in the fair value
reserve recognized in shareholders’ equity are reclassified to profit or
loss. Refer to Note 28 for significant judgements in determining the fair
value of available-for-sale financial instruments.
|
|
|
|
|
|
The Company applies the residual method in allocating the
investment cost of unit private placements to the underlying common share
and warrant components, unless the transaction price does not approximate
fair value. In such cases, each component of the investment is measured at
fair value with the difference between fair value at initial recognition
and the transaction price recognized in either profit or loss or deferred,
depending on whether the valuation inputs are based on observable market
data. The resulting unrealized gain at inception on the share component is
recognized in profit and loss and subsequent changes in fair value
recognized in other comprehensive income.
|
|
|
|
|
|
Impairment on available-for-sale
investments
|
|
|
|
|
|
The Company reviews these investments for
other-than-temporary declines in fair value. When there is a significant
or prolonged decline in the value of an investment, the cumulative loss
that had been recognized in other comprehensive income (loss) is
reclassified from equity to profit or loss.
|
|
|
|
|
|
Derivatives
|
|
|
|
|
|
The Company classifies derivative investments as
financial assets at fair value through profit or loss (“FVTPL”). At
initial recognition, the investment is recognized at fair value. If the
transaction price does not equal to fair value, management measures the
fair value of each component of the investment and any unrealized gains or
losses at inception is either recognized in profit or loss or deferred,
depending on whether the valuation inputs are based on observable market
data. The resulting unrealized gain or loss at inception and subsequent
changes in fair value are recognized in profit or loss for the period.
Directly attributable transaction costs on acquisition are expensed as
incurred. Refer to Note 28 for significant judgements in determining the
fair value of derivative financial instruments.
|
14
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
8.
|
Marketable Securities and Derivatives
(Continued)
|
|
|
|
|
|
The Company held the following marketable securities at
June 30, 2018:
|
|
|
|
|
Cann
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial asset hierarchy level
1
|
|
Group
|
|
|
CanniMed
|
|
|
Micron
|
|
|
Radient
|
|
|
Choom
|
|
|
|
|
|
|
Marketable securities
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(f)
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Balance, June 30, 2016
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Additions
|
|
6,627
|
|
|
-
|
|
|
-
|
|
|
1,023
|
|
|
-
|
|
|
7,650
|
|
|
|
Unrealized gain recognized at
inception
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,334
|
|
|
-
|
|
|
1,334
|
|
|
|
Unrealized gain (loss) on changes in fair value
|
|
6,806
|
|
|
-
|
|
|
-
|
|
|
(945
|
)
|
|
-
|
|
|
5,861
|
|
|
|
Balance, June 30, 2017
|
|
13,433
|
|
|
-
|
|
|
-
|
|
|
1,412
|
|
|
-
|
|
|
14,845
|
|
|
|
Additions
|
|
-
|
|
|
16,144
|
|
|
962
|
|
|
4,199
|
|
|
7,000
|
|
|
28,305
|
|
|
|
Unrealized gain recognized at
inception
|
|
-
|
|
|
-
|
|
|
2,170
|
|
|
3,700
|
|
|
2,268
|
|
|
8,138
|
|
|
|
Unrealized gain (loss) on changes in fair
value
|
|
42,934
|
|
|
10,423
|
|
|
(706
|
)
|
|
(2,340
|
)
|
|
3,451
|
|
|
53,762
|
|
|
|
Reclass to investment in
associates (Note 12(b))
|
|
(56,367
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(56,367
|
)
|
|
|
Acquisition of control (Note 13(a)(iv))
|
|
-
|
|
|
(26,567
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(26,567
|
)
|
|
|
Conversion of debenture (Note
7)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
7,571
|
|
|
-
|
|
|
7,571
|
|
|
|
Exercise of warrants
|
|
-
|
|
|
-
|
|
|
-
|
|
|
29,501
|
|
|
-
|
|
|
29,501
|
|
|
|
Balance, June 30, 2018
|
|
-
|
|
|
-
|
|
|
2,426
|
|
|
44,043
|
|
|
12,719
|
|
|
59,188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss)
on marketable securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit &
loss unrealized gain
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,334
|
|
|
-
|
|
|
1,334
|
|
|
|
OCI unrealized gain (loss)
|
|
7,021
|
|
|
-
|
|
|
-
|
|
|
(945
|
)
|
|
-
|
|
|
6,077
|
|
|
|
June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit & loss unrealized
gain
(1)
|
|
-
|
|
|
10,423
|
|
|
2,170
|
|
|
3,700
|
|
|
2,268
|
|
|
18,561
|
|
|
|
OCI unrealized gain (loss)
|
|
(7,021
|
)
|
|
-
|
|
|
(706
|
)
|
|
(2,340
|
)
|
|
3,451
|
|
|
(6,616
|
)
|
|
|
(1)
|
In addition to the $18,561 profit & loss unrealized
gain on marketable securities, the Company recognized an additional $1,522
unrealized gain at inception for TGOD’s participation right common shares
(Note 8(e)).
|
The Company held the following
derivative investments designated at FVTPL at June 30, 2018 on level 2 of the
fair value hierarchy:
|
|
Financial asset hierarchy level 2
|
|
TGOD
|
|
|
CTT
|
|
|
|
|
|
|
Derivative investments designated at FVTPL
|
|
(e)
|
|
|
(i)
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Balance, June 30, 2017
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Additions
|
|
55,000
|
|
|
1,319
|
|
|
56,319
|
|
|
|
Unrealized gain on changes in
fair value
|
|
153,043
|
|
|
18,821
|
|
|
171,864
|
|
|
|
Reclass to investment in associates (Note 12(g))
|
|
(108,572
|
)
|
|
-
|
|
|
(108,572
|
)
|
|
|
Balance, June 30, 2018
|
|
99,471
|
|
|
20,140
|
|
|
119,611
|
|
The Company held the following
held-for-trading derivative investments at June 30, 2018:
|
|
Financial asset hierarchy
|
|
Level 3
|
|
|
Level 3
|
|
|
Level 3
|
|
|
Level 2
|
|
|
|
|
|
|
Held-for-trading derivative
investments
|
|
Micron
|
|
|
Radient
|
|
|
Alcanna
|
|
|
Namaste
|
|
|
|
|
|
|
|
|
(c)
|
|
|
(d)
|
|
|
(g)
|
|
|
(h)
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Balance, June 30, 2016
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Additions
|
|
-
|
|
|
306
|
|
|
-
|
|
|
-
|
|
|
306
|
|
|
|
Unrealized gain recognized at inception
|
|
-
|
|
|
380
|
|
|
-
|
|
|
-
|
|
|
380
|
|
|
|
Unrealized loss on changes in fair value
|
|
-
|
|
|
(394
|
)
|
|
-
|
|
|
-
|
|
|
(394
|
)
|
|
|
Balance, June 30, 2017
|
|
-
|
|
|
292
|
|
|
-
|
|
|
-
|
|
|
292
|
|
|
|
Additions
|
|
538
|
|
|
2,083
|
|
|
28,060
|
|
|
1,333
|
|
|
32,014
|
|
|
|
Unrealized gain recognized at inception
|
|
1,213
|
|
|
1,837
|
|
|
-
|
|
|
-
|
|
|
3,050
|
|
|
|
Unrealized gain (loss) on
changes in fair value
|
|
(723
|
)
|
|
16,593
|
|
|
(25,660
|
)
|
|
(842
|
)
|
|
(10,632
|
)
|
|
|
Conversion of debenture (Note 7)
|
|
-
|
|
|
4,330
|
|
|
-
|
|
|
-
|
|
|
4,330
|
|
|
|
Exercise of warrants
|
|
-
|
|
|
(23,723
|
)
|
|
-
|
|
|
-
|
|
|
(23,723
|
)
|
|
|
Balance, June 30, 2018
|
|
1,028
|
|
|
1,412
|
|
|
2,400
|
|
|
491
|
|
|
5,331
|
|
15
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
8.
|
Marketable Securities and Derivatives
(Continued)
|
|
|
|
|
|
The following is a summary of derivative instrument
investments and a reconciliation of the unrealized gain (loss) on changes
in fair value of derivatives:
|
|
|
|
|
June 30, 2018
|
|
|
June 30, 2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Total derivative
instruments
|
|
|
|
|
|
|
|
|
Derivative investments – Level 2
|
|
119,611
|
|
|
-
|
|
|
|
Derivative investments – Level 3
|
|
5,331
|
|
|
292
|
|
|
|
|
|
124,942
|
|
|
292
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on changes in
fair value of derivatives
|
|
|
|
|
|
|
|
|
Inception gains amortized
|
|
|
|
|
|
|
|
|
Derivative investments – Level 3
|
|
5,217
|
|
|
59
|
|
|
|
Changes in fair value
|
|
|
|
|
|
|
|
|
Derivative investments – Level 2
|
|
171,023
|
|
|
-
|
|
|
|
Derivative investments – Level 3
|
|
(9,790
|
)
|
|
(394
|
)
|
|
|
|
|
166,450
|
|
|
(335
|
)
|
|
|
(a)
|
Cann Group Limited (“Cann Group”)
|
|
|
|
|
|
|
|
On April 25, 2017, the Company subscribed to the initial
public offering (“IPO”) of Cann Group on the Australian Stock Exchange for
21,562,314 fully paid ordinary shares at a price of A$0.30 per share for a
total investment of $6,627 (A$6,469).
|
|
|
|
|
|
|
|
As at June 30, 2017, the fair market value of the shares
of $13,433 (A$13,476) was based on a quoted market price of A$0.625 and an
unrealized gain of $6,806 in the fair value of marketable securities was
recognized during the year ended June 30, 2017, comprised of $7,021
unrealized gain on changes in fair value and $215 foreign exchange
losses.
|
|
|
|
|
|
|
|
On December 11, 2017, the Company acquired an additional
7,200,000 shares of Cann Group, bringing the Company’s total ownership
interest to 21.8%. As a result, the Company obtained significant influence
in Cann Group and the investment was accounted for under the equity
method. The 21,562,314 shares had a fair value of $56,367 (A$58,218) based
on a quoted market price of A$2.70 and was reclassified to investment in
associates (Note 12(b)). The cumulative unrealized gains of $50,463 at
December 11, 2017 was reclassified from other comprehensive income to
deficit. Subsequent to obtaining significant influence, the Company
further increased its ownership interest to 22.9% (Note 12(b)).
|
|
|
|
|
|
|
(b)
|
CanniMed Therapeutics Inc. (“CanniMed”)
|
|
|
|
|
|
|
|
On November 24, 2017, the Company formally commenced an
offer to purchase all of CanniMed’s issued and outstanding common shares.
During the year ended June 30, 2018 and prior to obtaining control on
March 15, 2018, the Company purchased an aggregate of 700,600 common
shares of CanniMed at an average price of $23.043 per share for
$16,144.
|
|
|
|
|
|
|
|
On March 15, 2018, the Company acquired control of
CanniMed and the shares had a fair value of $26,567. On acquisition of
control, the fair value of the shares was reclassified to the investment
in CanniMed and included as part of the determination of goodwill on the
acquisition date (Note 13(a)(iv)). The Company recognized in the statement
of comprehensive income (loss) a realized gain on the cumulative changes
in fair value of $10,423 for the CanniMed marketable securities.
|
|
|
|
|
|
|
(c)
|
Micron Waste Te
chnologies Inc.
(“Micron”)
|
|
|
|
|
|
|
|
On January 10, 2018, the Company subscribed to 4,411,765
units of Micron at $0.34 per unit for a total cost of $1,500. Each unit
consisted of one common share and one common share purchase warrant
exercisable at $0.50 per share expiring January 12, 2020.
|
|
|
|
|
|
|
|
The fair value of the investment differed from the
transaction price at initial recognition. At inception, the fair value of
the shares of $3,132 was based on a quoted market price of $0.71 per
share, and the warrants had a fair value of $1,751 which was estimated
using the Binomial model using historical volatility, which is a Level 3
input. As such, the $2,170 unrealized gain at inception for the shares was
recognized immediately through profit or loss, and the $1,213 unrealized
gain at inception for the warrants was deferred over the term of the
warrants.
|
16
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
8.
|
Marketable Securities and Derivatives
(Continued)
|
|
|
(c)
|
Micron Waste Technologies Inc.
(continued)
|
|
|
|
|
|
|
|
At June 30, 2018, the fair value of the shares of $2,426
was based on quoted market prices of $0.55 and the $1,028 fair value of
the warrants was estimated using the Binomial model with the following
assumptions: risk-free interest rate of 2.16% (inception – 2.11%);
dividend yield of 0% (inception – 0%); historical stock price volatility
of 81.18% (inception – 85.65%); and an expected life of 1.54 years
(inception – 2 years). If the estimated volatility increases or decreases
by 10%, the estimated fair value would increase or decrease by
approximately $97.
|
|
|
|
|
|
|
(d)
|
Radient Technol
ogies Inc.
(“Radient”)
|
|
|
|
|
|
|
|
The Company acquired the following securities of
Radient:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise
|
|
|
|
Date
|
|
Transactions
|
|
|
Cost ($)
|
|
|
Shares (#)
|
|
|
Warrants (#)
|
|
|
Price ($)
|
|
|
|
March 9, 2017
|
|
Private
placement of units @ $0.45 per unit
|
|
|
1,250
|
|
|
2,777,800
|
|
|
1,388,900
|
|
|
0.70
|
|
|
|
May 13, 2017
|
|
Convertible debenture
interests (Note 7)
|
|
|
50
|
|
|
104,167
|
|
|
104,167
|
|
|
0.48
|
|
|
|
July 28, 2017
|
|
Convertible debenture interests (Note 7)
|
|
|
41
|
|
|
77,540
|
|
|
77,540
|
|
|
0.53
|
|
|
|
July 28 2017
|
|
Debentures converted (Note
7)
|
|
|
2,000
|
|
|
14,285,714
|
|
|
14,285,714
|
|
|
0.33
|
|
|
|
Dec 11, 2017
|
|
Private
placement of units @ $1.37 per unit
|
|
|
6,222
|
|
|
4,541,889
|
|
|
4,541,889
|
|
|
1.71
|
|
|
|
Dec 11, 2017
|
|
Exercise of warrants
|
|
|
5,778
|
|
|
15,856,321
|
|
|
(15,856,321
|
)
|
|
0.36
|
|
|
|
|
|
|
|
|
15,341
|
|
|
37,643,431
|
|
|
4,541,889
|
|
|
|
|
As at June 30, 2017, the Company held
an aggregate of 2,881,967 common shares and 1,493,067 warrants of Radient. At
June 30, 2017, the $1,412 fair value of these shares was based on a quoted
market price of $0.49 per share (inception - $0.83) and the $292 fair value of
the warrants was estimated using the Black-Scholes pricing model with the
following weighted average assumptions: risk-free interest rate of 1.10%
(inception – 0.82%); dividend yield of 0% (inception – 0%); stock price
volatility of 99.05% (inception – 101.40%); and an expected life of 1.69 years
(inception – 2.00 years).
On December 11, 2017, the Company
exercised an aggregate of 15,856,321 warrants of Radient for a total cost of
$5,778. For the period ended June 30, 2018, the Company recorded unrealized
gains on changes in fair value of these derivatives of $19,083 and fully
amortized the deferred inception gains of $4,421 on the warrants. The aggregate
fair value of the exercised warrants of $23,723 was estimated using the Binomial
model with the following weighted average assumptions: share price of $1.83;
risk-free interest rate of 1.70%; dividend yield of 0%; historical stock price
volatility of 96.70%; and an expected life of 1.19 years.
As at June 30, 2018, the 37,643,431
common shares had a fair value of $44,043 based on a quoted market price of
$1.17 per share and the 4,541,889 warrants had a fair value of $1,412 which was
estimated using the Binomial model with the following weighted average
assumptions: risk-free interest rate of 2.14%; dividend yield of 0%; historical
stock price volatility of 80.37%; and an expected life of 1.45 years. If the
estimated volatility increases or decreases by 10%, the estimated fair value
would increase or decrease by approximately $251.
|
|
(e)
|
The Green Organic Dutchman Holdings Ltd.
(“TGOD”)
|
|
|
|
|
|
|
|
On January 4, 2018, the Company invested in 33,333,334
subscription receipts of TGOD at $1.65 per subscription receipt for a cost
of $55,000. Each subscription receipt was converted into units of TGOD
consisting of one common share and one-half of one share purchase warrant,
with each whole warrant exercisable at $3.00 per share expiring February
28, 2021. The common shares and warrants are subject to a lock-up period
for six and twelve months, respectively. In connection with the
subscription receipt investment, the Company entered into an Investor
Rights Agreement with TGOD where the Company received milestone options
and a participation right for future TGOD equity financings. The milestone
options allow the Company to increase its pro rata interest to over 50%
and to purchase the shares at a 10% discount to the listed market price
upon achievement of certain milestones. The Company elected to measure the
subscription receipts and milestone options together as a single compound
financial instrument at fair value through profit or loss.
|
|
|
|
|
|
|
|
Pursuant to the participation right, the Company
subscribed to TGOD’s IPO of 6,341,250 units at a price of $3.65 per unit
for a total investment of $23,146. Each unit consisted of one common share
and one-half of one share purchase warrant of TGOD. Each whole warrant is
exercisable at $7.00 per share expiring on May 20, 2020, subject to
accelerated expiry if TGOD’s shares trade at or above a VWAP of $9.00 for
any 10 consecutive trading day period.
|
17
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
8.
|
Marketable Securities and Derivatives
(Continued)
|
|
|
(e)
|
The Green Organic Dutchman Holdings Ltd.
(continued)
|
|
|
|
|
|
|
|
On May 2, 2018, TGOD completed its IPO and the Company
obtained significant influence upon conversion of the subscription
receipts and receipt of the participation right common shares and
warrants. The subscription receipts and milestone options had a fair value
of $155,358 of which $108,572, $31,016 and $15,770 was allocated to the
common shares, warrants and milestone options, respectively. The $108,572
fair value of the common shares was estimated based on a quoted market
price of $3.89 per share, offset by the $21,095 fair value of the common
share lock-up period which was estimated using the Binomial model with the
following assumptions: risk-free interest rate of 1.84%; dividend yield of
0%; stock price volatility of 60%; and an expected life of 0.50 years. The
aggregate $46,786 fair value of the warrants and milestone options were
also estimated using the Binomial model based on assumptions detailed
below. Prior to conversion, the Company recognized an unrealized gain of
$100,358 on the derivative instrument.
|
|
|
|
|
|
|
|
The $108,572 fair value of the 33,333,334 subscription
receipt common shares was reclassified to investment in associates, while
the $24,667 fair value of the 6,341,250 participation right common shares,
estimated based on a quoted market price of $3.89 per share, was
recognized directly to investment in associates (Note 12(g)). The
participation right warrants had a fair value of $1,631 at inception
estimated using the Binomial model based on assumptions detailed below.
The Company recognized an unrealized gain at inception of $1,522 and
$1,631 on the participation right common shares and warrants,
respectively.
|
|
|
|
|
|
|
|
The 19,837,292 share purchase warrants and milestone
options held by the Company were measured as a single derivative
instrument measured at fair value through profit or loss. At June 30,
2018, the warrants and milestone options had an aggregate fair value of
$99,471 (May 2, 2018 - $48,417) resulting in an unrealized gain of
$51,054. As of June 30, 2018, none of the milestone options were
exercisable.
|
|
|
|
|
|
|
|
At June 30, 2018, the $95,009 (May 2, 2018 - $46,786)
fair value of the subscription receipt warrants and milestone options were
estimated using the Binomial model with the following weighted average
assumptions: share price of $6.47 (May 2, 2018 - $3.89); risk-free
interest rate of 2.30% (May 2, 2018 – 2.37%); dividend yield of 0% (May 2,
2018 - 0%); stock price volatility of 60% (May 2, 2018 - 60%); and an
expected life of 2.52 years (May 2, 2018 – 2.68 years). The share price
input relating to the milestone options was also adjusted for the 10%
discount to the listed market price upon achievement of the milestones, as
well as the weighted average probability of 61% (May 2, 2018 - 61%) on the
achievement of the milestones.
|
|
|
|
|
|
|
|
At June 30, 2018, the $4,462 (inception - $1,631) fair
value of the participation right warrants was estimated using the
Monte-Carlo model with the following weighted average assumptions: share
price of $6.47 (inception - $3.89); risk- free interest rate of 2.21%
(inception – 2.42%); dividend yield of 0% (inception - 0%); stock price
volatility of 60% (inception - 60%); and an expected life of 1.84 years
(inception – 2.00 years).
|
|
|
|
|
|
|
(f)
|
Choom Hold
ings Inc. (“Choom”)
|
|
|
|
|
|
|
|
On June 12, 2018, the Company subscribed to 9,859,155
common shares of Choom at $0.71 per share for a total cost of $7,000,
representing an 8% ownership interest. The $9,268 fair value of the shares
at initial recognition was based on a quoted market price of $0.94 per
share and differed from the transaction price. As such, the unrealized
gain of $2,268 at inception for the shares was recognized immediately
through profit or loss. At June 30, 2018, the fair value of the 9,859,155
common shares of $12,719 was based on a quoted market price of $1.29 per
share.
|
|
|
|
|
|
|
(g)
|
Alcanna Inc. (“Alcanna”
, formerly Liquor Stores
N.A. Ltd.)
|
|
|
|
|
|
|
|
As part of the consideration paid for the investment in
Alcanna (Note 12(c)), the Company received an aggregate of 11,880,000
share purchase warrants of Alcanna allowing it to increase its pro rata
interest to approximately 40%. The share purchase warrants are exercisable
between $15.00 and $15.75 per share beginning May 9, 2018 and expire
between August 14, 2019 and January 31, 2022.
|
|
|
|
|
|
|
|
At June 30, 2018, the 11,880,000 warrants had a fair
value of $2,400 (inception - $28,060) resulting in an unrealized loss of
$25,660 since initial recognition. The fair value of the warrants was
estimated using the Binomial model with the following weighted average
assumptions: share price of $9.14 (inception – $11.95); risk-free interest
rate of 2.12% (inception – 2.12%); dividend yield of 0% (inception – 0%);
historical stock price volatility of 30.15% (inception – 52.03%); and an
expected life of 1.49 years (inception – 1.86 years). If the estimated
volatility increases or decreases by 10%, the estimated fair value would
increase or decrease by approximately $3,012.
|
18
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
8.
|
Marketable Securities and Derivatives
(Continued)
|
|
|
(h)
|
Namaste Technologies
Inc.
(“Namaste”)
|
|
|
|
|
|
|
|
Namaste issued 500,000 stock options to the Company
exercisable at $3.35 per share expiring December 27, 2021, vesting
quarterly over 12 months. At June 30, 2018, the options had a fair value
of $491 (inception - $1,333) resulting in an unrealized loss of $842 since
initial recognition. The fair value of the options was estimated using the
Black- Scholes pricing model with the following weighted average
assumptions: share price of $1.49 (inception – $3.35); risk- free interest
rate of 2.39% (inception – 2.21%); dividend yield of 0% (inception – 0%);
stock price volatility of 125% (inception – 125%); and an expected life of
3.50 years (inception 4.00 years).
|
|
|
|
|
|
|
(i)
|
CTT Pharmaceuticals Inc. (“CTT”)
|
|
|
|
|
|
|
|
On May 20, 2018, the Company purchased a $1,319 (US
$1,000) unsecured 5% convertible debenture of CTT with a term of 3 years,
convertible at the option of the holder into common shares at US $0.268
per share. Pursuant to the terms of the convertible debenture, the Company
also received 20,779,972 share purchase warrants of CTT allowing it to
increase its pro rata interest to approximately 42.5% on a fully diluted
basis (Note 12(e)). Each warrant is exercisable into one common share of
CTT at US $0.35 per share until May 20, 2021.
|
|
|
|
|
|
|
|
The convertible debenture and warrants were accounted for
as a single compound instrument with embedded derivatives classified as
fair value through profit or loss financial assets. At June 30, 2018, the
compound instrument had a fair value of $20,140 (inception - $1,319)
resulting in an unrealized gain of $18,821. The fair value of the compound
instrument was estimated using the Binomial model with the following
weighted average assumptions: share price of US$0.89 (inception -
US$0.27); risk-free interest rate of 2.85% (inception – 2.90%); dividend
yield of 0% (inception – 0%); stock price volatility of 20% (inception -
20%); and an expected life of 2.89 years (inception – 3.00
years).
|
|
9.
|
Biological Assets
|
|
|
|
|
|
Accounting Policy
|
|
|
|
|
|
The Company’s biological assets consist of medical cannabis
plants and are valued using the income approach. Production costs are
capitalized to biological assets and include all direct and indirect costs
relating to biological transformation. The Company measures and adjusts
the biological assets to the fair value less cost to sell up to the point
of harvest, which becomes the basis for the cost of finished goods
inventories after harvest. Unrealized gains or losses arising from the
changes in fair value less cost to sell during the period are included in
the results of operations for the related period.
|
|
|
|
|
|
Significant Judgement
|
|
|
|
|
|
Determination of the fair values of the biological assets
requires the Company to make assumptions about how market participants
assign fair values to these assets. These assumptions primarily relate to
the level of effort required to bring the cannabis up to the point of
harvest, costs to convert the harvested cannabis to finished goods, sales
price, risk of loss, expected future yields from the cannabis plants and
estimating values during the growth cycle. The average grow cycle of
plants up to the point of harvest is approximately twelve
weeks.
|
19
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
9.
|
Biological Assets (Continued)
|
|
|
|
|
|
The Company’s biological assets consist of cannabis
plants. The changes in the carrying value of biological assets are as
follows:
|
|
|
|
|
$
|
|
|
|
Balance at June 30, 2016
|
|
1,845
|
|
|
|
Changes in fair value less cost to sell due
to biological transformation
|
|
22,772
|
|
|
|
Transferred to inventory upon harvest
|
|
(20,529
|
)
|
|
|
Balance at June 30, 2017
|
|
4,088
|
|
|
|
Production costs capitalized
|
|
9,902
|
|
|
|
Biological assets acquired from CanniMed
(Note 13(a)(iv))
|
|
2,535
|
|
|
|
Changes in fair value less
cost to sell due to biological transformation
|
|
25,550
|
|
|
|
Transferred to inventory upon harvest
|
|
(28,455
|
)
|
|
|
Balance at June 30, 2018
|
|
13,620
|
|
As of June 30, 2018, the weighted
average fair value less cost to complete and cost to sell was $6.46 per gram
(2017 - $6.52 per gram).
The fair value of biological assets is
categorized within Level 3 on the fair value hierarchy. The inputs and
assumptions used in determining the fair value of biological assets include:
|
|
(a)
|
Selling price per gram;
|
Level 3 input
|
|
|
(b)
|
Attrition rate;
|
Level 3 input
|
|
|
(c)
|
Average yield per plant;
|
Level 3 input
|
|
|
(d)
|
Standard cost per gram to compete
production
|
Level 3 input
|
|
|
(e)
|
Cumulative stage of completion in
production process
|
Level 3 input
|
Significant unobservable assumptions
used in the valuation of biological assets, including the sensitivities on
changes in these assumptions and their effect on the fair value of biological
assets, are as follows:
|
|
|
|
|
|
|
|
|
|
Effect on fair value
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
Significant inputs & assumptions
|
|
Range of inputs
|
|
|
Sensitivity
|
|
|
2018
|
|
|
2017
|
|
|
|
Selling price per gram
(1)
|
|
$7.25 to $8.96
|
|
|
Increase or
decrease of $1.00 per gram
|
|
|
$
1,763
|
|
|
$
599
|
|
|
|
Average yield per plant
(2)
|
|
20 to 51 grams
|
|
|
Increase or decrease by 5 grams per plant
|
|
|
$ 1,999
|
|
|
$ 529
|
|
|
|
(1)
|
Selling price per gram is based on average selling prices
for the period.
|
|
|
(2)
|
Average yield per plant includes yields for new
facilities that recently started production.
|
The Company’s estimates are, by their
nature, subject to change and differences from the anticipated yield will be
reflected in the gain or loss on biological assets in future periods.
As of June 30, 2018, the biological
assets were on average 45% complete (2017 – 43%). During the year ended June 30,
2018, the Company’s biological assets produced 5,631,913 grams of dried cannabis
(2017 – 3,036,829 grams). As of June 30, 2018, it was expected that the
Company’s biological assets would yield approximately 3,794,770 grams (June 30,
2017 – 599,245 grams) of medical cannabis when harvested.
20
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
10.
|
Inventory
|
|
|
|
|
|
Accounting Policy
|
|
|
|
|
|
Inventories of purchased finished goods and packing
materials are initially valued at cost and subsequently at the lower of
cost and net realizable value. Inventories of harvested cannabis are
transferred from biological assets at their fair value less costs to sell
at harvest which becomes the deemed cost. Any subsequent post-harvest
costs are capitalized to inventory to the extent that the cost is less
than net realizable value. Net realizable value is determined as the
estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make
the sale. Cost is determined using the average cost basis. Products for
resale and supplies and consumables are valued at lower of cost and net
realizable value. The Company reviews inventory for obsolete, redundant
and slow-moving goods and any such inventory are written-down to net
realizable value.
|
|
|
|
|
|
Significant Judgement
|
|
|
|
|
|
The valuation of biological assets at the point of
harvest is the cost basis for all cannabis-based inventory and thus any
critical estimates and judgements related to the valuation of biological
assets (Note 9) are also applicable for inventory. The valuation of
work-in-process and finished goods also requires the estimate of
conversion costs incurred, which become part of the carrying amount for
the inventory. The Company must also determine if the cost of any
inventory exceeds its net realizable value, such as cases where prices
have decreased, or inventory has spoiled or has otherwise been
damaged.
|
The following is a breakdown of
inventory at June 30, 2018:
|
|
|
|
Capitalized
|
|
|
Fair value
|
|
|
Carrying
|
|
|
|
|
|
cost
|
|
|
adjustment
|
|
|
value
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Harvested cannabis
|
|
|
|
|
|
|
|
|
|
|
|
Work-in-process
|
|
2,215
|
|
|
6,337
|
|
|
8,552
|
|
|
|
Finished goods
|
|
5,637
|
|
|
7,742
|
|
|
13,379
|
|
|
|
|
|
7,852
|
|
|
14,079
|
|
|
21,931
|
|
|
|
Cannabis oils
|
|
|
|
|
|
|
|
|
|
|
|
Work-in-process
|
|
550
|
|
|
782
|
|
|
1,332
|
|
|
|
Finished goods
|
|
1,099
|
|
|
1,364
|
|
|
2,463
|
|
|
|
|
|
1,649
|
|
|
2,146
|
|
|
3,795
|
|
|
|
Capsules
|
|
|
|
|
|
|
|
|
|
|
|
Finished goods
|
|
166
|
|
|
90
|
|
|
256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indoor cultivation systems and hemp seed food
products
|
|
|
|
|
|
|
|
|
|
|
|
Raw materials
|
|
1,160
|
|
|
-
|
|
|
1,160
|
|
|
|
Work-in-process
|
|
701
|
|
|
-
|
|
|
701
|
|
|
|
Finished goods
|
|
323
|
|
|
-
|
|
|
323
|
|
|
|
|
|
2,184
|
|
|
-
|
|
|
2,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accessories, supplies and consumables
|
|
1,429
|
|
|
-
|
|
|
1,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2018
|
|
13,280
|
|
|
16,315
|
|
|
29,595
|
|
21
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
10.
|
Inventory (Continued)
|
|
|
|
|
|
The following is a breakdown of inventory at June 30,
2017:
|
|
|
|
|
Capitalized
|
|
|
Fair value
|
|
|
Carrying
|
|
|
|
|
|
cost
|
|
|
adjustment
|
|
|
value
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Harvested cannabis
|
|
|
|
|
|
|
|
|
|
|
|
Work-in-process
|
|
304
|
|
|
373
|
|
|
677
|
|
|
|
Finished goods
|
|
2,332
|
|
|
2,836
|
|
|
5,168
|
|
|
|
|
|
2,636
|
|
|
3,209
|
|
|
5,845
|
|
|
|
Cannabis oils
|
|
|
|
|
|
|
|
|
|
|
|
Work-in process
|
|
342
|
|
|
790
|
|
|
1,132
|
|
|
|
Finished goods
|
|
147
|
|
|
397
|
|
|
544
|
|
|
|
|
|
489
|
|
|
1,187
|
|
|
1,676
|
|
|
|
Supplies and consumables
|
|
182
|
|
|
-
|
|
|
182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2017
|
|
3,307
|
|
|
4,396
|
|
|
7,703
|
|
During the year ended June 30, 2018,
the Company recognized $37,227 (2017 - $24,783) of inventory expensed to cost of
goods sold including $17,624 (2017 - $16,908) non-cash expense relating to the
changes in fair value of inventory sold.
|
11.
|
Property, Plant and Equipment
|
|
|
|
|
|
Accounting Policy
|
|
|
|
|
|
Property, plant and equipment is measured at cost less
accumulated depreciation, residual values and impairment losses. Cost
includes expenditures that are directly attributable to the acquisition of
the asset. The cost of self- constructed assets includes the cost of
materials and direct labor, any other costs directly attributable to
bringing the asset to a working condition for the intended use and
borrowing costs on qualifying assets. During their construction, items of
property, plant and equipment are classified as construction in progress.
When the asset is available for use, it is transferred from construction
in progress to the appropriate category of property, plant and equipment
and depreciation on the item commences.
|
|
|
|
|
|
Depreciation is calculated on a straight-line basis over the
following estimated useful lives:
|
|
|
|
|
|
|
Computer software and equipment
|
3 years
|
|
|
|
|
Production equipment
|
2 - 4 years
|
|
|
|
|
Furniture and fixtures
|
5 years
|
|
|
|
|
Building and improvements
|
10 - 50 years
|
|
|
|
|
|
|
An asset’s residual value, useful life and depreciation
method are reviewed at each financial year-end and adjusted if
appropriate.
|
|
|
|
|
|
Gains and losses on disposal of an item are determined by
comparing the proceeds from disposal with the carrying amount of the item
and are recognized in profit or loss.
|
|
|
|
|
|
The Company capitalizes borrowing costs on capital
invested in projects under construction. Upon the asset becoming available
for use, capitalized borrowing costs, as a portion of the total cost of
the asset, are depreciated over the estimated useful life of the related
asset.
|
|
|
|
|
|
Impairment of property, plant and equipment
|
|
|
|
|
|
The Company assesses impairment on property, plant and
equipment when an indication of impairment occurs, such as evidence of
obsolescence or physical damage. In assessing impairment, the Company
compares the carrying amount to the recoverable amount which is determined
as the higher of the asset’s fair values less costs of disposal and its
value in use. Value in use is assessed based on the estimated future cash
flows, discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and
the risks specific to the asset. An impairment loss is recognized whenever
the carrying amount of the asset exceeds its recoverable amount and is
recorded in the consolidated statements of comprehensive income (loss).
|
|
|
|
|
|
Significant Judgment
|
|
|
|
|
|
Depreciation of property, plant and equipment is
dependent upon estimates of useful lives and residual values which are
determined through the exercise of judgement. The assessment of any
impairment of these assets is dependent upon estimates of recoverable
amounts that take into account factors such as economic and market
conditions and the useful lives of assets.
|
22
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
11.
|
Property, Plant and Equipment
(Continued)
|
|
|
|
|
|
|
|
|
|
|
Computer
|
|
|
|
|
|
Production
|
|
|
Finance
|
|
|
|
|
|
|
|
|
Building &
|
|
|
Construction
|
|
|
Software &
|
|
|
Furniture
|
|
|
& Other
|
|
|
Lease
|
|
|
|
|
|
|
|
|
Improvements
|
|
|
in progress
|
|
|
Equipment
|
|
|
& Fixtures
|
|
|
Equipment
|
|
|
Equipment
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2016
|
|
10,831
|
|
|
-
|
|
|
444
|
|
|
109
|
|
|
1,020
|
|
|
-
|
|
|
12,404
|
|
|
|
Additions
|
|
1,944
|
|
|
26,571
|
|
|
398
|
|
|
149
|
|
|
778
|
|
|
544
|
|
|
30,384
|
|
|
|
Additions from business combinations
and
asset acquisitions
|
|
4,407
|
|
|
-
|
|
|
63
|
|
|
34
|
|
|
364
|
|
|
-
|
|
|
4,868
|
|
|
|
Disposals
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(12
|
)
|
|
-
|
|
|
(12
|
)
|
|
|
Balance, June 30, 2017
|
|
17,182
|
|
|
26,571
|
|
|
905
|
|
|
292
|
|
|
2,150
|
|
|
544
|
|
|
47,644
|
|
|
|
Additions
|
|
16,896
|
|
|
115,653
|
|
|
3,333
|
|
|
2,859
|
|
|
12,750
|
|
|
-
|
|
|
151,491
|
|
|
|
Additions from business combinations
and
asset acquisitions
|
|
45,404
|
|
|
4,323
|
|
|
588
|
|
|
615
|
|
|
5,405
|
|
|
247
|
|
|
56,582
|
|
|
|
Disposals
|
|
(397
|
)
|
|
-
|
|
|
(753
|
)
|
|
(289
|
)
|
|
(1,087
|
)
|
|
-
|
|
|
(2,526
|
)
|
|
|
Foreign currency translation
|
|
-
|
|
|
-
|
|
|
5
|
|
|
-
|
|
|
4
|
|
|
-
|
|
|
9
|
|
|
|
Balance, June 30, 2018
|
|
79,085
|
|
|
146,547
|
|
|
4,078
|
|
|
3,477
|
|
|
19,222
|
|
|
791
|
|
|
253,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2016
|
|
616
|
|
|
-
|
|
|
162
|
|
|
19
|
|
|
237
|
|
|
-
|
|
|
1,034
|
|
|
|
Depreciation
|
|
438
|
|
|
-
|
|
|
221
|
|
|
40
|
|
|
351
|
|
|
39
|
|
|
1,089
|
|
|
|
Disposals
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2
|
)
|
|
-
|
|
|
(2
|
)
|
|
|
Balance, June 30, 2017
|
|
1,054
|
|
|
-
|
|
|
383
|
|
|
59
|
|
|
586
|
|
|
39
|
|
|
2,121
|
|
|
|
Depreciation
|
|
1,435
|
|
|
888
|
|
|
403
|
|
|
364
|
|
|
2,052
|
|
|
102
|
|
|
5,244
|
|
|
|
Disposals
|
|
(53
|
)
|
|
-
|
|
|
(206
|
)
|
|
(74
|
)
|
|
(188
|
)
|
|
-
|
|
|
(521
|
)
|
|
|
Foreign currency translation
|
|
-
|
|
|
-
|
|
|
4
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4
|
|
|
|
Balance, June 30, 2018
|
|
2,436
|
|
|
888
|
|
|
584
|
|
|
349
|
|
|
2,450
|
|
|
141
|
|
|
6,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Book Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
16,128
|
|
|
26,571
|
|
|
522
|
|
|
233
|
|
|
1,564
|
|
|
505
|
|
|
45,523
|
|
|
|
June 30, 2018
|
|
76,649
|
|
|
145,659
|
|
|
3,494
|
|
|
3,128
|
|
|
16,772
|
|
|
650
|
|
|
246,352
|
|
As at June 30, 2018, costs related to
the construction of production facilities were capitalized as construction in
progress and not amortized. Amortization will commence when construction is
completed, and the facility is available for its intended use.
During the year ended June 30, 2018,
$5,710 (2017 - $1,370) in borrowing costs were capitalized to construction in
progress at a weighted average rate of 20% (2017 – 22%).
23
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
12.
|
Investments in Associates and Joint
Venture
|
|
|
|
|
|
Accounting Policy
|
|
|
|
|
|
Associates are companies over which Aurora has significant
influence and are accounted for under the equity method. Significant
influence is assumed when the Company has 20%-49% ownership interest,
unless qualitative factors overcome this assumption. In assessing
significant influence, potential voting rights that are currently
exercisable are taken into account.
|
|
|
|
|
|
Joint ventures are joint arrangements whereby the parties
that have joint control of the arrangement have rights to the net assets
of the arrangement.
|
|
|
|
|
|
Investments in associates and joint ventures are accounted
for using the equity method and are initially recognized at cost,
excluding financial assets that are not in-substance common shares and
inclusive of transaction costs. When the Company holds available-for-sale
or derivative financial assets and subsequently obtains significant
influence in that investee, the fair value of the financial instruments
are reclassified to investments in associates as the deemed cost with the
cumulative unrealized gains or losses in other comprehensive income
(loss), if any, transferred to deficit. For each additional acquisition of
ownership interest within the investment in associate classification and
prior to obtaining control, the difference between the cost of the
incremental investment acquired and the investee’s fair value of
identifiable net assets is allocated to goodwill. The carrying amount of
goodwill arising from the acquisition of associates and joint ventures is
included in the carrying amount of the investments in associates and joint
ventures.
|
|
|
|
|
|
The consolidated financial statements include the Company's
share of the income and expenses and equity movement of equity accounted
investees. In accordance with IFRS, the investee’s most recent available
financial statements are used in the application of the equity method.
Where the investee’s reporting period differs from the Company’s, the
investee prepares financial information as of the same period end as the
Company, unless it is impracticable to do so. Otherwise, the Company will
adjust for its share of income and expenses and equity movement based on
the investee’s most recently completed financial statements, adjusted for
the effects of significant transactions. The Company does not recognize
losses exceeding the carrying value of its interest in the associate or
joint venture.
|
|
|
|
|
|
Impairment
|
|
|
|
|
|
The entire carrying amount of the investment is assessed for
indicators of impairment annually. An impairment test is performed when
there is objective evidence of impairment, such as significant adverse
changes in the environment in which the equity-accounted investee operates
or a significant or prolonged decline in the fair value of the investment
below its carrying amount. An impairment loss is recorded when the
recoverable amount becomes lower than the carrying amount.
|
|
|
|
|
|
Significant Judgment
|
|
|
|
|
|
The Company uses judgment in its assessment of whether
the Company has significant influence. Significant influence is the power
to participate in the financial and operating policy decisions of the
investee, including but not limited to, the ability to exercise
significant influence through board representation, material transactions
with the investee, provision of technical information, and the interchange
of managerial personnel. Whether an investment is classified as an
investment in associate can have a significant impact on the entries made
on and after acquisition.
|
The carrying value of investments in
associates and joint ventures consist of:
|
|
|
|
|
|
|
|
|
|
Balance,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OCI foreign
|
|
|
Balance,
|
|
|
|
|
|
|
|
|
%
|
|
|
Jun 30,
|
|
|
|
|
|
Transaction
|
|
|
Dividend
|
|
|
|
|
|
Share of net
|
|
|
exchange
|
|
|
Jun 30,
|
|
|
|
|
|
Note
|
|
|
Interest
|
|
|
2017
|
|
|
Additions
|
|
|
costs
|
|
|
income
|
|
|
Disposition
|
|
|
income (loss)
|
|
|
gain (loss)
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Australis Holdings
|
|
(a)
|
|
|
50%
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Cann Group Limited
|
|
(b)
|
|
|
23%
|
|
|
-
|
|
|
81,927
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(781
|
)
|
|
37
|
|
|
81,183
|
|
|
|
Alcanna Inc.
|
|
(c)
|
|
|
25%
|
|
|
-
|
|
|
109,940
|
|
|
1,586
|
|
|
(1,449
|
)
|
|
-
|
|
|
(500
|
)
|
|
-
|
|
|
109,577
|
|
|
|
SubTerra LLC
|
|
(d)
|
|
|
0%
|
|
|
-
|
|
|
78
|
|
|
-
|
|
|
-
|
|
|
(78
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
10647594 Canada
|
|
(d)
|
|
|
20%
|
|
|
-
|
|
|
134
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
134
|
|
|
|
CTT Pharmaceutical
|
|
(e)
|
|
|
0%
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Capcium Inc.
|
|
(f)
|
|
|
20%
|
|
|
-
|
|
|
11,270
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(14
|
)
|
|
-
|
|
|
11,256
|
|
|
|
TGOD
|
|
(g)
|
|
|
17%
|
|
|
-
|
|
|
133,239
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(947
|
)
|
|
-
|
|
|
132,292
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
336,588
|
|
|
1,586
|
|
|
(1,449
|
)
|
|
(78
|
)
|
|
(2,242
|
)
|
|
37
|
|
|
334,442
|
|
24
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
12.
|
Investments in Associates and Joint Venture
(Continued)
|
|
|
|
|
|
The following is a summary of aggregate financial
information for the Company’s associates and joint
ventures:
|
|
|
|
|
Cann
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
|
|
Group
|
|
|
Alcanna
|
|
|
Capcium
|
|
|
TGOD
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
(b)
|
|
|
(c)
|
|
|
(f)
|
|
|
(g)
|
|
|
Other
|
|
|
Total
|
|
|
Other
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Statement of financial
position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
48,243
|
|
|
78,595
|
|
|
252
|
|
|
261,816
|
|
|
1,317
|
|
|
390,223
|
|
|
107
|
|
|
|
Current assets
|
|
79,225
|
|
|
197,131
|
|
|
11,935
|
|
|
270,712
|
|
|
1,319
|
|
|
560,322
|
|
|
1
|
|
|
|
Non-current assets
|
|
5,258
|
|
|
252,262
|
|
|
6,701
|
|
|
48,078
|
|
|
3,029
|
|
|
315,328
|
|
|
2,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current financial liabilities, excluding
trade and other payables and provisions
|
|
4
|
|
|
1,380
|
|
|
-
|
|
|
-
|
|
|
1,737
|
|
|
3,121
|
|
|
283
|
|
|
|
Current liabilities
|
|
887
|
|
|
54,263
|
|
|
1,293
|
|
|
13,992
|
|
|
2,087
|
|
|
72,522
|
|
|
283
|
|
|
|
Non-current financial liabilities
|
|
16
|
|
|
72,697
|
|
|
18,583
|
|
|
-
|
|
|
2,057
|
|
|
93,353
|
|
|
2,415
|
|
|
|
Non-current liabilities
|
|
16
|
|
|
131,561
|
|
|
18,583
|
|
|
-
|
|
|
2,057
|
|
|
152,217
|
|
|
2,415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of
comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
552
|
|
|
223,991
|
|
|
104
|
|
|
-
|
|
|
-
|
|
|
224,647
|
|
|
-
|
|
|
|
Depreciation and amortization
|
|
-
|
|
|
(4,455
|
)
|
|
-
|
|
|
(121
|
)
|
|
-
|
|
|
(4,576
|
)
|
|
-
|
|
|
|
Interest income
|
|
-
|
|
|
-
|
|
|
-
|
|
|
381
|
|
|
-
|
|
|
381
|
|
|
-
|
|
|
|
Interest expense
|
|
(7
|
)
|
|
(1,916
|
)
|
|
-
|
|
|
(32
|
)
|
|
(57
|
)
|
|
(2,012
|
)
|
|
(110
|
)
|
|
|
Income tax recovery
|
|
-
|
|
|
751
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
751
|
|
|
-
|
|
|
|
Loss from continued
operations
|
|
(3,334
|
)
|
|
(2,108
|
)
|
|
(69
|
)
|
|
(5,578
|
)
|
|
(471
|
)
|
|
(11,560
|
)
|
|
(183
|
)
|
|
|
Loss from discontinued operations, net tax
|
|
-
|
|
|
(242
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(242
|
)
|
|
-
|
|
|
|
Other comprehensive income
|
|
-
|
|
|
1,402
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,402
|
|
|
-
|
|
|
|
Total comprehensive loss
|
|
(3,334
|
)
|
|
(974
|
)
|
|
(69
|
)
|
|
(5,578
|
)
|
|
(471
|
)
|
|
(10,426
|
)
|
|
(183
|
)
|
|
|
(a)
|
Australis Holdings
|
|
|
|
|
|
|
|
On April 7, 2015, the Company’s wholly-owned subsidiary,
Australis Capital Inc. (“ACI”), entered into a Limited Liability
Partnership Agreement with AJR Builders Group LLC (“AJR”) and formed
Australis Holdings LLP (“Australis Holdings” or “AHL”), a Washington
Limited Liability Partnership. Each of ACI and AJR holds a 50% interest in
Australis Holdings. Australis Holdings purchased two parcels of land in
2015 totaling approximately 24.5 acres (the “Property”) in Whatcom County,
Washington for USD$2,300, with the initial intention to construct a new
cannabis production and processing facility.
|
|
|
|
|
|
|
|
Pursuant to a promissory note dated April 10, 2015, the
Company through ACI loaned $1,645 to Australis Holdings to fund the
purchase of the Property. The note bears interest at a rate of 5% per
annum and had an original maturity date of October 31, 2017 which was
extended to October 31, 2018. In the event of a default, interest will be
charged at 12% per annum. The note is secured by a first mortgage on one
parcel of the Property and a second mortgage on the other title, as well
as a general security agreement granting ACI security over all present and
after acquired property of Australis Holdings. As of June 30, 2018, the
loan had a carrying amount of $1,785 (2017 - $1,736) including accrued
interest of $140 (2017 - $91). During the year ended June 30, 2018, the
Company accrued interest of $49 (2017 - $41) related to this loan. The
loan plus accrued interest were reclassified to assets held for
distribution to owners (Note 15).
|
|
|
|
|
|
|
|
The Company has advances of $1,659 to Australis Holdings
(2017 - $360), of which $1,235 (2017 - $nil) was held by ACI and
reclassified to assets held for distribution to owners (Note 15). The
advances are unsecured, non-interest bearing and have no fixed terms of
repayment.
|
|
|
|
|
|
|
|
As of June 30, 2018, the carrying value of the investment
is $nil (2017 - $nil). The Company’s share of losses in AHL is recognized
only to the extent of reducing the carrying value of the investment to
$nil. Total unrecognized share of AHL’s losses for the year ended June 30,
2018 and unrecognized cumulative losses was $98 and $243,
respectively.
|
|
|
|
|
|
|
|
Subsequent to June 30, 2018, the Company acquired the
remaining 50% interest in AHL from AJR (Note 31), as well as completed the
spin-out of ACI and the AHL investment to Aurora shareholders (Notes 15
and 31).
|
25
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
12.
|
Investments in Associates and Joint Venture
(Continued)
|
|
|
(b)
|
Cann Group Limited (“Cann Group”)
|
|
|
|
|
|
|
|
Cann Group is a public company listed on the Australian
Stock Exchange and its principal activities consist of the cultivation of
medicinal cannabis for both medicinal and research purposes, and
commercializing the outputs for medicinal uses in Australia.
|
|
|
|
|
|
|
|
On December 11, 2017, the Company obtained significant
influence in Cann Group through the acquisition of an additional 7,200,000
shares at A$2.50 per share for a cost of $17,577 (A$18,000). As a result,
the $56,367 fair value of the previously held 21,562,314 shares in Cann
Group were reclassified from marketable securities to investment in
associates as the deemed cost (Note 8(a)). On January 4, 2018, the Company
also acquired an additional 3,194,033 shares at a cost of $7,983
(A$7,985). As of June 30, 2018, the Company held an aggregate of
31,956,347 shares of Cann Group with a carrying value of $81,183 in
investment in associates, representing a 22.9% ownership interest.
Management continues to work on refining the estimate of the Company’s
share of the fair value of identifiable net assets acquired. As such, the
allocation of the purchase price to the various assets acquired is subject
to change.
|
|
|
|
|
|
|
|
Based on Cann Group’s closing price of A$3.50 on June 30,
2018, the shares held by the Company have a fair value of approximately
$108,861 (A$111,847).
|
|
|
|
|
|
|
(c)
|
Alcanna Inc.
(“Alcanna”)
|
|
|
|
|
|
|
|
On February 14, 2018, the Company subscribed to Alcanna’s
non-brokered private placement for 6,900,000 common shares at $15.00 per
share for a total cost of $103,500, representing a 19.9% interest in
Alcanna. The Company also subscribed to 2,300,000 subscription receipts of
Alcanna at $15.00 per subscription receipt for a total cost of $34,500
which was converted to common shares on May 9, 2018, increasing the
Company’s ownership to approximately 25% on an undiluted basis. As part of
the consideration transferred, the Company also received 11,880,000 share
purchase warrants of Alcanna. The total transaction price of $138,000 was
allocated first to the common shares and subscription receipts based on
Alcanna’s closing market price of $11.95 as of February 14, 2018,
resulting in total cost of $109,940 allocated to the investment in
associate and $28,060 being the implied fair value of the warrants. The
warrants are recognized as derivatives measured at fair value through
profit or loss (Note 8(g)). The Company also recognized $1,586 transaction
costs and $1,449 dividends to investment in associates. Of the $1,449
dividends, $828 remains receivable as of June 30, 2018 (Note 6).
Management continues to work on refining the estimate of the Company’s
share of the fair value of identifiable net assets acquired. As such, the
allocation of the purchase price to the various assets acquired is subject
to change.
|
|
|
|
|
|
|
|
Alcanna is an Alberta based public company listed on the
TSX and its principal activity is the retailing of wines, beers and
spirits in Canada and the United States of America. Alcanna also has
advanced plans to develop and launch a retail cannabis business in
Canadian jurisdictions where private retailing will be permitted upon
legalization. Management determined that the Company has significant
influence over Alcanna and accounts for the investment under the equity
method.
|
|
|
|
|
|
|
|
Based on Alcanna’s closing price of $9.14 on June 30,
2018, the shares held by the Company have a fair value of $84,088. The
Company assessed the carrying value of the investment against the
estimated recoverable amount and determined that no impairment was
necessary on the investment.
|
|
|
|
|
|
|
(d)
|
SubTerra LLC
(“SubTerra”)
and 10647594
Canada Inc. (“10647594 Canada”)
|
|
|
|
|
|
|
|
Pursuant to the acquisition of CanniMed (Note 13(a)(iv)),
the Company acquired a 19.9% interest in SubTerra, a Michigan limited
liability company, and a 19.9% interest in 10647594 Canada which holds
certain assets known as the Interleukin 37 protein.
|
|
|
|
|
|
|
|
On May 18, 2018, the Company sold its 19.9% interest in
SubTerra to CanniMed’s former Chief Executive Officer in exchange for $78
cash. Additionally, in exchange for the cancellation of $4,665 (US $3,580)
promissory notes and receivables from SubTerra, the Company received the
following assets with an estimated fair value of
$1,400:
|
|
|
(i)
|
5% of any gross revenues of SubTerra earned annually from
the sale of cannabis and cannabis-based products grown and/or processed at
its facility for the period commencing June 1, 2018 and ending May 31,
2028; and
|
|
|
(ii)
|
a payment of $150 annually for the period commencing June
1, 2018 and ending May 31, 2028.
|
The promissory notes and receivables
from SubTerra were previously written off prior to Aurora’s acquisition of
CanniMed. As such, the Company recognized a recovery of $1,400 upon receipt of
the above assets.
As part of the sale agreement, the
Company also received a two-year option to purchase a parcel of land located in
White Pine, Michigan for US $3.
26
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
12.
|
Investments in Associates and Joint Venture
(Continued)
|
|
|
(d)
|
SubTerra LLC and 10647594 Canada Inc.
(continued)
|
|
|
|
|
|
|
|
No income or loss was recognized on the investment in
associate from acquisition date to disposition.
|
|
|
|
|
|
|
|
Subsequent to June 30, 2018, the revenue royalty, annuity
payment and land purchase option were spun-out as part of the ACI spin-out
transaction (Notes 15 and 31).
|
|
|
|
|
|
|
(e)
|
CTT Pharmaceutical Holdings Ltd.
(
“CTT”)
|
|
|
|
|
|
|
|
The Company holds securities of CTT which if converted
and exercised would increase the Company’s ownership interest to 42.5% on
a fully diluted basis (Note 8(i)).
|
|
|
|
|
|
|
|
As of June 30, 2018, the Company held 0% non-diluted
ownership interest in CTT. Based on the Company’s potential voting rights
of up to 42.5% and other qualitative factors, the Company has determined
it holds significant influence in CTT and has accounted for its investment
under the equity method. As the Company has no present voting interest in
CTT, the compound financial instrument is measured as a financial asset at
fair value through profit or loss (Note 8(i)).
|
|
|
|
|
|
|
|
CTT is Ontario based and is in the business of developing
dose specific fast dissolving oral thin film wafers that provide a dose
specific, smoke-free delivery of medical cannabis or other active
ingredients. CTT’s common shares are listed on the OTC under the symbol
“CTTH“.
|
|
|
|
|
|
|
(f)
|
Capcium Inc. (“Capcium”)
|
|
|
|
|
|
|
|
On June 6, 2018, the Company acquired a 19.99% ownership
interest in Capcium by subscribing to 8,828,662 common shares. The
consideration was paid through the issuance of 1,144,481 common shares of
Aurora with a fair value of $10,770 and $500 cash. Capcium is a
Montreal-based private company in the business of manufacturing
soft-gels.
|
|
|
|
|
|
|
|
Based on the Company’s voting rights and other
qualitative factors, the Company has determined it holds significant
influence in Capcium and has accounted for its investment under the equity
method.
|
|
|
|
|
|
|
(g)
|
The Green Organic Dutchman Holdings Ltd.
(
“TGOD”)
|
|
|
|
|
|
|
|
TGOD is an Ontario based licensed producer of medical
cannabis in Canada. The Company’s investments in TGOD consist of compound
instruments which were classified as derivatives at fair value through
profit or loss. On closing of TGOD’s IPO and the conversion of
subscription receipts into common shares and common share purchase
warrants, based on the Company’s 18% ownership interest and other
qualitative factors, the Company obtained significant influence in TGOD
and the aggregate $133,239 fair value of the 39,674,584 common shares were
reclassified to investment in associates (Note 8(e)). Management continues
to work on refining the estimate of the Company’s share of the fair value
of identifiable net assets acquired. As such, the allocation of the
purchase price to the various assets acquired is subject to
change.
|
|
|
|
|
|
|
|
Based on TGOD’s closing price of $6.47 on June 30, 2018,
the shares held by the Company have a fair value of approximately
$256,695.
|
27
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
13.
|
Business Combinations and Asset
Acquisitions
|
|
|
|
|
|
Accounting Policy
|
|
|
|
|
|
Business combinations
|
|
|
|
|
|
A business combination is a transaction or event in which an
acquirer obtains control of one or more businesses and is accounted
for using the acquisition method. The total consideration paid for the
acquisition is the aggregate of the fair values of assets given,
liabilities incurred or assumed, and equity instruments issued in exchange
for control of the acquiree at the acquisition date. The acquisition date
is the date where the Company obtains control of the acquiree. The
identifiable assets acquired and liabilities assumed are recognized at
their acquisition date fair values, except for deferred taxes and
share-based payment awards where IFRS provides exceptions to recording the
amounts at fair value. Acquisition costs are expensed to profit or
loss.
|
|
|
|
|
|
Contingent consideration is measured at its acquisition-date
fair value and included as part of the consideration transferred in a
business combination. Contingent consideration that is classified as
equity is not remeasured at subsequent reporting dates and its subsequent
settlement is accounted for within equity. Contingent consideration that
is classified as an asset or a liability is remeasured at subsequent
reporting dates in accordance with IAS 39, or IAS 37 Provisions,
Contingent Liabilities and Contingent Assets, as appropriate, with the
corresponding gain or loss being recognized in profit or loss.
|
|
|
|
|
|
Non-controlling interest in the acquiree, if any, is
recognized either at fair value or at the non-controlling interest’s
proportionate share of the acquiree’s net assets, determined on an
acquisition-by-acquisition basis. For each acquisition, the excess of
total consideration, the fair value of previously held equity interest
prior to obtaining control and the non-controlling interest in the
acquire, over the fair value of the identifiable net asset acquired, is
recorded as goodwill.
|
|
|
|
|
|
Certain fair values may be estimated at the acquisition date
pending confirmation or completion of the valuation process. Where
provisional values are used in accounting for a business combination, they
may be adjusted retrospectively in subsequent periods. The measurement
period is the period from the acquisition date to the date complete
information about facts and circumstances that existed as of the
acquisition date is received. However, the measurement period does not
exceed one year from the acquisition date.
|
|
|
|
|
|
Asset acquisitions
|
|
|
|
|
|
Acquisitions that do not meet the definition of a business
combination are accounted for as an asset acquisition. Consideration paid
for an asset acquisition is allocated to the individual identifiable
assets acquired and liabilities assumed based on their relative fair
values. Asset acquisitions do not give rise to goodwill.
|
|
|
|
|
|
Significant Judgment
|
|
|
|
|
|
Classification of an acquisition as a business combination
or an asset acquisition depends on whether the assets acquired constitute
a business, which can be a complex judgment. Whether an acquisition is
classified as a business combination or asset acquisition can have a
significant impact on the entries made on and after acquisition.
|
|
|
|
|
|
In determining the fair value of all identifiable assets,
liabilities and contingent liabilities acquired, the most significant
estimates relate to contingent consideration and intangible assets.
Management exercises judgement in estimating the probability and timing of
when earn-outs are expected to be achieved which is used as the basis for
estimating fair value. For any intangible asset identified, depending on
the type of intangible asset and the complexity of determining its fair
value, an independent valuation expert or management may develop the fair
value, using appropriate valuation techniques, which are generally based
on a forecast of the total expected future net cash flows. The evaluations
are linked closely to the assumptions made by management regarding the
future performance of these assets and any changes in the discount rate
applied.
|
28
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
13.
|
Business Combinations and Asset Acquisitions
(Continued)
|
|
|
(a)
|
Business combinations
|
|
|
Completed during the year ended
|
|
BCNL / UCI
|
|
|
Hempco
|
|
|
Larssen
|
|
|
CanniMed
|
|
|
|
|
|
|
June 30, 2018
|
|
(i)
|
|
|
(ii)
|
|
|
(iii)
|
|
|
(iv)
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Total
consideration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid
|
|
3,294
|
|
|
946
|
|
|
3,500
|
|
|
130,979
|
|
|
138,719
|
|
|
|
Common shares issued
|
|
248
|
|
|
-
|
|
|
-
|
|
|
706,874
|
|
|
707,122
|
|
|
|
Share purchase warrants
issued
|
|
136
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
136
|
|
|
|
Loan settlement
|
|
716
|
|
|
2,301
|
|
|
-
|
|
|
-
|
|
|
3,017
|
|
|
|
Contingent consideration
|
|
1,119
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,119
|
|
|
|
|
|
5,513
|
|
|
3,247
|
|
|
3,500
|
|
|
837,853
|
|
|
850,113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net identifiable assets
(liabilities) acquired
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
138
|
|
|
908
|
|
|
-
|
|
|
38,883
|
|
|
39,929
|
|
|
|
Accounts receivables
|
|
394
|
|
|
1,388
|
|
|
-
|
|
|
986
|
|
|
2,768
|
|
|
|
Short-term investments
|
|
-
|
|
|
511
|
|
|
-
|
|
|
-
|
|
|
511
|
|
|
|
Biological assets
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,535
|
|
|
2,535
|
|
|
|
Inventories
|
|
874
|
|
|
1,875
|
|
|
-
|
|
|
10,269
|
|
|
13,018
|
|
|
|
Prepaid expenses and
deposits
|
|
55
|
|
|
178
|
|
|
-
|
|
|
223
|
|
|
456
|
|
|
|
Investments in
associates
|
|
-
|
|
|
-
|
|
|
-
|
|
|
212
|
|
|
212
|
|
|
|
Property, plant and
equipment
|
|
149
|
|
|
2,876
|
|
|
-
|
|
|
45,316
|
|
|
48,341
|
|
|
|
Intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships
|
|
105
|
|
|
-
|
|
|
-
|
|
|
7,000
|
|
|
7,105
|
|
|
|
Permits and licenses
|
|
-
|
|
|
-
|
|
|
-
|
|
|
65,100
|
|
|
65,100
|
|
|
|
Brand
|
|
654
|
|
|
-
|
|
|
-
|
|
|
127,000
|
|
|
127,654
|
|
|
|
Patents
|
|
521
|
|
|
-
|
|
|
-
|
|
|
1,700
|
|
|
2,221
|
|
|
|
Deferred tax asset
|
|
-
|
|
|
-
|
|
|
-
|
|
|
11,663
|
|
|
11,663
|
|
|
|
|
|
2,890
|
|
|
7,736
|
|
|
-
|
|
|
310,887
|
|
|
321,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and
accruals
|
|
(818
|
)
|
|
(968
|
)
|
|
-
|
|
|
(24,334
|
)
|
|
(26,120
|
)
|
|
|
Income taxes payable
|
|
(26
|
)
|
|
-
|
|
|
-
|
|
|
(20
|
)
|
|
(46
|
)
|
|
|
Deferred revenue
|
|
(86
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(86
|
)
|
|
|
Loans and borrowings
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(11,825
|
)
|
|
(11,825
|
)
|
|
|
Deferred tax liability
|
|
(335
|
)
|
|
-
|
|
|
-
|
|
|
(58,083
|
)
|
|
(58,418
|
)
|
|
|
|
|
1,625
|
|
|
6,768
|
|
|
-
|
|
|
216,625
|
|
|
225,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase price
allocation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net identifiable assets
acquired
|
|
1,625
|
|
|
6,768
|
|
|
-
|
|
|
216,625
|
|
|
225,018
|
|
|
|
Fair value of
previously held equity interest
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(26,567
|
)
|
|
(26,567
|
)
|
|
|
Non-controlling
interests
|
|
-
|
|
|
(5,935
|
)
|
|
-
|
|
|
(32,586
|
)
|
|
(38,521
|
)
|
|
|
Goodwill
|
|
3,888
|
|
|
2,414
|
|
|
3,500
|
|
|
680,381
|
|
|
690,183
|
|
|
|
|
|
5,513
|
|
|
3,247
|
|
|
3,500
|
|
|
837,853
|
|
|
850,113
|
|
|
|
Non-controlling interest
at acquisition (%)
|
|
0%
|
|
|
77.7%
|
|
|
0%
|
|
|
12.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash
outflows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash consideration paid
|
|
3,294
|
|
|
946
|
|
|
3,500
|
|
|
130,979
|
|
|
138,719
|
|
|
|
Cash acquired
|
|
(138
|
)
|
|
(908
|
)
|
|
-
|
|
|
(38,883
|
)
|
|
(39,929
|
)
|
|
|
|
|
3,156
|
|
|
38
|
|
|
3,500
|
|
|
92,096
|
|
|
98,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs
expensed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended June 30, 2018
|
|
65
|
|
|
71
|
|
|
30
|
|
|
7,235
|
|
|
7,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net accounts
receivables acquired
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross contractual
receivables acquired
|
|
504
|
|
|
1,420
|
|
|
-
|
|
|
986
|
|
|
2,910
|
|
|
|
Receivables expected to be uncollectible
|
|
(110
|
)
|
|
(32
|
)
|
|
-
|
|
|
-
|
|
|
(142
|
)
|
|
|
Net accounts receivables acquired
|
|
394
|
|
|
1,388
|
|
|
-
|
|
|
986
|
|
|
2,768
|
|
29
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
13.
|
Business Combinations and Asset Acquisitions
(Continued)
|
|
|
(a)
|
Business combinations
(continued)
|
|
|
(i)
|
BC Northern Lights Enterprises Ltd. (“BCNL”
)
and Urban Cultivator Inc. (“UCI”)
|
On September 29, 2017, the Company
acquired BCNL and UCI to cater to the home grow cannabis market. BCNL is in the
business of the production and sale of proprietary systems for the safe,
efficient and high-yield indoor cultivation of cannabis and UCI is in the
business of the production and sale of state-of-the-art indoor gardening
appliances for the cultivation of organic microgreens, vegetables and herbs in
home kitchens. The transaction was accounted for as a business combination.
The Company acquired all of the issued
and outstanding shares of BCNL and UCI for aggregate consideration of $5,513
comprised of $3,294 cash consideration, settlement of $716 loan receivable,
89,107 common shares with a fair value of $248, share purchase warrants with a
fair value of $136 exercisable at $2.8056 per share until September 29, 2020,
and $1,119 contingent consideration representing the estimated fair value of the
$4,000 gross consideration to be paid in cash or common shares at the election
of Aurora over a period of 3 years on the achievement of future milestones
related to aggregate earnings before interest, taxes, depreciation and
amortization (“EBITDA”). As of June 30, 2018, the fair value of contingent
consideration was $1,242 (Note 28(e)).
At the date of acquisition, management
was in the process of gathering the relevant information that existed as at the
acquisition date to determine the fair value of net identifiable assets
acquired. As such, the initial purchase price was provisionally allocated based
on the Company’s estimated fair value of the identifiable assets acquired and
the liabilities assumed on the acquisition date. Subsequently, the Company
finalized the purchase price allocation and has adjusted the values for the
working capital holdback pursuant to the acquisition agreement, contingent
consideration, intangible asset and goodwill. Accordingly, the purchase price
allocation has been retrospectively adjusted to reflect changes to the assets
acquired and liabilities assumed at the acquisition date as follows:
|
|
|
|
Provisional allocation
|
|
|
|
|
|
|
|
|
|
|
|
at acquisition
|
|
|
Adjustments
|
|
|
Final
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Net identifiable assets
acquired
|
|
846
|
|
|
779
|
|
|
1,625
|
|
|
|
Goodwill
|
|
6,551
|
|
|
(2,663
|
)
|
|
3,888
|
|
|
|
|
|
7,397
|
|
|
(1,884
|
)
|
|
5,513
|
|
Goodwill represents expected
synergies, future income and growth, and other intangibles that do not qualify
for separate recognition, as well as the deferred tax liability recognized for
all taxable temporary differences. None of the goodwill arising on this
acquisition is expected to be deductible for tax purposes.
For the year ended June 30, 2018, BCNL
and UCI accounted for $2,424 in revenues and $1,379 in net loss since September
29, 2017. If the acquisition had been completed on July 1, 2017, the Company
estimates it would have recorded an increase of $1,062 in revenues and an
increase of $41 in net loss for the year ended June 30, 2018.
|
|
(ii)
|
Hempco Food and Fiber Inc. (“Hempco”)
|
|
|
|
|
|
|
|
On November 14, 2017, the Company acquired a 22.3%
ownership interest in Hempco by subscribing to its private placement of
10,558,676 units at $0.3075 per unit for gross proceeds of $3,247. Each
unit consisted of one common share and one warrant exercisable at $0.41
per share for a period of two years, subject to accelerated expiry if
Hempco’s shares trade at or above a VWAP of $0.65 for any 30-day period.
The gross proceeds paid were offset against the $2,301 loan principal and
accrued interest receivable from Hempco.
|
|
|
|
|
|
|
|
The Company also entered into a call option agreement to
acquire up to an aggregate of 10,754,942 shares from the majority owners
of Hempco, which upon exercise, would bring the Company’s total ownership
interest in Hempco to over 50.1% on a fully diluted basis. As a result,
due primarily to potential voting rights, the Company has control over
Hempco, and the results of Hempco have been consolidated in these
financial statements. The non-controlling interest recognized at the
acquisition date was recorded at its proportionate share of Hempco’s fair
value of identifiable net assets.
|
|
|
|
|
|
|
|
Hempco, a Canadian public company listed on the TSX
Venture Exchange, is a producer of industrial hemp products and is
developing hemp foods, hemp fiber and hemp nutraceuticals. The Company
anticipates regulations preventing industrial hemp producers from
harvesting leaves, flowers and buds, which contain Cannabidiols (“CBD”)
will be revised to allow for processing of CBDs which Aurora intends to
use for the production of capsules, oils and
topicals.
|
30
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
13.
|
Business Combinations and Asset Acquisitions
(Continued)
|
|
|
(a)
|
Business combinations
(continued)
|
|
|
(ii)
|
Hempco Food and Fiber Inc. (continued)
|
|
|
|
|
|
|
|
At the date of acquisition, management was in the process
of gathering the relevant information that existed as at the acquisition
date to determine the fair value of net identifiable assets acquired. As
such, the initial purchase price was provisionally allocated based on the
Company’s estimated fair value of the identifiable assets acquired and the
liabilities assumed on the acquisition date. Management continues to work
on finalizing the purchase price allocation and identifying the fair value
of identifiable net assets acquired.
|
|
|
|
|
Provisional allocation
|
|
|
|
|
|
Adjusted
|
|
|
|
|
|
at acquisition
|
|
|
Adjustments
|
|
|
balance
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Net identifiable assets
acquired
|
|
7,499
|
|
|
(731
|
)
|
|
6,768
|
|
|
|
Non-controlling interest at acquisition
(77.7%)
|
|
(6,503
|
)
|
|
568
|
|
|
(5,935
|
)
|
|
|
Goodwill
|
|
2,251
|
|
|
163
|
|
|
2,414
|
|
|
|
|
|
3,247
|
|
|
-
|
|
|
3,247
|
|
Goodwill represents expected
synergies, future income and growth, and other intangibles that do not qualify
for separate recognition. None of the goodwill arising on this acquisition is
expected to be deductible for tax purposes.
If the acquisition had been completed
on July 1, 2017, the Company estimates that it would have recorded an increase
of $305 in revenues and an increase of $329 in net loss based on its 22.3%
initial interest in Hempco upon obtaining control.
Non-controlling interest
Non-controlling interest has been
recognized at the non-controlling interest’s proportionate share of the
acquiree’s net assets. On March 22, 2018 and May 7, 2018, the Company increased
its ownership interest in Hempco to 35.12% and 52.3% through the exercise of
10,558,676 share purchase warrants at $0.41 for a cost of $4,329, and the
exercise of its call option to purchase 10,754,942 shares from two founders at
$0.40 per share for a cost of $4,302, respectively. As a result, the
non-controlling interest was reduced proportionately for Aurora’s increase in
ownership. The $1,941 difference between the $2,361 proportionate change in
non-controlling interest and the $4,302 fair value of consideration paid was
recognized in equity attributable to the Aurora. The $4,329 fair value
consideration paid for the exercise of Hempco warrants was eliminated upon
consolidation.
The following is a continuity of
Hempco’s non-controlling interest:
|
|
|
|
$
|
|
|
|
Balance, June 30, 2017
|
|
-
|
|
|
|
Non-controlling interest
arising on acquisition of Hempco
|
|
2,905
|
|
|
|
Non-controlling interest
relating to outstanding Hempco vested share options and warrants at
acquisition
(1)
|
|
3,030
|
|
|
|
Non-controlling interest
relating to exercised Hempco share options and warrants
(1)
|
|
3,649
|
|
|
|
Non-controlling interest
transferred to Aurora for increase in ownership
|
|
(2,361
|
)
|
|
|
Share of loss for the year
|
|
(2,376
|
)
|
|
|
Balance, June 30, 2018
|
|
4,847
|
|
|
|
(1)
|
As at the acquisition date of November 14, 2017,
directors, officers, employees and consultants of Hempco held options to
purchase 2,851,000 common shares of Hempco which expire between April 2019
and April 2022, of which 777,917 of the outstanding stock options had
vested. Hempco also had 2,505,120 warrants outstanding exercisable into
common shares which expire between November 2017 and March 2019.
|
|
|
|
|
|
|
|
$3,030 represents the market-based measure of these
vested options and warrants in accordance with IFRS at the date of
acquisition. During the year ended June 30, 2018, the Company recognized
share-based payments of $1,519 for Hempco’s stock options vested during
the period from the date of acquisition.
|
|
|
|
|
|
|
|
During the year ended June 30, 2018, 667,000 stock
options and 12,850,709 warrants were exercised into common shares of
Hempco. Of the 12,850,709 warrants exercised, 10,558,676 were exercised by
Aurora. Accordingly, the Company recognized total stock option reserves of
$1,738 and warrant reserves of $588 which were allocated to
non-controlling interest (Note 19(b)(iv)).
|
31
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
13.
|
Business Combinations and Asset Acquisitions
(Continued)
|
|
|
(a)
|
Business combinations
(continued)
|
|
|
(iii)
|
Larssen Ltd. (“Larssen”)
|
On December 4, 2017, the Company,
through its wholly-owned subsidiary, Aurora Larssen Projects Inc., completed the
acquisition of Larssen, a Canadian company that provides consulting on the
design, engineering and construction oversight for advanced greenhouse
cultivation facilities. The Company brought Larssen’s expertise in-house to
construct Aurora’s production facilities as well as facilities for the Company’s
strategic partners.
The Company acquired all of the issued
and outstanding shares of Larssen for aggregate consideration of $3,500 cash. As
part of the acquisition agreement, an aggregate of $4,000 gross cash contingent
consideration is to be paid out on the first and second anniversaries of the
acquisition date subject to the continued employment of the President and Owner
of Larssen. Additionally, the acquisition agreement included an aggregate $6,000
gross project contingent consideration to be paid out on achievement of future
performance milestones related to construction projects completed by Larssen.
The project contingent consideration can be satisfied at the election of Aurora
in cash or common shares based on the VWAP of the Company’s shares for the first
five trading days of the next calendar year when a milestone is met. Both the
cash and project contingent consideration are accounted for as post-combination
services and expensed through profit and loss. During the year ended June 30,
2018, the Company accrued $1,250 compensation expense for the cash contingent
consideration. None of the project milestones were met at June 30, 2018.
The transaction was accounted for as a
business combination. At the date of acquisition, management was in the process
of gathering the relevant information that existed as at the acquisition date to
determine the fair value of net identifiable assets acquired. As such, the
initial purchase price was provisionally allocated based on the Company’s
estimated fair value of the identifiable assets acquired and the liabilities
assumed on the acquisition date. Subsequently, the Company finalized the
purchase price allocation and has adjusted the fair value of contingent
consideration. Accordingly, the purchase price allocation has been
retrospectively adjusted to reflect changes to the assets acquired and
liabilities assumed at the acquisition date as follows:
|
|
|
|
Provisional allocation
|
|
|
|
|
|
|
|
|
|
|
|
at acquisition
|
|
|
Adjustments
|
|
|
Final
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Net identifiable assets
acquired
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Goodwill
|
|
9,724
|
|
|
(6,224
|
)
|
|
3,500
|
|
|
|
|
|
9,724
|
|
|
(6,224
|
)
|
|
3,500
|
|
Goodwill represents expected
operational synergies, future income and growth, and other intangibles that do
not qualify for separate recognition. None of the goodwill arising on this
acquisition is expected to be deductible for tax purposes.
For the year ended June 30, 2018,
Larssen generated revenues of $4,218 and accounted for $3,000 in net income
since December 4, 2017.
|
|
(iv)
|
CanniMed Therapeutics Inc. (“CanniMed”)
|
|
|
|
|
|
|
|
On March 15, 2018, the Company acquired an 87.2%
ownership interest in CanniMed pursuant to an offer (the “Offer”) to
acquire all of the issued and outstanding CanniMed Shares not owned by
Aurora. The Offer provided CanniMed shareholders with the right to elect
to receive for each CanniMed share:
|
|
|
(a)
|
3.40 common shares of Aurora;
|
|
|
(b)
|
$0.43 in cash; or
|
|
|
(c)
|
any combination of common shares and cash, subject to
proration of a maximum aggregate cash amount of
$140,000.
|
Total consideration paid upon
acquisition of control was $837,853 comprised of $130,979 cash and 62,833,216
common shares with a fair value of $706,874. The Company acquired CanniMed to
increase production capacity, international presence, research and development
portfolio, patient count and revenue growth. CanniMed is a Canadian company
previously listed on the TSX and is in the business of production and
distribution of medical cannabis pursuant to the ACMPR.
32
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
13.
|
Business Combinations and Asset Acquisitions
(Continued)
|
|
|
(a)
|
Business combinations
(continued)
|
|
|
(iv)
|
CanniMed Therapeutics Inc.
(continued)
|
At the date of acquisition, management
was in the process of gathering the relevant information that existed as at the
acquisition date to determine the fair value of net identifiable assets
acquired. As such, the initial purchase price was provisionally allocated based
on the Company’s estimated fair value of the identifiable assets acquired and
the liabilities assumed on the acquisition date. Management continues to work on
finalizing the purchase price allocation for the fair value of intangible assets
acquired and the allocation of goodwill.
|
|
|
|
Provisional allocation
|
|
|
|
|
|
Adjusted
|
|
|
|
|
|
at acquisition
|
|
|
Adjustments
|
|
|
Balance
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Net identifiable assets
acquired
|
|
54,204
|
|
|
162,421
|
|
|
216,625
|
|
|
|
Fair value of previously held equity interest
(Note 8(b))
|
|
(26,567
|
)
|
|
-
|
|
|
(26,567
|
)
|
|
|
Non-controlling interest at
acquisition (12.8%)
|
|
(6,971
|
)
|
|
(25,615
|
)
|
|
(32,586
|
)
|
|
|
Goodwill
|
|
817,187
|
|
|
(136,806
|
)
|
|
680,381
|
|
|
|
|
|
837,853
|
|
|
-
|
|
|
837,853
|
|
Goodwill represents expected
synergies, future income and growth, and other intangibles that do not qualify
for separate recognition. None of the goodwill arising on this acquisition is
expected to be deductible for tax purposes.
On both a consolidated basis and
stand-alone entity basis before the elimination of intercompany transactions,
for the year ended June 30, 2018, CanniMed generated $6,715 in revenues and
accounted for $3,250 in net and comprehensive loss since March 15, 2018. If the
acquisition had been completed on July 1, 2017, the Company estimates that it
would have recorded an increase of $11,710 in revenues and an increase of
$37,640 in net loss based on its initial 87.2% interest in CanniMed.
Non-controlling interest
Non-controlling interest has been
recognized at the non-controlling interest’s proportionate share of CanniMed’s
fair value of identifiable net assets. On March 26, 2018 and May 1, 2018, the
Company increased its ownership interest in CanniMed by 8.7% and 4.1%,
respectively, and obtained 100% interest in CanniMed. The Company paid $106,214
for the additional 12.8% interest comprised of $14,304 in cash and 9,913,630
common shares of Aurora with a fair value of $91,910. As a result, the
non-controlling interest was reduced proportionately for Aurora’s increase in
ownership. The $73,573 difference between the $32,641 proportionate change in
non-controlling interest and the $106,214 fair value of consideration paid was
recognized in equity attributable to the Aurora.
The following is a continuity of
CanniMed’s non-controlling interest:
|
|
|
|
$
|
|
|
|
Balance, June 30, 2017
|
|
-
|
|
|
|
Non-controlling interest arising on acquisition of CanniMed
|
|
32,568
|
|
|
|
Non-controlling interest relating to
outstanding CanniMed vested share options at acquisition
(1)
|
|
18
|
|
|
|
Non-controlling interest relating to exercised CanniMed
share options
(1)
|
|
47
|
|
|
|
Non-controlling interest adjustment for
Aurora’s increase in ownership
|
|
(32,641
|
)
|
|
|
Share of income in
the period
|
|
8
|
|
|
|
Balance, June 30, 2018
|
|
-
|
|
|
|
(1)
|
As at the March 15, 2018 acquisition date, a CanniMed
employee held fully vested options to purchase 10,000 CanniMed common
shares expiring October 31, 2018. $18 represents the market-based measure
of these vested options in accordance with IFRS at the date of
acquisition. During the year ended June 30, 2018, the remaining 10,000
stock options were exercised into CanniMed common shares and accordingly,
the Company recognized total stock option reserves of $47 which was
allocated to the non-controlling interest.
|
At June 30, 2018, CanniMed held
$30,360 current assets, $34,833 non-current assets, $4,042 current liabilities
and $8,986 non-current liabilities before the elimination of intercompany
transactions.
33
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
13.
|
Business Combinations and Asset Acquisitions
(Continued)
|
|
|
(a)
|
Business combinations
(continued)
|
|
|
|
|
CanvasRx
|
|
|
Pedanios
|
|
|
Total
|
|
|
|
Completed during the year ended June 30, 2017
|
|
(v)
|
|
|
(vi)
|
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Consideration
paid
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
1,825
|
|
|
3,019
|
|
|
4,844
|
|
|
|
Common shares
|
|
-
|
|
|
20,709
|
|
|
20,709
|
|
|
|
Loan
|
|
450
|
|
|
-
|
|
|
450
|
|
|
|
Patient milestones
achieved
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
1,575
|
|
|
-
|
|
|
1,575
|
|
|
|
Common shares
|
|
11,440
|
|
|
-
|
|
|
11,440
|
|
|
|
Other liabilities assumed
|
|
18
|
|
|
-
|
|
|
18
|
|
|
|
Contingent consideration
|
|
21,819
|
|
|
-
|
|
|
21,819
|
|
|
|
|
|
37,127
|
|
|
23,728
|
|
|
60,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net identifiable assets (liabilities)
acquired
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
-
|
|
|
743
|
|
|
743
|
|
|
|
Accounts receivables
|
|
251
|
|
|
358
|
|
|
609
|
|
|
|
Inventories
|
|
-
|
|
|
328
|
|
|
328
|
|
|
|
Prepaid expenses and deposits
|
|
-
|
|
|
6
|
|
|
6
|
|
|
|
Office, furniture,
equipment
|
|
-
|
|
|
13
|
|
|
13
|
|
|
|
Intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
Customer
relationships
|
|
4,250
|
|
|
-
|
|
|
4,250
|
|
|
|
Permits and licenses
|
|
-
|
|
|
22,544
|
|
|
22,544
|
|
|
|
|
|
4,501
|
|
|
23,992
|
|
|
28,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and
accruals
|
|
(109
|
)
|
|
(264
|
)
|
|
(373
|
)
|
|
|
Deferred revenue
|
|
(939
|
)
|
|
-
|
|
|
(939
|
)
|
|
|
Deferred tax liability
|
|
(836
|
)
|
|
(6,590
|
)
|
|
(7,426
|
)
|
|
|
|
|
2,617
|
|
|
17,138
|
|
|
19,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase price allocation
|
|
|
|
|
|
|
|
|
|
|
|
Net identifiable assets
acquired
|
|
2,617
|
|
|
17,138
|
|
|
19,755
|
|
|
|
Goodwill
|
|
34,510
|
|
|
6,590
|
|
|
41,100
|
|
|
|
|
|
37,127
|
|
|
23,728
|
|
|
60,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash
outflows
|
|
|
|
|
|
|
|
|
|
|
|
Cash consideration paid
|
|
3,400
|
|
|
3,019
|
|
|
6,419
|
|
|
|
Bank overdraft (cash acquired)
|
|
18
|
|
|
(743
|
)
|
|
(725
|
)
|
|
|
|
|
3,418
|
|
|
2,276
|
|
|
5,694
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs expensed
|
|
|
|
|
|
|
|
|
|
|
|
Year ended June 30,
2017
|
|
1,022
|
|
|
243
|
|
|
1,265
|
|
|
|
Year ended June 30, 2018
|
|
884
|
|
|
28
|
|
|
912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net accounts receivables
acquired
|
|
|
|
|
|
|
|
|
|
|
|
Gross contractual
receivables acquired
|
|
251
|
|
|
358
|
|
|
609
|
|
|
|
Receivables expected to be uncollectible
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Net accounts receivables acquired
|
|
251
|
|
|
358
|
|
|
609
|
|
34
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
13.
|
Business Combinations and Asset Acquisitions
(Continued)
|
|
|
(a)
|
Business combinations
(continued)
|
|
|
(v)
|
CanvasRx
Inc. (“CanvasRx”)
|
|
|
|
|
|
|
|
On August 17, 2016, the Company completed the acquisition
of all of the issued and outstanding shares of CanvasRx pursuant to a
Share Purchase Agreement dated August 9, 2016, as amended and restated on
August 16, 2016 for a total consideration of $37,127 comprised of $1,825
cash, $11,440 fair value of 17,875,000 common shares and $1,575 cash for
performance milestones achieved related to patients, $450 loan to
CanvasRx, $18 other liabilities assumed and $21,819 contingent
consideration. The Company is indemnified from any tax liability arising
from pre-acquisition transactions of CanvasRx through adjustments to the
purchase consideration.
|
|
|
|
|
|
|
|
Goodwill represents the expected benefit of future market
share, future income growth, and other intangibles that do not qualify for
separate recognition. None of the goodwill arising on this acquisition is
deductible for tax purposes.
|
|
|
|
|
|
|
|
Contingent consideration represents the estimated
discounted value of the $26,750 gross consideration to be paid out over
three years on achievement of future performance milestones related to new
counseling rooms opened, patient accruals and revenue targets. This
consideration may be satisfied, at the Company’s sole discretion, in cash
or common shares at a 15% discount to the market price at the date of
issuance, unless the market price of the Company’s share is $0.47 or
below, at which point the consideration is convertible into a fixed number
of shares. In any case, the issuance of the Company’s shares should not
result in former CanvasRx shareholders accumulating 50% or more of the
Company’s shares. If the consideration payments cannot be satisfied in
cash and the issuance of shares would result in the former shareholders of
CanvasRx accumulating 50% or more of the Company’s shares, a convertible
debenture will be issued.
|
|
|
|
|
|
|
|
During the year ended June 30, 2018, certain patient and
counselling room performance milestones were achieved, and the Company
paid $Nil cash (2017 – $2,608) and issued 5,318,044 shares (2017 –
2,926,103 shares) at a weighted average price of $2.71 per share (2017 –
$2.532 per share) to the former shareholders of CanvasRx. As of June 30,
2018, the fair value of remaining contingent consideration was $5,884
(2017 - $13,221).
|
|
|
|
|
|
|
|
The Company acquired CanvasRx to access its database on
cannabis strains and related efficacy data, as well as information on
physician preferences and ordering patterns. CanvasRx is a counseling and
outreach service provider with over 24 physical locations in the provinces
of Ontario and Alberta, Canada. The transaction was accounted for as a
business combination.
|
|
|
|
|
|
|
|
For the year ended June 30, 2017, CanvasRx accounted for
$1,702 in net loss since August 17, 2016, including revenues of $2,145. If
the acquisition had been completed on July 1, 2016, the Company estimates
it would have recorded an increase of $159 in revenues and an increase of
$920 in net loss for the year ended June 30, 2017. Acquisition costs of
$884 incurred in the current year (2017 - $1,022) related to certain
contingent consideration and post-closing costs were excluded from the
consideration transferred and were recognized as an expense in the current
period.
|
|
|
|
|
|
|
(vi)
|
Pedanios
GmbH (“Pedanios”), Renamed Aurora
Deutschland GmbH (“Aurora Deutschland”)
|
|
|
|
|
|
|
|
On May 30, 2017, the Company completed the acquisition of
Pedanios, a registered wholesale importer, exporter and distributor of
medical cannabis in Germany. The acquisition positions the Company to
seize on opportunities in Germany and the EU’s emerging cannabis industry.
The Company acquired all of the issued and outstanding shares of Pedanios
for a total consideration of $23,728 comprised of €2,000 cash and
8,316,782 common shares with a fair value of $20,709. The transaction was
accounted for as a business combination.
|
|
|
|
|
|
|
|
Goodwill reflects the deferred tax liability recognized
for all taxable temporary differences. None of the goodwill arising on
this acquisition is deductible for tax purposes.
|
|
|
|
|
|
|
|
For the year ended June 30, 2017, Pedanios accounted for
$294 in net loss since May 30, 2017, including revenues of $439. If the
acquisition had been completed on July 1, 2016, the Company estimates it
would have recorded an increase of $1,702 in revenues and an increase of
$18 in net loss for the year ended June 30, 2017.
|
35
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
13.
|
Business Combinations and Asset Acquisitions
(Continued)
|
|
|
Completed during the year ended
|
|
June 30, 2018
|
|
|
June 30, 2017
|
|
|
|
|
|
H2
|
|
|
Peloton
|
|
|
|
|
|
(i)
|
|
|
(ii)
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Consideration
paid
|
|
|
|
|
|
|
|
|
Cash paid
|
|
-
|
|
|
4,717
|
|
|
|
Common shares issued
|
|
15,283
|
|
|
1,486
|
|
|
|
Cash acquisition costs paid
|
|
636
|
|
|
2,186
|
|
|
|
Shares issued for
acquisition costs
|
|
-
|
|
|
905
|
|
|
|
Loan settlement
|
|
3,000
|
|
|
-
|
|
|
|
Contingent consideration
|
|
14,957
|
|
|
-
|
|
|
|
|
|
33,876
|
|
|
9,294
|
|
|
|
|
|
|
|
|
|
|
|
|
Net identifiable assets (liabilities)
acquired
|
|
|
|
|
|
|
|
|
Cash
|
|
205
|
|
|
-
|
|
|
|
Accounts receivables
|
|
369
|
|
|
-
|
|
|
|
Property, plant and
equipment
|
|
8,304
|
|
|
4,846
|
|
|
|
Intangible assets – Permits and licenses
|
|
27,165
|
|
|
4,448
|
|
|
|
|
|
36,043
|
|
|
9,294
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accruals
|
|
(2,167
|
)
|
|
-
|
|
|
|
|
|
33,876
|
|
|
9,294
|
|
|
|
(i)
|
H2 Biopharma Inc. (“H2” or “Aurora
Eau”
)
|
|
|
|
|
|
|
|
On November 30, 2017, the Company acquired 100% of the
net assets of H2 for a total consideration of $33,876 comprised of
1,910,339 common shares with a fair value of $15,283 of which 181,622 were
placed in escrow, settlement of $3,000 loan receivable, $14,957 contingent
consideration payable and $636 acquisition costs. The contingent
consideration payable represents the discounted value of the $15,028 gross
consideration to be paid out over a five-year period on achievement of
future performance milestones related to completing the construction of
the facility and obtaining the relevant licenses to cultivate and sell
cannabis. This consideration is to be paid in common shares based on the
VWAP of the Company’s shares for the last five trading days immediately
prior to the Company confirming that the particular milestone has been
achieved. On closing, the Company issued and deposited 2,878,934 common
shares into escrow for the contingent consideration. As of June 30, 2018,
the fair value of contingent consideration was $14,207 (Note
28(e)).
|
|
|
|
|
|
|
|
During the year ended June 30, 2018, 238,044 common
shares with a fair value of $1,904 were released from escrow upon the
achievement of milestones (Note 19(b)(ii) and 19(c)).
|
|
|
|
|
|
|
|
At acquisition, H2 was completing a purpose-built 48,000
square foot cannabis production facility which is projected to produce
approximately 4,500 kilograms of cannabis per annum. The facility is
located on 46 acres of land located in Lachute, Quebec which H2 has the
right to acquire for $136.
|
|
|
|
|
|
|
|
The facility, known as Aurora Eau, completed construction
and received both its cultivation and sales license from Health Canada in
September 2018.
|
|
|
|
|
|
|
(ii)
|
Peloton Pharmaceuticals Inc. (“Peloton” or “Aurora
Vie”)
|
|
|
|
|
|
|
|
On April 28, 2017, the Company, through its wholly-owned
subsidiary, 10094595 Canada Inc., acquired 100% of the net assets of
Peloton, a late-stage ACMPR applicant, out of bankruptcy protection. The
transaction was accounted for as an asset acquisition. The Company
acquired all of the common shares of Peloton for a total consideration of
$9,294 comprised of 573,707 common shares with a fair value of $1,486,
$4,717 cash, and acquisition costs of $3,091 of which $2,186 was paid in
cash and $905 was paid through the issuance of 325,518 common
shares.
|
|
|
|
|
|
|
|
In October 2017, the Company completed construction of
the former Peloton 40,000 square foot cannabis production facility located
in Pointe Claire, Quebec. The facility, known as Aurora Vie, received its
cultivation and sales license from Health Canada on October 27, 2017 and
June 29, 2018, respectively.
|
36
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
14.
|
Controlling Interest in Aurora Nordic Cannabis A/S
(“Aurora Nordic”
)
|
|
|
|
|
|
On February 12, 2018, the Company and Alfred Pederson
& Søn (“APS”) formed Aurora Nordic, a company located in Odense,
Denmark. Pursuant to an agreement with APS, the Company and APS
contributed $58 (DKK 255,000) and $56 (DKK 245,000) for the initial
capital contribution, resulting in 51% and 49% ownership interest,
respectively. $100,000 in total additional capital is to be contributed on
a pro rata basis to fund the design, development and construction of a
production facility in Denmark. Based on majority voting rights and other
qualitative factors, the Company controls Aurora Nordic and has
consolidated its results in these financial statements.
|
|
|
|
|
|
Aurora Nordic is in the business of cultivation,
production, distribution and sale of medical cannabis. Aurora Nordic is
retrofitting an existing 100,000 square foot greenhouse and will be
constructing a new 1,000,000 square foot production facility.
|
|
|
|
|
|
Non-controlling interest
|
|
|
|
|
|
The non-controlling interest recognized at inception was
recorded at its proportionate share of Aurora Nordic’s initial capital
contribution.
|
|
|
|
$
|
|
|
Balance, June 30, 2017
|
-
|
|
|
Non-controlling interest on initial capital contribution
|
56
|
|
|
Share of profit (loss) for the period
|
(337)
|
|
|
Share of other
comprehensive income (loss) for the period
|
(4)
|
|
|
Balance, June 30,
2018
|
(285)
|
As of June 30, 2018, Aurora Nordic held
$419 current assets, $2,896 non-current assets, $993 current liabilities, $2,905
non-current liabilities before the elimination of intercompany transactions. For
the year ended June 30, 2018, Aurora Nordic generated $nil revenues and incurred
$688 net and comprehensive loss before the elimination of intercompany
transactions.
|
15.
|
Assets Held for Distribution to Owners
|
|
|
|
|
|
Accounting Policy
|
|
|
|
|
|
Non-current assets held for sale and disposal groups are
presented separately in the current section of the balance sheet when
management is committed to immediately distributing the asset or disposal
group in its present condition, and this distribution is highly probable
and expected to be completed within one year. Immediately before the
initial classification of the assets and disposal groups as held for sale
or for distribution, the carrying amounts of the assets, or all the assets
and liabilities in the disposal groups, are measured in accordance with
the applicable accounting policy:
|
|
|
|
|
|
|
Current assets
|
Amortized cost
|
|
|
|
Loans receivable from AHL
|
Loans
and receivable at amortized cost
|
|
|
|
SubTerra assets
|
Fair
value at initial recognition and subsequently at amortized cost
|
|
|
|
Current liabilities
|
Other
financial liabilities at amortized cost
|
|
|
|
|
|
Assets held for sale and disposal groups are
subsequently measured at the lower of their carrying amount and fair value
less cost to sell. Assets held for sale are no longer amortized or
depreciated.
|
|
|
|
|
|
Significant Judgment
|
|
|
|
|
|
The Company used judgement in estimating the fair value
of the SubTerra assets at initial recognition. In determining the fair
value of the revenue royalty, management exercised judgement in
determining the likelihood of SubTerra generating revenues from the sale
of cannabis-based products. The fair value of the annuity receivable was
estimated using the effective interest method using a ten-year corporate
debt yield at the measurement date.
|
37
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
15.
|
Assets Held for Distribution to Owners
(Continued)
|
|
|
|
|
|
In June 2018, the Company began reorganizing the Company
for the spin-out of ACI and its United States (“U.S.”) assets, and filed a
prospectus for the listing of ACI on the Canadian Stock Exchange (“CSE”).
As part of the reorganization, on June 13, 2018, the Company completed a
series of intercorporate transactions involving Aurora and its
subsidiaries resulting in Aurora holding a direct interest in 100% of the
outstanding shares and warrants of ACI, and ACI holding all of the U.S.
assets of Aurora and its subsidiaries, consisting of the
following:
|
|
|
•
|
a 50% joint venture interest in Australis
Holdings (Note 12(a)); and
|
|
|
•
|
the SubTerra assets (Note 12(d)).
|
On June 14, 2018, the Company and ACI
entered into a Funding Agreement pursuant to which Aurora advanced $500,000 to
ACI, in consideration for which ACI provided Aurora with a Restricted Back-in
Right, by issuing to Aurora:
|
|
(i)
|
a warrant to purchase a number of ACI shares equal to 20%
of the issued and outstanding shares as of the date on which ACI shares
commence trading on the CSE, exercisable for a period of ten years from
the date of issue at an exercise price of $0.20 per share; and
|
|
|
(ii)
|
a warrant to purchase a number of ACI shares equal to 20%
of the issued and outstanding shares as of the date of exercise,
exercisable for a period of ten years from the date of issue at an
exercise price equal to the five-day volume weighted average trading price
of ACI’s shares on the CSE or such other stock exchange on which the
shares may then be listed.
|
Aurora will be prohibited from
exercising the Restricted Back-in Right unless all of ACI’s business operations
in the U.S. are legal under applicable federal and state laws, and Aurora has
received the consent of the TSX and any other stock exchange on which Aurora may
be listed, as required.
The assets reclassified for
distribution to owners at June 30, 2018 are part of the medical cannabis segment
and is comprised of the following:
|
|
|
|
Note
|
|
|
June 30, 2018
|
|
|
June 30, 2017
|
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Total and net assets
held for distribution to owners
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
2
|
|
|
-
|
|
|
|
Loans receivable from AHL
|
|
12(a)
|
|
|
3,020
|
|
|
1,736
|
|
|
|
SubTerra assets
|
|
12(d)
|
|
|
1,400
|
|
|
-
|
|
|
|
|
|
|
|
|
4,422
|
|
|
1,736
|
|
Subsequent to June 30, 2018, the
Company completed the spin-out of ACI (Note 31).
38
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
16.
|
Intangible Assets and Goodwill
|
|
|
|
|
|
Accounting Policy
|
|
|
|
|
|
Intangible assets
|
|
|
|
|
|
Intangible assets are recorded at cost less accumulated
amortization and impairment losses, if any. Intangible assets acquired in
a business combination are measured at fair value at the acquisition date.
Amortization of definite life intangibles is provided on a straight-line
basis over their estimated useful lives, which do not exceed the
contractual period, if any, over the following terms:
|
|
|
|
|
|
|
Customer relationships
|
2 – 7 years
|
|
|
|
|
Patents
|
10 years
|
|
|
|
|
Health Canada licenses
|
Useful life of the facility or lease term
|
|
|
|
|
|
|
The estimated useful lives, residual values, and
amortization methods are reviewed at each year end, and any changes in
estimates are accounted for prospectively. Intangible assets with an
indefinite life or not yet available for use are not subject to
amortization. The Company’s indefinite life intangible assets are
comprised of brands and the Aurora Deutschland licenses and permits. The
Aurora Deutschland licenses and permits do not expire, as such, there is
no foreseeable limit to the period over which these assets are expected to
generate future cash inflows to the Company.
|
|
|
|
|
|
Research costs are expensed as incurred. Development
expenditures are capitalized only if development costs can be measured
reliably, the product or process is technically and commercially feasible,
future economic benefits are probable, and the Company intends to and has
sufficient resources to complete development to use or sell the asset.
Other development expenditures are recognized as research and development
expenses on the consolidated statement of comprehensive income (loss) as
incurred. Capitalized deferred development costs are internally generated
intangible assets.
|
|
|
|
|
|
Goodwill
|
|
|
|
|
|
Goodwill represents the excess of the purchase price paid
for the acquisition of an entity over the fair value of the net tangible
and intangible assets acquired. Goodwill is allocated to the cash
generating unit (“CGU”) or group of CGUs which are expected to benefit
from the synergies of the combination.
|
|
|
|
|
|
Impairment of intangible assets and
goodwill
|
|
|
|
|
|
Goodwill and intangible assets with an indefinite life or
not yet available for use are tested for impairment annually, and whenever
events or circumstances make it more likely than not that an impairment
may have occurred, such as a significant adverse change in the business
climate or a decision to sell or dispose all or a portion of a reporting
unit. Finite life intangible assets are tested when there is an indication
of impairment.
|
|
|
|
|
|
The Company has selected June as our annual test date.
For the purpose of impairment testing, goodwill and indefinite life
intangible assets have been allocated to CGUs representing the lowest
level that the assets are monitored for internal reporting purposes.
Goodwill and indefinite life intangible assets are tested for impairment
by comparing the carrying value of each CGU containing the assets to its
recoverable amount. An impairment loss is recognized for the amount by
which the asset’s carrying amount exceeds it recoverable amount. The
recoverable amount is the higher of the asset’s fair value less costs of
disposal and value-in-use.
|
|
|
|
|
|
Impairment losses recognized in respect of a CGU are
first allocated to the carrying value of goodwill and any excess is
allocated to the carrying amount of assets in the CGU. Any impairment is
recorded in profit and loss in the period in which the impairment is
identified. A reversal of an impairment loss for a CGU is allocated to the
assets of the unit, except for goodwill, pro rata with the carrying amount
of those assets. In allocating a reversal of an impairment loss, the
carrying amount of an asset shall not be increased above the lower of its
recoverable amount and the carrying amount that would have been determined
had no impairment loss ben recognized for the asset in prior period.
Impairment losses on goodwill are not subsequently reversed.
|
|
|
|
|
|
Significant Judgment
|
|
|
|
|
|
Amortization of intangible assets is dependent upon
estimates of useful lives and residual values which are determined through
the exercise of judgement.
|
|
|
|
|
|
CGUs are determined based on the smallest identifiable
group of assets that generates cash inflows that are largely independent
of cash inflows from other assets or group of assets. Management has
exercised judgment in this assessment and determined the Company’s CGUs to
be: the production and sale of medical cannabis; patient counselling
services; design, engineering and construction consulting services; the
production and sale of indoor cultivators; and the production and sale of
hemp related food products.
|
39
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
16.
|
Intangible Assets and Goodwill
(Continued)
|
|
|
|
|
|
The following is a continuity of intangible assets and
goodwill:
|
|
|
|
|
Definite life
intangibles subject to amortization
|
|
|
Indefinite life
intangibles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer
|
|
|
Permits and
|
|
|
|
|
|
|
|
|
|
|
|
Permits and
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
Relationships
|
|
|
Licenses
|
|
|
Patents
|
|
|
Total
|
|
|
Brand
|
|
|
Licenses
|
|
|
Total
|
|
|
Total
|
|
|
Goodwill
|
|
|
Intangible
|
|
|
|
|
|
Notes
|
|
|
Notes
|
|
|
Notes
|
|
|
Definite Life
|
|
|
Notes
|
|
|
Note
|
|
|
Indefinite Life
|
|
|
Intangible
|
|
|
Note
|
|
|
Assets and
|
|
|
|
|
|
13(a)(i)(iv)(v)
|
|
|
13(a)(iv), (b)(i)(ii)
|
|
|
13(a)(i)(iv)
|
|
|
Intangibles
|
|
|
13(a)(i)(iv)
|
|
|
13(a)(vi)
|
|
|
Intangibles
|
|
|
Assets
|
|
|
13(a)
|
|
|
Goodwill
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2016
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Additions from acquisitions
|
|
4,250
|
|
|
4,293
|
|
|
-
|
|
|
8,543
|
|
|
-
|
|
|
22,544
|
|
|
22,544
|
|
|
31,087
|
|
|
41,100
|
|
|
72,187
|
|
|
|
Balance, June 30, 2017
|
|
4,250
|
|
|
4,293
|
|
|
-
|
|
|
8,543
|
|
|
-
|
|
|
22,544
|
|
|
22,544
|
|
|
31,087
|
|
|
41,100
|
|
|
72,187
|
|
|
|
Additions from acquisitions
|
|
7,105
|
|
|
92,421
|
|
|
2,221
|
|
|
101,747
|
|
|
127,654
|
|
|
-
|
|
|
127,654
|
|
|
229,401
|
|
|
687,950
|
|
|
917,351
|
|
|
|
Balance, June 30, 2018
|
|
11,355
|
|
|
96,714
|
|
|
2,221
|
|
|
110,290
|
|
|
127,654
|
|
|
22,544
|
|
|
150,198
|
|
|
260,488
|
|
|
729,050
|
|
|
989,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2016
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Amortization
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Balance, June 30, 2017
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Amortization
|
|
2,224
|
|
|
1,943
|
|
|
89
|
|
|
4,256
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4,256
|
|
|
-
|
|
|
4,256
|
|
|
|
Balance, June 30, 2018
|
|
2,224
|
|
|
1,943
|
|
|
89
|
|
|
4,256
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4,256
|
|
|
-
|
|
|
4,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30, 2017
|
|
4,250
|
|
|
4,293
|
|
|
-
|
|
|
8,543
|
|
|
-
|
|
|
22,544
|
|
|
22,544
|
|
|
31,087
|
|
|
41,100
|
|
|
72,187
|
|
|
|
June 30, 2018
|
|
9,131
|
|
|
94,771
|
|
|
2,132
|
|
|
106,034
|
|
|
127,654
|
|
|
22,544
|
|
|
150,198
|
|
|
256,232
|
|
|
729,050
|
|
|
985,282
|
|
Permits and licenses of $22,544 were
acquired from Pedanios (Note 13(a)(vi)) and are classified as indefinite life
intangible assets as they do not have an expiration date. The remaining permits
and license are amortized over the life of the production facilities when they
are available for use as intended.
The $22,544 licenses and permits
acquired from Pedanios and $127,000 of the brand indefinite life intangibles
acquired from CanniMed (Note 13(a)(iv)) are allocated to the group of CGUs that
comprise the medical cannabis segment. The remaining $654 of the brand
intangibles are allocated to the indoor cultivation CGU (Note 13(a)(i)).
Amortization of intangible assets is
included in depreciation and amortization in the statement of comprehensive
income (loss).
For the purposes of impairment testing,
goodwill associated with B.C. Northern Lights Enterprises Ltd. and Urban
Cultivator Inc. acquisitions belong to the indoor cultivation CGU, goodwill
associated with the Hempco Food and Fiber Inc. acquisition belong to the hemp
related food products CGU, and goodwill associated for all remaining
acquisitions belong to the group of CGUs that comprise the medical cannabis
segment. Of the $729,050 goodwill balance at June 30, 2018, $724,981 is
allocated to the medical cannabis segment. The remaining $4,069 balance in
goodwill is attributable to the indoor cultivation and hemp related food product
CGUs.
The Company estimated the recoverable
amount of goodwill and indefinite life intangible assets based on the
value-in-use method which was higher than the carrying value at June 30, 2018.
The key assumptions used in the calculation of the recoverable amount include
sales growth per year, changes in cost of sales and capital expenditures based
on internal forecasts which were projected out 3 years with a terminal growth
rate of 2%. The range of weighted average cost of capital was determined to be
approximately 15% - 25% based on a risk-free rate, an equity risk premium
adjusted for betas of comparable publicly traded companies, an unsystematic risk
premium, and an after-tax cost of debt. The Company believes that a slight
change in the key assumptions would not cause the recoverable amount to decrease
below the carrying value.
40
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
17.
|
Convertible Debentures
|
|
|
|
|
|
Accounting Policy
|
|
|
|
|
|
Convertible notes are compound financial instruments which
are accounted for separately by their components: a financial liability
and an equity instrument. The financial liability, which represents the
obligation to pay coupon interest on the convertible notes in the future,
is initially measured at its fair value and subsequently measured at
amortized cost. The residual amount is accounted for as an equity
instrument at issuance.
|
|
|
|
|
|
Transaction costs are apportioned to the debt liability and
equity components in proportion to the allocation of proceeds as a
reduction to the carrying amount of the liability and equity
component.
|
|
|
|
|
|
The liability component of the convertible notes was valued
using Company specific interest rates assuming no conversion features
existed. The resulting debt component is accreted to its fair value over
the term to maturity as a non-cash interest charge and the equity
component is presented in convertible notes reserve as a separate
component of shareholders’ equity.
|
|
|
|
|
|
Significant Judgment
|
|
|
|
|
|
The identification of convertible note components is
based on interpretations of the substance of the contractual arrangement
and therefore requires judgement from management. The separation of the
components affects the initial recognition of the convertible debenture at
issuance and the subsequent recognition of interest on the liability
component. The determination of the fair value of the liability is also
based on a number of assumptions, including contractual future cash flows,
discount rates and the presence of any derivative financial
instruments.
|
|
|
|
|
|
May 2016
|
|
|
Sep 2016
|
|
|
Nov 2016
|
|
|
May 2017
|
|
|
Nov 2017
|
|
|
Mar 2018
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
Total
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Balance, June 30, 2016
|
|
|
1,281
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,281
|
|
|
|
Issued
|
|
|
-
|
|
|
15,000
|
|
|
25,000
|
|
|
75,000
|
|
|
-
|
|
|
-
|
|
|
115,000
|
|
|
|
Equity portion
|
|
|
-
|
|
|
(2,107
|
)
|
|
(5,271
|
)
|
|
(13,209
|
)
|
|
-
|
|
|
-
|
|
|
(20,587
|
)
|
|
|
Conversion
|
|
|
(2,135
|
)
|
|
(12,605
|
)
|
|
(16,745
|
)
|
|
(122
|
)
|
|
-
|
|
|
-
|
|
|
(31,607
|
)
|
|
|
Interest paid
|
|
|
(2
|
)
|
|
(55
|
)
|
|
(989
|
)
|
|
(849
|
)
|
|
-
|
|
|
-
|
|
|
(1,895
|
)
|
|
|
Financing fees
|
|
|
637
|
|
|
(606
|
)
|
|
(899
|
)
|
|
(2,622
|
)
|
|
-
|
|
|
-
|
|
|
(3,490
|
)
|
|
|
Accretion
|
|
|
117
|
|
|
241
|
|
|
1,277
|
|
|
1,094
|
|
|
-
|
|
|
-
|
|
|
2,729
|
|
|
|
Accrued interest
|
|
|
102
|
|
|
132
|
|
|
996
|
|
|
875
|
|
|
-
|
|
|
-
|
|
|
2,105
|
|
|
|
Balance, June 30, 2017
|
|
|
-
|
|
|
-
|
|
|
3,369
|
|
|
60,167
|
|
|
-
|
|
|
-
|
|
|
63,536
|
|
|
|
Issued
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
115,000
|
|
|
230,000
|
|
|
345,000
|
|
|
|
Equity portion
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(39,408
|
)
|
|
(39,530
|
)
|
|
(78,938
|
)
|
|
|
Conversion
|
|
|
-
|
|
|
-
|
|
|
(3,688
|
)
|
|
(63,102
|
)
|
|
(73,082
|
)
|
|
(195
|
)
|
|
(140,067
|
)
|
|
|
Interest paid
|
|
|
-
|
|
|
-
|
|
|
(148
|
)
|
|
(2,131
|
)
|
|
(1,025
|
)
|
|
(3,604
|
)
|
|
(6,908
|
)
|
|
|
Financing fees
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2,680
|
)
|
|
(6,455
|
)
|
|
(9,135
|
)
|
|
|
Accretion
|
|
|
-
|
|
|
-
|
|
|
218
|
|
|
2,768
|
|
|
809
|
|
|
6,845
|
|
|
10,640
|
|
|
|
Accrued interest
|
|
|
-
|
|
|
-
|
|
|
249
|
|
|
2,298
|
|
|
1,023
|
|
|
3,830
|
|
|
7,400
|
|
|
|
Balance, June 30, 2018
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
637
|
|
|
190,891
|
|
|
191,528
|
|
|
|
(a)
|
In May 2016, the Company completed a non-brokered private
placement of 10% unsecured convertible debentures in the principal amount
of $2,050. The debentures were convertible into common shares of the
Company at $0.53 per share for a period of 18 months. In September 2016,
the Company issued an aggregate of 5,674,542 shares on the conversion of
$2,050 principal amount of debentures (Note
19(b)(iv)).
|
41
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
17.
|
Convertible Debentures
(Continued)
|
|
|
(b)
|
On September 28, 2016, the Company closed a non-brokered
private placement of 10% unsecured convertible debentures in the aggregate
principal amount of $15,000. The debentures were convertible into common
shares of the Company at a price of $1.15 per share subject to a forced
conversion if the VWAP of the Company’s common shares equals or exceeds
$2.00 per share for 10 consecutive trading days. On closing, the Company
paid the Agent a commission of $600 and legal fees and expenses of
$105.
|
|
|
|
|
|
|
|
On October 20, 2016, the Company converted all the
debentures and accrued interest pursuant to the forced conversion related
to the VWAP mentioned above. During the period ended June 30, 2017, the
Company issued 13,110,184 common shares on the conversion of $15,000
principal amount of debentures (Note 19(b)(iv)).
|
|
|
|
|
|
|
(c)
|
On November 1, 2016, the Company completed a brokered
private placement of two-year unsecured convertible debentures in the
aggregate principal amount of $25,000. The debentures bore interest at 8%
per annum, payable semi-annually. The principal amount of the debentures
was convertible into common shares of the Company at a price of $2.00 per
share subject to a forced conversion if the VWAP of the Company’s common
shares equaled or exceeded $3.00 per share for 10 consecutive trading
days. On closing, the Company paid the Agent a commission of $1,000 and
legal fees and expenses of $139.
|
|
|
|
|
|
|
|
On November 6, 2017, the Company elected to exercise its
right pursuant to the forced conversion and converted all of the principal
amount outstanding of the remaining debentures. During the year ended June
30, 2018, the Company issued 2,310,000 common shares (2017 – 10,190,000
shares) on the conversion of $4,620 principal amount of debentures (2017 -
$20,380) (Note 19(b)(iv)).
|
|
|
|
|
|
|
(d)
|
On May 2, 2017, the Company completed a private placement
of two-year unsecured convertible debentures in the aggregate principal
amount of $75,000. The debentures bore interest at 7% per annum, payable
semi-annually. The debentures were convertible into common shares of the
Company at a price of $3.29 per share subject to a forced conversion if
the VWAP of the Company’s common shares exceeded $4.94 per share for 10
consecutive trading days. On closing, the Company paid the agent a
commission of $2,893 and legal fees and expenses of $289.
|
|
|
|
|
|
|
|
On November 16, 2017, the Company elected to exercise its
right pursuant to the forced conversion and converted all of the principal
amount outstanding of the remaining debentures. During the year ended June
30, 2018, the Company issued 22,750,747 common shares (2017 – 45,593
shares) on the conversion of $74,850 principal amount of debentures (2017
- $150) (Note 19(b)(iv)).
|
|
|
|
|
|
|
(e)
|
On November 28, 2017, the Company completed an offering
of 115,000 special warrants exercisable into convertible debentures for
gross proceeds of $115,000. The Company paid financing fees of $4,077
comprised of underwriters’ commissions of $3,734, legal fees of $304 and
regulatory and transfer agent fees of $39.
|
|
|
|
|
|
|
|
On January 12, 2018, the special warrants were exercised
into $115,000 principal amount of convertible debentures. The debentures
are unsecured, bear interest at 6% per annum and mature on November 28,
2022. The principal amount of the debentures is convertible into common
shares of the Company at $6.50 per share subject to a forced conversion if
after 4 months and 1 day following closing, the VWAP of the Company’s
common shares equals or exceeds $9.00 per share for 10 consecutive trading
days.
|
|
|
|
|
|
|
|
During the year ended June 30, 2018, the Company issued
17,394,146 common shares on partial conversion of $113,062 principal
amount of debentures (Note 19(b)(iv)).
|
|
|
|
|
|
|
(f)
|
On March 9, 2018, the Company completed a private
placement of two-year unsecured convertible debentures in the aggregate
principal amount of $230,000. The debentures bear interest at 5% per
annum, payable semi-annually. The debentures are convertible into common
shares of the Company at a price of $13.05 per share subject to a forced
conversion if the VWAP of the Company’s common shares exceeded $17.00 per
share for 10 consecutive trading days. On closing, the Company paid the
agent a commission and expenses of $7,473, legal fees of $304 and
regulatory fees of $18.
|
|
|
|
|
|
|
|
During the year ended June 30, 2018, the Company issued
18,542 common shares on partial conversion of $242 principal amount of
debentures (Note 19(b)(iv)).
|
42
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
18.
|
Loans and Borrowings
|
|
|
|
|
|
Accounting Policy
|
|
|
|
|
|
Loans and borrowings are classified as other financial
liabilities and are measured at fair value at initial recognition and
subsequently at amortized cost. Transactions costs are amortized over the
term of the liability.
|
|
|
|
|
|
A lease of property, plant and equipment is classified as
a finance lease if it transfers substantially all the risks and rewards
incidental to ownership to the Company. A lease of property, plant and
equipment is classified as an operating lease whenever the terms of the
lease do not transfer substantially all of the risks and rewards of
ownership to the lessee. Finance leases are capitalized at the
commencement of the lease at the lower of the fair value of the leased
property and the present value of the minimum lease payments. Property
acquired under a finance lease is depreciated over the shorter of the
period of expected use on the same basis as other similar property, plant
and equity or the lease term.
|
The changes in the carrying value of
loans and borrowings are as follows:
|
|
|
|
June 30, 2018
|
|
|
June 30, 2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Opening balance
|
|
351
|
|
|
-
|
|
|
|
Additions
|
|
-
|
|
|
374
|
|
|
|
Assumed on acquisition (Note
13(a)(iv))
|
|
11,825
|
|
|
-
|
|
|
|
Principal payments
|
|
(493
|
)
|
|
(23
|
)
|
|
|
Ending balance
|
|
11,683
|
|
|
351
|
|
As at June 30, 2018, the Company had
the following loans and borrowings:
|
|
|
|
|
|
|
June 30, 2018
|
|
|
June 30, 2017
|
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Term loans
|
|
(a)
|
|
|
9,971
|
|
|
-
|
|
|
|
Debentures
|
|
(b)
|
|
|
1,264
|
|
|
-
|
|
|
|
Finance leases
|
|
(c)
|
|
|
448
|
|
|
351
|
|
|
|
Total loans and borrowings
|
|
|
|
|
11,683
|
|
|
351
|
|
|
|
Current portion
|
|
|
|
|
(2,451
|
)
|
|
(69
|
)
|
|
|
Long-term
|
|
|
|
|
9,232
|
|
|
282
|
|
|
|
(a)
|
Term loans
|
|
|
|
|
|
|
|
The term loans were acquired through the CanniMed
acquisition (Note 13(a)(iv)) and consist of the
following:
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Capital loan, due for renewal
November 2019
(interest rate of Bank Prime Rate plus 1.75%)
|
|
7,800
|
|
|
-
|
|
|
|
Capital loan, payable in blended monthly
instalments of $60, due for renewal
November 2019 (5.20%, based on
Bank’s Prime rate plus 1.75% per annum).
|
|
2,171
|
|
|
-
|
|
|
|
|
|
9,971
|
|
|
-
|
|
|
|
Current portion
|
|
(1,111
|
)
|
|
-
|
|
|
|
|
|
8,860
|
|
|
-
|
|
The term loans are secured by a
general security agreement covering all of CanniMed’s assets. Subsequent to June
30, 2018, the Company repaid the full balance of the term loans.
Covenants
As of June 30, 2018, the Company had
met all covenants on its term loans.
43
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
18.
|
Loans and Borrowings
(Continued)
|
|
|
(b)
|
Debentures
|
|
|
|
|
|
|
|
The debentures were acquired through the CanniMed
acquisition (Note 13(a)(iv)) and consist of the
following:
|
|
|
|
|
Prescribe
|
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
|
|
d Rate
|
|
|
Maturity Date
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Debentures
|
|
5%
|
|
|
December 1,
2018
|
|
|
1,091
|
|
|
-
|
|
|
|
Debentures
|
|
12%
|
|
|
January 31, 2022
|
|
|
173
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
1,264
|
|
|
-
|
|
|
|
Current portion
|
|
|
|
|
|
|
|
(1,138
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
126
|
|
|
-
|
|
The debentures are secured by all
present and after-acquired property of CanniMed and are subordinate to all of
CanniMed’s other loans and borrowings.
|
|
(c)
|
Finance leases
|
|
|
|
|
|
|
|
In September 2016, the Company entered into finance lease
agreements related to three production equipment transactions totaling
$543, of which down payments of $169 were made. The finance leases are
repayable over a period of 3 to 4 years expiring January 2021 and December
2021.
|
|
|
|
|
|
|
|
As part of the CanniMed acquisition (Note 13(a)(iv)), the
Company acquired a finance lease with monthly principal payments of $10.
All amounts outstanding under this lease are repayable on demand, unless
and until otherwise demanded, in monthly installments of principal plus
interest at prime rate plus 1.00% per annum. Each advance under the
finance lease is repayable in full 48 months after the initial
advance.
|
|
|
|
|
June 30, 2018
|
|
|
June 30, 2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Less than 1 year
|
|
232
|
|
|
108
|
|
|
|
Between 1 and 5 years
|
|
279
|
|
|
344
|
|
|
|
Total minimum lease payments (Note 29(b))
|
|
511
|
|
|
452
|
|
|
|
Less: amount representing interest at approximately 8.19% to
20.26%
|
|
(63
|
)
|
|
(101
|
)
|
|
|
Present value of minimum lease payments
|
|
448
|
|
|
351
|
|
|
|
Less: current portion
|
|
(202
|
)
|
|
(69
|
)
|
|
|
|
|
246
|
|
|
282
|
|
44
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
19.
|
Share Capital
|
|
|
|
|
|
Accounting Policy
|
|
|
|
|
|
Share capital issued for non-monetary consideration is
recorded at an amount based on fair market value of the shares on the date
of issue. Transaction costs directly attributable to the issuance of
common shares are recognized as a deduction from equity. The proceeds from
the exercise of stock options or warrants together with amounts previously
recorded in reserves over the vesting periods are recorded as share
capital.
|
|
|
|
|
|
The Company issues share purchase warrants and determines
the fair value using the Binomial model. The fair value of broker warrants
are recognized as share issue costs and recorded to reserves.
|
|
|
|
|
|
Significant Judgment
|
|
|
|
|
|
In estimating the fair value of warrants using the
Binomial model, management is required to make certain assumptions and
estimates such as the expected life of warrants, volatility of the
Company’s future share price, risk free rate, and future dividend yields.
Changes in assumptions used to estimate fair value could result in
materially different results.
|
|
|
(a)
|
Authorized
|
|
|
|
|
|
|
|
The authorized share capital of the Company is comprised
of the following:
|
|
|
(i)
|
Unlimited number of common voting shares without par
value
|
|
|
|
|
|
|
|
Each Common Share carries the right to attend and vote at
all general meetings of shareholders. Holders of Common Shares are
entitled to receive on a pro rata basis such dividends, if any, as and
when declared by the Board at its discretion from funds legally available
for the payment of dividends and upon the liquidation, dissolution or
winding up of the Company are entitled to receive on a pro rata basis the
net assets of the Company after payment of debts and other liabilities, in
each case subject to the rights, privileges, restrictions and conditions
attaching to any other series or class of shares ranking senior in
priority to or on a pro rata basis with the holders of Common Shares with
respect to dividends or liquidation. The Common Shares do not carry any
pre-emptive, subscription, redemption or conversion rights, nor do they
contain any sinking or purchase fund provisions.
|
|
|
|
|
|
|
(ii)
|
Unlimited number of Class “A” Shares each with a par
value of $1.00.
|
|
|
|
|
|
|
|
Class A shares may be issued from time to time in one or
more series, and the directors may fix from time to time before such issue
the number of Class A shares of each series and the designation, rights
and restrictions attached thereto including any voting rights, dividend
rights, redemption, purchase or conversion rights, sinking fund or other
provisions. The Class A shares rank in priority over Common Shares and any
other shares ranking by their terms junior to the Class A shares as to
dividends and return of capital upon liquidation, dissolution or winding
up of the Company or any other return of capital or distribution of the
assets of the Company. No Class “A” Shares were issued and
outstanding.
|
|
|
|
|
|
|
(iii)
|
Unlimited number of Class “B” Shares each with a par
value of $5.00.
|
|
|
|
|
|
|
|
Class B shares may be issued from time to time in one or
more series, and the directors may fix from time to time before such issue
the number of Class B shares of each series and the designation, rights
and privileges attached thereto including any voting rights, dividend
rights, redemption, purchase or conversion rights, sinking fund or other
provisions. The Class B shares rank in priority over Common Shares and any
other shares ranking by their terms junior to the Class B shares as to
dividends and return of capital upon liquidation, dissolution or winding
up of the Company or any other return of capital or distribution of the
assets of the Company. No Class “B” Shares were issued and
outstanding.
|
45
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
19.
|
Share Capital
(Continued)
|
|
|
(b)
|
Issued and outstanding
|
|
|
|
|
|
|
|
At June 30, 2018, 568,113,131 common shares (2017 –
366,549,244) were issued and fully paid.
|
|
|
(i)
|
Shares for business combinations, asset acquisitions
and investment in associates
|
During the years ended June 30, 2018
and 2017, the Company issued the following shares for business combinations,
asset acquisitions and investment in associates:
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Note
|
|
|
shares issued
|
|
|
Share capital
|
|
|
|
|
|
|
|
|
|
#
|
|
|
$
|
|
|
|
Fiscal 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of BCNL and UCI
|
|
|
13(a)(i)
|
|
|
89,107
|
|
|
248
|
|
|
|
Acquisition of CanniMed
|
|
|
13(a)(iv)
|
|
|
72,746,846
|
|
|
798,784
|
|
|
|
Acquisition of H2
|
|
|
13(b)(i)
|
|
|
4,789,273
|
|
|
15,283
|
|
|
|
Investment in Capcium
|
|
|
12(f)
|
|
|
1,144,481
|
|
|
10,770
|
|
|
|
|
|
|
|
|
|
78,769,707
|
|
|
825,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of CanvasRx
|
|
|
13(a)(v)
|
|
|
17,875,000
|
|
|
11,440
|
|
|
|
Acquisition of Pedanios
|
|
|
13(a)(vi)
|
|
|
8,316,782
|
|
|
20,709
|
|
|
|
Acquisition of Peloton
|
|
|
13(b)(ii)
|
|
|
899,225
|
|
|
2,391
|
|
|
|
|
|
|
|
|
|
27,091,007
|
|
|
34,540
|
|
|
|
(ii)
|
Shares for earn out
payments
|
During the years ended June 30, 2018
and 2017, the Company issued the following shares for earn out payments:
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Note
|
|
|
shares issued
|
|
|
Share capital
|
|
|
|
|
|
|
|
|
#
|
|
|
$
|
|
|
|
Fiscal 2018
|
|
|
|
|
|
|
|
|
|
|
|
CanvasRx earn out payments
|
|
13(a)(v)
|
|
|
5,318,044
|
|
|
14,417
|
|
|
|
H2 earn out payments
(1)
|
|
13(b)(i)
|
|
|
-
|
|
|
1,904
|
|
|
|
|
|
|
|
|
5,318,044
|
|
|
16,321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2017
|
|
|
|
|
|
|
|
|
|
|
|
CanvasRx earn out payments
|
|
13(a)(v)
|
|
|
2,926,103
|
|
|
7,408
|
|
|
|
(1)
|
On November 30, 2017, 3,060,556 common shares were issued
for the H2 acquisition and were placed in escrow pending achievement of
milestones. During the year ended June 30, 2018, 238,044 common shares
with a fair value of $1,904 were released from escrow upon the achievement
of milestones (Note 13(b)(i)).
|
46
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
19.
|
Share Capital
(Continued)
|
|
|
(b)
|
Issued and outstanding
(continued)
|
|
|
(iii)
|
Shares for equity
financings
|
During the years ended June 30, 2018
and 2017, the Company completed equity financings and issued the following
shares:
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
shares issued
|
|
|
Share capital
|
|
|
Reserves
|
|
|
|
|
|
#
|
|
|
$
|
|
|
$
|
|
|
|
Fiscal 2018
|
|
|
|
|
|
|
|
|
|
|
|
November 2, 2017
(1)
|
|
|
|
|
|
|
|
|
|
|
|
Gross issuance
|
|
25,000,000
|
|
|
75,000
|
|
|
-
|
|
|
|
Cash share issuance costs
|
|
-
|
|
|
(4,361
|
)
|
|
-
|
|
|
|
Compensation warrants
|
|
-
|
|
|
(2,285
|
)
|
|
2,285
|
|
|
|
|
|
25,000,000
|
|
|
68,354
|
|
|
2,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2017
|
|
|
|
|
|
|
|
|
|
|
|
August 17, 2016
(2)
|
|
|
|
|
|
|
|
|
|
|
|
Gross issuance
|
|
57,500,000
|
|
|
23,000
|
|
|
-
|
|
|
|
Cash share
issuance costs
|
|
-
|
|
|
(1,804
|
)
|
|
-
|
|
|
|
Compensation warrants
|
|
-
|
|
|
(1,848
|
)
|
|
1,848
|
|
|
|
February 28, 2017
(3)
|
|
|
|
|
|
|
|
|
|
|
|
Gross issuance
|
|
33,337,500
|
|
|
75,009
|
|
|
-
|
|
|
|
Cash share
issuance costs
|
|
-
|
|
|
(4,479
|
)
|
|
-
|
|
|
|
Compensation warrants
|
|
-
|
|
|
(2,782
|
)
|
|
2,782
|
|
|
|
|
|
90,837,500
|
|
|
87,096
|
|
|
4,630
|
|
|
|
(1)
|
The Company issued 25,000,000 units at $3.00 per unit.
Each unit consisted of one common share and one warrant exercisable at a
price of $4.00 per share for a period of three years. An aggregate of
1,333,980 compensation warrants were issued to the underwriters. The
compensation warrants are exercisable into one common share at an exercise
price of $3.00 per share and expire on November 2, 2020. The fair value of
the compensation warrants at the date of grant was estimated at $1.71 per
warrant based on the following weighted average assumptions: Stock price
volatility – 85.49%; Risk-free interest rate – 1.40%; Dividend yield -
0.00%; and Expected life - 3 years.
|
|
|
(2)
|
The Company issued 57,500,000 subscription receipts in
conjunction with the acquisition of CanvasRx. Each subscription receipt
was converted into units of the Company at $0.40 per unit upon the
satisfaction of the conditions precedent to the acquisition. Each unit
consisted of one common share and one-half of one common share purchase
warrant of the Company. Each whole warrant is exercisable into one common
share of the Company at an exercise price of $0.55 per share expiring
August 9, 2018. A portion of the net proceeds from the Offering was used
to satisfy the cash component of the acquisition. An aggregate of
3,775,000 compensation options were issued to the agents. The compensation
options have the same terms as the private placement and expire August 9,
2018. The fair value of the compensation options at the date of grant was
estimated at $0.33 per warrant based on the following weighted average
assumptions: Stock price volatility - 79%; Risk-free interest rate -
0.70%; Dividend yield - 0.00%; and Expected life - 2 years.
|
|
|
(3)
|
The Company issued 33,337,500 units at $2.25 per unit.
Each unit consisted of one common share and one-half of one share purchase
warrant. Each warrant is exercisable into one common share at $3.00 per
share for two years, subject to a forced exercise provision if the
Company’s VWAP equals or exceeds $4.50 for 10 consecutive trading days. An
aggregate of 1,865,249 compensation options were issued to the
underwriters. The compensation options have the same terms as the private
placement and expire February 28, 2019. The fair value of the compensation
options at the date of grant was estimated at $0.99 per warrant based on
the following weighted average assumptions: Stock price volatility - 79%;
Risk-free interest rate - 0.70%; Dividend yield - 0.00%; and Expected life
- 2 years.
|
47
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
19.
|
Share Capital
(Continued)
|
|
|
(b)
|
Issued and outstanding
(continued)
|
|
|
(iv)
|
Shares for convertible debentures, options, warrants,
compensation warrants and RSUs
|
During the years ended June 30, 2018
and 2017, the Company issued the following shares on the conversion of
convertible debentures, exercise of options, warrants and compensation warrants,
and vesting of restricted share units (“RSUs”):
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
|
shares issued
|
|
|
Share capital
|
|
|
Reserves
|
|
|
|
|
|
|
|
|
#
|
|
|
$
|
|
|
$
|
|
|
|
Fiscal 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of convertible debentures
|
|
17(c)-(f)
|
|
|
42,473,435
|
|
|
177,127
|
|
|
(37,061
|
)
|
|
|
Exercise of options
(1)
|
|
|
|
|
4,809,443
|
|
|
12,006
|
|
|
(6,175
|
)
|
|
|
Exercise of warrants
(2)
|
|
|
|
|
43,200,881
|
|
|
136,293
|
|
|
(3,680
|
)
|
|
|
Exercise of compensation
warrants
|
|
|
|
|
1,865,249
|
|
|
6,051
|
|
|
(1,854
|
)
|
|
|
Vesting of RSUs
|
|
|
|
|
127,128
|
|
|
1,209
|
|
|
(351
|
)
|
|
|
|
|
|
|
|
92,476,136
|
|
|
332,686
|
|
|
(49,121
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of convertible debentures
|
|
17(a)-(d)
|
|
|
29,020,319
|
|
|
38,037
|
|
|
(4,800
|
)
|
|
|
Exercise of options
|
|
|
|
|
2,001,700
|
|
|
1,399
|
|
|
(578
|
)
|
|
|
Exercise of warrants
|
|
|
|
|
54,936,306
|
|
|
28,648
|
|
|
(2,046
|
)
|
|
|
Exercise of compensation warrants
|
|
|
|
|
4,084,434
|
|
|
2,966
|
|
|
(1,292
|
)
|
|
|
|
|
|
|
|
90,042,759
|
|
|
71,050
|
|
|
(8,716
|
)
|
|
|
(1)
|
Included in reserves for the exercise of options is
$1,738 reserves for the exercise of 667,000 Hempco stock options (Note
13(a)(ii)).
|
|
|
(2)
|
Included in reserves for the exercise of warrants is $588
reserves for the exercise of 2,292,033 Hempco warrants, excluding the
warrants exercised by Aurora (Note 13(a)(ii)).
|
During the year ended June 30, 2017,
the Company also issued the following shares:
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
shares issued
|
|
|
Share capital
|
|
|
Reserves
|
|
|
|
|
|
#
|
|
|
$
|
|
|
$
|
|
|
|
Fiscal 2017
|
|
|
|
|
|
|
|
|
|
|
|
Issued for compensation
|
|
25,510
|
|
|
13
|
|
|
(13
|
)
|
|
|
Performance shares
|
|
20,000,000
|
|
|
2,322
|
|
|
(2,322
|
)
|
|
|
Issued for loan
|
|
50,000
|
|
|
24
|
|
|
-
|
|
|
|
|
|
20,075,510
|
|
|
2,359
|
|
|
(2,335
|
)
|
48
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
19.
|
Share Capital
(Continued)
|
A summary of the status of the
escrowed securities outstanding follows:
|
|
|
|
Shares
|
|
|
Warrants
|
|
|
|
|
|
#
|
|
|
#
|
|
|
|
Balance, June 30, 2016
|
|
29,812,500
|
|
|
9,000,000
|
|
|
|
Issued (Exercised)
|
|
20,000,000
|
|
|
(8,000,000
|
)
|
|
|
Forfeited
|
|
-
|
|
|
(1,000,000
|
)
|
|
|
Released
|
|
(36,875,000
|
)
|
|
-
|
|
|
|
Balance, June 30, 2017
|
|
12,937,500
|
|
|
-
|
|
|
|
Issued
|
|
3,060,556
|
|
|
-
|
|
|
|
Released
|
|
(13,175,544
|
)
|
|
-
|
|
|
|
Balance, June 30, 2018
|
|
2,822,512
|
|
|
-
|
|
|
|
(i)
|
Pursuant to an escrow agreement dated September 18, 2014,
60,000,000 common shares of the Company were deposited into escrow with
respect to the RTO. In addition, warrants at $0.02 per share expiring
December 9, 2019 and stock options at $0.001 per share expiring December
1, 2019 were also subject to the escrow agreement. Under the escrow
agreement, 10% of the escrowed common shares were released from escrow on
December 9, 2014, the date of closing of the RTO, and 15% were released
every six months thereafter over a period of 36 months. As of June 30,
2018, all of these shares had been released from escrow.
|
|
|
(ii)
|
Pursuant to an escrow agreement dated November 30, 2017,
3,060,556 common shares of the Company were deposited into escrow with
respect to the acquisition of H2. (Note 13(b)(i)) The escrowed common
shares are to be released upon achievement of certain milestones relating
to the completion of construction of the H2 facility and receipt of
relevant licenses to cultivate and sell medical
cannabis.
|
|
|
(d)
|
Share purchase warrants
|
Each whole warrant entitles the holder
to purchase one common share of the Company. A summary of the status of the
warrants outstanding follows:
|
|
|
|
|
|
|
Weighted average
|
|
|
|
|
|
Warrants
|
|
|
exercise price
|
|
|
|
|
|
#
|
|
|
$
|
|
|
|
Balance, June 30, 2016
|
|
28,750,590
|
|
|
0.40
|
|
|
|
Issued
|
|
50,173,466
|
|
|
1.36
|
|
|
|
Forfeited
|
|
(1,000,000
|
)
|
|
0.02
|
|
|
|
Exercised
|
|
(54,936,306
|
)
|
|
0.48
|
|
|
|
Balance, June 30, 2017
|
|
22,987,750
|
|
|
2.32
|
|
|
|
Issued
|
|
27,355,709
|
|
|
3.91
|
|
|
|
Exercised
|
|
(43,200,881
|
)
|
|
3.08
|
|
|
|
Balance, June 30, 2018
|
|
7,142,578
|
|
|
3.81
|
|
During the year ended June 30, 2018,
the Company recorded share-based payments of $2,285 (2017 - $nil) for 1,333,980
broker warrants with a fair value of $1.71 per broker warrant issued related to
the financing (Note 19(b)(iii)). The 25,000,000 warrants attached to the
financing units (Note 19(b)(iii)) have a fair value of $1.52 per unit warrant
and was determined using the Binomial Tree model with the following assumptions:
risk-free interest rate of 1.88%; dividend yield of 0%; stock price volatility
of 85.49%; and an expected life of 3 years.
The following table summarizes the
warrants that remain outstanding as at June 30, 2018:
|
|
Exercise Price
|
|
|
Warrants
|
|
|
|
Expiry Date
|
|
|
|
$
|
|
|
#
|
|
|
|
|
|
|
|
0.55
|
|
|
61,500
|
|
|
|
August 9, 2018
|
|
|
|
0.55
|
|
|
301,000
|
|
|
|
August 17, 2018
|
|
|
|
2.81
|
|
|
89,107
|
|
|
|
September 29,
2020
|
|
|
|
3.00
|
|
|
633
|
|
|
|
November 2, 2020
|
|
|
|
4.00
|
|
|
6,690,338
|
|
|
|
November 2, 2020
|
|
|
|
|
|
|
7,142,578
|
|
|
|
|
|
49
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
19.
|
Share Capital
(Continued)
|
Each compensation option entitles the
holder to purchase one common share and one-half of one share purchase warrant
of the Company. Each whole warrant is exercisable into one additional common
share of the Company for a period of two years. A summary of the status of the
compensation options outstanding follows:
|
|
|
|
Compensation
|
|
|
Weighted average
|
|
|
|
|
|
options
|
|
|
exercise price
|
|
|
|
|
|
#
|
|
|
$
|
|
|
|
Balance, June 30, 2016
|
|
309,434
|
|
|
0.53
|
|
|
|
Issued
|
|
5,640,249
|
|
|
1.01
|
|
|
|
Exercised
(1)
|
|
(4,084,434
|
)
|
|
0.41
|
|
|
|
Balance, June 30, 2017
|
|
1,865,249
|
|
|
2.25
|
|
|
|
Exercised
(1)
|
|
(1,865,249
|
)
|
|
2.25
|
|
|
|
Balance, June 30, 2018
|
|
-
|
|
|
-
|
|
|
|
(1)
|
The weighted average share price at the time of exercise
was $4.43 (2017 - $2.26).
|
|
20.
|
Share-based Payments
|
|
|
|
|
|
Accounting Policy
|
|
|
|
|
|
Equity-settled share-based payments to employees are
measured at the fair value of the stock options at the grant date and
recognized in expense over the vesting periods.
|
|
|
|
|
|
Share-based payments to non-employees are measured at the
fair value of goods or services received or the fair value of the equity
instruments issued, if it is determined the fair value of the goods or
services cannot be reliably measured, and are recorded at the date the
goods or services are received. The corresponding amount is recorded to
the share- based payment reserve.
|
|
|
|
|
|
The fair value of options is determined using the
Black–Scholes option pricing model which incorporates all market vesting
conditions. The number of options expected to vest is reviewed and
adjusted at the end of each reporting period such that the amount
recognized for services received as consideration for the equity
instruments granted shall be based on the number of equity instruments
that eventually vest. Amounts recorded for forfeited or expired
unexercised options are transferred to deficit in the year of forfeiture
or expiry.
|
|
|
|
|
|
Upon the exercise of stock options, consideration received
on the exercise of these equity instruments is recorded as share capital
and the related share-based payment reserve is transferred to share
capital.
|
|
|
|
|
|
Significant Judgment
|
|
|
|
|
|
In estimating fair value of options using the
Black-Scholes option pricing model, management is required to make certain
assumptions and estimates such as the expected life of options, volatility
of the Company’s future share price, risk free rate, future dividend
yields and estimated forfeitures at the initial grant date. Changes in
assumptions used to estimate fair value could result in materially
different results.
|
Stock options and restricted
share units
On September 25, 2017, the Board
adopted a “rolling maximum” or “evergreen” plan which fixed a maximum number of
shares issuable thereunder at 10% of the issued and outstanding securities of
the Company. The Board of Directors may from time to time, in its discretion,
and in accordance with the Exchange requirements, grant to directors, officers,
employees and consultants, non-transferable options to purchase common shares
and restricted share units, provided that the number of common shares reserved
for issuance under the plan and all other share compensation arrangements of the
Company, will not exceed 10% of the issued and outstanding common shares of the
Company.
50
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
20.
|
Share-based Payments
(Continued)
|
A summary of the status of the options
outstanding follows:
|
|
|
|
Stock
|
|
|
Weighted Average
|
|
|
|
|
|
Options
|
|
|
Exercise Price
|
|
|
|
|
|
#
|
|
|
$
|
|
|
|
Balance, June 30, 2016
|
|
5,309,834
|
|
|
0.37
|
|
|
|
Granted
|
|
12,170,000
|
|
|
2.21
|
|
|
|
Exercised
(1)
|
|
(2,001,700
|
)
|
|
0.41
|
|
|
|
Forfeited
|
|
(244,568
|
)
|
|
0.74
|
|
|
|
Balance, June 30, 2017
|
|
15,233,566
|
|
|
1.84
|
|
|
|
Granted
|
|
18,530,000
|
|
|
7.16
|
|
|
|
Exercised
(1)
|
|
(4,809,443
|
)
|
|
1.91
|
|
|
|
Forfeited
|
|
(798,004
|
)
|
|
2.66
|
|
|
|
Balance, June 30, 2018
|
|
28,156,119
|
|
|
5.36
|
|
|
|
(1)
|
The weighted average share price during the period was
$9.05 (2017 - $2.31).
|
The following table summarizes the
stock options that remain outstanding as at June 30, 2018:
|
|
Expiry Date
|
|
Options Outstanding (#
)
|
|
|
Exercise Price ($)
|
|
|
Options Exercisable (#)
|
|
|
|
September 2018
|
|
63,112
|
|
|
0.30
|
|
|
63,112
|
|
|
|
May 2020
|
|
113,300
|
|
|
0.34
|
|
|
113,300
|
|
|
|
August 2020
|
|
418,627
|
|
|
0.295 – 0.30
|
|
|
306,960
|
|
|
|
March 2021
|
|
200,000
|
|
|
0.58
|
|
|
200,000
|
|
|
|
May 2021
|
|
500,000
|
|
|
0.46
|
|
|
100,000
|
|
|
|
August 2021
|
|
1,731,666
|
|
|
2.25
|
|
|
1,731,666
|
|
|
|
September 2021
|
|
704,569
|
|
|
1.30
|
|
|
704,569
|
|
|
|
January 2022
|
|
1,850,000
|
|
|
2.56
|
|
|
1,062,500
|
|
|
|
March 2022
|
|
2,500,000
|
|
|
2.27
|
|
|
1,041,667
|
|
|
|
May 2022
|
|
2,142,501
|
|
|
2.49
|
|
|
354,168
|
|
|
|
August 2022
|
|
1,151,667
|
|
|
2.39
|
|
|
210,417
|
|
|
|
September 2022
|
|
2,949,507
|
|
|
2.76
|
|
|
963,257
|
|
|
|
November 2022
|
|
2,713,336
|
|
|
4.64
|
|
|
400,836
|
|
|
|
December 2022
|
|
1,337,834
|
|
|
7.00 – 7.10
|
|
|
212,834
|
|
|
|
January 2023
|
|
2,525,000
|
|
|
9.60 – 13.63
|
|
|
577,084
|
|
|
|
February 2023
|
|
2,425,000
|
|
|
10.13 – 11.53
|
|
|
210,415
|
|
|
|
March 2023
|
|
925,000
|
|
|
9.03 – 11.74
|
|
|
77,083
|
|
|
|
April 2023
|
|
850,000
|
|
|
7.72 – 9.07
|
|
|
-
|
|
|
|
May 2023
|
|
2,030,000
|
|
|
7.20 – 8.38
|
|
|
-
|
|
|
|
June
2023
|
|
1,025,000
|
|
|
8.18 – 9.99
|
|
|
-
|
|
|
|
|
|
28,156,119
|
|
|
|
|
|
8,329,868
|
|
During the year ended June 30, 2018,
the Company recorded aggregate share-based payments of $34,062 (2017 - $7,584)
for all stock options granted and vested during the period including Hempco
stock options vested from the acquisition date (Note 13(a)(ii)).
The fair value of stock options
granted during the period was determined using the following weighted average
assumptions at the time of grant using the Black-Scholes option pricing model:
|
|
|
|
2018
|
|
|
2017
|
|
|
|
Risk-Free Annual Interest
Rate
|
|
1.73%
|
|
|
0.68%
|
|
|
|
Expected Annual Dividend Yield
|
|
0%
|
|
|
0%
|
|
|
|
Expected Stock Price
Volatility
|
|
81.02%
|
|
|
79.0%
|
|
|
|
Expected Life of Options
|
|
2.97 years
|
|
|
3.03 years
|
|
|
|
Forfeiture Rate
|
|
4.59%
|
|
|
5%
|
|
51
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
Stock options and restricted
share units
|
|
(a)
|
Stock options (continued)
|
Volatility was estimated by using the
average historical volatility of the Company. The expected life in years
represents the period of time that options granted are expected to be
outstanding. The risk-free rate is based on Canada government bonds with a
remaining term equal to the expected life of the options.
The weighted average fair value of
stock options granted during the year ended June 30, 2018 was $4.11 (2017 -
$1.15) per option. As at June 30, 2018, stock options outstanding have a
weighted average remaining contractual life of 4.13 years (2017 – 4.22 years).
|
|
(b)
|
Restricted Share Units
(“RSU”)
|
|
|
|
|
|
|
|
Accounting Policy
|
|
|
|
|
|
|
|
RSUs are measured at fair value on the date of grant
based on the closing price of the Company’s shares on the date prior to
the grant, and is recognized as share-based compensation expense on a
straight-line basis over the vesting period. The corresponding amount is
recorded to the share-based payment reserve. Upon the exercise of RSUs,
the related share-based payment reserve is transferred to share
capital.
|
On September 25, 2017, the Company
adopted a RSU plan for directors, officers, employees and consultants of the
Company (“Participants”). Under the terms of the plan, RSU’s are granted to
Participants and the shares issued vest over a period of up to three years from
the date of grant. Each RSU gives the Participant the right to receive one
common share of the Company. The Company has reserved 10,000,000 common shares
for issuance under this plan.
On September 29, 2017, the Company
granted 2,127,128 RSUs to directors, officers, employees and consultants of the
Company, of which 127,128 relate to fiscal 2017 which vested immediately. The
rest of the RSUs vest annually.
On January 15, 2018, the Company
granted 150,000 RSUs to an officer of the Company vesting annually over 3 years.
A summary of the status of the RSUs
outstanding is as follows:
|
|
|
|
|
|
|
Weighted average
|
|
|
|
|
|
RSUs
|
|
|
exercise price
|
|
|
|
|
|
#
|
|
|
$
|
|
|
|
Balance, June 30, 2017
|
|
-
|
|
|
-
|
|
|
|
Issued
|
|
2,277,128
|
|
|
3.26
|
|
|
|
Vested
|
|
(127,128
|
)
|
|
6.75
|
|
|
|
Balance, June 30, 2018
|
|
2,150,000
|
|
|
3.29
|
|
The weighted average fair value of
RSUs granted in the year ended June 30, 2018 was $3.29. During the year ended
June 30, 2018, the Company recorded share-based payments of $3,739 for 2,150,000
RSUs granted and vested during the period. Share-based payments of $351 for
127,128 RSUs were accrued during the year ended June 30, 2017.
The following table summarizes the
RSUs that remain outstanding as at June 30, 2018:
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
RSUs Outstanding
|
|
RSUs Vested
|
|
|
Expiry
|
|
|
Price per Share
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
525,000
|
|
-
|
|
|
September 29,
2018
|
|
|
2.76
|
|
|
|
1,475,000
|
|
-
|
|
|
September 29, 2020
|
|
|
2.76
|
|
|
|
150,000
|
|
-
|
|
|
January 15, 2021
|
|
|
10.32
|
|
|
|
2,150,000
|
|
-
|
|
|
|
|
|
3.29
|
|
52
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
20.
|
Share-based Payments
(Continued)
|
Employee Share Purchase Plan
(ESPP)
On September 25, 2017, the Company
adopted an ESPP whereby eligible employees may contribute to the ESPP at least
1% but no more than 10% of their annual gross salary up to a maximum of $10,500,
to purchase common shares of the Company in the open market at prevailing market
prices. The Company contributes an amount equal to 50% of the employee’s
contributions which are expensed as incurred as there are no vesting
provisions.
The Company contributed $58 to the ESPP
during the year ended June 30, 2018.
|
21.
|
Earnings (Loss) Per Share
|
|
|
|
|
|
Accounting Policy
|
|
|
|
|
|
The Company calculates basic earnings (loss) per share by
dividing net income (loss) by the weighted average number of common shares
outstanding during the year. Diluted earnings per share is determined by
adjusting profit or loss attributable to common shareholders and the
weighted average number of common shares outstanding, adjusted for the
effects of all dilutive potential common shares, which comprise
convertible debentures, restricted share units, warrants and share options
issued.
|
The following is a reconciliation for
the calculation of basic and diluted earnings (loss) per share:
Basic earnings (loss) per share
|
|
|
|
2018
|
|
|
2017
|
|
|
|
Net income (loss)
attributable to Aurora shareholders
|
|
$ 71,936
|
|
|
$ (12,968
|
)
|
|
|
Weighted average number of common shares outstanding
|
|
459,782,532
|
|
|
279,029,226
|
|
|
|
Basic earnings (loss) per share
|
|
$ 0.16
|
|
|
$ (0.05
|
)
|
Diluted earnings (loss) per
share
|
|
|
|
2018
|
|
|
2017
|
|
|
|
Net income (loss)
attributable to Aurora shareholders
|
|
$ 71,936
|
|
|
$ (12,968
|
)
|
|
|
Dilutive effect on income
|
|
-
|
|
|
-
|
|
|
|
Adjusted net income (loss)
attributable to Aurora shareholders
|
|
$ 71,936
|
|
|
$ (12,968
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
common shares outstanding - basic
|
|
459,782,532
|
|
|
279,029,226
|
|
|
|
Dilutive effect of options outstanding
|
|
7,121,278
|
|
|
-
|
|
|
|
Dilutive effect of warrants
outstanding
|
|
3,211,970
|
|
|
-
|
|
|
|
Dilutive effect of RSUs outstanding
|
|
1,202,699
|
|
|
-
|
|
|
|
Dilutive effect of convertible debentures outstanding
|
|
18,232
|
|
|
-
|
|
|
|
Weighted average number of common shares outstanding - diluted
|
|
471,336,711
|
|
|
279,029,226
|
|
|
|
Diluted earnings (loss) per share
|
|
$ 0.15
|
|
|
$ (0.05
|
)
|
Diluted loss per share is the same as
basic loss per share as the issuance of shares on the exercise of convertible
debentures, restricted share units, warrants and share options is anti-dilutive.
Subsequent to June 30, 2018, the
Company issued shares for business acquisitions, the exercise of options and
warrants, and the conversion of convertible debentures which would change the
number of ordinary shares or potential ordinary share outstanding at the end of
the period and would affect the calculation of basic and dilutive loss per share
(Note 31).
|
22.
|
Finance and Other
Costs
|
|
|
|
|
Years ended June 30,
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Accretion expense
|
|
10,641
|
|
|
3,570
|
|
|
|
Bank charges
|
|
214
|
|
|
28
|
|
|
|
Financing fees
|
|
25
|
|
|
1,692
|
|
|
|
Interest expense
|
|
2,282
|
|
|
1,292
|
|
|
|
|
|
13,162
|
|
|
6,582
|
|
53
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
23.
|
Income Taxes
|
|
|
|
|
|
Accounting Policy
|
|
|
|
|
|
Tax expense recognized in profit or loss comprises the sum
of current and deferred taxes not recognized in other comprehensive income
or directly in equity.
|
|
|
|
|
|
Current tax
|
|
|
|
|
|
Current tax assets and/or liabilities comprise those claims
from, or obligations to, fiscal authorities relating to the current or
prior reporting periods that are unpaid at the reporting date. Current tax
is payable on taxable profit, which differs from profit or loss in the
financial statements. Calculation of current tax is based on tax rates and
tax laws that have been enacted or substantively enacted at the end of the
reporting period.
|
|
|
|
|
|
Deferred tax
|
|
|
|
|
|
Deferred taxes are calculated using the liability method on
temporary differences between the carrying amounts of assets and
liabilities and their tax bases. Deferred tax assets and liabilities are
calculated, without discounting, at tax rates that are expected to apply
to their respective period of realization, provided they are enacted or
substantively enacted at the end of the reporting period. Deferred tax
liabilities are always provided for in full.
|
|
|
|
|
|
Deferred tax assets are recognized to the extent that it is
probable that they will be able to be utilized against future taxable
income. Deferred tax assets and liabilities are offset only when the
Company has a right and intention to offset current tax assets and
liabilities from the same taxation authority.
|
|
|
|
|
|
Changes in deferred tax assets or liabilities are recognized
as a component of tax income or expense in profit or loss, except where
they relate to items that are recognized in other comprehensive income or
directly in equity, in which case the related deferred tax is also
recognized in other comprehensive income or equity,
respectively.
|
|
|
|
|
|
Significant Judgment
|
|
|
|
|
|
Deferred tax assets, including those arising from tax
loss carry-forwards, require management to assess the likelihood that the
Company will generate sufficient taxable earnings in future periods in
order to utilize recognized deferred tax assets. Assumptions about the
generation of future taxable profits depend on management’s estimates of
future cash flows. In addition, future changes in tax laws could limit the
ability of the Company to obtain tax deductions in future periods. To the
extent that future cash flows and taxable income differ significantly from
estimates, the ability of the Company to realize the net deferred tax
assets recorded at the reporting date could be
impacted.
|
The net tax provision differs from that
expected by applying the combined federal and provincial tax rates of 26.5%
(2017 - 26%) to income (loss) before income tax for the following reasons:
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Income (loss) before tax
|
|
77,327
|
|
|
(17,264
|
)
|
|
|
Combined federal and provincial rate
|
|
26.5%
|
|
|
26%
|
|
|
|
Expected tax recovery
|
|
20,492
|
|
|
(4,489
|
)
|
|
|
Change in estimates from prior year
|
|
(244
|
)
|
|
(205
|
)
|
|
|
Non-deductible expenses
|
|
13,557
|
|
|
2,294
|
|
|
|
Non-deducible portion of capital gains
|
|
(623
|
)
|
|
-
|
|
|
|
Permanent portion of rate
difference on capital items
|
|
(23,751
|
)
|
|
-
|
|
|
|
Difference in statutory tax rate
|
|
(126
|
)
|
|
(16
|
)
|
|
|
Effect of change in tax rates
|
|
488
|
|
|
(21
|
)
|
|
|
Changes in deferred tax benefits not recognized
|
|
(1,693
|
)
|
|
(1,859
|
)
|
|
|
Income tax expense (recovery)
|
|
8,100
|
|
|
(4,296
|
)
|
The statutory combined federal and
provincial tax rate increased from 26% to 26.5% due to an increase in the
provincial tax rate on January 1, 2018.
54
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share
|
|
23.
|
Income Taxes (Continued)
|
Deferred taxes reflect the tax effects
of temporary differences between the carrying amounts of asset and liabilities
for financial reporting purposes and their tax values. Movements in deferred tax
assets (liabilities) at June 30, 2018 and 2017 are comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
Recovered through
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax
|
|
|
Recovered
|
|
|
(charged to)
|
|
|
Recovered
|
|
|
|
|
|
|
|
|
As of
|
|
|
assets (liabilities)
|
|
|
through
|
|
|
other
|
|
|
through
|
|
|
As of
|
|
|
|
|
|
June 30,
|
|
|
assumed from
|
|
|
(charged
|
|
|
comprehensive
|
|
|
(charged to)
|
|
|
June 30,
|
|
|
|
|
|
2017
|
|
|
acquisition
|
|
|
to) earnings
|
|
|
income
|
|
|
equity
|
|
|
2018
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-capital losses
|
|
7,637
|
|
|
10,207
|
|
|
14,612
|
|
|
-
|
|
|
-
|
|
|
32,456
|
|
|
|
Finance costs
|
|
3,520
|
|
|
1,075
|
|
|
759
|
|
|
-
|
|
|
2,533
|
|
|
7,887
|
|
|
|
Investment tax credit
|
|
75
|
|
|
381
|
|
|
137
|
|
|
-
|
|
|
-
|
|
|
593
|
|
|
|
Others
|
|
-
|
|
|
-
|
|
|
657
|
|
|
-
|
|
|
-
|
|
|
657
|
|
|
|
Total deferred tax assets
|
|
11,232
|
|
|
11,663
|
|
|
16,165
|
|
|
-
|
|
|
2,533
|
|
|
41,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible debenture
|
|
(4,170
|
)
|
|
-
|
|
|
347
|
|
|
-
|
|
|
(7,082
|
)
|
|
(10,905
|
)
|
|
|
Marketable securities
|
|
(788
|
)
|
|
885
|
|
|
(3,841
|
)
|
|
(55
|
)
|
|
-
|
|
|
(3,799
|
)
|
|
|
Investment in associates
|
|
-
|
|
|
(903
|
)
|
|
(3,540
|
))
|
|
-
|
|
|
(5,870
|
)
|
|
(10,313
|
)
|
|
|
Derivatives
|
|
43
|
|
|
-
|
|
|
(15,573
|
)
|
|
-
|
|
|
-
|
|
|
(15,530
|
)
|
|
|
Customer relationships
|
|
(1,126
|
)
|
|
(1,778
|
)
|
|
231
|
|
|
-
|
|
|
-
|
|
|
(2,673
|
)
|
|
|
Brand
|
|
-
|
|
|
(31,882
|
)
|
|
657
|
|
|
-
|
|
|
-
|
|
|
(31,225
|
)
|
|
|
Patents
|
|
-
|
|
|
(425
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(425
|
)
|
|
|
License and federal permits
|
|
(6,617
|
)
|
|
(16,275
|
)
|
|
(1,218
|
)
|
|
-
|
|
|
-
|
|
|
(24,110
|
)
|
|
|
Property, plant and equipment
|
|
(98
|
)
|
|
(4,637
|
)
|
|
2,997
|
|
|
-
|
|
|
-
|
|
|
(1,738
|
)
|
|
|
Inventory
|
|
(1,672
|
)
|
|
(2,877
|
)
|
|
(424
|
)
|
|
-
|
|
|
-
|
|
|
(4,973
|
)
|
|
|
Biological assets
|
|
(1,088
|
)
|
|
(325
|
)
|
|
(1,626
|
)
|
|
-
|
|
|
-
|
|
|
(3,039
|
)
|
|
|
Total deferred tax liabilities
|
|
(15,516
|
)
|
|
(58,217
|
)
|
|
(21,990
|
)
|
|
(55
|
)
|
|
(12,952
|
)
|
|
(108,730
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax liabilities
|
|
(4,284
|
)
|
|
(46,554
|
)
|
|
(5,825
|
)
|
|
(55
|
)
|
|
(10,419
|
)
|
|
(67,137
|
)
|
|
|
Deferred tax assets not recognized
|
|
(1,653
|
)
|
|
-
|
|
|
(616
|
)
|
|
-
|
|
|
-
|
|
|
(2,269
|
)
|
|
|
|
|
(5,937
|
)
|
|
(46,554
|
)
|
|
(6,441
|
)
|
|
(55
|
)
|
|
(10,419
|
)
|
|
(69,406
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recovered through
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax
|
|
|
Recovered
|
|
|
(charged to)
|
|
|
Recovered
|
|
|
|
|
|
|
|
|
As of
|
|
|
assets (liabilities)
|
|
|
through
|
|
|
other
|
|
|
through
|
|
|
As of
|
|
|
|
|
|
June 30,
|
|
|
assumed from
|
|
|
(charged
|
|
|
comprehensive
|
|
|
(charged to
|
|
|
June 30,
|
|
|
|
|
|
2016
|
|
|
acquisition )
|
|
|
to earnings
|
|
|
income
|
|
|
equity
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-capital losses
|
|
3,240
|
|
|
321
|
|
|
4,076
|
|
|
-
|
|
|
-
|
|
|
7,637
|
|
|
|
Finance costs
|
|
232
|
|
|
-
|
|
|
238
|
|
|
-
|
|
|
3,050
|
|
|
3,520
|
|
|
|
Investment tax credit
|
|
-
|
|
|
-
|
|
|
75
|
|
|
-
|
|
|
-
|
|
|
75
|
|
|
|
Total deferred tax assets
|
|
3,472
|
|
|
321
|
|
|
4,389
|
|
|
-
|
|
|
3,050
|
|
|
11,232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax
liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible debenture
|
|
(195
|
)
|
|
-
|
|
|
(226
|
)
|
|
-
|
|
|
(3,749
|
)
|
|
(4,170
|
)
|
|
|
Marketable securities
|
|
-
|
|
|
-
|
|
|
97
|
|
|
(885
|
)
|
|
-
|
|
|
(788
|
)
|
|
|
Derivatives
|
|
-
|
|
|
-
|
|
|
43
|
|
|
-
|
|
|
-
|
|
|
43
|
|
|
|
Customer relationships
|
|
-
|
|
|
(1,126
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,126
|
)
|
|
|
License and federal permits
|
|
-
|
|
|
(6,617
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(6,617
|
)
|
|
|
Property, plant and equipment
|
|
(158
|
)
|
|
(4
|
)
|
|
64
|
|
|
-
|
|
|
-
|
|
|
(98
|
)
|
|
|
Inventory
|
|
(313
|
)
|
|
-
|
|
|
(1,359
|
)
|
|
-
|
|
|
-
|
|
|
(1,672
|
)
|
|
|
Biological assets
|
|
(498
|
)
|
|
-
|
|
|
(590
|
)
|
|
-
|
|
|
-
|
|
|
(1,088
|
)
|
|
|
Total deferred tax liabilities
|
|
(1,164
|
)
|
|
(7,747
|
)
|
|
(1,971
|
)
|
|
(885
|
)
|
|
(3,749
|
)
|
|
(15,516
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets (liabilities)
|
|
2,308
|
|
|
(7,426
|
)
|
|
2,418
|
|
|
(885
|
)
|
|
(699
|
)
|
|
(4,284
|
)
|
|
|
Deferred tax assets not recognized
|
|
(2,308
|
)
|
|
-
|
|
|
1,859
|
|
|
-
|
|
|
(1,204
|
)
|
|
(1,653
|
)
|
|
|
|
|
-
|
|
|
(7,426
|
)
|
|
4,277
|
|
|
(885
|
)
|
|
(1,903
|
)
|
|
(5,937
|
)
|
55
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
23.
|
Income Taxes (Continued)
|
Deferred tax assets have not been
recognized with respect to the following items:
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Non-capital losses carried
forward
|
|
(2,269
|
)
|
|
(449
|
)
|
|
|
Share issue costs
|
|
-
|
|
|
(1,204
|
)
|
|
|
|
|
(2,269
|
)
|
|
(1,653
|
)
|
The Company has income tax loss
carryforwards of approximately $122,369 (2017 - $32,605) which are predominately
from Canada and if unused, will expire between 2031 to 2038.
|
24.
|
Related Party Transactions
|
|
|
|
|
|
Accounting Policy
|
|
|
|
|
|
The Company considers a person or entity as a related
party if they are a member of key management personnel including their
close relatives, an associate or joint venture, those having significant
influence over the Company, as well as entities that are controlled by
related parties.
|
The Company incurred the following
transactions with related parties during the year ended June 30, 2018:
|
|
|
|
Years ended
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Operational, administrative
and service fees paid or accrued pursuant to an agreement between CanvasRx
and a company having a former director in common with the Company
|
|
4,957
|
|
|
3,659
|
|
|
|
Consulting fees paid or accrued related to
the CanvasRx acquisition to a company owned by an officer of the Company
|
|
358
|
|
|
780
|
|
|
|
Marketing fees paid or
accrued to a company partially owned by an officer of the Company
|
|
2,210
|
|
|
-
|
|
|
|
Interest income earned from a 50% owned joint venture company
(Note 12(a))
|
|
49
|
|
|
41
|
|
|
|
|
|
7,574
|
|
|
4,480
|
|
During the year ended June 30, 2018 and
based on the Company’s existing interest in associates, the Company generated
$239 profit margin from design, engineering and construction consulting services
to Cann Group (Note 12(b)) and $240 profit margin from TGOD (Note 12(g)).
These transactions are in the normal
course of operations and are measured at the exchange value being the amounts
agreed to by the parties.
|
|
(b)
|
Compensation of key management
personnel
|
The Company’s key management personnel
have the authority and responsibility for planning, directing and controlling
the activities of the Company and consists of the Company’s executive management
team and management directors.
|
|
|
|
Years ended June 30,
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Management compensation
|
|
5,284
|
|
|
1,934
|
|
|
|
Directors’ fees
(1)
|
|
210
|
|
|
258
|
|
|
|
Share-based payments
(2)
|
|
14,608
|
|
|
6,431
|
|
|
|
|
|
20,102
|
|
|
8,623
|
|
|
|
(1)
|
Includes meeting fees and committee chair fees.
|
|
|
(2)
|
Share-based payments are the fair value of options
granted and vested to key management personnel and directors of the
Company under the Company’s stock option plan (Note
20).
|
56
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
24.
|
Related Party Transactions
(Continued)
|
|
|
(c)
|
Related party balances
|
The following related party amounts
were included in (i) accounts receivable, (ii) accounts payable and accrued
liabilities, and (iii) note receivable:
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
(i) A company having a
director in common
(1)
|
|
-
|
|
|
72
|
|
|
|
(i) Associates where the Company holds
significant influence
(2)
|
|
1,554
|
|
|
-
|
|
|
|
(ii) Companies controlled by
directors and officers of the Company
(1)
|
|
24
|
|
|
-
|
|
|
|
(ii) Directors and officers and a former
director and officer of the Company
(1)
|
|
1,128
|
|
|
565
|
|
|
|
(ii) A company partially
owned by an officer
(1)
|
|
1,976
|
|
|
-
|
|
|
|
(iii) A 50% owned joint venture company (Note 12(a))
|
|
3,444
|
|
|
2,096
|
|
|
|
(1)
|
The amounts are unsecured, non-interest bearing and have
no specific repayments term.
|
|
|
(2)
|
Amounts are due upon the issuance of the invoice, are
non-interest bearing and unsecured.
|
|
25.
|
Commitments and
Contingencies
|
|
|
(a)
|
Office and operating
leases
|
The Company is committed under lease
and sublease agreements with respect to various office premises, facilities and
warehouses located in Canada expiring between October 31, 2018 and April 30,
2032, office premise lease located in Berlin, Germany expiring December 31,
2022, and sublease agreements with respect to clinics located across Canada
expiring between August 1, 2019 and December 1, 2023, as follows:
|
|
|
|
$
|
|
|
|
2019
|
|
5,332
|
|
|
|
2020
|
|
5,337
|
|
|
|
2021
|
|
4,778
|
|
|
|
2022
|
|
4,649
|
|
|
|
2023
|
|
4,355
|
|
|
|
Thereafter
|
|
22,806
|
|
|
|
|
|
47,257
|
|
The Company has certain operating
leases with renewal options ranging from one to eight options, with each option
extending the lease for an additional five years. The Company also has an option
to purchase lands located in Cremona, Alberta which are currently being leased.
|
|
(b)
|
Claims and litigation
|
From time to time, the Company and/or
its subsidiaries may become defendants in legal actions and the Company intends
to defend itself vigorously against all legal claims. Other than the stock
option claim described below, as of the date of this report, Aurora is not aware
of any claims against the Company.
On November 29, 2017, a claim was
commenced against the Company regarding 300,000 stock options with an exercise
price of $0.39 per share issued to a consultant pursuant to an agreement dated
March 16, 2015. The agreement was terminated on March 8, 2016, and in accordance
to the Company’s stock option plan, the unexercised options expired 90 days from
the date of the termination of the agreement. The option holder is attempting to
enforce exercise rights which the Company believes do not exist. The Company
believes the action to be without merit and intends to defend this claim
vigorously. Due to the uncertainty of timing and the amount of estimated future
cash outflows relating to this claim, no provision had been recognized.
|
|
(c)
|
Capital Project
Commitments
|
The Company has capital project
commitments of approximately $38,474 expected to be paid in the next year.
57
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
26.
|
Construction Contracts
|
|
|
|
|
|
Accounting Policy
|
|
|
|
|
|
Construction contracts include contracts for the
rendering services which are directly related to the construction of the
asset, including services of project managers. Revenue from a construction
contract is recognized when the total contract revenue can be measured
reliably, it is probable that the economic benefits associated with the
contract will flow to the Company, both the contract costs to complete the
contract and the stage of completion at the end of the period can be
measured reliably, and the contract costs attributable to the contract can
be clearly identified and measured reliably so that actual contract costs
incurred can be compared with prior estimates. The Company generates
construction contract revenue from design and construction consulting
services. The stage of completion is determined based on the level of
completion of each phase of design and construction. If the outcome of the
construction contract cannot be estimated reliably, revenue is recognized
only to the extent of contract costs incurred that is probable that will
be recoverable, and contract costs are recognized as an expense in the
period they are incurred.
|
The following is a summary of
construction contract revenues and contracts currently in progress:
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
Construction contract revenue
|
|
4,218
|
|
|
-
|
|
|
|
Gross accounts receivable
|
|
2,179
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Contracts in progress
|
|
|
|
|
|
|
|
|
Recognized profits
|
|
3,276
|
|
|
-
|
|
|
|
Costs incurred
|
|
942
|
|
|
-
|
|
|
27.
|
Segmented Information
|
|
|
|
|
|
Accounting Policy
|
|
|
|
|
|
Operating segments are components of the Company that
engages in business activities from which they earn revenues and incur
expenses (including revenues and expenses related to transactions with
other components of the Company), the operations of which can be clearly
distinguished, and the operating results of which are regularly reviewed
by the chief operating decision maker (“CODM”) for the purposes of
resource allocation and assessing its performance.
|
|
|
|
|
|
As part of the integration of the Company’s recently
acquired businesses, the CODM has revised the manner in which they review
the operations and business performance of the Company. Key measures used
by the CODM in assessing performance and in making resource allocation
decisions include revenues, gross profit and net income (loss). The
Company’s operating results are divided into two reportable operating
segments plus corporate. The two reportable operating segments are medical
cannabis and horizontally-integrated businesses and other. The Company
primarily operates in the medical cannabis segment which includes support
services such as CanvasRx patient counselling services and design,
engineering and construction consulting services. Comparative historical
segmented information has been restated to conform with the organization
of segments in the current period.
|
|
|
|
|
|
Significant Judgement
|
|
|
|
|
|
Operating segments are determined based on internal
reports used in making strategic decisions that are reviewed by the CODMs.
The Company’s CODMs are the Chief Executive Officer, Chief Operating
Officer and the Chief Financial Officer.
|
58
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
27.
|
Segmented Information
(Continued)
|
Operating Segments
|
|
|
|
|
|
|
Horizontally
|
|
|
|
|
|
|
|
|
|
|
|
Medical
|
|
|
Integrated Businesses
|
|
|
|
|
|
|
|
|
|
Year ended June 30, 2018
|
|
Cannabis
|
|
|
and Other
|
|
|
Corporate
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Revenue
|
|
51,129
|
|
|
4,067
|
|
|
-
|
|
|
55,196
|
|
|
|
Gross profit
|
|
42,845
|
|
|
674
|
|
|
-
|
|
|
43,519
|
|
|
|
Net income (loss)
|
|
(1,622
|
)
|
|
(7,239
|
)
|
|
78,088
|
|
|
69,227
|
|
|
|
|
|
|
|
|
Horizontally
|
|
|
|
|
|
|
|
|
|
|
|
Medical
|
|
|
Integrated Businesses
|
|
|
|
|
|
|
|
|
|
Year ended June 30, 2017
|
|
Cannabis
|
|
|
and Other
|
|
|
Corporate
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Revenue
|
|
18,067
|
|
|
-
|
|
|
-
|
|
|
18,067
|
|
|
|
Gross profit
|
|
16,056
|
|
|
-
|
|
|
-
|
|
|
16,056
|
|
|
|
Net loss
|
|
(1,051
|
)
|
|
-
|
|
|
(11,917
|
)
|
|
(12,968
|
)
|
Geographical Segments
|
|
Year ended June 30, 2018
|
|
Canada
|
|
|
European Union
|
|
|
Other
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Non-current assets
|
|
1,658,793
|
|
|
32,225
|
|
|
-
|
|
|
1,691,018
|
|
|
|
Revenue
|
|
48,152
|
|
|
4,599
|
|
|
2,445
|
|
|
55,196
|
|
|
|
Gross profit
|
|
39,654
|
|
|
3,459
|
|
|
406
|
|
|
43,519
|
|
|
|
Year ended June 30, 2017
|
|
Canada
|
|
|
European Union
|
|
|
Other
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Non-current assets
|
|
122,469
|
|
|
6,604
|
|
|
-
|
|
|
129,073
|
|
|
|
Revenue
|
|
17,628
|
|
|
439
|
|
|
-
|
|
|
18,067
|
|
|
|
Gross profit
|
|
15,916
|
|
|
140
|
|
|
-
|
|
|
16,056
|
|
59
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
28.
|
Fair Value of Financial
Instruments
|
|
|
Accounting Policy
|
|
|
|
|
|
Fair Value Hierarchy
|
|
|
|
|
|
Financial instruments recorded at fair value are classified
using a fair value hierarchy that reflects the significance of the inputs
to fair value measurements. The three levels of hierarchy are:
|
|
|
|
|
|
|
|
|
Level 1 – Unadjusted quoted prices in active markets for
identical assets or liabilities;
|
|
|
Level 2 – Inputs other than quoted prices that are observable
for the asset or liability, either directly or indirectly; and
|
|
|
Level 3 – Inputs for the asset or liability that are not based
on observable market data.
|
|
|
|
|
|
|
|
|
Significant Judgment
|
|
|
|
|
|
The individual fair values attributed to the different
components of a financing transaction, notably investments in
available-for-sale equity securities, derivative financial instruments,
convertible debt and loans, are determined using valuation techniques. The
Company uses judgement to select the methods used to make certain
assumptions and in performing the fair value calculations in order to
determine (a) the values attributed to each component of a transaction at
the time of their issuance; (b) the fair value measurements for certain
instruments that require subsequent measurement at fair value on a
recurring basis; and (c) for disclosing the fair value of financial
instruments subsequently carried at amortized cost. These valuation
estimates could be significantly different because of the use of judgement
and the inherent uncertainty in estimating the fair value of these
instruments that are not quoted in an active market.
|
Financial instruments are measured
either at fair value or at amortized cost. The table below lists the valuation
methods used to determine fair value of each financial instrument.
|
|
|
|
Fair Value Method
|
|
|
Financial Instruments Measured at Fair Value
|
|
|
|
|
|
|
Closing market price of common shares as of the
measurement date
|
|
|
Marketable securities
|
|
(Level 1)
|
|
|
Convertible debenture investment
|
|
Discounted cash flow model
|
|
|
Derivatives
|
|
Binomial and Monte Carlo valuation model (Level
2 or Level 3)
|
|
|
Contingent
consideration
|
|
Discounted cash flow model
|
|
|
Financial Instruments Measured at Amortized
Cost
|
|
|
|
|
Cash and cash equivalents, short-term investments,
|
|
|
|
|
accounts receivable
|
|
Carrying amount (approximates fair value due to
short-term nature)
|
|
|
Accounts payable and deferred revenue
|
|
Carrying amount (approximates fair value due to
short-term nature)
|
|
|
Finance lease, convertible notes, loans and
|
|
Carrying value at the effective interest rate
which approximates
|
|
|
borrowings
|
|
fair value
|
The carrying values of the financial
instruments at June 30, 2018 are summarized in the following table:
|
|
|
|
|
|
|
|
|
|
Held-for-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-
|
|
|
|
|
|
trading
|
|
|
Financial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for-sale
|
|
|
|
|
|
derivative
|
|
|
assets
|
|
|
Other
|
|
|
Financial
|
|
|
|
|
|
|
|
|
financial
|
|
|
Loans and
|
|
|
assets
|
|
|
designated as
|
|
|
financial
|
|
|
liabilities
|
|
|
|
|
|
|
|
|
assets
|
|
|
receivables
|
|
|
at FVTPL
|
|
|
FVTPL
|
|
|
liabilities
|
|
|
at FVTPL
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
-
|
|
|
89,193
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
89,193
|
|
|
|
Short-term investments
|
|
-
|
|
|
990
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
990
|
|
|
|
Accounts receivable
|
|
-
|
|
|
15,096
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
15,096
|
|
|
|
Marketable securities
|
|
59,188
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
59,188
|
|
|
|
Derivatives
|
|
-
|
|
|
-
|
|
|
5,331
|
|
|
119,611
|
|
|
-
|
|
|
-
|
|
|
124,942
|
|
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
(1)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
47,456
|
|
|
-
|
|
|
47,456
|
|
|
|
Convertible notes
(2)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
191,528
|
|
|
-
|
|
|
191,528
|
|
|
|
Contingent consideration
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
21,333
|
|
|
21,333
|
|
|
|
Loans and borrowings
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
11,683
|
|
|
-
|
|
|
11,683
|
|
|
|
(1)
|
Balance includes interest rate swaps of $63 and are
included in accounts payable on the Statement of Financial
Position.
|
|
|
(2)
|
The fair value of convertible notes includes both the
debt and equity components.
|
60
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
28.
|
Fair Value of Financial Instruments
(Continued)
|
The following is a summary of
financial assets measured at fair value segregated based on the various levels
of inputs (Note 7 and 8):
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Marketable securities
|
|
59,188
|
|
|
-
|
|
|
-
|
|
|
59,188
|
|
|
|
Derivative assets
|
|
-
|
|
|
120,102
|
|
|
4,840
|
|
|
124,942
|
|
There have been no transfers between
fair value levels during the year.
|
|
(b)
|
Changes in level 3 financial
assets
|
Changes in the carrying value of level
3 financial assets for the year were as follows:
|
|
|
|
Convertible
|
|
|
Warrant
|
|
|
|
|
|
|
|
|
Debenture
|
|
|
Derivatives
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Opening, June 30, 2017
|
|
11,071
|
|
|
292
|
|
|
11,363
|
|
|
|
Additions
|
|
-
|
|
|
30,681
|
|
|
30,681
|
|
|
|
Unrealized gain at inception
|
|
-
|
|
|
3,050
|
|
|
3,050
|
|
|
|
Unrealized gain (loss)
|
|
830
|
|
|
(9,790
|
)
|
|
(8,960
|
)
|
|
|
Conversion of debenture
|
|
(11,901
|
)
|
|
4,330
|
|
|
(7,571
|
)
|
|
|
Exercise of warrants
|
|
-
|
|
|
(23,723
|
)
|
|
(23,723
|
)
|
|
|
Ending, June 30, 2018
|
|
-
|
|
|
4,840
|
|
|
4,840
|
|
|
|
(c)
|
Unrealized gains (losses) on level 3 financial
assets
|
For the year ended June 30, 2018, the
Company recognized unrealized gains (losses) on level 3 financial assets as
follows:
|
|
|
|
Convertible
|
|
|
Warrant
|
|
|
|
|
|
|
|
|
Debenture
|
|
|
Derivatives
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Gain (loss) on changes in
fair value
|
|
830
|
|
|
(9,790
|
)
|
|
(8,960
|
)
|
|
|
Amortized deferred inception gains
|
|
6,107
|
|
|
5,217
|
|
|
11,324
|
|
|
|
Unrealized gains (losses) on level 3 financial assets
|
|
6,937
|
|
|
(4,573
|
)
|
|
2,364
|
|
Changes in deferred gains on
convertible debenture and derivatives measured at fair value and included in
level 3 of the fair value hierarchy were as follows:
|
|
|
|
Convertible
|
|
|
Warrant
|
|
|
|
|
|
|
|
|
Debenture
|
|
|
Derivatives
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Opening balance
|
|
10,206
|
|
|
321
|
|
|
10,527
|
|
|
|
Additions
|
|
-
|
|
|
3,051
|
|
|
3,051
|
|
|
|
Conversion of debenture 3
|
|
(4,099
|
)
|
|
4,099
|
|
|
-
|
|
|
|
Unrealized gains amortized
|
|
(6,107
|
)
|
|
(5,217
|
)
|
|
(11,324
|
)
|
|
|
Ending balance
|
|
-
|
|
|
2,254
|
|
|
2,254
|
|
61
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
28.
|
Fair Value of Financial Instruments
(Continued)
|
|
|
(e)
|
Contingent consideration
payable
|
The following is a continuity of
contingent consideration payable:
|
|
|
|
BCNL UCI
|
|
|
CanvasRx
|
|
|
H2
|
|
|
|
|
|
|
|
|
Note
|
|
|
Note
|
|
|
Note
|
|
|
|
|
|
|
|
|
13(a)(i)
|
|
|
13(a)(v)
|
|
|
13(b)(i)
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Balance, June 30, 2017
|
|
-
|
|
|
13,221
|
|
|
-
|
|
|
13,221
|
|
|
|
Additions from acquisitions
|
|
1,119
|
|
|
-
|
|
|
14,957
|
|
|
16,076
|
|
|
|
Unrealized loss from changes
in fair value
|
|
123
|
|
|
6,703
|
|
|
1,018
|
|
|
7,844
|
|
|
|
Payments
|
|
-
|
|
|
(14,040
|
)
|
|
(1,768
|
)
|
|
(15,808
|
)
|
|
|
Balance, June 30, 2018
|
|
1,242
|
|
|
5,884
|
|
|
14,207
|
|
|
21,333
|
|
The Company’s contingent consideration
payable is measured at fair value based on unobservable inputs and is considered
a level 3 financial instrument. The fair value of these liabilities determined
by this analysis was primarily driven by the Company’s expectations of the
subsidiaries’ achieving their milestones. The expected milestones were assessed
probabilities by management which were discounted to present value in order to
derive a fair value of the contingent consideration. At June 30, 2018, the
probability of achieving the milestones was estimated to be 100% and the
discount rates were estimated to range between 15% and 36%. If the probability
of achieving the milestones decreased by 10%, the estimated fair value of
contingent consideration would decrease by approximately $2,034. If the discount
rate increased or decreased by 5%, the estimated fair value of contingent
consideration would increase or decrease by approximately $356.
|
29.
|
Financial Instruments Risk
|
The Company is exposed in varying
degrees to a variety of financial instrument related risks. The Board mitigates
these risks by assessing, monitoring and approving the Company’s risk management
processes.
Credit risk is the risk of a potential
loss to the Company if a customer or third party to a financial instrument fails
to meet its contractual obligations. The Company is moderately exposed to credit
risk from its cash and cash equivalents, trade and other receivables and
short-term GIC investments. The risk exposure is limited to their carrying
amounts at the statement of financial position date. The risk for cash and cash
equivalents is mitigated by holding these instruments with highly rated Canadian
financial institutions. The Company does not invest in asset-backed deposits or
investments and does not expect any credit losses. The Company periodically
assesses the quality of its investments and is satisfied with the credit rating
of the financial institutions and the investment grade of its GICs. Trade and other receivables primarily
consist of trade accounts receivable and goods and services taxes recoverable
(“GST”). The Company provides credit to its customers in the normal course of
business and has established credit evaluation and monitoring processes to
mitigate credit risk but has limited risk as the majority of sales are
transacted with credit cards.
As at June 30, 2018, the Company’s
aging of receivables was approximately as follows:
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
0 – 60 days
|
|
13,569
|
|
|
1,534
|
|
|
|
61 –
120 days
|
|
1,527
|
|
|
778
|
|
|
|
|
|
15,096
|
|
|
2,312
|
|
62
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
29.
|
Financial Instruments Risk
(Continued)
|
Liquidity risk is the risk that the
Company will not be able to meet its financial obligations associated with
financial liabilities. The Company manages liquidity risk through the management
of its capital structure. The Company has access to CanniMed’s Canadian and US
operating lines of credit with a maximum of $1,000 and US $500, respectively.
The Canadian and US operating lines of credit bear interest at bank prime rate
plus 0.75% and at US base rate plus 0.75%, respectively. The lines of credit are
secured by a general security agreement covering all assets of the Company and
can be accessed to the lesser of the maximum available credit or the aggregate
of 90% of Government of Canada receivables, 85% of undoubted receivables and 75%
of acceptable receivables, less intercompany and priority claim amounts. These
operating lines of credit were undrawn as of June 30, 2018. Subsequent to June
30, 2018, the Company also secured a $200,000 debt facility with BMO (Note 31).
The Company’s approach to managing liquidity is to ensure that it will have
sufficient liquidity to settle obligations and liabilities when due.
In addition to the commitments
outlined in Note 25, the Company has the following gross contractual obligations
subject to liquidity risk:
|
|
|
|
Total
|
|
|
<1 year
|
|
|
1 - 3 years
|
|
|
3 -5 years
|
|
|
> 5 years
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
Accounts payable and accrued
liabilities
|
|
47,456
|
|
|
47,456
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Convertible notes and interest
(1)
|
|
251,356
|
|
|
11,604
|
|
|
237,649
|
|
|
2,103
|
|
|
-
|
|
|
|
Loans and borrowings
(2)
|
|
11,747
|
|
|
2,482
|
|
|
2,511
|
|
|
1,415
|
|
|
5,339
|
|
|
|
Contingent consideration payable
|
|
23,742
|
|
|
14,438
|
|
|
9,304
|
|
|
-
|
|
|
-
|
|
|
|
|
|
334,301
|
|
|
75,980
|
|
|
249,464
|
|
|
3,518
|
|
|
5,339
|
|
|
|
(1)
|
Assumes the principal balance outstanding at June 30,
2018 remains unconverted and includes the estimated interest payable until
the maturity date.
|
|
|
(2)
|
The term loan balance of $9,971 at June 30, 2018 was
fully repaid subsequent to year-end. (Note
18(a)).
|
The operating results and financial
position of the Company are reported in Canadian dollars. As the Company
operates in an international environment, some of the Company’s financial
instruments and transactions are denominated in currencies other than the
Canadian dollar. The results of the Company’s operations are subject to currency
transaction and translation risks.
The Company’s main risk is associated
with fluctuations in Euros, Danish Krone, Australian and U.S. dollars as the
Company holds cash in Canadian dollars, U.S. dollars, Danish Krone and Euros,
and investments in Australian and U.S. dollars. Assets and liabilities are
translated based on the foreign currency translation policy.
The Company has determined that as at
June 30, 218, an effect of a 10% increase or decrease in Euros, Danish Krone,
Australian dollars and U.S. dollars against the Canadian dollar on financial
assets and liabilities would result in an increase or decrease of approximately
$79 (2017 - $1,430) to net income and comprehensive income for the year ended
June 30, 2018.
At June 30, 2018, the Company had no
hedging agreements in place with respect to foreign exchange rates. The Company
has not entered into any agreements or purchased any instruments to hedge
possible currency risks at this time.
Interest rate risk is the risk that
the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. Cash and cash equivalents bear
interest at market rates. The Company’s investments and convertible notes have
fixed rates of interest. The majority of the Company’s loans and borrowings have
floating interest rates. The Company holds interest rate swaps to fix its
exposure to variable interest rates on approximately one half of its loans and
borrowings.
63
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
29.
|
Financial Instruments Risk
(Continued)
|
|
|
(c)
|
Market risk
(continued)
|
Price risk is the risk of variability
in fair value due to movements in equity or market prices. The Company’s
marketable securities and investments are susceptible to price risk arising from
uncertainties about their future values. The fair value of marketable securities
is based on quoted market prices which the shares of the investments can be
exchanged for.
If the fair value of these financial
assets were to increase or decrease by 10%, the Company would incur an
associated increase or decrease in net and comprehensive income (loss) of
approximately $29,502 (2017 - $2,823). See Note 8 for additional details
regarding the fair value of marketable securities and derivatives.
The Company’s objectives when managing
capital are to ensure that there are adequate capital resources to safeguard the
Company’s ability to continue as a going concern and maintain adequate levels of
funding to support its ongoing operations and development such that it can
continue to provide returns to shareholders and benefits for other stakeholders.
The capital structure of the Company
consists of $1,766,342 (2017 – $282,820) in shareholders’ equity and debt. The
Company manages its capital structure and makes adjustments to it in light of
changes in economic conditions and the risk characteristics of the Company’s
underlying assets. The Company plans to use existing funds, as well as funds
from the future sale of products to fund operations and expansion
activities.
As disclosed in Note 18, the Company
has various loan facilities in place. Certain loans have financial covenants
which are generally in the form of leverage and liquidity ratios. During the
year ended June 30, 2018 and 2017, the Company was in compliance with all
covenants. The Company does not have any other externally imposed capital
requirements.
The following events occurred
subsequent to June 30, 2018:
|
|
(a)
|
On July 2, 2018, the Company subscribed to a US
$10,000,000 convertible debenture in a private company (“investee
company”) which if fully converted would provide the Company with a 14.3%
interest. The debentures bear interest at 1.5% per annum payable in cash
or common shares equal to the fair value of shares at the time of
issuance. The debentures are convertible into common shares of the
investee company at US $4.9585 at the option of the Aurora until July 2,
2023. The Company had advanced the funds to a legal trust account as of
June 30, 2018 (Note 4).
|
|
|
|
|
|
|
|
The Company also entered into an Investor Rights
Agreement where Aurora has the right to participate in any future
offerings of equity of the investee company to allow Aurora to maintain
its percentage ownership interest, as well as the right to nominate a
director to the investee company’s Board of Directors as long as the
Company owns at least 10% interest.
|
|
|
|
|
|
|
(b)
|
On July 10, 2018, the Company entered into a Product
Development and Distribution Agreement with Evio Beauty Group Ltd.
(“Evio”) pursuant to which both companies have agreed to collaborate to
develop and manufacture a line of at least 3 co-branded topical cosmetic
products formulated with a cannabinoid or cannabinoids. The agreement has
an initial term for 6 years and following expiry of the term, unless
renewed, neither party shall continue to sell the products. Aurora will
earn a 10% royalty on sales of all non-infused products, and Evio will
earn a 10% royalty on sale of all infused products in any geographical
area in which Aurora operates.
|
|
|
|
|
|
|
|
The Company also entered into an Investor Rights
Agreement where Aurora has the right to participate in any future
offerings of equity or debt convertible into equity of Evio to allow
Aurora to maintain its ownership interest.
|
64
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
31.
|
Subsequent Events
(Continued)
|
|
|
(c)
|
On July 17, 2018, the Company acquired the remaining 50%
interest in AHL from AJR for US $500 (Note 12(a)).
|
|
|
|
|
|
|
(d)
|
On July 25, 2018, Aurora completed the acquisition of all
of the issued and outstanding common shares of MedReleaf Corp.
(“MedReleaf”). Under the terms of the Amended Arrangement Agreement dated
May 23, 2018, holders of MedReleaf common shares received 3.575 common
shares of Aurora and $0.000001 cash for each MedReleaf common share held
(the “Exchange Ratio”). The Company issued an aggregate of 370,120,238
common shares with a fair value of $2,568,634 and 14,033,784 replacement
stock options and 10,278,125 replaced warrants. The exercise price of the
stock options are based on the exercise price per MedReleaf stock options
adjusted for the Exchange Ratio.
|
|
|
|
|
|
|
(e)
|
On August 1, 2018, the Company and CannaRoyalty entered
into an assignment and assumption agreement where CannaRoyalty assigned to
Aurora all of its rights, title and interest in an exclusive license for a
technology for creating machine-rolled cannabis developed by Wagner. In
consideration, Aurora paid to CannaRoyalty $7,000 through the issuance of
756,348 common shares at $9.255 per share.
|
|
|
|
|
|
|
(f)
|
Pursuant to the spin-out transaction (Note 15), ACI
completed a non-brokered private placement financing in two tranches on
July 5, 2018 and August 3, 2018. ACI issued 85,000,000 shares at $0.20 per
share for gross proceeds of $17,000.
|
|
|
|
|
|
|
(g)
|
On August 7, 2018, the Company entered into a Letter of
Intent to acquire HotHouse Consulting Inc. (“HotHouse”), a provider of
advanced greenhouse consulting services, for $2,000 to be paid in common
shares of Aurora.
|
|
|
|
|
|
|
(h)
|
On August 8, 2018, the Company completed the acquisition
of Anandia Laboratories Inc. (“Anandia”), a private company that holds a
Dealer’s License by Health Canada and provides analytical testing services
to Licensed Producers and patients. Anandia was acquired for its research
and development portfolio, including the exclusive rights to a number of
key genes in the cannabinoid pathway, patents pending for genetic markers,
as well as its product testing and product development facilities. Aurora
acquired all of the issued and outstanding common shares of Anandia in
exchange for 12,716,482 common shares and 6,358,210 share purchase
warrants of Aurora. The warrants are exercisable at $9.3717 per share
until August 9, 2023. Pursuant to the terms of the acquisition, upon the
achievement of future milestones, Aurora will pay an additional $10,000 by
way of the issuance of additional shares and warrants.
|
|
|
|
|
|
|
(i)
|
On August 20, 2018, the Company fully converted its US
$1,000 debenture into common shares of CTT (Notes 8(i) and
12(e)).
|
|
|
|
|
|
|
(j)
|
On August 29, 2018, the Company closed a $200,000 debt
facility with Bank of Montreal (“BMO”) consisting of a $150,000 term loan
and a $50,000 revolving credit facility, both of which will mature in
2021. The Company also has an option to upsize the facility to a total of
$250,000, subject to certain conditions. The debt facility will be
primarily secured by Aurora’s production facilities and can be repaid
without penalty at Aurora’s discretion. The interest rate for the debt
facility and revolving credit facility is a set margin over the BMO CAD
Prime Rate or a Bankers' Acceptance of appropriate term. Based on the
current BMO CAD Prime Rate, the interest payable is expected to be i n the
mid to high 4% per annum range over the term of the Loans.
|
|
|
|
|
|
|
(k)
|
On September 10, 2018, the Company announced it had
entered into a definitive arrangement agreement pursuant to which Aurora
intends to acquire all of the issued and outstanding common shares of ICC
Labs Inc. (“ICC”) for $1.95 per share, payable in common shares of Aurora
valued at the VWAP during the 20-day trading period ending the second to
last trading day on the TSX prior to the effective date. The Transaction
will be effected by way of a plan of arrangement under the Business
Corporations Act (BC).
|
|
|
|
|
|
|
(l)
|
On September 10, 2018, the Company acquired 100% of the
issued and outstanding shares of Agropro UAB (“Agropro”) and Borela UAB
(“Borela”) for total consideration of €6,418 of which €960 was paid
through the issuance of 170,834 common shares. In addition, the Company
paid a finder’s fee of €1,517, which was paid through the issuance of
270,024 common shares, and will also refinance Agropro’s existing debt
totaling €2,076. Agropro is a hemp seed contracting and processing
company, and its sister company, Borela, is a processor and distributor of
organic hulled hemp seeds, hemp seed protein, hemp flour and hemp seed
oil.
|
65
|
AURORA CANNABIS INC.
|
|
Notes to the Consolidated Financial Statements
|
|
Years ended June 30, 2018 and 2017
|
|
(In thousands of
Canadian dollars, except share and per share amounts)
|
|
31.
|
Subsequent Events
(Continued)
|
|
|
(m)
|
On September 19, 2018, the Company completed the spin-out
of ACI and distributed to Aurora shareholders, as a return of capital,
units of ACI on the basis of one unit for every thirty-four Aurora shares
outstanding on the August 24, 2018 record date (Note 15). Each unit
consisted of one common share and one warrant exercisable at $0.25 per
warrant for a period of one year. The results of ACI were deconsolidated
from the Company upon completion of the spin-out.
|
|
|
|
|
|
|
(n)
|
8,043,385 common shares were issued on the exercise of
8,043,385 stock options for gross proceeds of $21,336.
|
|
|
|
|
|
|
(o)
|
759,638 common shares were issued on the exercise of
759,638 warrants for gross proceeds of $2,659.
|
|
|
|
|
|
|
(p)
|
11,999 common shares were issued on the conversion of
$77,994 principal amount of debentures. (Note
17(c)).
|
66
MANAGEMENT’S DISCUSSION AND
ANALYSIS
TABLE OF CONTENTS
|
21 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
This Management’s Discussion and Analysis (“MD&A”) reports
on the consolidated financial condition and operating results of Aurora Cannabis
Inc. (“the Company” or “Aurora”) for the three and twelve-month periods ended
June 30, 2018 and has been prepared pursuant to the MD&A disclosure
requirements under National Instrument 51-102 - Continuous Disclosure
Obligations (“NI 51-102”) of the Canadian Securities Administrators. The
Company’s continuous disclosure documents, including Annual Information Form,
are available on SEDAR at www.sedar.com.
This MD&A should be read in conjunction with the Company’s
audited Consolidated Financial Statements for the year ended June 30, 2018 and
notes thereto (the “Financial Statements”) which have been prepared in
accordance with International Financial Reporting Standards (“IFRS”).
The
Financial Statements include the accounts of the Company and its wholly-owned
subsidiaries, Aurora Cannabis Enterprises Inc. (“ACE”), Aurora Deutschland GmbH
(“Aurora Deutschland”), CanniMed Therapeutics Inc. (“CanniMed”), Aurora Larssen
Projects Ltd. (“ALPS”), CanvasRX Inc. (“CanvasRX”), Peloton Pharmaceuticals Inc.
(“Peloton” or “Aurora Vie”), H2 Biopharma Inc. (“H2” or “Aurora Eau”), B.C.
Northern Lights Enterprises Ltd. (“BCNL”), Urban Cultivator Inc. (“UCI”), and
Hempco Food and Fiber Inc. (“Hempco”). All significant intercompany balances and
transactions have been eliminated on consolidation.
The Company has reclassified certain immaterial items on the
comparative consolidated statement of comprehensive loss to conform with current
period’s presentation and improve clarity.
All dollar amounts referred to in this MD&A are expressed
in thousands of Canadian dollars, except for share and per share amounts, and
where otherwise indicated.
This MD&A has been prepared as of September 24, 2018.
NON-IFRS FINANCIAL
MEASURES
The Financial Review contains certain financial performance
measures that are not defined by IFRS; and are used by management to assess the
financial and operational performance of the Company. These include, but are not
limited, to the following:
|
|
•
|
Cash cost of sales per gram of dried cannabis
sold
|
|
|
•
|
Cash cost to produce per gram of dried cannabis
sold
|
|
|
•
|
Gross profit on medical cannabis segment before
fair value adjustments
|
|
|
•
|
Gross profit on medical cannabis before fair
value adjustments
|
|
|
•
|
Gross margin on medical cannabis before fair
value adjustments
|
The Company believes that these non-IFRS financial measures, in
addition to conventional measures prepared in accordance with IFRS, enable
investors to evaluate the Company’s operating results, underlying performance
and prospects in a manner similar to Aurora’s management. These non-IFRS
financial performance measures are defined in the following sections.
As there are no standardized methods of calculating these
non-IFRS measures, the Company’s approaches may differ from those used by
others; and accordingly, the use of these measures may not be directly
comparable. Accordingly, these non-IFRS measures are intended to provide
additional information and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with IFRS.
|
22 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
ABOUT AURORA
Aurora Cannabis Inc. (the “Company” or “Aurora”) was
incorporated under the Business Corporations Act (British Columbia) on December
21, 2006. The Company’s shares are listed on the Toronto Stock Exchange (the
“Exchange”) under the symbol “ACB” and on the OTCQX under the symbol “ACBFF”.
The Company’s principal business is the production and
distribution of medical cannabis in Canada and internationally. The Company
produces and distributes dried medical cannabis and cannabis oils in Canada
pursuant to the
Access to Cannabis for Medical Purposes Regulations
(“ACMPR”) through its wholly-owned subsidiary, Aurora Cannabis Enterprises Inc.
(“ACE”), distributes wholesale medical cannabis in the European Union pursuant
to the
German Medicinal Products Act
and
German Narcotic Drugs
Act
, and in Italy through the January 2018 tender process.
Aurora does not engage in any U.S. cannabis-related activities
as defined in Canadian Securities Administrators Staff Notice 51-352. While the
Company has held an interest in Australis Holdings LLP (“Australis Holdings” or
“AHL”)), a U.S. based company, as at June 30, 2018, AHL has not engaged in any
cannabis-related activities for the periods ended. Additionally, AHL was
spun-out to Aurora shareholders as part of the Australis Capital Inc. spin-out
completed subsequent to June 30, 2018.
Aurora is one of the world`s largest and fastest growing
cannabis companies and has created a growing constellation of subsidiaries and
strategic partnerships that provide differentiation in terms of geographic
reach, production, technology, product offering, and execution.
With a growing number of countries adopting medical cannabis
legislation, the Company has embarked on an aggressive international expansion
strategy that currently sees Aurora with operations and investments in Germany,
Denmark, Italy, Australia, Cayman Islands, Malta, Lithuania, and South Africa.
|
23 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
SUMMARY OF FINANCIAL RESULTS
Summarized Key Quarterly Results
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
|
|
|
(in thousands except as otherwise
noted)
|
|
Q4
|
|
|
Q3
|
|
|
Q2
|
|
|
Q1
|
|
|
Total
|
|
|
Financial Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
19,147
|
|
$
|
16,100
|
|
$
|
11,700
|
|
$
|
8,249
|
|
$
|
55,196
|
|
|
Gross margin on medical cannabis
(
1)
|
|
74%
|
|
|
59%
|
|
|
63%
|
|
|
58%
|
|
|
65%
|
|
|
Earnings (loss)
|
|
79,268
|
|
|
(20,795
|
)
|
|
7,194
|
|
|
3,560
|
|
|
69,227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cannabis inventory and biological assets
|
|
41,031
|
|
|
29,162
|
|
|
17,325
|
|
|
16,846
|
|
|
41,031
|
|
|
Total assets
|
|
1,910,716
|
|
|
1,671,400
|
|
|
732,394
|
|
|
347,834
|
|
|
1,910,716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operational Results - Medical Cannabis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash cost of sales per gram of dried cannabis
sold
(
2)
|
$
|
1.87
|
|
$
|
1.80
|
|
$
|
1.74
|
|
$
|
2.16
|
|
|
n/a
|
|
|
Cash cost to produce per gram of dried
cannabis sold
(
2)
|
$
|
1.70
|
|
$
|
1.53
|
|
$
|
1.41
|
|
$
|
1.87
|
|
|
n/a
|
|
|
Active registered patients
|
|
43,308
|
|
|
45,776
|
|
|
21,718
|
|
|
19,280
|
|
|
n/a
|
|
|
Average net selling price of dried
cannabis
(
3)
|
$
|
8.02
|
|
$
|
7.30
|
|
$
|
7.86
|
|
$
|
7.32
|
|
$
|
7.65
|
|
|
Average net selling price of cannabis oil
(
3)
|
$
|
13.52
|
|
$
|
12.83
|
|
$
|
13.35
|
|
$
|
16.41
|
|
$
|
13.68
|
|
|
Kilograms produced
|
|
2,212
|
|
|
1,206
|
|
|
1,204
|
|
|
1,010
|
|
|
5,632
|
|
|
Kilograms sold
|
|
1,617
|
|
|
1,353
|
|
|
1,162
|
|
|
890
|
|
|
5,022
|
|
|
(1)
|
Represents the gross margin on medical cannabis before
fair value adjustments.
|
|
(2)
|
Represents the cash cost of sales per gram of dried
cannabis and cash cost to produce per gram of dried cannabis sold for
dried cannabis produced by Aurora.
|
|
(3)
|
Represents the net average selling price per gram of
dried cannabis or per gram of dried cannabis
equivalent.
|
|
(in thousands
except as otherwise noted)
|
|
Q4
2018
|
|
|
Q3
2018
|
|
|
Medical cannabis segment revenue
|
|
|
|
|
|
|
|
Canadian dried cannabis
|
$
|
7,529
|
|
$
|
6,304
|
|
|
Canadian cannabis oils
|
|
4,710
|
|
|
2,178
|
|
|
European dried cannabis
|
|
2,641
|
|
|
2,331
|
|
|
Medical cannabis revenue
|
|
14,880
|
|
|
10,813
|
|
|
Patient counselling services
|
|
1,553
|
|
|
591
|
|
|
Design, engineering and construction services
|
|
1,239
|
|
|
2,979
|
|
|
Other
|
|
85
|
|
|
97
|
|
|
Total medical cannabis segment revenue
|
|
17,757
|
|
|
14,480
|
|
|
Other segment revenues
|
|
1,390
|
|
|
1,620
|
|
|
Total revenue
|
$
|
19,147
|
|
$
|
16,100
|
|
The Company’s financial results for the fourth quarter
continued to show strong growth in medical dried cannabis and cannabis oil
sales. Compared to the prior quarter, medical cannabis revenue increased by 38%,
while at the same time allowing for a significant increase in inventory.
Cannabis inventory and biological assets increased 41% from the prior quarter in
preparation for the commencement of the Canadian adult-use market on October 17,
2018.
Compared to Q4 2017, total revenue increased by 223%, primarily
due to an increase in the number of active registered patients, increased
product availability and the consolidation of the results of acquisitions.
|
24 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
Aurora experienced a strong increase in margins mostly due to a
continuing shift of dried cannabis sales to cannabis oils for Aurora products,
and the consolidation of CanniMed revenues, which also had a strong oil
component. Compared to the prior quarter, sales of oil products as a percentage
of medical cannabis revenue increased from 20% to 32%. A planned reduction in
new patient promotional discounts also contributed to improved margins in the
quarter.
Aurora’s Mountain facility continued to produce high quality
cannabis at optimal levels. However, with additional production from new
facilities just coming online, the Company chose to constrain international
sales to properly serve the Canadian medical market, while also building
inventory in anticipation of the legalization of the Canadian adult-use market.
With Aurora Vie, Sky, and MedReleaf facilities now operational, and with
CanniMed yield improvements, this was a short-term constraint.
Cash cost of sales per gram of dried cannabis sold and cash
cost to produce per gram of dried cannabis sold increased by $0.07 and $0.17
respectively from the prior quarter, mainly due to the inclusion of CanniMed’s
higher per unit production costs, partially offset by lower utility costs in the
summer months. The Company has continued to drive yield and efficiency
improvements at CanniMed and is now realizing significant rewards.
Production costs per gram are expected to decrease
significantly once Aurora Sky is fully operational and the efficiencies from
automation, scale and yield expertise are also realized in the CanniMed
facilities and other newly acquired Aurora facilities. Management expects that
cash costs to produce a gram of cannabis at a Sky Class facility will be well
below $1.00 per gram. During the fourth quarter of 2018, Aurora continued to
ramp up investments in infrastructure and talent required to realize the
tremendous opportunities in the Canadian and international medical cannabis
markets, and the upcoming Canadian adult-use market. Across the company,
headcount increased from 300 at June 30, 2018 to over 1,400 currently.
General and administration costs increased primarily due to
professional fees related to the significant volume of strategic corporate
transactions, compliance, and other general corporate matters; travel costs
resulting from increased market development and integration activities; and
higher wages and benefits from additional headcount to support the Company’s
growth and strategic objectives. The inclusion of CanniMed’s general and
administrative cost accounted for 25% of the increase overall.
Sales and marketing costs also increased compared to the third
quarter of fiscal 2018. The increase was primarily due to significant investment
in the Company’s overall brand building initiatives, including consumer
education and engagement activities in preparation for the impending adult-use
market in Canada. The inclusion of CanniMed’s sales and marketing cost accounted
for 19% of the increase overall.
The Company continued to invest heavily in production
facilities and strategic assets. Aurora is building a diversified and vertically
integrated company that can realize the tremendous opportunity of the global
cannabis markets.
|
25 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
In June 2017, Aurora estimated the cost of construction of the
Sky facility to be approximately $120 million. Because this was the first time
these advanced technologies had been brought together in one agricultural
production facility, the Company and its advisors took a “Design-Build” approach
to the project. As Aurora moved through the construction phases of the facility,
design changes and improvements were made as additional information became
available. During the project, the Company implemented several improvements and
enhancements to the technologies, workflow, and size of this world class
facility. As the project nears full completion, the Company expects that the
total budget for construction and equipment will be approximately $150 million.
At full scale production of at least 100,000 kgs per year, and assuming average
pricing and margins on sales to provinces, the Company expects a full payback on
this project in a very short number of months. The Company anticipates that
future Sky Class facilities, Aurora Sun and Aurora Nordic, will have a lower per
square foot cost than Aurora Sky due to refined engineering requirements,
project workflow enhancements, and a reduced need for certain corporate and
infrastructure facilities to be incorporated into the design of these
facilities.
During fiscal 2018, Aurora made a number of investments in
publicly traded companies that provide a significant strategic advantage for the
company. These companies include TGOD, Radient, Alcanna, and Cann Group, as well
as a number of others. The Company reflects these investments in its IFRS
financial statements as either Marketable Securities, Derivatives, Investments
in Associates and/or Joint Ventures. However, under IFRS, these are not
necessarily all reflected at current market value. For the publicly traded
companies that Aurora has invested in, the market value of the shares, and
“in-the-money” warrants and options at June 30, 2018 was $697.6 million.
KEY DEVELOPMENTS DURING THE FOURTH
QUARTER 2018
Strategic Investments
|
|
a)
|
Strategic Investment in Hempco Food and Fiber Inc.
(“Hempco”)
|
|
|
|
On May 7, 2018, Aurora exercised its right under a
private option agreement to purchase an aggregate of 10,754,942 additional
common shares of Hempco, increasing its ownership interest to 52.3%. This
investment secures Aurora access to low-cost raw material for the
potential production of CBD extracts.
|
|
|
|
|
|
|
b)
|
Strategic Investment in CTT Pharmaceuticals Inc.
(“CTT”)
|
|
|
|
On May 20, 2018, the Company invested in a convertible
debenture, which, if converted, would result in a 9.14% ownership interest
in CTT. The Company also holds 20,779,972 warrants in CTT, enabling Aurora
to increase its ownership to 42.5%. CTT is developing a fast dissolving,
oral thin film wafer that will provide a dose specific, smoke-free
delivery of medical cannabis or other active ingredients. This investment
will provide the Company with global exclusivity to develop, manufacture
and market CTT's novel oral wafers.
|
|
|
|
|
|
|
|
On August 20, 2018, the Company fully converted its
debenture into common shares of CTT.
|
|
26 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
|
|
c)
|
Strategic Investments in Choom Holdings Inc.
(“Choom”)
|
|
|
|
On June 12, 2018, the Company subscribed to 9,859,155
common shares of Choom, representing an 8% ownership interest. Subsequent
to the initial investment, Choom acquired Specialty Medijuana Products
Inc. This investment positions the Company to participate in the emerging
craft cultivation market, as well as in an exciting Western Canada retail
strategy with products that are anticipated to resonate strongly with the
adult-use market.
|
|
|
|
|
|
|
d)
|
Strategic Investment in Capcium Inc.
(“Capcium”)
|
|
|
|
On June 6, 2018, the Company acquired 8,828,662 common
shares in Capcium, representing a 19.99% ownership interest. Capcium, an
emerging leader in softgel manufacturing, has developed expertise that is
ready to be applied to the cannabis industry and deliver high-volume
production capacity.
|
|
|
|
|
|
|
e)
|
Strategic Investment in The Green Organic Dutchman
Holdings Ltd. (“TGOD”)
|
|
|
|
On May 2, 2018, the Company participated in the initial
public officering of TGOD, purchasing 6,341,250 units at $3.65 per unit
for a total investment of $23,146. This followed an earlier strategic
investment in January 2018. As at June 30, 2018, the Company held a total
of 39,674,584 common shares and 19,837,292 warrants, representing an
ownership interest of 17% on an undiluted basis with options to increase
ownership interest to 50%.
|
|
|
|
|
|
|
|
TGOD is currently completing a 14,000 kg per year
facility in Ancaster, and constructing an 820,000 square foot, 104,000 kg
per annum, high-technology cannabis facility in Valleyfield, Quebec.
Aurora currently has rights to 20% of the production output from these two
facilities.
|
|
|
|
|
|
|
f)
|
Spin-
out of Australis Capital Inc.
(“ACI”)
|
|
|
|
In June 2018, the Company began reorganizing for the
spin-out of ACI and its United States (“U.S.”) assets, and filed a
prospectus for the listing of ACI on the Canadian Stock Exchange (“CSE”).
On June 13, 2018, the Company completed a series of intercorporate
transactions resulting in Aurora holding a direct interest in 100% of the
outstanding shares and warrants of ACI, and ACI holding all the U.S.
assets of Aurora and its subsidiaries. The assets primarily consisted of
the Company’s 50% joint venture interest in Australis Holdings, which was
subsequently increased to 100% for US $500, and rights to a number of
SubTerra assets.
|
|
|
|
|
|
|
|
On June 14, 2018, the Company entered into a Funding
Agreement pursuant to which Aurora advanced $500,000 to ACI, in
consideration for which ACI provided Aurora with the Restricted Back-in
Right, by issuing to Aurora:
|
|
|
i.
|
a warrant to purchase 20% of the issued and outstanding
shares of ACI at an exercise price of $0.20 per share; and
|
|
|
|
|
|
|
ii.
|
a warrant to purchase 20% of the issued and outstanding
shares of ACI at an exercise price equal to the five-day volume weighted
average trading price of ACI’s shares on the
CSE.
|
|
27 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
Aurora will be prohibited from
exercising the Restricted Back-in Right unless all of ACI’s business operations
in The U.S. are legal under federal and state laws, and Aurora has received the
consent of the TSX and any other stock exchange on which Aurora may be listed.
Subsequent to June 30, 2018, the
Company completed the spin-out of ACI and distributed to Aurora shareholders, as
a return of capital, units of ACI on the basis of one unit for every thirty-four
Aurora shares. Each unit consists of one unit share and one warrant exercisable
at $0.25 per warrant for a period of one year.
Supply Agreements and Partnerships
|
|
g)
|
Supplier Agreement with
Pharmasave
|
|
|
|
On April 4, 2018, CanniMed, a wholly owned subsidiary of
Aurora, entered into a Letter of Intent with Pharmasave, one of Canada’s
leading independent community pharmacy chains, to become a preferred
supplier of medical cannabis. With more than 650 independently owned
pharmacies within the Pharmasave network, CanniMed and Aurora will supply
and distribute medical cannabis across Canada through Pharmasave
pharmacists.
|
|
|
|
|
|
|
h)
|
Supplier Agreement with Société des Alcools du
Québec ("SAQ")
|
|
|
|
On April 11, 2018, Aurora completed an agreement with SAQ
to supply a minimum of 5,000 kg of cannabis per annum for the Quebec
adult-use market, once legalized.
|
|
|
|
|
|
|
|
Aurora will supply SAQ with a wide variety of premium
product from its facilities in Quebec, and elsewhere based on consumer
demand. Supply quantities will be determined based on demand with no set
maximum, and a minimum of 5,000 kg for the first
year.
|
Acquisitions
|
|
i)
|
Acquisition of CanniMed Therapeutics Inc.
(“CanniMed”)
|
|
|
|
On May 1, 2018, the Company completed the acquisition of
CanniMed by acquiring the remaining 4.1% interest for $28,679, comprised
of $1,746 cash and the issuance of 3,417,951 common shares with a fair
value of $26,933. The CanniMed Shares were de-listed from the Toronto
Stock Exchange ("TSX") as at the close of business on May 1,
2018.
|
|
|
|
|
|
|
|
The transaction creates strong strategic synergies, in
particular for the domestic and international medical cannabis markets, in
terms of distribution, product development, and branding. Integration of
CanniMed into Aurora is complete and acceleration of CanniMed’s production
and other operations has commenced.
|
|
28 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
International Developments
|
|
j)
|
Exporting to Italy
|
|
|
|
On April 13, 2018, Aurora completed the first ever
successful delivery of privately exported medical cannabis from Canada to
the Italian government through its wholly-owned German subsidiary Aurora
Deutschland GmbH (“Aurora Deutschland,” formerly “Pedanios
GmbH”).
|
|
|
|
|
|
|
|
This export followed Aurora and Aurora Deutschland’s
success in winning a highly- competitive EU-wide public tender to supply
medical cannabis to the Italian government through the Italian Ministry of
Defense, who oversee medical cannabis production and distribution in
Italy.
|
|
|
|
|
|
|
k)
|
Accelerating Growth and Market Penetration in
Germany
|
|
|
|
On May 28, 2018, Aurora, through Aurora Deutschland,
signed a collaboration agreement with Heinrich Klenk GmbH & Co. KG
(“Klenk”), one of Europe's largest medicinal plant companies. Klenk’s
products are carried in over 25,000 pharmacies throughout Germany and
Europe. Under the terms of the agreement, Aurora launched a new cannabis
brand called "Cannabis Klenk" which is produced in Canada, imported by
Aurora Deutschland, and sold to German pharmacies through Klenk's existing
and wide-reaching pharmaceutical wholesale distribution
network
.
|
|
|
|
|
|
|
l)
|
Market Penetration in Malta
|
|
|
|
On June 25, 2018, Aurora’s wholly owned German subsidiary
Aurora Deutschland, became the first licensed supplier of medical cannabis
to patients in Malta. The import license, issued by Malta Medicines
Authority, was received on June 5, 2018, and Aurora Deutschland received
their export license from German authorities on June 21, 2018, making
Malta the third European Union member country where Aurora Deutschland
currently sells medical cannabis.
|
Facility Development
|
|
m)
|
Aurora Sun
|
|
|
|
On April 16, 2018, Aurora acquired approximately 71 acres
of land in Medicine Hat, Alberta, for the construction of “Aurora Sun”, a
highly automated cannabis production facility with ultra-low operating
costs and robust margins. The facility will be 1,200,000 square feet, 50%
larger than Aurora's Sky.
|
|
|
|
|
|
|
n)
|
Sales License for Aurora Vie
|
|
|
|
On June 29, 2018, eight months after receiving its
cultivation license, the Aurora Vie production facility in Pointe-Claire,
Quebec, was granted its Health Canada sales license. The facility, now in
full commercial operation, is on target to produce at a rate of 4,000 kg
per year by October 2018. Multiple harvests have been completed to
date.
|
|
29 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
KEY DEVELOPMENTS SUBSEQUENT TO JUNE 30,
2018
Strategic Investments
|
|
a)
|
Investment in Evio Beauty Group Ltd (“Evio
Beauty”)
|
|
|
|
On July 10, 2018, the Company entered into a Product
Development and Distribution Agreement with Evio Beauty, pursuant to which
both companies have agreed to collaborate to develop and manufacture a
line of at least 3 co-branded topical cosmetic products formulated with a
cannabinoid or cannabinoids. Aurora will earn a 10% royalty on sales of
all non-infused products, and Evio Beauty will earn a 10% royalty on sale
of all infused products in any geographical area in which Aurora
operates.
|
|
|
|
|
|
|
b)
|
License Agreement with CannaRoyal
ty
Corp. (“CannaRoyalty”)
|
|
|
|
On August 1, 2018, the Company and CannaRoyalty entered
into an assignment and assumption agreement where CannaRoyalty assigned to
Aurora all of its rights, title and interest in an exclusive license for a
technology for creating machine-rolled cannabis developed by Wagner Dimas
Inc. In consideration, Aurora paid to CannaRoyalty $7,000 through the
issuance of 756,348 common shares at $9.255 per share. The Wagner
technology has now been installed at Aurora, and the large-scale
production of pre-rolled product has commenced in preparation to filling
orders received from provincial buyers who will be supplying the adult
consumer user market.
|
|
|
|
|
|
|
c)
|
Spin-
out of Australis Capital Inc.
(“ACI”)
|
|
|
|
On September 19, 2018, the Company completed the spin-out
of ACI, an independent company, and distributed to Aurora shareholders, as
a return of capital, units of ACI on the basis of one unit for every 34
Aurora shares. The units commenced trading on the Canadian Stock Exchange
on September 19, 2018. ACI is an investment company with a focus on the
U.S. cannabis market, which is characterized by large fragmentation and
limited access to capital. ACI’s management, board and advisory teams have
deep experience and relationships within the cannabis industry, and
believe they will be able to secure investments to build significant
shareholder value.
|
Supply Agreements and Partnerships
|
|
d)
|
Supply Agreements
|
|
|
|
On July 5, 2018, Aurora entered into an agreement with
the Alberta Gaming Liquor & Cannabis Commission("AGLC") to supply
high-quality cannabis products for the adult-use market in Alberta. The
AGLC is responsible for regulating private retail cannabis licensing,
distribution of cannabis to retail stores, and operation of an online
cannabis store for the Albertan market.
|
|
|
|
|
|
|
|
On August 21, 2018
,
Aurora and its wholly-owned
subsidiary, MedReleaf, entered into supply agreements with Ontario
Cannabis Stores, a key market in the Company's adult-use strategy. When
government-run online sales commence on October 17, Aurora and MedReleaf
will supply a broad range of dried flower and higher margin products, such
as pre-rolls, oils and capsules
|
|
30 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
Acquisitions
|
|
e)
|
Completion of CanniMed
Integration
|
|
|
|
The integration of CanniMed Therapeutics into Aurora was
successfully completed as of July 6, 2018, combining Aurora's execution
and agility with CanniMed's strong medical brand, assets and exceptionally
experienced team of scientists and operational cannabis
professionals.
|
|
|
|
|
|
|
|
Opportunities to increase Aurora's and CanniMed's
international reach are also being pursued through CanniMed's
relationships in South Africa, the Cayman Islands, and Australia. CanniMed
continues to ship oils to both of the latter jurisdictions.
|
|
|
|
|
|
|
f)
|
Acquisition of MedReleaf Corp.
(“MedReleaf”)
|
|
|
|
On July 25, 2018, Aurora and MedReleaf closed the world’s
largest cannabis industry transaction agreement whereby Aurora acquired
all of the issued and outstanding common shares of MedReleaf. Completion
of the transaction created a cannabis industry leader with a total funded
capacity of more than 500,000 kg per year. With MedReleaf, Aurora has
gained two facilities built to EU GMP specifications, which will increase
product availability for international markets.
|
|
|
|
|
|
|
|
Under the terms of the Amended Arrangement Agreement
dated May 23, 2018, holders of MedReleaf common shares received 3.575
common shares of Aurora and $0.000001 cash for each MedReleaf common share
held. The Company issued an aggregate of 370,120,238 common shares with a
fair value of $2,568,634 and 14,033,784 replacement stock options. The
exercise price of the stock options is based on the exercise price per
MedReleaf stock options adjusted for the Exchange Ratio.
|
|
|
|
|
|
|
g)
|
Acquisition of HotHouse Consulting Inc.
(“HotHouse”)
|
|
|
|
On August 7, 2018, Aurora entered into a Letter of Intent
whereby it intends to acquire the cannabis business of HotHouse, a
provider of advanced greenhouse consulting services with a focus on large
scale cannabis production.
|
|
|
|
|
|
|
h)
|
Acquisition of Anandia Laboratories Inc.
(“Anandia”)
|
|
|
|
On August 8, 2018, the Company acquired all of the issued
and outstanding common shares of Anandia in exchange for 12,716,482 common
shares and 6,358,210 share purchase warrants of Aurora. The warrants are
exercisable at $9.3717 per share until August 9, 2023. Pursuant to the
terms of the acquisition, upon the achievement of future milestones,
Aurora will pay an additional $10,000 by way of the issuance of additional
shares and warrants.
|
|
|
|
|
|
|
|
Anandia is a global leader in cannabis science (genetics,
breeding) and analytical product testing. The transaction enables the
Company to develop new strains with specific terpene/cannabinoid profiles
for targeted product applications, as well as strains with improved
cultivation characteristics. Management believes these activities will
lead both to the development of new, higher-margin products and a further
increase in efficiency of its cultivation
processes.
|
|
31 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
|
|
i)
|
Acquisition of ICC Labs Inc.
(“ICC”)
|
|
|
|
On September 10, 2018, Aurora entered into a definitive
agreement pursuant to which Aurora intends to acquire all of the issued
and outstanding common shares of ICC (for $1.95 per share) payable in
common shares of Aurora. The transaction reflects an aggregate purchase
price of approximately $290 million.
|
|
|
|
|
|
|
|
The Transaction, once approved, creates a strong
foundation for expansion and will leverage ICC's first mover advantage in
South America, bringing significant low -cost production capacity of both
THC and CBD based products in both Uruguay and Colombia. ICC presently has
over 70% market share in Uruguay, the first country in the world to
legalize cannabis for adult-use. In addition, ICC has extensive
distribution channels throughout South America and
internationally.
|
|
|
|
|
|
|
j)
|
Acquisition of Agropro
UAB
(“
Agropro
”) and Borela UAB
(“Borela”)
|
|
|
|
On September 10, 2018, the Company acquired 100% of the
issued and outstanding shares of Europe's largest producer, processor and
supplier of certified organic hemp and hemp products, Agropro, as well as
hemp processor and distributor Borela for total consideration of €6,418 of
which €960 was paid through the issuance of 170,834 common shares. In
addition, the Company paid a finder’s fee of €1,517, which was paid
through the issuance of 270,024 common shares, and will also refinance
Agropro’s existing debt totaling €2,076. This acquisition is anticipated
to yield significant quantities of CBD for extraction, and is expected to
create further synergies through the Company’s CBD and hemp product value
chain, which includes majority ownership of Hempco Food and
Fiber.
|
International Developments
|
|
k)
|
Approval for Malta’s First Cannabis
Cultiv
ation Facility
|
|
|
|
On July 24, 2018, Aurora received a Letter of Intent
issued from Maltese authorities, approving its application for the
establishment of the first seed-to-pharma cannabis operation in Malta,
subject to certain conditions.
|
|
|
|
|
|
|
|
The project includes the construction of a hybrid
cultivation, manufacturing, and distribution facility, with operations to
be carried out by a new subsidiary, Aurora Malta, to be formed with
Aurora's local Maltese partner, Cherubino Ltd., the largest pharmaceutical
wholesaler in the country. Aurora will be the majority shareholder in the
new venture. The Company anticipates the facility, to be designed by
Aurora Larssen Projects, to be focused on the production of higher margin
derivative products, aimed at serving the domestic Maltese and Southern
European markets.
|
|
32 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
|
|
l)
|
Commenced Cultivation at Aurora
Nordic
|
|
|
|
On August 13, 2018, Aurora completed the successful
shipment of cultivars from its Mountain facility to Denmark to commence
populating the Phase I Aurora Nordic facility, a 100,000 square foot,
retrofitted hybrid greenhouse, which will be ramping up to full production
capacity of 8,000 kg per year over the coming months. Aurora Nordic is a
51% Aurora owned subsidiary, owned in partnership with Alfred Pederson
& Son. Both the Phase I facility and Phase II, a 1,000,000 square
foot, hybrid greenhouse facility with a capacity of more than 120,000 KG
per year, have been designed by Aurora Larssen Projects Ltd. and will be
completed to EU GMP standards.
|
|
|
|
|
|
|
m)
|
New EU GMP Certification
|
|
|
|
On August 13, 2018, Aurora’s wholly-owned subsidiary
MedReleaf received full EU GMP certification for its Markham facility. The
certification of the Markham facility will increase product availability
for the rapidly growing, higher-margin and heavily regulated EU market.
All of the Company's facilities are being designed and built to EU GMP
standards.
|
|
|
|
|
|
|
n)
|
Establishing Aurora Europe
|
|
|
|
On August 13, 2018 Aurora established a pan-European
company, Aurora Europe GmbH, headquartered in Berlin, Germany. Pedanios
GmbH, Europe's largest distributor of cannabis, will henceforth operate as
Aurora Deutschland GmbH, while the Company has also formed Aurora Italia,
Aurora Nordic (Denmark), and a number of other, local companies. Aurora
currently employs over 70 people in Europe and anticipates this number to
grow substantially over the coming months as the Company expands its
business activities across the European continent
.
|
|
|
|
|
|
|
o)
|
MED Colombia
|
|
|
|
Through the acquisition of MedReleaf, the Company now
owns MED Colombia, a licensed cannabis company in Colombia with
substantial grow potential and a strong portfolio of genetics. Upon
successful completion of the ICC acquisition, MED Colombia will become
part of Aurora’s South American platform.
|
|
|
|
|
|
|
p)
|
Australia
|
|
|
|
Aurora recently exported oil products to Australia, which
were supplied to patients through its partially-owned strategic partner
Cann Group. Cann Group has announced it will be constructing an ALPS
(Aurora Larssen Projects) designed high-technology, hybrid cultivation
facility at the Melbourne International Airport. Aurora and its
wholly-owned subsidiary Anandia have also successfully exported plant
tissue culture derived genetics for Cann Group to enhance its cultivation
program.
|
|
33 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
Facility Licensing
|
|
q)
|
Capsules Licenses Granted
|
|
|
|
On July 3, 2018, Aurora’s wholly owned subsidiary,
CanniMed, received Health Canada approval to commence sales of CanniMed
Capsules, a line of vegan capsules which became available to patients on
August 22, 2018.
|
|
|
|
|
|
|
|
Aurora received its Health Canada license to produce
encapsulated oil at its Mountain facility. Aurora intends to produce
unique, integral hard shells for the medical markets, as well as for the
adult-use market, once legalized.
|
|
|
|
|
|
|
r)
|
Health C
anada Dealer’s License for
Aurora Mountain
|
|
|
|
On July 30, 2018, Aurora obtained a Health Canada
Dealer's License under the Controlled Drugs and Substances Act for its EU
GMP certified Aurora Mountain facility in Alberta. The new license will
allow Aurora additional opportunities to produce, assemble, and sell
cannabis oils and future novel, derivative products from Aurora Mountain.
Furthermore, the license provides additional opportunities to export
cannabis to international markets and the potential to carryout research
with cannabinoids not covered under an ACMPR license.
|
|
|
|
|
|
|
s)
|
Approval for Softgel Capsules
|
|
|
|
On August 22, 2018, Aurora received Health Canada
authorization to produce cannabis softgel capsules at its state-of-the-art
Aurora Vie facility in Pointe-Claire, Québec. Immediately following the
approval, Aurora started production of softgel capsules in partnership
with Capcium Inc. Aurora holds a 19.99 % ownership stake in Capcium, and
they are Aurora's exclusive manufacturer of cannabis softgel products in
North America.
|
Financing Activities
|
|
t)
|
Bank of Montreal (“BMO”) Debt
Facility
|
|
|
|
On August 29, 2018, the Company finalized a $200,000 debt
facility with BMO consisting of a $150,000 term loan and a $50,000
revolving credit facility, both of which will mature in 2021. The Company
also has an option to upsize the facility to a total of $250,000, subject
to certain conditions. The debt facility will be primarily secured by
Aurora’s production facilities and can be repaid without penalty at
Aurora’s discretion. The interest rate for the debt facility and revolving
credit facility is a set margin over the BMO CAD Prime Rate or a Bankers'
Acceptance of appropriate term.
|
|
34 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
FINANCIAL REVIEW
Consolidated Key Quarterly Results
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
|
|
|
(in thousands except as otherwise
noted)
|
|
Q4
|
|
|
Q3
|
|
|
Q2
|
|
|
Q1
|
|
|
Total
|
|
|
Financial Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
19,147
|
|
$
|
16,100
|
|
$
|
11,700
|
|
$
|
8,249
|
|
$
|
55,196
|
|
|
Gross margin on medical cannabis
(
1)
|
|
74%
|
|
|
59%
|
|
|
63%
|
|
|
58%
|
|
|
65%
|
|
|
Earnings (loss)
|
|
79,268
|
|
|
(20,795
|
)
|
|
7,194
|
|
|
3,560
|
|
|
69,227
|
|
|
Earnings (loss) attributable to Aurora
Cannabis Inc.
|
$
|
79,870
|
|
$
|
(19,215
|
)
|
$
|
7,721
|
|
$
|
3,560
|
|
|
71,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W orking capital
|
|
144,533
|
|
|
338,476
|
|
|
302,526
|
|
|
169,674
|
|
|
144,533
|
|
|
Cannabis inventory and biological assets
|
|
41,031
|
|
|
29,162
|
|
|
17,325
|
|
|
16,846
|
|
|
41,031
|
|
|
Total assets
|
|
1,910,716
|
|
|
1,671,400
|
|
|
732,394
|
|
|
347,834
|
|
|
1,910,716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operational Results - Medical Cannabis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash cost of sales per gram of dried cannabis
sold
(
2)
|
$
|
1.87
|
|
$
|
1.80
|
|
$
|
1.74
|
|
$
|
2.16
|
|
|
n/a
|
|
|
Cash cost to produce per gram of dried
cannabis sold
(
2)
|
$
|
1.70
|
|
$
|
1.53
|
|
$
|
1.41
|
|
$
|
1.87
|
|
|
n/a
|
|
|
Active registered patients
|
|
43,308
|
|
|
45,776
|
|
|
21,718
|
|
|
19,280
|
|
|
n/a
|
|
|
Average net selling price of dried
cannabis
(
3)
|
$
|
8.02
|
|
$
|
7.30
|
|
$
|
7.86
|
|
$
|
7.32
|
|
$
|
7.65
|
|
|
Average net selling price of cannabis oil
(
3)
|
$
|
13.52
|
|
$
|
12.83
|
|
$
|
13.35
|
|
$
|
16.41
|
|
$
|
13.68
|
|
|
Kilograms produced
|
|
2,212
|
|
|
1,206
|
|
|
1,204
|
|
|
1,010
|
|
|
5,632
|
|
|
Kilograms sold
|
|
1,617
|
|
|
1,353
|
|
|
1,162
|
|
|
890
|
|
|
5,022
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
Q4
|
|
|
Q3
|
|
|
Q2
|
|
|
Q1
|
|
|
Total
|
|
|
Financial Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
5,936
|
|
$
|
5,175
|
|
$
|
3,885
|
|
$
|
3,071
|
|
$
|
18,067
|
|
|
Gross margin on medical cannabis
(
1)
|
|
58%
|
|
|
58%
|
|
|
54%
|
|
|
53%
|
|
|
56%
|
|
|
Earnings (loss)
|
|
(4,816
|
)
|
|
139
|
|
|
(2,678
|
)
|
|
(5,613
|
)
|
|
(12,968
|
)
|
|
Earnings (loss) attributable to Aurora
Cannabis Inc.
|
|
(4,816
|
)
|
|
139
|
|
|
(2,678
|
)
|
|
(5,613
|
)
|
|
(12,968
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W orking capital
|
|
170,142
|
|
|
126,530
|
|
|
60,060
|
|
|
23,213
|
|
|
170,142
|
|
|
Cannabis inventory and biological assets
|
|
11,791
|
|
|
8,694
|
|
|
5,718
|
|
|
3,103
|
|
|
11,791
|
|
|
Total assets
|
|
322,679
|
|
|
197,065
|
|
|
98,219
|
|
|
56,769
|
|
|
322,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operational Results - Medical Cannabis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash cost of sales per gram of dried cannabis
sold
(
2)
|
$
|
2.09
|
|
$
|
2.31
|
|
$
|
2.56
|
|
$
|
3.89
|
|
|
n/a
|
|
|
Cash cost to produce per gram of dried
cannabis sold
(
2)
|
$
|
1.91
|
|
$
|
1.91
|
|
$
|
2.13
|
|
$
|
3.89
|
|
|
n/a
|
|
|
Active registered patients
|
|
16,400
|
|
|
13,110
|
|
|
12,200
|
|
|
8,200
|
|
|
n/a
|
|
|
Average net selling price of dried
cannabis
(
3)
|
$
|
6.79
|
|
$
|
6.64
|
|
$
|
5.96
|
|
$
|
6.32
|
|
$
|
6.47
|
|
|
Average net selling price of cannabis oil
(
3)( 4)
|
$
|
17.91
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
$
|
17.91
|
|
|
Kilograms produced
|
|
1,165
|
|
|
847
|
|
|
670
|
|
|
355
|
|
|
3,037
|
|
|
Kilograms sold
|
|
755
|
|
|
653
|
|
|
538
|
|
|
436
|
|
|
2,382
|
|
|
(1)
|
Represents the gross margin on medical cannabis before
fair value adjustments.
|
|
(2)
|
Represents the cash cost of sales per gram of dried
cannabis sold and cash cost to produce per gram of dried cannabis produced
by Aurora.
|
|
(3)
|
Represents the average net selling price per gram of
dried cannabis or per gram of dried cannabis equivalent.
|
|
(4)
|
The Company received its license to sell cannabis oils in
January 2017 and commenced sales of cannabis oils in Q4
2017.
|
|
35 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
Selected Annual Information
|
(in thousands
except as otherwise noted)
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
Revenue
|
$
|
55,196
|
|
$
|
18,067
|
|
$
|
1,439
|
|
|
Earnings (loss)
|
|
69,227
|
|
|
(12,968
|
)
|
|
(5,723
|
)
|
|
Earnings (loss) attributable to Common Shares
|
|
71,936
|
|
|
(12,968
|
)
|
|
(5,723
|
)
|
|
Earnings (loss) per Common Share:
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share (basic EPS)
|
$
|
0.16
|
|
$
|
(0.05
|
)
|
$
|
(0.04
|
)
|
|
Diluted
|
$
|
0.15
|
|
$
|
(0.05
|
)
|
$
|
(0.04
|
)
|
|
Total assets
|
|
1,910,716
|
|
|
322,679
|
|
|
18,396
|
|
|
Total non-current financial liabilities
|
|
200,760
|
|
|
63,818
|
|
|
4,440
|
|
|
Cash
dividends per share
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
Medical Cannabis
Revenue
The Company primarily operates in the medical cannabis market
which includes auxiliary support functions such as CanvasRX patient counselling
services, and Aurora Larssen Projects Ltd. (“ALPS”) design, engineering and
construction services.
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
|
|
|
2017
|
|
|
(in thousands except as otherwise
noted)
|
|
Q4
|
|
|
Q3
|
|
|
Q2
|
|
|
Q1
|
|
|
Total
|
|
|
Total
|
|
|
Medical cannabis segment revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canadian dried cannabis
|
$
|
7,529
|
|
$
|
6,304
|
|
$
|
5,757
|
|
$
|
4,641
|
|
$
|
24,231
|
|
$
|
14,679
|
|
|
Canadian cannabis oils
|
|
4,710
|
|
|
2,178
|
|
|
1,508
|
|
|
1,439
|
|
|
9,835
|
|
|
804
|
|
|
European dried cannabis
|
|
2,641
|
|
|
2,331
|
|
|
2,483
|
|
|
1,235
|
|
|
8,690
|
|
|
439
|
|
|
Medical cannabis revenue
|
|
14,880
|
|
|
10,813
|
|
|
9,748
|
|
|
7,315
|
|
|
42,756
|
|
|
15,922
|
|
|
Patient counselling services
|
|
1,553
|
|
|
591
|
|
|
866
|
|
|
923
|
|
|
3,933
|
|
|
2,145
|
|
|
Design, engineering and construction services
|
|
1,239
|
|
|
2,979
|
|
|
-
|
|
|
-
|
|
|
4,218
|
|
|
-
|
|
|
Other
|
|
85
|
|
|
97
|
|
|
32
|
|
|
11
|
|
|
225
|
|
|
-
|
|
|
Total medical cannabis segment revenue
|
|
17,757
|
|
|
14,480
|
|
|
10,646
|
|
|
8,249
|
|
|
51,132
|
|
|
18,067
|
|
|
Other segment revenues
|
|
1,390
|
|
|
1,620
|
|
|
1,054
|
|
|
-
|
|
|
4,064
|
|
|
-
|
|
|
Total revenue
|
$
|
19,147
|
|
$
|
16,100
|
|
$
|
11,700
|
|
$
|
8,249
|
|
$
|
55,196
|
|
$
|
18,067
|
|
Medical cannabis revenue increased $4,067, or 38%, over the
prior quarter. The increase in revenue was primarily due to higher volumes of
both dried cannabis and cannabis oils sold; coupled with higher average selling
prices relative to the prior quarter, both domestically and internationally, due
to the following factors:
|
|
•
|
Both dried cannabis and cannabis oils sold increased over
the previous quarter by 85,063 grams and 178,611 grams equivalents
respectively. The inclusion of CanniMed’s sales in the quarter accounted
for 422,771 grams, or 33%, of total dried cannabis sold; and 221,240 grams
equivalents, or 64%, of total cannabis oil gram equivalents sold. This was
partially offset by lower bulk sales as the Company increased its
inventory reserves for the impending legalization of the adult-use market
in Canada.
|
|
|
•
|
The average net selling price of dried cannabis increased
by $0.72 per gram over the prior quarter primarily due to higher prices
charged on bulk orders as well as lower promotional discounts offered to
new patients. The average net selling price of cannabis oils increased by
$0.69 per gram equivalent primarily due to lower promotional discounts for
new patients.
|
|
36 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
|
|
•
|
International dried cannabis sales increased by
$310, or 25,935 grams, over the prior quarter. On April 13, 2018, the
Company completed the first ever private export of medical cannabis to
Italy following its win of the highly competitive EU-wide public tender to
supply medical cannabis to the Italian government. On June 25, 2018, the
Company became the first licensed supplier of medical cannabis to patients
in Malta and have since successfully completed its first exports of
medical cannabis.
|
Design, engineering and consulting services decreased by $1,740
due to the timing of services provided.
Consolidated medical cannabis segment revenues for fiscal 2018
increased by $33,065, or 183%, over the prior year primarily attributable to:
|
|
•
|
Significant increase in Company’s combined active
registered patients of 26,908 due to growth in registered patients through
CanvasRX’s patient counselling services of 5,538, and the integration of
CanniMed’s registered patients of 21,370;
|
|
|
•
|
Increase in dried cannabis produced and sold both
domestically and internationally of $17,803, or 1,965,827 grams, including
CanniMed sales of $3,300, or 459,821 grams;
|
|
|
•
|
Increase in cannabis oils sold domestically of $9,031, or
673,752 grams, including CanniMed sales of $3,456 or 252,950 in cannabis
oil gram equivalents;
|
|
|
•
|
Increase in design, engineering consulting service
revenue of $4,218 from the acquisition of ALPS (formerly known as Larssen
Ltd.); and
|
|
|
•
|
Increase in CanvasRX patient counselling services of
$1,788 from Licensed Producer referral fees.
|
Gross Margin
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
|
|
|
2017
|
|
|
(in thousands except as otherwise
noted)
|
|
Q4
|
|
|
Q3
|
|
|
Q2
|
|
|
Q1
|
|
|
Total
|
|
|
Total
|
|
|
Medical cannabis segment revenue
|
$
|
17,757
|
|
$
|
14,480
|
|
$
|
10,646
|
|
$
|
8,249
|
|
$
|
51,132
|
|
$
|
18,067
|
|
|
Medical cannabis segment cost of sales
|
|
4,702
|
|
|
4,757
|
|
|
3,680
|
|
|
3,072
|
|
|
16,211
|
|
|
7,876
|
|
|
Gross profit on medical cannabis segment
before fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
adjustments
(
1)
|
|
13,055
|
|
|
9,723
|
|
|
6,966
|
|
|
5,177
|
|
|
34,921
|
|
|
10,191
|
|
|
Less: non-medical cannabis revenue
|
|
(2,792
|
)
|
|
(3,570
|
)
|
|
(866
|
)
|
|
(923
|
)
|
|
(8,151
|
)
|
|
(2,145
|
)
|
|
Add:
non-medical cannabis cost of sales
|
|
747
|
|
|
277
|
|
|
25
|
|
|
29
|
|
|
1,078
|
|
|
71
|
|
|
Gross profit on medical cannabis before fair
value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
adjustments
(
1)
|
|
11,010
|
|
|
6,430
|
|
|
6,125
|
|
|
4,283
|
|
|
27,848
|
|
|
8,117
|
|
|
Gross margin on medical cannabis before fair
value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
adjustments
(
1)
|
|
74%
|
|
|
59%
|
|
|
63%
|
|
|
58%
|
|
|
65%
|
|
|
56%
|
|
|
(1)
|
Gross profit on medical cannabis is a non-IFRS financial
measure and is calculate by taking the medical cannabis segment gross
profit excluding the effects of revenues and cost of sales from patient
counselling services; and design, engineering, and construction services.
These are considered auxiliary support services for the medical cannabis
market and do not directly relate to the production of
cannabis.
|
Gross margin on medical cannabis before the effect of changes
in fair value for the three months ended June 30, 2018, was 74% compared to 59%
for the prior quarter. The increase was primarily due to a higher average
selling price per gram, and a change in the sales ratio of cannabis oils to
dried cannabis, as cannabis oils have higher profit margin relative to dried
cannabis. For the three months ended June 30, 2018, cannabis oils comprised 32%
of total medical cannabis revenues compared to 20% of total medical cannabis
sales in the prior quarter.
|
37 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
The inclusion of CanniMed’s sales in the quarter accounted for
an additional 225,410 grams, or 18%, of total dried cannabis sold; and an
additional 221,240 grams, or 64%, of total cannabis oil gram equivalents sold.
Furthermore, there was an increase in the selling prices of bulk sales of both
dried cannabis and cannabis oils compared to the previous quarter.
Gross margin on medical cannabis before the effect of changes
in fair value for the twelve months ended June 30, 2018, was 65% compared to 56%
in the prior year. The increase is mostly attributable to an increase in the
average selling price per gram; from lower cost of sales per gram as the Company
realized further economies of scale from the full ramp up of its Aurora Mountain
facility; and a change in the sales ratio of cannabis oils to dried cannabis.
Cannabis oils made up 23% of medical cannabis revenues in the twelve months
ended June 30, 2018, compared to 5% in the prior year.
In accordance with IFRS, the Company is required to record its
biological assets at fair value. As biological assets move through the
production process, capitalized production costs and the fair value on the
eventual sale of the cannabis from the plants are both recognized based on the
stage of completion of the biological assets. The fair value portion of the
biological assets is recognized as unrealized gains from the change in fair
value of biological assets in the statement of operations for the reporting
period. At the time of harvest, the biological assets are transferred to
inventory and include capitalized production costs to date and the related fair
value portion, which is adjusted to the lower of cost or inventory net
realizable value. On the eventual sale of inventory, the fair value portion is
relieved through unrealized loss on change in fair value on sale of inventory
reported in the results of operations.
Cash Cost of Sales of Dried Cannabis and Cash Cost to
Produce Dried Cannabis Sold
–
Aurora Produced Medical Cannabis
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
|
|
|
(in thousands except as otherwise
noted)
|
|
Q4
|
|
|
Q3
|
|
|
Q2
|
|
|
Q1
|
|
|
Total
|
|
|
Total consolidated cost of sales
|
$
|
4,867
|
|
$
|
6,827
|
|
$
|
4,837
|
|
$
|
3,072
|
|
$
|
19,603
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-medical cannabis cost of sales
(
1)
|
|
135
|
|
|
(2,993
|
)
|
|
(1,889
|
)
|
|
(908
|
)
|
|
(5,655
|
)
|
|
Oil and extracts conversion costs
(
2)
|
|
(1,534
|
)
|
|
(862
|
)
|
|
(451
|
)
|
|
(217
|
)
|
|
(3,064
|
)
|
|
Cost of cannabis purchased
|
|
(108
|
)
|
|
(568
|
)
|
|
(536
|
)
|
|
(211
|
)
|
|
(1,423
|
)
|
|
Cost of consumable raw materials
|
|
(511
|
)
|
|
(350
|
)
|
|
(267
|
)
|
|
(197
|
)
|
|
(1,325
|
)
|
|
Depreciation
|
|
(301
|
)
|
|
(293
|
)
|
|
(203
|
)
|
|
(125
|
)
|
|
(922
|
)
|
|
Cash cost of sales of dried cannabis
sold
(
3)
|
$
|
2,548
|
|
$
|
1,761
|
|
$
|
1,491
|
|
$
|
1,414
|
|
$
|
7,214
|
|
|
Packaging costs
|
|
(221
|
)
|
|
(265
|
)
|
|
(283
|
)
|
|
(295
|
)
|
|
(1,064
|
)
|
|
Cash
cost to produce dried cannabis sold
(
3)
|
$
|
2,327
|
|
$
|
1,496
|
|
$
|
1,208
|
|
$
|
1,119
|
|
$
|
6,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grams of dried cannabis sold - Aurora
produced
|
|
1,366
|
|
|
979
|
|
|
856
|
|
|
653
|
|
|
3,854
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash cost of sales per gram of dried cannabis
sold
(
3)
|
$
|
1.87
|
|
$
|
1.80
|
|
$
|
1.74
|
|
$
|
2.17
|
|
$
|
1.87
|
|
|
Cash
cost to produce per gram of dried cannabis sold
( 3)
|
$
|
1.70
|
|
$
|
1.53
|
|
$
|
1.41
|
|
$
|
1.71
|
|
$
|
1.60
|
|
|
(1)
|
Non-medical cost of sales consists of patient counselling
services and design, engineering and construction services. These are
considered auxiliary support services as they are not directly related to
the production of medical cannabis.
|
|
(2)
|
Oil and extracts conversion costs are costs attributable
to the post-production processing of dried cannabis into cannabis
derivatives.
|
|
(3)
|
Cash cost of sales per gram of dried cannabis sold and
cash cost to produce per gram of dried cannabis sold represent the cash
cost per gram sold by Aurora, including CanniMed’s costs in Q4
2018.
|
Cash cost of sales per gram of dried cannabis sold and cash
cost to produce per gram of dried cannabis sold increased by $0.07 and $0.17
respectively from the prior quarter, mainly due to the inclusion of CanniMed,
partially offset by lower utility costs in the summer months.
|
38 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
Production costs per gram are expected to decrease
significantly once Aurora Sky is fully operational and the efficiencies from
automation, scale and yield expertise are also realized in the CanniMed
facilities and other newly acquired Aurora facilities.
Grams of Dried Cannabis and Grams Equivalent of Oil Produced
–
Medical Cannabis
Grams of dried cannabis produced in the period refers to the
grams of dried cannabis harvested from plants in the period. The Company
calculates grams produced in the period based on the final recorded weight of
dried harvested buds that have completed the drying stage net of any weight loss
during the drying process.
Grams equivalent of oil produced represents the equivalent
number of dried grams that would be used to produce the cannabis oils. The dried
cannabis is first extracted into a bulk concentrate which is then diluted into
cannabis oil. The “grams equivalent” measure is used to disclose the volume in
grams, of oil sold and (or) produced in the period as opposed to milliliters.
The actual grams used in the production of cannabis oils can vary depending on
the strain of dried cannabis used which yields a different potency and strength
in the oil. The Company estimates and converts its cannabis oil inventory to
equivalent grams based on the tetrahydrocannabinol (“THC”) and cannabidiol
(“CBD”) content in the cannabis oils.
Other Segments
The Company’s other reportable segments include its
horizontally integrated businesses and operating expenses.
Revenue
Other segment revenue of $4,067 relates to sales of hemp and
home cultivation products, attributable to acquisitions in the year.
Operating Expenses
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
|
|
|
2017
|
|
|
(in thousands except as otherwise
noted)
|
|
Q4
|
|
|
Q3
|
|
|
Q2
|
|
|
Q1
|
|
|
Total
|
|
|
Total
|
|
|
General and administration
|
$
|
22,557
|
|
$
|
9,847
|
|
$
|
7,568
|
|
$
|
2,993
|
|
$
|
42,965
|
|
$
|
6,813
|
|
|
Sales and marketing
|
|
14,761
|
|
|
5,880
|
|
|
5,136
|
|
|
3,668
|
|
$
|
29,445
|
|
|
10,270
|
|
|
Acquisition costs
|
|
8,025
|
|
|
5,543
|
|
|
1,756
|
|
|
340
|
|
$
|
15,664
|
|
|
1,551
|
|
|
Depreciation and amortization
|
|
10,121
|
|
|
873
|
|
|
460
|
|
|
634
|
|
$
|
12,088
|
|
|
716
|
|
|
Research and development
|
|
923
|
|
|
477
|
|
|
172
|
|
|
107
|
|
$
|
1,679
|
|
|
314
|
|
|
Share-based payments
|
|
11,636
|
|
|
15,872
|
|
|
7,456
|
|
|
2,486
|
|
$
|
37,450
|
|
|
7,584
|
|
|
Total operating expense
|
$
|
68,023
|
|
$
|
38,492
|
|
$
|
22,548
|
|
$
|
10,228
|
|
$
|
139,291
|
|
$
|
27,248
|
|
General and administration costs increased by $12,710, or 129%,
compared to the prior quarter. The increase was primarily due to increased
audit, legal and accounting fees relating to external financial reporting, audit
and tax fees, as well as consulting and legal fees related to the acquisition of
CanniMed. Travel costs increased due to market development, as well as CanniMed
integration activities. Wages and benefits increased as a result of growth in
Aurora’s workforce to support its corporate strategy. The inclusion of
CanniMed’s general and administrative cost accounted for $3,171, or 25%, of the
increase overall.
|
39 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
Sales and marketing cost increased by $8,881, or 151%, compared
to the third quarter of fiscal 2018. The increase was mainly due to continued
investment in the Company’s brand building initiatives, including consumer
education and engagement programs, such as our Illumination Concert Series. The
inclusion of CanniMed’s sales and marketing cost accounted for $1,715, or 19%,
of the increase overall.
Acquisition cost increased $2,482, or 45%, compared to the
prior quarter mainly due to professional, banking, and legal fees incurred in
relation to the successful completion of the acquisitions of both CanniMed and
MedReleaf.
Depreciation and amortization expense increased by $9,248, or
1,059%, from the third quarter of fiscal 2018 primarily due to the increase in
assets in use at the Aurora Sky facility; as well as the consolidation of
CanniMed’s depreciation and amortization expense in the quarter.
Annual operating expenses were $112,043 higher than the prior
year primarily due to an increase in the following:
|
|
•
|
General and administrative expenses of $36,152 in wages
and benefits expense due to increased headcount to support the growth of
various aspects of the Company; professional and transfer agent fees
relating to strategic corporate transactions and general corporate
matters; and corporate office charges related to the expansion of
operations and business functions;
|
|
|
•
|
Sales and marketing expense of $19,175 due to increased
brand, public relations and tradeshow activities;
|
|
|
•
|
Acquisition costs of $14,113 related to horizontally
diversified and vertically integrated business acquisitions;
|
|
|
•
|
Depreciation and amortization expense of $11,372 from
additional capital assets in operational use within Aurora Sky and other
facilities; and
|
|
|
•
|
Share-based payments of $29,866 from the issuance of
stock options.
|
The inclusion of CanniMed’s results accounted for 9% of the
annual increase in general and administrative expenses; and 9% of the annual
increase in sales and marketing expense.
LIQUIDITY AND CAPITAL
RESOURCES
During the twelve months ended June 30, 2018, the Company
generated revenue of $55,196 from operations, and financed its current
operations, growth initiatives, and met its capital requirements from debt and
equity financings. The Company’s objectives when managing its liquidity and
capital resources are to ensure sufficient liquidity to support its financial
obligations and execute its operating and strategic plans while maintaining
healthy liquidity reserves and access to capital for at least the next twelve
months.
The Company manages its liquidity risk by monitoring its
operating requirements and preparing budgets and cash forecasts to ensure it has
sufficient funds to fulfill obligations.
The table below sets out cash and working capital as at June
30, 2018, and 2017:
|
(In thousands
except as otherwise noted)
|
|
2018
|
|
|
2017
|
|
|
Cash and cash equivalents
|
$
|
89,193
|
|
$
|
159,715
|
|
|
Working capital
|
|
144,533
|
|
|
170,142
|
|
|
40 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
As at June 30, 2018, the Company maintained $89,193 in cash and
cash equivalents in contrast to $159,715 in cash and cash equivalents as at June
30, 2017.
The Company’s working capital as of June 30, 2018 was $144,533
compared to $170,142 as at June 30, 2017. The decrease in working capital of
$25,609 was largely attributable to an increase in the accounts payable and
accrued liabilities balance from the timing of payables related to construction
of our production facilities.
The table below summarizes total capitalization as at June 30,
2018, and 2017:
|
(in thousands
except as otherwise noted)
|
|
2018
|
|
|
2017
|
|
|
Convertible notes
|
$
|
191,528
|
|
$
|
63,536
|
|
|
Loans and borrowings
|
|
11,683
|
|
|
351
|
|
|
Total debt
|
|
203,211
|
|
|
63,887
|
|
|
Total equity
|
|
1,563,131
|
|
|
218,933
|
|
|
Total capitalization
|
$
|
1,766,342
|
|
$
|
282,820
|
|
Total capitalization increased $1,483,522 compared to the prior
year mostly due to an increase in equity of $1,344,198 from the issuance of
shares relation to strategic acquisitions; as well as from the exercise and
conversion of stock options, warrants and convertible debentures throughout
fiscal 2018.
On August 29, 2018, the Company closed a $200,000 debt facility
with Bank of Montreal, consisting of a $150,000 term loan and a $50,000
revolving credit facility, both of which will mature in 2021. The new debt
facility will shift the capital structure of the Company to include more
traditional debt financing which will lower the cost of capital. The Company
anticipates that it will have sufficient liquidity and capital resources to meet
its planned expenditures for the next twelve months.
The table below summarizes the Company’s cash flows for the
years ended June 30, 2018, and 2017:
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
|
|
|
2017
|
|
|
(in thousands except as otherwise
noted)
|
|
Q4
|
|
|
Q3
|
|
|
Q2
|
|
|
Q1
|
|
|
Total
|
|
|
Total
|
|
|
Cash used in operating activities
|
$
|
(45,121
|
)
|
$
|
(26,915
|
)
|
$
|
(4,657
|
)
|
$
|
(4,974
|
)
|
$
|
(81,667
|
)
|
$
|
(13,378
|
)
|
|
Cash used in investing activities
|
|
(105,548
|
)
|
|
(323,821
|
)
|
|
(79,958
|
)
|
|
(28,432
|
)
|
|
(537,759
|
)
|
|
(49,341
|
)
|
|
Cash provided by (used in) financing
activities
|
|
8,418
|
|
|
230,873
|
|
|
307,979
|
|
|
1,279
|
|
|
548,549
|
|
|
221,985
|
|
|
Effect of foreign exchange
|
|
502
|
|
|
45
|
|
|
(438
|
)
|
|
246
|
|
|
355
|
|
|
190
|
|
|
(Decrease) increase in cash and cash equivalents
|
$
|
(141,749
|
)
|
$
|
(119,818
|
)
|
$
|
222,926
|
|
$
|
(31,881
|
)
|
$
|
(70,522
|
)
|
$
|
159,456
|
|
Operating activities
For the twelve months ended June 30, 2018, cash used in
operating activities resulted primarily from cash inflows of $35,593 from gross
profit before the effect of changes in fair value; offset by cash flows used for
operating expenses of $84,717, finance and other costs of $7,159 and cash
outflows of $25,384 related to changes in non-cash working capital.
Cash used in operating activities in the prior year resulted
primarily from cash inflows of $10,192 from gross profit before the effect of
changes in fair value, offset by cash flows used for operating expenses of
$18,825, finance and other costs of $2,288 and cash outflows of $1,242 related
to changes in non-cash working capital.
|
41 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
Investing activities
For the twelve months ended June 30, 2018, cash used in
investing activities were primarily for the purchase of production equipment
building improvements and construction of other facilities of $136,945,
investments of $63,437 in marketable securities and derivatives, investment in
associates of $218,183, and the acquisition of assets and business combinations,
net of cash, for $108,329.
Investing activities in the prior year consisted primarily of
cash outflows of $25,718 for the purchase of equipment and the construction of
Aurora Sky, $13,665 for asset acquisitions and business combinations net of cash
acquired, and $7,877 from investments in marketable securities and derivatives.
Financing activities
For the twelve months ended June 30, 2018, cash provided by
financing activities were primarily generated from the November 2017 bought deal
financing for net proceeds of $70,639, the November 2017 special warrant
financing for net proceeds of $110,922, the March 2018 convertible debenture
financing for net proceeds of $222,205, and the exercise of warrants, options
and compensation options for $144,967.
Financing activities in the prior year were primarily generated
from equity financings for net proceeds of $91,727, net proceeds from
convertible debentures of $109,973, and the exercise of warrants, options and
compensation options for $29,096.
Capital Resource Measures
The Company’s major capital expenditures during the three
months ended June 30, 2018 mainly consisted of the construction of Aurora Sky
and the commencement of construction at Aurora Sun. Subsequent to June 30, 2018,
the Company finalized its $200,000 debt facility with BMO. The Company believes
it has sufficient cash and resources to fund the Company’s operations and
complete construction of its announced facilities for at least the next fiscal
year. See
“Facilities”
for Aurora’s operating, under construction and
announced production facilities.
Contractual Obligations
The Company had the following contractual obligations as of
June 30, 2018:
|
(In thousands
except as otherwise noted)
|
|
Total
|
|
|
Less
than 1 year
|
|
|
1 to
3 years
|
|
|
3 to
5 years
|
|
|
Accounts payable and accrued liabilities
|
$
|
47,456
|
|
$
|
47,456
|
|
$
|
-
|
|
$
|
-
|
|
|
Loans and borrowings
|
|
11,747
|
|
$
|
2,482
|
|
$
|
2,511
|
|
$
|
6,754
|
|
|
Contingent consideration payable
|
|
23,742
|
|
$
|
14,438
|
|
$
|
9,304
|
|
$
|
-
|
|
|
Operating lease
|
|
83
|
|
|
60
|
|
|
23
|
|
|
-
|
|
|
Convertible notes and interest
(
1)
|
|
251,356
|
|
|
11,604
|
|
|
237,649
|
|
|
2,103
|
|
|
Office lease
|
|
47,257
|
|
|
5,332
|
|
|
14,764
|
|
|
27,161
|
|
|
Capital projects
( 2)
|
|
38,474
|
|
|
38,474
|
|
|
-
|
|
|
-
|
|
|
Total contractual obligations
|
$
|
420,115
|
|
$
|
119,846
|
|
$
|
264,251
|
|
$
|
36,018
|
|
|
(1)
|
Assumes the principal balance outstanding at June 30,
2018 remains unconverted and includes the estimated interest payable until
the maturity date.
|
|
(2)
|
Relates to capital commitments that the Company has made
to specific vendors for capital projects pertaining to on-going
construction projects.
|
|
42 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
Contingencies
On November 29, 2017, a claim was commenced against the Company
regarding 300,000 stock options with an exercise price of $0.39 per share issued
to a consultant pursuant to an agreement dated March 16, 2015. The agreement was
terminated on March 8, 2016, and in accordance to the Company’s stock option
plan, the unexercised options expired 90 days from the date of the termination
of the agreement.
The option holder is attempting to enforce exercise rights
which the Company believes do not exist. The Company believes the action to be
without merit and intends to defend this claim vigorously. Due to the
uncertainty of timing and the amount of estimated future cash outflows relating
to this claim, no provision had been recognized.
Off-balance sheet arrangements
As at the date of this MD&A, the Company had no material
off-balance sheet arrangements that have, or are reasonably likely to have, a
current or future effect on the financial performance or financial condition of
the Company.
TRANSACTIONS WITH RELATED PARTIES
Goods and services
The Company incurred the following transactions with related
parties during the years ended June 30, 2018 and 2017:
Name and Relationship
to the
Company
|
Transaction
|
Year ended
June 30,
|
At as June
30,
|
|
2018
|
2017
|
2018
|
2017
|
|
Related
Party Transactions
|
Balance
Payable (Receivable)
(1)
|
Canadian Cannabis Clinics
(“CCC”), a company where
Joseph del Moral, is a
common director
|
Service fees
(
2)
|
$ 4,957
|
$ 3,659
|
$ -
|
$
(72)
|
Colour Media Inc., a company
partially owned by an
officer
of the Company, Savior
Joseph
|
Marketing fees
|
2,210
|
-
|
-
|
-
|
Belot Business Consulting
Corp, a company controlled
by Neil Belot, Chief Global
Business Development Office
|
Consulting fees
(
3)
|
358
|
780
|
24
|
-
|
Australis Holdings Limited
(“AHL”), a 50% owned joint
venture company
|
Interest income
(
4)
|
49
|
41
|
(3,444)
|
(2,096)
|
The Green Organic Dutchman
Holdings Ltd., an associate
of
the Company
|
Design, engineering
and construction
consulting services
(
5)
|
240
|
-
|
(620)
|
-
|
Cann Group Limited, an
associate of the Company
|
Design, engineering
and construction
consulting services
(
5)
|
239
|
-
|
(50)
|
-
|
|
(1)
|
The amounts are unsecured, non-interest bearing and have
no specific repayment terms.
|
|
(2)
|
CCC provides operational, administrative and consulting
services to CanvasRx.
|
|
(3)
|
Consulting fees paid related to the CanvasRx
acquisition.
|
|
43 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
|
(4)
|
Interest income earned on loans receivable from
AHL.
|
|
(5)
|
Profit margin generated from services provided to the
Company’s associates, based on the Company’s ownership interest at June
30, 2018.
|
These transactions are in the normal course of operations and
are measured at the exchange value being the amounts agreed to by the
parties.
Key management personnel compensation
The Company’s key management personnel have the authority and
responsibility for planning, directing and controlling the activities of the
Company and consists of the Company’s executive management team and management
directors.
|
(in thousands
except as otherwise noted)
|
|
2018
|
|
|
2017
|
|
|
Management compensation
|
$
|
5,284
|
|
$
|
1,934
|
|
|
Directors' fees
(
1)
|
$
|
210
|
|
$
|
258
|
|
|
Share-based payments
(
2)
|
|
14,608
|
|
|
6,431
|
|
|
|
$
|
20,102
|
|
$
|
8,623
|
|
|
(1)
|
Includes meeting fees and committee chair fees.
|
|
(2)
|
Share-based payments are the fair value of options
granted and vested to key management personnel and directors of the
Company under the Company’s stock option plan.
|
|
(3)
|
As at June 30, 2018, the amount payable to the directors
and officers and a former director and officer of the Company is $1,128
(2017 - $565).
|
CRITICAL ACCOUNTING ESTIMATES
The preparation of the Company’s Financial Statements in
conformity with IFRS requires management to make judgments, estimates, and
assumptions about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognized in the period in
which the estimate is revised, if the revision affects only that period, or in
the period of the revision and future periods, if the revision affects both
current and future periods.
Significant judgments, estimates and assumptions that have the
most significant effect on the amounts recognized in the Financial Statements
are as follows:
Biological assets
Determination of the fair values of the biological assets
requires the Company to make assumptions about how market participants assign
fair values to these assets. These assumptions primarily relate to the level of
effort required to bring the cannabis up to the point of harvest, costs to
convert the harvested cannabis to finished goods, sales price, risk of loss,
expected future yields from the cannabis plants and estimating values during the
growth cycle. The average grow cycle of plants up to the point of harvest is
approximately twelve weeks.
|
44 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
Inventory
The valuation of biological assets at the point of harvest is
the cost basis for all cannabis-based inventory and thus any critical estimates
and judgments related to the valuation of biological assets are also applicable
for inventory. The valuation of work-in-process and finished goods also requires
the estimate of conversion costs incurred, which become part of the carrying
amount for the inventory. The Company must also determine if the cost of any
inventory exceeds its net realizable value, such as cases where prices have
decreased, or inventory has spoiled or has otherwise been damaged.
Estimated useful lives and depreciation of property, plant
and equipment
Depreciation of property, plant and equipment is dependent upon
estimates of useful lives and residual values which are determined through the
exercise of judgment. The assessment of any impairment of these assets is
dependent upon estimates of recoverable amounts that take into account factors
such as economic and market conditions and the useful lives of assets.
Investments in associates and joint ventures
The Company uses judgement in its assessment of whether the
Company has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the investee,
including but not limited to, the ability to exercise significant influence
through board representation, material transactions with the investee, provision
of technical information, and the interchange of managerial personnel. Whether
an investment is classified as an investment in associate can have a significant
impact on the entries made on and after acquisition.
Business combinations and asset acquisitions
Classification of an acquisition as a business combination or
an asset acquisition depends on whether the assets acquired constitute a
business, which can be a complex judgement. Whether an acquisition is classified
as a business combination or asset acquisition can have a significant impact on
the entries made on and after acquisition.
In determining the fair value of all identifiable assets,
liabilities and contingent liabilities acquired, the most significant estimates
relate to contingent consideration and intangible assets. Management exercises
judgment in estimating the probability and timing of when earn-outs are expected
to be achieved which is used as the basis for estimating fair value. For any
intangible asset identified, depending on the type of intangible asset and the
complexity of determining its fair value, an independent valuation expert or
management may develop the fair value, using appropriate valuation techniques,
which are generally based on a forecast of the total expected future net cash
flows. The evaluations are linked closely to the assumptions made by management
regarding the future performance of these assets and any changes in the discount
rate applied.
Disposal group held for distribution
The Company held a revenue royalty and an annuity receivable
from SubTerra LLC. These assets were held in Australis Capital Inc. which was
classified as a disposal group held for distribution to Aurora shareholders. The
Company used judgment in estimating the fair value of the SubTerra assets. In
determining the fair value of the revenue royalty, management exercised judgment
in determining the likelihood of SubTerra generating revenues from the sale of
cannabis-based products. The fair value of the annuity receivable was estimated
using the effective interest method using a ten-year corporate debt yield at the
measurement date.
|
45 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
Goodwill and intangible asset impairment
Amortization of intangible assets is dependent upon estimates
of useful lives and residual values which are determined through the exercise of
judgment.
Goodwill is allocated to cash generating units (“CGUs”) which
are expected to benefit from the synergies of the business combination. CGUs are
determined based on the smallest identifiable group of assets that generates
cash inflows that are largely independent of cash inflows from other assets or
group of assets. Management has exercised judgement in this assessment and
determined the Company’s CGUs to be: the production and sale of medical
cannabis; patient counselling services; design, engineering and construction
consulting services; the production and sale of indoor cultivators; and the
production and sale of hemp related food products.
Convertible instruments
The identification of convertible notes components is based on
interpretations of the substance of the contractual arrangement and therefore
requires judgment from management. The separation of the components affects the
initial recognition of the convertible debenture at issuance and the subsequent
recognition of interest on the liability component. The determination of the
fair value of the liability is also based on a number of assumptions, including
contractual future cash flows, discount rates and the presence of any derivative
financial instruments.
Share-based payments
In estimating fair value of warrants using the Binomial model,
management is required to make certain assumptions and estimates such as the
expected life of warrants, volatility of the Company’s future share price, risk
free rate, and future dividend yields. Changes in assumptions used to estimate
fair value could result in materially different results.
In estimating fair value of options using the Black-Scholes
option pricing model, management is required to make certain assumptions and
estimates such as the expected life of options, volatility of the Company’s
future share price, risk free rate, future dividend yields and estimated
forfeitures at the initial grant date. Changes in assumptions used to estimate
fair value could result in materially different results.
Deferred tax assets
Deferred tax assets, including those arising from tax loss
carry-forwards, require management to assess the likelihood that the Company
will generate sufficient taxable earnings in future periods in order to utilize
recognized deferred tax assets. Assumptions about the generation of future
taxable profits depend on management’s estimates of future cash flows. In
addition, future changes in tax laws could limit the ability of the Company to
obtain tax deductions in future periods. To the extent that future cash flows
and taxable income differ significantly from estimates, the ability of the
Company to realize the net deferred tax assets recorded at the reporting date
could be impacted.
|
46 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
Fair value of financial instruments
The individual fair values attributed to the different
components of a financing transaction, notably investment in equity in
securities, derivative financial instruments, convertible debt and loans, are
determined using valuation techniques. The Company uses judgment to select the
methods used to make certain assumptions and in performing the fair value
calculations in order to determine (a) the values attributed to each component
of a transaction at the time of their issuance; (b) the fair value measurements
for certain instruments that require subsequent measurement at fair value on a
recurring basis; and (c) for disclosing the fair value of financial instruments
subsequently carried at amortized cost. These valuation estimates could be
significantly different because of the use of judgment and the inherent
uncertainty in estimating the fair value of these instruments that are not
quoted in an active market.
NEW ACCOUNTING PRONOUNCEMENTS
There were no new standards effective July 1, 2017, that had an
impact on the Company’s consolidated financial statements. The following IFRS
standards have been recently issued by the IASB. Pronouncements that are not
applicable or where it has been determined do not have a significant impact to
the Company have been excluded herein.
IFRS 7 Financial instruments: Disclosure
IFRS 7
Financial instruments: Disclosure,
was amended to
require additional disclosures on transition from IAS 39 to IFRS 9. IFRS 7 is
effective on adoption of IFRS 9, which is effective for annual periods
commencing on or after January 1, 2018. The Company intends to adopt the
amendments to IFRS 7 on July 1, 2018; and does not expect the implementation
will result in a significant effect to the financial statements.
IFRS 9, Financial Instruments
In July 2014, the IASB issued the final version of IFRS 9
Financial Instruments
, which reflects all phases of the financial
instruments project and replaces IAS 39
Financial Instruments: Recognition
and Measurement
and all previous versions of IFRS 9. The standard introduces
new requirements for classification and measurement, impairment, and hedge
accounting. IFRS 9 is effective for annual periods beginning on or after 1
January 2018, with early application permitted.
The Company intends to adopt IFRS 9 on July 1, 2018,
retrospectively where the cumulative impact of adoption will be recognized in
retained earnings as of July 1, 2018; comparatives will not be restated.
The Company has conducted a preliminary assessment of the
impact from this new standard. IFRS 9 introduces new requirements to determine
the measurement basis of financial assets, involving the cash flow
characteristics of assets and the business models under which they are managed.
Accordingly, the basis of measurement for the Company’s financial assets may
change. IFRS 9 affects the accounting for available-for-sale equity securities,
requiring a designation, on an instrument by instrument basis, between recording
both unrealized and realized gains and losses either through (i) OCI with no
recycling to profit and loss or (ii) profit and loss. The Company will be
electing to classify its available-for-sale equity investments at Fair Value
through OCI as these equity investments are for strategic purposes. The FVOCI
election is made upon initial recognition, on an instrument-by-instrument basis
and once made is irrevocable. Gains and losses on these instruments including
when derecognized or sold are recorded in OCI and are not subsequently
reclassified to the Consolidated Statement of Comprehensive Income (Loss).
|
47 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
For other financial instruments, the Company does not expect
the implementation will result in a significant change in the classification and
measurement of the Company’s financial assets.
IFRS 15 Revenue from Contracts with Customers
The IASB replaced IAS 18
Revenue
, in its entirety with
IFRS 15
Revenue from Contracts with Customers
. The standard contains a
single model that applies to contracts with customers and two approaches to
recognizing revenue: at a point in time or over time. The model features a
contract-based five-step analysis of transactions to determine whether, how much
and when revenue is recognized. IFRS 15 is effective for annual periods
beginning on or after January 1, 2018, with early application permitted.
The Company intends to adopt IFRS 15 on July 1, 2018, using the
modified retrospective approach where the cumulative impact of adoption will be
recognized in retained earnings as of July 1, 2018; comparatives will not be
restated.
The Company has conducted a preliminary assessment of the
impact from this new standard. Under IFRS 15, revenue from the sale of medicinal
cannabis would be recognized at a point in time when control over the goods have
been transferred to the customer. The Company transfers control and satisfies
its performance obligation upon delivery and acceptance by the customer, which
is consistent with the Company’s current revenue recognition policy under IAS
18.
Referral revenues earned from Licensed Producers through
CanvasRx are recognized over a period of time as the referred patients remain
active with the Licensed Producers. This is consistent with the Company’s
current revenue recognition policy under IAS 18 where revenue is recognized on a
monthly basis over a specified period of time that the referred patient remains
an active purchaser of medical cannabis with the Licensed Producer.
Based on the Company’s preliminary assessment, the adoption of
this new standard is not expected to have a material impact on its consolidated
financial statements.
IFRS 16 Leases
In January 2016, the IASB issued IFRS 16
Leases
, which
will replace IAS 17
Leases
. This standard introduces a single lessee
accounting model and requires a lessee to recognize assets and liabilities for
all leases with a term of more than twelve months, unless the underlying asset
is of low value. A lessee is required to recognize a right-of-use asset
representing its right to use the underlying asset and a lease liability
representing its obligation to make lease payments. The standard will be
effective for annual periods beginning on or after January 1, 2019, with earlier
application permitted for entities that apply IFRS 15
Revenue from Contracts
with Customers
at or before the date of initial adoption of IFRS 16. The
Company intends to adopt IFRS 16 on July 1, 2019, and is assessing the impact of
this new standard on its consolidated financial statements.
|
48 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
FINANCIAL INSTRUMENTS AND OTHER
INSTRUMENTS
Fair Value Hierarchy
Financial instruments recorded at fair value are classified
using a fair value hierarchy that reflects the significance of the inputs to
fair value measurements. The three levels of hierarchy are:
|
Level 1
|
Unadjusted quoted prices in active markets for
identical assets or liabilities;
|
|
Level 2
|
Inputs other than quoted prices that are
observable for the asset or liability, either directly or indirectly; and
|
|
Level 3
|
Inputs for the asset or liability that are not
based on observable market data.
|
Significant Judgement
The individual fair values attributed to the different
components of a financing transaction, notably investment in equity in
securities, derivative financial instruments, convertible debt and loans, are
determined using valuation techniques. The Company uses judgment to select the
methods used to make certain assumptions and in performing the fair value
calculations in order to determine (a) the values attributed to each component
of a transaction at the time of their issuance; (b) the fair value measurements
for certain instruments that require subsequent measurement at fair value on a
recurring basis; and (c) for disclosing the fair value of financial instruments
subsequently carried at amortized cost. These valuation estimates could be
significantly different because of the use of judgment and the inherent
uncertainty in estimating the fair value of these instruments that are not
quoted in an active market.
Summary of Financial Instruments
The carrying values of the financial instruments at June 30,
2018, are summarized in the following table:
|
|
|
|
|
|
|
|
|
Held-for-
|
|
|
Financial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
Financial
|
|
|
|
|
|
(in thousands
except as
|
|
|
|
|
Loans and
|
|
|
trading
|
|
|
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
sale financial
|
|
|
|
|
|
|
|
|
|
|
|
financial
|
|
|
liabilities at
|
|
|
Total
|
|
|
otherwise
noted)
|
|
|
|
|
receivables
|
|
|
derivative
|
|
|
designated as
|
|
|
|
|
|
|
|
|
|
|
|
|
|
assets
|
|
|
|
|
|
|
|
|
|
|
|
liabilities
|
|
|
FVTPL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
assets at FVTPL
|
|
|
FVTPL
|
|
|
|
|
|
|
|
|
|
|
|
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
-
|
|
$
|
89,193
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
- $
|
|
|
89,193
|
|
|
Short-term investments
|
|
-
|
|
|
990
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
990
|
|
|
Accounts receivable
|
|
-
|
|
|
15,096
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
15,096
|
|
|
Marketable securities
|
|
59,188
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
59,188
|
|
|
Derivatives
|
|
-
|
|
|
-
|
|
|
5,331
|
|
|
119,611
|
|
|
-
|
|
|
-
|
|
|
124,942
|
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
(
1)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
47,456
|
|
|
-
|
|
|
47,456
|
|
|
Convertible notes
(
2)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
191,528
|
|
|
-
|
|
|
191,528
|
|
|
Contingent consideration
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
21,333
|
|
|
21,333
|
|
|
Loans and borrowings
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
11,683
|
|
|
-
|
|
|
11,683
|
|
|
(1)
|
Balance includes interest rate swaps of $63 which are
included in accounts payable and accrued liabilities on the Statement of
Financial Position.
|
|
(2)
|
The fair value of convertible notes, including both the
debt and equity components.
|
|
49 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
Fair value hierarchy
The following is a summary of financial assets measured at fair
value segregated based on the various levels of inputs:
|
(in thousands
except as otherwise noted)
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Total
|
|
|
Marketable securities
|
$
|
59,188
|
|
$
|
-
|
|
$
|
-
|
|
|
59,188
|
|
|
Derivative assets
|
|
-
|
|
|
120,102
|
|
|
4,840
|
|
|
124,942
|
|
There have been no transfers between fair value levels during
the period.
Changes in level 3 financial assets
Changes in the carrying value of level 3 financial assets for
the period were as follows:
|
(in thousands
except as otherwise noted)
|
|
Convertible Debenture
|
|
|
Warrant Derivatives
|
|
|
Total
|
|
|
Opening, June 30, 2017
|
$
|
11,071
|
|
$
|
292
|
|
$
|
11,363
|
|
|
Additions
|
|
-
|
|
|
30,681
|
|
|
30,681
|
|
|
Unrealized gain at inception
|
|
-
|
|
|
3,050
|
|
|
3,050
|
|
|
Unrealized gain (loss)
|
|
830
|
|
|
(9,790
|
)
|
|
(8,960
|
)
|
|
Conversion of debenture
|
|
(11,901
|
)
|
|
4,330
|
|
|
(7,571
|
)
|
|
Exercise of warrants
|
|
-
|
|
|
(23,723
|
)
|
|
(23,723
|
)
|
|
Ending balance
|
$
|
-
|
|
$
|
4,840
|
|
$
|
4,840
|
|
Unrealized gains (losses) on level 3 financial assets
For the year ended June 30, 2018, the Company recognized
unrealized gains (losses) on level 3 financial assets as follows:
|
(in thousands
except as otherwise noted)
|
|
Convertible Debenture
|
|
|
Warrant Derivatives
|
|
|
Total
|
|
|
Gain (loss) on changes in fair value
|
$
|
830
|
|
$
|
(9,790
|
)
|
$
|
(8,960
|
)
|
|
Amortized deferred inception gains
|
|
6,107
|
|
|
5,217
|
|
|
11,324
|
|
|
Unrealized gains (losses) on level 3 financial assets
|
$
|
6,937
|
|
$
|
(4,573
|
)
|
$
|
2,364
|
|
Deferred gains
Changes in deferred gains on convertible debenture and
derivatives measured at fair value and included in level 3 of the fair value
hierarchy were as follows:
|
(in thousands
except as otherwise noted)
|
|
Convertible Debenture
|
|
|
Warrant Derivatives
|
|
|
Total
|
|
|
Opening, June 30, 2017
|
$
|
10,206
|
|
$
|
321
|
|
$
|
10,527
|
|
|
Additions
|
|
-
|
|
|
3,051
|
|
|
3,051
|
|
|
Conversion of debenture
|
|
(4,099
|
)
|
|
4,099
|
|
|
-
|
|
|
Unrealized gains amortized
|
|
(6,107
|
)
|
|
(5,217
|
)
|
|
(11,324
|
)
|
|
Ending balance
|
$
|
-
|
|
$
|
2,254
|
|
$
|
2,254
|
|
|
50 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
Contingent consideration
The following is a continuity of contingent consideration
liability:
|
(in thousands
except as otherwise noted)
|
|
BCNL
UCI
|
|
|
CanvasRx
|
|
|
H2
|
|
|
Total
|
|
|
Opening, June 30, 2017
|
$
|
-
|
|
$
|
13,221
|
|
$
|
-
|
|
$
|
13,221
|
|
|
Additions from acquisitions
|
|
1,119
|
|
|
-
|
|
|
14,957
|
|
|
16,076
|
|
|
Unrealized (gain) loss from change in fair
value
|
|
123
|
|
|
6,703
|
|
|
1,018
|
|
|
7,844
|
|
|
Payments
|
|
-
|
|
|
(14,040
|
)
|
|
(1,768
|
)
|
|
(15,808
|
)
|
|
Ending balance
|
$
|
1,242
|
|
$
|
5,884
|
|
$
|
14,207
|
|
$
|
21,333
|
|
The Company’s contingent consideration liability was measured
at fair value based on unobservable inputs and was considered a level 3
financial instrument. The fair value of these liabilities determined by this
analysis was primarily driven by the Company’s expectations of the Subsidiaries’
achieving their milestones. The expected milestones were assessed probabilities
by management which were discounted to present value in order to derive a fair
value of the contingent consideration. The primary inputs of the calculation
were the probabilities of achieving the milestones and a discount rate.
FINANCIAL INSTRUMENTS RISK
The Company is exposed in varying degrees to a variety of
financial instrument related risks. The Board mitigates these risks by
assessing, monitoring and approving the Company’s risk management processes:
Credit risk
Credit risk is the risk of a potential loss to the Company if a
customer or third party to a financial instrument fails to meet its contractual
obligations. The Company is moderately exposed to credit risk from its cash and
cash equivalents, trade and other receivables, short-term GIC investments, and
advances receivable. The risk exposure is limited to their carrying amounts at
the statement of financial position date. The risk for cash and cash equivalents
is mitigated by holding these instruments with highly rated Canadian financial
institutions. The Company does not invest in asset-backed deposits or
investments and does not expect any credit losses. The Company periodically
assesses the quality of its investments and is satisfied with the credit rating
of the financial institutions and the investment grade of its guaranteed
investment certificates. Trade and other receivables primarily consist of trade
accounts receivable and goods and services taxes recoverable (“GST”). Credit
risk from the advances receivable arises from the possibility that principal
and/or interest due may become uncollectible. The Company mitigates this risk by
managing and monitoring the underlying business relationships.
The Company provides credit to its customers in the normal
course of business and has established credit evaluation and monitoring
processes to mitigate credit risk but has limited risk as the majority of sales
are transacted with credit cards.
As at June 30, 2018 and 2017, the Company’s aging of
receivables was approximately as follows:
|
(in thousands
except as otherwise noted)
|
|
2018
|
|
|
2017
|
|
|
0 – 60 days
|
$
|
13,569
|
|
$
|
1,534
|
|
|
61 –
120 days
|
|
1,527
|
|
|
778
|
|
|
|
$
|
15,096
|
|
$
|
2,312
|
|
|
51 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
Liquidity risk
Liquidity risk is the risk that the Company will not be able to
meet its financial obligations associated with financial liabilities. The
Company manages liquidity risk through the management of its capital structure.
The Company has access to CanniMed’s Canadian and U.S. operating lines of credit
with a maximum of $1,000 and US $500, respectively. The Canadian and U.S.
operating lines of credit bear interest at bank prime rate plus 0.75% and at
U.S. base rate plus 0.75%, respectively. The lines of credit are secured by a
general security agreement covering all assets of the Company and can be
accessed to the lesser of the maximum available credit or the aggregate of 90%
of Government of Canada receivables, 85% of undoubted receivables and 75% of
acceptable receivables, less intercompany and priority claim amounts. These
operating lines of credit were undrawn as of June 30, 2018. Subsequent to June
30, 2018, the Company also secured a $200,000 debt facility with BMO. The
Company’s approach to managing liquidity is to ensure that it will have
sufficient liquidity to settle obligations and liabilities when due.
Market risk
The operating results and financial
position of the Company are reported in Canadian dollars. As the Company
operates in an international environment, some of the Company’s financial
instruments and transactions are denominated in currencies other than the
Canadian dollar.
The results of the Company’s operations
are subject to currency transaction and translation risks. The Company holds
cash in Canadian dollars, U.S. dollars, Danish Krone and Euros, and investments
in Australian and U.S. dollars. The Company’s main risk is associated with
fluctuations in the Euros, Danish Krone, Australian and U.S. dollars. Assets and
liabilities are translated based on the foreign currency translation policy.
The Company has determined that an
effect of a 10% increase or decrease in Euros, Danish Krone, Australian dollar,
and U.S. dollar against the Canadian dollar on financial assets and liabilities,
as at June 30, 2018, would result in an increase or decrease of approximately
$79 (2017 - $1,430) to the net loss and comprehensive loss for the year ended
June 30, 2018.
At June 30, 2018, the Company had no
hedging agreements in place with respect to foreign exchange rates. The Company
has not entered into any agreements or purchased any instruments to hedge
possible currency risks at this time.
Interest rate risk is the risk that the
fair value or future cash flows of a financial instrument will fluctuate because
of changes in market interest rates. Cash and cash equivalents bear interest at
market rates. The Company’s investments and convertible notes have fixed rates
of interest. The majority of the Company’s loans and borrowings have floating
interest rates. The Company holds interest rate swaps to fix its exposure to
variable interest rates on approximately one half of its loans and borrowings.
|
52 | Aurora Cannabis Inc.
|
2018 Management’s
Discussion & Analysis
|
Price risk is the risk of variability
in fair value due to movements in equity or market prices. The Company’s
marketable securities and investments are susceptible to price risk arising from
uncertainties about their future values. The fair value of marketable securities
is based on quoted market prices which the shares of the investments can be
exchanged for.
If the fair value of these financial
assets were to increase or decrease by 10%, the Company would incur an
associated increase or decrease in net loss and comprehensive loss of
approximately $28,221 (2017 - $2,823). See Note 8 for additional details
regarding the fair value of investments and marketable securities.
SUMMARY OF OUTSTANDING SHARE DATA
The Company had the following securities issued and outstanding
as at September 24, 2018:
|
Securities
(1)
|
|
Units
Outstanding
|
|
|
Issued and outstanding common shares
|
|
960,962,079
|
|
|
Stock options
|
|
42,824,768
|
|
|
Warrants
|
|
23,019,275
|
|
|
Restricted share units
|
|
2,718,527
|
|
|
Convertible debentures
|
|
17,892,131
|
|
|
(1)
|
See the Company’s Consolidated Financial Statements Note
17 “Convertible Debentures”, Note 19 “Share Capital and Warrants”, and
Note 20 “Share-based Payments” for a detailed description of these
securities.
|
RISK FACTORS
This section discusses factors relating to the business of
Company that should be considered by both existing and potential investors. The
information in this section is intended to serve as an overview and should not
be considered comprehensive and the Company may face risks and uncertainties not
discussed in this section, or not currently known to us, or that we deem to be
immaterial. All risks to the Company’s business have the potential to influence
its operations in a materially adverse manner.
Reliance on Licensing
The ability of Aurora to continue its business of growth,
storage and distribution of medical marijuana is dependent on the good standing
of all licenses, including the licenses to produce and sell cannabis oil
products, and adherence to all regulatory requirements related to such
activities. Any failure to comply with the terms of the licenses, or to renew
the licenses after their expiry dates, would have a material adverse impact on
the financial condition and operations of the business of the Company. Although
the Company believes that it will meet the requirements of the ACMPR for future
extensions or renewals of the licenses, there can be no assurance that Health
Canada will extend or renew the licenses, or if extended or renewed, that they
will be extended or renewed on the same or similar terms. Should Health Canada
not extend or renew the licenses, or should they renew the licenses on different
terms, the business, financial condition and operating results of the Company
would be materially adversely affected.
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53 | Aurora Cannabis Inc.
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Change in Law, Regulations and Guidelines
Aurora’s business is subject to a variety of laws, regulations
and guidelines relating to marketing, acquisition, manufacture, management,
transportation, storage, sale and disposal of medical marijuana but also laws
and regulations relating to health and safety, the conduct of operations and the
protection of the environment. Changes to such laws, regulations and guidelines
may cause adverse effects to the Company’s operations.
The Liberal Party of Canada, which has formed the current
federal Government of Canada, has made electoral commitments to legalize,
regulate and tax recreational cannabis use in Canada. On April 13, 2017, the
Government of Canada introduced the Cannabis Act. On June 19, 2018, Prime
Minister Justin Trudeau announced that the Cannabis Act and its regulations will
come into force in Canada on October 17, 2018, on order to provide the provinces
and territories time to prepare for retail sales. The Cannabis Act passed its
final legislative step and received Royal Assent on June 21, 2018.
The legislative framework pertaining to the Canadian
recreational cannabis market will be subject to significant provincial and
territorial regulation, which will vary across provinces and territories and
result in an asymmetric regulatory and market environment, different competitive
pressures and significant additional compliance and other costs and/or
limitations on the Company’s ability to participate in such market.
Regulatory Risk
Achievement of the Company’s business objectives are
contingent, in part, upon compliance with the regulatory requirements, including
those imposed by Health Canada, enacted by these government authorities and
obtaining all regulatory approvals, where necessary, for the sale of its
products. Aurora cannot predict the time required to secure all appropriate
regulatory approvals for its products, or the extent of testing and
documentation that may be required by government authorities. Any delays in
obtaining, or failure to obtain regulatory approvals would significantly delay
the development of markets and products and could have a material adverse effect
on the Company’s business, results of operation and financial condition.
Limited Operating History and No Assurance of Profitability
The Company is subject to all of the business risks and
uncertainties associated with any early-stage enterprise, including
under-capitalization, cash shortages, limitation with respect to personnel,
financial and other resources, and lack of revenues.
The Company has incurred operating losses in recent periods.
The Company may not be able to achieve or maintain profitability and may
continue to incur significant losses in the future. In addition, the Company
expects to continue to increase operating expenses as it implements initiatives
to grow its business. If the Company’s revenues do not increase to offset these
expected increases in costs and operating expenses, the Company will not be
profitable. There is no assurance that the Company will be successful in
achieving a return on shareholders’ investments and the likelihood of success
must be considered in light of the early stage of operations.
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54 | Aurora Cannabis Inc.
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Unfavourable Publicity or Consumer Perception
The success of the medical marijuana industry may be
significantly influenced by the public’s perception of marijuana’s medicinal
applications. Medical marijuana is a controversial topic, and there is no
guarantee that future scientific research, publicity, regulations, medical
opinion and public opinion relating to medical marijuana will be favourable. The
medical marijuana industry is an early-stage business that is constantly
evolving with no guarantee of viability. The market for medical marijuana is
uncertain, and any adverse or negative publicity, scientific research, limiting
regulations, medical opinion and public opinion relating to the consumption of
medical marijuana may have a material adverse effect on our operational results,
consumer base and financial results.
Competition
The market for the Company’s products does appear to be
sizeable and Health Canada has only issued a limited number of licenses under
the ACMPR to produce and sell medical marijuana. As a result, the Company
expects significant competition from other companies due to the recent nature of
the ACMPR regime. A large number of companies appear to be applying for
production licenses, some of which may have significantly greater financial,
technical, marketing and other resources, may be able to devote greater
resources to the development, promotion, sale and support of their products and
services, and may have more extensive customer bases and broader customer
relationships.
Should the size of the medical marijuana market increase as
projected the demand for products will increase as well, and in order for the
Company to be competitive it will need to invest significantly in research and
development, market development, marketing, production expansion, new client
identification, distribution channels and client support. If the Company is not
successful in achieving sufficient resources to invest in these areas, the
Company’s ability to compete in the market may be adversely affected, which
could materially and adversely affect the Company’s business, its financial
conditions and operations.
Realization of Growth Targets
The Company’s ability to continue production of marijuana is
affected by a number of factors, including plant design errors, non-performance
by third party contractors, increases in materials or labour costs, construction
performance falling below expected levels of output or efficiency, environmental
pollution, contractor or operator errors, breakdowns, aging or failure of
equipment or processes, labour disputes, as well as factors specifically related
to indoor agricultural practices, such as reliance on provision of energy and
utilities to the facility, and potential impacts of major incidents or
catastrophic events on the facility, such as fires, explosions, earthquakes or
storms.
Additional Financing
There is no guarantee that the Company will be able to execute
on its strategy. The continued development of the Company may require additional
financing. The failure to raise such capital could result in the delay or
indefinite postponement of current business strategy or the Company ceasing to
carry on business. There can be no assurance that additional capital or other
types of financing will be available if needed or that, if available, the terms
of such financing will be favorable to the Company. If additional funds are
raised through issuances of equity or convertible debt securities, existing
shareholders could suffer significant dilution. In addition, from time to time,
the Company may enter into transactions to acquire assets or the shares of other
Companies. These transactions may be financed wholly or partially with debt,
which may temporarily increase the Company’s debt levels above industry
standards. Any debt financing secured in the future could involve restrictive
covenants relating to capital raising activities and other financial and
operational matters, which may make it more difficult for the Company to obtain additional capital and to pursue business opportunities,
including potential acquisitions. Debt financings may contain provisions, which,
if breached, may entitle lenders to accelerate repayment of loans and there is
no assurance that the Company would be able to repay such loans in such an event
or prevent the enforcement of security granted pursuant to such debt financing.
The Company may require additional financing to fund its operations to the point
where it is generating positive cash flows. Negative cash flow may restrict the
Company’s ability to pursue its business objectives.
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55 | Aurora Cannabis Inc.
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Uninsured or Uninsurable Risk
The Company may be subject to liability for risks against which
it cannot insure or against which the Company may elect not to insure due to the
high cost of insurance premiums or other factors. The payment of any such
liabilities would reduce the funds available for the Company’s normal business
activities. Payment of liabilities for which the Company does not carry
insurance may have a material adverse effect on the Company’s financial position
and operations.
Key Personnel
The Company’s success will depend on its directors’ and
officers’ ability to develop and execute on the Company’s business strategies
and manage its ongoing operations, and on the Company’s ability to attract and
retain key quality assurance, scientific, sales, public relations and marketing
staff or consultants now that production and selling operations have begun. The
loss of any key personnel or the inability to find and retain new key persons
could have a material adverse effect on the Company’s business. Competition for
qualified technical, sales and marketing staff, as well as officers and
directors can be intense, and no assurance can be provided that the Company will
be able to attract or retain key personnel in the future, which may adversely
impact the Company’s operations.
Jurisdictions Outside of Canada
The Company intends to expand its operations and business into
jurisdictions outside of Canada. There can be no assurance that any market for
the Company’s products will develop in any such foreign jurisdiction. The
Company may face new or unexpected risks or significantly increase its exposure
to one or more existing risk factors, including economic instability, changes in
laws and regulations and the effects of competition. These factors may limit the
Company’s capability to successfully expand its operations and may have a
material adverse effect on the Company’s business, financial condition and
results of operations.
Strategic Alliances
The Company currently has, and may in the future enter into,
strategic alliances with third parties that the Company believes will complement
or augment its existing business. Aurora’s ability to complete strategic
alliances is dependent upon, and may be limited by, the availability of suitable
candidates and capital. In addition, strategic alliances could present
unforeseen integration obstacles or costs, may not enhance our business, and may
involve risks that could adversely affect the Company, including significant
amounts of management time that may be diverted from operations in order to
pursue and complete such transactions or maintain such strategic alliances.
Future strategic alliances could result in the incurrence of additional debt,
costs and contingent liabilities, and there can be no assurance that future
strategic alliances will achieve, or that the Company’s existing strategic
alliances will continue to achieve, the expected benefits to the Company’s
business or that the Company will be able to consummate future strategic
alliances on satisfactory terms, or at all. Any of the foregoing could have a
material adverse effect on the Company’s business, financial condition and
results of operations.
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Product Liability Claims
As a manufacturer and distributor of products designed to be
ingested by humans, the Company faces an inherent risk of exposure to product
liability claims, regulatory action and litigation if its products are alleged
to have caused significant loss or injury. In addition, the manufacture and sale
of cannabis products for medical purposes involves the risk of injury to
consumers due to tampering by unauthorized third parties or product
contamination. Previously unknown adverse reactions resulting from human
consumption of cannabis products alone or in combination with other medications
or substances could occur. The Company may be subject to various product
liability claims, including, among others, that the products produced by the
Company caused or contributed to injury or illness, include inadequate
instructions for use or include inadequate warnings concerning possible side
effects or interactions with other substances. A product liability claim or
regulatory action against the Company could result in increased costs, could
adversely affect the Company’s reputation and goodwill with its patients and
consumers generally, and could have a material adverse effect on the Company’s
business, financial condition and results of operations. There can be no
assurances that the Company will be able to obtain or maintain product liability
insurance on acceptable terms or with adequate coverage against potential
liabilities. Such insurance is expensive and may not be available in the future
on acceptable terms, or at all. The inability to obtain sufficient insurance
coverage on reasonable terms or to otherwise protect against potential product
liability claims could prevent or inhibit the commercialization of products.
Product Recalls and Returns
Manufacturers and distributors of products are sometimes
subject to the recall or return of their products for a variety of reasons,
including product defects, such as contamination, unintended harmful side
effects or interactions with other substances, packaging safety and inadequate
or inaccurate labeling disclosure. If any of the products produced by the
Company are recalled due to an alleged product defect or for any other reason,
the Company could be required to incur the unexpected expense of the recall and
any legal proceedings that might arise in connection with the recall. The
Company may lose a significant amount of sales and may not be able to replace
those sales at an acceptable margin or at all. In addition, a product recall may
require significant management attention. Although Aurora has detailed
procedures in place for testing finished products, there can be no assurance
that any quality, potency or contamination problems will be detected in time to
avoid unforeseen product recalls, regulatory action or lawsuits, whether
frivolous or otherwise. Additionally, if any of the products produced by Aurora
were subject to recall, the reputation and goodwill of that product and/or the
Company could be harmed. A recall for any of the foregoing reasons could lead to
decreased demand for products produced by Aurora and could have a material
adverse effect on the Company’s business, financial condition and results of
operations. Additionally, product recalls may lead to increased scrutiny of the
operations of Aurora by Health Canada or other regulatory agencies, requiring
further management attention, increased compliance costs and potential legal
fees, fines, penalties and other expenses. Furthermore, any product recall
affecting the medical cannabis industry more broadly could lead consumers to
lose confidence in the safety and security of the products sold by Licensed
Producers generally, which could have a material adverse effect on the Company’s
business, financial condition and results of operations.
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57 | Aurora Cannabis Inc.
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New Product Development
The medical cannabis industry is, and the recreational cannabis
industry will be, in its early stages of development and it is likely that the
Company, and its competitors, will seek to introduce new products in the future.
In attempting to keep pace with any new market developments, the Company may
need to expend significant amounts of capital in order to successfully develop
and generate revenues from new products introduced by the Company. As well, the
Company may be required to obtain additional regulatory approvals from Health
Canada and any other applicable regulatory authority, which may take significant
amounts of time. The Company may not be successful in developing effective and
safe new products, bringing such products to market in time to be effectively
commercialized, or obtaining any required regulatory approvals, which, together
with any capital expenditures made in the course of such product development and
regulatory approval processes, may have a material adverse effect on the
Company’s business, financial condition and results of operations.
Conflict of Interest
Certain of the Company’s directors and officers are also
directors and officers in other companies. Situations may arise in connection
with potential acquisitions or opportunities where the other interests of these
directors and officers conflict with or diverge from the Company interests. In
accordance with the BCBCA, directors who have a material interest in any person
who is a party to a material contract or a proposed material contract are
required, subject to certain exceptions, to disclose that interest and generally
abstain from voting on any resolution to approve the contract.
Litigation
The Company may become party to litigation, mediation and/or
arbitration from time to time in the ordinary course of business which could
adversely affect its business. Monitoring and defending against legal actions,
whether or not meritorious, can be time-consuming, divert management’s attention
and resources and cause the Company to incur significant expenses. In addition,
legal fees and costs incurred in connection with such activities may be
significant and we could, in the future, be subject to judgments or enter into
settlements of claims for significant monetary damages. While the Company has
insurance that may cover the costs and awards of certain types of litigation,
the amount of insurance may not be sufficient to cover any costs or awards.
Substantial litigation costs or an adverse result in any litigation may
adversely impact the Company’s business, operating results or financial
condition.
Agricultural Operations
Since the Company’s business will revolve mainly around the
growth of medical marijuana, an agricultural product, the risks inherent with
agricultural businesses will apply. Such risks may include disease and insect
pests, among others. Although the Company expects to grow its product in a
climate controlled, monitored, indoor location, there is no guarantee that
changes in outside weather and climate will not adversely affect production.
Further, any rise in energy costs may have a material adverse effect on the
Company’s ability to produce medical marijuana.
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Transportation Disruptions
The Company will depend on fast, cost-effective and efficient
courier services to distribute its product. Any prolonged disruption of this
courier service could have an adverse effect on the financial condition and
results of operations of the Company. Rising costs associated with the courier
service used by the Company to ship its products may also adversely impact the
business of the Company and its ability to operate profitably.
Fluctuating Prices of Raw Materials
The Company’s revenues are in a large part derived from the
production, sale and distribution of marijuana. The price of production, sale
and distribution of marijuana will fluctuate widely due to how young the
marijuana industry is and is affected by numerous factors beyond the Company’s
control including international, economic and political trends, expectations of
inflation, currency exchange fluctuations, interest rates, global or regional
consumptive patterns, speculative activities and increased production due to new
production and distribution developments and improved production and
distribution methods. The effect of these factors on the price of product
produced by the Company and, therefore, the economic viability of any of the
Company’s business, cannot accurately be predicted.
Environmental and Employee Health and Safety Regulations
The Company’s operations are subject to environmental and
safety laws and regulations concerning, among other things, emissions and
discharges to water, air and land; the handling and disposal of hazardous and
non-hazardous materials and wastes, and employee health and safety. The Company
will incur ongoing costs and obligations related to compliance with
environmental and employee health and safety matters. Failure to obtain an
Environmental Compliance Approval or otherwise comply with environmental and
safety laws and regulations may result in additional costs for corrective
measures, penalties or in restrictions on our manufacturing operations. In
addition, changes in environmental, employee health and safety or other laws,
more vigorous enforcement thereof or other unanticipated events could require
extensive changes to the Company’s operations or give rise to material
liabilities, which could have a material adverse effect on the business, results
of operations and financial condition of the Company.
Intellectual Property
The success of the Company’s business depends in part on its
ability to protect its ideas and technology. Aurora has applied for a patent for
Aurora Envoy
TM
in August 2017. AMI has also applied to register the
trademark “AURORA” and has received an approval notice from the Canadian
Intellectual Property Office. CanvasRx has registered a trademark for
“CanvasRx”. Even if the Company moves to protect its technology with trademarks,
patents, copyrights or by other means, Aurora is not assured that competitors
will not develop similar technology, business methods or that Aurora will be
able to exercise its legal rights. Other countries may not protect intellectual
property rights to the same standards as does Canada. Actions taken to protect
or preserve intellectual property rights may require significant financial and
other resources such that said actions have a meaningfully impact our ability to
successfully grow our business.
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Political and Economic Instability
The Company may be affected by possible political or economic
instability. The risks include, but are not limited to, terrorism, military
repression, extreme fluctuations in currency exchange rates and high rates of
inflation. Changes in medicine and agriculture development or investment
policies or shifts in political attitude in certain countries may adversely
affect the Company’s business. Operations may be affected in varying degrees by
government regulations with respect to restrictions on production, distribution,
price controls, export controls, income taxes, expropriation of property,
maintenance of assets, environmental legislation, land use, land claims of local
people and water use. The effect of these factors cannot be accurately
predicted.
Growth Expansion Efforts
There is no guarantee that the Company’s intentions to acquire
and/or construct additional cannabis production and manufacturing facilities in
Canada and in other jurisdictions with federal legal cannabis markets, and to
expand the Company’s marketing and sales initiatives will be successful. Any
such activities will require, among other things, various regulatory approvals,
licenses and permits (such as additional site licenses from Health Canada under
the ACMPR, as applicable) and there is no guarantee that all required approvals,
licenses and permits will be obtained in a timely fashion or at all. There is
also no guarantee that the Company will be able to complete any of the foregoing
activities as anticipated or at all. The failure of the Company to successfully
execute its expansion strategy (including receiving required regulatory
approvals and permits) could adversely affect the Company’s business, financial
condition and results of operations and may result in the Company failing to
meet anticipated or future demand for its cannabis-based pharmaceutical
products, when and if it arises.
In addition, the construction of Aurora Sky, Aurora Sun and
Aurora Nordic 2 is subject to various potential problems and uncertainties, and
may be delayed or adversely affected by a number of factors beyond its control,
including the failure to obtain regulatory approvals, permits, delays in the
delivery or installation of equipment by our suppliers, difficulties in
integrating new equipment with its existing facilities, shortages in materials
or labor, defects in design or construction, diversion of management resources,
or insufficient funding or other resource constraints. Moreover, actual costs
for construction may exceed the Company’s budgets. As a result of construction
delays, cost overruns, changes in market circumstances or other factors, the
Company may not be able to achieve the intended economic benefits from the
construction of the new facilities, which in turn may materially and adversely
affect its business, prospects, financial condition and results of operations.
Execution of Future Acquisitions or Dispositions
Material acquisitions, dispositions and other strategic
transactions involve a number of risks, including: (i) potential disruption of
the Company’s ongoing business; (ii) distraction of management; (iii) the
Company may become more financially leveraged; (iv) the anticipated benefits and
cost savings of those transactions may not be realized fully or at all or may
take longer to realize than expected; (v) increasing the scope and complexity of
the Company’s operations, and (vi) loss or reduction of control over certain of
the Company’s assets.
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The presence of one or more material liabilities of an acquired
company that are unknown to the Company at the time of acquisition could have a
material adverse effect on the results of operations, business prospects and
financial condition of the Company. A strategic transaction may result in a
significant change in the nature of the Company’s business, operations and
strategy. In addition, the Company may encounter unforeseen obstacles or costs
in implementing a strategic transaction or integrating any acquired business
into the Company’s operations.
Market Risk for Securities
The market price for the Common Shares of the Company could be
subject to wide fluctuations. Factors such as commodity prices, government
regulation, interest rates, share price movements of peer companies and
competitors, as well as overall market movements, may have a significant impact
on the market price of the Company. The stock market has from time to time
experienced extreme price and volume fluctuations, which have often been
unrelated to the operating performance of particular companies.
Global Economy Risk
An economic downturn of global capital markets has been shown
to make the raising of capital by equity or debt financing more difficult. The
Company will be dependent upon the capital markets to raise additional financing
in the future, while it establishes a user base for its products. As such, the
Company is subject to liquidity risks in meeting its development and future
operating cost requirements in instances where cash positions are unable to be
maintained or appropriate financing is unavailable. These factors may impact the
Company’s ability to raise equity or obtain loans and other credit facilities in
the future and on terms favorable to the Company and its management. If
uncertain market conditions persist, the Company’s ability to raise capital
could be jeopardized, which could have an adverse impact on the Company’s
operations and the trading price of the Company’s shares on the Exchange.
Dividend Risk
The Company has not paid dividends in the past and does not
anticipate paying dividends in the near future. The Company expects to retain
its earnings to finance further growth and, when appropriate, retire debt.
Volatile Market Price for Company Common Shares
The market price for Common Shares may be volatile and subject
to wide fluctuations in response to numerous factors, many of which are beyond
the Company’s control, including the following:
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actual or anticipated fluctuations in the Company’s
quarterly results of operations;
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recommendations by securities research analysts;
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changes in the economic performance or market valuations
of companies in the industry in which the Company operates;
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addition or departure of the Company’s executive officers
and other key personnel;
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release or expiration of transfer restrictions on
outstanding Company Common Shares;
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sales or perceived sales of additional Company Common
Shares;
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operating and financial performance that vary from the
expectations of management, securities analysts and investors;
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regulatory changes affecting the Company’s industry
generally and its business and operations;
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announcements of developments and other material events
by the Company or its competitors;
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fluctuations to the costs of vital production materials
and services;
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changes in global financial markets and global economies
and general market conditions, such as interest rates and pharmaceutical
product price volatility;
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significant acquisitions or business combinations,
strategic partnerships, joint ventures or capital commitments by or
involving the Company or its competitors;
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operating and share price performance of other companies
that investors deem comparable to the Company or from a lack of market
comparable companies; and
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news reports relating to trends, concerns, technological
or competitive developments, regulatory changes and other related issues
in the Company’s industry or target markets.
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Financial markets have recently experienced significant price
and volume fluctuations that have particularly affected the market prices of
equity securities of companies and that have often been unrelated to the
operating performance, underlying asset values or prospects of such companies.
Such volatility has been particularly evident with regards to the share prices
of medical cannabis companies that are public issuers in Canada. Accordingly,
the market price of Company Common Shares may decline even if the
Company’s operating results, underlying asset values or prospects have not
changed. Additionally, these factors, as well as other related factors, may
cause decreases in asset values that are lasting and not temporary, which may
result in impairment losses. There can be no assurance that continuing
fluctuations in share price and volume will not occur. If such increased levels
of volatility and market turmoil continue, the Company’s operations could be
adversely impacted, and the trading price of Company Common Shares may be
materially adversely affected.
Breaches of Security
Given the nature of the Company’s product and its lack of legal
availability outside of channels approved by the Government of Canada, as well
as the concentration of inventory in its facilities, despite meeting or
exceeding Health Canada’s security requirements, there remains a risk of
shrinkage as well as theft. A security breach at one of the Company’s facilities
could expose the Company to additional liability and to potentially costly
litigation, increase expenses relating to the resolution and future prevention
of these breaches and may deter potential patients from choosing the Company’s
products.
In addition, Aurora collects and stores personal information
about its patients and is responsible for protecting that information from
privacy breaches. A privacy breach may occur through procedural or process
failure, information technology malfunction, or deliberate unauthorized
intrusions. Theft of data for competitive purposes, particularly patient lists
and preferences, is an ongoing risk whether perpetrated via employee collusion
or negligence or through deliberate cyber-attack. Any such theft or privacy
breach would have a material adverse effect on the Company’s business, financial
condition and results of operations.
Furthermore, there are a number of federal and provincial laws
protecting the confidentiality of certain patient health information, including
patient records, and restricting the use and disclosure of that protected
information. In particular, the privacy rules under the
Personal Information
Protection and Electronics Documents Act
(Canada) (“PIPEDA”), protect
medical records and other personal health information by limiting their use and
disclosure of health information to the minimum level reasonably necessary to
accomplish the intended purpose. If the Company was found to be in violation of
the privacy or security rules under PIPEDA or other laws protecting the
confidentiality of patient health information, it could be subject to sanctions
and civil or criminal penalties, which could increase its liabilities, harm its
reputation and have a material adverse effect on the business, results of
operations and financial condition of the Company
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Information Technology Risks
The Company has entered into agreements with third parties for
hardware, software, telecommunications and other information technology (“IT”)
services in connection with its operations. The Company’s operations depend, in
part, on how well it and its suppliers protect networks, equipment, IT systems
and software against damage from a number of threats, including, but not limited
to, cable cuts, damage to physical plants, natural disasters, intentional damage
and destruction, fire, power loss, hacking, computer viruses, vandalism and
theft. The Company’s operations also depend on the timely maintenance,
upgrade and replacement of networks, equipment, IT systems and software, as well
as pre-emptive expenses to mitigate the risks of failures. Any of these and
other events could result in information system failures, delays and/or increase
in capital expenses. The failure of information systems or a component of
information systems could, depending on the nature of any such failure,
adversely impact the Company’s reputation and results of operations.
The Company has not experienced any material losses to date
relating to cyber-attacks or other information security breaches, but there can
be no assurance that the Company will not incur such losses in the future. The
Company’s risk and exposure to these matters cannot be fully mitigated because
of, among other things, the evolving nature of these threats. As a result, cyber
security and the continued development and enhancement of controls, processes
and practices designed to protect systems, computers, software, data and
networks from attack, damage or unauthorized access is a priority. As cyber
threats continue to evolve, the Company may be required to expend additional
resources to continue to modify or enhance protective measures or to investigate
and remediate any security vulnerabilities.
Holding Company Status
The Company is a holding company and essentially all of its
operating assets are the capital stock of its subsidiaries. As a result,
investors in the Company are subject to the risks attributable to its
subsidiaries. As a holding company, the Company conducts substantially all of
its business through its subsidiaries, which generate substantially all of its
revenues. Consequently, the Company’s cash flows and ability to complete current
or desirable future enhancement opportunities are dependent on the earnings of
its subsidiaries and the distribution of those earnings to the Company. The
ability of these entities to pay dividends and other distributions will depend
on their operating results and will be subject to applicable laws and
regulations which require that solvency and capital standards be maintained by
such companies and contractual restrictions contained in the instruments
governing their debt. In the event of a bankruptcy, liquidation or
reorganization of any of the Company’s subsidiaries, holders of indebtedness and
trade creditors will generally be entitled to payment of their claims from the
assets of those subsidiaries before any assets are made available for
distribution to the Company.
Integration of MedReleaf
It is expected that the acquisition of MedReleaf will result in
enhanced production capacity, increased earnings and cost savings by taking
advantage of operating and other synergies to be realized from the consolidation
of MedReleaf and the Company and enhanced growth opportunities for the combined
company. These anticipated benefits will depend in part on whether MedReleaf and
the Company’s operations can be integrated in an efficient and effective manner.
The integration of the two companies will present challenges to management,
including the integration of systems and personnel of the two companies, and
special risks, including possible unanticipated liabilities, unanticipated
costs, and the loss of key employees. The performance of operations acquired
from the Company from the acquisition of MedReleaf could be adversely affected
if the combined company cannot retain key employees to assist in the integration and operation of the Company and MedReleaf. As
a result of these factors, it is possible that the cost reductions and synergies
expected from the combination of MedReleaf the Company will not be realized.
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63 | Aurora Cannabis Inc.
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2018 Management’s
Discussion & Analysis
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INTERNAL CONTROLS OVER FINANCIAL
REPORTING
In accordance with National Instrument 52-109 Certification of
Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”), the
establishment and maintenance of Disclosure Controls and Procedures (“DCP”) and
Internal Control Over Financial Reporting (“ICFR”) is the responsibility of
management. The DCP and ICFR have been designed by management based on the 2013
Internal Control Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”) to provide reasonable
assurance that the Company’s financial reporting is reliable and that its
financial statements have been prepared in accordance with IFRS.
Pursuant to NI 52-109, the Company has limited the scope of the
design of DCP and ICFR to exclude controls, policies and procedures over
entities acquired by the Company not more than 365 days before the end of the
financial period. These recently acquired entities include BCNL and UCI
(acquired September 29, 2017), Hempco Food and Fiber Inc. (acquired November 14,
2017 with 52.3% interest held at June 30, 2018), H2 Biopharma Inc. (acquired
November 30, 2017), Larssen Ltd. (acquired December 4, 2017), Aurora Nordic
Cannabis A/S (51% interest acquired February 12, 2018) and CanniMed Therapeutics
Inc. (acquired March 15, 2018). Additionally, the Company does not have a
reasonable basis for making the representations on the adequacy of internal
controls for Hempco, which is proportionately consolidated based on the
Company’s percentage ownership interest as of June 30, 2018, as it does not have
sufficient access to design and evaluate those controls, policies and procedures
carried out by that subsidiary. Excluding goodwill and intangible assets
generated from these acquisitions, on a combined basis, BCNL, UCI, Hempco, H2,
Larssen, Aurora Nordic and CanniMed represent approximately 22% of the
Company’s current assets, 6% of total assets, 14% current liabilities, 11% total
liabilities, 35% revenue, and 12% net loss for the twelve months ended June 30,
2018.
Regardless of how well the DCP and ICFR are designed, internal
controls have inherent limitations and can only provide reasonable assurance
that the controls are meeting the Company’s objectives in providing reliable
financial reporting information in accordance with IFRS. These inherent
limitations include, but are not limited to, human error and circumvention of
controls and as such, there can be no assurance that the controls will prevent
or detect all misstatements due to errors or fraud, if any.
Based on the COSO control framework, the CEO and CFO concluded
that the design and operation of DCP and ICFR as at June 30, 2018 were effective
and provides reasonable assurance that material information relating to the
Company is made known to them, information required to be disclosed by the
Company is reported within the required time periods as specified in such
legislation, and that the Company’s financial reporting is reliable and its
financial statements have been prepared in accordance with IFRS. The CEO and CFO
are also responsible for disclosing any changes to the Company’s internal
controls during the most recent period that have materially affected, or are
reasonably likely to materially affect, its internal control over financial
reporting. There have been no changes to the Company’s internal control
over financial reporting during the three months ended June 30, 2018 that have
materially affected, or are likely to materially affect, the Company’s internal
control over financial reporting.
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64 | Aurora Cannabis Inc.
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2018 Management’s
Discussion & Analysis
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FORWARD-LOOKING
STATEMENTS
This MD&A may contain “forward-looking information” within
the meaning of Canadian securities legislation (“forward-looking statements”).
These forward-looking statements are made as of the date of this MD&A and
Company does not intend, and does not assume any obligation, to update these
forward-looking statements, except as required under applicable securities
legislation. Forward-looking statements relate to future events or future
performance and reflect Company management’s expectations or beliefs regarding
future events. In certain cases, forward-looking statements can be identified by
the use of words such as “plans”, “expects” or “does not expect”, “is expected”,
“budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or
“does not anticipate”, or “believes”, or variations of such words and phrases or
statements that certain actions, events or results “may”, “could”, “would”,
“might” or “will be taken”, “occur” or “be achieved” or the negative of these
terms or comparable terminology. In this document, certain forward-looking
statements are identified by words including “may”, “future”, “expected”,
“intends” and “estimates”. By their very nature forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by the forward-looking statements. The Company provides no assurance
that forward-looking statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward-looking
statements.
Certain forward-looking statements in this MD&A include,
but are not limited to the following:
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|
•
|
pro forma measures including revenue, registered medical
patients and grams produced;
|
|
|
•
|
the completion of construction of production facilities,
associated costs, and receipt of licenses from Health Canada to produce
and sell cannabis and cannabis related products from these facilities;
|
|
|
•
|
the successful integration of CanniMed and MedReleaf into
Aurora’s operations;
|
|
|
•
|
strategic investments and capital expenditures, and
related benefits;
|
|
|
•
|
future growth expansion plans;
|
|
|
•
|
expectations regarding production capacity, costs and
yields; and
|
|
|
•
|
product sales expectation and corresponding forecasted
increase in revenue.
|
The above and other aspects of the Company’s anticipated future
operations are forward-looking in nature and, as a result, are subject to
certain risks and uncertainties. Although the Company believes that the
expectations reflected in these forward-looking statements are reasonable, undue
reliance should not be placed on them as actual results may differ materially
from the forward-looking statements. Such forward-looking statements are
estimates reflecting the Company's best judgment based upon current information
and involve a number of risks and uncertainties, and there can be no assurance
that other factors will not affect the accuracy of such forward-looking
statements. Such factors include but are not limited to the Company’s ability to
obtain the necessary financing and the general impact of financial market
conditions, the yield from marijuana growing operations, product demand, changes
in prices of required commodities, competition, government regulations and other
risks as set out under “Risk Factors” in the Company’s Annual Information Form
dated September 24, 2018 filed on SEDAR at www.sedar.com.
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65 | Aurora Cannabis Inc.
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2018 Management’s
Discussion & Analysis
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AURORA CANNABIS INC.
ANNUAL INFORMATION FORM
For the Financial Year Ended June 30, 2018
Dated September 24, 2018
TABLE OF CONTENTS
2
ANNUAL INFORMATION FORM
In this Annual Information Form, unless otherwise noted or the
context indicates otherwise, the “Company”, “Aurora”, “we”, “us” and “our” refer
to Aurora Cannabis Inc. and its subsidiaries.
All financial information in this Annual Information Form is
prepared in Canadian dollars, unless otherwise indicated, and using
International Financial Reporting Standards as issued by the International
Accounting Standards Board. The information contained herein is dated as of
September 24, 2018, unless otherwise stated.
FORWARD-LOOKING STATEMENTS
This Annual Information Form contains certain statements which
may constitute “forward-looking information” and “forward-looking statements”
within the meaning of Canadian securities law requirements (collectively,
“
forward-looking statements
”). These forward-looking statements are made
as of the date of this Annual Information Form and the Company does not intend,
and does not assume any obligation, to update these forward-looking statements,
except as required under applicable securities legislation. Forward-looking
statements relate to future events or future performance and reflect Company
management’s expectations or beliefs regarding future events. In certain cases,
forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”,
“budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or
“does not anticipate”, or “believes”, or variations of such words and phrases or
statements that certain actions, events or results “may”, “could”, “would”,
“might” or “will be taken”, “occur” or “be achieved” or the negative of these
terms or comparable terminology. In this document, certain forward-looking
statements are identified by words including “may”, “future”, “expected”,
“intends” and “estimates”. By their very nature forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by the forward-looking statements. The Company provides no assurance
that forward-looking statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward-looking
statements. Certain forward-looking statements in this Annual Information Form
include, but are not limited to the following:
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|
•
|
the completion of construction of production
facilities, associated costs, and receipt of licenses from Health Canada
to produce and sell cannabis and cannabis related products from these
facilities;
|
|
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•
|
the successful integration of CanniMed and
MedReleaf into Aurora’s operations;
|
|
|
•
|
strategic investments and capital expenditures,
and related benefits;
|
|
|
•
|
future growth expansion plans;
|
|
|
•
|
expectations regarding production capacity,
costs and yields; and
|
|
|
•
|
product sales expectation and corresponding
forecasted increase in revenue.
|
3
The above and other aspects of the Company’s anticipated future
operations are forward-looking in nature and, as a result, are subject to
certain risks and uncertainties. Although the Company believes that the
expectations reflected in these forward-looking statements are reasonable, undue
reliance should not be placed on them as actual results may differ materially
from the forward-looking statements. Such forward-looking statements are
estimates reflecting the Company’s best judgment based upon current information
and involve a number of risks and uncertainties, and there can be no assurance
that other factors will not affect the accuracy of such forward-looking
statements. Such factors include but are not limited to the Company’s ability to
obtain the necessary financing and the general impact of financial market
conditions, the yield from marijuana growing operations, product demand, changes
in prices of required commodities, competition, government regulations and other
risks as set out under “Risk Factors” below.
GLOSSARY OF TERMS
The following is a glossary of certain terms used in this
Annual Information Form.
“
1769474
” means 1769474 Alberta Ltd., a wholly owned
subsidiary of AMI;
“
ABCA
” means
Business Corporations Act
(Alberta);
“
ACE
” means Aurora Cannabis Enterprises Inc., a wholly
owned subsidiary of AMI;
“
ACI
” means Australis Capital Inc.;
“
ACMPR
” means
Access to Cannabis for Medical Purposes
Regulations
;
“
AHL
” means Australis Holdings LLP, a company organized
as a limited liability partnership with AJR, of which Aurora holds a 50%
interest as of June 30, 2018;
“
AIF
” or “
Annual Information Form
” means this
annual information form of the Company dated September 24, 2018 for the year
ended June 30, 2018;
“Agropro”
means Agropro UAB;
“
AJR
” means AJR Builders Group LLC, Aurora’s joint
venture participant in AHL;
“
Alcanna
” means Alcanna Inc.;
“ALPS”
means Aurora Larssen Projects Ltd.;
“
AMI
” means Aurora Marijuana Inc., a wholly owned
subsidiary of the Company;
“
Anandia
” means Anandia Labs Inc.;
“
App
” means the Company’s mobile application for the
purchase of medical cannabis;
“APS”
means Alfred Pedersen & Søn;
“
Aurora
” or the “
Company
” means Aurora Cannabis
Inc., the parent company, and its subsidiaries;
“
Aurora Eau
” means the facility located in Lachute,
Quebec on 46 acres of land that the Company is currently completing
construction;
4
“Aurora Deutschland”
means Aurora Deutschland GmbH,
formerly known as Pedanios GmbH;
“
Aurora Mountain
” means the Company’s production
facility in Mountain View County near Cremona, Alberta;
“
Aurora Nordic
” means Aurora Nordic Cannabis A/S;
“Aurora Nordic 1”
means Aurora Nordic’s 100,000 square
foot retrofitted hybrid greenhouse facility;
“Aurora Nordic 2”
means Aurora Nordic’s 1,000,000 square
foot production facility currently under construction;
“
Aurora Sky
” means the Company’s production facility
located at Edmonton International Airport that is currently under construction;
“
Aurora Sun
” means the Company’s production facility
located in Medicine Hat, Alberta that is currently under construction;
“
Aurora Vie
” means the 40,000 square feet cannabis
production facility in Pointe-Claire, Quebec;
“
BCBCA
” means the
Business Corporations Act
(British Columbia);
“
BCNL
” means BC Northern Lights Enterprises Ltd., a
wholly-owned subsidiary of the Company;
“
Board
” means the Board of Directors of the Company;
“Borela”
means Borela UAB;
“
Common Shares
” means common shares in the capital of
the Company;
“Cannabis Act”
means Bill C-45
An Act respecting
cannabis and to amend the Controlled Drugs and Substances Act, the Criminal Code
and other Acts
which comes into effect on October 17, 2018 legalizing the
recreational use of cannabis nationwide in Canada
;
“
CanniMed
” means CanniMed Therapeutics Inc., a
wholly-owned subsidiary of the Company;
“CanniMed Facility”
means the 97,000 square foot
production facility located in Saskatoon, Saskatchewan acquired from CanniMed;
“
Cann Group
” means Cann Group Limited;
“
CanvasRx
” means CanvasRx Inc., a wholly owned
subsidiary of the Company;
“Capcium”
means Capcium Inc.;
“Choom”
means Choom Holdings Inc.;
“
CSE
” means the Canadian Securities Exchange;
“
FMV
” means fair market value;
5
“
Form 51-102F4
” means a Business Acquisition Report
filed pursuant to a significant acquisition as required under Part 8 of NI
51-102;
“H2”
means H2 Biopharma Inc.;
“
Health Canada
” is the Canadian federal department
responsible for health;
“
Hempco
” means Hempco Food and Fiber Inc.;
“IHR”
means Industrial Hemp Regulations;
“
ICC
” means ICC Labs Inc.;
“
IPO
” means initial public offering;
“IT”
means information technology;
“Klenk”
means Heinrich Klenk GmbH & Co. KG;
“Larssen”
means Larssen Ltd;
“
Licensed Producer
” has the meaning ascribed to such
term in the ACMPR;
“
MedReleaf
” means MedReleaf Corp.;
“MedReleaf Bradford”
means the 210,000 square foot
facility located in Bradford, Ontario acquired from MedReleaf;
“MedReleaf Exeter”
means the 1,000,000 square foot
facility located in Exeter, Ontario acquired from MedReleaf;
“MedReleaf Markh
a
m”
means the 55,000
square foot facility in Markham, Ontario acquired from MedReleaf;
“
MOU
” means Memorandum of Understanding;
“
MNP
” means MNP LLP, the auditors of the Company;
“
NI 51-102
” means National Instrument 51-102 Continuous
Disclosure Obligations;
“
NI 52-110
” means National Instrument 52-110 Audit
Committees;
“
Pedanios
” means Pedanios GmbH, a wholly owned
subsidiary of the Company, renamed as Aurora Deutschland GmbH;
“
Peloton
” means Peloton Pharmaceuticals Inc., a wholly
owned subsidiary of the Company;
“PIPEDA”
means the
Personal Information Protection
and Electronics Documents Act
(Canada);
“
Prescient
” means Prescient Mining Corp., the acquiree
in the RTO;
“
Radient
” means Radient Technologies Inc.;
“
RTO
” means the reverse takeover of Prescient by AMI,
completed on December 9, 2014;
6
“SDM”
means Shoppers Drug Mart Inc.;
“SubTerra”
means SubTerra LLC;
“TGOD”
means The Green Organic Dutchman Holdings Ltd.;
“
Tikun Olam
” means Tikun Olam Ltd.;
“
TSX
” means the Toronto Stock Exchange;
“
TSXV
” means the TSX Venture Exchange;
“
UCI
” means Urban Cultivator Inc., a wholly-owned
subsidiary of the Company;
“
U.S.
” or “
United States
” means United States of
America; and
“
VWAP
” means volume weighted average price
.
7
CORPORATE STRUCTURE
Name, Address, and Incorporation
Aurora Cannabis Inc. was
incorporated under the BCBCA on December 21, 2006 as Milk Capital Corp. On
September 3, 2010, Aurora changed its name to Prescient Mining Corp. Effective
October 2, 2014, Aurora changed its name to its present name, Aurora Cannabis
Inc.
The head office of Aurora is
located at Suite 500 – 10355 Jasper Avenue, Edmonton, Alberta, Canada T5J 1Y6.
The registered office of Aurora is located at Suite 1500, 1055 West Georgia
Street, Vancouver, British Columbia, V6E 4N7.
The Common Shares are listed on
the TSX under the trading symbol “ACB”, on the OTCBB under the symbol “ACBFF”
and on the Frankfurt Stock Exchange under the symbol “21P”. Aurora is a
reporting issuer in Canada in the Provinces of British Columbia, Alberta,
Saskatchewan, Manitoba, Ontario, Québec, New Brunswick, Nova Scotia, Prince
Edward Island and Newfoundland.
Intercorporate Relationships
As of the date of this AIF, the Company operates its business
through its 44 wholly-owned subsidiaries.
Aurora Marijuana Inc., a holding company, was incorporated
under the ABCA on September 5, 2013.
Aurora Cannabis Enterprises Inc., a Licensed Producer, was
incorporated under the ABCA on June 17, 2013.
1769474 Alberta Ltd., a holding company and the entity that
leases the lands for the production facilities of the Company, was incorporated
under the ABCA on August 20, 2013.
CanvasRx Inc., a counseling and outreach service provider, was
incorporated under the
Business Corporations Act
(Ontario) on March 7,
2013, amalgamated with CanvasRx Holdings Inc., and continued as CanvasRx Inc. on
August 16, 2016. CanvasRx was acquired by the Company on August 17, 2016.
10094595 Canada Inc., a holding company, was incorporated under
the BCBCA on February 7, 2017.
Peloton Pharmaceuticals Inc., a late-stage ACMPR applicant out
of bankruptcy protection, was incorporated under the
Canada Business
Corporations Act
on July 4, 2013, and was acquired by the Company on April
28, 2017.
Aurora Deutschland GmbH, formerly Pedanios GmbH, a limited
liability company under German law, is a registered wholesale importer, exporter
and distributor of medical cannabis in Germany and was acquired by the Company
on May 30, 2017.
BC Northern Lights Enterprises Ltd., a corporation producing
and selling proprietary systems indoor cultivation, was incorporated under the
Company Act
(British Columbia) on December 23, 2013 and transitioned to
the BCBCA on August 7, 2018. The Company acquired BCNL on September 29, 2017.
8
Urban Cultivator Inc., a corporation producing and selling
proprietary systems indoor cultivation, was incorporated under the BCBCA on
November 17, 2010 and was acquired by the Company on September 29, 2017.
Larssen Ltd., a consulting company for advanced greenhouse
cultivation facilities, was incorporated under the
Business Corporations Act
(Ontario) on February 13, 2003 and was acquired by the Company on December
4, 2017.
CanniMed Therapeutics Inc. was incorporated under the
Canada
Business Corporations Act
on October 31, 2016 and was 100% acquired by the
Company on May 1, 2018.
MedReleaf Corp. was incorporated under the
Business
Corporations Act
(Ontario) on February 28, 2013 and was acquired by the
Company on July 25, 2018.
9
The following chart sets out the intercorporate relationships
of Aurora:
10
GENERAL DEVELOPMENT OF THE BUSINESS
Three-Year History
Developments During the Financial Year Ended June 30,
2016
ACE received its first licenses to sell dried medical cannabis
and produce cannabis oil products on November 27, 2015 and February 16, 2016,
respectively.
On December 31, 2015 and January 19, 2016, the Company closed
two tranches of a non-brokered private placement of 9,091,670 units at $0.53 per
unit for aggregate gross proceeds of $4,818,585. Each unit consisted of one
Common Share and one Common Share purchase warrant, entitling the holder to
purchase an additional Common Share at a price of $0.66 per share for a period
of two years, subject to acceleration if the Company’s Common Shares trade above
$1.25 for 10 consecutive trading days. On October 4, 2016, the Company elected
to accelerate the expiry of 5,658,479 Common Share purchase warrants and 112,300
finder warrants as the closing price of the Common Shares exceeded $1.25 for 10
consecutive trading days. Any warrants that were unexercised after the
accelerated expiry date, November 11, 2016, were cancelled.
On December 14, 2016, Radient and Aurora executed a MOU to
evaluate an exclusive partnership for the Canadian market with regard to the
joint development and commercialization of standardized cannabinoid extracts.
Pursuant to the MOU, on February 13, 2017, the Company completed its investment
in Radient by way of a $2,000,000 unsecured 10% convertible debenture,
convertible into units at $0.14 per unit. Each unit consisted of one common
share and one share purchase warrant of Radient. Each warrant is exercisable
into one common share of Radient at an exercise price of $0.33 per share for a
period of two years. The debenture has a term of 2 years, is payable on demand
during the first 5 months following issuance, and is subject to a mandatory
conversion if, after 5 months from the date of issuance, (i) the VWAP of
Radient’s shares is equal to or greater than $0.40 for 10 consecutive days; or
(ii) the Company and Radient enter into an exclusivity, licensing, service or
similar agreement. On March 9, 2017, the Company participated in Radient’s
private placement of units for a total investment of $1,250,010. Each unit
consisted of one common share and one-half share purchase warrant of Radient at
a price of $0.45 per unit. Each whole warrant is exercisable into one common
share of Radient at $0.70 per share for a period of two years.
In May 2016, the Company closed two tranches of a 10% unsecured
convertible debenture financing for gross aggregate proceeds of $2,050,000. The
debentures were convertible into Common Shares of the Company at a price of
$0.53 per Common Share for a period of 18 months, subject to acceleration if the
closing price of the Common Shares was equal to or above $1.25 for 10
consecutive trading days. On July 28, 2016, the conversion price was reduced to
$0.40 per Common Share as consideration for the amendment of the debentures. In
September 2016, the debentures were converted into 5,674,542 Common Shares of
the Company.
In May 2016, the Company launched a same-day delivery of
medical cannabis to clients in Calgary, Edmonton and surrounding communities.
More than 75% of Aurora patients in the Metro Calgary area are receiving their
product orders within 24 hours, through same-day delivery and
subsequently-introduced overnight/next-day delivery.
11
Developments During the Financial Year Ended June 30,
2017
On July 13, 2016, the Company entered into an agreement for a
drawdown equity facility of up to $5,000,000, pursuant to which the Company
shall sell, on a private placement basis, units of the Company of between
$100,000 to $500,000 per tranche, at a discount of 25% to the market price or
such lesser discounts as allowed by the stock exchange on which the Company is
listed, over a period of 18 months from the date of the agreement. Each unit
will consist of one Common Share and one-half of one Common Share purchase
warrant. Each whole Common Share purchase warrant will be exercisable into one
Common Share at a 25% premium to the market price of the Common Shares for a
period of five years from the date of issuance. From July 13, 2016 to the expiry
date of January 13, 2018, the Company had not drawn down on the facility.
On August 17, 2016, the Company completed the acquisition of
all of the issued and outstanding shares of CanvasRx pursuant to a Share
Purchase Agreement dated August 9, 2016, as amended and restated on August 16,
2016, for a total consideration of $37 million. The total consideration is
conditional upon the satisfaction of future performance related milestones tied
to patients, counselling locations and certain revenue milestones over a
three-year period. The contingent consideration may be satisfied, at the
Company’s sole discretion, in cash or Common Shares at a 15% discount to the
market price at the date of issuance, unless the market price of the Company’s
shares is $0.47 or below, at which point the consideration is convertible into a
fixed number of shares. In any case, the issuance of the Company’s shares should
not result in former CanvasRx shareholders accumulating 50% or more of the
Company’s shares. If the consideration payments cannot be satisfied in cash and
the issuance of shares would result in the former shareholders of CanvasRx
accumulating 50% or more of the Company’s shares, a convertible debenture will
be issued. Pursuant to Part 8 of NI 51-102 and the Company has filed a Form
51-102F4 in respect of the acquisition.
In conjunction with the CanvasRx acquisition on August 17,
2016, the Company closed a brokered private placement of 57,500,000 subscription
receipts for gross proceeds of $23,000,000. Each subscription receipt was
converted into units of the Company at a price of $0.40 per unit upon the
satisfaction of the conditions precedent to the acquisition. Each unit consisted
of one Common Share and one-half of one Common Share purchase warrant, with each
whole warrant entitling the holder to purchase an additional Common Share at an
exercise price of $0.55 per Common Share, expiring August 9, 2018. A portion of
the proceeds from this private placement was used to satisfy the cash component
of the CanvasRx acquisition.
On September 12, 2016, the Company announced the launch of the
world’s first App allowing for the purchase of legal medical cannabis. The
feature-rich App, which was an immediate success, runs on both Apple and Android
platforms, and uses data encryption between Aurora’s server and consumer
devices, to ensure security and patient privacy.
On September 28, 2016, the Company closed a brokered private
placement of 10% unsecured 18-month convertible debentures in the aggregate
principal amount of $15,000,000, convertible into Common Shares of the Company
at a price of $1.15 per share. The debentures were subject to a forced
conversion provision if the VWAP of the Common Shares equaled or exceeded $2.00
per share for 10 consecutive trading days. On October 18, 2016, $10,000,000 of
the principal amount of the debentures were converted and the Company issued
8,695,652 Common Shares. On October 20, 2016, the Company elected to exercise
its right to convert the remaining $5,000,000 principal amount of debentures and
accrued interests as the VWAP of the Common Shares for 10 consecutive trading
days equaled $2.15.
12
On October 5, 2016, Aurora listed its Common Shares on the
TSXV, after delisting the Common Shares from the CSE.
On November 1, 2016, the Company closed a brokered private
placement of 8% unsecured two year convertible debentures in the aggregate
principal amount of $25,000,000, convertible into Common Shares at a price of
$2.00 per share, subject to a forced conversion if the VWAP of the Common Shares
equals or exceeds $3.00 per share for 10 consecutive trading days. On November
7, 2017, the Company elected to exercise its right to convert the remaining
$4.12 million principal amount of debentures as the VWAP of the Common Shares
for 10 consecutive trading days equaled $3.02. All accrued and unpaid interest
was paid in cash.
On January 16, 2017, the Company announced a voluntary recall
of products purchased from Organigram, an unrelated Licensed Producer, that
contained a pesticide not currently registered for use on medical cannabis under
the Pest Control Products Act. This recall is defined by Health Canada as a Type
II recall, a situation in which the use of, or exposure to, a product may cause
temporary adverse health consequences or where the probability of serious
adverse health consequences is remote. The Company has proactively and
diligently contacted all clients affected by the recall. Organigram fully
reimbursed the Company as follows: aggregate cash payments of $834,835,
constituting a full refund of $384,835 for product returned and a reimbursement
of $450,000, fully covering Aurora’s costs incurred via extension of purchase
credits by Aurora to its affected clients. The Company no longer purchases any
further products from Organigram.
On January 20, 2017, ACE received its license to sell cannabis
oil products to registered patients under the ACMPR. On April 19, 2017, the
Company generated its first sale of cannabis oil products
On February 28, 2017, the Company closed a bought deal private
placement for gross proceeds of $75,009,375. The Company issued 33,337,500 units
at a price of $2.25 per unit and each unit was comprised of one Common Share and
one-half Common Share purchase warrant. Each whole warrant is exercisable into
one Common Share at an exercise price of $3.00 per Common Share for a period of
two years, subject to adjustment in certain events and acceleration if the VWAP
of the Common Shares equals or exceeds $4.50 for 10 consecutive trading days. On
November 15, 2017, the Company elected to accelerate the expiry of 16,949,690
Common Share purchase warrants as the VWAP of the Common Shares for 10
consecutive trading days equaled $5.01. Any warrants that were unexercised after
the accelerated expiry date, December 15, 2017, were cancelled.
On March 1, 2017, Aurora unveiled the second generation of its
popular mobile application, incorporating a number of enhanced features to
provide a significantly upgraded user experience to new and existing clients of
the Company. Coupled with Aurora’s industry-leading same-day and next-day
delivery services, the App further expands the Company’s e-commerce strategy, a
key differentiator in the legal cannabis market. The next generation App, which
includes an updated look and feel, enables the Company to communicate directly
with clients via real-time push notifications for new product releases, send
automated text reminders for upcoming account renewals, and introduces clients
to a new message center with personalized Aurora Newsfeed. Registered clients
can conveniently scroll through high resolution images, view product
descriptions and cannabinoid profiles, and view account and prescription
details. Payment methods can be added and removed, answers to frequently asked
questions (FAQs) easily accessed, and clients can place orders and choose from
multiple courier options. The App allows clients to complete orders in seconds,
from any location, via their phone or tablet device, and also integrates Canada
Post and Purolator Application Programming Interfaces (APIs) to allow for
real-time tracking of shipments from directly within the App.
13
On March 30, 2017, the Company’s Common Shares commenced
trading on the OTCQX Best Market, operated by OTC Markets Group, after delisting
such Common Shares on the OTCQB. Aurora’s Common Shares continued to trade under
the ticker symbol “ACBFF”.
On April 28, 2017, the Company completed the acquisition of
Peloton, a late-stage ACMPR applicant, out of bankruptcy protection. Under the
terms of the acquisition, the Company provided a total investment pool of
$7,000,175 in cash for distribution to the creditors subject to: (i) the
creditors’ election to receive payments in cash, shares or a combination
thereof; and (ii) post-closing adjustments. Total consideration paid for the
acquisition was $9,294,141, consisting of $4,717,404 in cash, 573,707 Common
Shares with a fair value of $1,485,901, and $3,090,836 in acquisition related
costs. Total consideration paid is subject to change pending the settlement of
all claims by previous creditors. Pursuant to Part 8 of NI 51-102, this
acquisition did not constitute a significant acquisition and Form 51-102F4 was
not required to be filed.
On May 2, 2017, the Company completed a private placement of 7%
unsecured two year convertible debentures in the aggregate principal amount of
$75,000,000, convertible into Common Shares at a price of $3.29 per share,
subject to a forced conversion if the VWAP of the Common Shares equals or
exceeds $4.94 per share for 10 consecutive trading days. On November 16, 2017,
the Company elected to exercise its right to convert the remaining $73 million
principal amount of debentures as the VWAP of the Common Shares for 10
consecutive trading days equaled $5.09. All accrued and unpaid interest was paid
in cash.
On May 2, 2017, the Company commenced its international
expansion strategy and subscribed to the IPO of Cann Group on the Australian
Stock Exchange (ASX: CAN) as the cornerstone investor, securing a 19.9% stake in
Cann Group. On December 4, 2017, the Company announced it has increased its
ownership stake in Cann Group from 19.9% to 22.9% by participating in Cann
Group’s latest underwritten placement of shares price at A$2.50 per share. See
“
Description of Business - International Opportunities
–
Cann
Group
”.
In May 2017, Aurora acquired Pedanios, a leading wholesale
importer, exporter and distributor of medical cannabis in the European Union.
The Company acquired all of the issued and outstanding shares of Pedanios for a
total consideration of $23.7 million consisting of €2,000,000 and 8,316,782
Common Shares. Of the 8,316,782 Common Shares issued, 3,421,756 Common Shares
were issued to holders of Class B securities of Pedanios at a deemed price of
$2.14 per share, and 4,895,026 Common Shares were issued to holders of Class A
Common Shares of Pedanios which are held by the two founders/managing directors
of Pedanios who will continue to run the company. 17% of the 4,895,026 Common
Shares issued to holders of Class A Common Shares of Pedanios will become free
trading 4 months from closing, with the balance becoming unrestricted in equal
installments on a quarterly basis over 27 months, commencing February 2018.
Pursuant to Part 8 of NI 51-102, this acquisition did not constitute a
significant acquisition and Form 51-102F4 was not required to be filed. See
“
Description of Business - International Opportunities
–
Germany
”.
Pedanios was renamed as Aurora Deutschland.
On June 16, 2017, the Company obtained from Health Canada a
two-year renewal of Aurora’s license to produce and sell dried cannabis and
cannabis oils at Aurora Mountain.
Developments During the Financial Year Ended June 30,
2018
Aurora received a license to cultivate cannabis and a license
to sell cannabis at its facility in Pointe Claire, Québec on October 27, 2017
and June 29, 2018, respectively.
On July 24, 2017, the Company’s Common Shares commenced trading
on the TSX and delisted from the TSXV effective July 21, 2017.
14
On July 28, 2017, the Company received 14,285,714 units of
Radient pursuant to the mandatory conversion related to the VWAP on the
debentures issued on February 13, 2017. The Company received an aggregate of
181,707 units of Radient in exchange for its interest payments of $91,096, of
which 77,540 units were received for the $41,096 interest payment during the
year ended June 30, 2018. Each unit consisted of one common share and one
warrant, with each warrant exercisable into one common share at $0.53 per share
until February 13, 2019.
In July 2017, Aurora Deutschland successfully passed the first
stage of the tender application process to become a licensed producer of medical
cannabis in Germany. As a result of initial stage evaluations, the German
Federal Institute for Medicines and Medical Products, requested Aurora
Deutschland’s participation in the second and final stage of the application
process which involves a competitive bid proposal and contract negotiations to
cultivate, process, store, package and deliver cannabis for medical purposes in
Germany (the “
German Bid Process
”). However, the German Bid Process was
cancelled by the German government following a legal challenge which concerned
an administrative process technicality. The German government has reintroduced a
new German Bid Process, which is anticipated to be completed in the first half
of calendar 2019. Upon such a bid process being re-introduced, Aurora
Deutschland intends to participate. In the meantime, Aurora will continue to
increase the quantity of product being exported into this heavily undersupplied
market and will continue to receive high margins and rapid demand growth as
patient adoption rates continue to rapidly increase in part due to insurance
cost coverage for medical cannabis available to all citizens across the country.
On September 15, 2017, the Company and Hempco executed the
Investor Rights Agreement that will allow Aurora to nominate two directors to
the Hempco Board of Directors, require that Hempco adopt an expenditure policy,
provide for certain matters related to cannabidiol extraction from hemp, and
provide Aurora with anti-dilution protection. As of the date of this AIF, the
Hempco’s Board of Directors has appointed Mr. Allan Cleiren, Aurora’s Chief
Operating Officer, and Mr. Steve Dobler, Aurora’s President and Director, as
directors of Hempco.
On September 29, 2017, the Company acquired BCNL and UCI,
leading companies in the production and sale of proprietary systems for the
indoor cultivation of cannabis, organic microgreens, vegetables and herbs. The
acquisition represents an important step to serve patients who choose to grow
their own cannabis and ultimately, the adult recreation market in Canada upon
the anticipated legalization in October 2018, as well as provides
differentiation into the rapidly growing healthy lifestyle-driven urban garden
market. The Company acquired all of the issued and outstanding shares of BCNL
and UCI for a total consideration of $5,512,947 comprised of $3,294,701 cash,
$715,800 settlement of loan receivables, 89,107 common shares with a fair value
of $247,717, 89,107 share purchase warrants with a fair value of $135,590
exercisable at $2.8056 per share until September 29, 2020, and $1,119,139
contingent consideration representing the estimated fair value of the $4,000,000
gross consideration to be paid in cash or common shares over a period of three
years on the achievement of future milestones related to aggregate earnings
before interest, taxes, depreciation and amortization. Pursuant to Part 8 of NI
51-102, this acquisition did not constitute a significant acquisition and Form
51-102F4 was not required to be filed.
In September 2017, the Company received its export permit
issued by Health Canada, as well as provisional import status from the German
Bundesopiumstelle (Federal Narcotics Bureau), to import medical cannabis
products into Germany through Aurora Deutschland. On September 18, 2017, the
Company shipped its first 50 kilograms of dried cannabis from Aurora Mountain to
Aurora Deutschland with further ongoing shipments planned.
15
On November 6, 2017, the Company and Radient finalized a Master
Services Agreement pursuant to which Radient has agreed to perform certain
services for Aurora using its Map
TM
technology, as well as other
technologies, as an independent contractor in relation to the development,
commercialization and supply of standardized cannabis extracts. The agreement
has an initial term of five years, with an option for Aurora to renew the
agreement for an additional five years. On December 11, 2017, the Company
exercised all of its 15,856,231 common shares purchase warrants of Radient for a
total cost of $5,777,612. The Company also subscribed for 4,541,889 units at
$1.37 per unit in Radient’s private placement. Each unit consists of one common
share and one share purchase warrant exercisable at $1.71 per share for a period
of 24 months from closing of the private placement. Consequently, the Company
increased its ownership interest in Radient from 8.8% to 19.18% on an undiluted
basis.
On November 15, 2017, the Company acquired a 22.3% interest, on
an undiluted basis, in Hempco through a private placement of Hempco’s common
shares. Additionally, the Company has an option increase ownership of Hempco to
over 50% through: (i) the exercise of 10,558,676 warrants that were issued to
the Company pursuant to the private placement; and (ii) the exercise of a call
option agreement to purchase up to an aggregate of 10,754,942 shares from the
majority owners of Hempco. On March 22, 2018 and May 15, 2018, the Company
exercised its warrants and call option right, respectively, increasing the
Company’s ownership interest inHempco to 52%.
On November 2, 2017, the Company completed a public offering
and a concurrent private placement of units, raising proceeds of $69 million and
$6 million, respectively. Each unit consisted one Common Share and one Common
Share warrant exercisable at a price of $4.00 per Common Share for a period of
three years.
On November 28, 2017, the Company completed an offering of
115,000 special warrants exercisable into convertible debentures for gross
proceeds of $115,000. On January 12, 2018, the special warrants were exercised
into $115,000 principal amount of convertible debentures. The debentures are
unsecured, bear interest at 6% per annum and mature on November 28, 2022. The
principal amount of the debentures is convertible into Common Shares at $6.50
per Common Share subject to a forced conversion if after four months and one day
following closing, the VWAP of the Common Shares equals or exceeds $9.00 per
Common Share for 10 consecutive trading days.
On November 30, 2017, the Company completed the acquisition of
H2 Biopharma Inc. H2 was completing a state-of-the-art, purpose-built 48,000
square foot cannabis production facility which upon completion is projected to
produce approximately 4,500 kilograms of high-quality cannabis per annum. The
facility is located on 46 acres of land with significant expansion potential,
which H2 has the right to acquire for $136,000. The Company acquired all of the
issued and outstanding shares of H2 for aggregate consideration of $33,876,542
comprised of 1,910,339 common shares with a fair value of $15,282,704,
$3,000,562 settlement of loan receivables, $14,956,545 contingent consideration
payable and $636,731 in acquisition costs. The contingent consideration payable
represents the discounted value of the $15,028,037 gross consideration to be
paid out in Common Shares over a five-year period on achievement of future
performance milestones related to completing the construction of the facility
and obtaining the relevant license to cultivate and sell cannabis. On closing,
the Company issued 4,789,273 Common Shares of which, 3,060,556 Common Shares are
held in escrow and will be released upon achievement of the milestones. Pursuant
to Part 8 of NI 51-102, this acquisition did not constitute a significant
acquisition and Form 51-102F4 was not required to be filed.
16
On December 4, 2017, the Company completed the acquisition of
Larssen Ltd., a Canadian company that consults on the design, engineering and
construction oversight for advanced greenhouse cultivation facilities. Larssen
is overseeing the construction of the Company’s production facilities. The
Company acquired all of the issued and outstanding shares of Larssen for total
consideration of $3,500,000 cash. As part of the acquisition agreement, an
aggregate of $4,000,000 gross cash contingent consideration is to be paid out on
the first and second anniversaries of the acquisition date subject to the
continued employment of the President and Owner of Larssen. Additionally, the
acquisition agreement included an aggregate $6,000,000 gross project contingent
consideration to be paid out on achievement of future performance milestones
related to construction projects completed by Larssen. Pursuant to Part 8 of NI
51-102, this acquisition did not constitute a significant acquisition and Form
51-102F4 was not required to be filed.
On December 11, 2017 and January 4, 2018, the Company acquired
an additional 7,200,000 shares and 3,194,033 shares of Cann Group, respectively,
bringing the Company’s total ownership interest to approximately 22.9% .
In January 2018, Aurora Deutschland won a highly competitive
EU-wide public tender to supply medical cannabis to the Italian government
through the Ministry of Defense, which oversees medical cannabis productions and
distribution in Italy. In March 2018, Aurora Deutschland delivered its first
batch of medical cannabis to the Italian government.
On January 4, 2018, Aurora signed a binding term sheet for the
formation of a Danish corporation with Alfred Pedersen & Søn (“
APS
”)
pursuant to which Aurora and APS agreed to incorporate Aurora Nordic. Aurora
Nordic was incorporated on February 12, 2018 and Aurora owns 51% of Aurora
Nordic while Scandinavian Cannabis A/S (“
SC
”), a Danish corporation owned
by APS, owns 49% of Aurora Nordic. On January 1, 2018, APS received a licence to
cultivate cannabis from Lægemiddelstyrelsen, the Danish Medicines Agency and APS
transferred such license to Aurora Nordic in March 2018. Aurora Nordic is
constructing a 1 million square feet fully automated cannabis production
facility (the “
Aurora Nordic 2
”) and is also retrofitting an existing
100,000 square foot greenhouse (the “
Aurora Nordic 1
”). Both facilities
will have a combined cultivation capacity of more than 120,000 kilograms per
year.
On January 12, 2018, Aurora completed its investment in The
Green Organic Dutchman Holdings Ltd. to purchase an aggregate of $55,000,000
subscription receipts of TGOD (the “
TGOD
Subscription Receipts
”)
at $1.65 per Subscription Receipt (the “
TGOD Investment
”). Each TGOD
Subscription Receipt converted into one unit of TGOD (a “
TGOD Unit
”)
effective May 2, 2018, the date the common shares of TGOD commenced trading on
the TSX. Each TGOD Unit consists of one common share and one-half of one common
share purchase warrant of TGOD. Each full warrant is exercisable to acquire one
common share of TGOD at the exercise price of $3.00 per common share until
February 28, 2021.
17
Additionally, Aurora and TGOD entered into an investor rights
agreement (the “
TGOD Investor Rights Agreement
”), whereby Aurora will
have the right to nominate a member to the board of directors of TGOD so long as
Aurora maintains an ownership interest in TGOD of at least 10%, on a
fully-diluted basis. Aurora will also have the right to subscribe for that
number of additional shares of TGOD upon TGOD achieving the following milestones
(the “
TGOD
Milestones
”):
|
|
a)
|
a number of common shares equal to 8% of the issued and
outstanding common shares of TGOD (calculated on a fully-diluted basis),
by August 2, 2018, being three months after TGOD’s common shares were
listed on the TSX;
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b)
|
a number of common shares equal to 8% of the issued and
outstanding common shares of TGOD (calculated on a fully-diluted basis) if
TGOD’s cannabis cultivation facility located in Valleyfield, Quebec (the
“
Quebec Project
”) is permitted and construction of the Quebec
Project has reached 50% completion, as determined based on the
construction budget of the Quebec Project;
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c)
|
a number of common shares equal to 8% of the common
shares (calculated on a fully-diluted basis) upon the Quebec Project
receiving a license to cultivate cannabis in accordance with the ACMPR or
the Cannabis Act; and
|
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d)
|
a number of common shares equal to 12% of the common
shares (calculated on a fully-diluted basis) when TGOD completes an
aggregate of $100,000,000 in sales.
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(the “
TGOD Milestone
Options
”)
|
The price for common shares issued pursuant to these TGOD
Milestones shall be based on the volume-weighted average trading price of the
common shares of TGOD for the 10 consecutive trading days following the
achievement of the relevant TGOD Milestone minus a discount of 10%. As such,
until the milestones are achieved, the cost of further investments in TGOD
cannot be estimated.
TGOD shall provide a notice (the “
TGOD
Milestone
Notice
”) to Aurora within five business days of the achievement of each TGOD
Milestone. If Aurora does not exercise any one of the TGOD Milestone Options
within 30 days after the date of the TGOD Milestone Notice, then that TGOD
Milestone Option and all remaining TGOD Milestone Options will expire. In
September 2018, TGOD agreed to extend Aurora’s exercise deadline for the first
milestone option by six weeks to October 12, 2018.
The TGOD Investor Rights Agreement also provides Aurora with
the right to participate in any new equity offerings of TGOD to maintain its pro
rata ownership. Aurora exercised its participation right and subscribed to an
additional 6,341,250 units in TGOD at $3.65 per unit for a total cost of
$23,145,563. Each unit consisted of one common share and one-half of one share
purchase warrant exercisable at $7.00 per share expiring on May 20, 2020. Upon
completion of TGOD’s IPO, Aurora held approximately 18% ownership interest in
TGOD.
18
In connection with the TGOD Investment, Aurora and TGOD also
entered into a cannabis supply agreement whereby Aurora has the right to
purchase up to 20% of TGOD’s annual production of organic cannabis from TGOD’s
Ancaster, Ontario and Valleyfield, Québec facilities. Aurora will also have the
right to purchase up to 33% of TGOD’s organic cannabis production from the two
facilities if Aurora increases its equity ownership interest in TGOD to a
minimum of 31%, on a fully-diluted basis. In addition, Aurora Larssen, an
indirect wholly-owned subsidiary of Aurora, has entered into a consulting and
design agreement with TGOD to assist TGOD with the design and consulting for
TGOD’s proposed cannabis greenhouse facility located in Valleyfield, Québec. The
approximate total value of the contract is $1 million. This is an ordinary
course agreement for Aurora Larssen.
In February 2018, Aurora, through its subsidiary 2095173
Alberta Ltd., made a strategic investment in Alcanna by way of a non-brokered
private placement (the “
Alcanna Investment
”). The Alcanna Investment has
been structured in two phases, with an initial investment of $103,500,000 for an
approximate 19.9% ownership interest in Alcanna, with an option for Aurora to
increase its ownership stake up to 40% through exercising warrants granted to
Aurora as part of the investment. Details of the Alcanna Investment are more
particularly set out below.
Pursuant to the Alcanna Investment, Aurora subscribed for
6,900,000 common shares in the capital of Alcanna (the “
Alcanna Shares
”)
at a price of $15.00 per Alcanna Share for an aggregate subscription price of
$103,500,000 (the “
Initial Alcanna Investment
”), resulting in Aurora
acquiring approximately 19.9% of the Alcanna Shares (calculated on a non-diluted
basis). The Initial Alcanna Investment closed on February 14, 2018.
On February 14, 2018, Aurora also subscribed for 2,300,000
subscription receipts of Alcanna (the “
Alcanna Subscription Receipts
”) at
a price of $15.00 per Alcanna Subscription Receipt for aggregate proceeds of
$34,500,000 (the “
Alcanna Subscription Receipt Funds
”). Each Alcanna
Subscription Receipt entitles Aurora to receive, without payment of additional
consideration, one Alcanna Share for each Alcanna Subscription Receipt held,
subject to the satisfaction of certain escrow release conditions. On May 9,
2018, the Alcanna Subscription Receipts were converted into 2,300,000 Alcanna
Shares, increasing Aurora’s shareholdings in Alcanna to 9,200,000 Alcanna Shares
representing approximately 25% interest.
In addition, Alcanna issued to Aurora, for no additional
consideration, two classes of Alcanna Share purchase warrants: (1) 10,130,000
warrants with an exercise price of $15.75 per Alcanna Share to allow Aurora to
increase its pro rata equity interest in Alcanna to 40% on a fully diluted basis
(the “
Alcanna Sunshine Warrants
”); and (2) up to 1,750,000 warrants with
an exercise price of $15.00 per Alcanna Share exercisable upon any conversion of
any of the outstanding 4.70% convertible unsecured subordinated debentures of
Alcanna in such amount that is necessary to allow Aurora to maintain its pro
rata equity interest in Alcanna (the “
Alcanna Pro Rata Warrants
”). The
Alcanna Sunshine Warrants expire on August 14, 2019 and the Alcanna Pro Rata
Warrants expire on January 31, 2022.
The private placement of the Alcanna Subscription Receipts,
Alcanna Sunshine Warrants and Alcanna Pro Rata Warrants collectively comprise
the “
Alcanna Additional Investment
”.
The Alcanna Shares, Alcanna Subscription Receipts, Alcanna
Sunshine Warrants and the Alcanna Pro Rata Warrants will each be subject to a
hold period that will expire four months and one day after the closing of the
Alcanna Investment. The parties have agreed that the Alcanna Shares issued
pursuant to the Alcanna Investment as well as any Alcanna Shares issuable
pursuant to the exercise of the Alcanna Subscription Receipts, the Alcanna
Sunshine Warrants or the Alcanna Pro Rata Warrants will be subject to a
contractual escrow of twelve (12) months from the closing date of the Alcanna
Investment. The contractual escrow is subject to termination upon the occurrence
of certain stated events.
19
On February 28, 2018, Aurora entered into a cannabis supply
agreement with Shoppers Drug Mart Inc. Under the terms of the agreement, Aurora
shall sell cannabis products to SDM after SDM receives all applicable regulatory
approvals to sell such cannabis products under the ACMPR or its successor
legislation, in accordance with purchase orders delivered by SDM to Aurora from
time to time. SDM is not obligated to purchase any specific amount of cannabis.
In the event SDM does not receive regulatory approval to sell cannabis products,
Aurora will sell cannabis products to other purchasers.
On March 9, 2018, the Company completed a private placement of
a two-year unsecured convertible debentures in the aggregate principal amount of
$230,000,000. The debentures bear interest at 5% per annum, payable
semi-annually. The debentures are convertible into Common Shares at a price of
$13.05 per Common Share subject to a forced conversion if the VWAP of the Common
Shares exceeded $17.00 per Common Share for 10 consecutive trading days.
On March 15, 2018, Aurora completed its initial take-up of the
common shares of CanniMed (the “
CanniMed Shares
”) pursuant to its offer
(the “
CanniMed Offer
”) to purchase all of the issued and outstanding
CanniMed Shares. Aurora took up 21,309,517 CanniMed Shares representing 86.8% of
the total outstanding CanniMed Shares on a fully diluted basis which, together
with the 700,600 CanniMed Shares purchased in the market prior to the expiry of
the CanniMed
Offer by Aurora, represents 87.2% of the outstanding
CanniMed Shares. In consideration for the CanniMed Shares taken up on March 15,
2018, Aurora issued 62,833,216 Aurora common shares as share consideration and
paid cash consideration of $130,979,347, including the $9,500,000 million break
fee paid to Newstrike Resources Ltd. Shareholders of CanniMed who tendered
before the original expiry of the CanniMed
Offer on March 9, 2018,
predominantly elected to receive cash. On March 26, 2018, Aurora completed its
second take-up of CanniMed Shares, acquiring an additional 8.7% or 2,202,970 of
CanniMed Shares for consideration of approximately 6,495,679 Common Shares and
$12,558,534 cash. Based on the shares tendered in the first and second take-up,
CanniMed shareholders received approximately $5.70 per share in cash and
approximately 2.9486 common shares of Aurora. On May 1, 2018, Aurora completed
the take-over bid to purchase all of the issued and outstanding CanniMed Shares
by purchasing the remaining 4.1% outstanding CanniMed Shares by way of a
compulsory acquisition under the
Canada Business Corporations Act
.
1,045,935 CanniMed Shares were acquired for a consideration of 3,417,951 Common
Shares and $1,745,875 cash. CanniMed shareholders under the compulsory
acquisition each received on average $1.67 cash and 3.2678 common shares of
Aurora. The CanniMed Shares were de-listed from the TSX as at the close of
business on May 1, 2018. Pursuant to Part 8 of NI 51-102 and the Company has
filed a Form 51-102F4 in respect of the acquisition.
On May 14, 2018, Aurora entered into a definitive agreement
with MedReleaf (the “
Arrangement Agreement
”) to acquire all the issued
and outstanding common shares of MedReleaf in an-all share transaction valued at
approximately $3.2 billion on a fully diluted basis. Under the terms of the
Arrangement Agreement, holders of MedReleaf common shares will receive 3.575
Common Shares for each MedReleaf common share held.
On May 28, 2018, Aurora, through its wholly owned subsidiary
Aurora Deutschland, signed a collaboration agreement with Heinrich Klenk GmbH
& Co. KG, one of Europe’s largest medicinal plant companies. Klenk, whose
products are carried in over 25,000 pharmacies throughout Germany and Europe,
has been importing, exporting, and processing medicinal plants and herbal raw
materials for the pharmaceutical industry for over 90 years. Under the terms of
the agreement, Aurora has launched a new cannabis brand in Germany called
“Cannabis Klenk” which is produced in Canada, imported by Aurora Deutschland,
and sold to German pharmacies through Klenk’s existing and wide-reaching
pharmaceutical wholesale distribution network.
20
On June 5, 2018, Aurora Deutschland received an import license
issued by the Malta Medicines Authority and became the first licensed supplier
of medical cannabis to patients in Malta. Aurora Deutschland received the
necessary export license from German authorities on June 21, 2018.
On June 6, 2018, the Company acquired a 19.99% interest in
Capcium Inc., a privately-owned Montreal-based global leader in softgel
manufacturing. Production of high-precision dosage controlled softgels is an
extensive and complex process. Capcium, through its pharmaceutical and
encapsulation experience, has developed expertise that is ready to be applied to
the cannabis industry and deliver high-volume production capacity. Capcium and
Aurora have agreed to immediately establish a high-volume, state-of-the-art
softgel manufacturing operation at Aurora Vie while Capcium constructs its
manufacturing facility. Capcium will be the exclusive manufacturer of Aurora's
North American cannabis softgel products.
On June 12, 2018, the Company subscribed to 9,859,155 common
shares of Choom Holdings Inc. at $0.71 per share for a cost of $7,000,000
representing an 8% ownership interest. Choom currently operates two late stage
applicants under the ACMPR. Choom has agreements in place to acquire two
additional late-stage applicant craft growers in BC and Saskatchewan, including
a facility in Sooke, British Columbia, anticipated to receive its cultivation
license from Health Canada in the third quarter of 2018.
On June 20, 2018, Aurora announced that it intends to
distribute units consisting of shares and warrants of its subsidiary, ACI, to
shareholders of the Company by way of a return of capital. The spin-out of ACI
will happen in the form of a distribution of units (the “
Units
”) of ACI
to resident holders of Common Shares (the “
Distribution
”). The
Distribution will be paid on the basis of one Unit for every 34 Common Shares
outstanding as of August 24, 2018. Each Unit will consist of one common share of
ACI (“
Australis Share
”) and one Australis Share purchase warrant
(“
Australis
Warrant
”). Each Australis Warrant will entitle the
holder thereof to acquire one Australis Share at an exercise price of $0.25 per
Australis Share, on or prior to 4:00 p.m. (Eastern Time) on the date that is one
year from the date of the Distribution.
In June 2018, the Company began reorganizing the Company for
the spin-out of ACI and its U.S. assets, and filed a prospectus for the listing
of ACI on the CSE. As part of the reorganization, on June 13, 2018, the Company
completed a series of intercorporate transactions involving Aurora and its
subsidiaries resulting in Aurora holding a direct interest in 100% of the
outstanding shares and warrants of ACI, and ACI holding all of the U.S. assets
of Aurora and its subsidiaries. The assets primarily consisted of the Company’s
50% joint venture interest in Australis Holdings, which was subsequently
increased to 100% for US $500,000, and rights to the following SubTerra
assets:
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•
|
5% of any gross revenues of SubTerra earned annually from
the sale of cannabis and cannabis-based products grown and/or processed at
its facility for the period commencing June 1, 2018 and ending May 31,
2028;
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•
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a payment of $150,000 annually for the period commencing
June 1, 2018 and ending May 31, 2028; and
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•
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a two-year option to purchase a parcel of land located in
White Pine, Michigan for US $3,000.
|
21
On June 14, 2018, the Company and ACI entered into a Funding
Agreement pursuant to which Aurora advanced $500,000 to ACI, in consideration
for which ACI provided Aurora with the Restricted Back-in Right, by issuing to
Aurora:
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i.
|
a warrant to purchase a number of ACI shares equal to 20%
of the issued and outstanding shares as of the date on which ACI shares
commence trading on the CSE, which will be exercisable for a period of ten
years from the date of issue at an exercise price of $0.20 per share; and
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ii.
|
a warrant to purchase a number of ACI shares equal to 20%
of the number of issued and outstanding shares as of the date of exercise,
which will be exercisable for a period of ten years from the date of issue
at an exercise price equal to the five-day volume weighted average trading
price of ACI’s shares on the CSE.
|
Aurora will be prohibited from exercising the Restricted
Back-in Right unless all of ACI’s business operations in the United States are
legal under applicable federal and state laws, and Aurora has received the
consent of the TSX and any other stock exchange on which Aurora may be listed,
as required.
Developments Subsequent to the Financial Year Ended June
30, 2018
On July 2, 2018, the Company subscribed to a US $10,000,000
convertible debenture in a private company (“investee company”) which if fully
converted would provide the Company with 14.3% interest. The debentures are
convertible into common shares of the investee company at US $4.9585 at the
option of the Aurora until July 2, 2023. The Company has also entered into an
Investor Rights Agreement where Aurora has the right to participate in any
future offerings of equity of the investee company to allow Aurora maintain its
percentage ownership interest, as well as the right to nominate a director to
the investee company’s Board of Directors as long as the Company owns at least
10% interest.
On July 5, 2018, Aurora entered into an agreement with the
Alberta Gaming, Liquor & Cannabis Commission (
“AGLC”
) to supply
cannabis products for the adult consumer use market in the province.
On July 24, 2018, the Company received a Letter of Intent from
Malta Enterprise, approving the Company’s application for the establishment of a
seed-to-pharma cannabis operating subject to certain conditions.
On July 25, 2018, Aurora acquired all the issued and
outstanding common shares of MedReleaf pursuant to a plan of arrangement under
the
Business Corporations Act
(Ontario). Pursuant to Part 8 of NI 51-102,
this acquisition constitutes a significant acquisition and Form 51-102F4 will be
filed in due course.
On July 30, 2018, Aurora received a Dealer’s License from
Health Canada under the
Controlled Drugs and Substances Act
for Aurora
Mountain.
22
On August 8, 2018, Aurora acquired all of the issued and
outstanding common shares of Anandia, a privately held company, in an all share
transaction. Pursuant to the terms of the arrangement agreement, Aurora issued
12,716,482 shares and 6,358,210 warrants. In accordance with the terms of the
arrangement agreement, Aurora will pay an additional $10 million by way of the
issuance of additional shares and warrants upon the achievement of future
milestones. Anandia’s business includes analytical testing services including
potency, pesticides, microbes and terpenes. Pursuant to Part 8 of NI 51-102,
this acquisition did not constitute a significant acquisition and Form 51-102F4
was not required to be filed.
On August 8, 2018, Aurora and Alcanna entered into a license
agreement whereby Alcanna has been given exclusive rights to open retail
cannabis stores under the brand name “Aurora” across Canada. The stores will
represent a house of brands, carrying a carefully curated, but broad selection
of products from Licensed Producers across Canada, including Aurora, MedReleaf
and CanniMed.
On August 13, 2018, Aurora announced that it intends to
participate in the German government’s recent announcement of restarting the
tender process towards selecting a number of companies for domestic cultivation
of cannabis.
On August 14, 2018, ACI filed a prospectus in all provinces and
territories of Canada in respect of the Distribution, which is available on
SEDAR under ACI’s SEDAR profile. ACI has applied to list its Australis Shares
and Australis Warrants on the CSE and has received conditional approval. Aurora
completed the Distribution to shareholders and its CSE listing on September 19,
2018.
On August 22, 2018, the Company received Health Canada
authorization to produce cannabis softgel capsules at its Aurora Vie facility in
Pointe-Claire, Quebec and will begin production immediately in partnership with
Capcium.
On August 29, 2018, the Company finalized a $200 million debt
facility with Bank of Montreal (“
BMO
”) consisting of a $150 million term
loan and a $50 million revolving credit facility, both of which will mature in
2021. The Company also has an option to upsize the facility to a total of $250
million, subject to certain conditions. The debt facility will be primarily
secured by the Company’s production facilities and can be repaid without penalty
at the Company’s discretion.
On September 10, 2018, the Company entered into a definitive
agreement with ICC pursuant to which Aurora intends to acquire all of the issued
and outstanding common shares of ICC for $1.95 per share (payable in Common
Shares). The transaction reflects an aggregate purchase price of approximately
$290 million.
On September 10, 2018, the Company acquired 100% of the issued
and outstanding shares of Agropro UAB (“Agropro”) and Borela UAB (“Borela”) for
total consideration of €6,418 of which €960 was paid through the issuance of
170,834 common shares. In addition, the Company paid a finder’s fee of €1,517,
which was paid through the issuance of 270,024 common shares, and will also
refinance Agropro’s existing debt totaling €2,076. Agropro is a hemp seed
contracting and processing company, and its sister company, Borela, is a
processor and distributor of organic hulled hemp seeds, hemp seed protein, hemp
flour and hemp seed oil.
On September 19, 2018, the Company completed the spin-out of
ACI and distributed to Aurora shareholders, as a return of capital, units of ACI
on the basis of one unit for every thirty-four Aurora shares outstanding on the
August 24, 2018 record date.
23
DESCRIPTION OF THE BUSINESS
General
The Company’s principal business is the production and
distribution of medical cannabis in Canada and internationally. The Company
produces and distributes dried medical cannabis, cannabis oils and capsules in
Canada pursuant to the ACMPR, through its wholly-owned subsidiaries, ACE,
CanniMed, MedReleaf, and distributes wholesale medical cannabis in the European
Union pursuant to the German Medicinal Products Act and German Narcotic Drugs
Act, and in Italy through the January 2018 tender process.
Aurora’s medical cannabis products are cultivated and
manufactured in its seven licensed production facilities. See “
Description of
the Business
–
Production Facilities and Licenses”
.
Aurora intends to be a leader in the domestic adult consumer
use market as well as the domestic and international medical cannabis space,
both in terms of scale and profitability. To achieve this, the Company has
identified a number of factors it deems critical that inform its strategy.
Consequently, Aurora has been executing on an aggressive growth strategy that is
focused on developing a vertically integrated and horizontally diversified
company with a diversified portfolio offering. This dynamic growth strategy
focuses on the following areas to ultimately better enable Aurora to capture
greater margin across the entire cannabis industry value chain:
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Scale
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Develop large scale, highly efficient production capacity
in diverse geographic markets to serve the global demand for medical
cannabis;
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Cost of production
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Adopt a purpose-built, high-technology, automated, yield
optimized facility model that is replicable across the Company’s different
markets, ensuring consistently high-quality cannabis products, produced at
low costs;
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Distribution
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Develop strong domestic and international distribution
partners and networks to ensure a broad market reach;
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Science
|
Develop and acquire marketable intellectual property
while strengthening our global medical brand and generating increased
visibility;
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Innovation
|
Develop, adopt and acquire innovations across the entire
cannabis industry value chain to deliver efficiencies and create
competitive advantages;
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Diversification
|
Develop a broad portfolio of high value-add products to
deliver high margins; and
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Brands
|
Create unique brands and customer experiences that
resonate both with the medical community and the adult consumer user
market to help capture market share.
|
24
Production Facilities and Licenses
Overview
Aurora Mountain
In April 2015, the Company completed the construction of a
custom 55,200 square foot indoor growing, production and distribution facility
located in Mountain View County near Cremona, Alberta and termed as “Aurora Mountain”. Aurora Mountain is an
office and plant production building of pharmaceutical production grade quality
with hydroponic greenhouse high pressure sodium lighting and nutrient delivery
equipment which is capable of producing over 4,800 kilograms of medical cannabis
per year.
25
The Company also established an on-site laboratory and
installed an analytical equipment which includes ultra-performance liquid
chromatography, inductively coupled plasma-mass spectrometry and gas
chromatography mass spectrometry. The laboratory saves Aurora substantial time
and money by allowing the Company to perform Health Canada-mandated testing
in-house. Aurora Mountain ensures that testing methodologies are applied
consistently and accurately from batch to batch. Additionally, the on-site
laboratory accelerated releases of new batches of Aurora products by quality
control to registered patients, shortening time to market and increasing sales
capacity as the Company scaled up production capacity.
Continuous process improvement programs have resulted in an
increase in production at Aurora Mountain. Management anticipates production at
Mountain to reach 6,000 kg per annum, up by 25% from the facility's previously
disclosed capacity. The increase in production capacity at Mountain ensures the
Company will be able to allocate more product to the supply restrained
international markets.
In August 2017, the facility received EU GMP certification -
the standard required by the German government for export to that market. On
September 18, 2017, the Company began exporting dried medicinal cannabis flower
to Germany. On July 30, 2018, the Company received a Dealer’s License from
Health Canada under the
Controlled Drugs and Substances Act
for Aurora
Mountain.
Aurora Vie
On April 28, 2017, through the acquisition of Peloton, the
Company acquired a 40,000 square foot cannabis production facility in
Pointe-Claire, Quebec, which received a ready-to-build letter from Health Canada
in 2014. The Company estimates that as of the date of acquisition, construction
at Aurora Vie was approximately 80% complete. During the last half of 2017, the
Company completed construction at Aurora Vie and received its cultivation
license from Health Canada in October 2017. On June 29, 2018, the Company
received its sales license from Health Canada. The facility is expected to have
a capacity of producing up to 4,000 kilograms of cannabis annually.
Aurora Eau
Through the acquisition of H2, the Company acquired Aurora Eau
located in Lachute, Quebec on 46 acres of land, which the Company has the right
to acquire for $136,000. The facility is 48,000 square foot with a production
capacity of 4,500 kilograms per year and was purpose-built to EU GMP standards.
Aurora Eau received its Health Canada production license on September 7, 2018
and is now operating at full production capacity.
Aurora Sky
Located at Edmonton International Airport, Aurora Sky has
completed full cycles in its first two licensed grow rooms and its mother room,
and has submitted for final inspection towards obtaining its sales permit.
Health Canada has licensed two further production bays, each with more canopy
space than the entire Aurora Mountain facility. Aurora has commenced populating
these additional bays, bringing the total number of bays now in production,
including the mother room, to 5 of 17. The Company is in an ongoing process of
obtaining production licenses as new bays come online and anticipates submitting
the license applications for the final rooms in November. Minor construction and
commissioning items remain, which will be completed in advance of new bays
coming online. Consequently, the Company continues on schedule towards reaching
full 100,000 kilograms per annum production capacity around the end of calendar
2018.
26
Aurora Sun
On April 16, 2018, the Company announced it is in the process
of acquiring approximately 71 acres of land in Medicine Hat, Alberta, subject to
certain conditions, where the Company will be constructing a new
high-technology, low production cost, hybrid greenhouse cannabis production
facility. The new facility will measure 1,200,000 square feet and is readily
expandable to 1,500,000 square feet. Aurora Sun will have approximately 850,000
square feet of flowering space and will be built in compliance with EU GMP
standards. The Company anticipates benefiting from the positive local government
and community support, municipality-owned utilities offering low energy costs
and free power transmission, as well as country-leading annual sunshine hours in
Medicine Hat to accelerate construction timelines and continue reducing
production and operating costs. First planting is anticipated in the first half
of calendar 2019, and completion of the full facility in the second half of
calendar 2019. At full capacity, Aurora Sun is expected to bring an additional
150,000 kilograms of annual capacity, and such capacity is intended to serve and
will be serving both the pending Canadian adult consumer market and the rapidly
expanding international medical markets.
Aurora Nordic Facilities
Aurora Nordic 2 will be a one million square feet fully
automated cannabis production facility located in Odense, Denmark. The design
for the Aurora Nordic 2 is complete. Once all required permitting has been
received, construction will commence. The Aurora Nordic 2 is licensed to
cultivate cannabis. Aurora anticipates cannabis production capacity at the
Aurora Nordic 2 to be in excess of 120,000 kilograms per year.
In order to accelerate time to market, Aurora Nordic has
completed retrofitting an existing, Larrsen-designed 100,000 square feet
greenhouse, Aurora Nordic 1, that at full capacity should produce approximately
8,000 kilograms of cannabis per year. The facility is EU GMP compliant to ensure
Aurora Nordic can service the international market. The Company has shipped
cultivars from Aurora Mountain to Denmark to commence populating Aurora Nordic
1. The Company expects that Aurora Nordic 1 will have its first harvest in fall
2018.
CanniMed Facility
Through the acquisition of CanniMed, the Company acquired the
biosecure growth facility located in Saskatoon, Saskatchewan comprising of a
97,000 square feet above-ground production facility and a 96,000 square feet
support building. The 97,000 square feet facility houses 30 large individual
production growth chambers and has a total growing capacity of 19,000 kilograms.
The 96,000 square feet support building houses the Company’s administrative
infrastructure, including laboratories, quality control facilities, maintenance
areas, a customer care centre and shipping and distribution facilities. The
CanniMed Facility is equipped with a robust state-of-the-art security system,
with over 400 separate security devices. The CanniMed facility also houses five
separate Level 7 security compliant vaults, which are required for the storage
of controlled substances. The CanniMed Facility is focused primarily on the
commercialization of medical cannabis, as well as the research and development
of new strains of cannabis.
27
MedReleaf Markham
Through the acquisition of MedReleaf, the Company acquired a
55,000 square foot facility in Markham, Ontario. The MedReleaf Markham is a
modern, fully operational facility that has approximately 23,500 square feet of
dedicated cultivation space organized into 10 cultivation rooms, and
approximately 31,500 square feet of support and auxiliary services space,
including areas for propagation, trimming, drying, oil extraction, shipping,
storage, water treatment, laboratories, quality assurance and quality control
facilities, maintenance areas, shipping and distribution areas, management
offices, and a patient care centre. MedReleaf Markham also received its EU GMP
certification in August 2018.
MedReleaf Bradford
Through the acquisition of MedReleaf, the Company acquired a
210,000 square feet indoor cultivation facility in Bradford, Ontario. Upon full
build-out completion, the facility will have approximately 86,000 square feet of
dedicated cultivation space organized into 19 cultivation rooms and
approximately 124,000 square feet of support and auxiliary services space which
will include areas for propagation, trimming, drying, commercial-scale oil
extraction, pharmaceutical-grade manufacturing, an industrial kitchen, shipping,
storage, water treatment, laboratories, plant-based and analytical research and
development facilities, quality assurance and quality control facilities,
maintenance areas, shipping and distribution areas, and administrative offices.
MedReleaf Bradford also received its oils production license in September 2018.
MedReleaf Exeter
Through the acquisition of MedReleaf, the Company acquired a
property in Exeter, Ontario, consisting of one million square feet of existing
greenhouse infrastructure on a 69 acre property, along with 95 acres of adjacent
land. The Company is continuing to consider the manner and scope of retrofitting
the property. It is expected that, after retrofitting, the facility will have a
production capacity of up to 105,000 kilograms of cannabis product annually.
Storage and Security
The ACMPR prescribes physical security requirements that are
necessary to secure sites where Licensed Producers conduct activities with
cannabis for medical purposes. Aurora Mountain, Aurora Vie, Aurora Eau, Aurora
Sky, MedReleaf Markham, MedReleaf Bradford and the CanniMed Facility operate in
accordance with the ACMPR requirements, including in relation to the security
requirements. Health Canada conducts ad hoc, unscheduled site inspections of
Licensed Producers. As of the date hereof, there are no outstanding inspection
issues with Health Canada.
28
Products and Services
Medical Cannabis Products
Aurora’s principal market is patients who use medical cannabis
in Canada. The Company has currently reached over 40,000 active and pending
registered patients after initiating product sales in January 2016, which
management believes to be the fastest rate of patient registration for a
Licensed Producer after the launch of commercial operations.
The Company is authorized to cultivate and sell dried cannabis,
cannabis oils, and capsules for medical purposes to residents of Canada who
comply with the requirements of the ACMPR. The Company’s medical cannabis
products can be ingested in a variety of ways, including smoking, vaporizing,
and consumption in the form of oil or edibles.
Through the acquisition of CanniMed and MedReleaf, the Company
also acquired their product portfolios.
CanniMed
CanniMed produces seven strains of dried cannabis, three
varieties of CanniMed cannabis oil and capsules. CanniMed also sells vaporizers,
consumable vaporizer accessories (e.g., valves, screens, etc.) and herb mills
for using CanniMed herbal cannabis products.
MedReleaf
MedReleaf produces numerous strain varieties of dried cannabis,
cannabis oils, and cannabis oil capsules. MedReleaf’s plant genetics department
carefully breeds new varieties of cannabis plants resulting in unique varieties
of cannabis. In addition, in July 2013, MedReleaf entered into a strategic
alliance with Tikun Olam Ltd. whereby MedReleaf obtained an exclusive license to
exploit exclusive varieties of cannabis and access to extensive patient data
that Tikun Olam had gathered for over a decade.
New Products and Accessories
Aurora has a variety of new medical cannabis products at
various stages of development, including oral, topical, edible and inhalable
products. These products will need to be approved by Health Canada before they
can be offered. No assurance can be given that the Company will succeed in
bringing any of these products to market. See “
Risk Factors
”.
In addition to its medical cannabis products, the Company also
sells a variety of accessories including grinders, vaporizers and its exclusive
lockable containers, and continues to explore expanding these offerings for its
patients.
Patient Counseling and Outreach Services
The Company also provides patient counseling and outreach
services through the acquisition of CanvasRx on August 17, 2016. CanvasRx helps
patients learn how to safely and effectively use medical cannabis, select a
strain from the hundreds available in Canada and register with their choice of
licensed producer. CanvasRx has 28 physical locations in British Columbia,
Alberta and Ontario, and is the largest medical cannabis counseling and outreach
service in Canada. Over 9,500 medical doctors across Canada have referred
patients to CanvasRx or its affiliated medical clinics. CanvasRx has now helped
more than 42,200 Canadian patients access medical cannabis.
29
CanvasRx plays an important role in supporting the medical
cannabis segment domestically and internationally through the ongoing education
of physicians and patients interested in learning more about the medical
benefits of cannabis and the procedures under applicable regulations to obtain
cannabis. The acquisition of CanvasRx increases Aurora’s presence in the medical
cannabis sector, provides Aurora with access to valuable aggregate data on
patient use of medical cannabis, as well as the ability to jointly develop new
services for patients, and tailor its product line to offer an industry-leading
and demand matching selection of products and strains tailored to the needs of
patients.
Distribution Methods
The Company will distribute recreational cannabis products in
accordance with the finalized regulatory framework in relation to cannabis for
recreational purposes in Canada. The Company will also distribute medical and/or
recreational cannabis products internationally in accordance with all applicable
domestic and international laws and regulations.
The Company’s registered patients can order products through
the Company’s online shop, mobile application, or by phoning its client care
center. In May 2016, the Company became the first Licensed Producer to offer
same-day delivery of medical cannabis. The Company launched same-day delivery of
medical cannabis to clients in Calgary and Edmonton metropolitan areas which
allows Aurora patients in these areas to receive their product orders within 24
hours, through same-day delivery and subsequently introduced overnight/next-day
delivery. Medical cannabis is and will continue to be delivered by secured
courier or other methods permitted by the ACMPR or future regulation.
The Company has entered into agreements to collaborate with
PharmaChoice, Pharmasave and Shoppers Drug Mart on the distribution, sale and
marketing of medical cannabis through their respective networks of pharmacies,
subject to Health Canada approval. This collaboration will see Aurora produce
and deliver accredited pharmacy education programs to Canadian pharmacists and
eventually distribute medical cannabis through pharmacists across Canada.
Aurora has completed and is in the process of completing
agreements with provincial regulators to supply cannabis for the entire Canadian
adult consumer market, once legalized. Under the terms of these current and
prospective agreements, Aurora will supply the provinces with a wide variety of
premium product from its facilities. Supply quantities will be determined based
on demand on an ongoing basis.
Through the Company’s license agreement with Alcanna, the
Company has given exclusive rights to Alanna to open retail cannabis stores
under the brand name "Aurora" across Canada. The stores will represent a house
of brands, carrying a carefully curated, but broad selection of products from
Licensed Producers across Canada, including Aurora, MedReleaf and CanniMed. In
Alberta, Alcanna anticipates opening 37 stores, starting October 17, 2018, the
maximum number permitted to a single operator under provincial regulations in
year one of legalized adult consumer use.
Aurora continues to execute on its international expansion
strategy and is currently active in 9 countries outside of Canada. Through a
combination of strategic investments, domestic production, and supply
agreements, Aurora has amassed a strong early mover advantage in a growing
number of key international markets. With the EU GMP certification of Aurora
Mountain, MedReleaf Markham and Aurora Deutschland, Aurora is one of only a
handful of companies globally with this pharma-grade designation across both
production and distribution facilities in Canada and Germany respectively,
allowing it to sell into the most restrictive and promising markets in the EU,
such as Italy.
30
Research and Development
In addition to the production and sale of medical cannabis
productions, the Company is also focused on research and development activities,
which are organized into the following four main areas:
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Analytical science
|
Cannabinoid and terpene profiling, isolation
and purification
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Plant science
|
Intellectual property acquired from the
acquisition of Anandia, growth experiences, plant health and extraction;
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Discovery science
|
Pre-clinical studies and cannabinoid
application
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Clinical science
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Health outcomes, economic impact, targeted
indications and clinical trials
|
On August 8, 2018, the Company acquired all of the issued and
outstanding common shares of Anandia. Anandia was acquired for its leading
research in science and plant genetics and its extensive development portfolio,
which includes the exclusive rights to a number of key genes in the cannabinoid
pathway, patents pending for genetic markers, as well as its product testing and
product development facilities.
Clinical Trials
CanniMed is a plant biopharmaceutical company and has invested
significant resources towards research and development to further CanniMed’s
scientific understanding of medical cannabis and, ultimately, to the breeding
and production of new strains of cannabis for application in treatment of a wide
spectrum of medical conditions. Aurora intends to continue CanniMed’s focus on
research and development and expects to invest significant resources towards
clinical trials focused on validating medical cannabis as a safe and effective
pain relief option.
Specialized Skill and Knowledge
All aspects of the Company’s business require specialized
skills and knowledge. Such skills and knowledge include the areas of cultivation
and growing of medical marijuana, and specifically the unique indoor
agricultural skills required for the cultivation of marijuana in accordance with
the ACMPR requirements.
Aurora’s experienced growing team and quality assurance team
are focused on generating the highest quality and most consistent product that
meets and exceeds Health Canada expectations. The Company has established strict
regulatory compliance, a high level of quality assurance, and testing protocols
to maintain customer satisfaction. In addition, Aurora has a system that
provides additional certainty regarding the purity and safety of the cannabis it
produces and sells.
Management is composed of individuals who have extensive
expertise in the medical marijuana industry and are complemented by a strong
Board. See “
Directors and Officers
”.
31
Protection of Intangible Assets
The ownership and protection of the Company’s intellectual
property is a significant aspect of the Company’s future success. Currently the
Company protects its intangible assets through trade secrets, technical know-how
and proprietary information. The Company protects its intellectual property by
seeking and obtaining registered protection (including patents) where possible,
developing and implementing standard operating procedures and entering into
agreements with parties that have access to the Company’s inventions, trade
secrets, technical know-how and proprietary information such as business
partners, collaborators, employees and consultants, to protect the Company’s
confidentiality and ownership of its intellectual property. The Company also
seeks to preserve the integrity and confidentiality of its inventions, trade
secrets, trademarks, technical know-how and proprietary information by
maintaining physical security of the Company’s premises and physical and
electronic security of the Company’s information technology systems. In
addition, the Company has sought trademark and patent protection in Canada and
many other countries.
Canadian Medical Cannabis Regulatory Overview
The ACMPR are the current governing regulations regarding the
production, sale and distribution of cannabis and cannabis oil extracts for
medical purposes in Canada. The ACMPR provide for three possible alternatives
for Canadian residents who have been authorized by their health care
practitioner to access cannabis for medical purposes:
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they can continue to access quality-controlled cannabis
by registering with Licensed Producers;
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they can register with Health Canada to produce a limited
amount of cannabis for their own medical purposes (starting materials must
be obtained from a Licensed Producer); or
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•
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they can designate someone else who is registered with
Health Canada to produce cannabis on their behalf (starting materials must
be obtained from a Licensed Producer).
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In administering the ACMPR, Health Canada has two main roles:
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•
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licensing and overseeing the commercial
industry; and
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•
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registering and overseeing individuals who
produce a limited amount of cannabis for their own medical purposes (or to
have another individual produce it on their behalf).
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The ACMPR sets out, among other things, the authorized
activities and general responsibilities of Licensed Producers, including:
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•
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the requirement to obtain and maintain a
license from Health Canada prior to commencing any activities;
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•
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calculating the quantity of cannabis, other
than dried cannabis, that is equivalent to a given quantity of dried
cannabis;
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security measures relating to facilities and
personnel;
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good production practices;
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packaging, shipping, labelling, import and
export and record-keeping requirements; and
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patient registration and ordering requirements.
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32
Health Canada requires rigorous testing of cannabis products
and derivatives provided by Licensed Producers. A Licensed Producer is subject
to a wide variety of compliance and enforcement activities conducted by Health
Canada after it has received its license. For instance, Health Canada will
typically perform unannounced inspections on a Licensed Producer’s facility to
ensure adequate security measures and production practices are in place.
Expected Legalization of Recreational Cannabis in Canada
In connection with the current Government of Canada’s platform
advocating for the legalization and regulation of recreational cannabis in order
to dismantle the illegal market and restrict access by under-age individuals, on
April 13, 2017, the Government of Canada released Bill C-45 which would enact
An Act respecting cannabis and to amend the Controlled Drugs and Substances Act,
the Criminal Code and other Acts
. The Cannabis Act would provide a licensing
and permitting scheme for the production, testing, packaging, labeling, sending,
delivery, transportation, sale, possession, and disposal of cannabis for
non-medical (i.e., recreational) use, to be implemented by regulations made
under the Cannabis Act. The Cannabis Act proposes to maintain separate access to
cannabis for medical or scientific purposes, however the transitional provisions
of the Cannabis Act provide that every license issued under Section 35 of the
ACMPR that is in force immediately before the day on which the Cannabis Act
comes into force is deemed to be a license issued under the Cannabis Act, and
that such license will continue in force until it is revoked or expires.
On October 5, 2017, the Parliamentary Standing Committee on
Health presented proposed amendments to the Cannabis Act including, among other
things, an amendment that would permit cannabis edibles and concentrates to be
sold, to come into force no later than 12 months after the Cannabis Act comes
into force.
On November 10, 2017, the Government of Canada proposed that
combined federal tax on cannabis flowering material contained in a final
packaged product for adult use purposes should not exceed $1 per gram or 10% of
the producer’s sale price, whichever is higher, with retail sales taxes levied
on top of that amount.
While the Cannabis Act provides for the regulation of the
commercial production of cannabis for recreational purposes and related matters
by the federal government, the Cannabis Act proposes that the provinces and
territories of Canada will have authority to regulate other aspects of
recreational cannabis (similar to what is currently the case for liquor and
tobacco products), such as sale and distribution, minimum age requirements,
places where cannabis can be consumed, and a range of other matters.
The Governments of every Canadian province and territory have,
to varying degrees, announced proposed regulatory regimes for the distribution
and sale of cannabis for recreational purposes within those jurisdictions. Most
of these Canadian jurisdictions have announced a minimum age of 19 years old,
except for Québec and Alberta, where the minimum age will be 18.
There is no guarantee that the provincial and territorial
frameworks supporting the legalization of cannabis for recreational use in
Canada will be implemented on the terms anticipated, or at all. See “
Risk
Factors
”.
On June 19, 2018, Prime Minister Justin Trudeau announced that
the Cannabis Act and its regulations will come into force in Canada on October
17, 2018, in order to provide the province time to prepare for retail sales. The
Cannabis Act passed its final legislative step and received Royal Assent on June
21, 2018.
33
On July 11, 2018, the Federal Government published regulations
in the Canada Gazette, Part II, to support the coming into force of the Cannabis
Act, including the Cannabis Regulations (“
Cannabis Regulations
”), the new
Industrial Hemp Regulations (“
IHR
”, and together with the Cannabis
Regulations, collectively, the “
Regulations
”), along with proposed
amendments to the Narcotic Control Regulations and certain regulations under the
Food and Drugs Act
. Recognizing the Federal Government’s commitment to
bringing the Cannabis Act into force, the Regulations, among other things,
outline the rules for the legal cultivation, processing, research, testing,
distribution, sale, importation and exportation of cannabis and hemp in Canada,
including the various classes of licenses that can be granted, and set standards
for cannabis and hemp products that will be available for legal sale as of
October 17, 2018. Currently, medical cannabis is largely regulated by the ACMPR.
The ACMPR and the current IHR will no longer be in force on October 17, 2018 and
will be supplanted by the Cannabis Act and the Regulations and once the Cannabis
Act comes into force, cannabis will no longer be regulated under the CDSA and
will be regulated under the Cannabis Act.
Aurora intends to participate in the Canadian recreational
market, if and when the recreational use of cannabis is legalized in Canada, and
only in compliance with all applicable federal and provincial laws and
regulations concerning the Canadian recreational cannabis market. As it has done
in the Canadian medical cannabis market, the Company’s customer acquisition
strategy for the Canadian recreational cannabis market will be to focus on
leveraging its analytical and consumer insight capabilities in order to identify
profitable market segments, understand the unique needs of each segment, design
brands and products to address market demand, and collect and analyze customer
and sales data to improve the customer experience.
No assurance can be provided that the Company will be able to
participate in the Canadian recreational cannabis market, if or when such market
is created through the legalization of recreational cannabis use, or that the
Company will, or will be able to, design products and service the market
segments in which it may compete, or that the Company will be able to maintain
profitability. See “
Risk Factors
”.
International Opportunities
In addition to its Canadian domestic operations, the Company is
also exploring international opportunities, including (subject to applicable
laws and regulations): (a) opportunities to export its medical cannabis products
to other countries; and (b) opportunities to create international alliances with
local partners to apply for cultivation licenses in other countries. Aurora is
currently pursuing these opportunities in several countries.
Denmark
The Company has successfully shipped cultivars from its
Mountain facility to Denmark to commence populating the Phase I Aurora Nordic
facility, a 100,000 square foot, retrofitted hybrid greenhouse, which will be
ramping up to full production capacity of 8,000 kg per year of medical cannabis
over the coming months. Both the Phase I facility and Phase II, a 1,000,000
square foot, hybrid greenhouse facility with a cultivation capacity of more than
120,000 kg per year, have been designed by ALPS, and will be completed to EU GMP
standards, incorporating leading edge technologies. See
“Description of
Business –
Production Facilities and Licenses- Aurora Nordic
Facilities”
.
34
Germany
The Company acquired Pedanios in May 2017 which was renamed as
Aurora Deutschland GmbH. Aurora Deutschland holds all relevant licenses and
permits and has been importing, exporting and distributing cannabis for medical
purposes since December 2015 into and within the European Union. Aurora
Deutschland distributes to more than 1,500 German pharmacies and currently
relies exclusively on imported medical cannabis products from federally
regulated producers in Canada and the Netherlands.
Upon delivery to Aurora Deutschland, the product will be
distributed to a network of more than 1,500 pharmacies across Germany, a country
of more than 82 million people. Germany currently represents the largest single
federally-legal medical cannabis market in the world, and is experiencing a
significant shortage of supply. Of note, Germany is the first county in the
world to cover the cost of medical cannabis, for any therapeutic application
approved by a physician, through its national health insurance system. The
market for medical cannabis in Germany is expected to expand rapidly.
The German government recently announced it is restarting the
tender process towards selecting a number of companies for domestic cultivation.
Aurora was in the final round of the original tender process, and intends to
participate in the restarted process. Aurora anticipates the tender process to
be completed in 2019, in the meantime Aurora will continue to ship product to
Germany from its EU GMP certified facilities in Canada. The original tender
process was discontinued following a court decision to grant certain
stakeholders more time to complete submissions. See “
Development of Business
- Developments during the Financial Year ended June 30,
2018
”.
Earlier this month, MedReleaf announced it had commenced
shipping product to a German distribution partner. Through MedReleaf, the
Company believes it will be able to increase product availability to the
European market, increasing brand recognition and generating further growth.
Italy
On April 13, 2018, Aurora completed the first ever successful
delivery of privately exported medical cannabis from Canada to the Italian
government through its wholly-owned German subsidiary Aurora Deutschland.
This export followed Aurora and Aurora Deutschland’s success in
winning a highly-competitive EU-wide public tender to supply medical cannabis to
the Italian government through the Italian Ministry of Defense, who oversee
medical cannabis production and distribution in Italy.
Malta
On July 24, 2018, Aurora received a Letter of Intent issued
from Maltese authorities, approving its application for the establishment of the
first seed-to-pharma cannabis operation in Malta, subject to certain
conditions.
The project includes the construction of a hybrid cultivation,
manufacturing, and distribution facility, with operations to be carried out by a
new subsidiary, Aurora Malta, to be formed with Aurora's local Maltese partner,
Cherubino Ltd., the largest pharmaceutical wholesaler in the country. Aurora
will be the majority shareholder in the new venture. The Company anticipates the
facility, to be designed by Aurora Larssen Projects, to be focused on the
production of higher margin derivative products, aimed at serving the domestic
Maltese and Southern European markets.
35
Australia
Aurora owns approximately 22.9% of Australia's first licensed
cannabis company, Cann Group. Cann Group was issued Australia’s first medical
cannabis cultivation license in March 2017, in addition to Australia’s first
medical cannabis research license in February 2017. Cann Group has also been
issued with permits that facilitate the establishment of breeding plants for
propagation purposes; a research program being undertaken with Australia’s
Federal research agency, the Commonwealth Scientific and Industrial Research
Organization, to develop unique cannabis extracts; and the supply of plant
material for manufacturing into medical cannabis products for patient use. Cann
Group is building a world-class business focused on breeding, cultivating and
manufacturing medical cannabis for sale and use within Australia.
On July 18, 2017, Aurora entered into a technical services
agreement with Cann Group, which covers the period until the end of 2022, to
facilitate an exchange of information and support across areas including the
cultivation and processing of medical cannabis, extraction and manufacturing
technology, and analysis of cannabis extracts.
Cann Group completed a licensing and distribution agreement
with CannaKorp, Inc. to import and sell the Cannacloud vaporizing device and to
produce medical cannabis pods to be used with it. The vaporizing system will be
sold as an open platform for licensed medicinal cannabis cultivators looking to
have their cannabis available via a vaporization device.
Cann Group, which has selected ALPS as its project consultancy
for a high- technology, high efficiency production, GMP compliant facility, has
secured a lease with Australia Pacific Airports for a five-hectare (12.4 acres)
site which is part of the Melbourne Airport precinct. Project preparations,
including environmental and regulatory approvals continue to progress well.
Latin America
MedReleaf, as announced on July 24, 2018, acquired
MED-Colombia, a company with licenses in Colombia for the cultivation of
cannabis and the production of cannabis oil extracts. Through this acquisition,
Aurora gained an extensive library of cannabis genetics which Aurora anticipates
will resonate well with the market. Diversification of cultivars is considered
of great importance for the various markets Aurora services around the world,
including the Canadian adult consumer use market. The acquisition also provides
Aurora with the ability to develop additional, low-cost production capacity in
Latin America from which the Company can potentially service a number of export
markets, in addition to the domestic Colombian market.
The Company will only pursue international opportunities in
accordance and compliance with all applicable laws. The Company is currently
pursuing international opportunities in several countries where a legal
framework for the medical and/or recreational use of cannabis exists or is
expected to be implemented. The timing of the Company’s activities in any
international market is dependent on the pace of regulatory developments and, as
such, it is not feasible for the Company to provide a timeline with respect to
those activities. See “
Risk Factors
”.
On September 10, 2018, the Company announced it had entered
into a definitive agreement to acquire ICC. The acquisition of ICC will
establish Aurora as the industry leader in South America, a continent with over
420 million people. ICC presently has over 70% market share in Uruguay, the
first country in the world to legalize cannabis for adult consumer use. In
addition, ICC holds licenses in Colombia for the production of medical cannabis.
The acquisition creates a strong foundation for expansion, and will leverage
ICC’s first mover advantage in South America, bringing significant low-cost
production capacity, a well-diversified product portfolio, and extensive
distribution channels throughout South America and internationally.
36
Competitive Conditions
As of the date of this AIF, Health Canada has issued a total of
118 licenses to companies on its list of Licensed Producers. Additional
information on the current list of Licensed Producers can be found on Health
Canada’s website at:
https://www.canada.ca/en/health-canada/services/drugs-health-products/medical-use-marijuana/licensed-producers/authorized-licensed-producers-medical-purposes.html.
Due to the nature of the regulatory regime, Aurora anticipates
increases in the level of competition in the medical marijuana industry as new
competitors enter the market. The principal aspects of competition are
anticipated to be the price and quality of the cultivated marijuana, as well as
the services provided to patients.
Employees
As of June 30, 2018, the Company had approximately 967
employees (2017 – 171 employees). As of the date of this AIF, the Company has
over 1,400 employees.
Risk Factors
This section discusses factors relating to the business of
Company that should be considered by both existing and potential investors. The
information in this section is intended to serve as an overview and should not
be considered comprehensive and the Company may face risks and uncertainties not
discussed in this section, or not currently known to us, or that we deem to be
immaterial. All risks to the Company’s business have the potential to influence
its operations in a materially adverse manner.
Reliance on Licensing
The ability of Aurora to continue its business of growth,
storage and distribution of medical marijuana is dependent on the good standing
of all licenses, including the licenses to produce and sell cannabis oil
products, and adherence to all regulatory requirements related to such
activities. Any failure to comply with the terms of the licenses, or to renew
the licenses after their expiry dates, would have a material adverse impact on
the financial condition and operations of the business of the Company. Although
the Company believes that it will meet the requirements of the ACMPR for future
extensions or renewals of the licenses, there can be no assurance that Health
Canada will extend or renew the licenses, or if extended or renewed, that they
will be extended or renewed on the same or similar terms. Should Health Canada
not extend or renew the licenses or should they renew the licenses on different
terms, the business, financial condition and operating results of the Company
would be materially adversely affected.
Change in Law, Regulations and Guidelines
Aurora’s business is subject to a variety of laws, regulations
and guidelines relating to marketing, acquisition, manufacture, management,
transportation, storage, sale and disposal of medical marijuana but also laws
and regulations relating to health and safety, the conduct of operations and the
protection of the environment. Changes to such laws, regulations and guidelines
may cause adverse effects to the Company’s operations.
37
The Liberal Party of Canada, which has formed the current
federal Government of Canada, has made electoral commitments to legalize,
regulate and tax recreational cannabis use in Canada. On April 13, 2017, the
Government of Canada introduced the Cannabis Act. On June 19, 2018, Prime
Minister Justin Trudeau announced that the Cannabis Act and its regulations will
come into force in Canada on October 17, 2018, on order to provide the provinces
and territories time to prepare for retail sales. The Cannabis Act passed its
final legislative step and received Royal Assent on June 21, 2018.
The legislative framework pertaining to the Canadian
recreational cannabis market will be subject to significant provincial and
territorial regulation, which will vary across provinces and territories and
result in an asymmetric regulatory and market environment, different competitive
pressures and significant additional compliance and other costs and/or
limitations on the Company’s ability to participate in such market.
Regulatory Risk
Achievement of the Company’s business objectives are
contingent, in part, upon compliance with the regulatory requirements, including
those imposed by Health Canada, enacted by these government authorities and
obtaining all regulatory approvals, where necessary, for the sale of its
products. Aurora cannot predict the time required to secure all appropriate
regulatory approvals for its products, or the extent of testing and
documentation that may be required by government authorities. Any delays in
obtaining, or failure to obtain regulatory approvals would significantly delay
the development of markets and products and could have a material adverse effect
on the Company’s business, results of operation and financial condition.
Limited Operating History and No Assurance of Profitability
Aurora Marijuana Inc., which prior to the completion of the RTO
was the entity in which Aurora’s business was organized, was incorporated in
2013, and the business of the Company began operations in 2015, and started
generating revenues from the sale of medical cannabis in January 2016. The
Company is subject to all of the business risks and uncertainties associated
with any early-stage enterprise, including under-capitalization, cash shortages,
limitation with respect to personnel, financial and other resources, and lack of
revenues.
The Company has incurred operating losses in recent periods.
The Company may not be able to achieve or maintain profitability and may
continue to incur significant losses in the future. In addition, the Company
expects to continue to increase operating expenses as it implements initiatives
to grow its business. If the Company’s revenues do not increase to offset these
expected increases in costs and operating expenses, the Company will not be
profitable. There is no assurance that the Company will be successful in
achieving a return on shareholders’ investments and the likelihood of success
must be considered in light of the early stage of operations.
38
Unfavourable Publicity or Consumer Perception
The success of the medical marijuana industry may be
significantly influenced by the public’s perception of marijuana’s medicinal
applications. Medical marijuana is a controversial topic, and there is no
guarantee that future scientific research, publicity, regulations, medical
opinion and public opinion relating to medical marijuana will be favourable. The
medical marijuana industry is an early-stage business that is constantly
evolving with no guarantee of viability. The market for medical marijuana is
uncertain, and any adverse or negative publicity, scientific research, limiting
regulations, medical opinion and public opinion relating to the consumption of
medical marijuana may have a material adverse effect on our operational results,
consumer base and financial results.
Competition
The market for the Company’s products does appear to be
sizeable and Health Canada has only issued a limited number of licenses under
the ACMPR to produce and sell medical marijuana. As a result, the Company
expects significant competition from other companies due to the recent nature of
the ACMPR regime. A large number of companies appear to be applying for
production licenses, some of which may have significantly greater financial,
technical, marketing and other resources, may be able to devote greater
resources to the development, promotion, sale and support of their products and
services, and may have more extensive customer bases and broader customer
relationships.
Should the size of the medical marijuana market increase as
projected the demand for products will increase as well, and in order for the
Company to be competitive it will need to invest significantly in research and
development, market development, marketing, production expansion, new client
identification, distribution channels and client support. If the Company is not
successful in achieving sufficient resources to invest in these areas, the
Company’s ability to compete in the market may be adversely affected, which
could materially and adversely affect the Company’s business, its financial
conditions and operations.
Realization of Growth Targets
Aurora’s ability to continue production of marijuana, at the
same pace as of the date of this AIF or at all, is affected by a number of
factors, including plant design errors, non-performance by third party
contractors, increases in materials or labour costs, construction performance
falling below expected levels of output or efficiency, environmental pollution,
contractor or operator errors, breakdowns, aging or failure of equipment or
processes, labour disputes, as well as factors specifically related to indoor
agricultural practices, such as reliance on provision of energy and utilities to
the facility, and potential impacts of major incidents or catastrophic events on
the facility, such as fires, explosions, earthquakes or storms.
39
Additional financing
There is no guarantee that the Company will be able to execute
on its strategy. The continued development of the Company may require additional
financing. The failure to raise such capital could result in the delay or
indefinite postponement of current business strategy or the Company ceasing to
carry on business. There can be no assurance that additional capital or other
types of financing will be available if needed or that, if available, the terms
of such financing will be favorable to the Company. If additional funds are
raised through issuances of equity or convertible debt securities, existing
shareholders could suffer significant dilution. In addition, from time to time,
the Company may enter into transactions to acquire assets or the shares of other
Companies. These transactions may be financed wholly or partially with debt,
which may temporarily increase the Company’s debt levels above industry
standards. Any debt financing secured in the future could involve restrictive
covenants relating to capital raising activities and other financial and
operational matters, which may make it more difficult for the Company to obtain
additional capital and to pursue business opportunities, including potential
acquisitions. Debt financings may contain provisions, which, if breached, may
entitle lenders to accelerate repayment of loans and there is no assurance that
the Company would be able to repay such loans in such an event or prevent the
enforcement of security granted pursuant to such debt financing. The Company may
require additional financing to fund its operations to the point where it is
generating positive cash flows. Negative cash flow may restrict the Company’s
ability to pursue its business objectives.
Uninsured or Uninsurable Risk
The Company may be subject to liability for risks against which
it cannot insure or against which the Company may elect not to insure due to the
high cost of insurance premiums or other factors.The payment of any such
liabilities would reduce the funds available for the Company’s normal business
activities. Payment of liabilities for which the Company does not carry
insurance may have a material adverse effect on the Company’s financial position
and operations.
Key Personnel
The Company’s success will depend on its directors’ and
officers’ ability to develop and execute on the Company’s business strategies
and manage its ongoing operations, and on the Company’s ability to attract and
retain key quality assurance, scientific, sales, public relations and marketing
staff or consultants now that production and selling operations have begun. The
loss of any key personnel or the inability to find and retain new key persons
could have a material adverse effect on the Company’s business. Competition for
qualified technical, sales and marketing staff, as well as officers and
directors can be intense and no assurance can be provided that the Company will
be able to attract or retain key personnel in the future, which may adversely
impact the Company’s operations.
Aurora has expanded and intends to further expand its
business and operations into jurisdictions outside of Canada, and there are
risks associated with doing so
The Company intends to expand its operations and business into
jurisdictions outside of Canada. There can be no assurance that any market for
the Company’s products will develop in any such foreign jurisdiction. The
Company may face new or unexpected risks or significantly increase its exposure
to one or more existing risk factors, including economic instability, changes in
laws and regulations and the effects of competition. These factors may limit the
Company’s capability to successfully expand its operations and may have a
material adverse effect on the Company’s business, financial condition and
results of operations.
40
The Company may enter into strategic alliances, or expand
the scope of currently existing relationships with third parties with whom it
believes will have a beneficial impact on its business, financial condition and
results of operation and there are risks associated with such activities
The Company currently has, and may in the future enter into,
strategic alliances with third parties that the Company believes will complement
or augment its existing business. Aurora’s ability to complete strategic
alliances is dependent upon, and may be limited by, the availability of suitable
candidates and capital. In addition, strategic alliances could present
unforeseen integration obstacles or costs, may not enhance our business, and may
involve risks that could adversely affect the Company, including significant
amounts of management time that may be diverted from operations in order to
pursue and complete such transactions or maintain such strategic alliances.
Future strategic alliances could result in the incurrence of additional debt,
costs and contingent liabilities, and there can be no assurance that future
strategic alliances will achieve, or that the Company’s existing strategic
alliances will continue to achieve, the expected benefits to the Company’s
business or that the Company will be able to consummate future strategic
alliances on satisfactory terms, or at all. Any of the foregoing could have a
material adverse effect on the Company’s business, financial condition and
results of operations.
The Company may be subject to product liability claims
As a manufacturer and distributor of products designed to be
ingested by humans, the Company faces an inherent risk of exposure to product
liability claims, regulatory action and litigation if its products are alleged
to have caused significant loss or injury. In addition, the manufacture and sale
of cannabis products for medical purposes involves the risk of injury to
consumers due to tampering by unauthorized third parties or product
contamination. Previously unknown adverse reactions resulting from human
consumption of cannabis products alone or in combination with other medications
or substances could occur. The Company may be subject to various product
liability claims, including, among others, that the products produced by the
Company caused or contributed to injury or illness, include inadequate
instructions for use or include inadequate warnings concerning possible side
effects or interactions with other substances. A product liability claim or
regulatory action against the Company could result in increased costs, could
adversely affect the Company’s reputation and goodwill with its patients and
consumers generally, and could have a material adverse effect on the Company’s
business, financial condition and results of operations. There can be no
assurances that the Company will be able to obtain or maintain product liability
insurance on acceptable terms or with adequate coverage against potential
liabilities. Such insurance is expensive and may not be available in the future
on acceptable terms, or at all. The inability to obtain sufficient insurance
coverage on reasonable terms or to otherwise protect against potential product
liability claims could prevent or inhibit the commercialization of products.
The Company’s medical cannabis products may be subject to
recalls for a variety of reasons
Manufacturers and distributors of products are sometimes
subject to the recall or return of their products for a variety of reasons,
including product defects, such as contamination, unintended harmful side
effects or interactions with other substances, packaging safety and inadequate
or inaccurate labeling disclosure. If any of the products produced by the
Company are recalled due to an alleged product defect or for any other reason,
the Company could be required to incur the unexpected expense of the recall and
any legal proceedings that might arise in connection with the recall. The
Company may lose a significant amount of sales and may not be able to replace
those sales at an acceptable margin or at all. In addition, a product recall may
require significant management attention. Although Aurora has detailed
procedures in place for testing finished products, there can be no assurance
that any quality, potency or contamination problems will be detected in time to
avoid unforeseen product recalls, regulatory action or lawsuits, whether frivolous or otherwise. Additionally, if any
of the products produced by Aurora were subject to recall, the reputation and
goodwill of that product and/or the Company could be harmed. A recall for any of
the foregoing reasons could lead to decreased demand for products produced by
Aurora and could have a material adverse effect on the Company’s business,
financial condition and results of operations. Additionally, product recalls may
lead to increased scrutiny of the operations of Aurora by Health Canada or other
regulatory agencies, requiring further management attention, increased
compliance costs and potential legal fees, fines, penalties and other expenses.
Furthermore, any product recall affecting the medical cannabis industry more
broadly could lead consumers to lose confidence in the safety and security of
the products sold by Licensed Producers generally, which could have a material
adverse effect on the Company’s business, financial condition and results of
operations.
41
Aurora may not be able to successfully develop new products
or find a market for their sale
The medical cannabis industry is, and the recreational cannabis
industry (if implemented) will be, in its early stages of development and it is
likely that the Company, and its competitors, will seek to introduce new
products in the future. In attempting to keep pace with any new market
developments, the Company may need to expend significant amounts of capital in
order to successfully develop and generate revenues from new products introduced
by the Company. As well, the Company may be required to obtain additional
regulatory approvals from Health Canada and any other applicable regulatory
authority, which may take significant amounts of time. The Company may not be
successful in developing effective and safe new products, bringing such products
to market in time to be effectively commercialized, or obtaining any required
regulatory approvals, which, together with any capital expenditures made in the
course of such product development and regulatory approval processes, may have a
material adverse effect on the Company’s business, financial condition and
results of operations.
Conflict of Interest
Certain of the Company’s directors and officers are also
directors and officers in other companies.Situations may arise in connection
with potential acquisitions or opportunities where the other interests of these
directors and officers conflict with or diverge from the Company interests. In
accordance with the BCBCA, directors who have a material interest in any person
who is a party to a material contract or a proposed material contract are
required, subject to certain exceptions, to disclose that interest and generally
abstain from voting on any resolution to approve the contract.
Litigation
The Company may become party to litigation, mediation and/or
arbitration from time to time in the ordinary course of business which could
adversely affect its business. Monitoring and defending against legal actions,
whether or not meritorious, can be time-consuming, divert management’s attention
and resources and cause the Company to incur significant expenses. In addition,
legal fees and costs incurred in connection with such activities may be
significant and we could, in the future, be subject to judgments or enter into
settlements of claims for significant monetary damages. While the Company has
insurance that may cover the costs and awards of certain types of litigation,
the amount of insurance may not be sufficient to cover any costs or awards.
Substantial litigation costs or an adverse result in any litigation may
adversely impact the Company’s business, operating results or financial
condition.
42
Agricultural Operations
Since the Company’s business will revolve mainly around the
growth of medical marijuana, an agricultural product, the risks inherent with
agricultural businesses will apply. Such risks may include disease and insect
pests, among others. Although the Company expects to grow its product in a
climate controlled, monitored, indoor location, there is no guarantee that
changes in outside weather and climate will not adversely affect production.
Further, any rise in energy costs may have a material adverse effect on the
Company’s ability to produce medical marijuana.
Transportation Disruptions
The Company will depend on fast, cost-effective and efficient
courier services to distribute its product. Any prolonged disruption of this
courier service could have an adverse effect on the financial condition and
results of operations of the Company. Rising costs associated with the courier
service used by the Company to ship its products may also adversely impact the
business of the Company and its ability to operate profitably.
Fluctuating Prices of Raw Materials
The Company’s revenues are in a large part derived from the
production, sale and distribution of marijuana. The price of production, sale
and distribution of marijuana will fluctuate widely due to how young the
marijuana industry is and is affected by numerous factors beyond the Company’s
control including international, economic and political trends, expectations of
inflation, currency exchange fluctuations, interest rates, global or regional
consumptive patterns, speculative activities and increased production due to new
production and distribution developments and improved production and
distribution methods. The effect of these factors on the price of product
produced by the Company and, therefore, the economic viability of any of the
Company’s business, cannot accurately be predicted.
Environmental and Employee Health and Safety Regulations
The Company’s operations are subject to environmental and
safety laws and regulations concerning, among other things, emissions and
discharges to water, air and land; the handling and disposal of hazardous and
non-hazardous materials and wastes, and employee health and safety. The Company
will incur ongoing costs and obligations related to compliance with
environmental and employee health and safety matters. Failure to obtain an
Environmental Compliance Approval or otherwise comply with environmental and
safety laws and regulations may result in additional costs for corrective
measures, penalties or in restrictions on our manufacturing operations. In
addition, changes in environmental, employee health and safety or other laws,
more vigorous enforcement thereof or other unanticipated events could require
extensive changes to the Company’s operations or give rise to material
liabilities, which could have a material adverse effect on the business, results
of operations and financial condition of the Company.
43
Intellectual Property
The success of the Company’s business depends in part on its
ability to protect its ideas and technology. Even if the Company moves to
protect its technology with trademarks, patents, copyrights or by other means,
Aurora is not assured that competitors will not develop similar technology,
business methods or that Aurora will be able to exercise its legal rights. Other
countries may not protect intellectual property rights to the same standards as
does Canada. Actions taken to protect or preserve intellectual property rights
may require significant financial and other resources such that said actions
have a meaningfully impact our ability to successfully grow our business.
Political and Economic Instability
The Company may be affected by possible political or economic
instability. The risks include, but are not limited to, terrorism, military
repression, extreme fluctuations in currency exchange rates and high rates of
inflation. Changes in medicine and agriculture development or investment
policies or shifts in political attitude in certain countries may adversely
affect the Company’s business. Operations may be affected in varying degrees by
government regulations with respect to restrictions on production, distribution,
price controls, export controls, income taxes, expropriation of property,
maintenance of assets, environmental legislation, land use, land claims of local
people and water use. The effect of these factors cannot be accurately
predicted.
The Company’s expansion efforts may not be successful
There is no guarantee that the Company’s intentions to acquire
and/or construct additional cannabis production and manufacturing facilities in
Canada and in other jurisdictions with federal legal cannabis markets, and to
expand the Company’s marketing and sales initiatives will be successful. Any
such activities will require, among other things, various regulatory approvals,
licenses and permits (such as additional site licenses from Health Canada under
the ACMPR, as applicable) and there is no guarantee that all required approvals,
licenses and permits will be obtained in a timely fashion or at all. There is
also no guarantee that the Company will be able to complete any of the foregoing
activities as anticipated or at all. The failure of the Company to successfully
execute its expansion strategy (including receiving required regulatory
approvals and permits) could adversely affect the Company’s business, financial
condition and results of operations and may result in the Company failing to
meet anticipated or future demand for its cannabis-based pharmaceutical
products, when and if it arises.
In addition, the construction of Aurora Sky, Aurora Sun and
Aurora Nordic 2 is subject to various potential problems and uncertainties, and
may be delayed or adversely affected by a number of factors beyond its control,
including the failure to obtain regulatory approvals, permits, delays in the
delivery or installation of equipment by our suppliers, difficulties in
integrating new equipment with its existing facilities, shortages in materials
or labor, defects in design or construction, diversion of management resources,
or insufficient funding or other resource constraints. Moreover, actual costs
for construction may exceed the Company’s budgets. As a result of construction
delays, cost overruns, changes in market circumstances or other factors, the
Company may not be able to achieve the intended economic benefits from the
construction of the new facilities, which in turn may materially and adversely
affect its business, prospects, financial condition and results of operations.
44
The Company may not be able to successfully identify and
execute future acquisitions or dispositions, or to successfully manage the
impacts of such transactions on its operations
Material acquisitions, dispositions and other strategic
transactions involve a number of risks, including: (i) potential disruption of
the Company’s ongoing business; (ii) distraction of management; (iii) the
Company may become more financially leveraged; (iv) the anticipated benefits and
cost savings of those transactions may not be realized fully or at all or may
take longer to realize than expected; (v) increasing the scope and complexity of
the Company’s operations, and (vi) loss or reduction of control over certain of
the Company’s assets.
The presence of one or more material liabilities of an acquired
company that are unknown to the Company at the time of acquisition could have a
material adverse effect on the results of operations, business prospects and
financial condition of the Company. A strategic transaction may result in a
significant change in the nature of the Company’s business, operations and
strategy. In addition, the Company may encounter unforeseen obstacles or costs
in implementing a strategic transaction or integrating any acquired business
into the Company’s operations.
Market Risk for Securities
The market price for the Common Shares of the Company could be
subject to wide fluctuations. Factors such as commodity prices, government
regulation, interest rates, share price movements of peer companies and
competitors, as well as overall market movements, may have a significant impact
on the market price of the Company. The stock market has from time to time
experienced extreme price and volume fluctuations, which have often been
unrelated to the operating performance of particular companies.
Global Economy Risk
An economic downturn of global capital markets has been shown
to make the raising of capital by equity or debt financing more difficult. The
Company will be dependent upon the capital markets to raise additional financing
in the future, while it establishes a user base for its products. As such, the
Company is subject to liquidity risks in meeting its development and future
operating cost requirements in instances where cash positions are unable to be
maintained or appropriate financing is unavailable. These factors may impact the
Company’s ability to raise equity or obtain loans and other credit facilities in
the future and on terms favorable to the Company and its management. If
uncertain market conditions persist, the Company’s ability to raise capital
could be jeopardized, which could have an adverse impact on the Company’s
operations and the trading price of the Company’s shares on the Exchange.
Dividend Risk
The Company has not paid dividends in the past and does not
anticipate paying dividends in the near future. The Company expects to retain
its earnings to finance further growth and, when appropriate, retire debt.
45
Volatile Market Price for Company Common Shares
The market price for Common Shares may be volatile and subject
to wide fluctuations in response to numerous factors, many of which are beyond
the Company’s control, including the following:
|
|
•
|
actual or anticipated fluctuations in the
Company’s quarterly results of operations;
|
|
|
•
|
recommendations by securities research
analysts;
|
|
|
•
|
changes in the economic performance or market
valuations of companies in the industry in which the Company operates;
|
|
|
•
|
addition or departure of the Company’s
executive officers and other key personnel;
|
|
|
•
|
release or expiration of transfer restrictions
on outstanding Company Common Shares;
|
|
|
•
|
sales or perceived sales of additional Company
Common Shares;
|
|
|
•
|
operating and financial performance that vary
from the expectations of management, securities analysts and investors;
|
|
|
•
|
regulatory changes affecting the Company’s
industry generally and its business and operations;
|
|
|
•
|
announcements of developments and other
material events by the Company or its competitors;
|
|
|
•
|
fluctuations to the costs of vital production
materials and services;
|
|
|
•
|
changes in global financial markets and global
economies and general market conditions, such as interest rates and
pharmaceutical product price volatility;
|
|
|
•
|
significant acquisitions or business
combinations, strategic partnerships, joint ventures or capital
commitments by or involving the Company or its competitors;
|
|
|
•
|
operating and share price performance of other
companies that investors deem comparable to the Company or from a lack of
market comparable companies; and
|
|
|
•
|
news reports relating to trends, concerns,
technological or competitive developments, regulatory changes and other
related issues in the Company’s industry or target markets.
|
Financial markets have recently experienced significant price
and volume fluctuations that have particularly affected the market prices of
equity securities of companies and that have often been unrelated to the
operating performance, underlying asset values or prospects of such companies.
Such volatility has been particularly evident with regards to the share prices
of medical cannabis companies that are public issuers in Canada. Accordingly,
the market price of Company Common Shares may decline even if the Company’s
operating results, underlying asset values or prospects have not changed.
Additionally, these factors, as well as other related factors, may cause
decreases in asset values that are lasting and not temporary, which may result
in impairment losses. There can be no assurance that continuing fluctuations in
share price and volume will not occur. If such increased levels of volatility
and market turmoil continue, the Company’s operations could be adversely
impacted and the trading price of Company Common Shares may be materially
adversely affected.
46
The Company may experience breaches of security at its
facilities or in respect of electronic documents and data storage and may face
risks related to breaches of applicable privacy laws
Given the nature of the Company’s product and its lack of legal
availability outside of channels approved by the Government of Canada, as well
as the concentration of inventory in its facilities, despite meeting or
exceeding Health Canada’s security requirements, there remains a risk of
shrinkage as well as theft. A security breach at one of the Company’s facilities
could expose the Company to additional liability and to potentially costly
litigation, increase expenses relating to the resolution and future prevention
of these breaches and may deter potential patients from choosing the Company’s
products.
In addition, Aurora collects and stores personal information
about its patients and is responsible for protecting that information from
privacy breaches. A privacy breach may occur through procedural or process
failure, information technology malfunction, or deliberate unauthorized
intrusions. Theft of data for competitive purposes, particularly patient lists
and preferences, is an ongoing risk whether perpetrated via employee collusion
or negligence or through deliberate cyber-attack. Any such theft or privacy
breach would have a material adverse effect on the Company’s business, financial
condition and results of operations.
Furthermore, there are a number of federal and provincial laws
protecting the confidentiality of certain patient health information, including
patient records, and restricting the use and disclosure of that protected
information. In particular, the privacy rules under the
Personal Information
Protection and Electronics Documents Act
(Canada) (“
PIPEDA
”), protect
medical records and other personal health information by limiting their use and
disclosure of health information to the minimum level reasonably necessary to
accomplish the intended purpose. If the Company was found to be in violation of
the privacy or security rules under PIPEDA or other laws protecting the
confidentiality of patient health information, it could be subject to sanctions
and civil or criminal penalties, which could increase its liabilities, harm its
reputation and have a material adverse effect on the business, results of
operations and financial condition of the Company
Aurora may be subject to risks related to its information
technology systems, including cyber-attacks
The Company has entered into agreements with third parties for
hardware, software, telecommunications and other IT services in connection with
its operations. The Company’s operations depend, in part, on how well it and its
suppliers protect networks, equipment, IT systems and software against damage
from a number of threats, including, but not limited to, cable cuts, damage to
physical plants, natural disasters, intentional damage and destruction, fire,
power loss, hacking, computer viruses, vandalism and theft. The Company’s
operations also depend on the timely maintenance, upgrade and replacement of
networks, equipment, IT systems and software, as well as pre-emptive expenses to
mitigate the risks of failures. Any of these and other events could result in
information system failures, delays and/or increase in capital expenses. The
failure of information systems or a component of information systems could,
depending on the nature of any such failure, adversely impact the Company’s
reputation and results of operations.
47
The Company has not experienced any material losses to date
relating to cyber-attacks or other information security breaches, but there can
be no assurance that the Company will not incur such losses in the future. The
Company’s risk and exposure to these matters cannot be fully mitigated because
of, among other things, the evolving nature of these threats. As a result, cyber
security and the continued development and enhancement of controls, processes
and practices designed to protect systems, computers, software, data and
networks from attack, damage or unauthorized access is a priority. As cyber
threats continue to evolve, the Company may be required to expend additional
resources to continue to modify or enhance protective measures or to investigate
and remediate any security vulnerabilities.
Holding Company Status
The Company is a holding company and essentially all of its
operating assets are the capital stock of its subsidiaries. As a result,
investors in the Company are subject to the risks attributable to its
subsidiaries. As a holding company, the Company conducts substantially all of
its business through its subsidiaries, which generate substantially all of its
revenues. Consequently, the Company’s cash flows and ability to complete current
or desirable future enhancement opportunities are dependent on the earnings of
its subsidiaries and the distribution of those earnings to the Company. The
ability of these entities to pay dividends and other distributions will depend
on their operating results and will be subject to applicable laws and
regulations which require that solvency and capital standards be maintained by
such companies and contractual restrictions contained in the instruments
governing their debt. In the event of a bankruptcy, liquidation or
reorganization of any of the Company’s subsidiaries, holders of indebtedness and
trade creditors will generally be entitled to payment of their claims from the
assets of those subsidiaries before any assets are made available for
distribution to the Company.
The integration of MedReleaf and the Company may not occur
as planned
It is expected that the acquisition of MedReleaf will result in
enhanced production capacity, increased earnings and cost savings by taking
advantage of operating and other synergies to be realized from the consolidation
of MedReleaf and the Company and enhanced growth opportunities for the combined
company. These anticipated benefits will depend in part on whether MedReleaf and
the Company’s operations can be integrated in an efficient and effective manner.
The integration of the two companies will present challenges to management,
including the integration of systems and personnel of the two companies, and
special risks, including possible unanticipated liabilities, unanticipated
costs, and the loss of key employees. The performance of operations acquired
from the Company from the acquisition of MedReleaf could be adversely affected
if the combined company cannot retain key employees to assist in the integration
and operation of the Company and MedReleaf. As a result of these factors, it is
possible that the cost reductions and synergies expected from the combination of
MedReleaf the Company will not be realized.
DIVIDENDS AND DISTRIBUTIONS
Aurora has not declared nor paid any cash dividends on any of
its issued shares since its inception. Other than requirements imposed under
applicable corporate law, there are no other restrictions on the Company’s
ability to pay dividends under the Company’s constating documents. The Company
has not paid any dividends on the Common Shares since its incorporation. The
Company has no present intention of paying dividends on the Common Shares, as it
anticipates that all available funds will be invested to finance the growth of
its business and, when appropriate, retire debt.
48
DESCRIPTION OF CAPITAL STRUCTURE
The Company’s authorized share capital consists of an unlimited
number of Common Shares without par value, an unlimited number of Class A shares
with a par value of $1.00 each; and an unlimited number of Class B shares with a
par value of $5.00 each.
As at June 30, 2018, the issued share capital consisted of
568,113,131 Common Shares. No class A Shares or Class B Shares were issued or
outstanding.
Common Shares
Each Common Share carries the right to attend and vote at all
general meetings of shareholders. Holders of Common Shares are entitled to
receive on a pro rata basis such dividends, if any, as and when declared by the
Board at its discretion from funds legally available for the payment of
dividends and upon the liquidation, dissolution or winding up of the Company are
entitled to receive on a pro rata basis the net assets of the Company after
payment of debts and other liabilities, in each case subject to the rights,
privileges, restrictions and conditions attaching to any other series or class
of shares ranking senior in priority to or on a pro rata basis with the holders
of Common Shares with respect to dividends or liquidation. The Common Shares do
not carry any pre-emptive, subscription, redemption or conversion rights, nor do
they contain any sinking or purchase fund provisions.
Class A Shares
Class A shares may be issued from time to time in one or more
series, and the directors may fix from time to time before such issue the number
of Class A shares of each series and the designation, rights and restrictions
attached thereto including any voting rights, dividend rights, redemption,
purchase or conversion rights, sinking fund or other provisions. The Class A
shares rank in priority over Common Shares and any other shares ranking by their
terms junior to the Class A shares as to dividends and return of capital upon
liquidation, dissolution or winding up of the Company or any other return of
capital or distribution of the assets of the Company.
Class B Shares
Class B shares may be issued from time to time in one or more
series, and the directors may fix from time to time before such issue the number
of Class B shares of each series and the designation, rights and privileges
attached thereto including any voting rights, dividend rights, redemption,
purchase or conversion rights, sinking fund or other provisions. The Class B
shares rank in priority over Common Shares and any other shares ranking by their
terms junior to the Class B shares as to dividends and return of capital upon
liquidation, dissolution or winding up of the Company or any other return of
capital or distribution of the assets of the Company.
As of the date of this AIF, there are 960,962,079 Common Shares
issued and outstanding (1,047,416,780 fully-diluted). No class A Shares or Class
B Shares are issued or outstanding.
49
As of the date of this AIF, the dilutive securities are
summarized as follows:
|
Security Type
|
Common Shares
Issuable (#)
|
Exercise price
(average) ($)
|
Cash proceeds or
debt
reduction if exercised
($)
|
|
Warrants
(1)
|
23,019,275
|
7.96
|
183,327,931
|
|
Stock Options
|
42,824,768
|
5.65
|
241,803,305
|
|
Convertible Debentures
|
17,892,131
|
12.95
|
231,618,000
|
|
RSUs
|
2,718,527
|
N/A
|
N/A
|
Notes:
|
(1)
|
Details of warrants outstanding: (i) 89,107 common share
purchase warrants exercisable at a price of $2.81 until September 29,
2020; (ii) 6,448,077 common share purchase warrants exercisable at a price
of $4.00 until November 2, 2020; (iii) 633 common share purchase warrants
exercisable at a price of $3.00 until November 2, 2020; (iv) 10,136,199
common share purchase warrants exercisable at a price of $9.65 until
January 31, 2020; and (v) 6,345,259 common share purchase warrants
exercisable at a price of $9.3717 until August 9,
2023.
|
MARKET FOR SECURITIES
Trading Price and Volume
The Common Shares have been listed on the TSX under the trading
symbol “ACB” since July 24, 2017 and on the OTCQX since March 30, 2017 under the
trading symbol “ACBFF”. Prior to this the Common Shares were listed on the TSXV.
The following tables set forth information relating to the trading of the Common
Shares on the TSX and the TSXV for the months indicated.
Month
|
Price Range
($)
|
Total Volume (#)
|
|
High
|
Low
|
|
TSX-V
|
|
July 1 – 23, 2017
|
2.595
|
2.050
|
19,818,643
|
|
TSX
|
|
July 24 – 31, 2017
|
2.820
|
2.630
|
12,868,225
|
|
August 2017
|
2.710
|
2.350
|
18,947,860
|
|
September 2017
|
2.890
|
2.490
|
31,775,052
|
|
October 2017
|
3.19
|
2.65
|
80,450,988
|
|
November 2017
|
8.66
|
3.01
|
554,248,727
|
|
December 2017
|
10.52
|
6.31
|
254,972,431
|
|
January 2018
|
15.20
|
8.90
|
604,723,498
|
|
February 2018
|
12.55
|
7.11
|
365,286,690
|
|
March 2018
|
11.98
|
8.81
|
217,623,205
|
|
April 2018
|
9.34
|
6.75
|
226,335,287
|
|
May 2018
|
8.77
|
7.17
|
149,828,955
|
|
June 2018
|
10.72
|
8.02
|
243,442,800
|
50
Prior Sales
During the year ended June 30, 2018, the Company issued the
following securities, which are convertible into Common Shares but are not
listed or quoted on a marketplace:
|
Date of Issuance
|
Security
|
Number of
Securities
|
Issue/Exercise Price Per
Security ($)
|
|
August 8, 2017
|
Aurora Options
|
1,305,000
(1)
|
$2.39
|
|
September 29, 2017
|
Aurora Options
|
3,130,000
(2)
|
$2.76
|
|
November 13, 2017
|
Aurora Options
|
2,865,000
(3)
|
$4.64
|
|
December 7, 2017
|
Aurora Options
|
50,000
(4)
|
$7.00
|
|
December 14, 2017
|
Aurora Options
|
850,000
(4)
|
$7.00
|
|
December 15, 2017
|
Aurora Options
|
100,000
(5)
|
$7.10
|
|
December 21, 2017
|
Aurora Options
|
350,000
(6)
|
$7.03
|
|
January 2, 2018
|
Aurora Options
|
1,075,000
(4)
|
$9.60
|
|
January 10, 2018
|
Aurora Options
|
400,000
(4)
|
$13.63
|
|
January 12, 2018
|
Aurora Options
|
200,000
(4)
|
$12.24
|
|
January 15, 2018
|
Aurora Options
|
650,000
(4)
|
$10.32
|
|
January 22, 2018
|
Aurora Options
|
50,000
(4)
|
$10.32
|
|
January 31, 2018
|
Aurora Options
|
150,000
(4)
|
$11.50
|
|
February 2, 2018
|
Aurora Options
|
100,000
(4)
|
$10.22
|
|
February 7, 2018
|
Aurora Options
|
1,750,000
(7)
|
$11.53
|
|
February 8, 2018
|
Aurora Options
|
100,000
(4)
|
$11.15
|
|
February 13, 2018
|
Aurora Options
|
75,000
(4)
|
$11.31
|
|
February 19, 2018
|
Aurora Options
|
250,000
(4)
|
$10.13
|
|
February 26, 2018
|
Aurora Options
|
250,000
(4)
|
$10.57
|
|
March 5, 2018
|
Aurora Options
|
150,000
(4)
|
$10.63
|
|
March 7, 2018
|
Aurora Options
|
150,000
(4)
|
$11.74
|
|
March 13, 2018
|
Aurora Options
|
125,000
(4)
|
$11.65
|
|
March 19, 2018
|
Aurora Options
|
325,000
(4)
|
$10.95
|
|
March 21, 2018
|
Aurora Options
|
100,000
(4)
|
$10.30
|
|
March 28, 2018
|
Aurora Options
|
50,000
(4)
|
$9.53
|
|
March 29, 2018
|
Aurora Options
|
25,000
(4)
|
$9.03
|
|
April 3, 2018
|
Aurora Options
|
100,000
(4)
|
$9.07
|
|
April 9, 2018
|
Aurora Options
|
250,000
(4)
|
$8.10
|
|
April 12, 2018
|
Aurora Options
|
100,000
(4)
|
$7.93
|
|
April 17, 2018
|
Aurora Options
|
50,000
(4)
|
$8.93
|
|
April 23, 2018
|
Aurora Options
|
100,000
(4)
|
$8.61
|
|
April 24, 2018
|
Aurora Options
|
50,000
(4)
|
$8.02
|
|
April 25, 2018
|
Aurora Options
|
100,000
(4)
|
$8.24
|
|
April 27, 2018
|
Aurora Options
|
100,000
(4)
|
$7.72
|
51
|
Date of Issuance
|
Security
|
Number of
Securities
|
Issue/Exercise Price Per
Security ($)
|
|
May 3, 2018
|
Aurora Options
|
350,000
(8)
|
$7.95
|
|
May 7, 2018
|
Aurora Options
|
50,000
(4)
|
$8.03
|
|
May 10, 2018
|
Aurora Options
|
100,000
(4)
|
$8.03
|
|
May 11, 2018
|
Aurora Options
|
175,000
(4)
|
$7.96
|
|
May 14, 2018
|
Aurora Options
|
455,000
(4)
|
$8.07
|
|
May 18, 2018
|
Aurora Options
|
200,000
(4)
|
$7.20
|
|
May 22, 2018
|
Aurora Options
|
100,000
(4)
|
$7.92
|
|
May 23, 2018
|
Aurora Options
|
275,000
(4)
|
$8.38
|
|
May 28, 2018
|
Aurora Options
|
125,000
(4)
|
$8.02
|
|
May 30, 2018
|
Aurora Options
|
50,000
(4)
|
$8.14
|
|
May 31, 2018
|
Aurora Options
|
150,000
(4)
|
$8.18
|
|
June 5, 2018
|
Aurora Options
|
350,000
(4)
|
$8.71
|
|
June 6, 2018
|
Aurora Options
|
225,000
(4)
|
$8.71
|
|
June 8, 2018
|
Aurora Options
|
50,000
(4)
|
$9.64
|
|
June 14, 2018
|
Aurora Options
|
50,000
(4)
|
$9.02
|
|
June 15, 2018
|
Aurora Options
|
100,000
(4)
|
$8.98
|
|
June 25, 2018
|
Aurora Options
|
100,000
(4)
|
$9.99
|
|
June 28, 2018
|
Aurora Options
|
50,000
(4)
|
$8.96
|
|
June 29, 2018
|
Aurora Options
|
100,000
(4)
|
$9.41
|
|
September 29, 2017
|
Aurora Warrants
|
89,107
(9)
|
$2.81
|
|
October 10, 2017
|
Aurora Warrants
|
582,890
(10)
|
$3.00
|
|
November 2, 2017
|
Aurora Warrants
|
25,000,000
(11)
|
$4.00
|
|
November 2, 2017
|
Aurora Warrants
|
1,333,980
(12)
|
$3.00
|
|
January 12, 2018
|
Aurora Debentures
|
17,692,308
(13)
|
$6.50
|
|
March 9, 2018
|
Aurora Debentures
|
17,624,521
(14)
|
$13.05
|
Notes:
|
(1)
|
Of these options, 1,085,000 remain outstanding as at the
date hereof.
|
|
(2)
|
Of these options, 2,843,086 remain outstanding as at the
date hereof.
|
|
(3)
|
Of these options, 2,655,001 remain outstanding as at the
date hereof.
|
|
(4)
|
All of these options remain outstanding as at the date
hereof.
|
|
(5)
|
Of these options, 94,000 remain outstanding as at the
date hereof.
|
|
(6)
|
Of these options, 337,834 remain outstanding as at the
date hereof.
|
|
(7)
|
Of these options, 1,650,000 remain outstanding as of the
date hereof.
|
|
(8)
|
Of these options, 341,667 remain outstanding as of the
date hereof.
|
|
(9)
|
All of these warrants remain outstanding as at the date
hereof.
|
|
(10)
|
As of the date hereof all of these warrants have been
exercised.
|
|
(11)
|
Of these warrants, 6,448,077 remain outstanding as of the
date hereof.
|
|
(12)
|
Of these warrants 633 remain outstanding as of the date
hereof.
|
|
(13)
|
As of the date hereof, $1,860,000 principal amount of
these debenture are convertible into Common Shares.
|
|
(14)
|
As of the date hereof, $229,758,000 principal amount of
these debenture are convertible into Common
Shares.
|
52
Subsequent to the financial year ended June 30, 2018, the
Company issued the following securities convertible into Common Shares but are
not listed or quoted on a marketplace:
|
Date of Issuance
|
Security
|
Number of
Securities
|
Issue/Exercise Price
Per Security ($)
|
|
July 4, 2018
|
Stock options
|
150,000
(1)
|
$9.28
|
|
July 12, 2018
|
Stock options
|
236,000
(1)
|
$9.03
|
|
July 13, 2018
|
Stock options
|
50,000
(1)
|
$8.93
|
|
July 17, 2018
|
Stock options
|
65,000
(1)
|
$8.06
|
|
July 19, 2018
|
Stock options
|
340,000
(1)
|
$7.96
|
|
July 20, 2018
|
Stock options
|
140,000
(1)
|
$7.68
|
|
July 24, 2018
|
Stock options
|
80,000
(1)
|
$7.70
|
|
July 26, 2018
|
Stock options
|
11,404,830
(2)(3)
|
$2.66
|
|
July 26, 2018
|
Stock options
|
328,896
(2)
|
$5.45
|
|
July 26, 2018
|
Stock options
|
436,144
(2)
|
$4.79
|
|
July 26, 2018
|
Stock options
|
580,489
(2)(4)
|
$8.28
|
|
July 26, 2018
|
Stock options
|
80,000
(1)
|
$6.94
|
|
July 31, 2018
|
Stock options
|
180,000
(1)
|
$6.81
|
|
August 3, 2018
|
Stock options
|
364,650
(2)
|
$4.78
|
|
August 3, 2018
|
Stock options
|
918,775
(2)
|
$5.44
|
|
August 3, 2018
|
Stock options
|
5,547,000
(1)
|
$7.39
|
|
August 7, 2018
|
Stock options
|
160,000
(1)
|
$6.54
|
|
August 13, 2018
|
Stock options
|
130,000
(1)
|
$6.09
|
|
August 20, 2018
|
Stock options
|
160,000
(1)
|
$6.50
|
|
August 21, 2018
|
Stock options
|
70,000
(1)
|
$7.61
|
|
August 24, 2018
|
Stock options
|
10,000
(1)
|
$8.03
|
|
August 27, 2018
|
Stock options
|
25,000
(1)
|
$8.59
|
|
August 31, 2018
|
Stock options
|
40,000
(1)
|
$8.79
|
|
September 14, 2018
|
Stock options
|
240,000
(1)
|
$8.30
|
|
September 17, 2018
|
Stock options
|
1,125,000
(1)
|
$8.54
|
|
July 25, 2018
|
Warrants
|
10,278,125
(2)
|
$9.65
|
|
August 8, 2018
|
Warrants
|
6,358,210
(5)
|
$9.3717
|
Notes:
|
(1)
|
All of these options remain outstanding as at the date
hereof.
|
|
(2)
|
Issued in connection with the acquisition of
MedReleaf.
|
|
(3)
|
Of these options, 4,103,079 remain outstanding as of the
date hereof.
|
|
(4)
|
Of these options, 516,139 remain outstanding as of the
date hereof.
|
|
(5)
|
Issued in connection with the acquisition of
Anandia.
|
53
ESCROWED SECURITIES
The following table includes the balance of escrowed securities
as at June 30, 2018:
|
Designation of Class
|
Number of Securities held in Escrow
(1)
|
Percentage of Class
(2)
|
|
Common Shares
|
2,822,512
|
0.5%
|
|
Options
|
Nil
|
Nil
|
|
Warrants
|
Nil
|
Nil
|
As of the date of this AIF, there were 1,560,710 Common Shares
held in escrow.
Notes:
|
(1)
|
Pursuant to an escrow agreement dated November 30, 2017,
3,060,556 Common Shares were deposited into escrow with respect to the
acquisition of H2. The escrowed common shares are to be released upon
achievement of certain milestones relating to the completion of
construction of a production facility and receipt of relevant licenses to
cultivate and sell medical cannabis.
|
|
(2)
|
Based on 568,113,131 Common Shares issued and outstanding
as at June 30, 2018.
|
DIRECTORS AND OFFICERS
Name, Occupation and Security Holding
The following table sets forth information regarding our
directors and executive officers. Each of the directors is elected to hold
office until the next annual meeting of the Company or until a successor is duly
elected or appointed.
Name, Province or State
and Country
of
Residence
|
Positions with
Aurora
|
Date of
Appointment
|
Principal Occupation Within the Past
Five
Years
(1)
|
Michael Singer
(2)(3)(4)
Montreal, Quebec
Canada
|
Chairman of
the Board and
Independent
Director
|
May 20, 2016
|
Chairman of the Board and Director of Aurora; Chartered
Professional Accountant (CPA, CGA), Consultant and Entrepreneur; CFO of
Clementia Pharmaceuticals Inc. from May 2015 to August 2018; CFO of
Bedrocan Cannabis Corp. from May 2014 to June 2015; and CFO of Thallion
Pharmaceuticals Inc. from March 2007 to August 2013.
|
Terry Booth
(4)
Edmonton, Alberta
Canada
|
Chief Executive
Officer and
Director
|
December 9, 2014
|
Chief Executive Officer and Director of Aurora; President
and part owner of Superior Safety Codes Inc.
|
Steve Dobler
(3)
Calgary, Alberta
Canada
|
President and
Director
|
December 9, 2014
|
President and Director of Aurora; Professional Engineer;
Vice President and part owner of Superior Safety Codes Inc.; President of
ICC Enterprises Corp. since May 2002.
|
Jason R.B. Dyck
(2)(4)
Sherwood Park, Alberta
Canada
|
Director
|
March 9, 2015
|
Director of Aurora; Professor, Department of Pediatrics,
University of Alberta since July 1999; and Vice-President, Metabolic
Modulators Research Ltd. since July 1999.
|
54
Adam K. Szweras
(2)(3)(4)
Toronto,
Ontario
Canada
|
Director
|
August 10, 2015
|
Director of Aurora; Barrister & Solicitor; Partner at
Fogler, Rubinoff LLP since February 2006; and Chairman of Foundation
Markets Inc. since December 2005.
|
Diane Jang
Director
British Columbia,
Canada
|
Director
|
November 13, 2017
|
Director of Aurora; Business Consultant; President,
Sunrise Soya Foods Inc. (from October 2015 to December 2016; General
Manager, Dairy Alternatives, Earth’s Own Food Company Inc. from May 2008
to 2015; General Manager, International, SoyaWorld Inc. from 2006 to 2008;
Director of Sales, SoyaWorld Inc., from 1998 to 2006; Sales and Marketing
Manager, Sunrise Soya Foods, from 1992 to 1998.
|
Norma Beauchamp
Director
Ontario, Canada
|
Independent
Director
|
July 25, 2018
|
Director of MedReleaf Corp., Board of Director, Acerus
Pharma and Eve Medical; Past President and CEO, Cystic Fibrosis Canada;
Past SVP Pharmaceuticals, Bayer Canada; Past VP, Global Strategic
Marketing, Gynecology and Andrology, Bayer AG.
|
Ronald Funk
Director
Ontario, Canada
|
Independent
Director
|
July 25, 2018
|
Director of MedReleaf Corp. and Consultant. Chairman of
the Board of Carey Management Inc.
|
Glen Ibbott
Vancouver, British
Columbia
Canada
|
Chief Financial
Officer
|
May 8, 2017
|
Chief Financial Officer of Aurora; Chartered Professional
Accountant (CPA, CA) and Certified Public Accountant; CFO of QLT Inc. from
January 2015 to April 2017; Vice President of Finance of Nordion Inc.
August 2010 to Dec 2014.
|
Cameron Battley
Toronto, Ontario
Canada
|
Chief
Corporate
Officer
|
November 7, 2016
|
Chief Corporate Officer of Aurora; President of Health
Strategy Group Inc. from January 1998 to March 2016.
|
Allan Cleiren
Edmonton, Alberta
Canada
|
Chief
Operating
Officer
|
May 22, 2017
|
Chief Operating Officer of Aurora; Chartered Professional
Accountant (CPA, CA); COO of Jardine Lloyd Thompson Canada Inc. from June
2016 to June 2017; Executive Vice-President of Universal Rail Systems
Inc., from April 2012 to February 2016.
|
55
Neil Belot
Vancouver, British
Columbia
Canada
|
Chief Global
Business
Development
Officer
|
March 21, 2017
|
Chief Global Business Development Officer of Aurora;
Chief Brand Officer at Aurora from September 8, 2015 to March 20, 2017;
Executive Director of Canadian Medical Cannabis Industry Association from
November 2014 to September 2015; Gas Portfolio & Energy Services
Manager of Housing Services Corp. from September 2012 to September 2014.
|
Darryl Vleeming
Edmonton, Alberta
Canada
|
Chief
Information
Officer
|
November 2, 2017
|
Chief Information Officer of Aurora; Vice- President, IS
and Chief Information Officer at Capital Power Corporation (2013 to 2017)
|
Nilda Rivera
Vancouver, British
Columbia
Canada
|
Vice President,
Finance
|
August 1, 2017
|
Vice President, Finance of Aurora; Controller of Aurora
from August 2015 to July 31, 2017; and CFO of Avarone Metals Inc. from
June 2010 to August 2015.
|
Corporate
Secretary
|
September 8, 2015
|
Jillian Swainson
Edmonton, Alberta
Canada
|
Senior Vice
President and
General
Counsel
|
January 15, 2018
|
Senior Vice President and General Counsel of Aurora; and
Partner at Brownlee LLP
|
Andre Jerome
Lachute, Quebec
Canada
|
Senior Vice
President,
Business
Integration
|
February 22, 2018
|
Senior Vice President, Business Integration of Aurora;
CEO and Co-Founder of H2 Biopharma Inc. from September 2014 to February
2018
|
Savior Joseph
Halifax, Nova Scotia
Canada
|
Senior Vice
President,
Global
Marketing
|
February 1, 2018
|
Senior Vice President, Global Marketing at Aurora;
President at Colour from January 2017 to January 2018; Managing Partner at
Colour from November 2011 to January 2017.
|
Debra Wilson
Edmonton, Alberta
Canada
|
Chief Human
Resources
Officer
|
June 22, 2017
|
Chief Human Resources Officer of Aurora; Vice President,
Human Resources of Aurora, June 2017 to August 2018; Instructor at
Northern Alberta Institute of Technology, August 2016 to July 2017;
Director of HR of Universal Rail from October 2013 to March 2016; VP of HR
& OD of Alberta Pensions Services from January 2011 to October 2016.
|
Nick Whitehead
Vancouver, British
Columbia
Canada
|
Vice President,
Market
Development
|
August 1, 2017
|
Vice President, Market Development of Aurora; Manager of
Public Affairs at Aurora from January 2016 to July 2017; Director of
Organizing for Sensible BC Campaign January 2013 to January 2016; Junior
Transportation Planner at McCormick-Rankin Corporation May 2012 to
September 2012.
|
56
Dieter MacPherson
Victoria, British
Columbia
Canada
|
Vice President,
Production
|
August 1, 2017
|
Vice President, Production at Aurora; Manager of
Production at Aurora from February 2017 to July 31, 2017; General Manager
at Trees Dispensary from February 2015 to January 2017; Executive Director
at Victoria Cannabis Buyers Club from March 2013 to February 2015; Shift
Manager at Victoria Cannabis Buyers Club from January 2012 to March 2013.
|
Thomas Larssen
Toronto, Ontario
Canada
|
President of
Aurora Larssen
Projects
Ltd.
|
December 4, 2017
|
President of Larssen Ltd.
|
Notes:
|
(1)
|
The information as to the principal occupation, business
or employment is not within the knowledge of the Company and has been
furnished by the respective director.
|
|
(2)
|
Member of the Audit Committee
|
|
(3)
|
Member of the Compensation Committee
|
|
(4)
|
Member of the Nominating and Corporate Governance
Committee
|
As of the date of the AIF, our directors and executive
officers, as a group, beneficially owned, directly or indirectly, or exercised
control or direction over 36,279,129 Common Shares, representing approximately
3.78% of the issued and outstanding Common Shares. The statement as to the
number of Common Shares beneficially owned directly or indirectly, or over which
control or direction is exercised by the directors and executive officers of the
Company as a group is based upon information furnished by the directors and
executive officers.
Cease Trade Orders, Bankruptcies, Penalties or Sanctions
Except as disclosed below, no director or executive officer of
the Company is, as at the date of this AIF, or has been within 10 years before
the date of this AIF, a director, chief executive officer or chief financial
officer of any company (including the Company), that:
|
|
(a)
|
was subject to a cease trade order, an order similar to a
cease trade order, or an order that denied the relevant company access to
any exemption under securities legislation, that was in effect for a
period of more than 30 consecutive days, that was issued while the
director or executive officer was acting in the capacity as director,
chief executive officer or chief financial officer, or
|
|
|
|
|
|
|
(b)
|
was subject to a cease trade order, an order similar to a
cease trade order, or an order that denied the relevant company access to
any exemption under securities legislation, that was in effect for a
period of more than 30 consecutive days, that was issued after the
director or executive officer ceased to be a director, chief executive
officer or chief financial officer and which resulted from an event that
occurred while that person was acting in the capacity as director, chief
executive officer or chief financial officer.
|
Adam Szweras was a director and secretary of Bassett Media
Group Corp. (“Bassett”), a TSX-V listed company, until March 16, 2010. Bassett
has been subject to a cease trade order since June 16, 2010 due to not filing
its financial statements and management’s discussion and analysis pursuant to NI
51-102.
57
No director or executive officer of the Company, nor a
shareholder holding a sufficient number of securities of the Company to affect
materially the control of the Company:
|
|
(a)
|
is, as at the date of this AIF, or has been within 10
years before the date of this AIF, a director or executive officer of any
company (including the Company) that, while that person was acting in that
capacity, or within a year of that person ceasing to act in that capacity,
became bankrupt, made a proposal under any legislation relating to
bankruptcy or insolvency or was subject to or instituted any proceedings,
arrangement or compromise with creditors or had a receiver, receiver
manager or trustee appointed to hold its assets; or
|
|
|
|
|
|
|
(b)
|
has, within 10 years before the date of this AIF, become
bankrupt, made a proposal under any legislation relating to bankruptcy or
insolvency, or become subject to or instituted any proceedings,
arrangement or compromise with creditors, or had a receiver, receiver
manager or trustee appointed to hold the assets of the proposed
director.
|
No director or executive officer of the Company has been
subject to:
|
|
(a)
|
any penalties or sanctions imposed by a court relating to
securities legislation or by a securities regulatory authority or has
entered into a settlement agreement with a securities regulatory
authority; or
|
|
|
|
|
|
|
(b)
|
any other penalties or sanctions imposed by a court or
regulatory body that would likely be considered important to a reasonable
security holder in deciding whether to vote for a proposed
director.
|
Conflicts of Interest
The Company’s directors and officers may serve as directors or
officers, or may be associated with, other reporting companies, or have
significant shareholdings in other public companies. To the extent that such
other companies may participate in business or asset acquisitions, dispositions,
or ventures in which the Company may participate, the directors and officers of
the Company may have a conflict of interest in negotiating and concluding terms
respecting the transaction. If a conflict of interest arises, the Company will
follow the provisions of the BCBCA dealing with conflict of interest. These
provisions state that where a director has such a conflict, that director must,
at a meeting of the Company’s directors, disclose his or her interest and
refrain from voting on the matter unless otherwise permitted by the BCBCA. In
accordance with the laws of the Province of British Columbia, the directors and
officers of the Company are required to act honestly, in good faith, and the
best interest of the Company.
58
LEGAL PROCEEDINGS
During the financial year ended June 30, 2018, other than as
described below, there are no legal proceedings to which the Company is a party
to or to which any of its property is subject outside of the ordinary course of
the Company’s business, and no such proceedings are known to the Company to be
contemplated.
On November 29, 2017, a claim was commenced against the Company
regarding 300,000 stock options with an exercise price of $0.39 per share issued
to a consultant pursuant to an agreement dated March 16, 2015. The agreement was
terminated on March 8, 2016, and in accordance to the Company’s stock option
plan, the unexercised options expired 90 days from the date of the termination
of the agreement. The option holder is attempting to enforce exercise rights
which the Company believes do not exist. The Company believes the action to be
without merit and intends to defend this claim vigorously. Due to the
uncertainty of timing and the amount of estimated future cash outflows relating
to this claim, no provision had been recognized.
INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
Other than as disclosed elsewhere in this AIF and in the
consolidated financial statements of the Company for the year ended June 30,
2018, to the best of the Company’s knowledge, none of the directors or executive
officers of the Company, or any shareholders who beneficially own, control or
direct, directly or indirectly, more than 10% of the Company’s outstanding
Common Shares, or any known associates or affiliates of such persons, had any
material interests, direct or indirect, in any transaction within the three most
recently completed financial years or during the current year that has
materially affected or is reasonably expected to materially affect the Company.
TRANSFER AGENT AND REGISTRARS
The Company’s Registrar and Transfer Agent is Computershare
Investor Services Inc., located at 510 Burrard Street, 2
nd
Floor,
Vancouver, British Columbia V6C 3B9.
MATERIAL CONTRACTS
Except for contracts entered into in the ordinary course of
business, the only contracts entered into by the Company during the 12-month
period ended June 30, 2018 which are material or entered into before the
12-month period ended June 30, 2018, but are still in effect and which are
required to be filed with Canadian securities regulatory authorities in
accordance with Section 12.2 of National Instrument 51-102 – Continuous
Disclosure Obligations are the following:
|
|
(a)
|
the drawdown equity facility agreement dated July 13,
2016 (see “
General Development of the Business
–
Three
Year History
–
Developments during the Financial Year ended
June 30, 2017
”);
|
|
|
|
|
|
|
(b)
|
the acquisition of CanvasRx on August 17, 2016 (see
“
General Development of the Business
–
Three Year History
–
Developments during the Financial Year ended June 30,
2017
”);
|
|
|
|
|
|
|
(c)
|
the Master Services Agreement with Radient (see
“
General Development of the Business
–
Three Year History
–
Developments during the Financial Year ended June 30,
2018
”).
|
59
|
|
(d)
|
the investment in Hempco (see “
General Development of
the Business
–
Three Year History
–
Developments during the Financial Year ended June 30, 2018
”);
|
|
|
|
|
|
|
(e)
|
the investment in Aurora Nordic (see “
General
Development of the Business
–
Three Year
History
–
Developments during the Financial Year ended June 30,
2018
”);
|
|
|
|
|
|
|
(f)
|
the investment in TGOD (see “
General Development of
the Business
–
Three Year History
–
Developments during the Financial Year ended June 30, 2018
”);
|
|
|
|
|
|
|
(g)
|
the investment in Alcanna (see “
General Development of
the Business
–
Three Year History
–
Developments during the Financial Year ended June 30, 2018
”);
|
|
|
|
|
|
|
(h)
|
the acquisition of CanniMed on May 1, 2018 (see
“
General Development of the Business
–
Three Year History
–
Developments during the Financial Year ended June 30,
2018
”) ;
|
|
|
|
|
|
|
(i)
|
the acquisition of MedReleaf on July 25, 2018 (see
“
General Development of the Business
–
Three Year History
–
Developments Subsequent to the Financial Year ended June
30,
2018
”);
|
|
|
|
|
|
|
(j)
|
the acquisition of Anandia on August 8, 2018 (see
“
General Development of the Business
–
Three Year History
–
Developments Subsequent to the Financial Year ended June
30,
2018
”); and
|
|
|
|
|
|
|
(k)
|
the $200 million debt facility, with a potential upsize
to $250 million, with the Bank of Montreal (see “
General Development of
the Business
–
Three Year History
–
Developments
Subsequent to the Financial Year ended June 30,
2018
”);
|
|
|
|
|
|
|
(l)
|
the acquisition of ICC (see “
General Development of
the Business
–
Three Year History
–
Developments Subsequent to the Financial Year ended June 30, 2018
”)
|
INTEREST OF EXPERTS
Name of Experts
The following are the persons or companies who were named as
having prepared or certified a statement, report or valuation in this AIF either
directly or in a document incorporated by reference and whose profession or
business gives authority to the statement, report or valuation made by the
person or company:
MNP LLP, the Company’s independent auditors, has prepared an
independent audit report dated September 24, 2018 in respect of the Company’s
audited consolidated financial statements for the years ended June 30, 2018 and
2017.
Interests of Experts
MNP LLP, auditors of the Company, have confirmed that they are
independent of the Company within the meaning of the ‘Rules of Professional
Conduct’ of the Chartered Professional Accountants of British Columbia.
60
AUDIT COMMITTEE
The Company’s audit committee has various responsibilities as
set forth in NI 52-110 made under securities legislation, concerning
constitution of its audit committee and its relationship with its independent
auditor and among such responsibilities being a requirement that the audit
committee establish a written charter that sets out its responsibilities.
Composition of the Audit Committee
At the present time, the Company’s Audit Committee is composed
of the following members:
|
Member
|
Independent/Not
Independent
(1)
|
Financially
Literate/
Not Financially Literate
(2)
|
Relevant Education and Experience
|
|
Michael Singer Chair
|
Independent
|
Financially Literate
|
Mr. Singer is a CPA. He was CFO of Clementia
Pharmaceuticals Inc., a public company listed on the NASDAQ, from May 2015
to August 2018. He previously served as a director, CFO and audit
committee member for other publicly traded companies.
|
|
Adam Szweras
|
Independent
|
Financially Literate
|
Mr. Szweras, LLB, is a partner at Fogler, Rubinoff LLP.
He is currently Chairman of a merchant bank and serves as a director
and/or officer and audit committee member for other publicly traded
companies.
|
|
Ronald Funk
|
Independent
|
Financially Literate
|
Director of MedReleaf Corp. and Consultant. Chairman of
the Board of Carey Management Inc.
|
Notes:
|
(1)
|
A member of an audit committee is independent if the
member has no direct or indirect material relationship with the Company
that could, in the view of the Board, reasonably interfere with the
exercise of a member’s independent judgment.
|
|
(2)
|
An individual is financially literate if he has the
ability to read and understand a set of financial statements that present
a breadth of complexity of accounting issues that are generally comparable
to the breadth and complexity of the issues that can reasonably be
expected to be raised by the Company’s financial
statements.
|
Audit Committee Charter
A copy of the charter of the audit committee is available as
Schedule “A” to this AIF.
Audit Committee Oversight
The Audit Committee has not made any recommendations to the
Board to nominate or compensate any auditor other than MNP for the fiscal year
ended June 30, 2018.
61
Reliance on Certain Exemptions
At no time has the Company relied on an exemption from NI
52-110, in whole or in part, granted under Part 8 of NI 52-110.
Pre-Approval Policies and Procedures
The Audit Committee has not adopted specific policies and
procedures for the engagement of non-audit services, other than as set out in
the audit committee charter.
External Auditor Service Fees (By Category)
The Audit Committee has reviewed the nature and amount of the
audit services provided by MNP to the Company to ensure auditor independence.
The aggregate fees billed by the Company’s external auditor during the financial
years ended June 30, 2018 and June 30, 2017 were as follows:
|
Financial Period
Ending
|
Audit Fees ($)
(1)
|
Audit Related Fees
($)
(2)
|
Tax Fees ($)
(3)
|
All Other Fees ($)
(4)
|
|
2018
(5)
|
350,000
|
204,616
|
8,988
|
13,717
|
|
2017
|
86,000
|
73,268
|
6,699
|
7,610
|
|
(1)
|
“Audit Fees” includes fees for the performance of the
annual audit and for accounting consultations on matters reflected in the
financial statements.
|
|
(2)
|
“Audit-Related Fees” includes fees for assurance and
related services that are related to the performance of the review of the
financial statements including fees for Annual Information Form and
“earn-in” audit work and are not reported under (1).
|
|
(3)
|
“Tax Fees” includes fees for tax compliance, tax planning
and tax advice.
|
|
(4)
|
“All Other Fees” includes fees on consultations on
acquisition related matters.
|
|
(5)
|
2018 external auditor fees are estimates as the final
invoices have not yet been received.
|
ADDITIONAL INFORMATION
Additional information relating to the Company is available
under the Company’s profile on SEDAR at www.sedar.com.
Additional information, including directors’ and officers’
remuneration and indebtedness, principal holders of the Company’s securities,
and securities authorized for issuance under the Company’s equity compensation
plans, as applicable, is contained in the Company’s Management Information
Circular for its most recent Annual General Meeting.
Additional financial information is provided in the Company’s
Audited Consolidated Financial Statements and Management’s Discussion and
Analysis for the year ended June 30, 2018 which may be obtained upon request
from Aurora’s head office, or may be viewed on the Company’s website
(www.auroramj.com) or on the SEDAR website (www.sedar.com).
62
SCHEDULE “A”
AUDIT COMMITTEE CHARTER
Article 1
–
Mandate and Responsibilities
The Audit Committee is appointed by the Board to oversee the
accounting and financial reporting process of the Company and audits of the
financial statements of the Company. The
Audit Committee’s primary duties and responsibilities are
to:
|
|
(a)
|
recommend to the Board the external auditor to be
nominated for the purpose of preparing or issuing an auditor’s report or
performing other audit, review or attest services for the
Company;
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(b)
|
recommend to the Board the compensation of the external
auditor;
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(c)
|
oversee the work of the external auditor engaged for the
purpose of preparing or issuing an auditor’s report or performing other
audit, review or attest services for the
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Company, including the resolution of disagreements
between management and the external auditor regarding financial
reporting;
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(d)
|
pre-approve all non-audit services to be provided to the
Company or its subsidiaries by the Company’s external auditor;
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(e)
|
review the Company’s financial statements, MD&A and
annual and interim earnings press releases before the Company publicly
discloses this information;
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(f)
|
be satisfied that adequate procedures are in place for
the review of all other public disclosure of financial information
extracted or derived from the Company’s financial statements, and to
periodically assess the adequacy of those procedures;
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(g)
|
establish procedures for:
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|
(i)
|
the receipt, retention and treatment of complaints
received by the Company regarding accounting, internal accounting controls
or auditing matters; and
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(ii)
|
the confidential, anonymous submission by employees of
the Company of concerns regarding questionable accounting or auditing
matters; and
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(h)
|
review and approve the Company’s hiring policies
regarding partners, employees and former partners and employees of the
present and former external auditor of the
Company.
|
The Board and management will ensure that the Audit Committee
has adequate funding to fulfill its duties and responsibilities.
Article 2
–
Pre-Approval of Non-Audit Services
The Audit Committee may delegate to one or more of its members
the authority to pre-approve non-audit services to be provided to the Company or
its subsidiaries by the Company’s external auditor. The pre-approval of
non-audit services must be presented to the Audit Committee at its first
scheduled meeting following such pre-approval.
63
The Audit Committee may satisfy its duty to pre-approve
non-audit services by adopting specific policies and procedures for the
engagement of the non-audit services, provided the policies and procedures are
detailed as to the particular service, the Audit Committee is informed of each
non-audit service and the procedures do not include delegation of the Audit
Committee’s responsibilities to management.
Article 3
–
External Advisors
The Audit Committee has the authority to conduct any
investigation appropriate to fulfilling its responsibilities, and it has direct
access to the external auditors as well as anyone in the organization. The Audit
Committee has the ability to retain, at the Company’s expense, special legal,
accounting or other consultants or experts it deems necessary in the performance
of its duties.
Article 4
–
External Auditors
The external auditors are ultimately accountable to the Audit
Committee and the Board, as representatives of the shareholders. The external
auditors will report directly to the Audit Committee. The Audit Committee will:
|
|
(a)
|
review the independence and performance of the external
auditors and annually recommend to the Board the nomination of the
external auditors or approve any discharge of external auditors when
circumstances warrant;
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(b)
|
approve the fees and other significant compensation to be
paid to the external auditors;
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(c)
|
on an annual basis, review and discuss with the external
auditors all significant relationships they have with the Company that
could impair the external auditors’ independence;
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(d)
|
review the external auditors’ audit plan to see that it
is sufficiently detailed and covers any significant areas of concern that
the Audit Committee may have;
|
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(e)
|
before or after the financial statements are issued,
discuss certain matters required to be communicated to audit committees in
accordance with the standards established by the Canadian Institute of
Chartered Accountants;
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(f)
|
consider the external auditors’ judgments about the
quality and appropriateness of the Company’s accounting principles as
applied in the Company’s financial reporting;
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(g)
|
resolve any disagreements between management and the
external auditors regarding financial reporting;
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(h)
|
approve in advance all audit services and any
non-prohibited non-audit services to be undertaken by the external
auditors for the Company; and
|
64
|
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(i)
|
receive from the external auditors timely reports
of:
|
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|
(i)
|
all critical accounting policies and practises to be
used;
|
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|
|
|
(ii)
|
all alternative treatments of financial information
within generally accepted accounting principles that have been discussed
with management, ramifications of the use of such alternative disclosures
and treatments and the treatment preferred by the external auditors;
and
|
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(iii)
|
other material written communications between the
external auditors and management.
|
Article 5
–
Legal Compliance
On at least an annual basis, the Audit Committee will review
with the Company’s legal counsel any legal matters that could have a significant
impact on the organization’s financial statements, the Company’s compliance with
applicable laws and regulations and inquiries received from regulators or
governmental agencies.
Article 6 - Complaints
Individuals are strongly encouraged to approach a member of the
Audit Committee with any complaints or concerns regarding accounting, internal
accounting controls or auditing matters. The Audit Committee will from time to
time establish procedures for the submission, receipt and treatment of such
complaints and concerns. In all cases the Audit Committee will conduct a prompt,
thorough and fair examination, document the situation and, if appropriate,
recommend to the Board appropriate corrective action.
To the extent practicable, all complaints will be kept
confidential. The Company will not condone any retaliation for a complaint made
in good faith.
65
FORM 52-109F1
CERTIFICATION OF ANNUAL FILINGS
FULL CERTIFICATE
I, Glen Ibbott, Chief Financial Officer of Aurora Cannabis
Inc., certify the following:
1.
Review:
I have reviewed the AIF, if any,
annual financial statements and annual MD&A, including, for greater
certainty, all documents and information that are incorporated by reference in
the AIF (together, the “annual filings”) of Aurora Cannabis Inc. (the “issuer”)
for the financial year ended
June 30, 2018
2.
No misrepresentations:
Based on my knowledge,
having exercised reasonable diligence, the annual filings do not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated or that is necessary to make a statement not misleading in light of
the circumstances under which it was made, for the period covered by the annual
filings.
3.
Fair presentation:
Based on my knowledge,
having exercised reasonable diligence, the annual financial statements together
with the other financial information included in the annual filings fairly
present in all material respects the financial condition, financial performance
and cash flows of the issuer, as of the date of and for the periods presented in
the annual filings.
4.
Responsibility:
The issuer’s other certifying
officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (DC&P) and internal control over financial reporting
(ICFR), as those terms are defined in National Instrument 52-109
Certification of Disclosure in Issuers’ Annual and Interim Filings
, for
the issuer.
5.
Design:
Subject to the limitations, if any,
described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s)
and I have, as at the financial year end
|
A.
|
designed DC&P, or caused it to be designed under our
supervision, to provide reasonable assurance
that
|
|
|
I.
|
material information relating to the issuer is made known
to us by others, particularly during the period in which the annual
filings are being prepared; and
|
|
|
|
|
|
|
II.
|
information required to be disclosed by the issuer in its
annual filings, interim filings or other reports filed or submitted by it
under securities legislation is recorded, processed, summarized and
reported within the time periods specified in securities legislation;
and
|
|
B.
|
designed ICFR, or caused it to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with the issuer’s
GAAP.
|
5.1
Control framework:
The control framework the
issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is
the Internal Control – Integrated Framework (COSO Framework 2013) published by
The Committee of Sponsoring Organization of the Treadway Commission (COSO).
|
5.2
|
ICFR – material weakness relating to design:
N/A
|
|
|
|
|
5.3
|
Limitation on scope of design:
The issuer
has disclosed in its annual MD&A
|
|
A.
|
the fact that the issuer’s other certifying officer(s)
and I have limited the scope of our design of DC&P and ICFR to exclude
controls, policies and procedures of
|
|
|
I.
|
N/A
|
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II.
|
N/A
|
|
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|
|
|
III.
|
a business that the issuer acquired not more than 365
days before the issuer’s financial year end;
and
|
|
B.
|
summary financial information about the proportionately
consolidated entity, special purpose entity or business that the issuer
acquired that has been proportionately consolidated or consolidated in the
issuer’s financial statements.
|
6.
Evaluation:
The issuer’s other certifying
officer(s) and I have
|
A.
|
evaluated, or caused to be evaluated under our
supervision, the effectiveness of the issuer’s DC&P at the financial
year end and the issuer has disclosed in its annual MD&A our
conclusions about the effectiveness of DC&P at the financial year end
based on that evaluation; and
|
|
|
|
|
B.
|
evaluated, or caused to be evaluated under our
supervision, the effectiveness of the issuer’s ICFR at the financial year
end and the issuer has disclosed in its annual
MD&A
|
|
|
I.
|
our conclusions about the effectiveness of ICFR at the
financial year end based on that evaluation; and
|
|
|
|
|
|
|
II.
|
N/A
|
7.
Reporting changes in ICFR:
The issuer has
disclosed in its annual MD&A any change in the issuer’s ICFR that occurred
during the period beginning on
April 1, 2018
and ended on
June 30,
2018
that has materially affected, or is reasonably likely to materially
affect, the issuer’s ICFR.
8.
Reporting to the issuer’s auditors and board of
directors or audit committee:
The issuer’s other certifying officer(s)
and I have disclosed, based on our most recent evaluation of ICFR, to the
issuer’s auditors, and the board of directors or the audit committee of the
board of directors any fraud that involves management or other employees who
have a significant role in the issuer’s ICFR.
|
Date:
September 25, 2018
|
|
|
|
(signed) Glen Ibbott
|
|
Glen Ibbott
|
|
Chief Financial Officer
|
AURORA CANNABIS INC.
Suite 900 – 510 Seymour
Street
Vancouver, British Columbia Canada V6B 3J5
Telephone: 1-855-279-4652
(the “Company”)
NOTICE OF CHANGE OF AUDITOR
(the “Notice”)
|
To:
|
MNP LLP, Chartered
Professional Accountants
|
|
|
|
|
And To:
|
KPMG LLP, Chartered
Professional Accountants
|
|
|
1.
|
The directors of the Company do not propose to re-appoint
MNP LLP, Chartered Professional Accountants, as auditors for the Company;
and
|
|
|
|
|
|
|
2.
|
The directors of the Company propose to appoint KPMG LLP,
Chartered Professional Accountants, as successor auditors of the Company,
in place of MNP LLP, Chartered Professional Accountants, effective on July
1, 2018, following the release of the Company’s annual financial
statements for the Company’s financial year ended June 30,
2018.
|
In accordance with National Instrument 51-102
Continuous
Disclosure Obligations
(“NI 51-102”), the Company confirms that:
|
|
1.
|
MNP LLP, Chartered Professional Accountants, was asked to
resign as auditor of the Company, effective July 1, 2018, the beginning of
the fiscal year 2019,to facilitate the appointment of KPMG LLP, Chartered
Professional Accountants, with offices at Pacific Centre, 777 West Georgia
Street, Vancouver, British Columbia Canada V6E 4T5;
|
|
|
|
|
|
|
2.
|
MNP LLP, Chartered Professional Accountants, has not
expressed any reservation in its report for the most recently completed
two fiscal years of the Company, and the date of this Notice;
|
|
|
|
|
|
|
3.
|
In the opinion of the Board of Directors of the Company,
no “reportable event” as defined in NI 51-102 has occurred in connection
with the audits of the Company’s two most recently completed fiscal years
of the Company and the date of this Notice; and
|
|
|
|
|
|
|
4.
|
The Notice and Auditor’s Letters have been reviewed by
the Audit Committee and the Board of Directors.
|
Dated as of the 25
th
day of September, 2018
AURORA CANNABIS INC.
Glen Ibbott,
Chief Financial Officer
LEGAL_29780626.1
|
|
KPMG LLP
|
|
|
PO Box 10426 777 Dunsmuir Street
|
|
|
Vancouver BC V7Y 1K3
|
|
|
Canada
|
|
|
Telephone (604) 691-3000
|
|
|
Fax (604) 691-3031
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
British Columbia Securities
Commission
|
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|
Alberta Securities Commission
|
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|
Financial and Consumer Affairs
Authority of Saskatchewan
|
|
|
Manitoba Securities Commission
|
|
|
Ontario Securities Commission
|
|
|
Autorité des marchés financiers
|
|
|
Financial and Consumer Services
Commission (New Brunswick)
|
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|
Nova Scotia Securities Commission
|
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|
PEI Securities Office
|
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|
Newfoundland and Labrador
Securities Commission
|
|
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|
October 1, 2018
|
|
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|
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|
|
Dear Sir/Madam
|
|
|
|
|
|
Re: Notice of Change of
Auditors of AuroraCannabisInc. (the“Company”)
|
|
|
|
|
|
Please be advised that, in connection with National
Instrument 51-102 – Continuous Disclosure Obligations, we hereby notify
you that we have read the Company’s Notice of Change of Auditor dated
September 25, 2018 (the “Notice”) and are in agreement with the statements
contained in such Notice, except we have no basis to agree or disagree
with the statement contained in (3).
|
|
|
|
|
|
Yours very truly,
|
|
|
|
|
|
Chartered Professional
Accountants
|
KPMG LLP is a Canadian limited liability
partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. KPMG Canada provides
services to KPMG LLP.
|
September 27, 2018
|
VIA SEDAR
|
|
TO:
|
British Columbia Securities
Commission
|
|
|
Alberta Securities
Commission
|
|
|
Financial and Consumer Affairs
Authority of Saskatchewan
|
|
|
Manitoba Securities
Commission
|
|
|
Ontario Securities
Commission
|
|
|
Autorité Des Marches
Financiers
|
|
|
Financial and Consumer
Services Commission (New Brunswick)
|
|
|
Nova Scotia Securities
Commission
|
|
|
PEI Securities Office
|
|
|
Newfoundland and Labrador
Securities Commission
|
|
|
|
|
|
|
|
Re:
|
Aurora Cannabis Inc.
(the “Company”)
|
|
|
Notice Pursuant to National
Instrument 51-102
–
Change of Auditor
(“Notice”)
|
As required by National Instrument 51-102, we have reviewed the
information contained in the Notice dated September 25, 2018 given by the
Company to ourselves and KPMG LLP.
In reference to the Notice of Change of Auditor, we wish to
advise the relevant securities commissions that we have read the Notice and,
based on our knowledge as at the time of receipt of the Notice that we agree
with the comments within the Notice.
Yours very truly,
MNP LLP
Chartered Professional Accountants
The Board of Directors
Aurora Cannabis Inc.
We consent to the use in this Registration Statement on Form
40-F of:
-
our report, dated September 24, 2018, on the consolidated financial
statements of Aurora Cannabis Inc. (the “
Company
”) which comprise the
consolidated statements of financial position as at June 30, 2018 and June 30,
2017, the consolidated statements of comprehensive income (loss), changes in
equity and cash flows for the years ended June 30, 2018 and June 30, 2017, and
notes, comprising a summary of significant accounting policies, significant
judgements and other explanatory information; and
-
our report dated September 25, 2017, on the consolidated financial
statements of the Company which comprise the consolidated statements of
financial position as at June 30, 2017 and June 30, 2016, the consolidated
statements of comprehensive loss, changes in equity and cash flows for the
years ended June 30, 2017 and June 30, 2016, and notes, comprising a summary
of significant accounting policies and other explanatory information.
each of which is included in this Registration Statement on
Form 40-F of the Company.
Chartered Professional Accountants
October 5, 2018
Vancouver, British Columbia, Canada
