¨
|
REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
|
x
|
ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the fiscal year ended June 30, 2020
|
Commission File Number: 001-38691
|
British Columbia, Canada
|
|
2833
|
|
N/A
|
(Province or Other Jurisdiction of Incorporation or Organization)
|
|
(Primary Standard Industrial Classification Code)
|
|
(I.R.S. Employer
Identification No.) |
Title of Each Class
|
Trading Symbol(s)
|
Name of Each Exchange on Which Registered
|
Common Shares, no par value
|
ACB
|
New York Stock Exchange
|
Rights to purchase Common Shares, without par value
|
|
|
x
|
Annual Information Form
|
x
|
Audited Annual Financial Statements
|
Yes
|
x
|
|
No
|
¨
|
Yes
|
x
|
|
No
|
¨
|
Document
|
Exhibit No.
|
Audited consolidated financial statements of the Company and notes thereto as at and for the year ended June 30, 2020, together with the report thereon of the independent registered public accounting firm
|
99.5
|
Management’s Discussion and Analysis of the Company for the year ended June 30, 2020 (the “2020 MD&A”)
|
99.6
|
Annual Information Form of the Company for the year ended June 30, 2020 (the “AIF”)
|
99.7
|
•
|
pro forma measures including revenue, expected SG&A run-rates, and grams produced;
|
•
|
the completion of construction of production facilities, associated costs, and receipt of licenses from Health Canada to produce and sell cannabis and cannabis related products from these facilities;
|
•
|
strategic investments and capital expenditures, and related benefits;
|
•
|
future strategic plans;
|
•
|
growth in the global consumer use cannabis market;
|
•
|
expectations regarding production capacity, costs and yields;
|
•
|
product sales expectations and corresponding forecasted increases in revenues; and
|
•
|
the impact of the COVID-19 pandemic on the Company’s business, operations, capital resources and/or financial results.
|
Financial Period Ending
|
Audit Fees ($)(1)
|
Audit Related Fees ($)(2)
|
Tax Fees ($)(3)
|
All Other Fees ($)(4)
|
2020
|
2,856,480
|
231,120
|
255,010
|
—
|
2019
|
1,395,500 (5)
|
279,341 (5)
|
967,352
|
—
|
(1)
|
“Audit Fees” includes fees for the performance of the annual audit and quarterly reviews of the financial statements, which includes the audit of significant transactions and matters.
|
(2)
|
“Audit-Related Fees” includes fees for assurance related services that have not been reflected under (1). This includes, but is not limited to, services in connection with registration statements such as due diligence procedures or issuance of comfort letters and audit or attest services not required by legislation or regulation.
|
(3)
|
“Tax Fees” includes fees for tax compliance, tax planning, tax structuring and tax advice.
|
(4)
|
“All Other Fees” refers to fees for ad hoc projects, which include reviews of prospectus and financing documents.
|
(5)
|
Fees related to prospectus and related assistance to underwriters of $260,000 were reclassified from Audit Fees to Audit Related Fees.
|
|
|
Payments due by period
|
||||||||
|
Total
($)
|
Less than one year
($)
|
1 - 3
years
($)
|
3 - 5
years
($)
|
More than 5 years
($)
|
|||||
Long-Term Debt Obligations (1)
|
694,582
|
|
148,885
|
|
51,539
|
|
494,158
|
|
—
|
|
Lease Obligations
|
171,868
|
|
11,243
|
|
32,643
|
|
27,468
|
|
100,514
|
|
Contingent Consideration (2)
|
101,466
|
|
66,426
|
|
35,040
|
|
—
|
|
—
|
|
Purchase Obligations (3)
|
30,578
|
|
21,281
|
|
4,132
|
|
4,132
|
|
1,033
|
|
License and sponsorship fees (4)
|
141,397
|
|
2,851
|
|
46,460
|
|
50,880
|
|
41,206
|
|
Other long-term liabilities (5)
|
5,773
|
|
—
|
|
—
|
|
1,827
|
|
3,946
|
|
Total
|
1,145,664
|
|
250,686
|
|
169,814
|
|
578,465
|
|
146,699
|
|
(1)
|
Long-term debt obligations include bank loans and convertible debentures.
|
(2)
|
Contingent consideration represents the gross amount estimated to be paid out on achievement of future performance milestones related to acquisitions.
|
(3)
|
Purchase obligations include capital commitments,and purchase commitments relating to a manufacturing agreement for the encapsulation of softgels.
|
(4)
|
On September 8, 2020, the Company and UFC mutually terminated its partnership for a one-time payment of US$30.0 million.
|
(5)
|
Other long-term liabilities reflected on the balance sheet as at June 30, 2020, includes derivative liabilities and deferred tax liabilities.
|
(a)
|
to directors, officers or substantial security holders of the Company (each, a “Related Party”), a subsidiary, affiliate or other closely-related person of a Related Party or any company or entity in which a Related Party has a substantial interest, where the number of common shares, or the number of common shares into which the securities are convertible or exercisable, exceeds either (i) 1% of the outstanding common shares before the issuance; or (ii) 1% of the voting power of the outstanding common shares before the issuance, in either case except for substantial security holders paying cash and full book and market value for less than 5% of the number of common shares and voting power outstanding before the issuance;
|
(b)
|
the common shares, or the number of common shares into which the securities are convertible or exercisable, constitute at least (i) 20% of the voting power of the outstanding common shares before the issuance; or (ii) 20% of the outstanding common shares before the issuance, in either case except for public offerings of common shares for cash and private financings involving sales of common shares at a price, or securities convertible or exercisable into common shares with a conversion or exercise price, of at least the market values of the common shares; and
|
(c)
|
where the issuance would result in a change of control of the Company.
|
(a)
|
those plans or arrangements allowing employees, directors or service providers to buy such securities on the open market or from the Company for current fair market value;
|
(b)
|
grants of options or other equity-based compensation as a material inducement upon hiring or to new employees in connection with a merger or acquisition; and
|
(c)
|
conversions, replacements or adjustments of outstanding options or other equity compensation awards to reflect a merger or acquisition.
|
Date: September 24, 2020
|
AURORA CANNABIS INC.
|
|
|
|
By:
|
/s/ Glen Ibbott
|
|
|
|
Glen Ibbott
Chief Financial Officer |
|
Exhibit Number
|
Exhibit Description
|
|
|
99.1
|
|
99.2
|
|
99.3
|
|
99.4
|
|
99.5
|
|
99.6
|
|
99.7
|
|
99.8
|
|
101.INS
|
XBRL Instance
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.
|
Date: September 24, 2020
|
By: /s/ Miguel Martin
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.
|
Date: September 24, 2020
|
By: /s/ Glen Ibbott
|
By:
|
/s/ Miguel Martin
|
|
Miguel Martin
Chief Executive Officer
(Principal Executive Officer)
|
By:
|
/s/ Glen Ibbott
|
|
Glen Ibbott
Chief Financial Officer
(Principal Financial Officer)
|
Note 1
|
Nature of Operations
|
|
Note 16
|
Loans and Borrowings
|
||
Note 2
|
Significant Accounting Policies and Judgments
|
|
Note 17
|
Share Capital
|
||
Note 3
|
Restructuring Provision
|
|
Note 18
|
Share-Based Compensation
|
||
Note 4
|
Accounts Receivable
|
|
Note 19
|
(Loss) Earnings Per Share
|
||
Note 5
|
Strategic Investments
|
|
Note 20
|
Other (Losses) Gains
|
||
Note 6
|
Marketable Securities and Derivatives
|
|
Note 21
|
Supplementary Cash Flow Information
|
||
Note 7
|
Investments in Associates and Joint Ventures
|
|
Note 22
|
Income Taxes
|
||
Note 8
|
Biological Assets
|
|
Note 23
|
Related Party Transactions
|
||
Note 9
|
Inventory
|
|
Note 24
|
Commitments and Contingencies
|
||
Note 10
|
Property, Plant and Equipment
|
|
Note 25
|
Revenue
|
||
Note 11
|
Assets Held for Sale and Discontinued Operations
|
|
Note 26
|
Segmented Information
|
||
Note 12
|
Business Combinations
|
|
Note 27
|
Fair Value of Financial Instruments
|
||
Note 13
|
Non-Controlling Interests
|
|
Note 28
|
Financial Instruments Risk
|
||
Note 14
|
Intangible Assets and Goodwill
|
|
Note 29
|
Capital Management
|
||
Note 15
|
Convertible Debentures
|
|
Note 30
|
Subsequent Events
|
“Miguel Martin”
|
|
“Glen Ibbott”
|
Miguel Martin
Chief Executive Officer
|
|
Glen Ibbott
Chief Financial Officer
|
•
|
evaluating the discount rates used in the impairment analyses by comparing them to discount rate ranges that were independently developed using publicly available market data for comparable entities; and
|
•
|
performing sensitivity analyses over the discount rates to assess their impact on the determination of fair value.
|
|
|
|
Restated - Note 2(h)
|
|
|
|
Notes
|
June 30, 2020
|
|
June 30, 2019
|
|
|
|
$
|
|
$
|
|
Assets
|
|
|
|
||
Current
|
|
|
|
||
Cash and cash equivalents
|
|
162,179
|
|
172,727
|
|
Restricted cash
|
|
—
|
|
46,066
|
|
Accounts receivable
|
4, 28(a)
|
54,110
|
|
103,493
|
|
Income taxes receivable
|
|
—
|
|
8,833
|
|
Marketable securities
|
6(a)
|
7,066
|
|
143,248
|
|
Derivatives
|
6(b)
|
11,791
|
|
—
|
|
Biological assets
|
8
|
35,435
|
|
50,567
|
|
Inventory
|
9
|
121,827
|
|
111,321
|
|
Prepaids and other current assets
|
|
22,137
|
|
24,323
|
|
Assets held for sale
|
11(a)
|
6,194
|
|
—
|
|
|
|
420,739
|
|
660,578
|
|
|
|
|
|
||
Property, plant and equipment
|
10
|
946,380
|
|
765,567
|
|
Derivatives
|
6(b)
|
41,791
|
|
86,409
|
|
Deposits
|
|
12,329
|
|
6,926
|
|
Loan receivable
|
23
|
3,643
|
|
—
|
|
Investments in associates and joint ventures
|
7
|
18,114
|
|
118,845
|
|
Intangible assets
|
14
|
412,267
|
|
688,366
|
|
Goodwill
|
14
|
928,432
|
|
3,172,550
|
|
Total assets
|
|
2,783,695
|
|
5,499,241
|
|
|
|
|
|
||
Liabilities
|
|
|
|
||
Current
|
|
|
|
||
Accounts payable and accrued liabilities
|
28(b)
|
95,574
|
|
152,884
|
|
Deferred revenue
|
|
3,505
|
|
749
|
|
Convertible debentures
|
15
|
32,110
|
|
235,909
|
|
Loans and borrowings
|
16
|
120,508
|
|
13,758
|
|
Contingent consideration payable
|
27
|
19,604
|
|
28,137
|
|
Deferred gain on derivatives
|
|
20
|
|
728
|
|
Provisions
|
3, 24
|
1,485
|
|
4,200
|
|
|
|
272,806
|
|
436,365
|
|
|
|
|
|
||
Convertible debentures
|
15
|
294,928
|
|
267,672
|
|
Loans and borrowings
|
16
|
83,701
|
|
127,486
|
|
Derivative liability
|
15(iii)
|
1,827
|
|
177,395
|
|
Other long-term liability
|
|
37
|
|
11,979
|
|
Deferred tax liability
|
22
|
3,946
|
|
90,970
|
|
Total liabilities
|
|
657,245
|
|
1,111,867
|
|
|
|
|
|
||
Shareholders’ equity
|
|
|
|
||
Share capital
|
17
|
5,785,395
|
|
4,673,118
|
|
Reserves
|
|
145,395
|
|
139,327
|
|
Accumulated other comprehensive loss
|
|
(187,197
|
)
|
(143,170
|
)
|
Deficit
|
|
(3,592,787
|
)
|
(286,311
|
)
|
Total equity attributable to Aurora shareholders
|
|
2,150,806
|
|
4,382,964
|
|
Non-controlling interests
|
13
|
(24,356
|
)
|
4,410
|
|
Total equity
|
|
2,126,450
|
|
4,387,374
|
|
Total liabilities and equity
|
|
2,783,695
|
|
5,499,241
|
|
|
|
Years ended June 30,
|
|
||
|
|
||||
|
|
|
Restated - Note 2(h)
|
|
|
|
Notes
|
2020
|
|
2019
|
|
|
|
$
|
|
$
|
|
Revenue from sale of goods
|
25
|
323,201
|
|
271,105
|
|
Revenue from provision of services
|
25
|
5,002
|
|
7,589
|
|
Excise taxes
|
25
|
(49,297
|
)
|
(33,158
|
)
|
Net revenue
|
|
278,906
|
|
245,536
|
|
|
|
|
|
||
Cost of sales
|
|
277,234
|
|
123,778
|
|
|
|
|
|
||
Gross profit before fair value adjustments
|
|
1,672
|
|
121,758
|
|
|
|
|
|
||
Changes in fair value of inventory sold
|
|
91,825
|
|
71,821
|
|
Unrealized gain on changes in fair value of biological assets
|
8
|
(56,614
|
)
|
(92,503
|
)
|
|
|
|
|
||
Gross (loss) profit
|
|
(33,539
|
)
|
142,440
|
|
|
|
|
|
||
Expense
|
|
|
|
||
General and administration
|
|
205,276
|
|
159,069
|
|
Sales and marketing
|
|
91,271
|
|
99,272
|
|
Acquisition costs
|
|
6,493
|
|
17,217
|
|
Research and development
|
|
26,070
|
|
14,778
|
|
Depreciation and amortization
|
10, 14
|
68,414
|
|
63,343
|
|
Share-based compensation
|
18(a)(b)
|
59,899
|
|
107,039
|
|
|
|
457,423
|
|
460,718
|
|
|
|
|
|
||
Loss from operations
|
|
(490,962
|
)
|
(318,278
|
)
|
|
|
|
|
||
Other (expense) income
|
|
|
|||
Interest and other income
|
|
4,990
|
|
3,679
|
|
Finance and other costs
|
|
(77,538
|
)
|
(39,409
|
)
|
Foreign exchange (“FX”) loss
|
|
(12,779
|
)
|
(5,147
|
)
|
Other (losses) gains
|
20
|
(28,643
|
)
|
110,797
|
|
Restructuring charges
|
3
|
(1,947
|
)
|
—
|
|
Impairment of property, plant and equipment
|
10, 11(a)
|
(157,838
|
)
|
—
|
|
Impairment of investment in associates
|
7
|
(75,035
|
)
|
(73,289
|
)
|
Impairment of intangible assets and goodwill
|
14
|
(2,544,144
|
)
|
(9,002
|
)
|
|
|
(2,892,934
|
)
|
(12,371
|
)
|
|
|
|
|
||
Loss from operations before taxes and discontinued operations
|
|
(3,383,896
|
)
|
(330,649
|
)
|
|
|
|
|
||
Income tax recovery
|
|
|
|
||
Current
|
22
|
5,100
|
|
6,000
|
|
Deferred, net
|
22
|
78,303
|
|
23,909
|
|
|
|
83,403
|
|
29,909
|
|
|
|
|
|
||
Net loss from continuing operations
|
|
(3,300,493
|
)
|
(300,740
|
)
|
|
|
|
|
||
Net (loss) income from discontinued operations, net of tax
|
|
(9,844
|
)
|
144
|
|
|
|
|
|
||
Net loss
|
|
(3,310,337
|
)
|
(300,596
|
)
|
|
|
Year ended June 30,
|
|
||||
|
|
||||||
|
|
|
Restated - Note 2(h)
|
|
|||
|
Notes
|
2020
|
|
2019
|
|
||
|
|
$
|
|
$
|
|
||
Other comprehensive (loss) income (“OCI”) that will not be reclassified to net loss
|
|
|
|
||||
Deferred tax recovery
|
|
624
|
|
11,948
|
|
||
Unrealized losses on marketable securities
|
6(a)
|
(43,613
|
)
|
(78,837
|
)
|
||
|
|
(42,989
|
)
|
(66,889
|
)
|
||
|
|
|
|
||||
Other comprehensive (loss) income that may be reclassified to net loss
|
|
|
|
||||
Share of (loss) income from investment in associates
|
7
|
(379
|
)
|
352
|
|
||
Foreign currency translation loss
|
|
(5,884
|
)
|
(5,629
|
)
|
||
|
|
(6,263
|
)
|
(5,277
|
)
|
||
|
|
|
|
||||
Total other comprehensive loss
|
|
(49,252
|
)
|
(72,166
|
)
|
||
|
|
|
|
||||
Comprehensive loss from continuing operations
|
|
(3,349,745
|
)
|
(372,906
|
)
|
||
Comprehensive (loss) income from discontinued operations
|
|
(9,844
|
)
|
144
|
|
||
Comprehensive loss
|
|
(3,359,589
|
)
|
(372,762
|
)
|
||
|
|
|
|
||||
Net loss from continuing operations attributable to:
|
|
|
|
||||
Aurora Cannabis Inc.
|
|
(3,273,827
|
)
|
(293,653
|
)
|
||
Non-controlling interests
|
|
(26,666
|
)
|
(7,087
|
)
|
||
|
|
|
|
||||
Net (loss) income from discontinued operations attributable to:
|
|
|
|
||||
Aurora Cannabis Inc.
|
|
(9,844
|
)
|
144
|
|
||
Non-controlling interests
|
|
—
|
|
—
|
|
||
|
|
|
|
||||
Comprehensive loss attributable to:
|
|
|
|
||||
Aurora Cannabis Inc.
|
|
(3,330,913
|
)
|
(360,332
|
)
|
||
Non-controlling interests
|
|
(28,676
|
)
|
(12,430
|
)
|
||
|
|
|
|
||||
Net loss per share - basic and diluted
|
|
|
|
||||
Continuing operations
|
19
|
|
($33.84
|
)
|
|
($3.66
|
)
|
Discontinued operations
|
19
|
|
($0.10
|
)
|
|
$0.00
|
|
Total operations
|
19
|
|
($33.94
|
)
|
|
($3.66
|
)
|
|
|
Share Capital(1)
|
|
Reserves
|
|
AOCI
|
Restated - Note 2(h)
|
|
|
|
|||||||||||||||||||||||
|
Note
|
Common Shares
|
|
Amount
|
|
|
Share-Based
Compensation
|
|
Compensation
Options/
Warrants
|
|
Convertible
Notes
|
|
Change in
Ownership Interest |
|
Total
Reserves
|
|
|
Fair
Value
|
|
Deferred
Tax
|
|
Associate OCI Pick-up
|
|
Foreign Currency Translation
|
|
Total
AOCI
|
|
Retained
Earnings (Deficit) |
|
Non-Controlling Interests
|
|
Total
|
|
|
|
#
|
|
$
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Balance, June 30, 2019
|
|
84,786,562
|
|
4,673,118
|
|
|
143,947
|
|
40,495
|
|
41,685
|
|
(86,800
|
)
|
139,327
|
|
|
(156,249
|
)
|
18,295
|
|
352
|
|
(5,568
|
)
|
(143,170
|
)
|
(286,311
|
)
|
4,410
|
|
4,387,374
|
|
Shares issued for business combinations & asset acquisitions
|
17(b)(i)
|
2,689,933
|
|
57,420
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
57,420
|
|
Shares released for earn out payments
|
|
614,513
|
|
15,992
|
|
|
—
|
|
(7,871
|
)
|
—
|
|
—
|
|
(7,871
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
8,121
|
|
Shares issued through equity financing
|
17(b)(ii)
|
21,009,339
|
|
585,146
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
585,146
|
|
Share issuance costs
|
|
—
|
|
(12,507
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(12,507
|
)
|
Deferred tax on share issuance costs
|
|
—
|
|
2,231
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,231
|
|
Conversion of convertible debentures
|
15(ii)
|
5,761,260
|
|
433,177
|
|
|
—
|
|
—
|
|
(41,266
|
)
|
—
|
|
(41,266
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
391,911
|
|
Deferred tax on convertible debentures
|
|
—
|
|
1,703
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
82
|
|
—
|
|
1,785
|
|
Exercise of stock options
|
18(a)
|
103,841
|
|
6,382
|
|
|
(3,588
|
)
|
—
|
|
—
|
|
—
|
|
(3,588
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,794
|
|
Exercise of warrants
|
17(c)
|
986
|
|
102
|
|
|
—
|
|
(29
|
)
|
—
|
|
—
|
|
(29
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
73
|
|
Exercise of RSUs
|
18(b)
|
44,823
|
|
2,268
|
|
|
(2,268
|
)
|
—
|
|
—
|
|
—
|
|
(2,268
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Share-based compensation (2)(3)
|
18(a)(b)
|
—
|
|
—
|
|
|
50,712
|
|
10,378
|
|
—
|
|
—
|
|
61,090
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
61,090
|
|
Change in ownership interests in subsidiaries
|
13
|
217,554
|
|
20,363
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(18,263
|
)
|
(2,100
|
)
|
—
|
|
Choom marketable securities transferred to investment in associate
|
5(f)
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
5,225
|
|
(601
|
)
|
—
|
|
—
|
|
4,624
|
|
(4,624
|
)
|
—
|
|
—
|
|
Comprehensive income (loss) for the period
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(43,613
|
)
|
1,225
|
|
(379
|
)
|
(5,884
|
)
|
(48,651
|
)
|
(3,283,671
|
)
|
(26,666
|
)
|
(3,358,988
|
)
|
Balance, June 30, 2020
|
|
115,228,811
|
|
5,785,395
|
|
|
188,803
|
|
42,973
|
|
419
|
|
(86,800
|
)
|
145,395
|
|
|
(194,637
|
)
|
18,919
|
|
(27
|
)
|
(11,452
|
)
|
(187,197
|
)
|
(3,592,787
|
)
|
(24,356
|
)
|
2,126,450
|
|
(1)
|
Common share amounts have been retrospectively restated for all prior periods to reflect the Share Consolidation effected on May 11, 2020 (Note 2(a)).
|
(2)
|
Included in share-based compensation is $10.4 million (June 30, 2019 - $15.1 million) expense relating to milestone payments for the year ended June 30, 2020 of which $5.4 million (June 30, 2019 - $7.4 million) relates to Anandia Laboratories Inc. (Note 12(b)(ii)), $4.5 million (June 30, 2019 - $7.6 million) relates to Whistler Medical Marijuana Corporation (Note 12(b)(v)), and $0.4 million (June 30, 2019 - $0.1 million) relates to an immaterial acquisition.
|
(3)
|
Of the total $61.1 million share-based compensation reserve, $1.2 million was capitalized to property, plant and equipment for the year ended June 30, 2020 (June 30, 2019 - $2.1 million).
|
|
|
Share Capital
|
|
Reserves
|
|
AOCI
|
Restated - Note 2(h)
|
|
|
|
|||||||||||||||||||||||
|
|
Common Shares
|
|
Amount
|
|
|
Share-Based
Compensation
|
|
Compensation
Options/
Warrants
|
|
Convertible Notes
|
|
Change in
Ownership Interest |
|
Total
Reserves
|
|
|
Fair
Value
|
|
Deferred
Tax
|
|
Associate OCI Pick-up
|
|
Foreign Currency Translation
|
|
Total
AOCI
|
|
Retained Earnings
(Deficit)
|
|
Non-Controlling Interests
|
|
Total
|
|
|
|
#
|
|
$
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
$
|
|
$
|
|
|
$
|
|
$
|
|
|
$
|
|
$
|
|
||
Balance, June 30, 2018
|
|
47,342,761
|
|
1,466,433
|
|
|
38,335
|
|
307
|
|
41,792
|
|
(85,719
|
)
|
(5,285
|
)
|
|
(539
|
)
|
(55
|
)
|
—
|
|
61
|
|
(533
|
)
|
87,748
|
|
4,562
|
|
1,552,925
|
|
Shares issued for business combinations & asset acquisitions
|
17(b)(i)
|
35,943,803
|
|
3,060,894
|
|
|
75,490
|
|
27,111
|
|
—
|
|
—
|
|
102,601
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3,163,495
|
|
Shares issued for earn out payments
|
|
20,311
|
|
18,227
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
18,227
|
|
Conversion of convertible debentures
|
|
27,611
|
|
1,539
|
|
|
—
|
|
—
|
|
(520
|
)
|
—
|
|
(520
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,019
|
|
Deferred tax on convertible debentures
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
413
|
|
—
|
|
413
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
413
|
|
Exercise of stock options
|
18(a)
|
1,202,242
|
|
108,150
|
|
|
(60,776
|
)
|
—
|
|
—
|
|
—
|
|
(60,776
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
47,374
|
|
Exercise of warrants
|
17(c)
|
187,685
|
|
13,903
|
|
|
—
|
|
(1,964
|
)
|
—
|
|
—
|
|
(1,964
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
11,939
|
|
Exercise of compensation options
|
17(d)
|
300
|
|
38
|
|
|
—
|
|
(21
|
)
|
—
|
|
—
|
|
(21
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
17
|
|
Exercise of RSUs
|
18(b)
|
61,849
|
|
2,482
|
|
|
(2,482
|
)
|
—
|
|
—
|
|
—
|
|
(2,482
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Forfeited options
|
|
—
|
|
—
|
|
|
(674
|
)
|
—
|
|
—
|
|
—
|
|
(674
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
674
|
|
—
|
|
—
|
|
Share-based compensation
|
18(a)(b)
|
—
|
|
—
|
|
|
94,054
|
|
15,062
|
|
—
|
|
—
|
|
109,116
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
109,116
|
|
Contribution from non-controlling interest
|
13
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
5,854
|
|
5,854
|
|
Change in ownership interests in subsidiaries
|
13
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
(1,081
|
)
|
(1,081
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,081
|
|
—
|
|
Australis Capital first tranche private placement proceeds
|
5(i)
|
—
|
|
7,800
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
7,800
|
|
Australis Capital NCI reclass on loss of control
|
|
—
|
|
(6,348
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6,348
|
|
—
|
|
Spin-out of Australis Capital
|
5(i)
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(151,695
|
)
|
(6,348
|
)
|
(158,043
|
)
|
Reclass gain from Australis Capital shares on derecognition upon spin-out
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(76,873
|
)
|
6,402
|
|
—
|
|
—
|
|
(70,471
|
)
|
70,471
|
|
—
|
|
—
|
|
Comprehensive income (loss) for the period
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(78,837
|
)
|
11,948
|
|
352
|
|
(5,629
|
)
|
(72,166
|
)
|
(293,509
|
)
|
(7,087
|
)
|
(372,762
|
)
|
Balance, June 30, 2019
|
|
84,786,562
|
|
4,673,118
|
|
|
143,947
|
|
40,495
|
|
41,685
|
|
(86,800
|
)
|
139,327
|
|
|
(156,249
|
)
|
18,295
|
|
352
|
|
(5,568
|
)
|
(143,170
|
)
|
(286,311
|
)
|
4,410
|
|
4,387,374
|
|
|
|
Year ended June 30,
|
|
||
|
|
|
Restated - Note 2(h)
|
|
|
|
Notes
|
2020
|
|
2019
|
|
|
|
$
|
|
$
|
|
Operating activities
|
|
|
|
||
Net loss from continuing operations
|
|
(3,300,493
|
)
|
(300,740
|
)
|
Adjustments for non-cash items:
|
|
|
|
||
Unrealized gain on changes in fair value of biological assets
|
8
|
(56,614
|
)
|
(92,503
|
)
|
Changes in fair value included in inventory sold
|
|
91,825
|
|
71,821
|
|
Depreciation of property, plant and equipment
|
10
|
74,314
|
|
45,362
|
|
Amortization of intangible assets
|
14
|
40,577
|
|
42,893
|
|
Share-based compensation
|
18(a)(b)
|
59,899
|
|
107,039
|
|
Non-cash acquisition costs
|
|
—
|
|
4,243
|
|
Impairment of property, plant and equipment
|
10
|
157,838
|
|
—
|
|
Impairment of investment in associate
|
7
|
75,035
|
|
73,289
|
|
Impairment of intangible assets and goodwill
|
14
|
2,544,144
|
|
9,002
|
|
Accrued interest and accretion expense
|
15, 16
|
18,591
|
|
22,798
|
|
Interest and other income
|
|
(4,835
|
)
|
(265
|
)
|
Deferred tax expense (recovery)
|
|
(78,303
|
)
|
(23,909
|
)
|
Other (losses) gains, net
|
20
|
28,643
|
|
(109,464
|
)
|
Foreign exchange loss
|
|
12,779
|
|
(3,814
|
)
|
Changes in non-cash working capital
|
21
|
7,643
|
|
(37,285
|
)
|
Net cash used in operating activities from discontinued operations
|
|
(8,995
|
)
|
(712
|
)
|
Net cash used in operating activities
|
|
(337,952
|
)
|
(192,245
|
)
|
|
|
|
|
||
Investing activities
|
|
|
|
||
Marketable securities and derivative investments
|
6
|
(2,000
|
)
|
(50,584
|
)
|
Proceeds from disposal of marketable securities and derivatives
|
6
|
90,843
|
|
46,975
|
|
Purchase of property, plant and equipment, and intangible assets
|
10
|
(355,006
|
)
|
(414,190
|
)
|
Disposal of property, plant and equipment
|
10
|
3,739
|
|
—
|
|
Acquisition of businesses, net of cash acquired
|
12
|
280
|
|
114,213
|
|
Payment of contingent consideration
|
|
(1,993
|
)
|
(4,112
|
)
|
Loan receivable
|
|
(3,643
|
)
|
—
|
|
Dividends received
|
|
—
|
|
828
|
|
Deposits
|
|
(17,744
|
)
|
(5,452
|
)
|
Proceeds from disposal of investment in associates
|
5(c)
|
27,600
|
|
134
|
|
Net cash used in investing activities from discontinued operations
|
|
8,441
|
|
(109
|
)
|
Net cash used in investing activities
|
|
(249,483
|
)
|
(312,297
|
)
|
|
|
|
|
||
Financing activities
|
|
|
|
||
Proceeds from long-term loans
|
|
86,394
|
|
605,104
|
|
Repayment of long-term loans
|
|
(115,130
|
)
|
(21,126
|
)
|
Repayment of short-term loans
|
|
—
|
|
(238
|
)
|
Repayment of convertible debenture
|
|
(2,306
|
)
|
—
|
|
Payments of principal portion of lease liabilities
|
|
(7,788
|
)
|
—
|
|
Proceeds from lease inducements
|
|
1,746
|
|
—
|
|
Restricted cash
|
|
46,066
|
|
(32,668
|
)
|
Financing fees
|
|
(1,789
|
)
|
(18,709
|
)
|
Shares issued for cash, net of share issue costs
|
|
575,506
|
|
59,331
|
|
Capital contribution from non-controlling interest
|
|
—
|
|
5,854
|
|
Net cash used in financing activities from discontinued operations
|
|
(137
|
)
|
—
|
|
Net cash provided by financing activities
|
|
582,562
|
|
597,548
|
|
Effect of foreign exchange on cash and cash equivalents
|
|
(5,675
|
)
|
2,936
|
|
Increase (decrease) in cash and cash equivalents
|
|
(10,548
|
)
|
95,942
|
|
Cash and cash equivalents, beginning of year
|
|
172,727
|
|
76,785
|
|
Cash and cash equivalents, end of year
|
|
162,179
|
|
172,727
|
|
|
|
|
Note 1
|
Nature of Operations
|
•
|
Production, distribution and sale of medical and consumer cannabis products in Canada pursuant to the Cannabis Act; and
|
•
|
Distribution of wholesale medical cannabis in the European Union (“EU”) pursuant to the German Medicinal Products Act and German Narcotic Drugs Act.
|
Note 2
|
Significant Accounting Policies and Judgments
|
(a)
|
Basis of Presentation and Measurement
|
(b)
|
COVID-19 Estimation Uncertainty
|
|
|
|
Major subsidiaries
|
Percentage Ownership
|
Functional Currency
|
1769474 Alberta Ltd. (“1769474”)
|
100%
|
Canadian Dollar
|
2105657 Alberta Inc. (“2105657”)
|
100%
|
Canadian Dollar
|
Aurora Cannabis Enterprises Inc. (“ACE”)
|
100%
|
Canadian Dollar
|
Aurora Deutschland GmbH (“Aurora Deutschland”)
|
100%
|
European Euro
|
Aurora Nordic Cannabis A/S (“Aurora Nordic”)
|
51%
|
Danish Krone
|
Cannimed Therapeutics Inc. (“CanniMed”)
|
100%
|
Canadian Dollar
|
H2 Biopharma Inc. (“H2” or “Aurora Eau”)
|
100%
|
Canadian Dollar
|
MedReleaf Corp. (“MedReleaf”)
|
100%
|
Canadian Dollar
|
Peloton Pharmaceuticals Inc. (“Peloton” or “Aurora Vie”)
|
100%
|
Canadian Dollar
|
Whistler Medical marijuana Corporation (“Whistler”)
|
100%
|
Canadian Dollar
|
(d)
|
Foreign Currency Translation
|
(e)
|
Cash and Cash Equivalents
|
(f)
|
Government Grants
|
(g)
|
Provisions
|
|
|
|
(h)
|
Change in Accounting Policy
|
June 30, 2019
As previously reported
|
|
Inventory Adjustments
|
|
Discontinued Operations
(Note 11(b))
|
|
June 30, 2019
Restated
|
|
|
Consolidated Statement of Financial Position
|
|
|
|
|
||||
Biological assets
|
51,836
|
|
(1,269
|
)
|
—
|
|
50,567
|
|
Inventory
|
113,641
|
|
(2,320
|
)
|
—
|
|
111,321
|
|
Deferred tax liability
|
91,886
|
|
(916
|
)
|
—
|
|
90,970
|
|
Deficit
|
(283,639
|
)
|
(2,672
|
)
|
—
|
|
(286,311
|
)
|
Year ended
June 30, 2019
As previously reported
|
|
Inventory Adjustments
|
|
Discontinued Operations
(Note 11(b))
|
|
Year ended
June 30, 2019
Restated
|
|
|
Consolidated Statement of Comprehensive Loss
|
|
|
|
|
||||
Cost of sales
|
112,526
|
|
11,252
|
|
—
|
|
123,778
|
|
Gross profit before fair value adjustments
|
135,413
|
|
(11,252
|
)
|
(2,403
|
)
|
121,758
|
|
|
|
|
|
|
||||
Changes in fair value of inventory sold
|
72,129
|
|
(308
|
)
|
—
|
|
71,821
|
|
Unrealized gain on changes in fair value of biological assets
|
(96,531
|
)
|
4,028
|
|
—
|
|
(92,503
|
)
|
Gross profit
|
159,815
|
|
(14,972
|
)
|
(2,403
|
)
|
142,440
|
|
|
|
|
|
|
||||
General and administration
|
172,365
|
|
(11,384
|
)
|
(1,912
|
)
|
159,069
|
|
|
|
|
|
|
||||
Deferred tax (recovery) expense
|
(23,257
|
)
|
(916
|
)
|
264
|
|
(23,909
|
)
|
|
|
|
|
|
||||
Net loss from continuing operations
|
(297,924
|
)
|
(2,672
|
)
|
(144
|
)
|
(300,740
|
)
|
Net loss attributable to Aurora shareholders
|
(290,837
|
)
|
(2,672
|
)
|
—
|
|
(293,509
|
)
|
Loss per share (basic and diluted)
|
(3.63
|
)
|
(0.03
|
)
|
n/a
|
|
(3.66
|
)
|
Year ended
June 30, 2019
As previously reported
|
|
Inventory Adjustments
|
|
Discontinued Operations
(Note 11(b)) |
|
Year ended
June 30, 2019
Restated
|
|
|
Consolidated Statement of Cash Flows
|
|
|
|
|
||||
Unrealized gain on changes in fair value of biological assets
|
(96,531
|
)
|
4,028
|
|
—
|
|
(92,503
|
)
|
Changes in fair value of inventory sold
|
72,129
|
|
(308
|
)
|
—
|
|
71,821
|
|
Deferred tax expense (recovery)
|
(23,257
|
)
|
(916
|
)
|
264
|
|
(23,909
|
)
|
Changes in non-cash working capital
|
(37,952
|
)
|
(211
|
)
|
878
|
|
(37,285
|
)
|
Net cash used in operating activities
|
(192,245
|
)
|
—
|
|
—
|
|
(192,245
|
)
|
(i)
|
Adoption of New Accounting Pronouncements
|
(i)
|
IFRS 16 Leases
|
|
|
|
i)
|
higher non-current assets related to the initial recognition of the present value of our unavoidable future lease payments as right-of-use assets under property, plant and equipment, adjusted by the amount of any prepaid or accrued lease payments relating to the lease recognized in the balance sheet as at July 1, 2019;
|
ii)
|
higher current and non-current liabilities related to the concurrent recognition of lease liabilities, which are measured at the present value of the remaining fixed lease payments, discounted by our weighted average incremental borrowing rate of 5.62% as of July 1, 2019;
|
iii)
|
replacement of rent expense previously recorded in cost of goods sold, general and administration, and sales and marketing expenses with depreciation expense of these right-of-use assets and higher finance costs related to the accretion and interest expense of the corresponding lease liabilities; and
|
iv)
|
variable lease payments and non-lease components are expensed as incurred.
|
i)
|
recognition exemption of short-term leases;
|
ii)
|
recognition exemption of low-value leases;
|
iii)
|
application of a single discount rate to a portfolio of leases with similar characteristics on transition;
|
iv)
|
exclusion of initial direct costs from the measurement of the right-of-use assets upon transition;
|
v)
|
application of hindsight in determining the applicable lease term at the date of transition; and
|
vi)
|
election to not separate non-lease components from lease components, and instead account for each lease component and any associated non-lease components as a single lease component.
|
As at July 1, 2019
|
As previously reported under IAS 17
|
|
IFRS 16 transition adjustments
|
|
Inventory restatement adjustments
(Note 2(h))
|
|
As reported under
IFRS 16 |
|
|
$
|
|
$
|
|
|
$
|
|
|
Prepaid deposits
|
24,323
|
|
(585
|
)
|
—
|
|
23,738
|
|
Property, plant and equipment
|
765,567
|
|
96,049
|
|
—
|
|
861,616
|
|
Current loans and borrowings
|
(13,758
|
)
|
(6,630
|
)
|
—
|
|
(20,388
|
)
|
Non-current loans and borrowings
|
(127,486
|
)
|
(88,834
|
)
|
—
|
|
(216,320
|
)
|
Deficit
|
283,639
|
|
—
|
|
2,672
|
|
286,311
|
|
Operating lease commitments as at June 30, 2019
|
$
|
94,780
|
|
Add: finance lease liabilities recognized as at June 30, 2019
|
1,326
|
|
|
Add: adjustments as a result of a different treatment for extension and termination options
|
94,829
|
|
|
Effect of discounting using the lessee's incremental borrowing rate
|
(88,767
|
)
|
|
Less: lease commitments not yet in effect
|
(4,068
|
)
|
|
Less: short-term, low-value asset leases and others
|
(1,318
|
)
|
|
Lease liabilities recognized as at July 1, 2019
|
$
|
96,782
|
|
|
|
|
(j)
|
New Accounting Pronouncements
|
|
|
|
Accounting Policy
A restructuring provision is recognized when the Company has developed a detailed formal plan for the restructuring and has raised a valid expectation that it will carry out the restructuring by starting to implement the plan or announcing its main features to those individuals who are affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring, which reflect amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity.
|
|
Total
|
|
|
$
|
|
Initial recognition
|
1,947
|
|
Payments
|
(1,390
|
)
|
Balance at June 30, 2020
|
557
|
|
Accounting Policy
Accounts receivable are recognized initially at fair value and subsequently measured at amortized cost, less any provisions for impairment. Financial assets measured at amortized cost are assessed for impairment at the end of each reporting period. Impairment provisions are estimated using the expected credit loss impairment model where any expected future credit losses are provided for, irrespective of whether a loss event has occurred at the reporting date.
Estimates of expected credit losses take into account the Company’s collection history, deterioration of collection rates during the average credit period, as well as observable changes in and forecasts of future economic conditions that affect default risk. Where applicable, the carrying amount of a trade receivable is reduced for any expected credit losses through the use of an allowance for doubtful accounts (“AFDA”) provision. Changes in the AFDA provision are recognized in the statement of comprehensive loss. When the Company determines that no recovery of the amount owing is possible, the amount is deemed irrecoverable and the financial asset is written off.
|
|
|
June 30, 2020
|
|
June 30, 2019
|
|
|
|
$
|
|
$
|
|
Trade receivables
|
Note 28(a)
|
45,199
|
|
83,877
|
|
Sales taxes receivable
|
|
5,912
|
|
18,261
|
|
Other receivables(1)
|
|
2,999
|
|
1,355
|
|
|
|
54,110
|
|
103,493
|
|
(1)
|
Includes interest receivable from the secured convertible debenture held in Choom Holdings Inc. and unsecured convertible debentures held in High Tide (Note 5(f) and 5(h))
|
|
|
|
(a)
|
Cann Group Limited (“Cann Group”)
|
(b)
|
Radient Technologies Inc. (“Radient”)
|
(c)
|
Alcanna Inc. (“Alcanna”)
|
(i)
|
Common Shares and Investment in Associate
|
(ii)
|
Warrants
|
(d)
|
Capcium Inc. (“Capcium”)
|
|
|
|
(e)
|
The Green Organic Dutchman Holdings Ltd. (“TGOD”)
|
(f)
|
Choom Holdings Inc. (“Choom”)
|
(i)
|
Common Shares and Investment in Associate
|
|
|
|
(ii)
|
Convertible Debenture
|
(iii)
|
Warrants
|
(g)
|
Investee-B
|
(h)
|
High Tide Inc. (“High Tide”)
|
|
|
|
(i)
|
Australis Capital Inc. (“ACI”)
|
(a)
|
22,628,751 warrants exercisable at $0.20 per share expiring September 19, 2028; and
|
(b)
|
The number of warrants equal to 20% of the number of common shares issued and outstanding in ACI as of the date of exercise. The warrants are exercisable at the five-day volume weighted average trading price (“VWAP”) of ACI’s shares and have an expiration date of September 19, 2028.
|
(j)
|
EnWave Corporation (“EnWave’)
|
|
|
|
(a)
|
Marketable securities
|
Accounting Policy
Marketable securities are initially measured at fair value and are subsequently measured at fair value through profit or loss (“FVTPL”) or are designated at fair value through other comprehensive income (loss) (“FVTOCI”). The Company designates its marketable securities as financial assets measured at FVTOCI. This designation is made on an instrument-by-instrument basis and if elected, subsequent changes in fair value are recognized in other comprehensive (loss) income only and not through profit or loss upon disposition.
|
Financial asset hierarchy level
|
Level 1
|
|
Level 1
|
|
Level 1
|
|
Level 1
|
|
Level 1
|
|
Level 1
|
|
Level 3
|
|
|
|
Marketable securities designated at FVTOCI
|
Micron
|
|
Radient
|
|
TGOD
|
|
ACI
|
|
Choom
|
|
EnWave
|
|
Other immaterial investments
|
|
Total
|
|
|
Note 5(b)
|
|
Note 5(e)
|
|
Note 5(i)
|
|
Note 5(f)
|
|
Note 5(j)
|
|
||||||
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Balance, June 30, 2018
|
2,426
|
|
44,043
|
|
—
|
|
—
|
|
12,719
|
|
—
|
|
—
|
|
59,188
|
|
(Disposals) additions
|
—
|
|
—
|
|
(46,663
|
)
|
228
|
|
—
|
|
10,000
|
|
1,091
|
|
(35,344
|
)
|
Transfer from investment in associates
|
—
|
|
—
|
|
275,342
|
|
5,360
|
|
—
|
|
—
|
|
—
|
|
280,702
|
|
Unrealized (loss) gain on changes in fair value
|
(1,278
|
)
|
(13,177
|
)
|
(135,547
|
)
|
76,873
|
|
(8,331
|
)
|
2,619
|
|
4
|
|
(78,837
|
)
|
Spin-out
|
—
|
|
—
|
|
—
|
|
(82,461
|
)
|
—
|
|
—
|
|
—
|
|
(82,461
|
)
|
Balance, June 30, 2019
|
1,148
|
|
30,866
|
|
93,132
|
|
—
|
|
4,388
|
|
12,619
|
|
1,095
|
|
143,248
|
|
Disposals
|
(191
|
)
|
—
|
|
(86,465
|
)
|
—
|
|
—
|
|
(4,138
|
)
|
—
|
|
(90,794
|
)
|
Transfer to investment in associates
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,775
|
)
|
—
|
|
—
|
|
(1,775
|
)
|
Unrealized loss on changes in fair value
|
(957
|
)
|
(24,845
|
)
|
(6,667
|
)
|
—
|
|
(2,613
|
)
|
(8,481
|
)
|
(50
|
)
|
(43,613
|
)
|
Balance, June 30, 2020
|
—
|
|
6,021
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,045
|
|
7,066
|
|
|
|
|
|
|
|
|
|
|
||||||||
Unrealized (loss) gain on marketable securities
|
|
|
|
|
|
|
|
|
||||||||
Year ended June 30, 2019
|
|
|
|
|
|
|
|
|
||||||||
OCI unrealized (loss) gain
|
(1,278
|
)
|
(13,177
|
)
|
(135,547
|
)
|
76,873
|
|
(8,331
|
)
|
2,619
|
|
4
|
|
(78,837
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Year ended June 30, 2020
|
|
|
|
|
|
|
|
|
||||||||
OCI unrealized loss
|
(957
|
)
|
(24,845
|
)
|
(6,667
|
)
|
—
|
|
(2,613
|
)
|
(8,481
|
)
|
(50
|
)
|
(43,613
|
)
|
|
|
|
(b)
|
Derivatives
|
Accounting Policy
Derivatives are initially measured at fair value and are subsequently measured at FVTPL. If the transaction price does not equal to fair value at the point of initial recognition, management measures the fair value of each component of the investment and any unrealized gains or losses at inception are either recognized in profit or loss or deferred and recognized over the term of the investment, depending on whether the valuation inputs are based on observable market data. The resulting unrealized gain or loss at inception and subsequent changes in fair value are recognized in profit or loss for the period. Transaction costs, which are directly attributable to the acquisition of the investment, are expensed as incurred. Refer to Note 27 for significant judgments in determining the fair value of derivative financial instruments.
|
Financial asset hierarchy level
|
Level 3
|
|
Level 3
|
|
Level 3
|
|
Level 2
|
|
Level 2
|
|
Level 2
|
|
Level 2
|
|
Level 2
|
|
Level 3
|
|
Level 2
|
|
Level 2
|
|
|
|
Derivatives and convertible debentures at FVTPL
|
Micron
|
|
Radient
|
|
Alcanna
|
|
CTT
|
|
Capcium
|
|
TGOD
|
|
ACI
|
|
Choom
|
|
Investee-B
|
|
High Tide
|
|
Namaste
|
|
Total
|
|
|
Note 5(b)
|
|
Note 5(c)
|
|
|
Note 5(d)
|
|
Note 5(e)
|
|
Note 5(i)
|
|
Note 5(f)
|
|
Note 5(g)
|
|
Note 5(h)
|
|
|
|
|||||
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Balance, June 30, 2018
|
1,028
|
|
1,412
|
|
2,400
|
|
20,140
|
|
—
|
|
99,471
|
|
—
|
|
—
|
|
—
|
|
—
|
|
491
|
|
124,942
|
|
Additions
|
—
|
|
—
|
|
—
|
|
—
|
|
4,883
|
|
—
|
|
541
|
|
20,000
|
|
13,403
|
|
11,000
|
|
—
|
|
49,827
|
|
Transfer on loss of control of subsidiary
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
679
|
|
—
|
|
—
|
|
—
|
|
—
|
|
679
|
|
Unrealized (loss) gain on changes in fair value
|
(944
|
)
|
(1,347
|
)
|
(1,975
|
)
|
(16,694
|
)
|
2,635
|
|
(75,309
|
)
|
78,097
|
|
(631
|
)
|
(420
|
)
|
(759
|
)
|
(378
|
)
|
(17,725
|
)
|
Transfer to investment in associates (Note 7)
|
—
|
|
—
|
|
—
|
|
(3,413
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(3,413
|
)
|
Spin-out
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(69,234
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(69,234
|
)
|
Foreign exchange
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,333
|
|
—
|
|
—
|
|
1,333
|
|
Balance, June 30, 2019
|
84
|
|
65
|
|
425
|
|
33
|
|
7,518
|
|
24,162
|
|
10,083
|
|
19,369
|
|
14,316
|
|
10,241
|
|
113
|
|
86,409
|
|
(Disposals) additions
|
—
|
|
—
|
|
(49
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,000
|
|
—
|
|
1,951
|
|
Unrealized (loss) gain on changes in fair value
|
(84
|
)
|
(65
|
)
|
(376
|
)
|
(33
|
)
|
(7,518
|
)
|
(23,030
|
)
|
(6,905
|
)
|
1,130
|
|
1,465
|
|
419
|
|
(102
|
)
|
(35,099
|
)
|
Foreign exchange
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
321
|
|
—
|
|
—
|
|
321
|
|
Balance, June 30, 2020
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,132
|
|
3,178
|
|
20,499
|
|
16,102
|
|
12,660
|
|
11
|
|
53,582
|
|
Current portion
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,132
|
)
|
—
|
|
—
|
|
—
|
|
(10,659
|
)
|
—
|
|
(11,791
|
)
|
Long-term portion
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3,178
|
|
20,499
|
|
16,102
|
|
2,001
|
|
11
|
|
41,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Unrealized (loss) gain on derivatives (Note 20)
|
||||||||||||||||||||||||
Year ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange gain
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,333
|
|
—
|
|
—
|
|
1,333
|
|
Inception gains amortized
|
607
|
|
919
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,526
|
|
Unrealized (loss) gain on changes in fair value
|
(944
|
)
|
(1,347
|
)
|
(1,975
|
)
|
(16,694
|
)
|
2,635
|
|
(75,309
|
)
|
78,097
|
|
(631
|
)
|
(420
|
)
|
(759
|
)
|
(378
|
)
|
(17,725
|
)
|
|
(337
|
)
|
(428
|
)
|
(1,975
|
)
|
(16,694
|
)
|
2,635
|
|
(75,309
|
)
|
78,097
|
|
(631
|
)
|
913
|
|
(759
|
)
|
(378
|
)
|
(14,866
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Year ended June 30, 2020
|
||||||||||||||||||||||||
Foreign exchange gain
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
321
|
|
—
|
|
—
|
|
321
|
|
Inception gains amortized
|
306
|
|
403
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
709
|
|
Unrealized (loss) gain on changes in fair value
|
(84
|
)
|
(65
|
)
|
(376
|
)
|
(33
|
)
|
(7,518
|
)
|
(23,030
|
)
|
(6,905
|
)
|
1,130
|
|
1,465
|
|
419
|
|
(102
|
)
|
(35,099
|
)
|
|
222
|
|
338
|
|
(376
|
)
|
(33
|
)
|
(7,518
|
)
|
(23,030
|
)
|
(6,905
|
)
|
1,130
|
|
1,786
|
|
419
|
|
(102
|
)
|
(34,069
|
)
|
|
|
|
Note 7
|
Investments in Associates and Joint Ventures
|
Accounting Policy
Associates are companies over which Aurora has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence represents the power to participate in the financial and operating policy decisions of the investee but does not represent the right to exercise control or joint control over those policies.
A joint venture is a contractual arrangement whereby the Company and other parties undertake an economic activity that is subject to joint control (i.e. when the strategic, financial and operating policy decisions relating to the activities of the joint venture require the unanimous consent of the parties sharing control).
Investments in associates and joint ventures are accounted for using the equity method and are initially recognized at cost, excluding financial assets that are not in-substance common shares and inclusive of transaction costs. When the Company holds marketable securities or derivative financial assets and subsequently obtains significant influence in that investee, the fair value of the financial instruments are reclassified to investments in associates at the deemed cost with the cumulative unrealized fair value gains or losses in other comprehensive loss, if any, transferred to deficit.
The consolidated financial statements include the Company’s share of the investee’s income, expenses and equity movements. Where the Company transacts with its joint ventures or associates, unrealized profits or losses are eliminated to the extent of the Company’s interest in the joint venture or associate.
Investments in associates and joint ventures are assessed for indicators of impairment at each period end. An impairment test is performed when there is objective evidence of impairment, such as significant adverse changes in the environment in which the equity-accounted investee operates or there is a significant or prolonged decline in the fair value of the investment below its carrying amount. An impairment loss is recorded when the recoverable amount is lower than the carrying amount. An impairment loss is reversed if the reversal is related to an event occurring after the impairment loss is recognized. Reversals of impairment losses are recognized in profit or loss and are limited to the original carrying amount under the equity method as if no impairment had been recognized for the asset in prior periods. The Company uses judgment in assessing whether impairment has occurred or a reversal is required as well as the amounts of such adjustments.
|
|
Cann Group
|
|
Alcanna
|
|
CTT
|
|
Capcium
|
|
TGOD
|
|
Choom
|
|
ACI
|
|
Other immaterial investments
|
|
Total
|
|
|
Note 5(a)
|
|
Note 5(c)
|
|
|
Note 5(d)
|
|
Note 5(e)
|
|
Note 5(f)
|
|
Note 5(i)
|
|
|||||
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Balance, June 30, 2018
|
81,183
|
|
109,577
|
|
—
|
|
11,256
|
|
132,292
|
|
—
|
|
—
|
|
134
|
|
334,442
|
|
Additions
|
—
|
|
—
|
|
3,413
|
|
3
|
|
—
|
|
—
|
|
5,360
|
|
—
|
|
8,776
|
|
Dividend income
|
—
|
|
(828
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(828
|
)
|
Disposition / reclassification
|
—
|
|
—
|
|
—
|
|
—
|
|
(130,974
|
)
|
—
|
|
(5,360
|
)
|
(134
|
)
|
(136,468
|
)
|
Share of net loss (1)
|
(1,520
|
)
|
(5,099
|
)
|
(230
|
)
|
(1,406
|
)
|
(1,318
|
)
|
—
|
|
—
|
|
—
|
|
(9,573
|
)
|
Impairment
|
(18,158
|
)
|
(68,696
|
)
|
(2,078
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(88,932
|
)
|
Impairment reversal
|
—
|
|
15,643
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
15,643
|
|
OCI FX gain (loss)
|
(4,488
|
)
|
353
|
|
(80
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(4,215
|
)
|
Balance, June 30, 2019
|
57,017
|
|
50,950
|
|
1,025
|
|
9,853
|
|
—
|
|
—
|
|
—
|
|
—
|
|
118,845
|
|
Additions
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,775
|
|
—
|
|
—
|
|
1,775
|
|
Disposition / reclassification
|
—
|
|
(15,645
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(15,645
|
)
|
Share of net income (loss)(1)
|
(2,930
|
)
|
(7,174
|
)
|
(58
|
)
|
(840
|
)
|
—
|
|
(532
|
)
|
—
|
|
—
|
|
(11,534
|
)
|
Impairment
|
(37,213
|
)
|
(27,748
|
)
|
(633
|
)
|
(9,013
|
)
|
—
|
|
(428
|
)
|
—
|
|
—
|
|
(75,035
|
)
|
OCI FX gain (loss)
|
43
|
|
(383
|
)
|
47
|
|
—
|
|
—
|
|
1
|
|
—
|
|
—
|
|
(292
|
)
|
Balance, June 30, 2020
|
16,917
|
|
—
|
|
381
|
|
—
|
|
—
|
|
816
|
|
—
|
|
—
|
|
18,114
|
|
(1)
|
Represents an estimate of the Company’s share of net loss based on the latest available information of each investee.
|
|
|
|
|
At June 30, 2020
|
At June 30, 2019
|
||||||
|
Cann Group
|
|
Cann Group
|
|
Alcanna
|
|
Total
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Date obtained significant influence
|
Dec 11, 2017
|
|
Dec 11, 2017
|
|
Feb 14, 2018
|
|
|
|
|
|
|
|
|
||||
Statement of financial position
|
|
|
|
|
||||
Cash and cash equivalents
|
7,513
|
|
43,752
|
|
22,115
|
|
65,867
|
|
Current assets
|
12,760
|
|
69,620
|
|
149,835
|
|
219,455
|
|
Non-current assets
|
58,521
|
|
7,208
|
|
480,070
|
|
487,278
|
|
|
|
|
|
|
||||
Current financial liabilities, excluding trade and other payables and provisions
|
—
|
|
4
|
|
22,237
|
|
22,241
|
|
Current liabilities
|
5,497
|
|
1,394
|
|
54,375
|
|
55,769
|
|
Non-current financial liabilities
|
—
|
|
—
|
|
73,364
|
|
73,364
|
|
Non-current liabilities
|
835
|
|
13
|
|
73,364
|
|
73,377
|
|
|
|
|
|
|
||||
Statement of comprehensive loss
|
|
|
|
|
||||
Revenue
|
1,025
|
|
—
|
|
136,424
|
|
136,424
|
|
Depreciation and amortization
|
(1,992
|
)
|
—
|
|
(30,040
|
)
|
(30,040
|
)
|
Interest income
|
448
|
|
1,691
|
|
—
|
|
1,691
|
|
Interest expense
|
(83
|
)
|
(21
|
)
|
(22,872
|
)
|
(22,893
|
)
|
Income tax expense
|
—
|
|
—
|
|
(16,000
|
)
|
(16,000
|
)
|
Loss from continued operations
|
(15,084
|
)
|
(9,276
|
)
|
(37,180
|
)
|
(46,456
|
)
|
Loss from discontinued operations, net tax
|
—
|
|
—
|
|
(916
|
)
|
(916
|
)
|
Other comprehensive income
|
—
|
|
—
|
|
(2,532
|
)
|
(2,532
|
)
|
Total comprehensive loss
|
(15,084
|
)
|
(9,276
|
)
|
(40,628
|
)
|
(49,904
|
)
|
Note 8
|
Biological Assets
|
|
|
|
Significant inputs & assumptions
|
Inputs
|
|
Impact on fair value
|
|
|||||||||
June 30, 2020
|
|
June 30, 2019
|
|
Sensitivity
|
June 30, 2020
|
|
June 30, 2019
|
|
|||||
Average selling price per gram
|
|
$4.78
|
|
|
$5.86
|
|
Increase or decrease of $1.00 per gram
|
|
$14,070
|
|
|
$14,868
|
|
Weighted average yield (grams per plant)
|
52.73
|
|
44.31
|
|
Increase or decrease by 5 grams per plant
|
|
$3,756
|
|
|
$6,295
|
|
||
Standard cost per gram to complete production
|
|
$1.73
|
|
|
$2.04
|
|
Increase or decrease of $1.00 per gram
|
|
$19,318
|
|
|
$17,735
|
|
|
Year ended
June 30, 2020
|
|
Year ended
June 30, 2019
Restated (Note 2(h))
|
|
|
$
|
|
$
|
|
Opening balance
|
50,567
|
|
13,620
|
|
Production costs capitalized
|
62,177
|
|
41,857
|
|
Biological assets acquired through business combinations (Note 12)
|
—
|
|
8,888
|
|
Changes in fair value less cost to sell due to biological transformation
|
56,614
|
|
92,503
|
|
Transferred to inventory upon harvest
|
(133,923
|
)
|
(106,301
|
)
|
Ending balance
|
35,435
|
|
50,567
|
|
Note 9
|
Inventory
|
Accounting Policy
The Company defines inventory as all cannabis products after the point of harvest (“Cannabis Inventory”), hemp products, purchased finished goods for resale, consumable supplies and accessories. Cannabis Inventory includes harvested cannabis, trim, cannabis oils, capsules, edibles and vaporizers.
Inventories of harvested cannabis are transferred from biological assets at fair value less costs to sell at the point of harvest, which becomes the deemed cost. By-products, such as trim, are measured at their net-realizable-value (“NRV”) at point of harvest which is deducted from the total deemed cost to give a net cost for the primary product. Any subsequent post-harvest costs are capitalized to Cannabis Inventory to the extent that the cost is less than NRV. NRV for work-in-process (“WIP”) and finished Cannabis Inventory is determined by deducting estimated remaining conversion/completion costs and selling costs from the estimated sale price achievable in the ordinary course of business. Conversion and selling costs are determined using average cost. In the period that Cannabis Inventory is sold, the fair value portion of the deemed cost is recorded within changes in fair value of inventory sold line, and the cost of such Cannabis Inventory, including direct and indirect costs, are recorded within the cost of sales line on the statement of comprehensive loss.
Products for resale, consumable supplies and accessories are initially recognized at cost and subsequently valued at the lower of cost and NRV. The Company reviews these types of inventory for obsolescence, redundancy and slow turnover to ensure that they are written-down and reflected at NRV.
The Company uses judgment in determining the NRV of inventory. When assessing NRV, the Company considers the impact of price fluctuation, inventory spoilage, inventory excess, age and damage.
|
|
|
|
|
June 30, 2020
|
|
June 30, 2019 (1)
|
||||||||||
|
Capitalized
cost |
|
Fair value
adjustment |
|
Carrying
value |
|
|
Capitalized
cost
|
|
Fair value
adjustment
|
|
Carrying
value
|
|
|
$
|
|
$
|
|
$
|
|
|
$
|
|
$
|
|
$
|
|
Harvested cannabis
|
|
|
|
|
|
|
|
||||||
Work-in-process
|
29,737
|
|
16,708
|
|
46,445
|
|
|
30,518
|
|
31,386
|
|
61,904
|
|
Finished goods
|
11,826
|
|
1,735
|
|
13,561
|
|
|
8,529
|
|
5,007
|
|
13,536
|
|
|
41,563
|
|
18,443
|
|
60,006
|
|
|
39,047
|
|
36,393
|
|
75,440
|
|
Extracted cannabis
|
|
|
|
|
|
|
|
||||||
Work-in-process
|
21,608
|
|
4,995
|
|
26,603
|
|
|
4,536
|
|
1,356
|
|
5,892
|
|
Finished goods
|
15,758
|
|
1,396
|
|
17,154
|
|
|
7,563
|
|
1,224
|
|
8,787
|
|
|
37,366
|
|
6,391
|
|
43,757
|
|
|
12,099
|
|
2,580
|
|
14,679
|
|
|
|
|
|
|
|
|
|
||||||
Hemp products
|
|
|
|
|
|
|
|
||||||
Raw materials
|
929
|
|
—
|
|
929
|
|
|
4,508
|
|
—
|
|
4,508
|
|
Work-in-process
|
235
|
|
—
|
|
235
|
|
|
1,000
|
|
—
|
|
1,000
|
|
Finished goods
|
107
|
|
—
|
|
107
|
|
|
3,183
|
|
—
|
|
3,183
|
|
|
1,271
|
|
—
|
|
1,271
|
|
|
8,691
|
|
—
|
|
8,691
|
|
|
|
|
|
|
|
|
|
||||||
Supplies and consumables
|
16,125
|
|
—
|
|
16,125
|
|
|
9,673
|
|
—
|
|
9,673
|
|
|
|
|
|
|
|
|
|
||||||
Merchandise and accessories
|
668
|
|
—
|
|
668
|
|
|
2,838
|
|
—
|
|
2,838
|
|
|
|
|
|
|
|
|
|
||||||
Ending Balance
|
96,993
|
|
24,834
|
|
121,827
|
|
|
72,348
|
|
38,973
|
|
111,321
|
|
(1)
|
Amounts have been retroactively restated for the change in accounting policy relating to the valuation of Cannabis Inventory (Note 2(h).
|
|
|
|
Note 10
|
Property, Plant and Equipment
|
Accounting Policy
Property, plant and equipment is measured at cost, net of accumulated depreciation and any impairment losses.
Cost includes expenditures that are directly attributable to the asset acquisition. The cost of self-constructed assets includes the cost of materials, direct labor, other costs directly attributable to make the asset available for its intended use, as well as relevant borrowing costs on qualifying assets as further described below. During their construction, property, plant and equipment are classified as construction in progress (“CIP”) and are not subject to depreciation. When the asset is available for use, it is transferred from CIP to the relevant category of property, plant and equipment and depreciation commences.
Where particular parts of an asset are significant, discrete and have distinct useful lives, the Company may allocate the associated costs between the various components, which are then separately depreciated over the estimated useful lives of each respective component. Depreciation is calculated on a straight-line basis over the following estimated useful lives:
Computer software and equipment 3 years
Production equipment 2 - 4 years
Furniture and fixtures 5 years
Building and improvements 20 - 30 years
Residual values, useful lives and depreciation methods are reviewed annually for relevancy and changes are accounted for prospectively.
Gains and losses on asset disposals are determined by deducting the carrying value from the sale proceeds and are recognized in profit or loss.
The Company capitalizes borrowing costs on qualifying capital construction projects. Upon the asset becoming available for use, capitalization of borrowing costs ceases and depreciation commences on a straight-line basis over the estimated useful life of the related asset.
On July 1, 2019, the Company adopted IFRS 16: Leases (Note 2(i)(i)) which replaced IAS 17: Leases.
Impairment of property, plant and equipment
The Company assesses impairment of property, plant and equipment when an impairment indicator arises (e.g. change in use or discontinued use, obsolescence or physical damage). When the asset does not generate cash inflows that are largely independent of those from other assets or group of assets, the asset is tested at the cash generating unit (“CGU”) level. In assessing impairment, the Company compares the carrying amount of the asset or CGU to the recoverable amount, which is determined as the higher of the asset or CGU’s fair value less costs of disposal and its value-in-use. Value-in-use is assessed based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects applicable market and economic conditions, the time value of money and the risks specific to the asset. An impairment loss is recognized whenever the carrying amount of the asset or CGU exceeds its recoverable amount and is recorded in the consolidated statements of comprehensive loss.
|
|
June 30, 2020
|
June 30, 2019
|
||||||||||||
|
Cost
|
|
Accumulated depreciation
|
|
Impairment
|
|
Net book value
|
|
Cost
|
|
Accumulated depreciation
|
|
Net book value
|
|
Owned assets
|
|
|
|
|
|
|
|
|||||||
Land
|
31,485
|
|
—
|
|
(893
|
)
|
30,592
|
|
39,532
|
|
—
|
|
39,532
|
|
Real estate
|
515,264
|
|
(51,867
|
)
|
(82,721
|
)
|
380,676
|
|
420,737
|
|
(25,682
|
)
|
395,055
|
|
Construction in progress
|
349,274
|
|
—
|
|
(37,741
|
)
|
311,533
|
|
222,884
|
|
—
|
|
222,884
|
|
Computer software & equipment
|
30,947
|
|
(12,687
|
)
|
(108
|
)
|
18,152
|
|
20,850
|
|
(5,367
|
)
|
15,483
|
|
Furniture & fixtures
|
9,888
|
|
(3,635
|
)
|
(139
|
)
|
6,114
|
|
9,312
|
|
(2,847
|
)
|
6,465
|
|
Production & other equipment
|
187,512
|
|
(46,856
|
)
|
(24,216
|
)
|
116,440
|
|
102,403
|
|
(17,894
|
)
|
84,509
|
|
Total owned assets
|
1,124,370
|
|
(115,045
|
)
|
(145,818
|
)
|
863,507
|
|
815,718
|
|
(51,790
|
)
|
763,928
|
|
|
|
|
|
|
|
|
|
|||||||
Right-of-use lease assets(1)
|
|
|
|
|
|
|
|
|||||||
Land
|
27,862
|
|
(787
|
)
|
—
|
|
27,075
|
|
—
|
|
—
|
|
—
|
|
Real estate
|
63,548
|
|
(7,729
|
)
|
(2,416
|
)
|
53,403
|
|
—
|
|
—
|
|
—
|
|
Production & other equipment
|
5,591
|
|
(3,196
|
)
|
—
|
|
2,395
|
|
2,010
|
|
(371
|
)
|
1,639
|
|
Total right-of-use lease assets
|
97,001
|
|
(11,712
|
)
|
(2,416
|
)
|
82,873
|
|
2,010
|
|
(371
|
)
|
1,639
|
|
|
|
|
|
|
|
|
|
|||||||
Total property, plant and equipment
|
1,221,371
|
|
(126,757
|
)
|
(148,234
|
)
|
946,380
|
|
817,728
|
|
(52,161
|
)
|
765,567
|
|
(1)
|
Effective July 1, 2019, the Company adopted IFRS 16 Leases (Note 2(i)(i)).
|
|
|
|
|
Balance, June 30, 2019
|
|
IFRS 16 Transition (1)
|
|
Additions
|
|
Disposals
|
|
Other (2)(3)(4)
|
|
Depreciation
|
|
Impairment
|
|
Foreign currency translation
|
|
Balance,
June 30,
2020
|
|
Owned assets
|
|
|
|
|
|
|
|
|
|
|||||||||
Land
|
39,532
|
|
—
|
|
337
|
|
—
|
|
(8,347
|
)
|
—
|
|
(893
|
)
|
(37
|
)
|
30,592
|
|
Real estate
|
395,055
|
|
—
|
|
32,614
|
|
(267
|
)
|
69,001
|
|
(33,942
|
)
|
(82,721
|
)
|
936
|
|
380,676
|
|
Construction in progress
|
222,884
|
|
—
|
|
261,830
|
|
(2,128
|
)
|
(130,522
|
)
|
—
|
|
(37,741
|
)
|
(2,790
|
)
|
311,533
|
|
Computer software & equipment
|
15,483
|
|
—
|
|
9,660
|
|
(52
|
)
|
142
|
|
(6,973
|
)
|
(108
|
)
|
—
|
|
18,152
|
|
Furniture & fixtures
|
6,465
|
|
—
|
|
4,594
|
|
(120
|
)
|
(3,417
|
)
|
(1,192
|
)
|
(139
|
)
|
(77
|
)
|
6,114
|
|
Production & other equipment
|
84,509
|
|
—
|
|
30,708
|
|
(2,302
|
)
|
48,715
|
|
(21,024
|
)
|
(24,216
|
)
|
50
|
|
116,440
|
|
Total owned assets
|
763,928
|
|
—
|
|
339,743
|
|
(4,869
|
)
|
(24,428
|
)
|
(63,131
|
)
|
(145,818
|
)
|
(1,918
|
)
|
863,507
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Right-of-use leased assets (1)
|
|
|
|
|
|
|
|
|
||||||||||
Land
|
—
|
|
30,936
|
|
169
|
|
—
|
|
(3,243
|
)
|
(787
|
)
|
—
|
|
—
|
|
27,075
|
|
Real estate
|
—
|
|
62,817
|
|
7,764
|
|
(1,957
|
)
|
(5,230
|
)
|
(7,732
|
)
|
(2,416
|
)
|
157
|
|
53,403
|
|
Production & other equipment
|
1,639
|
|
2,296
|
|
1,453
|
|
(169
|
)
|
—
|
|
(2,825
|
)
|
—
|
|
1
|
|
2,395
|
|
Total right-of-use lease assets
|
1,639
|
|
96,049
|
|
9,386
|
|
(2,126
|
)
|
(8,473
|
)
|
(11,344
|
)
|
(2,416
|
)
|
158
|
|
82,873
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total property, plant and equipment
|
765,567
|
|
96,049
|
|
349,129
|
|
(6,995
|
)
|
(32,901
|
)
|
(74,475
|
)
|
(148,234
|
)
|
(1,760
|
)
|
946,380
|
|
(1)
|
Effective July 1, 2019, the Company adopted IFRS 16 Leases (Note 2(i)(i)).
|
(2)
|
Includes reclassification of construction in progress cost when associated projects are complete. Includes the $24.4 million transfer of land and real estate to assets held for sale, associated with the Exeter property, the Jamaica property and the Latin American properties (Note 11).
|
(3)
|
During the year ended June 30, 2020, the Company recorded a non-material year end correction to re-classify $34.3 million of net book value of production and other equipment which was initially classified as real estate.
|
(4)
|
As part of the Company’s restructuring activities (Note 3), management re-assessed the likelihood of executing renewal options of its existing leases which resulted in a reduction of the assessed lease term of several of the Company’s leases.
|
|
Balance, June 30, 2018
|
|
Additions
|
|
Additions from business combinations
|
|
Disposals
|
|
Other (1)
|
|
Depreciation
|
|
Foreign currency translation
|
|
Balance, June 30, 2019
|
|
Owned assets
|
|
|
|
|
|
|
|
|
||||||||
Land
|
—
|
|
20,865
|
|
18,637
|
|
—
|
|
—
|
|
—
|
|
30
|
|
39,532
|
|
Real estate
|
76,649
|
|
130,165
|
|
74,373
|
|
—
|
|
137,098
|
|
(23,280
|
)
|
50
|
|
395,055
|
|
Construction in progress
|
145,659
|
|
164,213
|
|
49,913
|
|
—
|
|
(137,098
|
)
|
888
|
|
(691
|
)
|
222,884
|
|
Computer software & equipment
|
3,494
|
|
13,757
|
|
5,204
|
|
—
|
|
(2,185
|
)
|
(4,792
|
)
|
5
|
|
15,483
|
|
Furniture & fixtures
|
3,128
|
|
4,819
|
|
3,806
|
|
—
|
|
(2,746
|
)
|
(2,505
|
)
|
(37
|
)
|
6,465
|
|
Production & other equipment
|
17,015
|
|
65,753
|
|
14,511
|
|
—
|
|
2,746
|
|
(15,443
|
)
|
(73
|
)
|
84,509
|
|
Total owned assets
|
245,945
|
|
399,572
|
|
166,444
|
|
—
|
|
(2,185
|
)
|
(45,132
|
)
|
(716
|
)
|
763,928
|
|
|
|
|
|
|
|
|
|
|
||||||||
Right-of-use leased assets
|
|
|
|
|
|
|
|
|||||||||
Land
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Real estate
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Production & other equipment
|
407
|
|
859
|
|
607
|
|
—
|
|
—
|
|
(234
|
)
|
—
|
|
1,639
|
|
Total right-of-use lease assets
|
407
|
|
859
|
|
607
|
|
—
|
|
—
|
|
(234
|
)
|
—
|
|
1,639
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total property, plant and equipment
|
246,352
|
|
400,431
|
|
167,051
|
|
—
|
|
(2,185
|
)
|
(45,366
|
)
|
(716
|
)
|
765,567
|
|
(1)
|
Includes reclassifications and other adjustments.
|
|
|
|
i.
|
Revenue decline - Slower than anticipated launch of new products resulting in a decrease of expected sales and profitability for the Canadian Hemp CGU as compared to outcomes initially forecasted by management;
|
i.
|
Change in strategic plans - As at March 31, 2020, management was evaluating the Company’s strategy and market opportunities with respect to hemp-derived CBD, including the divestiture of certain Canadian Hemp assets (Note 26).
|
|
|
|
Accounting Policy
Assets Held for Sale
Non-current assets, or disposal groups comprising assets and liabilities, are classified as held-for-sale if it is highly probable that they will be recovered primarily through sale rather than through continued use. Such assets, or disposal groups, are generally measured at the lower of their carrying amount and the fair value less costs of disposal. Impairment losses recognized upon initial classification as held-for-sale and subsequent gains and losses on re-measurement are recognized in the statement of comprehensive loss. Once classified as held-for-sale, intangible assets and property, plant and equipment are no longer amortized or depreciated.
Discontinued Operations
A disposal group qualifies as discontinued operations if it is a component of an entity that has either been disposed of, or is classified as held for sale, and (i) represents a separate major line of business or geographical area of operations, (ii) is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations, or (iii) is a subsidiary acquired exclusively with a view to resale.
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the consolidated statement of comprehensive loss and comparative periods have been restated.
|
(a)
|
Assets Held for Sale
|
|
|
Land
|
|
Building & Improvements
|
|
Total
|
|
|
|
$
|
|
$
|
|
$
|
|
Net book value
|
|
2,653
|
|
17,024
|
|
19,677
|
|
Impairment
|
|
(734
|
)
|
(709
|
)
|
(1,443
|
)
|
Fair value transferred to assets held for sale
|
|
1,919
|
|
16,315
|
|
18,234
|
|
Impairment
|
|
(485
|
)
|
(9,119
|
)
|
(9,604
|
)
|
Fair value
|
|
1,434
|
|
7,196
|
|
8,630
|
|
Proceeds from disposal
|
|
1,393
|
|
7,214
|
|
8,607
|
|
(Loss) gain on disposal
|
|
(41
|
)
|
18
|
|
(23
|
)
|
|
|
|
(b)
|
Discontinued Operations
|
|
|
Years ended,
|
|
||
|
|
June 30, 2020
|
|
June 30, 2019
|
|
Operating results from discontinued operations
|
|
$
|
|
$
|
|
Revenue
|
|
—
|
|
2,403
|
|
General and administration expenses
|
|
5,951
|
|
1,912
|
|
Other expenses
|
|
572
|
|
1,661
|
|
Loss on disposal of discontinued operations
|
|
2,816
|
|
—
|
|
Net loss from discontinued operations before taxes
|
|
(9,339
|
)
|
(1,170
|
)
|
Income tax (expense) recovery
|
|
(505
|
)
|
1,314
|
|
Net loss (income) from discontinued operations, net of tax
|
|
(9,844
|
)
|
144
|
|
Accounting Policy
A business combination is a transaction or event in which an acquirer obtains control of one or more businesses and is accounted for using the acquisition method. The total consideration paid for the acquisition is the aggregate of the fair values of assets acquired, liabilities assumed, and equity instruments issued in exchange for control of the acquiree at the acquisition date. The acquisition date is the date when the Company obtains control of the acquiree. The identifiable assets acquired and liabilities assumed are recognized at their acquisition date fair values, except for deferred taxes and share-based payment awards where IFRS provides exceptions to recording the amounts at fair value. Goodwill represents the difference between total consideration paid and the fair value of the net identifiable assets acquired. Acquisition costs incurred are expensed through the statement of comprehensive loss.
Contingent consideration is measured at its acquisition date fair value and is included as part of the consideration transferred in a business combination, subject to the applicable terms and conditions. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IFRS 9 Financial Instruments with the corresponding gain or loss recognized in profit or loss.
Based on the facts and circumstances that existed at the acquisition date, management will perform a valuation analysis to allocate the purchase price based on the fair values of the identifiable assets acquired and liabilities assumed on the acquisition date. Management has one year from the acquisition date to confirm and finalize the facts and circumstances that support the finalized fair value analysis and related purchase price allocation. Until such time, these values are provisionally reported and are subject to change. Changes to fair values and allocations are retrospectively adjusted in subsequent periods.
In determining the fair value of all identifiable assets acquired and liabilities assumed, the most significant estimates generally relate to contingent consideration and intangible assets. Management exercises judgment in estimating the probability and timing of when earn-out milestones are expected to be achieved, which is used as the basis for estimating fair value. Identified intangible assets are fair valued using appropriate valuation techniques which are generally based on a forecast of the total expected future net cash flows of the acquiree. Valuations are highly dependent on the inputs used and assumptions made by management regarding the future performance of these assets and any changes in the discount rate applied.
Acquisitions that do not meet the definition of a business combination are accounted for as asset acquisitions. Consideration paid for an asset acquisition is allocated to the individual identifiable assets acquired and liabilities assumed based on their relative fair values. Asset acquisitions do not give rise to goodwill.
|
|
|
|
(a)
|
Business Combinations Completed During the Year Ended June 30, 2020
|
i)
|
Reliva LLC (“Reliva”)
|
Total consideration
|
$
|
|
Cash paid
|
—
|
|
Common shares issued
|
52,380
|
|
Funds held in escrow
|
688
|
|
|
53,068
|
|
|
|
|
Net identifiable assets acquired (liabilities assumed)
|
|
|
Cash
|
280
|
|
Accounts receivable
|
316
|
|
Inventories
|
1,195
|
|
Prepaids and other current assets
|
657
|
|
Intangible asset: Distribution network
|
13,489
|
|
Accounts payable and accrued liabilities
|
(429
|
)
|
Deferred revenue
|
(618
|
)
|
|
14,890
|
|
|
|
|
Purchase price allocation
|
|
|
Net identifiable assets acquired
|
14,890
|
|
Goodwill
|
38,178
|
|
|
53,068
|
|
|
|
|
Net cash outflows
|
|
|
Cash consideration paid
|
—
|
|
Cash acquired
|
280
|
|
|
280
|
|
|
|
|
Acquisition costs expensed
|
|
|
Year ended June 30, 2020
|
1,849
|
|
|
|
|
(b)
|
Business Combinations Completed During the Year Ended June 30, 2019
|
(1)
|
Goodwill arising from acquisitions represent expected synergies, future income and growth, and other intangibles that do not qualify for separate recognition, as well as the deferred tax liability recognized for all taxable temporary differences. None of the goodwill arising on these acquisitions are expected to be deductible for tax purposes.
|
|
|
|
(i)
|
MedReleaf
|
|
Provisional allocation
at acquisition
|
|
Adjustments
|
|
Final
|
|
|
$
|
|
$
|
|
$
|
|
Consideration payable
|
2,644,115
|
|
(108
|
)
|
2,644,007
|
|
Loans receivable
|
845
|
|
(845
|
)
|
—
|
|
Property, plant and equipment
|
134,414
|
|
(15,090
|
)
|
119,324
|
|
Intangible assets
|
335,988
|
|
(51,001
|
)
|
284,987
|
|
Loans and borrowings
|
(845
|
)
|
845
|
|
—
|
|
Provision
|
—
|
|
(4,200
|
)
|
(4,200
|
)
|
Deferred tax liability
|
(75,920
|
)
|
15,935
|
|
(59,985
|
)
|
Goodwill
|
2,086,382
|
|
54,248
|
|
2,140,630
|
|
(ii)
|
Anandia Laboratories Inc. (“Anandia”)
|
|
|
|
(iii)
|
Aurora Hemp Europe UAB (“Aurora Hemp Europe”)(formerly UAB Agropro (“Agropro”) and UAB Borela (“Borela”))
|
(iv)
|
ICC Labs Inc. (“ICC”)
|
|
Provisional allocation
at acquisition
|
|
Adjustments
|
|
Final
|
|
|
$
|
|
$
|
|
$
|
|
Property, plant and equipment
|
18,012
|
|
(5,300
|
)
|
12,712
|
|
Intangible assets
|
141,558
|
|
8,187
|
|
149,745
|
|
Deferred tax liability
|
(35,389
|
)
|
32,772
|
|
(2,617
|
)
|
Goodwill
|
131,154
|
|
(35,658
|
)
|
95,496
|
|
(v)
|
Whistler Medical Marijuana Corporation (“Whistler”)
|
•
|
1,121,736 common shares with a fair value of $130.8 million;
|
•
|
$2.9 million related to the settlement of a pre-existing loan; and
|
•
|
$24.4 million of contingent consideration, which represents the estimated fair value of $25.1 million gross consideration to be paid in Aurora common shares upon achievement of certain milestones related to Whistler’s Pemberton facility obtaining a cannabis license and the facility being fully planted.
|
|
|
|
|
Provisional allocation
at acquisition
|
|
Adjustments
|
|
Final
|
|
|
$
|
|
$
|
|
$
|
|
Net identifiable assets acquired, excluding intangible assets
|
18,238
|
|
(517
|
)
|
17,721
|
|
Intangible assets
|
31,100
|
|
(300
|
)
|
30,800
|
|
Goodwill
|
108,763
|
|
817
|
|
109,580
|
|
(vi)
|
Immaterial Transactions
|
Accounting Policy
Non-controlling interests (“NCI”) are recognized either at fair value or at the NCI’s proportionate share of the acquiree’s net assets, determined on an acquisition-by-acquisition basis. For each acquisition, the excess of total consideration, the fair value of previously held equity interests held prior to obtaining control and the NCI in the acquiree, over the fair value of the identifiable net asset acquired, is recorded as goodwill.
|
|
|
June 30, 2020
|
|
|
|
$
|
|
Current assets
|
|
5,947
|
|
Non-current assets
|
|
21,171
|
|
Current liabilities
|
|
3,067
|
|
Non-current liabilities
|
|
80,590
|
|
Revenue for the year ended
|
|
171
|
|
Net loss for the year ended
|
|
(54,421
|
)
|
|
|
|
Note 14
|
Intangible Assets and Goodwill
|
|
|
|
|
|
|
|
June 30, 2020
|
June 30, 2019
|
||||||||||||
|
Cost
|
|
Accumulated amortization
|
|
Impairment
|
|
Net book value
|
|
Cost
|
|
Accumulated amortization
|
|
Net book value
|
|
Definite life intangible assets:
|
|
|
|
|
|
|
|
|||||||
Customer relationships and distribution network
|
104,807
|
|
(29,209
|
)
|
(4,203
|
)
|
71,395
|
|
86,278
|
|
(14,710
|
)
|
71,568
|
|
Permits and licenses
|
216,220
|
|
(29,260
|
)
|
(105,345
|
)
|
81,615
|
|
227,916
|
|
(18,588
|
)
|
209,328
|
|
Patents
|
1,895
|
|
(477
|
)
|
—
|
|
1,418
|
|
1,895
|
|
(293
|
)
|
1,602
|
|
Intellectual property and know-how
|
82,500
|
|
(25,308
|
)
|
(4,401
|
)
|
52,791
|
|
82,500
|
|
(12,386
|
)
|
70,114
|
|
Software
|
35,137
|
|
(3,472
|
)
|
—
|
|
31,665
|
|
17,824
|
|
(1,172
|
)
|
16,652
|
|
Indefinite life intangible assets:
|
|
|
|
|
|
|
|
|||||||
Brand
|
148,399
|
|
—
|
|
(1,700
|
)
|
146,699
|
|
148,399
|
|
—
|
|
148,399
|
|
Permits and licenses
|
170,098
|
|
—
|
|
(143,414
|
)
|
26,684
|
|
170,703
|
|
—
|
|
170,703
|
|
Total intangible assets
|
759,056
|
|
(87,726
|
)
|
(259,063
|
)
|
412,267
|
|
735,515
|
|
(47,149
|
)
|
688,366
|
|
Goodwill
|
3,213,513
|
|
—
|
|
(2,285,081
|
)
|
928,432
|
|
3,172,550
|
|
—
|
|
3,172,550
|
|
Total
|
3,972,569
|
|
(87,726
|
)
|
(2,544,144
|
)
|
1,340,699
|
|
3,908,065
|
|
(47,149
|
)
|
3,860,916
|
|
|
Balance, June 30, 2019
|
|
Additions (2)
|
|
Disposals
|
|
Amortization
|
|
Impairment
|
|
Foreign currency translation
|
|
Balance, June 30, 2020
|
|
Definite life intangible assets:
|
|
|
|
|
|
|
|
|||||||
Customer relationships and distribution network
|
71,568
|
|
18,529
|
|
—
|
|
(14,499
|
)
|
(4,203
|
)
|
—
|
|
71,395
|
|
Permits and licenses
|
209,328
|
|
493
|
|
(12,189
|
)
|
(10,672
|
)
|
(105,345
|
)
|
—
|
|
81,615
|
|
Patents
|
1,602
|
|
—
|
|
—
|
|
(184
|
)
|
—
|
|
—
|
|
1,418
|
|
Intellectual property and know-how
|
70,114
|
|
—
|
|
—
|
|
(12,922
|
)
|
(4,401
|
)
|
—
|
|
52,791
|
|
Software
|
16,652
|
|
17,313
|
|
—
|
|
(2,300
|
)
|
—
|
|
—
|
|
31,665
|
|
Indefinite life intangible assets:
|
|
|
|
|
|
|
|
|||||||
Brand
|
148,399
|
|
—
|
|
—
|
|
—
|
|
(1,700
|
)
|
—
|
|
146,699
|
|
Permits and licenses (1)
|
170,703
|
|
—
|
|
—
|
|
—
|
|
(143,414
|
)
|
(605
|
)
|
26,684
|
|
Total intangible assets
|
688,366
|
|
36,335
|
|
(12,189
|
)
|
(40,577
|
)
|
(259,063
|
)
|
(605
|
)
|
412,267
|
|
Goodwill
|
3,172,550
|
|
38,178
|
|
—
|
|
—
|
|
(2,285,081
|
)
|
2,785
|
|
928,432
|
|
Total
|
3,860,916
|
|
74,513
|
|
(12,189
|
)
|
(40,577
|
)
|
(2,544,144
|
)
|
2,180
|
|
1,340,699
|
|
(1)
|
Indefinite life permits and licenses are predominantly held by the Company’s foreign subsidiaries. Given that these permits and licenses are connected to the subsidiary rather than a specific asset, there is no foreseeable limit to the period over which these assets are expected to generate future cash inflows for the Company.
|
(2)
|
Included in the $74.5 million additions is (i) a $13.5 million distribution network intangible asset and $38.2 million goodwill from the acquisition of Reliva (Note 12(a)(i)); (ii) $17.3 million from capitalized ERP costs; and (iii) $5.0 million from the acquisition of a customer list purchased through the issuance of common shares (Note 17(b)(i)).
|
|
Balance, June 30, 2018 (2)
|
|
Additions from acquisitions
|
|
Additions (4)
|
|
Amortization
|
|
Impairment
|
|
Foreign currency translation
|
|
Balance, June 30, 2019
|
|
Definite life intangible assets:
|
|
|
|
|
|
|
|
|||||||
Customer relationships
|
9,331
|
|
69,400
|
|
5,362
|
|
(12,486
|
)
|
(39
|
)
|
—
|
|
71,568
|
|
Permits and licenses
|
95,471
|
|
111,300
|
|
19,202
|
|
(16,645
|
)
|
—
|
|
—
|
|
209,328
|
|
Patents
|
2,132
|
|
130
|
|
—
|
|
(204
|
)
|
(456
|
)
|
—
|
|
1,602
|
|
Intellectual property and know-how
|
—
|
|
82,500
|
|
—
|
|
(12,386
|
)
|
—
|
|
—
|
|
70,114
|
|
Software (1)
|
—
|
|
—
|
|
17,824
|
|
(1,172
|
)
|
—
|
|
—
|
|
16,652
|
|
Indefinite life intangible assets (3):
|
|
|
|
|
|
|
|
|||||||
Brand
|
70,854
|
|
78,200
|
|
—
|
|
—
|
|
(655
|
)
|
—
|
|
148,399
|
|
Permits and licenses
|
22,544
|
|
153,702
|
|
—
|
|
—
|
|
(3,962
|
)
|
(1,581
|
)
|
170,703
|
|
Total intangible assets
|
200,332
|
|
495,232
|
|
42,388
|
|
(42,893
|
)
|
(5,112
|
)
|
(1,581
|
)
|
688,366
|
|
Goodwill
|
760,744
|
|
2,416,940
|
|
—
|
|
—
|
|
(3,890
|
)
|
(1,244
|
)
|
3,172,550
|
|
Total
|
961,076
|
|
2,912,172
|
|
42,388
|
|
(42,893
|
)
|
(9,002
|
)
|
(2,825
|
)
|
3,860,916
|
|
(1)
|
During the year ended June 30, 2019, capitalized ERP costs with a net book value of $2.1 million were reclassified in accordance with IAS 38 - Intangible Assets from computer software & equipment in property, plant and equipment owned assets (Note 10) to intangible assets.
|
|
|
|
(2)
|
In accordance with IFRS 3 - Business Combinations, acquisition date fair values assigned to intangible assets have been adjusted, within the applicable measurement period, where new information is obtained about facts and circumstances that existed at the acquisition date (Note 12). Related amortization amounts have also been adjusted to reflect the outcomes of the finalized business combination purchase price allocations.
|
(3)
|
Indefinite life permits and licenses are predominantly held by the Company’s foreign subsidiaries. Given that these permits and licenses are connected to the subsidiary rather than a specific asset, there is no foreseeable limit to the period over which these assets are expected to generate future cash inflows for the Company.
|
(4)
|
Included in the $42.4 million additions are $4.5 million and $5.4 million for the acquisition of an operating license and customer list, respectively, purchased through the issuance of common shares (Note 17(b)(i)).
|
i.
|
Cash flows: Estimated cash flows were projected based on actual operating results from internal sources as well as industry and market trends. Estimated cash flows are primarily driven by sales volumes, selling prices and operating costs. The forecasts are extended to a total of five years (and a terminal year thereafter);
|
ii.
|
Terminal value growth rate: The terminal growth rate was based on historical and projected consumer price inflation, historical and projected economic indicators, and projected industry growth;
|
iii.
|
Post-tax discount rate: The post-tax discount rate is reflective of the CGUs Weighted Average Cost of Capital (“WACC”). The WACC was estimated based on the risk-free rate, equity risk premium, beta adjustment to the equity risk premium based on a direct comparison approach, an unsystematic risk premium, and after-tax cost of debt based on corporate bond yields; and
|
iv.
|
Tax rate: The tax rates used in determining the future cash flows were those substantively enacted at the respective valuation date.
|
|
Indefinite Life Intangible Impairment Testing
|
|
|
Goodwill Impairment Testing
|
|
|||||||||||
|
Canadian Cannabis CGU
|
|
European Cannabis CGU
|
|
Latin American CGU
|
|
|
Cannabis Operating Segment
|
|
U.S CBD CGU(1)
|
|
|||||
June 30, 2020
|
|
|
|
|
|
|
||||||||||
Terminal value growth rate
|
3.0
|
%
|
3.0
|
%
|
n/a
|
|
|
3.0
|
%
|
3.0
|
%
|
|||||
Discount rate
|
16.1
|
%
|
16.0
|
%
|
n/a
|
|
|
16.1
|
%
|
20.3
|
%
|
|||||
Budgeted revenue growth rate (average of next five years)
|
44.9
|
%
|
75.0
|
%
|
n/a
|
|
|
45.4
|
%
|
212.4
|
%
|
|||||
Fair value less cost to dispose
|
|
$1,956,844
|
|
|
$113,703
|
|
n/a
|
|
|
|
$2,188,056
|
|
|
$54,367
|
|
|
|
|
|
|
|
|
|
||||||||||
June 30, 2019
|
|
|
|
|
|
|
||||||||||
Terminal value growth rate
|
3.0
|
%
|
3.0
|
%
|
1.9
|
%
|
|
3.0
|
%
|
n/a
|
|
|||||
Discount rate
|
11.5
|
%
|
18.5
|
%
|
28.4
|
%
|
|
13.5
|
%
|
n/a
|
|
|||||
Budgeted revenue growth rate (average of next five years)
|
69.5
|
%
|
88.7
|
%
|
60.5
|
%
|
|
78.6
|
%
|
n/a
|
|
|||||
Fair value less cost to dispose
|
|
$4,287,265
|
|
|
$50,707
|
|
|
$299,012
|
|
|
|
$6,037,423
|
|
n/a
|
|
(1)
|
Goodwill is a result of the Company’s acquisition of Reliva (Note 12(a)(i)) on May 28, 2020; no comparative period information is presented.
|
|
|
|
i.
|
Revenue decline - Constraints in the provincial retail distribution network, including a slower than expected roll-out of retail stores across Canada, has resulted in a decrease of expected sales and profitability as compared to outcomes initially forecasted by management;
|
ii.
|
Change in strategic plans - Halting of construction at Aurora’s Nordic Sky Facility and deferral of the majority of final construction and commissioning activities at its Aurora Sun Facility;
|
iii.
|
Decline in stock price and market capitalization - As at December 31, 2019, the carrying amount of the Company’s total net assets exceeded the Company’s market capitalization.
|
|
Canadian Cannabis CGU
|
|
Latin American CGU
|
|
European Hemp CGU
|
|
Analytical Testing CGU
|
|
||||
Terminal value growth rate
|
3.0
|
%
|
3.0
|
%
|
3.0
|
%
|
3.0
|
%
|
||||
Discount Rate
|
11.5
|
%
|
31.8
|
%
|
15.0
|
%
|
14.0
|
%
|
||||
Budgeted Revenue growth rate (average of next five years)
|
50.6
|
%
|
3.0
|
%
|
13.5
|
%
|
12.5
|
%
|
||||
Fair Value Less Cost to Dispose
|
|
$3,712,967
|
|
|
$12,386
|
|
|
$11,572
|
|
|
$8,064
|
|
|
|
|
Note 15
|
Convertible Debentures
|
Accounting Policy
Convertible debentures are financial instruments which are accounted for separately dependent on the nature of their components: a financial liability and an equity instrument. The identification of such components embedded within a convertible debenture requires significant judgment given that it is based on the interpretation of the substance of the contractual arrangement. Where the conversion option has a fixed conversion rate, the financial liability, which represents the obligation to pay coupon interest on the convertible debentures in the future, is initially measured at its fair value and subsequently measured at amortized cost. The residual amount is accounted for as an equity instrument at issuance. Where the conversion option has a variable conversion rate, the conversion option is recognized as a derivative liability measured at fair value through profit and loss. The residual amount is recognized as a financial liability and subsequently measured at amortized cost. The determination of the fair value is also an area of significant judgment given that it is subject to various inputs, assumptions and estimates including: contractual future cash flows, discount rates, credit spreads and volatility.
Transaction costs are apportioned to the debt liability and equity components in proportion to the allocation of proceeds.
|
|
|
|
|
Nov 2017
(i) |
|
Mar 2018
(ii) |
|
Jan 2019
(iii) |
|
Total
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Balance, June 30, 2018
|
637
|
|
190,891
|
|
—
|
|
191,528
|
|
Issued
|
—
|
|
—
|
|
460,610
|
|
460,610
|
|
Conversion option portion
|
—
|
|
—
|
|
(169,228
|
)
|
(169,228
|
)
|
Financing fees
|
—
|
|
—
|
|
(14,965
|
)
|
(14,965
|
)
|
Conversion of debt
|
(640
|
)
|
(378
|
)
|
—
|
|
(1,018
|
)
|
Interest paid
|
(69
|
)
|
(11,466
|
)
|
—
|
|
(11,535
|
)
|
Accretion
|
34
|
|
21,574
|
|
10,046
|
|
31,654
|
|
Accrued interest
|
38
|
|
11,473
|
|
10,886
|
|
22,397
|
|
Unrealized gain on foreign exchange
|
—
|
|
—
|
|
(5,862
|
)
|
(5,862
|
)
|
Balance, June 30, 2019
|
—
|
|
212,094
|
|
291,487
|
|
503,581
|
|
Current portion
|
—
|
|
(212,094
|
)
|
(23,815
|
)
|
(235,909
|
)
|
Long-term portion
|
—
|
|
—
|
|
267,672
|
|
267,672
|
|
|
|
|
|
|
||||
Balance, June 30, 2019
|
—
|
|
212,094
|
|
291,487
|
|
503,581
|
|
Conversion of debt
|
—
|
|
(219,614
|
)
|
—
|
|
(219,614
|
)
|
Interest paid
|
—
|
|
(7,948
|
)
|
(27,789
|
)
|
(35,737
|
)
|
Accretion
|
—
|
|
9,857
|
|
26,942
|
|
36,799
|
|
Accrued interest
|
—
|
|
7,917
|
|
25,548
|
|
33,465
|
|
Principal repayment
|
—
|
|
(2,306
|
)
|
—
|
|
(2,306
|
)
|
Unrealized gain on foreign exchange
|
—
|
|
—
|
|
10,850
|
|
10,850
|
|
Balance, June 30, 2020
|
—
|
|
—
|
|
327,038
|
|
327,038
|
|
Current portion
|
—
|
|
—
|
|
(32,110
|
)
|
(32,110
|
)
|
Long-term portion
|
—
|
|
—
|
|
294,928
|
|
294,928
|
|
(i)
|
Represents $115.0 million principal amount of convertible debentures that were unsecured, bore interest at 6% per annum and mature on November 28, 2022. The principal amount of the debentures is convertible by the holder into common shares of the Company at $78.00 per share subject to a forced conversion if the VWAP of the Company’s common shares exceed $108.00 per share for 10 consecutive trading days. The convertible debenture was fully converted during the year ended June 30, 2019.
|
(ii)
|
On March 9, 2018, the Company completed a private placement of $230.0 million 2-year unsecured convertible debentures (the ”March 2018 Debentures”). The debentures bore interest at 5% per annum, payable semi-annually. The debentures were convertible by the holder into common shares of the Company at a price of $156.60 per share subject to a forced conversion if the VWAP of the Company’s common shares exceeded $204.00 per share for 10 consecutive trading days.
|
(iii)
|
On January 24, 2019, the Company issued $460.6 million (US$345.0 million) in aggregate principal amount of Convertible Senior Notes due 2024 (“Senior Notes”) issued at par value. Holders may convert all or any portion of the Senior Notes at any time. The Senior Notes are unsecured, mature on February 28, 2024 and bear cash interest semi-annually at a rate of 5.5% per annum. The initial conversion rate for the Senior Notes is 11.53 common shares per US$1,000 principal amount of Senior Notes, equivalent to an initial conversion price of approximately US$86.72 per common share.
|
|
|
|
Note 16
|
Loans and Borrowings
|
Accounting Policy
Loans and borrowings are classified as other financial liabilities and are measured at fair value at initial recognition and subsequently at amortized cost. Transactions costs are deferred and amortized over the term of the liability.
On July 1, 2019, the Company adopted IFRS 16: Leases (Note 2(i)(i)) which replaced IAS 17: Leases.
|
|
Note
|
June 30, 2020
|
|
June 30, 2019
|
|
|
|
$
|
|
$
|
|
Term loan credit facilities
|
16(a)
|
113,921
|
|
139,900
|
|
Debentures
|
|
4
|
|
18
|
|
Lease liabilities
|
16(b)
|
90,284
|
|
1,326
|
|
Total loans and borrowings
|
|
204,209
|
|
141,244
|
|
Current portion
|
|
(120,508
|
)
|
(13,758
|
)
|
Long-term portion
|
|
83,701
|
|
127,486
|
|
|
|
|
(a)
|
Credit facilities
|
|
Term loan credit facilities
|
|
Revolving credit facility
|
|
|
$
|
|
$
|
|
Balance, June 30, 2018
|
10,637
|
|
—
|
|
Additions
|
150,985
|
|
—
|
|
Deferred financing fee
|
(3,744
|
)
|
—
|
|
Assumed on acquisition
|
6,003
|
|
—
|
|
Gain on debt modification
|
(1,886
|
)
|
—
|
|
Accretion
|
5,760
|
|
—
|
|
Interest payments
|
(6,479
|
)
|
—
|
|
Principal repayments
|
(21,376
|
)
|
—
|
|
Balance, June 30, 2019
|
139,900
|
|
—
|
|
Current portion
|
(13,398
|
)
|
—
|
|
Long-term portion
|
126,502
|
|
—
|
|
|
|
|
||
Balance, June 30, 2019
|
139,900
|
|
—
|
|
Additions
|
64,394
|
|
22,000
|
|
Deferred financing fee
|
(1,937
|
)
|
—
|
|
Gain on debt modification
|
(1,287
|
)
|
—
|
|
Accretion
|
12,497
|
|
108
|
|
Interest payments
|
(6,516
|
)
|
(108
|
)
|
Principal repayments
|
(93,130
|
)
|
(22,000
|
)
|
Balance, June 30, 2020
|
113,921
|
|
—
|
|
Current portion
|
(113,921
|
)
|
—
|
|
Long-term portion
|
—
|
|
—
|
|
|
|
|
•
|
Total funded debt to shareholders’ equity is not to exceed 0.20:1 at any time. Total funded debt includes all obligations (except those noted below) which constitute debt and is calculated as the total principal outstanding under Facility A, Facility B, Facility C, the January 24, 2019 Senior Notes, total obligations under capital leases determined in accordance with IAS 17: Leases, and other obligations secured by Purchase-Money Security Interests, capitalized interest, the redemption price of any securities which are redeemable at the option of the holder, and any aggregate actual hedge liability. Total funded debt excludes accounts payable, payroll accruals, accruals in respect of normal business expenses and future income taxes;
|
•
|
Maintenance of a minimum $35.0 million unrestricted cash balance at any time. Unrestricted cash is defined as the amount of cash held in bank accounts of secured companies maintained by BMO that are not subject to any lien or any other restriction that would prevent the Company from using such cash for operating purposes in the ordinary course of business, less any outstanding principal drawn under Facility A; and
|
•
|
Achievement of quarterly minimum EBITDA thresholds beginning in the quarter ending September 30, 2020. For the purposes of this calculation, EBITDA is defined as the consolidated net income of the Company excluding the following: extraordinary or non-recurring income (expenses) and gains (losses), non‐cash gains (losses) (such as unrealized foreign exchange gains (losses)) and income of the unsecured subsidiaries (except to the extent that dividends in respect of such income have been paid in cash by such unsecured subsidiaries to a secured company); plus the following amounts (to the extent such amounts were deducted in determining such consolidated net income, and without duplication): (a) Interest, fees and expenses paid in connection with permitted funded debt; (b) income and capital taxes; (c) depreciation and amortization; (d) non‐cash charges and expenses such as unrealized foreign exchange losses and charges relating to the impairment of goodwill and other intangible assets; (e) non‐cash share‐based compensation; (f) extraordinary non-recurring expenses or losses to the extent approved by the lenders in writing; and (g) any other expenses approved in writing by the lenders in their discretion. The minimum thresholds were as follows:
|
(i)
|
for the fiscal quarter ended September 30,2020: $5.0 million;
|
(ii)
|
for the fiscal quarter ended December 31,2020: $5.0 million;
|
(iii)
|
for the fiscal quarter ended March 31, 2021: $16.0 million;
|
(iv)
|
for the fiscal quarter ended June 30, 2021: $25.0 million; and
|
(v)
|
for the twelve month fiscal period ending June 30, 2021: $51.0 million
|
•
|
Total funded debt to shareholders’ equity is not to exceed 0.28:1 for the quarters ending June 30, 2020 and September 30, 2020, and shall be reduced to 0.25:1 for the quarter ending December 31, 2020 onwards. For the purposes of calculating the total funded debt to shareholders’ equity ratio, shareholders’ equity excludes the $172.3 million loss from the induced conversion of the March 2018 Debentures (Note 15(ii));
|
•
|
Total senior funded debt to EBITDA is not to exceed 3.00:1 at June 30, 2021. Total senior funded debt is defined as total funded debt of the Aurora and its subsidiaries, other than subordinated debt and such convertible notes as agreed to be excluded by the Lenders;
|
•
|
Maintenance of a minimum $35.0 million unrestricted cash balance at any time; and
|
•
|
Achievement of quarterly minimum EBITDA thresholds as follows:
|
(i)
|
for the fiscal quarter ended September 30,2020: $(11.0) million;
|
(ii)
|
for the fiscal quarter ended December 31,2020: $4.0 million;
|
(iii)
|
for the fiscal quarter ended March 31, 2021: $10.0 million;
|
(iv)
|
for the fiscal quarter ended June 30, 2021: $17.0 million; and
|
|
|
|
(v)
|
for the twelve month fiscal period ending June 30, 2021: $20.0 million.
|
(b)
|
Lease liabilities
|
|
|
$
|
|
Balance, June 30, 2018
|
|
448
|
|
Lease additions
|
|
985
|
|
Assumed on acquisition
|
|
298
|
|
Lease payments
|
|
(405
|
)
|
Balance, June 30, 2019
|
|
1,326
|
|
Current portion
|
|
(360
|
)
|
Long-term portion
|
|
966
|
|
|
|
|
|
Balance, June 30, 2019
|
|
1,326
|
|
IFRS 16 transition (1)
|
|
95,464
|
|
Lease additions
|
|
9,465
|
|
Disposal of leases
|
|
(2,123
|
)
|
Lease payments
|
|
(13,468
|
)
|
Lease term reduction and other items (2)
|
|
(6,108
|
)
|
Changes due to foreign exchange rates
|
|
185
|
|
Interest expense on lease liabilities
|
|
5,543
|
|
Balance, June 30, 2020
|
|
90,284
|
|
Current portion
|
|
(6,587
|
)
|
Long-term portion
|
|
83,697
|
|
(1)
|
Effective July 1, 2019, the Company adopted IFRS 16 Leases (Note 2(i)(i)).
|
(2)
|
As part of the Company’s restructuring activities (Note 3), management re-assessed the likelihood of executing renewal options of its existing leases which resulted in a reduction of the assessed lease term of several of the Company’s leases.
|
Note 17
|
Share Capital
|
(a)
|
Authorized
|
(i)
|
Unlimited number of common voting shares without par value.
|
(ii)
|
Unlimited number of Class “A” Shares each with a par value of $1.00.
|
(iii)
|
Unlimited number of Class “B” Shares each with a par value of $5.00.
|
|
|
|
(b)
|
Issued and outstanding
|
(i)
|
Shares for business combinations, asset acquisitions and strategic investments
|
|
Note
|
Number of
shares issued
|
|
Share capital
|
|
|
|
#
|
|
$
|
|
Year ended June 30, 2020
|
|
|
|
||
Acquisition of Reliva
|
12(a)(i)
|
2,480,810
|
|
52,380
|
|
Acquisition of intangible asset
|
14
|
209,123
|
|
5,040
|
|
|
|
2,689,933
|
|
57,420
|
|
|
|
|
|
||
Year ended June 30, 2019
|
|
|
|
||
Acquisition of MedReleaf
|
12(b)(i)
|
30,843,353
|
|
2,568,634
|
|
Acquisition of Anandia
|
12(b)(ii)
|
1,059,707
|
|
78,588
|
|
Acquisition of Aurora Hemp Europe
|
12(b)(iii)
|
36,738
|
|
3,641
|
|
Acquisition of ICC
|
12(b)(iv)
|
2,658,722
|
|
255,237
|
|
Acquisition of Whistler
|
12(b)(v)
|
1,138,994
|
|
132,852
|
|
Acquisition of immaterial acquisitions
|
12(b)(vi)
|
22,376
|
|
2,101
|
|
Acquisition of intangible assets
|
14
|
113,864
|
|
9,841
|
|
Investment in EnWave
|
5(j)
|
70,049
|
|
10,000
|
|
|
|
35,943,803
|
|
3,060,894
|
|
(ii)
|
Shares issued for earn-out payments
|
(iii)
|
Shares issued for equity financing
|
|
|
|
(c)
|
Share Purchase Warrants
|
Exercise Price ($)
|
Expiry Date
|
Warrants (#)
|
|
16.36 - 48.00
|
November 2, 2020 - May 29, 2025
|
550,555
|
|
112.46 - 116.09
|
August 9, 2023 to August 22, 2024
|
528,192
|
|
|
|
1,078,747
|
|
(d)
|
Compensation Options
|
|
|
Compensation options
|
|
Weighted average
exercise price
|
|
|
|
#
|
|
$
|
|
Balance, June 30, 2018
|
|
300
|
|
55.52
|
|
Exercised
|
|
(300
|
)
|
55.52
|
|
Balance, June 30, 2019 and 2020
|
|
—
|
|
—
|
|
|
|
|
Note 18
|
Share-Based Compensation
|
Accounting Policy
Stock Options
Stock options issued to employees are measured at fair value at the grant date and are recognized as an expense over the relevant vesting periods with a corresponding credit to share reserves.
Stock options issued to non-employees are measured at the fair value of goods or services received or the fair value of equity instruments issued, if it is determined that the fair value of the goods or services cannot be reliably measured. The fair value of non-employee stock options is recorded as an expense at the date the goods or services are received with a corresponding credit to share reserves.
Depending on the complexity of the stock option terms, the fair value of options is calculated using either the Black-Scholes option pricing model or the Binomial model. When determining the fair value of stock options, management is required to make certain assumptions and estimates related to expected lives, volatility, risk-free rate, future dividend yields and estimated forfeitures at the initial grant date.
The number of options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest. Upon the exercise of stock options, proceeds received from stock option holders are recorded as an increase to share capital and the related share reserve is transferred to share capital.
Restricted Share Units (“RSUs”) and Deferred Share Units (“DSUs”)
RSUs are equity-settled share-based payments. RSUs are measured at their intrinsic fair value on the date of grant based on the closing price of the Company’s shares on the date prior to the grant, and is recognized as share-based compensation expense over the vesting period with a corresponding credit to share reserves. Under IFRS, the Company’s DSUs are classified as equity-settled share-based payment transactions as they are settled in either cash or common shares at the sole discretion of Aurora. As such, the DSUs are measured in the same manner as RSUs.
The amount recognized for services received as consideration for the RSUs and DSUs granted is based on the number of equity instruments that eventually vest. Upon the release of RSUs and DSUs, the related share reserve is transferred to share capital.
|
(a)
|
Stock Options
|
|
Stock
Options
|
|
Weighted Average
Exercise Price
|
|
|
#
|
|
$
|
|
Balance, June 30, 2018
|
2,346,343
|
|
64.32
|
|
Granted
|
4,897,993
|
|
97.44
|
|
Exercised (1)
|
(1,202,242
|
)
|
38.64
|
|
Forfeited
|
(348,697
|
)
|
100.92
|
|
Balance, June 30, 2019
|
5,693,397
|
|
95.88
|
|
Granted
|
1,232,796
|
|
54.27
|
|
Exercised (1)
|
(103,828
|
)
|
26.91
|
|
Expired
|
(135,926
|
)
|
51.72
|
|
Forfeited
|
(937,936
|
)
|
98.94
|
|
Balance, June 30, 2020
|
5,748,503
|
|
88.60
|
|
(1)
|
The weighted average share price on the option exercise dates for the year ended June 30, 2020 was $78.08 (year ended June 30, 2019 – $120.60).
|
|
|
|
Exercise Price ($)
|
Expiry Date
|
Weighted Average Remaining Life
|
Options Outstanding (#)
|
|
Options Exercisable (#)
|
|
3.54 - 19.80
|
August 10, 2020 - June 24, 2025
|
2.61
|
96,383
|
|
72,949
|
|
21.72 - 83.88
|
August 9, 2020 - May 25, 2025
|
3.13
|
1,848,143
|
|
1,001,407
|
|
84.00 - 119.88
|
December 21, 2022 - September 19, 2024
|
3.35
|
1,441,674
|
|
598,656
|
|
120.00 - 131.52
|
November 8, 2023 - March 13, 2026
|
5.37
|
1,928,815
|
|
758,568
|
|
132.00 - 202.33
|
October 23, 2023 - May 28, 2024
|
3.36
|
433,488
|
|
216,549
|
|
|
|
3.95
|
5,748,503
|
|
2,648,129
|
|
|
Year ended
June 30, 2020
|
|
Year ended
June 30, 2019
|
|
Risk-free annual interest rate (1)
|
0.88
|
%
|
1.81
|
%
|
Expected annual dividend yield
|
0
|
%
|
0
|
%
|
Expected stock price volatility (2)
|
89.60
|
%
|
81.37
|
%
|
Expected life of options (years) (3)
|
2.37
|
|
2.96
|
|
Forfeiture rate
|
12.54
|
%
|
4.17
|
%
|
(1)
|
The risk-free rate is based on Canada government bonds with a remaining term equal to the expected life of the options.
|
(2)
|
Volatility was estimated by using the average historical volatility of the Company.
|
(3)
|
The expected life in years represents the period of time that options granted are expected to be outstanding.
|
(b)
|
Restricted Share Units (“RSU”) and Deferred Share Units (“DSU”)
|
|
RSUs and DSUs
|
|
Weighted Average
Issue Price of RSUs and DSUs
|
|
|
#
|
|
$
|
|
Balance, June 30, 2018
|
179,167
|
|
39.48
|
|
Issued
|
61,877
|
|
96.24
|
|
Vested, released and issued
|
(61,849
|
)
|
40.08
|
|
Forfeited
|
(10,000
|
)
|
50.04
|
|
Balance, June 30, 2019
|
169,195
|
|
59.28
|
|
Issued
|
266,640
|
|
37.82
|
|
Vested, released and issued
|
(44,823
|
)
|
50.58
|
|
Forfeited
|
(14,716
|
)
|
86.77
|
|
Balance, June 30, 2020
|
376,296
|
|
44.06
|
|
(1)
|
As of June 30, 2020, there were 360,098 RSUs and 16,198 DSUs outstanding (June 30, 2019 - 166,778 RSUs and 2,417 DSUs).
|
|
|
|
Weighted Average Issue Price ($)
|
Expiry Date
|
Outstanding (#)
|
|
Vested (#)
|
|
10.45 - 24.99
|
September 29, 2020 - February 10, 2025
|
209,322
|
|
23,516
|
|
25.00 - 88.67
|
August 3, 2021 - March 13, 2023
|
80,942
|
|
51,015
|
|
88.68 - 123.84
|
July 12, 2021 - January 15, 2023
|
86,032
|
|
27,025
|
|
|
|
376,296
|
|
101,556
|
|
Note 19
|
Loss Per Share
|
Accounting Policy
The Company calculates basic (loss) earnings per share by dividing net (loss) income by the weighted average number of common shares outstanding during the period. Diluted (loss) earnings per share is determined by adjusting profit or loss attributable to common shareholders and the weighted average number of common shares outstanding, for the effects of all dilutive potential common shares, which comprise convertible debentures, RSU, DSU, warrants and share options issued.
|
|
Year ended
June 30, 2020
|
|
Year ended
June 30, 2019
|
|
||
Net loss from continuing operations attributable to Aurora shareholders
|
|
($3,273,827
|
)
|
|
($293,653
|
)
|
Net loss from discontinuing operations attributable to Aurora shareholders
|
|
($9,844
|
)
|
|
$144
|
|
Net loss attributable to Aurora shareholders
|
|
($3,283,671
|
)
|
|
($293,509
|
)
|
|
|
|
||||
Weighted average number of common shares outstanding
|
96,753,429
|
|
80,122,906
|
|
||
|
|
|
||||
Continuing operations, basic and diluted loss per share
|
|
($33.84
|
)
|
|
($3.66
|
)
|
Discontinued operations, basic and diluted loss per share
|
|
($0.10
|
)
|
|
$—
|
|
Basic and diluted loss per share
|
|
($33.94
|
)
|
|
($3.66
|
)
|
Note 20
|
Other (Losses) Gains
|
|
Note
|
June 30, 2020
|
|
June 30, 2019
|
|
|
|
$
|
|
$
|
|
Share of loss from investment in associates
|
7
|
(11,534
|
)
|
(9,573
|
)
|
Gain on deemed disposal of significant influence investment
|
5(c)
|
11,955
|
|
144,368
|
|
Loss on induced conversion of debenture
|
15(ii)
|
(172,291
|
)
|
—
|
|
Unrealized loss on derivative investments
|
6(b)
|
(34,069
|
)
|
(14,866
|
)
|
Unrealized gain (loss) on derivative liability
|
15(iii)
|
175,568
|
|
(8,167
|
)
|
Unrealized gain (loss) on changes in contingent consideration fair value
|
27
|
2,357
|
|
(3,263
|
)
|
Gain on debt modification
|
16(a)
|
1,287
|
|
1,886
|
|
Gain on loss of control of subsidiary
|
|
500
|
|
412
|
|
Provision for minimum purchase commitments
|
24(b)
|
(2,416
|
)
|
—
|
|
Total other (losses) gains
|
|
(28,643
|
)
|
110,797
|
|
|
|
|
Note 21
|
Supplemental Cash Flow Information
|
|
June 30, 2020
|
|
June 30, 2019
|
|
|
$
|
|
$
|
|
Accounts receivable
|
55,459
|
|
(68,519
|
)
|
Biological assets
|
(62,177
|
)
|
(41,858
|
)
|
Inventory
|
32,787
|
|
(8,558
|
)
|
Prepaid and other current assets
|
1,748
|
|
(11,029
|
)
|
Accounts payable and accrued liabilities
|
(21,459
|
)
|
100,573
|
|
Income taxes payable
|
3,369
|
|
(6,306
|
)
|
Deferred revenue
|
2,116
|
|
(1,588
|
)
|
Provisions
|
(4,200
|
)
|
—
|
|
Changes in operating assets and liabilities
|
7,643
|
|
(37,285
|
)
|
|
June 30, 2020
|
|
June 30, 2019
|
|
|
$
|
|
$
|
|
Property, plant and equipment in accounts payable
|
7,867
|
|
41,646
|
|
Right-of-use-asset additions
|
9,386
|
|
—
|
|
Capitalized borrowing costs
|
21,961
|
|
25,244
|
|
Interest paid
|
47,904
|
|
18,055
|
|
Interest received
|
2,516
|
|
4,970
|
|
|
|
|
Note 22
|
Income Taxes
|
Accounting Policy
Tax expense recognized in profit or loss comprises the sum of current and deferred taxes not recognized in other comprehensive (loss) income or equity.
Current tax assets and liabilities
Current tax assets and/or liabilities comprise those claims from, or obligations to, fiscal authorities relating to the current or prior reporting periods that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted at the end of the reporting period. Current tax assets arise when the amount paid for taxes exceeds the amount due for the current and prior periods.
Deferred tax assets and liabilities
Deferred taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective periods of realization, provided they are enacted or substantively enacted at the end of the reporting period. Deferred tax liabilities are always provided for in full.
Deferred tax assets are recognized to the extent that it is probable that they will be able to be utilized against future taxable income. Deferred tax assets and liabilities are offset only when the Company has a right and intention to offset current tax assets and liabilities from the same taxation authority.
Changes in deferred tax assets or liabilities are recognized as a component of tax income or expense in profit or loss, except where they relate to items that are recognized in other comprehensive income or equity, in which case the related deferred tax is also recognized in other comprehensive income or equity, respectively.
Significant estimates are required in determining the Company’s provision for income taxes and uncertain tax positions. Some of these estimates are based on interpretations of existing tax laws or regulations. Various internal and external factors may have favorable or unfavorable effects on the Company’s future effective tax rate. These factors include, but are not limited to, changes in tax laws, regulations and/or rates, changing interpretations of existing tax laws or regulations, changes in estimates of prior years’ items, results of tax audits by tax authorities, future levels of research and development spending, changes in estimates related to repatriation of undistributed earnings of foreign subsidiaries, and changes in overall levels of pre-tax earnings. The realization of the Company’s deferred tax assets is primarily dependent on whether the Company is able to generate sufficient capital gains and taxable income prior to expiration of any loss carry forward balance. A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized. The assessment of whether or not a valuation allowance is required often requires significant judgment with regard to management’s assessment of the long-range forecast of future taxable income and the evaluation of tax planning initiatives. Adjustments to the deferred tax valuation allowances are made to earnings in the period when such assessments are made.
The Company records tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances and information available at the reporting date. There is inherent uncertainty in quantifying income tax positions. The Company has recorded tax benefits for those tax positions where it is more likely than not that a tax benefit will result upon ultimate settlement with a tax authority that has all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will result, no tax benefit has been recognized in the consolidated financial statements.
|
|
|
|
|
2020
|
|
Restated Note 2(h)
2019
|
|
|
$
|
|
$
|
|
Loss from continuing operations before tax
|
(3,383,896
|
)
|
(330,649
|
)
|
Combined federal and provincial rate
|
27.0
|
%
|
27.0
|
%
|
Expected tax recovery from continuing operations
|
(913,652
|
)
|
(89,275
|
)
|
Change in estimates from prior year
|
(115
|
)
|
2,984
|
|
Foreign exchange
|
(373
|
)
|
—
|
|
Non-deductible expenses
|
20,081
|
|
34,552
|
|
Non-deducible (non-taxable) portion of capital items
|
20,839
|
|
(11,344
|
)
|
Non-deducible loss on conversion of debt
|
46,598
|
|
—
|
|
Goodwill and other impairment items
|
659,980
|
|
—
|
|
Tax impact on divestitures
|
(5,170
|
)
|
—
|
|
Difference in statutory tax rate
|
17,414
|
|
(665
|
)
|
Effect of change in tax rates
|
711
|
|
3,793
|
|
Changes in deferred tax benefits not recognized
|
70,284
|
|
30,046
|
|
Income tax recovery from continuing operations
|
(83,403
|
)
|
(29,909
|
)
|
(1)
|
Excludes tax expense from discontinued operations of $0.5 million (2019 - $1.3 million recovery) and the tax expense from the loss on the sale of the discontinued operation of nil (2019 - nil). These amounts are included in net loss (income) from discontinued operations, net of tax on the statement of comprehensive loss.
|
|
As of
June 30, 2019
|
|
Discontinued operations
|
|
Recovered through (charged to) earnings
|
|
Recovered through
(charged to) other comprehensive income |
|
Recovered through (charged to) equity
|
|
As of
June 30, 2020
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Deferred tax assets
|
|
|
|
|
|
|
||||||
Non-capital losses
|
44,303
|
|
(1,358
|
)
|
82,761
|
|
81
|
|
—
|
|
125,787
|
|
Capital losses
|
—
|
|
—
|
|
501
|
|
—
|
|
—
|
|
501
|
|
Finance costs
|
11,545
|
|
—
|
|
(4,087
|
)
|
—
|
|
2,231
|
|
9,689
|
|
Investment tax credit
|
728
|
|
—
|
|
(159
|
)
|
—
|
|
—
|
|
569
|
|
Property, plant and equipment
|
13,701
|
|
401
|
|
(14,102
|
)
|
—
|
|
—
|
|
—
|
|
Derivatives
|
37,462
|
|
—
|
|
(37,042
|
)
|
—
|
|
—
|
|
420
|
|
Leases
|
—
|
|
—
|
|
13,050
|
|
25
|
|
—
|
|
13,075
|
|
Others
|
9,470
|
|
—
|
|
(9,470
|
)
|
|
|
—
|
|
—
|
|
Total deferred tax assets
|
117,209
|
|
(957
|
)
|
31,452
|
|
106
|
|
2,231
|
|
150,041
|
|
|
|
|
|
|
|
|
||||||
Deferred tax liabilities
|
|
|
|
|
|
|
||||||
Convertible debenture
|
(47,089
|
)
|
—
|
|
11,599
|
|
—
|
|
1,703
|
|
(33,787
|
)
|
Marketable securities
|
(6,141
|
)
|
—
|
|
4,916
|
|
624
|
|
601
|
|
—
|
|
Investment in associates
|
(4,409
|
)
|
—
|
|
4,409
|
|
—
|
|
—
|
|
—
|
|
Derivatives
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Intangible assets
|
(129,562
|
)
|
—
|
|
38,807
|
|
(197
|
)
|
—
|
|
(90,952
|
)
|
Property, plant and equipment
|
—
|
|
—
|
|
(7,100
|
)
|
(18
|
)
|
—
|
|
(7,118
|
)
|
Inventory
|
(11,665
|
)
|
—
|
|
(3,007
|
)
|
—
|
|
—
|
|
(14,672
|
)
|
Biological assets
|
(9,313
|
)
|
—
|
|
2,404
|
|
—
|
|
—
|
|
(6,909
|
)
|
Others
|
—
|
|
—
|
|
(549
|
)
|
—
|
|
—
|
|
(549
|
)
|
Total deferred tax liabilities
|
(208,179
|
)
|
—
|
|
51,479
|
|
409
|
|
2,304
|
|
(153,987
|
)
|
|
|
|
|
|
|
|
||||||
Net deferred tax assets (liabilities)
|
(90,970
|
)
|
(957
|
)
|
82,931
|
|
515
|
|
4,535
|
|
(3,946
|
)
|
|
|
|
Restated (Note 2(h))
|
As of
June 30,
2018
|
|
Discontinued operations
|
|
Deferred tax assets (liabilities) assumed from acquisition
|
|
Recovered through (charged to) earnings
|
|
Recovered through
(charged to) other comprehensive income |
|
Recovered through (charged to) equity
|
|
As of
June 30,
2019
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|||||||
Non-capital losses
|
30,186
|
|
739
|
|
10,552
|
|
2,826
|
|
—
|
|
—
|
|
44,303
|
|
Finance costs
|
7,888
|
|
—
|
|
4,710
|
|
(1,053
|
)
|
—
|
|
—
|
|
11,545
|
|
Investment tax credit
|
593
|
|
—
|
|
—
|
|
135
|
|
—
|
|
—
|
|
728
|
|
Property, plant and equipment
|
—
|
|
—
|
|
7,835
|
|
5,866
|
|
—
|
|
—
|
|
13,701
|
|
Derivatives
|
—
|
|
—
|
|
—
|
|
37,462
|
|
—
|
|
—
|
|
37,462
|
|
Others
|
658
|
|
(55
|
)
|
90
|
|
8,777
|
|
—
|
|
—
|
|
9,470
|
|
Total deferred tax assets
|
39,325
|
|
684
|
|
23,187
|
|
54,013
|
|
—
|
|
—
|
|
117,209
|
|
|
|
|
|
|
|
|
|
|||||||
Deferred tax liabilities
|
|
|
|
|
|
|
|
|||||||
Convertible debenture
|
(10,905
|
)
|
—
|
|
—
|
|
(36,597
|
)
|
—
|
|
413
|
|
(47,089
|
)
|
Marketable securities
|
(3,799
|
)
|
—
|
|
—
|
|
(20,145
|
)
|
17,803
|
|
—
|
|
(6,141
|
)
|
Investment in associates
|
(10,313
|
)
|
—
|
|
—
|
|
5,384
|
|
520
|
|
—
|
|
(4,409
|
)
|
Derivatives
|
(15,530
|
)
|
—
|
|
—
|
|
15,530
|
|
—
|
|
—
|
|
—
|
|
Intangible assets
|
(44,433
|
)
|
—
|
|
(93,201
|
)
|
8,072
|
|
—
|
|
—
|
|
(129,562
|
)
|
Property, plant and equipment
|
(1,738
|
)
|
(420
|
)
|
—
|
|
2,158
|
|
—
|
|
—
|
|
—
|
|
Inventory
|
(4,975
|
)
|
—
|
|
(8,456
|
)
|
1,766
|
|
—
|
|
—
|
|
(11,665
|
)
|
Biological assets
|
(3,041
|
)
|
—
|
|
—
|
|
(6,272
|
)
|
—
|
|
—
|
|
(9,313
|
)
|
Total deferred tax liabilities
|
(94,734
|
)
|
(420
|
)
|
(101,657
|
)
|
(30,104
|
)
|
18,323
|
|
413
|
|
(208,179
|
)
|
|
|
|
|
|
|
|
|
|||||||
Net deferred tax assets (liabilities)
|
(55,409
|
)
|
264
|
|
(78,470
|
)
|
23,909
|
|
18,323
|
|
413
|
|
(90,970
|
)
|
|
|
|
Accounting Policy
The Company considers a person or entity as a related party if they are a member of key management personnel including their close relatives, an associate or joint venture, those having significant influence over the Company, as well as entities that are under common control or controlled by related parties.
|
|
Years ended June 30,
|
|
||
|
2020
|
|
2019
|
|
|
$
|
|
$
|
|
Short-term employment benefits (1)
|
8,118
|
|
7,446
|
|
Termination benefit
|
4,553
|
|
—
|
|
Directors’ fees (2)
|
586
|
|
349
|
|
Share-based compensation (3)
|
20,628
|
|
20,132
|
|
Total management compensation (4)
|
33,885
|
|
27,927
|
|
(1)
|
Short-term employment benefits include salaries, wages, bonuses and non-monetary benefits such as subsidized vehicle costs. Short-term employment benefits are measured at the exchange value, being the amounts agreed to by each party.
|
(2)
|
Includes meeting fees and committee chair fees.
|
(3)
|
Share-based compensation represent the contingent consideration, and the fair value of options, restricted share units, and deferred share units granted and vested to key management personnel and directors of the Company under the Company’s share-based compensation plans (Note 18).
|
(4)
|
As of June 30, 2020, $3.8 million is payable or accrued for key management compensation (June 30, 2019 – $2.6 million).
|
|
Years ended June 30,
|
|
||
|
2020
|
|
2019
|
|
|
$
|
|
$
|
|
Operational, administrative and service fees (1)
|
—
|
|
6,696
|
|
Marketing fees (2)
|
—
|
|
3,124
|
|
Production costs (3)
|
6,330
|
|
500
|
|
Services and advisory fees (4)
|
1,247
|
|
160
|
|
|
7,577
|
|
10,480
|
|
(1)
|
Operational, administrative and service fees paid or accrued pursuant to a service agreement between CanvasRx and Canadian Cannabis Clinics (“CCC”). Aurora has an option to acquire CCC if CCC breaches the terms of the service agreement.
|
(2)
|
Marketing fees paid to Colour Creative Persuasion Inc., a company partially owned by a former officer of the Company.
|
(3)
|
Production costs incurred with (i) Capcium, a company where Aurora holds significant influence; and (ii) Iotron Industries Canada Inc. (“Iotron”), an associate of the Company’s joint venture company. Aurora does not have the authority or ability to exert power over either Capcium or Iotron’s financial and/or operating decisions (i.e. control).
|
(4)
|
Finders’, service and advisory fees paid to Belot Business Consulting Corp. (a company controlled by the former Chief Global Development Officer), Lola Ventures Inc. (a company controlled by the former CEO), and Superior Safety Codes (a company controlled by the former CEO and President). No fees will be paid to these entities in future periods.
|
|
|
|
|
June 30, 2020
|
|
June 30, 2019
|
|
|
$
|
|
$
|
|
Loan receivable from joint venture (1)
|
3,242
|
|
—
|
|
Production costs with investments in associates (2)(3)
|
(1,365
|
)
|
—
|
|
|
1,877
|
|
—
|
|
(1)
|
Relates to the purchase of production equipment on behalf of the Company’s joint venture, Auralux Enterprises Ltd. The loan bears interest at 5% per annum, payable monthly. The loan is to be repaid in installments on an annual basis in an amount equal to 50% of the associate’s EBITDA. The unpaid balance of the loan matures 10 years from the funding date.
|
(2)
|
Production costs incurred with (i) Capcium Inc., who manufactures softgels for the Company and (ii) Iotron Industries Canada Inc. who provides cannabis processing services to the Company. Aurora has significant influence over Capcium Inc. Note 5(d) and is party to a common joint venture with Iotron Industries Canada Inc. Pursuant to a manufacturing agreement with Capcium Inc., the Company is contractually committed to purchase a minimum number of softgels during calendar 2020 and thereafter. If the Company fails to meet the required purchase minimum, then it is required to pay a penalty fee equal to the difference between the actual purchased quantity and the required purchase minimum multiplied by cost of the softgels. The Company is committed to purchase 42.7 million capsules in calendar 2020, and 20.0 million capsules per calendar year until December 31, 2026. The Company believes that it is more likely than not that the minimum quantity will not be met as of December 31, 2020 and as a result, the Company recognized a $0.9 million provision as of June 30, 2020 (Note 24(b)).
|
(3)
|
Amounts are due upon the issuance or receipt of invoices, are unsecured and non-interest bearing.
|
Note 24
|
Commitments and Contingencies
|
(a)
|
Claims and Litigation
|
|
|
|
(b)
|
Commitments
|
(i)
|
Pursuant to a manufacturing agreement, the Company is contractually committed to purchase a minimum number of softgels during calendar 2020. If the Company fails to meet the required purchase minimum, then it is required to pay a penalty fee equal to the difference between the actual purchased quantity and the required purchase minimum multiplied by cost of the softgels. As of June 30, 2020, the Company believes that it is more likely than not that the minimum quantity will not be met as of December 31, 2020. As a result, the Company has recognized a provision of $0.9 million as of June 30, 2020.
|
(ii)
|
The Company has various lease commitments related to various office space, production equipment, vehicles, facilities and warehouses expiring between April 2020 and June 2033. The Company has certain leases with optional renewal terms that the Company may exercise at its option. The Company also has an option to purchase lands located in Cremona, Alberta which are currently being leased.
|
(iii)
|
In connection with the acquisition of MedReleaf, the Company has an obligation to purchase $3.0 million of intangible assets on December 8, 2020 through the issuance of common shares contingent on the seller meeting specified revenue targets.
|
|
$
|
|
Next 12 months
|
24,132
|
|
Over 1 year to 2 years
|
24,701
|
|
Over 2 years to 3 years
|
25,891
|
|
Over 3 years to 4 years
|
26,950
|
|
Over 4 years to 5 years
|
28,062
|
|
Thereafter
|
42,239
|
|
|
171,975
|
|
|
|
|
Accounting Policy
The Company generates revenue primarily from the sale of cannabis, cannabis related products and provision of services. The Company uses the following five-step contract-based analysis of transactions to determine if, when and how much revenue can be recognized:
1. Identify the contract with a customer;
2. Identify the performance obligation(s) in the contract;
3. Determine the transaction price;
4. Allocate the transaction price to the performance obligation(s) in the contract; and
5. Recognize revenue when or as the Company satisfies the performance obligation(s).
Revenue from the sale of cannabis is generally recognized when control over the goods has been transferred to the customer. Payment for medical sales is typically due prior to shipment. Payment for wholesale transactions is due within a specified time period as permitted by the underlying agreement and the Company’s credit policy upon the transfer of goods to the customer. The Company generally satisfies its performance obligation and transfers control to the customer upon delivery and acceptance by the customer. Revenue is recorded at the estimated amount of consideration to which the Company expects to be entitled.
For bill-and-hold arrangements, revenue is recognized before delivery but only upon transfer of control of the good to the customer. Control is transferred to the customer when the substance of the bill-and-hold arrangement is substantive, the Company cannot sell the goods to another customer, the goods can be identified separately and are ready for physical transfer to the customer.
Service revenues, including patient referral and construction consulting services, are recognized over a period of time as performance obligations are completed. Payment of the transaction price for patient counselling is typically due prior to the services being rendered and therefore, the transaction price is recognized as a contract liability, or deferred revenue, when payment is received. Contract liabilities are subsequently recognized into revenue as or when the Company fulfills its performance obligation. Payment of the transaction price for design, engineering and construction consulting services are typically due upon completion of the performance-related milestone.
Effective October 17, 2018, Canada Revenue Agency (“CRA”) began levying an excise tax on the sale of medical and consumer cannabis products. The Company becomes liable for these excise duties when cannabis products are delivered to the customer. The excise taxes payable is the higher of (i) a flat-rate duty which is imposed when a cannabis product is packaged, and (ii) an advalorem duty that is imposed when a cannabis product is delivered to the customer. Effective May 1, 2019, excise tax calculated on edible cannabis products, cannabis extracts and cannabis topicals will prospectively be calculated as a flat rate based on the quantity of total tetrahydrocannabinol (THC) contained in the final product. There were no changes in the legislation in calculating excise taxes for fresh cannabis, dried cannabis, seeds and plants. Where the excise tax has been billed to customers, the Company has reflected the excise tax as part of revenue in accordance with IFRS 15. Net revenue from sale of goods, as presented on the consolidated statements of comprehensive (loss) income, represents revenue from the sale of goods less applicable excise taxes. Given that the excise tax payable/paid to CRA cannot be reclaimed and is not always billed to customers, the Company recognizes that the excise tax is an operating cost that affects gross margin to the extent that it is not recovered from its customers.
For certain sale of goods in which the Company earns a manufacturing fee, the Company records net revenue as an agent on the basis that the Company does not control pricing or bear inventory or credit risk.
|
Year Ended June 30, 2020
|
Point-in-time
|
|
Over-time
|
|
Total
|
|
|
$
|
|
$
|
|
$
|
|
Cannabis
|
|
|
|
|||
Revenue from sale of goods
|
322,112
|
|
—
|
|
322,112
|
|
Revenue from provision of services
|
—
|
|
5,002
|
|
5,002
|
|
Other
|
|
|
|
|||
Revenue from sale of goods
|
1,089
|
|
—
|
|
1,089
|
|
Excise taxes
|
(49,297
|
)
|
—
|
|
(49,297
|
)
|
Net Revenue
|
273,904
|
|
5,002
|
|
278,906
|
|
|
|
|
Year Ended June 30, 2019
|
Point-in-time
|
|
Over-time
|
|
Total
|
|
|
$
|
|
$
|
|
$
|
|
Cannabis
|
|
|
|
|||
Revenue from sale of goods
|
268,592
|
|
—
|
|
268,592
|
|
Revenue from provision of services
|
—
|
|
7,589
|
|
7,589
|
|
Other
|
|
|
|
|||
Revenue from sale of goods
|
2,513
|
|
—
|
|
2,513
|
|
Excise taxes
|
(33,158
|
)
|
—
|
|
(33,158
|
)
|
Net Revenue
|
237,947
|
|
7,589
|
|
245,536
|
|
Note 26
|
Segmented Information
|
Accounting Policy
Operating segments are components of the Company that engage in business activities which generate revenues and incur expenses (including intercompany revenues and expenses related to transactions conducted with other components of the Company). The operations of an operating segment are distinct and the operating results are regularly reviewed by the chief operating decision maker (“CODM”) for the purposes of resource allocation decisions and assessing its performance. Reportable segments are Operating segments whose revenues or profit/loss or total assets exceed ten percent or more of those of the combined entity.
Key measures used by the CODM to assess performance and make resource allocation decisions include revenues, gross profit and net (loss) income. The Company’s operating results are divided into two reportable segments plus corporate. The two reportable segments are (i) Cannabis; and (ii) Horizontally Integrated Businesses. The Company primarily operates in the Cannabis segment which includes support services such as patient counselling services and analytical testing services.
|
Operating Segments
|
Cannabis (3)
|
|
Horizontally Integrated Businesses (2)
|
|
Corporate (1)
|
|
Total
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Year ended June 30, 2020
|
|
|
|
|
||||
Net revenue
|
277,817
|
|
1,089
|
|
—
|
|
278,906
|
|
Gross profit (loss)
|
(33,601
|
)
|
62
|
|
—
|
|
(33,539
|
)
|
Net loss before taxes and discontinued operations
|
(3,153,763
|
)
|
3,988
|
|
(234,121
|
)
|
(3,383,896
|
)
|
|
|
|
|
|
||||
Year ended June 30, 2019
|
|
|
|
|
||||
Net revenue
|
243,023
|
|
2,513
|
|
—
|
|
245,536
|
|
Gross profit (loss)
|
145,535
|
|
(1,556
|
)
|
(1,539
|
)
|
142,440
|
|
Net loss before taxes and discontinued operations
|
(190,425
|
)
|
(7,326
|
)
|
(132,898
|
)
|
(330,649
|
)
|
(1)
|
Net (loss) income under the Corporate allocation includes fair value gains and losses from investments in marketable securities, derivatives and investment in associates. Corporate and administrative expenditures such as regulatory fees, share based compensation and financing expenditures relating to debt issuances are also included under Corporate.
|
(2)
|
During the year ended June 30, 2020, the Company sold B.C. Northern Lights Enterprises Ltd. (“BCNL”) and sold certain assets of Urban Cultivator Inc (“UCI”). The remaining UCI operations were wound down as of June 30, 2020. Both BCNL and UCI represent the indoor cultivator CGU which forms the horizontally integrated businesses segment.
|
(3)
|
During the year ended June 30, 2020, ALPS ceased being included in the Cannabis segment of the Company following reclassification into discontinued operations (Note 11(b)).
|
|
|
|
Geographical Segments
|
Canada (1)
|
|
European Union
|
|
Other
|
|
Total
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Non-current assets other than financial instruments and deferred tax assets
|
|
|
|
|
||||
As at June 30, 2020
|
2,139,765
|
|
81,927
|
|
95,830
|
|
2,317,522
|
|
As at June 30, 2019
|
4,442,849
|
|
82,922
|
|
226,483
|
|
4,752,254
|
|
|
|
|
|
|
||||
Year ended June 30, 2020
|
|
|
|
|
||||
Net revenue
|
255,278
|
|
21,527
|
|
2,101
|
|
278,906
|
|
Gross profit (loss)
|
(37,153
|
)
|
5,572
|
|
(1,958
|
)
|
(33,539
|
)
|
|
|
|
|
|
||||
Year ended June 30, 2019
|
|
|
|
|
||||
Net revenue
|
230,279
|
|
11,789
|
|
3,468
|
|
245,536
|
|
Gross profit
|
135,570
|
|
8,268
|
|
(1,398
|
)
|
142,440
|
|
(1)
|
During the year ended June 30, 2020, ALPS ceased being included in the Canadian geographical segment of the Company following reclassification into discontinued operations (Note 11(b)).
|
Note 27
|
Fair Value of Financial Instruments
|
|
|
|
|
Amortized cost
|
|
FVTPL
|
|
Designated
FVTOCI
|
|
Total
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Financial Assets
|
|
|
|
|
||||
Cash and cash equivalents
|
162,179
|
|
—
|
|
—
|
|
162,179
|
|
Restricted cash
|
—
|
|
—
|
|
—
|
|
—
|
|
Accounts receivable, excluding sales taxes receivable
|
48,198
|
|
—
|
|
—
|
|
48,198
|
|
Marketable securities
|
—
|
|
—
|
|
7,066
|
|
7,066
|
|
Derivatives
|
—
|
|
53,582
|
|
—
|
|
53,582
|
|
Loans receivable
|
3,643
|
|
—
|
|
—
|
|
3,643
|
|
Financial Liabilities
|
|
|
|
|
||||
Accounts payable and accrued liabilities
|
95,574
|
|
—
|
|
—
|
|
95,574
|
|
Convertible debentures (1)
|
327,038
|
|
—
|
|
—
|
|
327,038
|
|
Contingent consideration payable
|
—
|
|
19,604
|
|
—
|
|
19,604
|
|
Loans and borrowings
|
204,209
|
|
—
|
|
—
|
|
204,209
|
|
Derivative liability
|
—
|
|
1,827
|
|
—
|
|
1,827
|
|
(1)
|
The fair value of convertible notes includes both the debt and equity components.
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
As of June 30, 2020
|
|
|
|
|
||||
Marketable securities
|
6,066
|
|
—
|
|
1,000
|
|
7,066
|
|
Derivative assets
|
—
|
|
37,480
|
|
16,102
|
|
53,582
|
|
Contingent consideration payable
|
—
|
|
—
|
|
19,604
|
|
19,604
|
|
Derivative liability
|
—
|
|
1,827
|
|
—
|
|
1,827
|
|
|
|
|
|
|
||||
As of June 30, 2019
|
|
|
|
|
||||
Marketable securities
|
142,248
|
|
—
|
|
1,000
|
|
143,248
|
|
Derivative assets
|
—
|
|
64,001
|
|
22,408
|
|
86,409
|
|
Contingent consideration payable
|
—
|
|
—
|
|
28,137
|
|
28,137
|
|
Derivative liability
|
—
|
|
177,395
|
|
—
|
|
177,395
|
|
|
BCNL UCI
|
|
CanvasRx
|
|
H2
|
|
Whistler
|
|
Reliva
|
|
Immaterial transactions
|
|
Total
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Balance, June 30, 2018
|
1,242
|
|
5,884
|
|
14,207
|
|
—
|
|
—
|
|
—
|
|
21,333
|
|
Additions
|
—
|
|
—
|
|
—
|
|
24,395
|
|
—
|
|
383
|
|
24,778
|
|
Unrealized loss from changes in fair value
|
458
|
|
261
|
|
2,060
|
|
376
|
|
—
|
|
108
|
|
3,263
|
|
Payments
|
(1,700
|
)
|
(4,160
|
)
|
(15,036
|
)
|
—
|
|
—
|
|
(341
|
)
|
(21,237
|
)
|
Balance, June 30, 2019
|
—
|
|
1,985
|
|
1,231
|
|
24,771
|
|
—
|
|
150
|
|
28,137
|
|
Additions
|
—
|
|
—
|
|
—
|
|
—
|
|
688
|
|
—
|
|
688
|
|
Unrealized loss from changes in fair value
|
—
|
|
8
|
|
(49
|
)
|
(2,316
|
)
|
—
|
|
—
|
|
(2,357
|
)
|
Payments
|
—
|
|
(1,993
|
)
|
(1,182
|
)
|
(3,689
|
)
|
—
|
|
—
|
|
(6,864
|
)
|
Balance, June 30, 2020
|
—
|
|
—
|
|
—
|
|
18,766
|
|
688
|
|
150
|
|
19,604
|
|
|
|
|
Note 28
|
Financial Instruments Risk
|
(a)
|
Credit risk
|
|
June 30, 2020
|
|
June 30, 2019
|
|
|
$
|
|
$
|
|
0 – 60 days
|
34,167
|
|
49,452
|
|
61+ days
|
11,032
|
|
34,425
|
|
|
45,199
|
|
83,877
|
|
(b)
|
Liquidity risk
|
|
June 30, 2020
|
|
June 30, 2019
|
|
|
$
|
|
$
|
|
Trade payables
|
19,706
|
|
38,671
|
|
Accrued liabilities
|
42,910
|
|
79,933
|
|
Payroll liabilities
|
23,752
|
|
17,727
|
|
Excise tax payable
|
6,770
|
|
10,040
|
|
Other payables
|
2,436
|
|
6,513
|
|
|
95,574
|
|
152,884
|
|
|
Total
|
|
≤1 year
|
|
Over 1 year – 3 years
|
|
Over 3 years – 5 years
|
|
> 5 years
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Accounts payable and accrued liabilities
|
95,574
|
|
95,574
|
|
—
|
|
—
|
|
—
|
|
Convertible notes and interest (1)(2)
|
571,439
|
|
25,760
|
|
51,521
|
|
494,158
|
|
—
|
|
Lease liabilities (2)
|
171,868
|
|
11,243
|
|
32,643
|
|
27,468
|
|
100,514
|
|
Loans and borrowings excluding lease liabilities (2)
|
123,143
|
|
123,125
|
|
18
|
|
—
|
|
—
|
|
Contingent consideration payable (3)
|
101,466
|
|
66,426
|
|
35,040
|
|
—
|
|
—
|
|
|
1,063,490
|
|
322,128
|
|
119,222
|
|
521,626
|
|
100,514
|
|
(1)
|
Assumes the principal balance of the notes outstanding at June 30, 2020 remains unconverted and includes the estimated interest payable until the February 28, 2024 maturity date.
|
(2)
|
Includes interest payable until maturity date.
|
(3)
|
Contingent consideration is payable in Aurora common shares, cash, or a combination of both, at the sole discretion of Aurora.
|
|
|
|
▪
|
In November 2019, the Company announced that it had ceased construction of its Aurora Nordic Sky facility in Denmark and deferred spending on construction and commission costs for its Aurora Sun facility.
|
▪
|
On November 25, 2019, the Company reduced its near term debt obligations when holders of $227.0 million principal amount, or approximately 99%, of the Company’s Debentures voluntarily elected to convert their Debentures pursuant to the Early Amended Conversion Privilege (the “Elected Debentures”). Under the terms of the Supplemental Indenture, the Elected Debentures were converted into common shares of the Company (the "Common Shares") at the Amended Early Conversion Price (as defined in the Supplemental Indenture) of $39.40 resulting in the issuance of an aggregate of 5,761,260 Common Shares. The remaining $2.3 million principal amount of these Debentures were repaid in cash on March 6, 2020 (Note 15(ii)).
|
▪
|
In February 2020, the Company announced a restructuring plan to reduce operating expenses and further streamline capital investments.
|
▪
|
In April 2020, the Company accepted an offer to sell its Exeter property for net proceeds of $8.6 million. The Company also entered into a contract to sell its Jamaica property for gross proceeds of US$3.5 million (Note 11(a)).
|
▪
|
In April 2020, the Company sold 5,302,227 common shares of EnWave Corporation at $0.80 per share for net proceeds of $4.1 million.
|
▪
|
During the year ended June 30, 2020, the Company raised net proceeds of US$426.8 million (CAD$573.4 million) under its ATM program Note 17(b). As at June 30, 2020, the Company has US$214.5 million of remaining available room under the ATM and US$60.0 million remaining available room under the Shelf Prospectus for future financings or issuances of securities.
|
▪
|
During the year ended June 30, 2020 the Company sold 9,200,000 common shares of Alcanna at $3.00 per share for gross proceeds of $27.6 million (Note 5(c));
|
▪
|
In June 2020, the Company announced further restructuring initiatives including a 25% reduction in Aurora’s SG&A staff and a 30% reduction in Aurora operational staff over the next several quarters. The Company also announced the consolidation of certain production facilities including Aurora Prairie, Aurora Mountain, Aurora Ridge, Aurora Vie and Aurora Eau (Note 3).
|
▪
|
In order to ensure compliance with its debt covenants at June 30, 2020 and prospectively, effective September 9, 2020, the Company entered into the Second Amendment to the First Amended and Restated Credit Agreement with its Canadian banking syndicate (Note 16(a)).
|
•
|
$162.2 million cash and cash equivalents of which the Company must maintain a minimum unrestricted cash balance of $35.0 million at any time (Note 16(a));
|
•
|
$264.4 million Credit Facility with BMO, of which $1.4 million letters of credit and no principal is outstanding under Facility A, $113.8 million of principal is outstanding under Facility B, and $3.7 million of principal is outstanding under Facility C (Note 16(a));
|
•
|
Subsequent to June 30, 2020 and as at September 22, 2020, the Company raised US$36.7 million gross proceeds under its ATM program, with US$177.8 million of remaining available room under the ATM and US$60.0 million remaining available room under the Shelf Prospectus for future financings or issuances of securities.
|
(c)
|
Market risk
|
|
|
|
(i)
|
Currency risk
|
(ii)
|
Interest rate risk
|
(iii)
|
Price risk
|
Note 30
|
Subsequent Events
|
|
|
|
Business Overview
|
|
Statement of Comprehensive Loss
|
|
Key Quarterly Financial and Operating Results
|
|
Financial Highlights
|
|
Key Developments During the Three Month Period Ended June 30, 2020
|
|
Key Developments Subsequent to June 30, 2020
|
|
Critical Accounting Estimates
|
|
Change in Accounting Policies
|
|
Historical Quarterly Results
|
|
Internal Controls Over Financial Reporting
|
|
Cautionary Statement Regarding Forward-Looking Statements
|
|
Cautionary Statement Regarding Certain Non-GAAP Performance Measures
|
2 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
•
|
Purpose-built growing facilities, which we believe are the most technologically advanced indoor agricultural growing facilities in the world. These facilities consistently produce high-quality cannabis at scale, lower the risk of crop failure, and provide low per-unit production costs.
|
•
|
Research and innovation in plant genetics, cultivation, consumer insights, and product development.
|
•
|
A broad and growing portfolio of successful brands that align to the needs of consumers and patients in segments from discount to ultra premium.
|
•
|
Global leadership in consumer and medical markets that have significant and near-term profit potential.
|
•
|
A transformed cost structure that provides a path to near-term, sustainable, and growing positive earnings before interest, taxes, depreciation and amortization (“EBITDA”) and cash flow.
|
•
|
Global medical cannabis market: Production, distribution and sale of pharmaceutical-grade cannabis products in countries around the world where permitted by government legislation. Currently, there are approximately 50 countries that have implemented regimes for some form of access to cannabis for medical purposes. The Company’s current principal medical markets are Canada and Germany. Aurora has established a market position in both countries;
|
•
|
Global consumer use cannabis market: Currently, only Canada and Uruguay have implemented federally-regulated consumer use of cannabis regimes and the Company has primarily focused on the opportunities in Canada. Aurora has established a top-three market
|
3 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
•
|
Global hemp-derived cannabidiol (“CBD”) market: The Company expects consumer demand for products containing CBD derived from hemp plants to be an exciting growth opportunity in the coming years. The Company believes that the most important near-term market opportunity for hemp-derived CBD is in the U.S. On May 28, 2020, the Company acquired Reliva, LLC (“Reliva”), a U.S. company based in Massachusetts, which specializes in the distribution and sale of hemp-derived CBD products and has established a leading brand in the U.S. market.
|
4 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
•
|
Cash used in operations was $63.9 million;
|
•
|
Cash expenditures on capital assets of approximately $32.8 million, which includes invoices paid related to work done in Q3; and
|
•
|
Payment of debt and lease obligations of approximately $53.3 million.
|
•
|
Net proceeds under the At-the-Market (“ATM”) program of $48.3 million; and
|
•
|
Net proceeds of $33.7 million through the sale of its investments in Alcanna Inc., EnWave Corporation, and certain items of property, plant and equipment.
|
5 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
•
|
Cash cost to produce cannabis per gram of dried cannabis sold was restated to $1.22, compared to $0.85 as previously reported;
|
•
|
Gross margin and gross margin before fair value were restated, respectively, to 26% and 30%, compared to 36% and 42% as previously reported;
|
•
|
Adjusted gross margin before FV adjustments on consumer and medical cannabis net revenue were restated, respectively, to 29% and 60%, compared to 43% and 66% as previously reported, adjusted to remove $6.4 million depreciation from cost of sales; and
|
•
|
Adjusted EBITDA loss was restated to $50.4 million, compared to $47.7 million EBITDA loss as previously reported, adjusted for $1.3 million acquisition costs and the exclusion of $1.9 million EBITDA loss from discontinued operations.
|
|
Three months ended
|
Year ended
|
|||||||||||||
($ thousands)
|
June 30, 2020
|
|
March 31, 2020 (1)(2)
|
|
June 30, 2020
|
|
June 30, 2019 (1)(2)
|
|
June 30, 2018 (2)
|
|
|||||
Net revenue (3)
|
|
$72,114
|
|
|
$75,520
|
|
|
$278,906
|
|
|
$245,536
|
|
|
$50,978
|
|
Gross (loss) profit before fair value (“FV”) adjustments
|
|
($79,855
|
)
|
|
$23,008
|
|
|
$1,672
|
|
|
$121,758
|
|
|
$32,317
|
|
Gross (loss) profit
|
|
($111,129
|
)
|
|
$19,768
|
|
|
($33,539
|
)
|
|
$142,440
|
|
|
$40,243
|
|
Operating expenses
|
|
$90,668
|
|
|
$104,067
|
|
|
$457,423
|
|
|
$460,718
|
|
|
$137,765
|
|
Loss from operations
|
|
($201,797
|
)
|
|
($84,299
|
)
|
|
($490,962
|
)
|
|
($318,278
|
)
|
|
($97,522
|
)
|
Other (expense) income
|
|
($1,725,811
|
)
|
|
($63,602
|
)
|
|
($2,892,934
|
)
|
|
($12,371
|
)
|
|
$173,098
|
|
Net (loss) income from continuing operations
|
|
($1,860,027
|
)
|
|
($136,132
|
)
|
|
($3,300,493
|
)
|
|
($300,740
|
)
|
|
$67,477
|
|
Net (loss) income from discontinued operations, net of taxes
|
|
($2,954
|
)
|
|
($3,882
|
)
|
|
($9,844
|
)
|
|
$144
|
|
|
$1,750
|
|
Net (loss) income
|
|
($1,862,981
|
)
|
|
($140,014
|
)
|
|
($3,310,337
|
)
|
|
($300,596
|
)
|
|
$69,227
|
|
Adjusted EBITDA(4)(5)
|
|
($34,606
|
)
|
|
($50,427
|
)
|
|
($190,672
|
)
|
|
($138,010
|
)
|
|
($40,246
|
)
|
(1)
|
Amounts have been retroactively restated for the change in accounting policy for inventory costing relating to by-products and the allocation of production management staff salaries. Refer to the “Change in Accounting Policies” section below for further detail.
|
(2)
|
As a result of the Company’s divestment of its wholly owned subsidiary, Aurora Larssen Projects Inc. (“ALPS”), the operations of ALPS have been presented as discontinued operations and the Company’s operational results have been retroactively restated, as required. Please see Note 11(b) of the Financial Statements for more information about the divestiture.
|
(3)
|
Net revenue represents our total gross revenue exclusive of excise taxes levied by the Canada Revenue Agency (“CRA”) on the sale of medical and consumer cannabis products effective October 17, 2018.
|
(4)
|
This term is defined in the “Cautionary Statement Regarding Certain Performance Measures” section of this MD&A. Refer to the “Adjusted EBITDA” section for reconciliation to the IFRS equivalent.
|
(5)
|
Included in the three months ended June 30, 2020, are $3.1 million SG&A costs relating to divested businesses and severance and benefit costs associated with our business transformation plan, and $0.8 million R&D termination costs. Excluding these expenses, Adjusted EBITDA loss would have been $30.7 million.
|
6 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
($ thousands, except Operational Results)
|
Q4 2020
|
|
Q3 2020 (1)
|
|
$ Change
|
|
% Change
|
|
|||
Financial Results
|
|
|
|
|
|||||||
Total net revenue (2)
|
|
$72,114
|
|
|
$75,520
|
|
|
($3,406
|
)
|
(5
|
)%
|
Cannabis net revenue (2)(3a)
|
|
$67,492
|
|
|
$69,637
|
|
|
($2,145
|
)
|
(3
|
)%
|
Medical cannabis net revenue (3a)
|
|
$32,226
|
|
|
$31,086
|
|
|
$1,140
|
|
4
|
%
|
Consumer cannabis net revenue (3a)
|
|
$35,266
|
|
|
$38,551
|
|
|
($3,285
|
)
|
(9
|
)%
|
Adjusted gross margin before FV adjustments on cannabis net revenue (3b)
|
50
|
%
|
43
|
%
|
N/A
|
7
|
%
|
||||
Adjusted gross margin before FV adjustments on medical cannabis net revenue (3b)
|
67
|
%
|
60
|
%
|
N/A
|
7
|
%
|
||||
Adjusted gross margin before FV adjustments on consumer cannabis net revenue (3b)
|
35
|
%
|
29
|
%
|
N/A
|
6
|
%
|
||||
SG&A expense (4)
|
|
$60,088
|
|
|
$73,289
|
|
|
($13,201
|
)
|
(18
|
)%
|
R&D expense
|
|
$7,646
|
|
|
$5,601
|
|
|
$2,045
|
|
37
|
%
|
Adjusted EBITDA (7)
|
|
($34,606
|
)
|
|
($50,427
|
)
|
|
$15,821
|
|
31
|
%
|
|
|
|
|
|
|||||||
Balance Sheet
|
|
|
|
|
|||||||
Working capital
|
|
$147,933
|
|
|
$429,293
|
|
|
($281,360
|
)
|
(66
|
)%
|
Cannabis inventory and biological assets (5)
|
|
$139,198
|
|
|
$225,966
|
|
|
($86,768
|
)
|
(38
|
)%
|
Total assets
|
|
$2,783,695
|
|
|
$4,699,137
|
|
|
($1,915,442
|
)
|
(41
|
)%
|
|
|
|
|
|
|||||||
Operational Results – Cannabis
|
|
|
|
|
|||||||
Cash cost to produce per gram of dried cannabis sold (3c)
|
|
$0.89
|
|
|
$1.22
|
|
|
($0.33
|
)
|
(27
|
)%
|
Average net selling price of dried cannabis (3)
|
|
$3.60
|
|
|
$4.64
|
|
|
($1.04
|
)
|
(22
|
)%
|
Kilograms produced
|
44,406
|
|
36,207
|
|
8,199
|
|
23
|
%
|
|||
Kilograms sold (6)
|
16,748
|
|
12,729
|
|
4,019
|
|
32
|
%
|
(1)
|
Certain previously reported amounts have been restated to exclude the results related to discontinued operations and change in accounting policy for inventory costing relating to by-products and the allocation of production management staff salaries. For further detail, refer to Note 11(b) of the Financial Statements and “Change in Accounting Policies” section below, respectively.
|
(2)
|
Includes the impact of actual and expected product returns and price adjustments (three and twelve months ended June 30, 2020 - $1.9 million and $15.3 million; three and twelve months ended June 30, 2019 - nil and nil).
|
(3)
|
These terms are defined in the “Cautionary Statement Regarding Certain Non-GAAP Performance Measures” section of this MD&A. Refer to the following sections for reconciliation of the non-GAAP measures to the IFRS equivalent measure
|
a.
|
Refer to the “Revenue” section for a reconciliation to the IFRS equivalent.
|
b.
|
Refer to the “Gross Margin” section for reconciliation to the IFRS equivalent.
|
c.
|
Refer to the “Cash Cost of Sales of Dried Cannabis and Cash Cost to Produce Dried Cannabis Sold – Aurora Produced Cannabis” section for reconciliation to the IFRS equivalent.
|
(4)
|
Includes costs from divested businesses and severance and benefit costs associated with our business transformation plan of $2.1 million and $1.0 million, respectively (Q3 2020 - $1.0 million and $5.0 million, respectively).
|
(5)
|
Represents total biological assets and cannabis inventory, exclusive of merchandise, accessories, supplies and consumables.
|
(6)
|
The kilograms sold is offset by the grams returned.
|
(7)
|
Included in Q4 2020, are $3.1 million SG&A costs relating to divested businesses and severance and benefit costs associated with our business transformation plan, and $0.8 million R&D termination costs. Excluding these expenses, Adjusted EBITDA loss would have been $30.7 million.
|
7 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
8 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
a)
|
Sale of EnWave Corporation (“EnWave”) Marketable Securities
|
b)
|
Sale of Alcanna Inc. common shares
|
9 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
($ thousands)
|
Three months ended
|
Year ended
|
||||||
June 30, 2020
|
|
March 31, 2020
|
|
June 30, 2020
|
|
June 30, 2019
|
|
|
Medical cannabis net revenue
|
|
|
|
|
||||
Canada dried cannabis
|
15,571
|
|
14,894
|
|
60,150
|
|
58,101
|
|
Canada cannabis extracts
|
12,063
|
|
12,155
|
|
45,615
|
|
34,447
|
|
International dried cannabis
|
4,555
|
|
4,020
|
|
14,886
|
|
14,141
|
|
International cannabis extracts (1)
|
37
|
|
17
|
|
497
|
|
—
|
|
Total medical cannabis net revenue
|
32,226
|
|
31,086
|
|
121,148
|
|
106,689
|
|
|
|
|
|
|
||||
Consumer cannabis net revenue
|
|
|
|
|
||||
Dried cannabis
|
30,190
|
|
32,996
|
|
118,853
|
|
88,603
|
|
Cannabis extracts (1)
|
6,929
|
|
8,473
|
|
23,228
|
|
7,993
|
|
Net revenue provisions
|
(1,853
|
)
|
(2,918
|
)
|
(15,336
|
)
|
—
|
|
Total consumer cannabis net revenue
|
35,266
|
|
38,551
|
|
126,745
|
|
96,596
|
|
|
|
|
|
|
||||
Wholesale bulk cannabis net revenue
|
|
|
|
|
||||
Dried cannabis
|
—
|
|
—
|
|
9,784
|
|
22,181
|
|
Cannabis extracts (1)
|
—
|
|
—
|
|
2,904
|
|
—
|
|
Total wholesale bulk cannabis net revenue
|
—
|
|
—
|
|
12,688
|
|
22,181
|
|
|
|
|
|
|
||||
Total cannabis net revenue
|
67,492
|
|
69,637
|
|
260,581
|
|
225,466
|
|
Ancillary net revenue (2)
|
4,622
|
|
5,883
|
|
18,325
|
|
20,070
|
|
Total net revenue
|
72,114
|
|
75,520
|
|
278,906
|
|
245,536
|
|
(1)
|
Cannabis extracts revenue includes cannabis oils, capsules, softgels, sprays, topical, edibles, vaporizer revenue and U.S. CBD product sales.
|
(2)
|
As a result of the Company’s divestment of its wholly owned subsidiary, ALPS, the operations of ALPS have been presented as discontinued operations and the Company’s operational results have been retroactively restated, as required. Please see Note 11(b) of the Financial Statements for more information about the divestiture. ALPS generated no net revenue for both the three months ended June 30, 2020 and March 31, 2020, and $nil, $2.4 million and $4.2 million for the years ended June 30, 2020, 2019 and 2018, respectively.
|
10 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
•
|
Canadian dried cannabis sales increased by $0.7 million over the prior period. The slight increase of 62 kilograms sold was offset by a 0.5% decline in the average net selling price of medical cannabis; and
|
•
|
International dried cannabis sales increased by $0.5 million or 70 kilograms over the prior quarter.
|
•
|
a $2.8 million decrease in dried cannabis net revenue which was primarily driven by a 30% decrease in the average net selling price per gram of consumer dried cannabis which was offset by an increase of 2,962 kilograms sold as compared to the prior quarter. Daily Special, the Company’s value brand, was a significant driver in the increased volume and decreased average net selling price per gram of consumer cannabis, with dried cannabis Daily Special net revenues accounting for 62% of total dried cannabis net revenues for the three months ended June 30, 2020 as compared to 35% in the three months ended March 31, 2020. During the three months ended June 30, 2020, a 28 gram Daily Special pack size was launched, which also contributed to the greater percentage mix, as initial orders were filled.
|
•
|
a $1.5 million decrease in cannabis extracts net revenue, which includes the sale of Cannabis 2.0 products, driven primarily by a decrease in sale of vapes and sublingual products; and
|
•
|
a $1.1 million reduction in actual net returns, price adjustments and provisions as compared to Q3 2020.
|
11 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
($ thousands)
|
Three months ended
|
Year ended
|
||||||
June 30, 2020
|
|
March 31, 2020 (1)
|
|
June 30, 2020
|
|
June 30, 2019 (1)(3)
|
|
|
Net revenue
|
72,114
|
|
75,520
|
|
278,906
|
|
245,536
|
|
Cost of sales
|
(151,969
|
)
|
(52,512
|
)
|
(277,234
|
)
|
(123,778
|
)
|
Gross profit before FV adjustments (2)
|
(79,855
|
)
|
23,008
|
|
1,672
|
|
121,758
|
|
Changes in fair value of inventory sold
|
(43,153
|
)
|
(14,144
|
)
|
(91,825
|
)
|
(71,821
|
)
|
Unrealized gain on changes in fair value of biological assets
|
11,879
|
|
10,904
|
|
56,614
|
|
92,503
|
|
Gross profit
|
(111,129
|
)
|
19,768
|
|
(33,539
|
)
|
142,440
|
|
Gross margin
|
(154
|
)%
|
26
|
%
|
(12
|
)%
|
58
|
%
|
(1)
|
Amounts have been retroactively restated for the change in accounting policy for inventory costing relating to by-products and the allocation of production management staff salaries. Refer to the “Change in Accounting Policies” section below for further detail.
|
(2)
|
Gross profit before fair value adjustments is a non-GAAP measure. Refer to “Cautionary Statement Regarding Certain Non-GAAP Performance Measures” section of this MD&A for the defined term.
|
(3)
|
As a result of the Company’s divestment of its wholly owned subsidiary ALPS, the operations of ALPS have been presented as discontinued operations and the Company’s operational results have been retroactively restated, as required. Please see Note 11(b) of the Financial Statements for more information about the divestiture. ALPS generated $nil gross profit for both the three months ended June 30, 2020 and March 31, 2020, and $nil, $2.4 million gross profit for the years ended June 30, 2020 and 2019, respectively.
|
($ thousands)
|
Medical Cannabis
|
|
|
Consumer Cannabis
|
|
|
Auxiliary Support Functions
|
|
|
Total
|
|
Three months ended June 30, 2020
|
|
|
|
|
|
|
|
||||
Gross Revenue
|
35,494
|
|
|
48,299
|
|
|
4,622
|
|
|
88,415
|
|
Excise taxes
|
(3,268
|
)
|
|
(13,033
|
)
|
|
—
|
|
|
(16,301
|
)
|
Net revenue
|
32,226
|
|
|
35,266
|
|
|
4,622
|
|
|
72,114
|
|
Cost of sales
|
(32,118
|
)
|
|
(100,266
|
)
|
|
(19,585
|
)
|
|
(151,969
|
)
|
Gross profit (loss) before FV adjustments (1)
|
108
|
|
|
(65,000
|
)
|
|
(14,963
|
)
|
|
(79,855
|
)
|
Depreciation
|
3,073
|
|
|
4,703
|
|
|
—
|
|
|
7,776
|
|
Inventory impairment in cost of sales
|
18,260
|
|
|
72,749
|
|
|
14,479
|
|
|
105,488
|
|
Adjusted gross profit (loss) before FV adjustments (1)
|
21,441
|
|
|
12,452
|
|
|
(484
|
)
|
|
33,409
|
|
Adjusted gross margin before FV adjustments (1)
|
67
|
%
|
|
35
|
%
|
|
(10
|
)%
|
|
46
|
%
|
|
|
|
|
|
|
|
|
||||
Three months ended March 31, 2020 (2)(3)
|
|||||||||||
Gross Revenue
|
34,339
|
|
|
49,387
|
|
|
5,883
|
|
|
89,609
|
|
Excise taxes
|
(3,253
|
)
|
|
(10,836
|
)
|
|
—
|
|
|
(14,089
|
)
|
Net revenue
|
31,086
|
|
|
38,551
|
|
|
5,883
|
|
|
75,520
|
|
Cost of sales
|
(15,422
|
)
|
|
(32,115
|
)
|
|
(4,975
|
)
|
|
(52,512
|
)
|
Gross profit before FV adjustments (1)
|
15,664
|
|
|
6,436
|
|
|
908
|
|
|
23,008
|
|
Depreciation
|
2,887
|
|
|
4,703
|
|
|
—
|
|
|
7,590
|
|
Adjusted gross profit before FV adjustments (1)
|
18,551
|
|
|
11,139
|
|
|
908
|
|
|
30,598
|
|
Adjusted gross margin before FV adjustments (1)
|
60
|
%
|
|
29
|
%
|
|
15
|
%
|
|
41
|
%
|
(1)
|
Adjusted gross profit and gross margin before fair value adjustments are both non-GAAP measures. Refer to “Cautionary Statement Regarding Certain Non-GAAP Performance Measures” section of this MD&A for the defined terms.
|
(2)
|
Amounts have been retroactively restated for the change in accounting policy for inventory costing relating to by-products and the allocation of production management staff salaries. Refer to the “Change in Accounting Policies” section below for further detail.
|
(3)
|
As a result of the Company’s divestment of its wholly owned subsidiary ALPS, the operations of ALPS have been presented as discontinued operations and the Company’s operational results have been retroactively restated, as required. Please see Note 11(b) of the Financial Statements for more information about the divestiture.
|
12 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
(i)
|
a decrease of our cash cost of sales per gram of dried cannabis sold due to lower packaging costs as the Company increased sales of multi-gram dried cannabis product;
|
(ii)
|
a decrease of $1.1 million in actual net returns, price adjustments and net revenue provisions for the period to $1.9 million, and offset by;
|
(iii)
|
an increase of 3,859 kilograms of consumer cannabis sold as a result of a continued shift in our sales mix towards our Daily Special value brand which is sold at a more competitive price point for the value market segment. As a result of these factors, our average net selling price per gram of consumer cannabis decreased from $4.33 per gram in Q3 2020 to $2.76 per gram in Q4 2020.
|
($ thousands)
|
Medical Cannabis
|
|
Consumer Cannabis
|
|
Wholesale Bulk
|
|
Auxiliary Support Functions
|
|
Total
|
|
Year ended June 30, 2020
|
|
|
|
|
|
|||||
Gross Revenue
|
134,086
|
|
163,104
|
|
12,688
|
|
18,325
|
|
328,203
|
|
Excise taxes
|
(12,938
|
)
|
(36,359
|
)
|
—
|
|
—
|
|
(49,297
|
)
|
Net revenue
|
121,148
|
|
126,745
|
|
12,688
|
|
18,325
|
|
278,906
|
|
Cost of sales
|
(73,670
|
)
|
(166,621
|
)
|
(5,431
|
)
|
(31,512
|
)
|
(277,234
|
)
|
Gross profit (loss) before FV adjustments (1)
|
47,478
|
|
(39,876
|
)
|
7,257
|
|
(13,187
|
)
|
1,672
|
|
Depreciation
|
10,986
|
|
15,041
|
|
1,174
|
|
—
|
|
27,201
|
|
Inventory impairment in cost of sales
|
18,260
|
|
72,749
|
|
—
|
|
14,479
|
|
105,488
|
|
Adjusted gross profit before FV adjustments (1)
|
76,724
|
|
47,914
|
|
8,431
|
|
1,292
|
|
134,361
|
|
Adjusted gross margin before FV adjustments (1)
|
63
|
%
|
38
|
%
|
66
|
%
|
7
|
%
|
48
|
%
|
|
|
|
|
|
|
|||||
Year ended June 30, 2019 (2)(3)
|
|
|
|
|
|
|||||
Gross Revenue
|
115,890
|
|
120,553
|
|
22,181
|
|
20,070
|
|
278,694
|
|
Excise taxes
|
(9,201
|
)
|
(23,957
|
)
|
—
|
|
—
|
|
(33,158
|
)
|
Net revenue
|
106,689
|
|
96,596
|
|
22,181
|
|
20,070
|
|
245,536
|
|
Cost of sales
|
(49,499
|
)
|
(54,668
|
)
|
(7,426
|
)
|
(12,185
|
)
|
(123,778
|
)
|
Gross profit before FV adjustments (1)
|
57,190
|
|
41,928
|
|
14,755
|
|
7,885
|
|
121,758
|
|
Depreciation
|
5,556
|
|
6,584
|
|
1,211
|
|
—
|
|
13,351
|
|
Adjusted gross profit before FV adjustments (1)
|
62,746
|
|
48,512
|
|
15,966
|
|
7,885
|
|
135,109
|
|
Adjusted gross margin before FV adjustments (1)
|
59
|
%
|
50
|
%
|
72
|
%
|
39
|
%
|
55
|
%
|
(1)
|
Adjusted gross profit and gross margin before fair value adjustments are both non-GAAP measures. Refer to “Cautionary Statement Regarding Certain Non-GAAP Performance Measures” section of this MD&A for the defined terms.
|
(2)
|
Amounts have been retroactively restated for the change in accounting policy for inventory costing relating to by-products and the allocation of production management staff salaries. Refer to the “Change in Accounting Policies” section below for further detail.
|
(3)
|
As a result of the Company’s divestment of its wholly owned subsidiary ALPS, the operations of ALPS have been presented as discontinued operations and the Company’s operational results have been retroactively restated, as required. Please see Note 11(b) of the Financial Statements for more information about the divestiture.
|
(i)
|
a 14% increase in medical cannabis net revenue driven primarily through an increase of 2,608 kilograms of medical cannabis sold as compared to the prior year;
|
(ii)
|
a reduction in our production costs through the increase of production capacity and realization of economies of sale at our production facilities; offset by
|
13 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
(iii)
|
a 6% decrease in the average net selling price per gram of medical cannabis.
|
(i)
|
a decline in the average net selling price per gram of consumer cannabis from $5.36 for the year ended June 30, 2019 to $3.94 the year ended June 30, 2020 as a result of a continued shift in our sales mix towards our Daily Special value brand which is sold at a more competitive price point for the value market segment;
|
(ii)
|
$15.3 million in net returns and price adjustments reducing net revenue, including a $1.9 million net provision for future returns and price adjustments; offset by
|
(iii)
|
a reduction in our production costs through the increase of production capacity and realization of economies of scale at our production facilities; and
|
(iv)
|
a $30.1 million increase in consumer cannabis net revenue, as a result of a 78% increase in kilograms of consumer cannabis sold, 32,157 kilograms sold for the current year compared to 18,023 kilograms sold in the prior year.
|
($ thousands)
|
Three months ended
|
Year ended
|
||||||||||
June 30, 2020
|
|
March 31, 2020 (1)
|
|
June 30, 2020
|
|
June 30, 2019 (1)
|
|
|||||
Total consolidated cost of sales
|
151,969
|
|
52,512
|
|
277,234
|
|
123,778
|
|
||||
Adjustments:
|
|
|
|
|
||||||||
Non-cannabis segment and non-cannabis cost of sales (2)
|
(19,585
|
)
|
(5,759
|
)
|
(33,246
|
)
|
(17,570
|
)
|
||||
Cannabis inventory impairment (6)
|
(91,009
|
)
|
—
|
|
(91,009
|
)
|
—
|
|
||||
Cash cost of sales for cannabis extracts
|
(10,647
|
)
|
(13,471
|
)
|
(41,236
|
)
|
(15,716
|
)
|
||||
Cost of cannabis purchased from other licensed producers
|
(97
|
)
|
(434
|
)
|
(1,180
|
)
|
(5,075
|
)
|
||||
Depreciation
|
(7,776
|
)
|
(7,590
|
)
|
(27,201
|
)
|
(13,351
|
)
|
||||
Cost of accessories (3)
|
—
|
|
—
|
|
(402
|
)
|
(907
|
)
|
||||
Cash cost of sales of dried cannabis sold (4)
|
22,855
|
|
25,258
|
|
82,960
|
|
71,159
|
|
||||
Packaging costs
|
(7,717
|
)
|
(9,064
|
)
|
(28,616
|
)
|
(15,751
|
)
|
||||
Cash cost to produce dried cannabis sold (4)
|
15,138
|
|
16,194
|
|
54,344
|
|
55,408
|
|
||||
|
|
|
|
|
||||||||
Kilogram equivalents of cannabis sold produced by Aurora (5)
|
16,960
|
|
13,239
|
|
52,112
|
|
33,361
|
|
||||
Cash cost of sales per gram of dried cannabis sold (4)
|
|
$1.35
|
|
|
$1.91
|
|
|
$1.59
|
|
|
$2.13
|
|
Cash cost to produce per gram of dried cannabis sold (4)
|
|
$0.89
|
|
|
$1.22
|
|
|
$1.04
|
|
|
$1.66
|
|
(1)
|
Amounts have been retroactively restated for the change in accounting policy for inventory costing relating to by-products and the allocation of production management staff salaries. Refer to the “Change in Accounting Policies” section below for further detail.
|
(2)
|
Non-cannabis segment cost of sales consists of cost of sales from the production and sale of indoor cultivation systems. Non-cannabis cost of sales consists of cost of sales from patient counseling services, hemp products, design, engineering and construction services, and analytical product testing. These were removed from consolidated cost of sales to determine cash costs solely related to the sales of dried cannabis produced by Aurora
|
(3)
|
Cost of accessories includes cost of sales from vaporizers, grinders, and capsule fillers.
|
(4)
|
Cash cost of sales per gram of dried cannabis sold and cash cost to produce per gram of dried cannabis sold are non-GAAP financial measures and are not recognized, defined, or subject to standardized measurement under IFRS. These respective metrics represent the blended and consolidated cash costs for dried cannabis produced by Aurora operations and sold under our Aurora, CanniMed, MedReleaf, ICC and Whistler operations during the year ended June 30, 2020. However, due to the acquisitions completed and growth achieved in fiscal 2019, the metrics for the fiscal 2019, reflect the blended and consolidated cash costs of dried cannabis produced and sold by our Aurora, CanniMed, MedReleaf, ICC and Whistler operations. Refer to “Cautionary Statement Regarding Certain Non-GAAP Performance Measures” section of this MD&A for the defined terms.
|
(5)
|
Kilograms of dried cannabis sold includes dried kilograms sold by our Aurora, CanniMed, MedReleaf, ICC and Whistler operations, but excludes kilograms returned and dried kilograms sold purchased from other Licensed Producers.
|
(6)
|
$105.5 million of inventory impairment charges were recognized through cost of sales of which $91.0 million relates to cannabis and $14.5 million relates to auxiliary support functions.
|
14 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
($ thousands)
|
Three months ended
|
Year ended
|
||||||
June 30, 2020
|
|
March 31, 2020
|
|
June 30, 2020
|
|
June 30, 2019
|
|
|
General and administration (1)
|
43,299
|
|
49,937
|
|
205,276
|
|
159,069
|
|
Sales and marketing
|
16,789
|
|
23,352
|
|
91,271
|
|
99,272
|
|
Acquisition costs
|
2,170
|
|
1,300
|
|
6,493
|
|
17,217
|
|
Research and development
|
7,646
|
|
5,601
|
|
26,070
|
|
14,778
|
|
Depreciation and amortization
|
14,789
|
|
14,673
|
|
68,414
|
|
63,343
|
|
Share-based compensation
|
5,975
|
|
9,204
|
|
59,899
|
|
107,039
|
|
Total operating expenses
|
90,668
|
|
104,067
|
|
457,423
|
|
460,718
|
|
(1)
|
Amounts have been retroactively restated for the change in accounting policy for the allocation of production management staff salaries. Refer to the “Change in Accounting Policies” section below for further detail.
|
(2)
|
As a result of the Company’s divestment of its wholly owned subsidiary, ALPS, the operations of ALPS have been presented as discontinued operations and the Company’s operational results have been retroactively restated, as required. Please see Note 11(b) of the Financial Statements for more information about the divestiture. ALPS incurred a nominal and $1.9 million of SG&A for the three months ended June 30, 2020 and March 31, 2020, respectively, and $6.0 million and $1.9 million for the years ended June 30, 2020 and 2019, respectively.
|
15 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
16 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
($ thousands)
|
Three months ended
|
Year ended
|
||||||
June 30, 2020 (5)
|
|
March 31, 2020 (1)(5)
|
|
June 30, 2020 (5)
|
|
June 30, 2019 (1)(5)
|
|
|
Net loss from continuing operations
|
(1,860,027
|
)
|
(136,132
|
)
|
(3,300,493
|
)
|
(300,740
|
)
|
Finance costs
|
29,120
|
|
6,662
|
|
77,538
|
|
39,409
|
|
Interest income
|
376
|
|
(2,195
|
)
|
(4,990
|
)
|
(3,679
|
)
|
Income tax expense
|
(67,581
|
)
|
(11,769
|
)
|
(83,403
|
)
|
(29,909
|
)
|
Depreciation and amortization
|
22,565
|
|
22,263
|
|
95,615
|
|
76,694
|
|
EBITDA
|
(1,875,547
|
)
|
(121,171
|
)
|
(3,215,733
|
)
|
(218,225
|
)
|
Changes in fair value of inventory sold
|
43,153
|
|
14,144
|
|
91,825
|
|
71,821
|
|
Unrealized gain on changes in fair value of biological assets
|
(11,879
|
)
|
(10,904
|
)
|
(56,614
|
)
|
(92,503
|
)
|
Share-based compensation
|
5,975
|
|
9,204
|
|
59,899
|
|
107,039
|
|
Acquisition costs (2)
|
2,170
|
|
1,300
|
|
6,493
|
|
17,217
|
|
Foreign exchange (gain) loss
|
(3,613
|
)
|
11,684
|
|
12,779
|
|
5,147
|
|
Share of loss from investment in associates
|
2,601
|
|
4,611
|
|
11,534
|
|
9,573
|
|
Gain on loss of control of subsidiary
|
—
|
|
(500
|
)
|
(500
|
)
|
(412
|
)
|
(Gain) loss on financial instruments (4)
|
(3,265
|
)
|
(6,416
|
)
|
27,148
|
|
24,410
|
|
Gain on deemed disposal of significant influence investment
|
(11,955
|
)
|
—
|
|
(11,955
|
)
|
(144,368
|
)
|
Restructuring charges
|
1,947
|
|
—
|
|
1,947
|
|
—
|
|
Impairment of inventory, investment in associates, property, plant and equipment, intangibles, and goodwill
|
1,815,807
|
|
47,621
|
|
2,882,505
|
|
82,291
|
|
Adjusted EBITDA(3)
|
(34,606
|
)
|
(50,427
|
)
|
(190,672
|
)
|
(138,010
|
)
|
(1)
|
Certain previously reported amounts have been restated to exclude the results related to discontinued operations and to reflect the change in accounting policy for the allocation of production management staff salaries. For further detail, refer to Note 11(b) of the Financial Statements and “Change in Accounting Policies” section below, respectively.
|
(2)
|
During the three months ended June 30, 2020, the Company adjusted for acquisition costs within its definition of Adjusted EBITDA and has applied this change retroactively. The Company believes that this presentation increases comparability and provides more relevant information to the users of the MD&A.
|
(3)
|
Adjusted EBITDA is a non-GAAP financial measure and is not a recognized, defined, or standardized measure under IFRS. Refer to “Cautionary Statement Regarding Certain Performance Measures” section of the MD&A.
|
(4)
|
Includes fair value changes on derivative investments, derivative liability, contingent consideration, loss on induced conversion of a debenture, and gain on the modification of debt. Refer to Note 20 of the Financial Statements.
|
(5)
|
As a result of the Company’s divestment of its wholly owned subsidiary ALPS, the operations of ALPS have been presented as discontinued operations and the Company’s operational results have been retroactively restated, as required. Please see Note 11(b) of the Financial Statements for more information about the divestiture. Including the results of ALPS, adjusted EBITDA loss would have been $34.4 million and $52.3 million for the three months ended June 30, 2020 and March 31, 2020, respectively, and $196.6 million and $137.5 million for the years ended June 30, 2020 and June 30, 2019, respectively.
|
17 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
($ thousands)
|
June 30, 2020
|
|
June 30, 2019
|
|
June 30, 2018
|
|
Cash and cash equivalents
|
162,179
|
|
172,727
|
|
76,785
|
|
Restricted cash
|
—
|
|
46,066
|
|
13,398
|
|
Marketable securities
|
7,066
|
|
143,248
|
|
59,188
|
|
|
|
|
|
|||
Working capital
|
147,933
|
|
224,213
|
|
144,533
|
|
Total assets
|
2,783,695
|
|
5,499,241
|
|
1,886,510
|
|
Total non-current liabilities
|
384,439
|
|
675,502
|
|
258,419
|
|
|
|
|
|
|||
Capitalization
|
|
|
|
|||
Convertible notes
|
327,038
|
|
503,581
|
|
191,528
|
|
Loans and borrowings
|
204,209
|
|
141,244
|
|
11,683
|
|
Total debt
|
531,247
|
|
644,825
|
|
203,211
|
|
Total equity
|
2,126,450
|
|
4,387,374
|
|
1,552,926
|
|
Total capitalization
|
2,657,697
|
|
5,032,199
|
|
1,756,137
|
|
▪
|
In November 2019, the Company announced that it had ceased construction of its Aurora Nordic Sky facility in Denmark and deferred spending on construction and commission costs for its Aurora Sun facility.
|
▪
|
On November 25, 2019, the Company reduced its near term debt obligations when holders of $227.0 million principal amount, or approximately 99%, of the Company’s Debentures voluntarily elected to convert their Debentures pursuant to the Early Amended Conversion Privilege (the “Elected Debentures”). Under the terms of the Supplemental Indenture, the Elected Debentures were converted into common shares of the Company (the "Common Shares") at the Amended Early Conversion Price (as defined in the Supplemental Indenture) of $39.40 resulting in the issuance of an aggregate of 5,761,260 Common Shares. The remaining $2.3 million principal amount of these Debentures were repaid in cash on March 6, 2020. For more information, refer to Note 15(ii) of the Financial Statements.
|
▪
|
In February 2020, the Company announced a restructuring plan to reduce operating expenses and further streamline capital investments. These actions reset SG&A expenses to approximately $40 million to $45 million by the beginning of fiscal Q1 2021.
|
▪
|
In April 2020, the Company sold 5,302,227 common shares of EnWave Corporation at $0.80 per share for gross proceeds of $4.1 million.
|
▪
|
On April 2, 2019, the Company filed a Shelf Prospectus and a corresponding Registration Statement with the Securities Exchange Commission (“SEC”), which allows Aurora to make offerings of common shares, debt securities, subscription receipts, units, warrants or any combination thereof up to US$750.0 million during the 25-month period that the Shelf Prospectus is effective. In connection with the Shelf Prospectus, the Company also filed an ATM supplement which provides for US$400.0 million in common shares to be sold by registered dealers on behalf of Aurora in the United States at prevailing market prices at the time of sale. On April 16, 2020, the Company filed a second ATM supplement to its existing Shelf Prospectus which provides for an additional US$250.0 million in common shares to be sold by the executing sales agents at market prices, thus increasing the total available financing under the ATM from US$400.0 million to US$650.0 million while reducing the total available financing under the Shelf Prospectus to US$100.0 million. During the year ended June 30, 2020, the Company raised net proceeds of US$426.8 million (CAD$573.4 million) under its ATM program. As at June 30, 2020, the Company has US$214.5 million of remaining available room under the ATM and US$60.0 million remaining available room under the Shelf Prospectus for future financings or issuances of securities.
|
▪
|
In May 2020, the Company completed the sale of its Exeter property for net proceeds of $8.6 million. The Company also entered into an agreement to sell its Jamaica property subsequent to June 30, 2020 for gross proceeds of US$3.5 million.
|
▪
|
During the year ended June 30, 2020 the Company sold 9,200,000 common shares of Alcanna at $3.00 per share for gross proceeds of $27.6 million;
|
▪
|
In June 2020, the Company announced further restructuring initiatives including a 25% reduction in Aurora’s SG&A staff and a 30% reduction in Aurora operational staff over the next several quarters. The Company also announced the consolidation of certain production facilities including Aurora Prairie, Aurora Mountain, Aurora Ridge, Aurora Vie, and Aurora Eau.
|
▪
|
In order to ensure prospective compliance with its debt covenants, effective September 9, 2020, the Company entered into the Second Amendment to the First Amended and Restated Credit Agreement with its Canadian banking syndicate (Note 16(a) of the Financial Statements).
|
18 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
•
|
$162.2 million cash and cash equivalents which the Company must maintain a minimum unrestricted cash balance of $35.0 million at any time (refer to “Credit Facility” section of this MD&A for more information);
|
•
|
$264.4 million Credit Facility with BMO, of which $1.4 million letters of credit is outstanding under Facility A, $113.8 million of principal is outstanding under Facility B, and $3.7 million of principal is outstanding under Facility C (Note 16(a) of the Financial Statements). As of June 30, 2020, the Company had an undrawn balance of $41.6 million under Facility A, of which $10.0 was available to the Company;
|
•
|
Subsequent to June 30, 2020 and as at September 22, 2020, the Company raised US$36.7 million gross proceeds under its ATM program, with US$177.8 million of remaining available room under the ATM and US$60.0 million remaining available room under the Shelf Prospectus for future financings or issuances of securities.
|
i.
|
the complete removal of a senior funded debt to EBITDA covenant of 3.00:1 and a total funded debt to EBITDA covenant of 4.00:1 ;
|
ii.
|
the complete removal of a 1.25:1 minimum fixed charge coverage ratio;
|
iii.
|
an adjustment to the total funded debt to adjusted shareholders’ equity ratio not to exceed 0.25:1 prior to September 30, 2020 to 0.20:1 effective March 31, 2020. Total funded debt includes all obligations (except those noted below) which constitute debt and is calculated as the total principal outstanding under Facility A, Facility B, Facility C, the January 24, 2019 Senior Notes and total obligations under capital leases determined in accordance with IAS 17 - Leases, and other obligations secured by Purchase-Money Security Interests, capitalized interest, the redemption price of any securities which are redeemable at the option of the holder, and any aggregate actual hedge liability. Total funded debt excludes accounts payable, payroll accruals, accruals in respect of normal business expenses and future income taxes;
|
iv.
|
maintenance of a minimum $35.0 million unrestricted cash balance at any time. Unrestricted cash is defined as the amount of cash held in bank accounts maintained by BMO that is not subject to any lien or any other restriction that would prevent the Company from using such cash for operating purposes in the ordinary course of business less any outstanding principal drawn under Facility A; and
|
v.
|
achievement of certain quarterly minimum EBITDA thresholds beginning in the quarter ending September 30, 2020. For the purposes of this calculation, EBITDA is defined as the consolidated net income of the Company excluding the following: extraordinary or non‐recurring income (expenses) and gains (losses), non‐cash gains (losses) (such as unrealized foreign exchange gains (losses)) and income of the unsecured subsidiaries (except to the extent that dividends in respect of such income have been paid in cash by such unsecured subsidiaries to a secured company); plus the following amounts (to the extent such amounts were deducted in determining such consolidated net income, and without duplication): (a) Interest, fees and expenses paid in connection with permitted funded Debt; (b) income and capital taxes; (c) depreciation and amortization; (d) non‐cash charges and expenses such as unrealized foreign exchange losses and charges relating to the impairment of goodwill and other intangible assets; (e) non‐cash share‐based compensation; (f) extraordinary non‐recurring expenses or losses to the extent approved by the lenders in writing; and (g) any other expenses approved in writing by the lenders in their discretion. The minimum thresholds applicable under the First Amendment to the First Amended and Restated Credit Agreement were as follows:
|
(i)
|
for the fiscal quarter ended September 30,2020: $5.0 million;
|
(ii)
|
for the fiscal quarter ended December 31,2020: $5.0 million;
|
(iii)
|
for the fiscal quarter ended March 31, 2021: $16.0 million;
|
19 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
(iv)
|
for the fiscal quarter ended June 30, 2021: $25.0 million; and
|
(v)
|
for the twelve month fiscal period ending June 30, 2021: $51.0 million
|
•
|
Total funded debt to shareholders’ equity is not to exceed 0.28:1 for the quarters ending June 30, 2020 and September 30, 2020, and shall be reduced to 0.25:1 for the quarter ending December 31, 2020 onwards. For the purposes of calculating the total funded debt to shareholders’ equity ratio, shareholders’ equity excludes the $172.3 million loss from the induced conversion of the March 2018 Debentures (refer to Note 15(ii) of the consolidated financial statements for the year ended June 30, 2020);
|
•
|
Total senior funded debt to EBITDA is not to exceed 3.00:1 at June 30, 2021. Total senior funded debt is defined as total funded debt of the Aurora and its subsidiaries, other than subordinated debt and such convertible notes as agreed to be excluded by the Lenders;
|
•
|
Maintenance of a minimum $35.0 million unrestricted cash balance at any time; and
|
•
|
Achievement of quarterly minimum EBITDA thresholds as follows:
|
(i)
|
for the fiscal quarter ended September 30,2020: $(11.0) million;
|
(ii)
|
for the fiscal quarter ended December 31,2020: $4.0 million;
|
(iii)
|
for the fiscal quarter ended March 31, 2021: $10.0 million;
|
(iv)
|
for the fiscal quarter ended June 30, 2021: $17.0 million; and
|
(v)
|
for the twelve month fiscal period ending June 30, 2021: $20.0 million.
|
20 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
($ thousands) |
Three months ended
|
Year ended
|
||||||
June 30, 2020
|
|
March 31, 2020
|
|
June 30, 2020
|
|
June 30, 2019
|
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Cash used in operating activities
|
(49,650
|
)
|
(58,687
|
)
|
(337,952
|
)
|
(192,245
|
)
|
Cash used in investing activities
|
(2,873
|
)
|
(85,539
|
)
|
(249,483
|
)
|
(312,297
|
)
|
Cash (used in) provided by financing activities
|
(5,068
|
)
|
212,575
|
|
582,562
|
|
597,548
|
|
Effect of foreign exchange
|
(10,438
|
)
|
5,525
|
|
(5,675
|
)
|
2,936
|
|
Increase (decrease) in cash and cash equivalents
|
(68,029
|
)
|
73,874
|
|
(10,548
|
)
|
95,942
|
|
21 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
($ thousands)
|
Total
|
|
≤ 1 year
|
|
Over 1 year
to 3 years
|
|
Over 3 years
to 5 years
|
|
> 5 years
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Accounts payable and accrued liabilities
|
95,574
|
|
95,574
|
|
—
|
|
—
|
|
—
|
|
Convertible notes and interest (1)
|
571,439
|
|
25,760
|
|
51,521
|
|
494,158
|
|
—
|
|
Lease liability (2)
|
171,868
|
|
11,243
|
|
32,643
|
|
27,468
|
|
100,514
|
|
Loans and borrowings, excluding lease liabilities (2)
|
123,143
|
|
123,125
|
|
18
|
|
—
|
|
—
|
|
Contingent consideration payable (3)
|
101,466
|
|
66,426
|
|
35,040
|
|
—
|
|
—
|
|
Capital commitments (4)
|
17,830
|
|
17,830
|
|
—
|
|
—
|
|
—
|
|
Purchase commitments (5)
|
12,748
|
|
3,451
|
|
4,132
|
|
4,132
|
|
1,033
|
|
License and sponsorship fees (6)
|
141,397
|
|
2,851
|
|
46,460
|
|
50,880
|
|
41,206
|
|
Total contractual obligations
|
1,235,465
|
|
346,260
|
|
169,814
|
|
576,638
|
|
142,753
|
|
(1)
|
Assumes the principal balance outstanding at June 30, 2020 remains unconverted and includes the estimated interest payable until the maturity date.
|
(2)
|
Includes interest payable until maturity date.
|
(3)
|
Payable in cash, shares, or a combination of both at Aurora’s sole discretion.
|
(4)
|
Relates to remaining commitments that the Company has made to vendors for equipment purchases and capital projects pertaining to existing construction.
|
(5)
|
Relates to a manufacturing agreement with Capcium for the encapsulation of softgels.
|
(6)
|
Subsequent to June 30, 2020, the Company and UFC mutually terminated its partnership for a one-time payment of US$30.0 million.
|
22 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
|
Years ended June 30,
|
|
||
($ thousands)
|
2020
|
|
2019
|
|
Short-term employment benefits (1)
|
8,118
|
|
7,446
|
|
Termination benefits
|
4,553
|
|
—
|
|
Directors’ fees (2)
|
586
|
|
349
|
|
Share-based compensation (3)
|
20,628
|
|
20,132
|
|
Total management compensation (4)
|
33,885
|
|
27,927
|
|
(1)
|
Short-term employment benefits include salaries, wages, bonuses and non-monetary benefits such as subsidized vehicle costs. Short-term employment benefits are measured at the exchange value, being the amounts agreed to by each party.
|
(2)
|
Includes meeting fees and committee chair fees.
|
(3)
|
Share-based compensation represent the contingent consideration, and the fair value of options, restricted share unites, and deferred share units granted and vested to key management personnel and directors of the Company under the Company’s share-based compensation plans (Note 18 of the Financial Statements).
|
(4)
|
As of June 30, 2020, $3.8 million is payable or accrued for key management compensation (June 30, 2019 - $2.6 million).
|
|
Years ended June 30,
|
|
||
($ thousands)
|
2020
|
|
2019
|
|
Operational, administrative and service fees (1)
|
—
|
|
6,696
|
|
Marketing fees (2)
|
—
|
|
3,124
|
|
Production costs (3)
|
6,330
|
|
500
|
|
Services and advisory fees (4)
|
1,247
|
|
160
|
|
|
7,577
|
|
10,480
|
|
(1)
|
Operational, administrative and service fees paid or accrued pursuant to a service agreement between CanvasRx and Canadian Cannabis Clinics (“CCC”). Aurora has an option to acquire CCC if CCC breaches the terms of the service agreement.
|
(2)
|
Marketing fees paid to Colour Creative Persuasion Inc., a company partially owned by a former officer of the Company.
|
(3)
|
Production costs incurred with (i) Capcium Inc. (“Capcium”), a company where Aurora holds significant influence; and (ii) Iotron Industries Canada Inc. (“Iotron”), an associate of the Company’s joint venture company. Aurora does not have the authority or ability to exert power over either Capcium or Iotron’s financial and/or operating decisions (i.e. control).
|
(4)
|
Finders’, service and advisory fees paid to Belot Business Consulting Corp. (a company controlled by the former Chief Global Development Officer), Lola Ventures Inc. (a company controlled by the former CEO), and Superior Safety Codes (a company controlled by the former CEO and President). Subsequent to June 30, 2020, the Company will no longer incur fees to these entities. No fees will be paid to these entities in future periods.
|
23 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
($ thousands)
|
June 30, 2020
|
|
June 30, 2019
|
|
Loan receivable from joint venture (1)
|
3,242
|
|
—
|
|
Production costs with investments in associates (2)(3)
|
(1,365
|
)
|
—
|
|
|
1,877
|
|
—
|
|
(1)
|
Relates to the purchase of production equipment on behalf of the Company’s joint venture, Auralux Enterprises Ltd. The loan bears interest at 5% per annum, payable monthly. The loan is to be repaid in installments on an annual basis in an amount equal to 50% of the associate’s EBITDA. The unpaid balance of the loan matures 10 years from the funding date.
|
(2)
|
Production costs incurred with (i) Capcium Inc., who manufactures softgels for the Company and (ii) Iotron Industries Canada Inc. who provides cannabis processing services to the Company. Aurora has significant influence over Capcium Inc. and is party to a common joint venture with Iotron Industries Canada Inc. Pursuant to a manufacturing agreement with Capcium Inc., the Company is contractually committed to purchase a minimum number of softgels during calendar 2020 and thereafter. If the Company fails to meet the required purchase minimum, then it is required to pay a penalty fee equal to the difference between the actual purchased quantity and the required purchase minimum multiplied by cost of the softgels. The Company is committed to purchase 40.7 million capsules in calendar 2020, and 20.0 million capsules per calendar year until December 31, 2026. The Company believes that it is more likely than not that the minimum quantity will not be met as of December 31, 2020 and as a result, the Company recognized a $0.9 million provision as of June 30, 2020. Under a License Agreement with CTT Pharmaceutical Holdings Inc., a company where Aurora holds significant influence, the Company also has a commitment to pay royalties at a rate of 5% of gross sales of all products and licensed services under the agreement.
|
(3)
|
Amounts are due upon the issuance or receipt of invoices, are unsecured and non-interest bearing.
|
Inputs and assumptions
|
Description
|
Correlation between inputs and fair value
|
Average selling price per gram
|
Represents the average selling price per gram of dried cannabis net of excise taxes, where applicable, for the period for all strains of cannabis sold, which is expected to approximate future selling prices.
|
If the average selling price per gram were higher (lower), estimated fair value would increase (decrease).
|
Average attrition rate
|
Represents the weighted average number of plants culled at each stage of production.
|
If the average attrition rate was lower (higher), estimated fair value would increase (decrease).
|
Weighted average yield per plant
|
Represents the weighted average number of grams of dried cannabis inventory expected to be harvested from each cannabis plant.
|
If the average yield per plant was higher (lower), estimated fair value would increase (decrease).
|
Standard cost per gram to complete production
|
Based on actual production costs incurred divided by the grams produced in the period.
|
If the standard cost per gram to complete production was lower (higher), estimated fair value would increase (decrease).
|
Stage of completion in the production process
|
Calculated by taking the weighted average number of days in production over a total average grow cycle of approximately twelve weeks.
|
If the number of days in production was higher (lower), estimated fair value would increase (decrease).
|
24 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
25 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
June 30, 2019
As previously reported
|
|
Inventory Adjustments
|
|
Discontinued Operations
|
|
June 30, 2019
Restated
|
|
|
Consolidated Statement of Financial Position
|
|
|
|
|
||||
Biological assets
|
51,836
|
|
(1,269
|
)
|
—
|
|
50,567
|
|
Inventory
|
113,641
|
|
(2,320
|
)
|
—
|
|
111,321
|
|
Deferred tax liability
|
91,886
|
|
(916
|
)
|
—
|
|
90,970
|
|
Deficit
|
(283,639
|
)
|
(2,672
|
)
|
—
|
|
(286,311
|
)
|
26 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
Year ended
June 30, 2019
As previously reported
|
|
Inventory Adjustments
|
|
Discontinued Operations
|
|
Year ended
June 30, 2019
Restated
|
|
|
Consolidated Statement of Comprehensive Loss
|
|
|
|
|
||||
Cost of sales
|
112,526
|
|
11,252
|
|
—
|
|
123,778
|
|
Gross profit before fair value adjustments
|
135,413
|
|
(11,252
|
)
|
(2,403
|
)
|
121,758
|
|
|
|
|
|
|
||||
Changes in fair value of inventory sold
|
72,129
|
|
(308
|
)
|
—
|
|
71,821
|
|
Unrealized gain on changes in fair value of biological assets
|
(96,531
|
)
|
4,028
|
|
—
|
|
(92,503
|
)
|
Gross profit
|
159,815
|
|
(14,972
|
)
|
(2,403
|
)
|
142,440
|
|
|
|
|
|
|
||||
General and administration
|
172,365
|
|
(11,384
|
)
|
(1,912
|
)
|
159,069
|
|
|
|
|
|
|
||||
Deferred tax (recovery) expense
|
(23,257
|
)
|
(916
|
)
|
264
|
|
(23,909
|
)
|
|
|
|
|
|
||||
Net loss from continuing operations
|
(297,924
|
)
|
(2,672
|
)
|
(144
|
)
|
(300,740
|
)
|
Net loss attributable to Aurora shareholders
|
(290,837
|
)
|
(2,672
|
)
|
—
|
|
(293,509
|
)
|
Loss per share (basic and diluted)
|
(3.63
|
)
|
(0.03
|
)
|
n/a
|
|
(3.66
|
)
|
Year ended
June 30, 2019
As previously reported
|
|
Inventory Adjustments
|
|
Discontinued Operations
|
|
Year ended
June 30, 2019
Restated
|
|
|
Consolidated Statement of Cash Flows
|
|
|
|
|
||||
Unrealized gain on changes in fair value of biological assets
|
(96,531
|
)
|
4,028
|
|
—
|
|
(92,503
|
)
|
Changes in fair value of inventory sold
|
72,129
|
|
(308
|
)
|
—
|
|
71,821
|
|
Deferred tax expense (recovery)
|
(23,257
|
)
|
(916
|
)
|
264
|
|
(23,909
|
)
|
Changes in non-cash working capital
|
(37,952
|
)
|
(211
|
)
|
878
|
|
(37,285
|
)
|
Net cash used in operating activities
|
(192,245
|
)
|
—
|
|
—
|
|
(192,245
|
)
|
(i)
|
IFRS 16 Leases
|
i)
|
higher non-current assets related to the initial recognition of the present value of our unavoidable future lease payments as right-of-use assets under property, plant and equipment, adjusted by the amount of any prepaid or accrued lease payments relating to the lease recognized in the balance sheet as at July 1, 2019;
|
ii)
|
higher current and non-current liabilities related to the concurrent recognition of lease liabilities, which are measured at the present value of the remaining fixed lease payments, discounted by our weighted average incremental borrowing rate of 5.62% as of July 1, 2019;
|
iii)
|
replacement of rent expense previously recorded in cost of goods sold, general and administration, and sales and marketing expenses with depreciation expense of these right-of-use assets and higher finance costs related to the accretion and interest expense of the corresponding lease liabilities; and
|
iv)
|
variable lease payments and non-lease components are expensed as incurred.
|
i)
|
recognition exemption of short-term leases;
|
ii)
|
recognition exemption of low-value leases;
|
iii)
|
application of a single discount rate to a portfolio of leases with similar characteristics on transition;
|
iv)
|
exclusion of initial direct costs from the measurement of the right-of-use assets upon transition;
|
v)
|
application of hindsight in determining the applicable lease term at the date of transition; and
|
vi)
|
election to not separate non-lease components from lease components, and instead account for each lease component and any associated non-lease components as a single lease component.
|
27 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
As at July 1, 2019
|
As previously reported under IAS 17
|
|
IFRS 16 transition adjustments
|
|
Inventory adjustments
(noted above) |
|
As reported under
IFRS 16 |
|
|
$
|
|
$
|
|
|
$
|
|
|
Prepaid deposits
|
24,323
|
|
(585
|
)
|
—
|
|
23,738
|
|
Property, plant and equipment
|
765,567
|
|
96,049
|
|
—
|
|
861,616
|
|
Current loans and borrowings
|
(13,758
|
)
|
(6,630
|
)
|
—
|
|
(20,388
|
)
|
Non-current loans and borrowings
|
(127,486
|
)
|
(88,834
|
)
|
—
|
|
(216,320
|
)
|
Accumulated deficit
|
283,639
|
|
—
|
|
2,672
|
|
286,311
|
|
Operating lease commitments as at June 30, 2019
|
$
|
94,780
|
|
Add: finance lease liabilities recognized as at June 30, 2019
|
1,326
|
|
|
Add: adjustments as a result of a different treatment for extension and termination options
|
94,829
|
|
|
Effect of discounting using the lessee's incremental borrowing rate
|
(88,767
|
)
|
|
Less: lease commitments not yet in effect
|
(4,068
|
)
|
|
Less: short-term, low-value asset leases and others
|
(1,318
|
)
|
|
Lease liabilities recognized as at July 1, 2019
|
$
|
96,782
|
|
28 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
29 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
|
Amortized Cost
|
|
FVTPL
|
|
Designated FVTOCI
|
|
Total
|
|
Financial Assets
|
$
|
|
$
|
|
$
|
|
$
|
|
Cash and cash equivalents
|
162,179
|
|
—
|
|
—
|
|
162,179
|
|
Restricted cash
|
—
|
|
—
|
|
—
|
|
—
|
|
Accounts receivable, excluding taxes receivable
|
48,198
|
|
—
|
|
—
|
|
48,198
|
|
Marketable securities
|
—
|
|
—
|
|
7,066
|
|
7,066
|
|
Derivatives
|
—
|
|
53,582
|
|
—
|
|
53,582
|
|
Loans receivable
|
3,643
|
|
—
|
|
—
|
|
3,643
|
|
Financial Liabilities
|
|
|
|
|
||||
Accounts payable and accrued liabilities
|
95,574
|
|
—
|
|
—
|
|
95,574
|
|
Convertible debentures (1)
|
327,038
|
|
—
|
|
—
|
|
327,038
|
|
Contingent consideration payable
|
—
|
|
19,604
|
|
—
|
|
19,604
|
|
Loans and borrowings
|
204,209
|
|
—
|
|
—
|
|
204,209
|
|
Derivative liability
|
—
|
|
1,827
|
|
—
|
|
1,827
|
|
(1)
|
The fair value of convertible notes includes both the debt and equity components.
|
Level 1
|
Unadjusted quoted prices in active markets for identical assets or liabilities;
|
Level 2
|
Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; and
|
Level 3
|
Inputs for the asset or liability that are not based on observable market data.
|
($ thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
As of June 30, 2020
|
|
|
|
|
||||
Marketable securities (1)
|
6,066
|
|
—
|
|
1,000
|
|
7,066
|
|
Derivative assets (1)
|
—
|
|
37,480
|
|
16,102
|
|
53,582
|
|
Contingent consideration payable (2)
|
—
|
|
—
|
|
19,604
|
|
19,604
|
|
Derivative liability (2)
|
—
|
|
1,827
|
|
—
|
|
1,827
|
|
|
|
|
|
|
||||
As at June 30, 2019
|
|
|
|
|
||||
Marketable securities
|
142,248
|
|
—
|
|
1,000
|
|
143,248
|
|
Derivative assets
|
—
|
|
64,001
|
|
22,408
|
|
86,409
|
|
Contingent consideration payable
|
—
|
|
—
|
|
28,137
|
|
28,137
|
|
Derivative liability (2)
|
—
|
|
177,395
|
|
—
|
|
177,395
|
|
(1)
|
For a reconciliation of realized and unrealized gains and losses applicable to financial assets measured at fair value for the year ended June 30, 2020, refer to Notes 6(a) and (b) of the Financial Statements.
|
(2)
|
For a reconciliation of unrealized gains and losses applicable to financial liabilities measured at fair value for the year ended June 30, 2020, please refer to Note 15(iii) and Note 27 of the Financial Statements.
|
30 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
(a)
|
Currency risk
|
(b)
|
Interest rate risk
|
(c)
|
Price risk
|
31 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
Securities (1)
|
Units Outstanding
|
|
Issued and outstanding common shares
|
121,528,720
|
|
Stock options
|
5,324,821
|
|
Warrants
|
1,078,747
|
|
Restricted share units
|
810,669
|
|
Deferred share units
|
25,305
|
|
Performance share units
|
419,442
|
|
Convertible debentures
|
47,737,650
|
|
(1)
|
Refer to Note 15 “Convertible Debentures”, Note 17 “Share Capital” and Note 18 “Share-Based Compensation” of the Financial Statements for a detailed description of these securities. All references to the number of securities above have been retroactively adjusted to reflect the Share Consolidation effective May 11, 2020.
|
32 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
($ thousands, except per share and Operational Results)
|
Q4 2020
|
|
Q3 2020 (1)
|
|
Q2 2020 (1)
|
|
Q1 2020 (1)
|
|
||||
Financial Results
|
|
|
|
|
||||||||
Net revenue (2)
|
|
$72,114
|
|
|
$75,520
|
|
|
$56,027
|
|
|
$75,245
|
|
Adjusted gross margin before FV adjustments on cannabis net revenue (4)
|
50
|
%
|
43
|
%
|
48
|
%
|
62
|
%
|
||||
(Loss) earnings from continuing operations attributable to common shareholders
|
|
($1,855,484
|
)
|
|
($136,164
|
)
|
|
($1,292,314
|
)
|
|
$10,135
|
|
(Loss) earnings from discontinued operations attributable to common shareholders
|
|
($2,954
|
)
|
|
($3,882
|
)
|
|
($1,695
|
)
|
|
($1,313
|
)
|
(Loss) earnings attributable to common shareholders
|
|
($1,858,438
|
)
|
|
($140,046
|
)
|
|
($1,294,009
|
)
|
|
$8,822
|
|
Basic and diluted (loss) earnings per share from continuing operations
|
|
($16.67
|
)
|
|
($1.36
|
)
|
|
($14.25
|
)
|
|
$0.12
|
|
Basic and diluted (loss) earnings per share
|
|
($16.69
|
)
|
|
($1.40
|
)
|
|
($14.26
|
)
|
|
$0.10
|
|
|
|
|
|
|
||||||||
Balance Sheet
|
|
|
|
|
||||||||
Working capital
|
|
$147,933
|
|
|
$429,293
|
|
|
$400,070
|
|
|
$116,228
|
|
Cannabis inventory and biological assets (5)
|
|
$139,198
|
|
|
$225,966
|
|
|
$200,868
|
|
|
$171,225
|
|
Total assets
|
|
$2,783,695
|
|
|
$4,699,137
|
|
|
$4,656,046
|
|
|
$5,599,277
|
|
|
|
|
|
|
||||||||
Operational Results – Cannabis
|
|
|
|
|
||||||||
Cash cost to produce per gram sold (6)
|
|
$0.89
|
|
|
$1.22
|
|
|
$1.05
|
|
|
$1.05
|
|
Average net selling price of dried cannabis (4)
|
|
$3.60
|
|
|
$4.64
|
|
|
$4.69
|
|
|
$4.90
|
|
Kilograms produced
|
44,406
|
|
36,207
|
|
30,691
|
|
41,436
|
|
||||
Kilograms sold
|
16,748
|
|
12,729
|
|
9,501
|
|
12,463
|
|
||||
|
|
|
|
|
||||||||
|
Q4 2019 (1)(7)
|
|
Q3 2019 (1)
|
|
Q2 2019 (1)
|
|
Q1 2019 (1)
|
|
||||
Financial Results
|
|
|
|
|
||||||||
Net revenue (2)
|
|
$98,942
|
|
|
$64,231
|
|
|
$54,178
|
|
|
$28,185
|
|
Adjusted gross margin before FV adjustments on cannabis net revenue (4)
|
63
|
%
|
54
|
%
|
48
|
%
|
53
|
%
|
||||
(Loss) earnings from continuing operations attributable to common shareholders
|
|
($3,151
|
)
|
|
($155,027
|
)
|
|
($241,669
|
)
|
|
$106,194
|
|
(Loss) earnings from discontinued operations attributable to common shareholders
|
|
$2,939
|
|
|
($1,775
|
)
|
|
($288
|
)
|
|
($732
|
)
|
(Loss) earnings attributable to common shareholders
|
|
($212
|
)
|
|
($156,802
|
)
|
|
($241,957
|
)
|
|
$105,462
|
|
Basic (loss) earnings per share from continuing operations
|
|
($0.04
|
)
|
|
($1.85
|
)
|
|
($2.97
|
)
|
|
$1.50
|
|
Diluted (loss) earnings per share from continuing operations
|
|
($0.04
|
)
|
|
($1.85
|
)
|
|
($2.97
|
)
|
|
$1.47
|
|
Basic (loss) earnings per share
|
|
$0.00
|
|
|
($1.88
|
)
|
|
($2.97
|
)
|
|
$1.49
|
|
Diluted (loss) earnings per share
|
|
$0.00
|
|
|
($1.88
|
)
|
|
($2.97
|
)
|
|
$1.46
|
|
|
|
|
|
|
||||||||
Balance Sheet
|
|
|
|
|
||||||||
Working capital
|
|
$224,213
|
|
|
$467,076
|
|
|
$270,424
|
|
|
$548,446
|
|
Cannabis inventory and biological assets (5)
|
|
$140,687
|
|
|
$115,370
|
|
|
$75,719
|
|
|
$80,848
|
|
Total assets
|
|
$5,499,241
|
|
|
$5,547,127
|
|
|
$4,871,679
|
|
|
$4,955,361
|
|
|
|
|
|
|
||||||||
Operational Results – Cannabis
|
|
|
|
|
||||||||
Cash cost to produce per gram sold (6)
|
|
$1.21
|
|
|
$2.12
|
|
|
$2.49
|
|
|
$1.45
|
|
Average net selling price of dried cannabis (4)
|
|
$4.91
|
|
|
$5.86
|
|
|
$6.23
|
|
|
$8.31
|
|
Kilograms produced
|
29,034
|
|
15,590
|
|
7,822
|
|
4,996
|
|
||||
Kilograms sold
|
17,793
|
|
9,160
|
|
6,999
|
|
2,676
|
|
(1)
|
Certain previously reported amounts have been restated to exclude the results related to discontinued operations and change in accounting policy for the valuation of inventory costing relating to by-products. For further detail, refer to Note 11(b) of the Financial Statements and “Change in Accounting Policies” section above, respectively.
|
(2)
|
Net revenues represent our total gross revenues net of excise taxes levied by the CRA effective October 17, 2018, on the sale of medical and consumer use cannabis products. Given that our gross revenue figures exclude excise taxes that were levied and billed back to customers, as reflected in accordance with IFRS 15, we believe that the presentation of net revenue more accurately reflects the level of revenue earned during the relevant period.
|
(3)
|
Gross margin on cannabis net revenue is a non-GAAP measure. Refer to “Cautionary Statement Regarding Certain Non-GAAP Performance Measures” section of this MD&A for the defined term. Gross margin on cannabis net revenue for Q2 2019 and subsequent periods were comprised of revenues from both medical and consumer markets, while gross margin on cannabis net revenues for the periods prior to Q2 2019 were comprised of revenues from medical cannabis only. Given that our gross revenue from the sale of goods figure excludes excise taxes, we believe that the presentation of gross margin on cannabis net revenue more accurately reflects the level of gross profit earned from cannabis products during the relevant period.
|
(4)
|
Refer to “Cautionary Statement Regarding Certain Performance Measures” section of this MD&A for the defined terms.
|
(5)
|
Represents total biological assets and cannabis inventory, exclusive of merchandise, accessories, supplies and consumables.
|
(6)
|
Cash cost of sales per gram of dried cannabis sold and cash cost to produce per gram of dried cannabis sold are non-GAAP financial measures and are not recognized, defined, or subject to standardized measurement under IFRS. These respective metrics represent the blended and consolidated cash costs for dried cannabis produced by Aurora operations and sold under our Aurora, CanniMed, MedReleaf, Whistler, and ICC operations during the year ended June 30, 2020. However, due to the acquisitions completed and growth achieved in fiscal 2019, the metrics for the fiscal 2019, reflect the blended and consolidated
|
33 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
(7)
|
During the three months ended June 30, 2019, the Company recorded non-material year end corrections to: (i) capitalize certain payroll, share-based compensation and borrowing costs, related to the construction of our production facilities that were incorrectly expensed in prior periods; and (ii) reverse items that had been over-accrued in prior periods. The net impact of these adjustments to the three months ended June 30, 2019 Adjusted EBITDA was a $14.9 million reduction in reported operating expenses.
|
34 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
35 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
36 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
37 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
38 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
39 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
40 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
•
|
actual or anticipated fluctuations in the Company’s results of operations;
|
•
|
recommendations by securities research analysts;
|
•
|
changes in the economic performance or market valuations of companies in the same industry in which the Company operates;
|
•
|
addition or departure of the Company’s executive officers and other key personnel;
|
•
|
release or expiration of transfer restrictions on outstanding Common Shares;
|
•
|
sales or perceived sales of additional Common Shares;
|
•
|
operating and financial performance that varies significantly from the expectations of management, securities analysts and investors;
|
•
|
regulatory changes affecting the Company’s industry, business and operations;
|
•
|
announcements of developments and other material events by the Company or its competitors;
|
•
|
fluctuations in the costs of vital production inputs, materials and services;
|
•
|
changes in global financial markets, global economies and general market conditions, such as interest rates and product price volatility;
|
•
|
significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving the Company or its competitors;
|
•
|
operating and share price performance of other companies that investors deem comparable to the Company; and
|
•
|
news reports relating to trends, concerns, technological or competitive developments, regulatory changes and other related issues in the Company’s industry or target markets.
|
41 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
•
|
a limited availability of market quotations for our Common Shares;
|
•
|
reduced liquidity for our Common Shares;
|
•
|
a determination that our Common Shares are “penny stock”, which would require brokers trading in our Common Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Common Shares;
|
•
|
a limited amount of news and analyst coverage of us; and
|
•
|
a decreased ability for us to issue additional equity securities or obtain additional equity or debt financing in the future.
|
42 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
•
|
the rules under the U.S. Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC;
|
•
|
the sections of the U.S. Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of securities registered under the U.S. Exchange Act;
|
•
|
the sections of the U.S. Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and
|
•
|
the selective disclosure rules by issuers of material non-public information under Regulation FD.
|
43 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
44 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
•
|
IT General Controls: The Company had a combination of pervading control deficiencies within its information technology (IT) general and application controls across systems supporting the Company’s in-scope business processes, including access controls related to maintaining appropriate segregation of duties, monitoring control activities when involving third party service providers, and super-user access. We have concluded that process-level automated controls and manual controls that were dependent upon IT general controls, information and data derived from impacted IT systems were ineffective because they could have been adversely impacted.
|
•
|
Third-Party Service Organization Controls: The Company did not sufficiently evaluate controls maintained by Service Organizations through the timely receipt and evaluation of the Service Organization Control (SOC-1) reports, attesting to the design and effectiveness of the Service Organizations IT controls, due to the timing of the Company’s fiscal year end and the date of attestation of such reports. As a result, the Company did not have evidence of the design and operating effectiveness of automated transaction-level controls or information produced by third-party systems that are relied upon in the related procure-to-pay, hire-to-pay and medical order-to-cash cycles.
|
•
|
Complex Spreadsheet Controls: The Company did not implement and maintain effective controls surrounding certain complex spreadsheets. Spreadsheets are inherently prone to error due to their manual nature and increased risk of human error. The Company’s controls related to complex spreadsheets did not address all identified risks associated with manual data entry, completeness of data entry, and the accuracy of mathematical formulas, impacting complex spreadsheets used in fixed asset continuity schedules, production and revenue forecasting, and the calculation of the fair value of biological assets.
|
•
|
Journal Entries: The Company did not effectively design and maintain appropriate segregation of duties and controls over the effective preparation, review and approval, and associated documentation of journal entries, across its three significant ERP platforms.
|
45 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
•
|
pro forma measures including revenue, expected SG&A run-rates, and grams produced;
|
•
|
the completion of construction of production facilities, associated costs, and receipt of licenses from Health Canada to produce and sell cannabis and cannabis related products from these facilities;
|
•
|
strategic investments and capital expenditures, and related benefits;
|
•
|
future strategic plans;
|
•
|
expectations regarding production capacity, costs and yields;
|
•
|
product sales expectations and corresponding forecasted increases in revenues; and
|
•
|
the impact of the COVID-19 pandemic on the Company’s business, operations, capital resources and/or financial results.
|
•
|
Cash cost of sales of dried cannabis sold is calculated by taking the cost of sales, excluding the effect of changes in the FV of biological assets and inventory, and deducting non-cash production costs, cannabis extract conversion costs, cost of accessories, cost of products purchased from other Licensed Producers that were sold, cost of sales from non-cannabis producing subsidiaries, and inventory impairment. Cash cost of sales per gram of dried cannabis sold is calculated by taking cash cost of sales of dried cannabis sold divided by total grams of dried cannabis sold in the period that was produced by Aurora. Management believes these measures provide useful information about the efficiency of production and fulfillment for our core cannabis operations.
|
•
|
Cash cost to produce dried cannabis sold is equal to cash cost of sales of dried cannabis sold less packaging costs (i.e. post-production costs). Cash cost to produce per gram of dried cannabis sold is calculated by taking cash cost to produce dried cannabis sold divided by total grams of dried cannabis sold in the period that was produced by Aurora. Management believes these measures provide useful information about the efficiency of our production of cannabis.
|
•
|
Cannabis net revenue represents revenue from the sale of cannabis products, excluding excise taxes and revenues from patient counseling services, design, engineering and construction services, sale of hemp products, and analytical testing services. Cannabis net revenue is further broken down as follows:
|
◦
|
Medical cannabis net revenue represents Canadian and international cannabis net revenue for medical cannabis sales only, excluding wholesale bulk cannabis net revenue.
|
◦
|
Consumer cannabis net revenue represents cannabis net revenue for consumer cannabis sales only.
|
46 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
◦
|
Wholesale bulk cannabis net revenue represents cannabis net revenue for wholesale bulk cannabis only.
|
•
|
Average net selling price per gram and gram equivalent is calculated by taking cannabis net revenue divided by total grams and grams equivalent of cannabis sold in the period. Average net selling price per gram and gram equivalent is further broken down as follows:
|
◦
|
Average net selling price per gram of dried cannabis represents the average net selling price per gram for dried cannabis sales only, excluding wholesale bulk cannabis sold in the period.
|
◦
|
Average net selling price per gram equivalent of cannabis extracts represents the average net selling price per gram equivalent for cannabis extracts only, excluding wholesale bulk cannabis extracts sold in the period.
|
◦
|
Average net selling price per gram and gram equivalent of medical cannabis represents the average net selling price per gram and gram equivalent for dried cannabis and cannabis extracts sold in the medical market.
|
◦
|
Average net selling price per gram and gram equivalent of consumer cannabis represents the average net selling price per gram and gram equivalent for dried cannabis and cannabis extracts sold in the consumer market.
|
◦
|
Average net selling price per gram and gram equivalent of wholesale bulk cannabis represents the average net selling price per gram and gram equivalent of wholesale bulk cannabis and cannabis extracts sold in the period. Wholesale bulk cannabis sales are not subject to excise taxes.
|
•
|
Gross profit before FV adjustments on cannabis net revenue is calculated by subtracting (i) cost of sales, before the effects of changes in FV of biological assets and inventory, and (ii) cost of sales from non-cannabis auxiliary support functions, from total cannabis net revenue. Gross margin before FV adjustments on cannabis net revenue is calculated by dividing gross profit before FV adjustments on cannabis net revenue divided by cannabis net revenue.
|
•
|
Adjusted gross profit before FV adjustments on cannabis net revenue represents cash gross profit and gross margin on cannabis net revenue and is calculated by subtracting from total cannabis net revenue (i) cost of sales, before the effects of changes in FV of biological assets and inventory; (ii) cost of sales from non-cannabis auxiliary support functions; and removing (iii) depreciation in cost of sales; and (iv) cannabis inventory impairment. Adjusted gross margin before FV adjustments on cannabis net revenue is calculated by dividing adjusted gross profit before FV adjustments on cannabis net revenue divided by cannabis net revenue. Adjusted gross profit and gross margin before FV adjustments on cannabis net revenue is further broken down as follows:
|
◦
|
Adjusted gross profit and gross margin before FV adjustments on medical cannabis net revenue represents adjusted gross profit and gross margin before FV adjustments on sales generated in the medical market only.
|
◦
|
Adjusted gross profit and gross margin before FV adjustments on consumer cannabis net revenue represents adjusted gross profit and gross margin before FV adjustments on sales generated in the consumer market only.
|
◦
|
Adjusted gross profit and gross margin before FV adjustments on wholesale bulk cannabis net revenue represents adjusted gross profit and gross margin before FV adjustments on sales generated from wholesale bulk cannabis only.
|
•
|
Adjusted EBITDA is calculated as net (loss) income excluding interest income (expense), accretion, income taxes, depreciation, amortization, changes in fair value of inventory sold, changes in fair value of biological assets, share-based compensation, acquisition costs, foreign exchange, changes in fair value of financial instruments, gains and losses on deemed disposal, and non-cash impairment of intangibles, goodwill, inventory, property, plant and equipment and other assets. Adjusted EBITDA is intended to provide a proxy for the Company’s operating cash flow and is widely used by industry analysts to compare Aurora to its competitors, and derive expectations of future financial performance for Aurora. Adjusted EBITDA increases comparability between comparative companies by eliminating variability resulting from differences in capital structures, management decisions related to resource allocation, and the impact of FV adjustments on biological assets and inventory and financial instruments, which may be volatile and fluctuate significantly from period to period.
|
47 | AURORA CANNABIS INC.
|
2020 ANNUAL REPORT
|
|
•
|
pro forma measures including revenue, expected SG&A run-rates, and grams produced;
|
•
|
the completion of construction of production facilities, associated costs and receipt of licenses from Health Canada to produce and sell cannabis and cannabis related products from these facilities;
|
•
|
strategic investments and capital expenditures, and related benefits;
|
•
|
future strategic plans;
|
•
|
growth in the global consumer use cannabis market;
|
•
|
expectations regarding production capacity, costs and yields;
|
•
|
product sales expectations and corresponding forecasted increases in revenues; and
|
•
|
the impact of the COVID-19 pandemic on the Company’s business, operations, capital resources and/or financial results.
|
•
|
Aurora Cannabis Enterprises Inc., a holder of licenses under the Cannabis Act, which was formed under the Business Corporations Act (Alberta) on July 1, 2020 through the amalgamation of MedReleaf, CanniMed, CanniMed Ltd., Prairie Plant Systems Ltd. and the former Aurora Cannabis Enterprises Inc.
|
•
|
1769474 Alberta Ltd., a holding company and the entity that leases the lands for some of our production facilities, which was incorporated under the ABCA on August 20, 2013.
|
•
|
2105657 Alberta Inc., a holding company and the entity that is holding land for the construction for the Aurora Sun production facility, which was incorporated under the ABCA on March 15, 2018.
|
•
|
Aurora Deutschland GmbH, a limited liability company under German law, which is a registered wholesale importer, exporter and distributor of medical cannabis in Germany and which we acquired on May 30, 2017.
|
•
|
Whistler, a company incorporated under the BCBCA which holds the Whistler Facility and the Pemberton Facility, and which we acquired on March 1, 2019.
|
•
|
Reliva LLC, a Delaware corporation, which we acquired on May 28, 2020.
|
•
|
On July 24, 2017, the Company’s Common Shares commenced trading on the TSX after graduating from the TSX Venture Exchange. This marked the commencement of trading of the Company’s securities on a senior exchange for the first time and provided new finance opportunities to the Company.
|
•
|
On November 2, 2017, the Company completed a public offering and a concurrent private placement of units, raising proceeds of $69 million and $6 million, respectively. Each unit consisted of one Common Share and one Common Share warrant exercisable at a price of $48.00 per Common Share for a period of three years.
|
•
|
On November 28, 2017, the Company completed an offering of 9,583 special warrants exercisable into convertible debentures for gross proceeds of $115 million. On January 12, 2018, the special warrants were exercised into $115 million principal amount of convertible debentures. The debentures are unsecured, bear interest at 6% per annum and mature on November 28, 2022. The principal amount of the debentures was convertible into Common Shares at $78.00 per Common Share subject to a forced conversion if after four months and one day following closing, the VWAP of the Common Shares equals or exceeds $108.00 per Common Share for 10 consecutive trading days. On October 17, 2018, the Company announced that it had elected its right to convert all of the principal amount outstanding into Common Shares and the conversion was completed on November 16, 2018.
|
•
|
On March 9, 2018, the Company completed a private placement of two-year unsecured convertible debentures (the “March Debentures”) in the aggregate principal amount of $230 million. The March Debentures bear interest at 5% per annum, payable semi-annually and were convertible into Common Shares at a price of $156.60 per Common Share, subject to a forced conversion if the VWAP of the Common Shares exceeded $204.00 per Common Share for 10 consecutive trading days.
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On June 20, 2018, Aurora announced that it intended to distribute units consisting of shares and warrants of its subsidiary, Australis Capital Inc. (“ACI”), to shareholders of the Company by way of a return of capital. The spin-out of ACI happened in the form of a distribution of units of ACI to resident holders of Common Shares. The distribution was paid on the basis of one Unit for every 3 Common Shares outstanding as of August 24, 2018 on a post-share consolidation basis. Each Unit consisted of one common share of ACI (“Australis Share”) and one Australis Share purchase warrant.
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On July 28, 2017, the Company received 14,285,714 units of Radient Technologies Inc. (“Radient”) pursuant to the mandatory conversion of debentures issued to the Company on February 13, 2017.
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On September 29, 2017, the Company acquired BC Northern Lights Enterprises Ltd. (“BCNL”) and Urban Cultivator Inc. (“UCI”), leading companies, respectively, in the production and sale of proprietary systems for the safe, efficient and high-yield indoor cultivation of cannabis, and in state-of-the-art indoor gardening appliances for the cultivation of organic microgreens, vegetables and herbs in home kitchens. Total aggregate consideration for the acquisition was $5.5 million. Pursuant to Part 8 of NI 51-102, this acquisition did not constitute a significant acquisition and Form 51-102F4 was not required to be filed. At the time, these transactions were an important step in the Company’s strategy to serve the home gardening market in Canada for patients who choose to grow their own medical cannabis, and ultimately for adult consumers who choose to grow their own after the legalization of adult usage in Canada.
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On November 6, 2017, the Company and Radient finalized a Master Services Agreement pursuant to which Radient agreed to perform certain services for Aurora using its MapTM technology, as well as other technologies, as an independent contractor in relation to the development, commercialization and supply of standardized cannabis extracts. Subsequently, on December 11, 2017, the Company exercised all of its 15,856,231 common share purchase warrants of Radient for a total cost of $5.8 million. The Company also subscribed for 4,541,889 units at $1.37 per unit in Radient’s private placement. As a result, the Company increased its ownership interest in Radient from 8.8% to 19.18% on an undiluted basis.
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On November 20, 2017, the Company announced that it would make an offer to purchase all of the outstanding shares of CanniMed Therapeutics Inc. CanniMed was an early provider of medical cannabis in Canada with production facilities in Saskatchewan. Aurora had purchased 700,600 CanniMed common shares in the market for $16.1 million. On March 15, 2018, Aurora acquired control of CanniMed with 87.2% interest in consideration for $131 million cash and 5,236,101 Aurora common shares with a fair value of $706.9 million. The Company was ultimately successful, completing the acquisition of the remaining issued and outstanding CanniMed shares with a final purchase on May 1, 2018. The Company acquired the remaining 12.8% interest in CanniMed in exchange for $14.3 million cash and 826,136 common shares with a fair value of $91.9 million. Pursuant to Part 8 of NI 51-102, this acquisition constituted
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On December 11, 2017 and January 4, 2018, the Company acquired 7,200,000 shares and 3,194,033 shares of Cann Group Limited. (“Cann Group”), respectively, increasing the Company’s total ownership interest to approximately 22.9% at the time. As of the date of this AIF, the Company has a 12.29% ownership in Cann Group.
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On January 4, 2018, the Company signed a binding term sheet with Alfred Pedersen & Søn (“APS”) with respect to the formation of a Danish entity. Aurora Nordic was incorporated on February 12, 2018, with Aurora owning 51%. The Company subsequently entered into an agreement to acquire the remaining 49% interest, which is expected to close shortly. On September 11, 2020, Aurora Nordic received EU GMP certification which allows for the export of both dried flower and oils to the rest of Europe.
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In February 2018, Aurora made a strategic investment in Alcanna Inc. (“Alcanna”) by way of a non-brokered private placement. The Alcanna investment was structured in two phases, with an initial investment of $103.5 million for an approximate 19.9% ownership interest, with an option for Aurora to increase its ownership stake up to 40% through exercising warrants granted as part of the investment.
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On May 14, 2018, Aurora entered into an agreement with MedReleaf to acquire all the issued and outstanding common shares of MedReleaf in an-all share transaction. The acquisition was completed subsequent to the year end.
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On June 6, 2018, the Company acquired a 19.99% interest in Capcium Inc., a privately-owned Montreal-based global leader in softgel manufacturing.
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On June 12, 2018, the Company subscribed for 9,859,155 common shares of Choom Holdings Inc. (“Choom”) at $0.71 per share for a cost of $7 million representing an 8% ownership interest at the time.
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In September 2017, the Company received its export permit issued by Health Canada, as well as provisional import status from the German Bundesopiumstelle (Federal Narcotics Bureau), to import medical cannabis products into Germany through Aurora Deutschland. On September 18, 2017, the Company shipped its first 50 kg of dried cannabis from Aurora Mountain, to Aurora Deutschland, with further ongoing shipments planned.
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In January 2018, Aurora Deutschland won a competitive EU-wide public tender to supply medical cannabis to the Italian government through the Ministry of Defense, which oversees medical cannabis productions and distribution in Italy. In March 2018, Aurora Deutschland delivered its first batch of medical cannabis to the Italian government.
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On July 25, 2018, Aurora completed the acquisition of all the issued and outstanding common shares of MedReleaf pursuant to a statutory plan of arrangement under the Business Corporations Act (Ontario) for total consideration of $2.6 billion, comprised of 30,843,353 Common Shares at an exchange ratio of 0.2979 Common Shares and $75.4 million fair value of replaced share-based payments. Pursuant to Part 8 of NI 51-102, this acquisition constituted a significant acquisition and a Form 51-102F4 was filed.
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On August 8, 2018, Aurora acquired all of the issued and outstanding common shares of Anandia, a privately held and globally recognized leader in cannabis science, in an all share transaction. Pursuant to the terms of the arrangement agreement, Aurora issued 1,059,707 shares and 529,851 warrants for total consideration of $98.2 million, with an additional $10 million to be paid by way of the issuance of additional shares and warrants upon the achievement of future milestones. Pursuant to Part 8 of NI 51-102, this acquisition did not constitute a significant acquisition and Form 51-102F4 was not required to be filed. Subsequently, on November 14, 2018 the Company appointed Jonathan Page, a co-founder of Anandia, as Chief Science Officer of the Company. This transaction has, among other things, enabled the Company to develop new, customized cultivars for specific applications, creating high-margin products that generate positive health outcomes in relation to specific medical indications, while further enhancing efficiencies at its facilities. In April 2020, Anandia ceased serving external customers to devote all of its resources to the Company’s analytical testing needs.
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On November 5, 2018, the Company increased its investment in Choom by an additional $20 million through a convertible debenture maturing in four years and convertible into Common Shares: (i) at the option of Aurora, any time prior to the Maturity Date at a conversion price of $1.25 per Common Share, subject to a minimum conversion amount of $5 million, and (ii) at the option of Choom any time after the hold period has expired and the VWAP of Choom’s common shares on the Canadian Securities Exchange is $3.00 or more for a period of 10 consecutive trading days.
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On November 22, 2018, Aurora acquired all of the issued and outstanding common shares of ICC for total consideration of $262.9 million comprised of 2,658,722 Common Shares and $7.7 million fair value of replaced share-based payments issued to ICC shareholders. Pursuant to Part 8 of NI 51-102, this acquisition did not constitute a significant acquisition and Form 51-102F4 was not required to be filed.
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On December 13, 2018, the Company invested $10 million by way of a brokered private placement in High Tide Inc., a privately held, Alberta-based, retail-focused cannabis and lifestyle accessories company. The Company received 10,000 senior unsecured convertible debentures priced at $1,000 per debenture, bearing an interest rate of 8.5% per annum, and convertible in aggregate to 13,333,333 common shares of High Tide Inc. at $0.75 per share.
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On March 1, 2019, the Company completed the acquisition of Whistler in an all-share transaction pursuant to the terms of an amalgamation agreement for total consideration of $158.1 million. On closing, the Company issued 1,121,736 Common Shares to Whistler shareholders, with two milestone payments in the amounts of $30 million and $10 million payable upon certain conditions being met. Pursuant to Part 8 of NI 51-102, this acquisition did not constitute a significant acquisition and Form 51-102F4 was not required to be filed.
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On March 13, 2019, the Company appointed Nelson Peltz as a strategic advisor, through 280 Park ACI Holdings, LLC. In consideration for the services, the Company granted stock options to purchase 1,663,480 Common Shares at $124.08 per share.
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On April 16, 2019, the Company announced that it had entered into a binding letter agreement with Hempco with respect to the acquisition of all of the issued and outstanding common shares of Hempco not already owned by Aurora at an agreed price of $1.04 per Hempco Share and payable in Common Shares.
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On May 21, 2019, the Company entered into a global partnership with the Ultimate Fighting Championship intended to advance further clinical research on the relationship between 100% hemp-derived CBD products and athlete wellness and recovery, with a view to accelerating CBD product development and education. As the cannabis market did not grow as quickly as expected following legalization, and in line with the Company’s later focus on financial discipline and near-term profit pools (as detailed below under fiscal 2020), this partnership was mutually terminated, with the Company expected to make a one-time payment of US$30 million in Q1 2021.
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On September 4, 2018, the Company closed a $200 million debt facility with Bank of Montreal (the “Credit Facility”) consisting of a $150 million term loan and a $50 million revolving credit facility, both of which will mature in 2021. The Company had an option to upsize the Credit Facility to a total of $250 million, subject to the implementation of the Cannabis Act. The Credit Facility is primarily secured by the Company’s Canadian production facilities.
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On September 18, 2018, Aurora completed the distribution to shareholders and the public listing of ACI.
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On October 23, 2018, the Company’s Common Shares commenced trading on the NYSE under the symbol “ACB”, providing the Company with access to a broad universe of investors, access to equity capital and trading liquidity.
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On January 24, 2019, the Company closed a private offering of convertible senior notes due in 2024 for gross proceeds of US$345 million (including US$45 million pursuant to the exercise of the initial purchasers’ over-allotment option). The notes are unsecured and will mature on February 28, 2024. The notes bear cash interest semi-annually at a rate of 5.5% per annum.
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On April 2, 2019, the Company filed a preliminary short form base shelf prospectus (“Shelf”) with the securities regulators in each province of Canada, except for the Province of Quebec, and a corresponding shelf registration statement on Form F-10 with the SEC in order to conduct “at-the-market” (“ATM”) offerings in the United States. The ATM offering was put in place to support the strength of the Company’s balance sheet and provide continued access to equity capital as the Company continued to align with the realities of the Canadian and international cannabis market .
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On October 25, 2018, the Company announced that the Polish Ministry of Health had granted Aurora Deutschland approval for its first shipment of medical cannabis to Poland, to be sent to a pain treatment center and a hospital in Warsaw.
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On December 6, 2018, the Company announced that Aurora Europe had been selected by the Luxembourg Health Ministry for the supply of medical cannabis to Luxembourg and an initial purchase order for approximately 20 kgs had been received. The Company received all required authorizations (import and export licenses) had commenced its first shipment of high-grade medical cannabis to Luxembourg’s Division de la Pharmacie et des Medicaments, representing the second time the Company received an order directly from a European government.
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On February 11, 2019, the Company announced it completed its first commercial export of cannabis oil to the United Kingdom (UK), making it one of the first Canadian companies to commercially supply cannabis-based medicines into the UK under the new legal framework that came into effect on November 1, 2018.
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On March 11, 2019, the Company announced that it had commenced the sale of cannabis oils to German pharmacies following receipt of all necessary approvals from the Canadian and German regulatory authorities.
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On April 5, 2019, the Company announced it was selected by the German Bundesinstitut für Arzneimittel und Medizinprodukte BfArM (Federal Institute for Drugs and Medical Devices) as one of three winners in the public tender to cultivate and distribute medical cannabis in Germany. The Company was awarded
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On July 5, 2018, Aurora entered into an agreement with the Alberta Gaming, Liquor & Cannabis Commission to supply cannabis products for the adult consumer use market in Alberta.
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On July 11, 2018, the Company entered an agreement with CannaRoyalty Corp. to purchase its exclusive Canadian license to use and commercialize pre-roll technology developed by Wagner Dimas Inc. for an aggregate consideration of $4.5 million in Common Shares.
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On July 30, 2018, Aurora received a Dealer’s License from Health Canada under the Controlled Drugs and Substances Act for Aurora Mountain.
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On August 21, 2018, the Company announced it entered into a supply agreement with the Ontario Cannabis Stores, a key market in the Company’s adult consumer use strategy.
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On August 22, 2018, the Company received Health Canada authorization to produce cannabis softgel capsules at Aurora Vie and began production immediately in partnership with Capcium Inc.
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On September 7, 2018, Aurora announced it had received a Health Canada production license for Aurora Eau and had received its oils production license for its Aurora River production facility.
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On September 18, 2018, the Company announced additional supply arrangements with a number of provinces across Canada to supply a broad range of Aurora and MedReleaf brand dried flower and higher margin products, such as pre-rolls, oils and capsules.
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On October 16, 2018, the Company announced it had received the necessary compliance verification from Health Canada to release for sale its innovative, high-potency, vape-ready CBD oil product line under the brand Aurora Cloud. At the time, Aurora Cloud was the only vape-ready CBD product legally available in Canada.
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On October 17, 2018, the Company announced that its Aurora Sky production facility had been granted a sales license by Health Canada. The Company also announced that it had received a sales license from Health Canada permitting the sale of cannabis softgel capsules produced at its Aurora Vie production facility.
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On November 5, 2018, the Company announced the official opening of Aurora Eau.
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On December 3, 2018, the Company announced that it had commenced shipments of cannabis softgel capsules for both the Canadian medical and adult-use markets.
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On February 4, 2019, the Company announced that its extraction technology partner, Radient, had received its Standard Processing License from Health Canada.
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On February 12, 2019, the Company announced the construction of a 300,000 square foot expansion at the Edmonton International Airport adjacent to Aurora Sky, Aurora Polaris. Once completed, Aurora Polaris is intended to serve as the centre of excellence for the industrial-scale production of higher margin, value-added products, such as edibles. Aurora Polaris remains under construction, with the shell of the building and office and warehouse spaces fully complete.
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On February 25, 2019, the Company announced that both its Aurora Sky and Aurora River facilities were fully licensed by Health Canada for the production and sale of cannabis and cannabis derivative products.
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On July 15, 2019, the Company announced it received Health Canada licenses for outdoor cultivation at two Canadian sites. The new sites in Quebec and British Columbia will be used for cultivation research to develop new technology, genetics and intellectual property in order to drive sustainable, high-quality outdoor production.
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On July 18, 2019, the Company announced it had been selected as the only winner of the Italian government's public tender to supply medical cannabis in Italy. The supply contract was finalized on September 18, 2019. The tender saw Aurora selected as the sole winner of three lots to supply the Italian market, which is one of the most strictly regulated medical cannabis markets in the world. Aurora will supply a minimum of 400 kg of medical cannabis over the two-year contract with the cannabis coming from its Canadian EU GMP certified facilities and imported to Italy through Aurora Deutschland. The cannabis will be sold to Agenzia Industrie Difesa (an agency of the Italian Ministry of Defense) for distribution to local pharmacies, who dispense directly to patients.
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On August 19, 2019, the Company completed the acquisition of all of the remaining outstanding shares of Hempco.
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On November 27, 2019, the Company announced the grand opening of its flagship retail store in West Edmonton Mall in Edmonton, Alberta. At approximately 11,000 square feet, the store offers visitors a safe, age-gated retail experience in compliance with all relevant federal and provincial regulations.
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On December 2, 2019, the Company announced that one of its oil products had been approved for use under Ireland’s new Medical Cannabis Access Programme. Aurora’s High CBD Oil Drops received approval from the Irish authorities and have been added to a regulatory schedule by the Irish Minister of Health enabling importation, prescribing and supply under the scheme and is to date, one of only two products to gain such authorization.
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On February 3, 2020, the Company announced that Aurora River received EU GMP certification and it had received all necessary approvals from local regulators in Germany for sales of its medical cannabis products, following a temporary sales suspension on certain products in December 2019.
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On May 20, 2020, the Company announced it had entered into an agreement to strategically enter the United States through the acquisition of Reliva. The acquisition closed on May 28, 2020 for total consideration of US$38.6 million comprised of 2,480,810 Common Shares at a price of US$15.34 and $0.5 million fair value of contingent consideration. The transaction also included a potential earn-out of up to a maximum of US$45 million payable in Common Shares, cash or a combination thereof, over the next two years contingent upon Reliva achieving certain financial targets. Pursuant to Part 8 of NI 51-102, this acquisition did not constitute a significant acquisition and Form 51-102F4 was not required to be filed. This acquisition marked the Company’s entry into the U.S. hemp-derived CBD market. Reliva is a leader in delivering high quality hemp-derived CBD products to consumers. Built on a philosophy of compliance, testing, product innovation and approachable price points Reliva has grown to become one of the largest retail CBD brands in the U.S. Reliva's products contain CBD derived from industrial hemp in compliance with the U.S. Agriculture Improvement Act of 2018 (2018 Farm Bill), and its products are not subject to the U.S. Controlled Substances Act.
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On August 15, 2019, the Company announced that it had secured commitments from an expanded syndicate of lenders to amend and upsize its existing Credit Facility to $360 million (the “Amended and Restated Credit Facility”). The Amended and Restated Credit Facility consists of an additional $160 million allocated between both term loans and a revolving credit facility, both of which will mature in August 2021. In connection with the amendment, the Company also obtained the right to increase the loan amount by an additional $39.1 million under the same terms of the existing agreement. Closing of the Amended and Restated Credit Facility was announced on September 9, 2019.
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On November 14, 2019, the Company announced it had provided notice to all holders (the “Debentureholders”) of the March Debentures of an opportunity to voluntarily convert at an amended early conversion ratio, equal to $1,000 principal amount of March Debentures divided by a 6% discount to 5-day VWAP of the Common Shares (the “Amended Early Conversion Ratio”). All Debentureholders would be able to convert their March Debentures at the Amended Early Conversion Ratio during the period commencing on November 18, 2019 and ending on November 20, 2019. On November 25, 2019, the Company announced it received notice from Debentureholders representing approximately $227 million principal (or approximately 99%) to voluntarily convert into Common Shares at a price of $39.4044 resulting in the issuance of an aggregate of 5,761,260 Common Shares, in accordance with the Amended Early Conversion Ratio.
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On December 20, 2019, Cam Battley stepped down as Chief Corporate Officer of the Company.
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On February 6, 2020, the Company announced the retirement of Terry Booth, the Company’s founder and Chief Executive Officer. As part of his succession plan, Terry would become a Senior Strategic Advisor and remain on the Board of Directors, with Michael Singer replacing him as Interim Chief Executive Officer. The Company also appointed Michael Detlefsen and Lance Friedmann as new independent directors. Concurrent with these updates, the Company announced a business transformation plan intended to rationalize the cost structure and balance sheet going forward, which included the elimination of close to 500 full-time equivalent staff across the company, including approximately 25% of corporate positions. Additionally, management announced the restructuring of spending plans on information technology projects, sales and marketing initiatives, travel & entertainment, professional services, and other non-revenue generating third-party costs which do not provide an immediate impact on revenue.
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On March 25, 2020, the Company executed an amendment to the Amended and Restated Credit Facility with Bank of Montreal. The amendment eliminated the $96.5 million non-revolving facility (Facility D) as the funds were initially earmarked for the construction of Aurora Sun which has since been deferred, utilized the $45.0 million restricted cash to repay and permanently reduce the outstanding term loan balance under Facility C, and amended our financial covenant ratios.
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On April 13, 2020, the Company announced its intention to consolidate its Common Shares on a 12 to 1 basis to restore compliance with the NYSE’s continued listing standards, and to provide access to a broad universe of investors, access to equity capital and trading liquidity. The consolidation became effective on May 11, 2020 on both the TSX and NYSE.
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On June 3, 2020, the Company and Alcanna jointly announced that they had entered into an agreement with a syndicate of underwriters led by Cormark Securities Inc. (collectively, the “Underwriters”) pursuant to which the Underwriters agreed to purchase, on a “bought deal” basis, 9,200,000 common shares of Alcanna (“Alcanna Shares”) held by Aurora (the “Offered Shares”) at a price of $3.00 per Offered Share and offer them to the public by way of short form prospectus for total gross proceeds to Aurora of approximately $27.6 million. The sale closed on June 24, 2020 and as a result, the Company no longer holds any Alcanna Shares or warrants to purchase Alcanna Shares.
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On June 16, 2020, the Company announced that co-founder Steve Dobler would be retiring from his roles as President and Director of the Company effective June 30, 2020.
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On June 23, 2020, the Company provided further updates on its business transformation plan previously announced on February 6, 2020, which included a material reduction in both corporate and production level employees and third-party consulting and professional spending across the organization. The corporate headcount rationalization was undertaken at all levels of the Company, including a restructuring of the executive leadership team and the recently announced retirement of President Steve Dobler. The Company also initiated a plan to close operations at five facilities over the next two quarters in order to focus production and manufacturing at the Company’s larger scale and highly efficient sites. The affected facilities are the smaller scale facilities, Aurora Prairie, Aurora Mountain, Aurora Ridge, Aurora Vie and Aurora Eau. The Company expects that part of the Aurora Vie production facility in Quebec will remain operational to allow for the manufacturing of certain higher margin products. The Company intends to consolidate Canadian production and manufacturing at Aurora Sky, Aurora River (EU-GMP certified), Whistler Pemberton, and Polaris.
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On June 26, 2020, co-founder Terry Booth retired from his position as a Director of the Company.
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On July 6, 2020, the Company appointed Miguel Martin, President of Aurora USA and head of Reliva, as Chief Commercial Officer of the Company, replacing Darren Karasiuk. Miguel was subsequently appointed Chief Executive Officer on September 8, 2020, replacing Michael Singer who held that position on an interim basis from February 6, 2020. Miguel has deep, diverse experience in consumer-packaged goods, highly regulated industries and the U.S. cannabinoid industry and is well-positioned to execute the next phase of Aurora’s business transformation, with a focus on commercial strategy.
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On September 8, 2020, the Company announced it had reached an agreement with its syndicate of banks regarding amendments to its Credit Facility, to provide additional flexibility during the Company’s business transformation plan, and announced the termination of the partnership with UFC, as earlier described, in consideration of a one-time payment of US$30 million.
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Purpose-built growing facilities, which we believe are the most technologically advanced indoor agricultural growing facilities in the world. These facilities consistently produce high-quality cannabis at scale, lower the risk of crop failure, and provide low per-unit production costs.
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Research and innovation in plant genetics, cultivation, consumer insights, and product development.
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A broad and growing portfolio of successful brands that align to the needs of consumers and patients in segments from discount to ultra-premium.
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Global leadership in consumer and medical markets that have significant and near-term profit potential.
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A transformed cost structure that provides a path to near-term, sustainable, and growing positive earnings before interest, taxes, depreciation and amortization (“EBITDA”) and cash flow.
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Global medical cannabis market: Production, distribution and sale of pharmaceutical-grade cannabis products in countries around the world where permitted by government legislation. Currently, there are approximately 50 countries that have implemented regimes for some form of access to cannabis for medical purposes. The Company’s current principal medical markets are Canada and Germany. Aurora has established a market position in both countries;
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Global consumer use cannabis market: Currently, only Canada and Uruguay have implemented federally-regulated consumer use of cannabis regimes and the Company has primarily focused on the opportunities in Canada. Aurora has established a top-three market position in the Canadian consumer market overall. Longer-term, the Company believes that the increasing success of medical cannabis regimes globally may lead to increased legalization of adult-use consumer markets; and
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Global hemp-derived CBD market: The Company expects consumer demand for products containing CBD derived from hemp plants to be an exciting growth opportunity in the coming years. The Company believes that the most important near-term market opportunity for hemp-derived CBD is in the U.S. On May 28, 2020, the Company acquired Reliva, a U.S. company based in Massachusetts, which specializes in the distribution and sale of hemp-derived CBD products and has established a leading brand in the U.S. market.
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The United States represents the largest cannabis and hemp-derived CBD market globally. As such Aurora has established an operating footprint in the U.S. through the acquisition of Reliva. Aurora expects hemp-derived CBD as an ingredient infused into a number of consumer products, both topicals (i.e.: creams, balms, and lotions) and ingestibles (e.g., tincture, gummies, gum, mints, and drink mixes) to be a significant long-term growth opportunity for the Company. Reliva is an agile, consumer focused hemp-derived CBD branding company, and represents Aurora’s growth engine in the United States.
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FACILITY
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LOCATION
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SIZE
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ESTIMATED ANNUAL CAPACITY
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STATUS
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LICENSE
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Cultivation
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Sale
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EU GMP
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Aurora Sky
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Edmonton, AB
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800,000 ft2
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>100,000 kg/year
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Facility in full operation
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Aurora River
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Bradford, ON
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210,000 ft2
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28,000 kg/year
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Facility in full operation
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Aurora Nordic 1
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Odense,
Denmark
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100,000 ft2
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10,000 kg/year
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Facility in full operation. EU GMP Certification pending
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Whistler Pemberton
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Pemberton, BC
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62,000 ft2
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4,500 kg/year
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Facility in full operation
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the number of cultivation rooms in the facility;
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the planned (or actual) number of plants each cultivation room is built to contain;
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the average per gram yield per plant based on Aurora’s historical averages for the strain and growing conditions;
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the number of harvests (turns) planned (or realized) per year; and
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licensing from the relevant governmental authority to operate at the stated capacity.
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FACILITY
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LOCATION
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SIZE
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STATUS
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LICENSE (Research)
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Aurora Coast
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Comox, BC
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22,500 ft2
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Operating research facility
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Anandia UBC
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Vancouver, BC
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3,000 ft2
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Operating research facility
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Anandia GNW
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Vancouver, BC
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12,700 ft2
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Licensed analytical testing facility. Research licensing underway
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(Analytical testing) |
Anandia Toronto
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Toronto, ON
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2,700 ft2
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Licensed analytical facility
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(Analytical testing) |
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Aurora is known around the globe for research-driven innovation at scale. In addition to a wide selection of dried flower, oils, and softgels, Aurora was one of the first Licensed Producers to the Canadian medical cannabis market with a wide range of Cannabis 2.0 products including edibles, vapes, and concentrates. As a longstanding supporter of Canadian veterans, Aurora drives veteran access to medical cannabis through strong prescriber/clinic relationships, robust veteran support programs, and ongoing advocacy work.
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Whistler Cannabis Co. is Canada’s first organic certified brand. Our Whistler cannabis is farmed in living soil, by people with a passion for cultivation. Our premium products are crafted with care so you can enjoy an authentic high-quality cannabis experience.
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San Rafael ‘71 is an award-winning brand that is dedicated to harvesting the best-in-class premium cannabis with innovative, high-THC & terpene rich strains & formats that stay true to classic cannabis culture.
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Aurora Drift offers a diverse range of strains, innovative formats, edibles and cannabinoid formulas for all occasions, so current and new consumers can enjoy cannabis their way.
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Daily Special is a no-frills brand that is focused on providing the best value across multiple formats for price-conscious consumers seeking reliable & high potency cannabis.
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Alta Vie is a brand for wellness-minded individuals, searching for physical, mental and emotional enrichment. Our AltaVie products are milder in THC & higher in CBD.
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Woodstock takes its name from the 1969 festival known to be one of the most important events in music history. Almost 50 years later, Woodstock is a line of cannabis products for the thriving music and festival lover.
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expanding and accelerating a portfolio of differentiated vape products
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pre-roll expansion into premium brands
|
•
|
consumer-focused cultivars expansion
|
•
|
entry into the concentrates category
|
Source
|
Year ended June 30, 2020
($ thousands)
|
Year ended June 30, 2019
($ thousands) |
Net revenue from dried flower
|
189,543
|
183,026
|
Net revenue from extracts
|
71,038
|
42,440
|
Cannabis net revenue
|
260,581
|
225,466
|
Plant science:
|
Breeding and genetics of new cultivars, tissue culture, cultivar commercialization and intellectual property, analysis of chemistry and quality for sales and marketing
|
Analytical science:
|
Quality control testing, development of new assays, support for new product formats, R&D analysis
|
•
|
Extraction & Production Systems & Methods
|
•
|
Genetics & Biosynthesis
|
•
|
Horticultural Methods & Apparatus
|
•
|
Medical & Recreational Products
|
•
|
Plant Variety Protection
|
Province/Territory
|
Legal Age
|
Where it’s Legal to Purchase:
|
Public Possession Limit
|
Alberta
|
18
|
Private licensed stores or government-operated online store
|
30 grams
|
British Columbia
|
19
|
Government-operated stores or online, or private licensed stores
|
30 grams
|
Manitoba
|
19
|
Private licensed stores or online
|
30 grams
|
New Brunswick
|
19
|
Government-operated stores or online
|
30 grams
|
Newfoundland and Labrador
|
19
|
Private licensed stores or government-operated online store
|
30 grams
|
Northwest Territories
|
19
|
Government-operated stores or online
|
30 grams
|
Nova Scotia
|
19
|
Government-operated stores or online
|
30 grams
|
Nunavut
|
19
|
Government-operated online store or by phone
|
30 grams
|
Ontario
|
19
|
Private licensed stores or government-operated online store
|
30 grams
|
Prince Edward Island
|
19
|
Government-operated stores or online
|
30 grams
|
Quebec
|
21
|
Government-operated stores or online
|
30 grams
|
Saskatchewan
|
19
|
Private licensed stores or online
|
30 grams
|
Yukon
|
19
|
Government-operated stores or online
|
30 grams
|
•
|
actual or anticipated fluctuations in the Company’s results of operations;
|
•
|
recommendations by securities research analysts;
|
•
|
changes in the economic performance or market valuations of companies in the same industry in which the Company operates;
|
•
|
addition or departure of the Company’s executive officers and other key personnel;
|
•
|
release or expiration of transfer restrictions on outstanding Common Shares;
|
•
|
sales or perceived sales of additional Common Shares;
|
•
|
operating and financial performance that varies significantly from the expectations of management, securities analysts and investors;
|
•
|
regulatory changes affecting the Company’s industry, business and operations;
|
•
|
announcements of developments and other material events by the Company or its competitors;
|
•
|
fluctuations in the costs of vital production inputs, materials and services;
|
•
|
changes in global financial markets, global economies and general market conditions, such as interest rates and product price volatility;
|
•
|
significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving the Company or its competitors;
|
•
|
operating and share price performance of other companies that investors deem comparable to the Company; and
|
•
|
news reports relating to trends, concerns, technological or competitive developments, regulatory changes and other related issues in the Company’s industry or target markets.
|
•
|
a limited availability of market quotations for our Common Shares;
|
•
|
reduced liquidity for our Common Shares;
|
•
|
a determination that our Common Shares are “penny stock”, which would require brokers trading in our Common Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Common Shares;
|
•
|
a limited amount of news and analyst coverage of us; and
|
•
|
a decreased ability for us to issue additional equity securities or obtain additional equity or debt financing in the future.
|
•
|
the rules under the U.S. Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC;
|
•
|
the sections of the U.S. Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of securities registered under the U.S. Exchange Act;
|
•
|
the sections of the U.S. Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and
|
•
|
the selective disclosure rules by issuers of material non-public information under Regulation FD.
|
Security Type
|
Common Shares Issuable
(#)
|
Exercise price (average)
($)
|
Cash proceeds or debt
reduction if exercised
($)
|
Warrants (1)
|
1,078,747
|
77.36
|
83,446,796
|
Stock Options
|
5,324,821
|
88.74
|
472,516,532
|
Convertible Debentures
|
47,737,650
|
US 7.23
|
459,195,000
|
Restricted Share Units (“RSUs”) (2)
|
810,669
|
—
|
—
|
Performance Share Units (“PSUs”) (2)(3)
|
419,442
|
—
|
—
|
Deferred Share Units (“DSUs”) (2)
|
25,305
|
—
|
—
|
(1)
|
Details of warrants outstanding: (i) 473,713 common share purchase warrants exercisable at a price of $48.00 until November 2, 2020; (ii) 53 common share purchase warrants exercisable at a price of $36.00 until November 2, 2020; (iii) 514,486 common share purchase warrants exercisable at a price of $112.46 until August 9, 2023; (iv) 13,706 common share purchase warrants exercisable at a price of $116.09 until August 22, 2024; (v) and 76,789 common share purchase warrants exercisable at a price of $16.36 until May 29, 2025.
|
(2)
|
RSUs, PSUs and DSUs do not have an exercise price and no cash proceeds are required upon release of the units.
|
(3)
|
Subject to shareholder approval at the annual general and special meeting to be held on November 12, 2020.
|
Month
|
TSX Price Range
|
Total Volume
|
|
High
|
Low
|
||
July 2019
|
123.12
|
94.80
|
5,639,183
|
August 2019
|
114.12
|
86.04
|
7,876,835
|
September 2019
|
102.84
|
66.88
|
9,404,151
|
October 2019
|
74.28
|
55.08
|
12,114,312
|
November 2019
|
61.80
|
33.84
|
21,814,914
|
December 2019
|
43.32
|
29.40
|
14,691,776
|
January 2020
|
36.24
|
23.52
|
17,038,165
|
February 2020
|
35.04
|
21.36
|
13,482,771
|
March 2020
|
22.80
|
10.44
|
21,282,474
|
April 2020
|
15.60
|
11.04
|
13,017,486
|
May 2020
|
26.79
|
7.50
|
75,656,069
|
June 2020
|
21.30
|
16.20
|
44,275,334
|
Date of Issuance
|
Type of Security Issued
|
Number of Common Shares Issuable Upon Exercise or Conversion
|
Exercise or Conversion
Price Per Common Share
|
|||
Stock Options
|
||||||
July 2, 2019
|
Stock Options
|
16,666
|
|
|
$123.12
|
|
July 3, 2019
|
Stock Options
|
20,833
|
|
|
$119.88
|
|
July 4, 2019
|
Stock Options
|
6,666
|
|
|
$120.00
|
|
July 8, 2019
|
Stock Options
|
9,166
|
|
|
$118.32
|
|
July 12, 2019
|
Stock Options
|
2,500
|
|
|
$112.44
|
|
July 16, 2019
|
Stock Options
|
8,333
|
|
|
$109.56
|
|
July 19, 2019
|
Stock Options
|
5,000
|
|
|
$108.60
|
|
July 29, 2019
|
Stock Options
|
8,333
|
|
|
$101.28
|
|
August 7, 2019
|
Stock Options
|
3,333
|
|
|
$108.60
|
|
August 28, 2019
|
Stock Options
|
6,667
|
|
|
$88.80
|
|
September 10, 2019
|
Stock Options
|
352,490
|
|
|
$94.92
|
|
September 13, 2019
|
Stock Options
|
5,309
|
|
|
$93.00
|
|
September 18, 2019
|
Stock Options
|
2,253
|
|
|
$83.88
|
|
September 19, 2019
|
Stock Options
|
880
|
|
|
$84.24
|
|
September 24, 2019
|
Stock Options
|
972
|
|
|
$80.64
|
|
September 27, 2019
|
Stock Options
|
3,086
|
|
|
$75.84
|
|
September 30, 2019
|
Stock Options
|
350
|
|
|
$73.44
|
|
October 1, 2019
|
Stock Options
|
4,144
|
|
|
$69.84
|
|
October 3, 2019
|
Stock Options
|
2,331
|
|
|
$66.72
|
|
October 8, 2019
|
Stock Options
|
118
|
|
|
$66.00
|
|
October 9, 2019
|
Stock Options
|
150
|
|
|
$66.24
|
|
October 21, 2019
|
Stock Options
|
4,446
|
|
|
$57.72
|
|
October 24, 2019
|
Stock Options
|
1,414
|
|
|
$57.84
|
|
November 1, 2019
|
Stock Options
|
1,217
|
|
|
$56.64
|
|
November 6, 2019
|
Stock Options
|
8,333
|
|
|
$59.16
|
|
November 7, 2019
|
Stock Options
|
2,066
|
|
|
$59.04
|
|
November 8, 2019
|
Stock Options
|
11,667
|
|
|
$56.52
|
|
November 14, 2019
|
Stock Options
|
1,770
|
|
|
$56.28
|
|
November 21, 2019
|
Stock Options
|
1,064
|
|
|
$42.00
|
|
November 25, 2019
|
Stock Options
|
1,068
|
|
|
$42.96
|
|
November 28, 2019
|
Stock Options
|
4,550
|
|
|
$40.32
|
|
December 5, 2019
|
Stock Options
|
1,220
|
|
|
$39.12
|
|
December 9, 2019
|
Stock Options
|
14,167
|
|
|
$38.52
|
|
December 16, 2019
|
Stock Options
|
4,083
|
|
|
$41.64
|
|
January 10, 2020
|
Stock Options
|
1,380
|
|
|
$27.24
|
|
January 17, 2020
|
Stock Options
|
913
|
|
|
$33.48
|
|
February 3, 2020
|
Stock Options
|
1,539
|
|
|
$30.00
|
|
February 10, 2020
|
Stock Options
|
16,807
|
|
|
$56.52
|
|
February 10, 2020
|
Stock Options
|
23,558
|
|
|
$24.96
|
|
Date of Issuance
|
Type of Security Issued
|
Number of Common Shares Issuable Upon Exercise or Conversion
|
Exercise or Conversion
Price Per Common Share
|
|||
February 20, 2020
|
Stock Options
|
1,345
|
|
|
$27.12
|
|
February 29, 2020
|
Stock Options
|
14,776
|
|
|
$21.72
|
|
March 23, 2020
|
Stock Options
|
2,706
|
|
|
$12.60
|
|
March 26, 2020
|
Stock Options
|
1,190
|
|
|
$12.72
|
|
April 6, 2020
|
Stock Options
|
898
|
|
|
$13.56
|
|
May 12, 2020
|
Stock Options
|
980
|
|
|
$10.45
|
|
May 25, 2020
|
Stock Options
|
593,695
|
|
|
$22.48
|
|
May 31, 2020
|
Stock Options
|
17,048
|
|
|
$19.27
|
|
June 10, 2020
|
Stock Options
|
328
|
|
|
$19.80
|
|
June 16, 2020
|
Stock Options
|
16,666
|
|
|
$17.94
|
|
June 24, 2020
|
Stock Options
|
666
|
|
|
$18.40
|
|
Warrants
|
||||||
August 22, 2019
|
Warrants
|
13,706
|
|
|
$116.09
|
|
May 29, 2020
|
Warrants
|
76,789
|
|
|
$16.36
|
|
RSU and DSUs
|
|
|
|
|||
September 10, 2019
|
RSUs
|
43,600
|
|
|
$94.92
|
|
September 10, 2019
|
DSUs
|
2,765
|
|
|
$94.92
|
|
October 15, 2019
|
RSUs
|
446
|
|
|
$58.32
|
|
October 21, 2019
|
RSUs
|
911
|
|
|
$57.72
|
|
November 28, 2019
|
RSUs
|
848
|
|
|
$40.32
|
|
December 9, 2019
|
RSUs
|
4,167
|
|
|
$38.52
|
|
December 16, 2019
|
RSUs
|
842
|
|
|
$41.64
|
|
January 17, 2020
|
RSUs
|
161
|
|
|
$33.48
|
|
February 10, 2020
|
RSUs
|
3,578
|
|
|
$56.52
|
|
February 10, 2020
|
RSUs
|
197,974
|
|
|
$24.96
|
|
February 29, 2020
|
DSUs
|
4,834
|
|
|
$21.72
|
|
April 6, 2020
|
RSUs
|
100
|
|
|
$13.56
|
|
May 12, 2020
|
RSUs
|
232
|
|
|
$10.45
|
|
May 31, 2020
|
DSUs
|
5,448
|
|
|
$19.27
|
|
June 30, 2020
|
DSUs
|
736
|
|
|
$17.82
|
|
(1)
|
Excluded from the stock options issued above are 21,656 Common Shares issuable upon the exercise of Hempco stock options assumed from the Hempco acquisition on August 19, 2019. The Hempco stock options have a weighted average exercise price of $146.06.
|
Designation of Class
|
Number of Securities held in Escrow (1)
|
Percentage of Class (2)
|
Common Shares
|
50,283
|
0.04%
|
Options
|
Nil
|
Nil
|
Warrants
|
Nil
|
Nil
|
(1)
|
Pursuant to an escrow agreement dated November 30, 2017, 239,911 Common Shares were deposited into escrow with respect to the acquisition of H2 Biopharma Inc. The escrowed Common Shares were to be released upon achievement of certain milestones relating to the completion of construction of a production facility and receipt of relevant licenses to cultivate and sell medical cannabis. As of the date of this AIF, all applicable milestones have been achieved and the applicable quantities of Common Shares have been released. The balance of Common Shares held in escrow are pending cancellation.
|
(2)
|
Based on 115,228,811 Common Shares issued and outstanding as at June 30, 2020.
|
Name and Province or
State and Country of
Residence
|
Position with
Aurora
|
Director or
Officer Since
|
Principal Occupation(s) for the Last Five years(1)
|
Miguel Martin
Virginia, USA
|
Chief Executive Officer and Director
|
July 2020
|
Chief Commercial Officer of Aurora; President of Aurora USA since May 28, 2020 and head of Reliva LLC since November 2018; former President/General Manager of Logic Technology Development LLC from August 2013 to January 2018.
|
Michael Singer
Quebec, Canada
|
Executive Chairman
|
May 2016
|
Executive Chairman of Aurora; CPA, CGA, Consultant and Entrepreneur; Previously was independent Director and Chairman of the Board from May 2016 until February 2019; CFO of Clementia Pharmaceuticals Inc. from May 2015 until July 2018; CFO of Bedrocan Cannabis Corp. from May 2014 to June 2015.
|
Ron Funk (2) (3) (4) (5)
Ontario, Canada
|
Lead Independent Director
|
July 2018
|
Owner of Funk Consulting (May 2009 to present).
|
Norma Beauchamp(3) (4)
Ontario, Canada
|
Independent Director
|
July 2018
|
Director of Aurora; Self-employed public company director; past President and CEO, Cystic Fibrosis Canada.
|
Name and Province or
State and Country of
Residence
|
Position with
Aurora
|
Director or
Officer Since
|
Principal Occupation(s) for the Last Five years(1)
|
Margaret Shan
Atkins(2) (3)
Florida, USA
|
Independent Director
|
February 2019
|
Director of Aurora; Chartered Professional Accountant (CPA, CA) and Certified Public Accountant; Self-employed public company director (May 2003 to present); Owner of Chetrum Capital LLC (2002 to February 2018).
|
Adam Szweras(3) (4)
Ontario, Canada
|
Independent Director
|
August 2015
|
Director of Aurora; Barrister & Solicitor; Partner at Fogler, Rubinoff LLP since February 2006; and Chairman of Foundation Markets Inc. since December 2005.
|
Michael Detlefsen (2) (5)
Ontario, Canada
|
Independent Director
|
February 2020
|
Managing Director of Pomegranate Capital Advisors (2016 to present); former Managing Director at Muir Detlefsen & Associates (2007 to 2016).
|
Lance Friedmann (2) (5)
Illinois, USA
|
Independent Director
|
February 2020
|
Retired (2015 to present); Independent public company director.
|
Glen Ibbott
British Columbia, Canada
|
Chief Financial Officer
|
May 2017
|
Chief Financial Officer of Aurora; Chartered Professional Accountant (CPA, CA) and Certified Public Accountant; CFO of QLT Inc. from January 2015 to April 2017; Vice President of Finance of Nordion Inc. August 2010 to Dec 2014.
|
Allan Cleiren
Alberta, Canada
|
Chief Operating Officer
|
May 2017
|
Chief Operating Officer of Aurora; Chartered Professional Accountant (CPA, CA); COO of Jardine Lloyd Thompson Canada Inc. from June 2016 to June 2017; Executive Vice-President of Universal Rail Systems Inc., from April 2012 to February 2016.
|
Jillian Swainson
Alberta, Canada
|
Chief Legal Officer and Corporate Secretary
|
February 2018
|
Chief Legal Officer and Corporate Secretary of Aurora; Senior VP and General Counsel (January 2018 to February 2019); former Partner at Brownlee LLP.
|
Jonathan Page
British Columbia, Canada
|
Chief Science Officer
|
November 2018
|
Chief Science Officer of Aurora; CEO at Anandia Laboratories (January 2014 to October 2018).
|
Debra Wilson
Alberta, Canada
|
Executive Vice-President, Human Resources
|
June 2017
|
Executive Vice-President, Human Resources and former Chief Human Resources Officer of Aurora; Vice President, Human Resources of Aurora, June 2017 to August 2018; Instructor at Northern Alberta Institute of Technology, August 2016 to July 2017; Director of HR of Universal Rail from October 2013 to March 2016; VP of HR & OD of Alberta Pensions Services from January 2011 to October 2016.
|
Darryl Vleeming
Alberta, Canada
|
Executive Vice-President, Information Services
|
October 2017
|
Executive Vice-President, Information Services and former Chief Information Officer of Aurora; Chief Information Officer at Capital Power (August 2006 to September 2017).
|
Name and Province or
State and Country of
Residence
|
Position with
Aurora
|
Director or
Officer Since
|
Principal Occupation(s) for the Last Five years(1)
|
Andre Jerome
Quebec, Canada
|
Executive Vice-President, Global Business Development
|
November 2019
|
Executive Vice-President, Integrations; former Chief Integrations Officer of Aurora from November 2019 to June 2020; former SVP Integrations from February 2018 to November 2019; CEO of H2 Biopharma Inc. from September 2014 to February 2018.
|
(1)
|
The information as to the principal occupation, business or employment is not within the knowledge of the Company and has been furnished by the respective director.
|
(2)
|
Member of the Audit Committee
|
(3)
|
Member of the Human Resources and Compensation Committee
|
(4)
|
Member of the Nominating and Corporate Governance Committee
|
(5)
|
Member of the Science and Innovation Committee
|
(a)
|
was subject to a cease trade order, an order similar to a cease trade order, or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days, that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer, or
|
(b)
|
was subject to a cease trade order, an order similar to a cease trade order, or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days, that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.
|
(a)
|
is, as at the date of this AIF, or has been within 10 years before the date of this AIF, a director or executive officer of any company (including the Company) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or
|
(b)
|
has, within 10 years before the date of this AIF, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the proposed director.
|
(a)
|
any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or
|
(b)
|
any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable security holder in deciding whether to vote for a proposed director.
|
•
|
On November 21, 2019, a purported class action proceeding was commenced in the United States District Court for the District of New Jersey against the Company and certain of its directors and officers on behalf of persons or entities who purchased, or otherwise acquired, publicly traded Aurora securities between October 23, 2018 and January 6, 2020. The complaint(s) alleges, inter alia, that the Company and certain of its officers and directors violated the federal securities laws by making false or misleading statements, materially overstated the demand and potential market for the Company’s consumer cannabis products; that the Company’s ability to sell products had been materially impaired by extraordinary market oversupply, that the Company’s spending growth and capital commitments were slated to exceed our revenue growth; that the Company had violated German law mandating that companies receive special permission to distribute medical products exposed to regulated irradiation techniques, and that the foregoing, among others, had negatively impacted the Company’s business, operations, and prospects and impaired the Company’s ability to achieve profitability. A lead plaintiff has been appointed and an amended complaint was filed and served on September 21, 2020. We dispute the allegations in the complaints and intend to vigorously defend against the claims.
|
•
|
The Company and its subsidiary, Aurora Cannabis Enterprises Inc., have been named in a purported class action proceeding which commenced on June 18, 2020 in the Province of Alberta in relation to the alleged mislabeling of cannabis products with inaccurate THC/CBD content. The class action involves a number of other parties including Aleafia Health Inc., Hexo Corp, Tilray Canada Ltd., among others, and alleges that upon laboratory testing, certain cannabis products, including Aurora Sativa Drops, lot number 1102019000120 were found to have lower THC potency than the labeled amount, suggesting, among other things, that plastic containers may be leeching cannabinoids. This matter is ongoing, and an amended statement of claim was filed on July 20, 2020. The Company disputes the allegations and intend to vigorously defend against the claims.
|
•
|
A claim was commenced by a party to a former term sheet on June 15, 2020 with the Queen's Bench of Alberta against Aurora and a former officer alleging a claim of breach of obligations under said term sheet, with the plaintiff seeking $18,000,000 in damages. While this matter is ongoing, the Company believes the action to be without merit and intends to defend the claim.
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•
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On August 10, 2020, a purported class action lawsuit was filed with the Queen's Bench of Alberta against Aurora and certain executive officers in the Province of Alberta on behalf of persons or entities who purchase, or otherwise acquired, publicly traded Aurora securities and suffered losses as a result of Aurora releasing statements containing misrepresentations during the period of September 11, 2019 and December 21, 2019. The Company disputes the allegations and intend to vigorously defend against the claims.
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•
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the Master Services Agreement with Radient;
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•
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the acquisition of Anandia on August 8, 2018;
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•
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the Arrangement Agreement with MedReleaf on July 25, 2018; and
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•
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The Credit Facility with Bank of Montreal, as amended.
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Member
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Independent/Not
Independent (1)
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Financially Literate/
Not Financially
Literate (2)
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Relevant Education and Experience
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Margaret Shan Atkins (Chair)
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Independent
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Financially Literate
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Margaret Shan is a chartered public accountant in Canada, a certified public accountant in the United States and holds an MBA from Harvard Business School and a Bachelor of Commerce (with honours) through Queens University. She is considered a “Financial Expert” as defined by the SEC and has acted as an independent director and as chair of the audit committee for a number of public companies.
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Ron Funk
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Independent
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Financially Literate
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Ron holds an MBA from Kellogg-Schulich and has been providing consulting services since 2009. He previously served on the Board of MedReleaf prior to its acquisition by the Company, where he served as a member of its audit committee.
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Michael Detlefsen
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Independent
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Financially Literate
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Michael holds a Bachelor of Commerce (with honours) from Queen’s University and a Master’s in Public Policy from Harvard Kennedy School, and is considered a “Financial Expert” as defined by the SEC. He has served on audit committees of several public and private companies and is a private equity investor in multiple businesses, requiring extensive financial and accounting knowledge.
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Lance Friedmann
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Independent
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Financially Literate
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Lance holds a BA in Economics from Stanford University and an MBA from Harvard Business School, and has 40 years’ experience in business, with continuous exposure to financial data throughout his career.
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(1)
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A member of an audit committee is independent if the member has no direct or indirect material relationship with the Company that could, in the view of the Board, reasonably interfere with the exercise of a member’s independent judgment.
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(2)
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An individual is financially literate if he has the ability to read and understand a set of financial statements that present a breadth of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company’s financial statements.
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Financial Period Ending
|
Audit Fees ($)(1)
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Audit Related Fees
($)(2)
|
Tax Fees ($)(3)
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All Other Fees ($)(4)
|
2020
|
2,856,480
|
231,120
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255,010
|
—
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2019
|
1,395,500 (5)
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279,341 (5)
|
967,352
|
—
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(1)
|
“Audit Fees” includes fees for the performance of the annual audit and quarterly reviews of the financial statements, which includes the audit of significant transactions and matters.
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(2)
|
“Audit-Related Fees” includes fees for assurance related services that have not been reflected under (1). This includes, but is not limited to, services in connection with registration statements such as due diligence procedures or issuance of comfort letters and audit or attest services not required by legislation or regulation.
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(3)
|
“Tax Fees” includes fees for tax compliance, tax planning, tax structuring and tax advice.
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(4)
|
“All Other Fees” refers to fees for ad hoc projects, which include reviews of prospectus and financing documents.
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(5)
|
Fees related to prospectus and related assistance to underwriters of $260,000 were moved from Audit Fees to Audit Related Fees.
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(i)
|
The integrity of the Company’s financial statements;
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(ii)
|
The Company’s compliance with legal and regulatory requirements;
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(iii)
|
The independent auditor’s qualifications and independence;
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(iv)
|
The performance of the Company’s internal audit function and independent auditor; and
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(v)
|
Treasury matters, including debt and equity financing decisions and the maintenance of adequate liquidity.
|
(a)
|
Appointment and Oversight. The Committee is directly responsible for the appointment, compensation, retention and oversight of the work of the independent auditor (including resolution of any disagreements between Company management and the independent auditor regarding financial reporting) and any other registered public accounting firm engaged for the purpose of preparing or issuing an audit report or related work or performing the audit, review or attest services for the Company, and the independent auditor and such other registered public accounting firm must report directly to the Committee. The Committee must pre-approve any audit and non-audit service provided to the Company by the independent auditor, unless the engagement is entered into pursuant to appropriate preapproval authority delegated to the Chair of the Committee under policies established by the Committee. Any services pre-approved by the Chair must be ratified by the full Committee at its next regularly scheduled meeting.
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(b)
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Annual Report on Independence and Quality Control. The Committee must, as least annually, obtain and review a report from the independent auditor describing:
|
(i)
|
The auditing firm’s internal quality-control procedures;
|
(ii)
|
Any material issues raised by the most recent internal quality-control review or peer review of the auditing firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years relating to any independent audit conducted by the auditing firm, and any steps taken to deal with any such issues; and
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(iii)
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All relationships and services between the independent auditor and the Company in order to assess the independent auditors’ independence.
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(c)
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Audit Problems. The Committee must discuss with the independent auditor any audit problems or difficulties and management’s response.
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(d)
|
Annual Report on Form 20-F Review. The Committee must review and discuss the annual audited financial statements with management and the independent auditor, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
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(e)
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Audit Committee Report. The Committee must provide the Company with the report of the Committee with respect to the audited financial statements for inclusion in each of the Company’s annual proxy statements.
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(f)
|
Form 10-Q Review. The Committee must review and discuss the quarterly financial statements with management and the independent auditor, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
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(g)
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Approval. The Committee, as delegated by the Board, has the authority to approve the quarterly financial statements and accompanying “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the first three quarters of each fiscal year, as permitted by statute.
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(h)
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Enterprise Risk and Assurance. The Enterprise Risk and Assurance (“ERA”) function provides management and the Audit Committee with ongoing assessment and information regarding the Company’s risk management processes and system of internal control, including the delivery of internal audit services and assurance projects. ERA will report functionally to the Audit Committee and administratively to the Chief Financial Officer. Oversight responsibilities of the Committee include:
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(i)
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Implementation. The Committee must assist with Board oversight of the design and implementation of the ERA function.
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(ii)
|
Risk Assessment and Risk Management. The Committee must discuss the Company’s policies with respect to risk assessment and risk management.
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(iii)
|
Enterprise Risk and Assurance Charter. The Committee must approve the Enterprise Risk and Assurance Charter, any significant revisions thereto, as well as receive communication from the function’s leadership at least annually, confirming the scope, mandate, and independence of the ERA function.
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(iv)
|
Annual Risk-Based Audit and Advisory Plan. The Committee must annually approve the annual Risk-Based Audit and Advisory Plan and associated budget, which includes the planned projects for the upcoming fiscal year, as well as any significant changes to the plan during the fiscal year to accommodate changes in circumstances and any ad-hoc Committee or management requests.
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(v)
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Quarterly Reporting. The Committee must receive quarterly communications from the function’s leadership on performance relative to the Risk-Based Audit and Advisory Plan, results of planned projects, the ERM Framework, and other matters.
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(vi)
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Function Performance. The Committee must annually assess the effectiveness of the ERA function, provide input into the performance appraisal process for the Senior Director, Enterprise Risk and Assurance and approve any decisions regarding the appointment and removal of the Senior Director, Enterprise Risk and Assurance.
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(i)
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Review of Earnings Releases. The Committee must discuss the Company’s earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies.
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(j)
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Oversight of Treasury Functions. The Committee must provide oversight of liquidity and broader balance sheet management by the Company, including debt and equity financing decisions.
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(k)
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Hiring of Independent Auditor Employees. The Committee must set clear hiring policies for employees or former employees of the Company’s independent auditor.
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(l)
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Complaint Procedures. The Committee must establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and for the confidential and anonymous submission by Company employees of concerns regarding questionable accounting or auditing matters.
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(m)
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Reports to the Board of Directors. The Committee must report regularly to the Board regarding the activities of the Committee.
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(n)
|
Committee Self-Evaluation. The Committee must at least annually perform an evaluation of the performance of the Committee.
|
(a)
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review the independence and performance of the external auditors and annually recommend to the Board the nomination of the external auditors or approve any discharge of external auditors when circumstances warrant;
|
(b)
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approve the fees and other significant compensation to be paid to the external auditors;
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(c)
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on an annual basis, review and discuss with the external auditors all significant relationships they have with the Company that could impair the external auditors’ independence;
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(d)
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review the external auditors’ audit plan to see that it is sufficiently detailed and reflects any significant areas of focus that the Audit Committee deems important;
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(e)
|
before the financial statements are issued, discuss certain matters required to be communicated to audit committees in accordance with the standards established by Chartered Professional Accountants Canada (CPA Canada);
|
(f)
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consider the external auditors’ judgments about the quality and appropriateness of the Company’s accounting principles as applied in the Company’s financial reporting;
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(g)
|
resolve any disagreements between management and the external auditors regarding financial reporting;
|
(h)
|
approve in advance all audit services and any non-prohibited non-audit services to be undertaken by the external auditors for the Company; and
|
(i)
|
receive from the external auditor’s timely reports of:
|
(i)
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any and all critical accounting policies and key audit matters;
|
(ii)
|
any alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatments and the treatment preferred by the external auditors, together with rationale; and
|
(iii)
|
any other material written communications between the external auditors and management.
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