EX-99.96 97 a18-26052_1ex99d96.htm EX-99.96

Exhibit 99.96

 

Form 51-102F4

Business Acquisition Report

 

Item 1 Identity of Company

 

1.1                               Name and Address of Company

 

Aphria Inc. (the “Company” or “Aphria”)

245 Talbot St. W., Suite 103

Leamington, ON N8H 1N8

 

1.2                               Executive Officer

 

For further information, please contact Carl Merton, Chief Financial Officer, by telephone at (519) 398-8800.

 

Item 2 Details of Acquisition

 

2.1                               Nature of Business Acquired

 

On March 23, 2018, the Company and Nuuvera Inc. (“Nuuvera”) completed their previously announced arrangement (the “Arrangement”) under the provisions of the Business Corporations Act (Ontario), pursuant to which, among other things, the Company acquired all of the common shares of Nuuvera (the “Nuuvera Shares”) not already owned by it.

 

Under the terms of the Arrangement, each former Nuuvera shareholder is entitled to receive $0.62 in cash, plus 0.3546 of a common share in the capital of Aphria (each whole common share, a “Common Share”), for each Nuuvera Share held prior to the Arrangement. The Arrangement was effected by way of a court-approved plan of arrangement and pursuant to the terms of an arrangement agreement between Aphria and Nuuvera dated January 28, 2018, as amended by an arrangement agreement amending agreement dated February 19, 2018.

 

2.2                               Acquisition Date

 

March 23, 2018.

 

2.3                               Consideration

 

As consideration for the Arrangement, each former Nuuvera shareholder is entitled to receive $0.62 in cash, plus 0.3546 of a Common Share, for each Nuuvera Share held prior to the Arrangement. The total aggregate cash consideration issued was approximately $54,604,000, funded from cash on hand at Aphria and Nuuvera.

 

Under the Arrangement, an aggregate of (i) 31,226,910 Common Shares were issued to the former holders of Nuuvera Shares; (ii) 1,280,914 Common Shares were reserved for issuance to former option holders under the Nuuvera stock option plan;

 



 

and (iii) 1,668,231 Common Shares were reserved for issuance to the holders of certain common share purchase warrants of Nuuvera.

 

2.4                               Effect on Financial Position

 

The expected effect of the acquisition on the Company’s financial position is outlined in the unaudited pro forma consolidated financial statements of the Company included with this Business Acquisition Report.

 

The Company does not have any current plans or proposals for material changes in its business affairs, or the affairs of Nuuvera, which would have a significant effect on the financial performance or position of the Company.

 

Upon completion of the Arrangement, Nuuvera became a wholly-owned subsidiary of Aphria. The business and operations of Nuuvera have been combined with those of Aphria and are managed concurrently.

 

2.5                               Prior Valuations

 

To the knowledge of the Company, there has not been any valuation opinion obtained within the last 12 months by the Company or Nuuvera required by securities legislation or a Canadian exchange or market to support the consideration paid by Aphria in connection with the Arrangement.

 

However, the Company obtained a fairness opinion from Cormark Securities Inc. dated February 19, 2018 attesting to the fairness of the consideration offered by Aphria pursuant to the Arrangement, from a financial point of view. Nuuvera obtained a fairness opinion from Canaccord Genuity Corp. dated February 19, 2018 attesting to the fairness of the consideration received by Nuuvera shareholders (other than Aphria) pursuant to the Arrangement, from a financial point of view.

 

2.6                               Parties to Transaction

 

Directors and officers of Aphria, together with their affiliates and associates, collectively, held approximately 720,000 shares of Nuuvera at the time of the Arrangement, representing less than 1% of the total issued and outstanding Nuuvera Shares.

 

Except as set forth above, the Arrangement was not with an “informed person” (as such term is defined in section 1.1 of National Instrument 51-102 - Continuous Disclosure Obligations), associate or affiliate of the Company.

 

2.7                               Date of Report

 

May 30, 2018.

 

2



 

Item 3 Financial Statements and Other Information

 

The following financial statements are attached as schedules to this Business Acquisition Report and form an integral part of this Business Acquisition Report:

 

Exhibit A — Selected Unaudited Pro Forma Consolidated Financial Data

 

Attached as Exhibit A are the Unaudited Pro Forma Consolidated Financial Statements of Aphria for the year ended May 31, 2017 and nine month period ended February 28, 2018, by combining the actual results of Aphria with the constructed results of Nuuvera for the period from incorporation on January 30, 2017 to June 30, 2017 and the six months ended December 31, 2017.

 

The constructed statements of net income for Nuuvera have been constructed with a period from incorporation on January 30, 2017 to June 30, 2017. To arrive at this constructed period, Nuuvera’s six months ended December 31, 2017 were removed from the period from incorporation January 30, 2017 to December 31, 2017. Similarly, the constructed results for the nine month period ended February 28, 2018 were calculated by combining Aphria’s actual results from June 1, 2017 to February 28, 2018 with the constructed results for Nuuvera for the six months ended December 31, 2017.

 

All giving the effect to the successful completion of the Arrangement and all other significant acquisitions completed during the relevant period as if same occurred on June 1, 2016.

 

Exhibit B - Audited Financial Statements of Nuuvera

 

Attached as Exhibit B hereto are the audited financial statements of Nuuvera as at and for the period from incorporation on January 30, 2017 to December 31, 2017 and the notes thereto, together with the independent auditor’s report thereon.

 

Caution Regarding Unaudited Pro Forma Condensed Combined Financial Statements

 

This Business Acquisition Report contains the unaudited pro forma consolidated financial statements of the Company comprised of the pro forma consolidated statements of net income of the Company for the nine months ended February 28, 2018 and the year ended May 31, 2017, giving effect to the Arrangement and all other significant acquisitions completed during the relevant period.

 

Such unaudited pro forma condensed combined financial statements have been prepared using certain of the Company’s and Nuuvera’s respective historical financial statements as more particularly described in the notes to such unaudited pro forma consolidated financial statements. In preparing such unaudited pro forma consolidated financial statements, the Company has not independently verified the financial statements of Nuuvera that were used to prepare the unaudited pro forma condensed combined financial statements. The historical unaudited consolidated and historical audited consolidated financial information has been adjusted in the unaudited pro forma consolidated financial statements to give effect to events that are: (i) directly attributable to the pro forma events, for which there are

 

3



 

firm commitments and for which the complete financial effects are objectively determinable and (ii) with respect to the unaudited pro forma consolidated statements of earnings, expected to have a continuing impact on the combined company’s results. As such, the impact from merger-related expenses is not included in the unaudited pro forma condensed combined statements of earnings. The unaudited pro forma consolidated financial statements do not reflect any cost savings from operational efficiencies or synergies that could result from the Arrangement or for liabilities that may result from integration planning. The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and do not necessarily reflect what the combined company’s financial condition and results of operations would have been had the Arrangement occurred on the dates indicated.

 

They also may not be useful in predicting the future financial condition and results of the operations of the combined company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The pro forma adjustments are based on preliminary estimates of the fair value of the consideration paid and the fair value of the assets acquired and liabilities assumed, currently available information and certain assumptions that the Company believes are reasonable in the circumstances, as described in the notes to the unaudited pro forma condensed combined financial statements. As a result of these factors, the actual adjustments will differ from the pro forma adjustments, and the differences may be material.

 

Forward-Looking Statements

 

This Business Acquisition Report may contain certain “forward-looking statements” or “forward-looking information” under applicable securities laws. Forward-looking terms such as “may,” “will,” “could,” “should,” “would,” “plan,” “potential,” “intend,” “anticipate,” “project,” “target,” “believe,” “estimate” or “expect” and other words, terms and phrases of similar nature are often intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and represent management’s best judgment based on facts and assumptions that management considers reasonable.

 

Any such forward-looking statements are subject to a number of risks and uncertainties that could cause actual results and expectations to differ materially from the anticipated results or expectations expressed in this Business Acquisition Report. The Company cautions readers that should certain risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary significantly from those expected. You are referred to the risk factors described in the Company’s most recent annual Management’s Discussion and Analysis, Annual Information Form and other documents on file with the Canadian securities regulatory authorities, which are available online under the Company’s SEDAR profile at www.sedar.com or on the Company’s website at www.aphria.com. The forward-looking statements and information contained in this Business Acquisition Report represent the Company’s views only as of today’s date. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether because of new information, future events or otherwise, other than as

 

4



 

required by law, rule or regulation. You should not place undue reliance on forward-looking statements.

 

5



 

Exhibit “A”

Selected Unaudited Pro Forma Consolidated Financial Data

 

(See attached)

 



 

 

Aphria Inc.

 

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MAY 31, 2017 AND NINE MONTHS ENDED FEBRUARY 28, 2018

 

(Expressed in Canadian Dollars, unless otherwise noted)

 



 

Aphria Inc.

Pro Forma Consolidated Statements of Financial Position

(Unaudited — in thousands of Canadian dollars, except share and per share amounts)

 

 

 

Aphria

 

Nuuvera

 

 

 

 

 

 

 

 

 

February 28,

 

December 31,

 

 

 

Pro forma

 

 

 

 

 

2018

 

2017

 

Note 5

 

adjustments

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

119,435

 

$

44,121

 

(k)

 

$

(35,000

)

$

122,597

 

 

 

 

 

 

 

(l)

 

48,645

 

 

 

 

 

 

 

 

 

(m)

 

(54,604

)

 

 

Marketable securities

 

54,248

 

 

 

 

 

54,248

 

Accounts receivable

 

4,362

 

 

 

 

 

4,362

 

Other current assets

 

10,133

 

1,087

 

 

 

 

11,220

 

Inventory

 

11,761

 

232

 

 

 

 

11,993

 

Biological assets

 

3,101

 

 

 

 

 

3,101

 

Due from related parties

 

 

 

 

 

 

 

Land available for sale

 

40,851

 

 

 

 

 

40,851

 

Current portion of convertible notes receivable

 

1,921

 

 

 

 

 

1,921

 

Promissory note receivable

 

33,395

 

 

 

 

 

33,395

 

 

 

279,207

 

45,440

 

 

 

(40,959

)

283,688

 

Capital assets

 

236,504

 

3,008

 

 

 

 

239,512

 

Intangible assets

 

93,445

 

18,913

 

 

 

 

112,358

 

Convertible notes receivable

 

14,765

 

 

 

 

 

14,765

 

Interest in equity investee

 

 

 

 

 

 

 

Long-term investments

 

86,789

 

 

(q)

 

(26,031

)

60,758

 

Deferred tax asset

 

 

 

 

 

 

 

Goodwill

 

143,907

 

10,621

 

(j)

 

(10,621

)

583,485

 

 

 

 

 

 

 

(s)

 

439,578

 

 

 

 

 

$

854,617

 

$

77,982

 

 

 

$

361,967

 

$

1,294,566

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

22,495

 

$

3,075

 

 

 

$

 

25,570

 

Due to related parties

 

 

 

 

 

 

 

Income taxes payable

 

2,719

 

 

 

 

 

2,719

 

Deferred revenue

 

4,100

 

 

 

 

 

4,100

 

Current portion of promissory note payable

 

555

 

 

 

 

 

555

 

Current portion of long-term debt

 

8,009

 

 

 

 

 

8,009

 

Current portion of derivative liability

 

6,740

 

 

 

 

 

6,740

 

Non-controlling interest liability

 

 

35,000

 

(k)

 

(35,000

)

 

 

 

44,618

 

38,075

 

 

 

(35,000

)

47,693

 

Long-term liabilities

 

 

 

 

 

 

 

 

 

 

 

Promissory note payable

 

623

 

 

 

 

 

623

 

Long-term debt

 

29,473

 

 

 

 

 

29,473

 

Derivative liability

 

10,110

 

 

 

 

 

10,110

 

Deferred tax liability

 

23,898

 

2,978

 

 

 

 

26,876

 

 

 

108,722

 

41,053

 

 

 

(35,000

)

114,775

 

Shareholders’ equity

 

 

 

 

 

 

 

 

 

 

 

Share capital

 

695,135

 

71,401

 

(g)

 

(71,401

)

1,106,393

 

 

 

 

 

 

 

(n)

 

411,258

 

 

 

Warrants

 

445

 

 

(p)

 

4,944

 

5,389

 

Share-based payment reserve

 

10,999

 

3,020

 

(h)

 

(3,020

)

25,512

 

 

 

 

 

 

 

(o)

 

14,513

 

 

 

Accumulated other comprehensive loss

 

(801

)

 

 

 

 

(801

)

Non-controlling interest

 

9,799

 

 

 

 

 

9,799

 

Retained earnings (deficit)

 

30,318

 

(37,492

)

(i)

 

37,492

 

33,499

 

 

 

 

 

 

 

(r)

 

3,181

 

 

 

 

 

745,895

 

36,929

 

 

 

396,967

 

1,179,791

 

 

 

$

854,617

 

$

77,982

 

 

 

$

361,967

 

$

1,294,566

 

 

The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements

 

2



 

Aphria Inc.

Pro Forma Consolidated Statements of Net Income

(Unaudited — In thousands of Canadian dollars, except share and per share amounts)

 

 

 

Aphria

 

Broken Coast

 

Cannan

 

Nuuvera Inc.

 

 

 

 

 

 

 

 

 

nine months

 

six months

 

six months

 

six months

 

 

 

 

 

 

 

 

 

February 28,

 

December 31,

 

December 31,

 

December 31,

 

 

 

Pro forma

 

 

 

 

 

2018

 

2017

 

2017

 

2017

 

Note 5

 

adjustments

 

Pro forma

 

Revenue

 

$

24,891

 

$

3,717

 

$

 

$

39

 

 

 

$

 

$

28,647

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production costs

 

6,447

 

3,239

 

 

 

(f)

 

(1,749

)

7,937

 

Gross profit before fair value adjustments

 

18,444

 

478

 

 

39

 

 

 

1,749

 

20,710

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value adjustment on sale of inventory

 

7,250

 

 

 

 

(f)

 

1,749

 

8,999

 

Fair value adjustment on growth of biological assets

 

(11,481

)

(3,578

)

 

 

 

 

 

(15,059

)

Gross profit

 

22,675

 

4,056

 

 

39

 

 

 

 

26,770

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

6,502

 

1,187

 

1

 

7,231

 

 

 

 

14,921

 

Share-based compensation

 

10,668

 

 

 

2,404

 

 

 

 

13,072

 

Selling, marketing and promotion

 

7,758

 

350

 

 

137

 

 

 

 

8,245

 

Amortization

 

1,270

 

231

 

 

843

 

(b)

 

4,250

 

6,594

 

Research and development

 

280

 

 

 

 

 

 

 

280

 

 

 

26,478

 

1,768

 

1

 

10,615

 

 

 

4,250

 

43,112

 

 

 

(3,803

)

2,288

 

(1

)

(10,576

)

 

 

(4,250

)

(16,342

)

Non-operating items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consulting revenue

 

689

 

19

 

 

 

 

 

 

708

 

Foreign exchange gain

 

69

 

 

 

11

 

 

 

 

80

 

Loss on marketable securities

 

(2,193

)

 

 

 

 

 

 

(2,193

)

Loss on sale of capital assets

 

(191

)

 

 

 

 

 

 

(191

)

Gain on dilution of ownership in equity investee

 

7,535

 

 

 

 

 

 

 

7,535

 

Loss from equity investee

 

(9,281

)

 

744

 

 

(d)

 

(744

)

(9,281

)

Gain on sale of equity investee

 

26,347

 

 

 

 

 

 

 

26,347

 

Deferred gain on sale of intellectual property recognized

 

700

 

 

 

 

 

 

 

700

 

Finance income, net

 

3,533

 

(61

)

 

53

 

 

 

 

3,525

 

Unrealized gain on embedded derivatives

 

576

 

 

 

 

 

 

 

576

 

Gain on long-term investments

 

39,701

 

 

 

 

 

 

 

39,701

 

Unrealized loss on derivative liability

 

(16,850

)

 

 

 

 

 

 

(16,850

)

Transaction costs

 

(4,253

)

 

 

(3,080

)

 

 

 

(7,333

)

Change in fair value of non-controlling interest liability

 

 

 

 

(21,376

)

 

 

 

(21,376

)

 

 

46,382

 

(42

)

744

 

(24,392

)

 

 

(744

)

43,324

 

Income before income taxes

 

42,579

 

2,246

 

743

 

(34,968

)

 

 

(4,994

)

26,982

 

Income taxes

 

8,139

 

720

 

102

 

(548

)

(c)

 

(1,126

)

7,185

 

 

 

 

 

 

 

 

 

 

 

(e)

 

(102

)

 

 

Net income

 

$

34,440

 

$

1,526

 

$

641

 

$

(34,420

)

 

 

$

(3,766

)

$

19,797

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares - basic

 

147,274,372

 

 

 

 

 

 

 

(a)

 

14,373,675

 

192,874,957

 

 

 

 

 

 

 

 

 

 

 

(n)

 

31,226,910

 

 

 

Weighted average number of common shares - diluted

 

153,189,773

 

 

 

 

 

 

 

(a)

 

14,373,675

 

200,030,896

 

 

 

 

 

 

 

 

 

 

 

(n)

 

31,226,910

 

 

 

 

 

 

 

 

 

 

 

 

 

(o)

 

1,240,538

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - basic

 

$

0.23

 

 

 

 

 

 

 

 

 

 

 

$

0.10

 

Earnings per share - diluted

 

$

0.22

 

 

 

 

 

 

 

 

 

 

 

$

0.10

 

 

The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements

 

3



 

Aphria Inc.

Pro Forma Consolidated Statements of Net Income

(Unaudited — In thousands of Canadian dollars, except share and per share amounts)

 

 

 

 

 

 

 

 

 

Nuuvera

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

period from

 

 

 

 

 

 

 

 

 

 

 

 

 

Aphria

 

Broken Coast

 

Cannan

 

incorporation

 

Avanti

 

Avalon

 

 

 

 

 

 

 

 

 

year ended

 

year ended

 

year ended

 

January 30,

 

year ended

 

year ended

 

 

 

 

 

 

 

 

 

May 31,

 

June 30,

 

June 30,

 

2017 to June 30,

 

June 30,

 

June 30,

 

 

 

Pro forma

 

 

 

 

 

2017

 

2017

 

2017

 

2017

 

2017

 

2017

 

Note 5

 

adjustments

 

Pro forma

 

Revenue

 

$

20,438

 

$

6,193

 

$

 

$

 

$

13

 

$

 

 

 

$

 

$

26,644

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production costs

 

4,585

 

6,387

 

 

 

 

 

(f)

 

(3,449

)

7,523

 

Gross profit before fair value adjustments

 

15,853

 

(194

)

 

 

13

 

 

 

 

3,449

 

19,121

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value adjustment on sale of inventory

 

3,561

 

 

 

 

 

 

(f)

 

3,449

 

7,010

 

Fair value adjustment on growth of biological assets

 

(5,005

)

(6,387

)

 

 

 

 

 

 

 

(11,392

)

Gross profit

 

17,297

 

6,193

 

 

 

13

 

 

 

 

 

23,503

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

4,678

 

1,594

 

23

 

3,042

 

2,013

 

7

 

 

 

 

11,357

 

Share-based compensation

 

2,399

 

30

 

 

561

 

 

 

 

 

 

2,990

 

Selling, marketing and promotion

 

6,664

 

561

 

 

 

 

 

 

 

 

7,225

 

Amortization

 

956

 

395

 

 

 

269

 

 

(b)

 

8,500

 

10,120

 

Research and development

 

492

 

 

 

 

 

 

 

 

 

492

 

Impairment of intangible asset

 

3,500

 

 

 

 

 

 

 

 

 

3,500

 

 

 

18,689

 

2,580

 

23

 

3,603

 

2,282

 

7

 

 

 

8,500

 

35,684

 

 

 

(1,392

)

3,613

 

(23

)

(3,603

)

(2,269

)

(7

)

 

 

(8,500

)

(12,181

)

Non-operating items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consulting revenue

 

512

 

19

 

 

 

 

 

 

 

 

531

 

Foreign exchange gain

 

483

 

 

 

517

 

(10

)

 

 

 

 

990

 

Gain on marketable securities

 

209

 

 

 

 

 

 

 

 

 

209

 

Gain on sale of capital assets

 

11

 

 

 

 

 

 

 

 

 

11

 

Gain from equity investee

 

210

 

 

1,010

 

 

 

 

(d)

 

(1,010

)

210

 

Finance income, net

 

728

 

(128

)

 

14

 

(22

)

 

 

 

 

592

 

Gain on long-term investments

 

3,571

 

 

 

 

 

 

(r)

 

3,181

 

6,752

 

 

 

5,724

 

(109

)

1,010

 

531

 

(32

)

 

 

 

2,171

 

9,295

 

Income before income taxes

 

4,332

 

3,504

 

987

 

(3,072

)

(2,301

)

(7

)

 

 

(6,329

)

(2,886

)

Income taxes

 

134

 

949

 

132

 

 

 

 

(c)

 

(2,252

)

(1,169

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(e)

 

(132

)

 

 

Net income

 

$

4,198

 

$

2,555

 

$

855

 

$

(3,072

)

$

(2,301

)

$

(7

)

 

 

$

(3,945

)

$

(1,717

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares - basic

 

104,341,319

 

 

 

 

 

 

 

 

 

 

 

(a)

 

14,373,675

 

149,941,904

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(n)

 

31,226,910

 

 

 

Weighted average number of common shares - diluted

 

111,427,893

 

 

 

 

 

 

 

 

 

 

 

(a)

 

14,373,675

 

150,654,573

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(n)

 

31,226,910

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(t)

 

(6,373,905

)

 

 

Earnings per share - basic

 

$

0.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(0.01

)

Earnings per share - diluted

 

$

0.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(0.01

)

 

The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements

 

4



 

Aphria Inc.

Notes to the unaudited pro forma consolidated financial statements

(Unaudited — in thousands of Canadian dollars, except share and per share amounts)

 

1.                   Basis of presentation

 

The accompanying unaudited pro forma consolidated financial statements are based on the historical financial statements of Aphria Inc. (“Aphria”), Nuuvera Corp. (“Nuuvera”), Broken Coast Cannabis Ltd. (“Broken Coast”), and Cannan Growers Inc. (“Cannan”), consolidated and adjusted to give effect to the acquisition by Aphria, of all of the issued and outstanding shares of Nuuvera, Cannan, and 99.86% of the issued and outstanding shares of Broken Coast (the “Acquisitions”). They are presented for illustrative purposes only and may not be indicative of the consolidated company’s financial position or results of operations that would have actually occurred had the Acquisitions been completed at or as of the dates indicated, nor is it indicative of our future operating results or financial position.

 

The unaudited pro forma consolidated statements of financial position as at February 28, 2018 assumes the Acquisition of Nuuvera was completed as of February 28, 2018. The historical statement of financial position of Aphria as at February 28, 2018 includes the effect of the acquistions of Broken Coast and Cannan. The unaudited pro forma consolidated statements of net income for the year ended May 31, 2017 and the nine month period ended February 28, 2018 assumes that the Acquisitions took place at June 1, 2016, the beginning of the financial year.

 

The historical consolidated financial information has been adjusted in the unaudited pro forma consolidated financial statements to give effect to pro forma events that are (1) directly attributable to the Acquisitions, (2) objectively determinable, and (3) with respect to the statements of net income, expected to have a continuing impact on the consolidated results. The unaudited pro forma consolidated financial statements was based on and should be read in conjunction with the following historical financial statements and accompanying notes of Nuuvera, for the applicable periods, which are included elsewhere in the business acquisition report, and the financial statements of Aphria, Broken Coast and Cannan, which have been previously filed on SEDAR:

 

·                       Historical audited consolidated financial statements of Aphria for the year ended May 31, 2017 and the related notes;

 

·                       Historical audited financial statements of Nuuvera for the period from incorporation January 30, 2017 to December 31, 2017 and the related notes;

 

·                       Historical audited financial statements of Broken Coast for the year ended December 31, 2017 and the related notes;

 

·                       Historical audited financial statements of Cannan for the year ended December 31, 2017 and the related notes.

 

The unaudited pro forma consolidated financial statements is presented for informational purposes only. The unaudited pro forma consolidated financial statements may not be indicative of the financial position that would have prevailed and operating results that would have been obtained if the Acquisitions had been completed on those dates or for the periods presented, nor do they claim to project the financial position or operating results which may be obtained in the future. The unaudited pro forma consolidated financial statements are not forecast or projection of future results. The actual financial position and results of operation of Aphria for any period following the closing of the Acquisitions will vary from the amounts set forth in the unaudited pro forma consolidated financial statements and such variations may be material. Any potential integration gains that may be realized and integration costs that may be incurred upon completion of the Acquisitions, have been excluded from the unaudited pro forma consolidated financial statements.

 

5



 

Aphria Inc.

Notes to the unaudited pro forma consolidated financial statements

(Unaudited — in thousands of Canadian dollars, except share and per share amounts)

 

In the opinion of management, the accounting policies used in the preparation of the unaudited pro forma consolidated financial position as at February 28, 2018, the unaudited pro forma consolidated interim statements of net income for the nine months ended February 28, 2018 and for the year ended May 31, 2017, include all the adjustments necessary for the fair presentation of the Acquisitions in accordance with the recognition and measurement principles of International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and incorporate the significant accounting policies expected to be used to prepare Aphria’s consolidated financial statements. Certain financial statement line items included in Nuuvera, Broken Coast and Cannan’s historical presentation have been disaggregated or condensed to conform to corresponding financial statement line items included in Aphria’s historical presentation.

 

The unaudited pro forma consolidated financial statements have been prepared using the acquisition method of accounting in accordance with IFRS 3, Business Combinations (“IFRS 3”). Under the acquisition method of accounting, the total estimated purchase price of an acquisition is allocated to the net tangible and intangible assets and liabilities assumed based on their estimated fair values. The pro forma adjustments related to the purchase price allocation in connection with the Acquisitions are preliminary and based upon information obtained to date and assumptions that we believe are reasonable. The actual purchase accounting adjustments described in the accompanying notes will be made after the closing of the Acquisitions and finalized as information becomes available, but limited to one year after the acquisition date, and may differ from those reflected in the unaudited pro forma consolidated financial statements presented below. The actual amounts that we record are based on our final allocation of the purchase price, after giving effect to the final purchase price adjustments at the closing date, and our final assessment of fair values may differ materially from those recorded in our unaudited pro forma consolidated financial statements. The unaudited pro forma consolidated statements of net income do not reflect any non-recurring charges or gains that we may record in connection with the Acquisitions.

 

The unaudited pro forma consolidated statements of net income for the year ended May 31, 2017 has been derived as follows:

 

(i)            the consolidated statements of income and comprehensive income of Aphria for the year ended May 31, 2017 from the audited consolidated financial statements of Aphria as at May 31, 2017 and for the year then ended;

 

(ii)           the consolidated statement of loss and comprehensive loss for the period from incorporation January 30, 2017 to December 31, 2017, which was adjusted to remove the unaudited consolidated statement of loss and comprehensive loss for the six months ended December 31, 2017;

 

(iii)          the statement of comprehensive income of Broken Coast for the year ended December 31, 2016 from the audited financial statements of Broken Coast as at and for the year ended December 31, 2017, which was adjusted to remove the unaudited statement of comprehensive income for the six month period ended June 30, 2016 and to add the unaudited financial statement of comprehensive income for the six month period ended June 30, 2017; and

 

(iv)          the statement of comprehensive income of Cannan for the year ended December 31, 2016 from the audited financial statements of Cannan as at and for the year ended December 31, 2017, which was adjusted to remove the unaudited statement of comprehensive income for the six month period ended June 30, 2016 and to add the unaudited statement of comprehensive income for the six month period ended June 30, 2017.

 

The unaudited pro forma consolidated statements of net income for the nine month period ended February 28, 2018 has been derived as follows:

 

(i)            the unaudited condensed interim consolidated statements of income and comprehensive income of Aphria for the nine month period ended February 28, 2018 from the unaudited condensed interim consolidated financial statements of Aphria as at and for the periods ended February 28, 2018;

 

(ii)           the consolidated statement of loss and comprehensive loss for the six months ended December 31, 2017;

 

(i)            the statement of comprehensive income of Broken Coast for the year ended December 31, 2017 from the audited financial statements of Broken Coast as at and for the year ended December 31, 2017, which was adjusted to remove the unaudited statement of comprehensive income for the six month period ended June 30, 2017; and

 

6



 

Aphria Inc.

Notes to the unaudited pro forma consolidated financial statements

(Unaudited — in thousands of Canadian dollars, except share and per share amounts)

 

(ii)           the statement of comprehensive income of Cannan for the year ended December 31, 2017 from the audited financial statements of Cannan as at and for the year ended December 31, 2017, which was adjusted to remove the unaudited statement of comprehensive income for the six month period ended June 30, 2017.

 

The unaudited pro forma consolidated statements of net income for the year ended May 31, 2017 include the results Nuuvera for the period from incorporation January 30, 2017 to June 30, 2017, Broken Coast and Cannan for the year ended June 30, 2017. The unaudited pro forma consolidated statements of net income for the nine month period ended February 28, 2018 include the results Nuuvera, Broken Coast and Cannan for the six months ended December 31, 2017.

 

The unaudited pro forma consolidate financial statements are only a summary and are not necessarily indicative of the results of Aphria’s, Nuuvera, Broken Coast’s or Cannan’s future operations.

 

2.                   Description of Transactions

 

Effective February 1, 2018, Aphria entered into a definitive purchase agreement and acquired 99.86% of the outstanding shares of Broken Coast, through a direct acquisition of 132,576.59 shares of Broken Coast and the acquisition of 100% of the shares of Cannan which owned the remaining 33,576 outstanding shares of Broken Coast. Pursuant to the terms and conditions set forth in the definitive agreement between Aphria, Broken Coast and Cannan that was entered into effective February 1, 2017 (the “Transaction”). The total consideration transferred was $216,899 to be paid in 14,373,675 Aphria shares issued at a deemed price of $15.09 representing the 20-day VWAP of Aphria at market close on the business day immediately prior to signing of the parties initial non-binding letter of intent.

 

On March 23, 2018, Aphria completed the previously announced definitive arrangement agreement (the “Arrangement Agreement”) pursuant to which Aphria acquired, by way of a court-approved plan of arrangement unther the Business Corporations Act (Ontario) (the “Transaction”) all of the issued and outstanding common shares not already owned (on a fully diluted basis) of Nuuvera for a total consideration of $0.62 in cash plus 0.3546 of an Aphria share for each Nuuvera share held which. All of Nuuvera’s outstanding options were exchanged for an equivalent option granted pursuant to Aphria’s stock option plan (each, a “Replacement Option”) to purchase from Aphria the number of common shares (rounded to the nearest whole share) equal to: (i) the exchange ration multiplied by (ii) the number of Nuuvera shares subject to such Nuuvera Option. Each such Replacement Option shall provide for an exercise price per common share (rounded to the nearest whole cent) equal to: (i) the exercise price per Nuuvera share purchasable pursuant to such Nuuvera Option; divided by (ii) the exchange ratio.

 

3.                   Significant accounting policies

 

The accounting policies used in preparing the unaudited pro forma consolidated financial statements are set out in Aphria’s audited consolidated financial statements for the year ended May 31, 2017 and as described in Aphria’s unaudited condensed interim consolidated financial statements for the three months and nine months ended February 28, 2018. The financial statements of Nuuvera, Broken Coast and Cannan (which form the basis of the unaudited pro forma consolidated financial statements) were prepared in accordance with IFRS.

 

The pro forma consolidated financial statements do not include all the information and disclosures required by IFRS for annual financial statements and should be read in conjunction with the financial statements of Aphria, Broken Coast, and Cannan, as weel as the financial statements of Nuuvera, that are included herein. These pro forma statements have been prepared in thousands of Canadian dollars unless otherwise noted.

 

7



 

Aphria Inc.

Notes to the unaudited pro forma consolidated financial statements

(Unaudited — in thousands of Canadian dollars, except share and per share amounts)

 

4.                   Fair value of consideration transferred in connection with the Acquisitions

 

The following table summarizes the purchase price for the Broken Coast and Cannan Acquisition:

 

 

 

 

 

 

 

 

 

Estimated

 

 

 

 

 

Number of

 

 

 

preliminary fair

 

 

 

Note

 

shares

 

Share price

 

value

 

Consideration paid

 

 

 

 

 

 

 

 

 

Shares issued

 

(i)

 

14,373,675

 

$

14.90

 

214,168

 

Total consideration paid

 

 

 

 

 

 

 

214,168

 

 

 

 

 

 

 

 

 

 

 

Net assets acquired

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

Cash

 

 

 

 

 

 

 

1,956

 

Accounts receivable

 

 

 

 

 

 

 

305

 

Other current assets

 

 

 

 

 

 

 

43

 

Inventory

 

 

 

 

 

 

 

2,149

 

Biological assets

 

 

 

 

 

 

 

767

 

Long-term assets

 

 

 

 

 

 

 

 

 

Capital assets

 

 

 

 

 

 

 

12,938

 

Customer relationships

 

 

 

 

 

 

 

11,730

 

Corporate website

 

 

 

 

 

 

 

39

 

Licence

 

 

 

 

 

 

 

6,320

 

Non-competition agreements

 

 

 

 

 

 

 

1,930

 

Trademark & brands

 

 

 

 

 

 

 

72,490

 

Goodwill

 

 

 

 

 

 

 

142,707

 

Total assets

 

 

 

 

 

 

 

253,374

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

 

 

 

 

 

 

8,475

 

Income taxes payable

 

 

 

 

 

 

 

632

 

Non-current liabilities

 

 

 

 

 

 

 

 

 

Deferred tax liability

 

 

 

 

 

 

 

24,185

 

Long-term debt

 

 

 

 

 

 

 

5,914

 

Total liabilities

 

 

 

 

 

 

 

39,206

 

 

 

 

 

 

 

 

 

 

 

Total net assets acquired

 

 

 

 

 

 

 

$

214,168

 

 


(i)            Share price based on the price of the shares on February 1, 2018.

 

8



 

Aphria Inc.

Notes to the unaudited pro forma consolidated financial statements

(Unaudited — in thousands of Canadian dollars, except share and per share amounts)

 

The following table summarizes the purchase price for the Nuuvera Acquisition:

 

 

 

 

 

 

 

 

 

Estimated

 

 

 

 

 

Number of 

 

 

 

preliminary fair

 

 

 

Note

 

shares

 

Share price

 

value

 

Consideration paid

 

 

 

 

 

 

 

 

 

Cash

 

 

 

 

 

 

 

54,604

 

Shares issued

 

(i)

 

31,226,910

 

$

13.17

 

411,258

 

Warrants outstanding

 

(ii)

 

1,345,866

 

 

 

4,944

 

Replacement options issued

 

(ii)

 

1,280,914

 

 

 

14,513

 

Total consideration paid

 

 

 

 

 

 

 

485,319

 

 

 

 

 

 

 

 

 

 

 

Fair value of previously held investment

 

 

 

 

 

 

 

 

 

Shares held by Aphria

 

(i)

 

1,878,738

 

$

14.92

 

28,028

 

Warrants held by Aphria

 

(ii)

 

322,365

 

 

 

1,184

 

Total fair value of previously held investment

 

 

 

 

 

 

 

29,212

 

 

 

 

 

 

 

 

 

 

 

Net assets acquired

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

Cash

 

 

 

 

 

 

 

57,766

 

Other current assets

 

 

 

 

 

 

 

1,087

 

Inventory

 

 

 

 

 

 

 

232

 

Long-term assets

 

 

 

 

 

 

 

 

 

Capital assets

 

 

 

 

 

 

 

3,008

 

Intangible assets

 

 

 

 

 

 

 

18,913

 

Total assets

 

 

 

 

 

 

 

81,006

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

 

 

 

 

 

 

3,075

 

Non-current liabilities

 

 

 

 

 

 

 

 

 

Deferred tax liability

 

 

 

 

 

 

 

2,978

 

Total liabilities

 

 

 

 

 

 

 

6,053

 

 

 

 

 

 

 

 

 

 

 

Net assets

 

 

 

 

 

 

 

74,953

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

(iii)

 

 

 

 

 

$

439,578

 

 


(i)            Share price based on the price of the shares on March 23, 2018, shares held by Aphria include the cash consideration paid.

 

(ii)           Options and warrants valued using the Black Scholes option pricing model using the following assumptions: the risk-free rate of 2.19%; expected life 1 – 10 years; volatility of 70% based on comparable companies; forfeiture rate of nil; dividend yield of nil; and the exercise price of $2.52 – $20.30.

 

(iii)          A preliminary fair value estimate of $439,578 has been allocated to goodwill acquired, which primarily consisting of: supply agreements, customer list, and goodwill.

 

9



 

Aphria Inc.

Notes to the unaudited pro forma consolidated financial statements

(Unaudited — in thousands of Canadian dollars, except share and per share amounts)

 

5.                   Pro forma adjusments in connection with the Acquisitions

 

This note should be read in conjunction with Note 1 Basis of presentation; Note 2 Description of transaction; and Note 4 Fair value of consideration transferred in connection with the Acquisitions. The following summarizes the pro forma adjustments in connection with the Acquisitions to give effect to the acquisitions as if it had occurred on February 28, 2018 for purposes of the pro forma consolidated statements of financial position, on June 1, 2016 for purposes of the pro forma consolidated statements of net income for the year ended May 31, 2017, and for the nine months ended February 28, 2018.

 

Broken Coast and Cannan

 

(a)                         An increase in weighted average number of common shares basic and diluted to record the 14,373,675 shares issued for the Acquisitions.

 

(b)                         An increase in amortization of $8,500 for the year ended May 31, 2017 and $4,250 for the nine months ended February 28, 2018 representing the amortization of the preliminary fair value of the intangible assets acquired from the Acquisitions.

 

(c)                          A reduction in income tax expense of $2,252 for the year ended May 31, 2017 and $1,126 for the nine months ended February 28, 2018 representing the deferred tax impact of the the increase in amortization of the preliminary fair value of intangible assets acquired from the Acquisitions.

 

(d)                         A reduction in the gain from equity investee of $1,010 for the year ended June 30, 2017 and $744 for the six months ended December 31, 2017 to eliminate Cannan’s share of the income of Broken Coast.

 

(e)                          reduction in income tax expense of $132 for the year ended May 31, 2017 and $102 for the six months ended November 30, 2017 to eliminate the deferred tax expense recognized on Cannan’s share of the income in Broken Coast.

 

(f)                           A reduction in production costs of $1,749 for the six months ended December 31, 2017 and $3,449 for the year ended June 30, 2017, with a corresponding increase in fair value adjustment on sale of inventory representing the expected fair value adjustment included in cost of inventory sold, to align the accounting presentation of Broken Coast with Aphria.

 

Nuuvera

 

(g)                          A reduction in share capital of $71,401 to eliminate the historical share capital of Nuuvera.

 

(h)                         A reduction in share-based payment reserve of $3,020 to eliminate the historical share-based payment reserve of Nuuvera.

 

(i)                             An increase in retained earnings of $37,492 to eliminate the historical deficit of Nuuvera.

 

(j)                            A reduction in goodwill of $10,621 to eliminate the historical goodwill from Nuuvea Acquisitions.

 

(k)                         A reduction in non-controlling interest liability and cash and cash equivalents of $35,000 for the completion of the acquisition of Avanti by Nuuvera.

 

(l)                             An increase in cash and cash equivalents of $48,645 representing the proceeds net of commission received from the closing of the Nuuvera bought deal, prior to completion of the Nuuvera Acquisition.

 

(m)                     A reduction in cash of $54,604 to record the cash paid as part of the Nuuvera Acquisition. (n) An increase in share capital of $411,258 to record the 331,226,910 shares issued for the Nuuvera Acquisition.

 

(o)                         An increase in share-based payment reserve of $14,513 to record the 1,280,914 replacement options issued for the Nuuvera Acquisition.

 

(p)                         An increase in warrants of $4,944 to record the 1,345,866 replacement warrants issued for the Nuuvera Acquisition.

 

(q)                         A reduction in long-term investments of $26,031 to remove the carrying value of the long-term investment in Nuuvera as at February 28, 2018.

 

(r)                            An increase in retained earnings of $3,181 representing the fair value increase of the investment in Nuuvera as at the acquisition date.

 

10



 

Aphria Inc.

Notes to the unaudited pro forma consolidated financial statements

(Unaudited — in thousands of Canadian dollars, except share and per share amounts)

 

(s)                           An increase in goodwill of $439,578 representing the preliminary fair value of the goodwill and intangible assets acquired from the Nuuvera Acquisition.

 

(t)                            A decrease in weighted average number of common shares — diluted of 6,373,905 to remove the dilution effect of warrants and options, due to pro forma loss position, resulting in the impact being anti-dilutive for the year ended May 31, 2017.

 

6.              Pro forma net income per share

 

The pro forma basic and diluted earnings per share have been calculated as follows:

 

 

 

For the year

 

For the nine

 

 

 

ended

 

months ended

 

 

 

May 31,

 

February 28,

 

 

 

2017

 

2018

 

Basic earnings per share:

 

 

 

 

 

Pro forma net income for the period

 

$

(1,717

)

$

19,897

 

Average number of common shares outstanding during the period

 

149,941,904

 

192,874,957

 

Pro forma earnings per share - basic

 

$

(0.01

)

$

0.10

 

 

 

 

For the year

 

For the nine

 

 

 

ended

 

months ended

 

 

 

May 31,

 

February 28,

 

 

 

2017

 

2018

 

Diluted earnings per share:

 

 

 

 

 

Pro forma net income for the period

 

$

(1,717

)

$

19,897

 

 

 

 

 

 

 

Average number of common shares outstanding during the period

 

149,941,904

 

192,874,957

 

“In the money” warrants outstanding during the period

 

 

2,077,483

 

“In the money” options outstanding during the period

 

 

5,536,960

 

 

 

149,941,904

 

200,489,400

 

pro forma earnings per share - diluted

 

$

(0.01

)

$

0.10

 

 

11



 

Exhibit “B”

Audited Financial Statements of Nuuvera

 

(See attached)

 



 

 

Consolidated Financial Statements

(Expressed in Canadian dollars)

 

NUUVERA INC.

 

(formerly Mira IX Acquisition Corp.)

 

(INCORPORATED UNDER THE LAWS OF CANADA)

 

For the period from Incorporation on January 30, 2017 to December 31, 2017

 



 

 

INDEPENDENT AUDITOR’S REPORT

 

To the Directors of Nuuvera Inc.

 

We have audited the accompanying consolidated financial statements of Nuuvera Inc. and its subsidiaries, which comprise the consolidated statement of financial position as at December 31, 2017 and the consolidated statements of loss and comprehensive loss, changes in equity and cash flows for the period from incorporation, January 30, 2017, to December 31, 2017 and a summary of significant accounting policies and other explanatory information.

 

Management’s Responsibility for the Consolidated Financial Statements

 

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

 

Auditor’s Responsibility

 

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 

Opinion

 

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Nuuvera Inc. and its subsidiaries, as at December 31, 2017, and the results of its operations and its cash flows for the period from incorporation, January 30, 2017, to December 31, 2017 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

 

/s/ RSM Canada LLP

 

Licensed Public Accountants

Chartered Professional Accountants

May 15, 2018

Toronto

 

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NUUVERA INC.

Consolidated Statement of Financial Position

(Expressed in Canadian dollars)

 

 

 

As at

 

 

 

December 31,

 

 

 

2017

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

Cash

 

$

44,121,265

 

Supplies

 

231,735

 

Prepaid expenses and other receivables (Note 8)

 

837,383

 

Total current assets

 

45,190,383

 

 

 

 

 

Deposit on capital asset

 

100,000

 

Loan receivable

 

150,000

 

Property and equipment (Note 4,5,10)

 

3,007,912

 

Intangibles assets (Notes 4,5,11)

 

18,912,623

 

Goodwill (Note 4)

 

10,621,414

 

 

 

$

77,982,332

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

Accounts payable and accrued liabilities

 

3,075,568

 

Non-controlling interest liability (Note 17)

 

35,000,000

 

Total current liabilities

 

38,075,568

 

 

 

 

 

Deferred tax liabilities (Note 18)

 

2,978,151

 

Total Liabilities

 

41,053,719

 

 

 

 

 

Equity

 

 

 

Common shareholders’ equity

 

 

 

Capital stock (Note 13 (a))

 

71,400,986

 

Contributed surplus (Note 13 (b))

 

3,019,598

 

Deficit

 

(37,491,971

)

Total common shareholders’ equity

 

36,928,613

 

 

 

$

77,982,332

 

 

Commitment and contingencies (Note 19)

Subsequent events (Note 20)

 

See accompanying notes to the consolidated financial statements.

 

Approved by the Board of Directors on May 15, 2018

 

1



 

NUUVERA INC.

Consolidated Statement of Loss and Comprehensive Loss

The period from Incorporation January 30, 2017 to December 31, 2017

(Expressed in Canadian dollars)

 

Revenue

 

 

 

Service revenue

 

$

38,756

 

 

 

 

 

Expenses

 

 

 

Salaries and employee benefit expenses

 

2,274,547

 

Depreciation

 

842,648

 

Professional fees

 

2,719,334

 

Acquisition costs (Note 4, 5 and 10)

 

459,049

 

Transaction costs (Note 6)

 

2,621,357

 

Consulting fees

 

2,815,727

 

Service fees

 

98,135

 

Sales expenses

 

137,494

 

Office and administration

 

2,366,765

 

Stock based compensation

 

2,964,598

 

Finance costs (income):

 

 

 

Foreign exchange gain

 

(528,343

)

Interest income

 

(67,610

)

Change in fair value of non-controlling interest liability (Note 17)

 

21,375,550

 

Total expenses

 

38,079,251

 

 

 

 

 

Loss before tax

 

(38,040,495

)

 

 

 

 

Deferred income tax recovery (Note 18)

 

548,524

 

 

 

 

 

Net loss and comprehensive loss for the period

 

$

(37,491,971

)

 

 

 

 

Basic and diluted loss per share attributable to common shareholders (Note 16)

 

$

(0.58

)

 

 

 

 

Weighted average number of common shares

 

 

 

Basic and diluted

 

64,706,391

 

 

See accompanying notes to the consolidated financial statements.

 

2



 

NUUVERA INC.

Consolidated Statement of Changes in Equity

For the period from Incorporation on January 30, 2017 to December 31, 2017

(Expressed in Canadian dollars)

 

 

 

 

 

 

 

 

 

Deficit

 

 

 

 

 

Share Capital

 

Contributed

 

Common

 

 

 

 

 

Shares

 

Amount

 

Surplus

 

Shareholders

 

Total Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, January 30, 2017

 

 

$

 

$

 

$

 

$

 

Shares issued — Founders shares

 

20,000,000

 

20,000

 

 

 

20,000

 

Shares issued — Private placements

 

59,180,000

 

71,180,000

 

 

 

71,180,000

 

Shares and options issued — RTO

 

750,000

 

1,875,000

 

55,000

 

 

1,930,000

 

Cost of issuance of shares

 

 

(1,674,014

)

 

 

(1,674,014

)

Stock based compensation

 

 

 

2,964,598

 

 

2,964,598

 

Comprehensive loss for the period

 

 

 

 

(37,491,971

)

(37,491,971

)

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2017

 

79,930,000

 

$

71,400,986

 

$

3,019,598

 

$

(37,491,971

)

$

36,928,613

 

 

See accompanying notes to the consolidated financial statements.

 

3



 

NUUVERA INC.

Consolidated Statement of Cash Flows

The period from Incorporation January 30, 2017 to December 31, 2017

(Expressed in Canadian dollars)

 

Cash provided by (used in):

 

 

 

 

 

 

 

Operating activities:

 

 

 

Net loss for the period

 

$

(37,491,971

)

Adjustment for non-cash items:

 

 

 

Stock based compensation

 

2,964,598

 

Depreciation

 

846,472

 

Deferred income tax recovery

 

(548,524

)

Transaction costs (Note 6)

 

1,997,582

 

Change in fair value of non-controlling interest

 

21,375,550

 

Net changes in non-cash working capital:

 

 

 

Supplies

 

(231,735

)

Advances for purchase of capital assets

 

(100,000

)

Prepaid expenses and other receivables

 

(784,392

)

Accounts payable and accrued liabilities

 

2,909,741

 

Net cash used in operating activities

 

(9,062,679

)

 

 

 

 

Investing activities:

 

 

 

Cash acquired in reverse takeover

 

24,972

 

Additions to property and equipment (Note 10)

 

(1,000,606

)

Acquisition of subsidiary with NCI (Note 4), net of cash acquired

 

(13,250,860

)

Acquisition of group of assets (Note 5)

 

(3,000,000

)

Net cash provided by investing activities

 

(17,226,494

)

 

 

 

 

Financing activities:

 

 

 

Net proceeds on issuance of capital stock

 

69,525,988

 

Additional funding from NCI

 

884,450

 

Net cash provided by financing activities

 

70,410,438

 

 

 

 

 

Net change in cash during the period

 

44,121,265

 

Cash, beginning of period