EX-99.1 2 sndl-ex991_13.htm EX-99.1 sndl-ex991_13.htm

EXHIBIT 99.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sundial Growers Inc.

Condensed Consolidated Interim Financial Statements

For the three and six months ended June 30, 2020

(Unaudited – expressed in thousands of Canadian dollars)

 

 

 

 


 

Sundial Growers Inc.

Condensed Consolidated Interim Statements of Financial Position

(Unaudited - expressed in thousands of Canadian dollars)

As at

Note

June 30, 2020

 

December 31, 2019

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

21,629

 

 

45,337

 

Restricted cash

 

 

5,330

 

 

15,827

 

Accounts receivable

4

 

9,419

 

 

27,638

 

Biological assets

5

 

3,047

 

 

14,309

 

Inventory

6

 

55,633

 

 

59,942

 

Prepaid expenses and deposits

 

 

5,212

 

 

9,564

 

 

 

 

100,270

 

 

172,617

 

Non-current assets

 

 

 

 

 

 

 

Property, plant and equipment

7

 

183,990

 

 

281,984

 

Intangible assets

8

 

18,302

 

 

43,995

 

Goodwill

9

 

 

 

11,440

 

Total assets

 

 

302,562

 

 

510,036

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

 

36,659

 

 

58,110

 

Current portion of long-term debt

10

 

8,400

 

 

177,913

 

Current portion of lease obligations

11

 

236

 

 

722

 

Derivative warrant liabilities

13

 

10,819

 

 

 

Contingent consideration

14

 

 

 

32,501

 

 

 

 

56,114

 

 

269,246

 

Non-current liabilities

 

 

 

 

 

 

 

Long-term debt

10

 

64,372

 

 

 

Lease obligations

11

 

795

 

 

16,227

 

Convertible notes

12

 

70,612

 

 

 

Deferred tax liability

 

 

 

 

3,365

 

Total liabilities

 

 

191,893

 

 

288,838

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

Share capital

15(b)

 

471,868

 

 

509,654

 

Warrants

15(c)

 

27,831

 

 

27,831

 

Contributed surplus

 

 

33,262

 

 

30,192

 

Contingent consideration

 

 

2,279

 

 

2,279

 

Accumulated deficit

 

 

(429,120

)

 

(360,338

)

Accumulated other comprehensive income

 

 

 

 

6,866

 

Total shareholders’ equity

 

 

106,120

 

 

216,484

 

Non-controlling interest

 

 

4,549

 

 

4,714

 

Total liabilities and shareholders’ equity

 

 

302,562

 

 

510,036

 

Going concern (note 1)

Commitments (note 23)

Subsequent events (notes 12 and 24)

See accompanying notes to the condensed consolidated interim financial statements.

 

1


 

Sundial Growers Inc.

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss

(Unaudited - expressed in thousands of Canadian dollars, except per share amounts)

 

 

 

 

Three months ended

June 30

 

 

Six months ended

June 30

 

 

 

Note

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Gross revenue

 

17

 

 

24,341

 

 

 

20,284

 

 

 

40,931

 

 

 

21,975

 

Excise taxes

 

 

 

 

4,147

 

 

 

985

 

 

 

6,731

 

 

 

1,177

 

Net revenue

 

 

 

 

20,194

 

 

 

19,299

 

 

 

34,200

 

 

 

20,798

 

Cost of sales

 

6

 

 

17,336

 

 

 

10,434

 

 

 

30,843

 

 

 

11,212

 

Inventory obsolescence

 

6

 

 

10,026

 

 

 

 

 

 

17,741

 

 

 

 

Gross margin before fair value adjustments

 

 

 

 

(7,168

)

 

 

8,865

 

 

 

(14,384

)

 

 

9,586

 

Change in fair value of biological assets

 

 

 

 

(1,756

)

 

 

12,174

 

 

 

4,659

 

 

 

12,866

 

Change in fair value realized through inventory

 

6

 

 

(6,213

)

 

 

(1,769

)

 

 

(15,905

)

 

 

(1,689

)

Gross margin

 

 

 

 

(15,137

)

 

 

19,270

 

 

 

(25,630

)

 

 

20,763

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

 

 

7,735

 

 

 

6,454

 

 

 

18,343

 

 

 

11,445

 

Sales and marketing

 

 

 

 

518

 

 

 

1,533

 

 

 

2,310

 

 

 

2,745

 

Research and development

 

 

 

 

36

 

 

 

1,756

 

 

 

343

 

 

 

1,851

 

Depreciation and amortization

 

8,9

 

 

1,277

 

 

 

148

 

 

 

1,934

 

 

 

268

 

Foreign exchange loss (gain)

 

 

 

 

599

 

 

 

215

 

 

 

(955

)

 

 

(54

)

Share-based compensation

 

16

 

 

1,885

 

 

 

13,446

 

 

 

3,121

 

 

 

26,154

 

Restructuring costs

 

 

 

 

2,363

 

 

 

 

 

 

5,082

 

 

 

 

Asset impairment

 

7

 

 

 

 

 

 

 

 

5,659

 

 

 

162

 

Loss from operations

 

 

 

 

(29,550

)

 

 

(4,282

)

 

 

(61,467

)

 

 

(21,808

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction costs

 

 

 

 

(1,297

)

 

 

 

 

 

(2,398

)

 

 

 

Finance costs

 

18

 

 

(591

)

 

 

(7,358

)

 

 

(6,573

)

 

 

(10,143

)

Loss on financial obligation

 

 

 

 

 

 

 

(725

)

 

 

 

 

 

(725

)

(Loss) gain on disposition of PP&E

 

 

 

 

(122

)

 

 

15

 

 

 

488

 

 

 

15

 

Loss before income tax

 

 

 

 

(31,560

)

 

 

(12,350

)

 

 

(69,950

)

 

 

(32,661

)

Income tax recovery

 

 

 

 

 

 

 

 

 

 

 

 

 

3,609

 

Net loss from continuing operations

 

 

 

 

(31,560

)

 

 

(12,350

)

 

 

(69,950

)

 

 

(29,052

)

Net loss from discontinued operations

 

3

 

 

(28,860

)

 

 

 

 

 

(34,453

)

 

 

 

Net loss

 

 

 

 

(60,420

)

 

 

(12,350

)

 

 

(104,403

)

 

 

(29,052

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) gain on translation of foreign operations

 

 

 

 

(1,093

)

 

 

 

 

 

600

 

 

 

 

Comprehensive loss

 

 

 

 

(61,513

)

 

 

(12,350

)

 

 

(103,803

)

 

 

(29,052

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss from continuing operations attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sundial Growers Inc.

 

 

 

 

(31,483

)

 

 

(12,322

)

 

 

(69,785

)

 

 

(29,024

)

Non-controlling interest

 

 

 

 

(77

)

 

 

(28

)

 

 

(165

)

 

 

(28

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sundial Growers Inc.

 

 

 

 

(60,343

)

 

 

(12,322

)

 

 

(104,238

)

 

 

(29,024

)

Non-controlling interest

 

 

 

 

(77

)

 

 

(28

)

 

 

(165

)

 

 

(28

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sundial Growers Inc.

 

 

 

 

(61,436

)

 

 

(12,322

)

 

 

(103,638

)

 

 

(29,024

)

Non-controlling interest

 

 

 

 

(77

)

 

 

(28

)

 

 

(165

)

 

 

(28

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share attributable to Sundial Growers Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

19

 

$

(0.57

)

 

$

(0.16

)

 

$

(0.97

)

 

$

(0.40

)

2


 

See accompanying notes to the condensed consolidated interim financial statements.

 

3


 

Sundial Growers Inc.

Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity

(Unaudited - expressed in thousands of Canadian dollars)

 

Note

Share capital

 

Warrants

 

Contributed

surplus

 

Convertible

notes – equity

component

 

Contingent consideration

 

Accumulated deficit

 

Accumulated

other

comprehensive

income

 

Non-

controlling

interest

 

Total equity

 

Balance at December 31, 2019

 

 

509,654

 

 

27,831

 

 

30,192

 

 

 

 

2,279

 

 

(360,338

)

 

6,866

 

 

4,714

 

 

221,198

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

(104,238

)

 

 

 

(165

)

 

(104,403

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

600

 

 

 

 

600

 

Share issuances

15(b)

 

610

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

610

 

Dispositions

3

 

(38,447

)

 

 

 

 

 

 

 

 

 

35,456

 

 

(7,466

)

 

 

 

(10,457

)

Share-based compensation

16

 

51

 

 

 

 

3,070

 

 

 

 

 

 

 

 

 

 

 

 

3,121

 

Balance at June 30, 2020

 

 

471,868

 

 

27,831

 

 

33,262

 

 

 

 

2,279

 

 

(429,120

)

 

 

 

4,549

 

 

110,669

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2020

 

 

510,314

 

 

27,831

 

 

31,378

 

 

 

 

2,279

 

 

(404,233

)

 

8,559

 

 

4,626

 

 

180,754

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

(60,343

)

 

 

 

(77

)

 

(60,420

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,093

)

 

 

 

(1,093

)

Dispositions

3

 

(38,447

)

 

 

 

 

 

 

 

 

 

35,456

 

 

(7,466

)

 

 

 

(10,457

)

Share-based compensation

16

 

1

 

 

 

 

1,884

 

 

 

 

 

 

 

 

 

 

 

 

1,885

 

Balance at June 30, 2020

 

 

471,868

 

 

27,831

 

 

33,262

 

 

 

 

2,279

 

 

(429,120

)

 

 

 

4,549

 

 

110,669

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2018

 

 

65,133

 

 

3,108

 

 

9,493

 

 

3,232

 

 

 

 

(88,874

)

 

 

 

 

 

(7,908

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

(29,024

)

 

 

 

(28

)

 

(29,052

)

Share issuances

15(b)

 

6,992

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,992

 

Share issuance costs

15(b)

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

Business acquisitions

 

 

2,601

 

 

 

 

 

 

 

 

2,279

 

 

 

 

 

 

4,879

 

 

9,759

 

Warrants exercised

15(c)

 

19,563

 

 

(3,108

)

 

 

 

 

 

 

 

 

 

 

 

 

 

16,455

 

Share-based compensation

16

 

582

 

 

 

 

25,572

 

 

 

 

 

 

 

 

 

 

 

 

26,154

 

Employee warrants exercised

16

 

16,735

 

 

 

 

(15,658

)

 

 

 

 

 

 

 

 

 

 

 

1,077

 

Balance at June 30, 2019

 

 

111,605

 

 

 

 

19,407

 

 

3,232

 

 

2,279

 

 

(117,898

)

 

 

 

4,851

 

 

23,476

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2019

 

 

84,229

 

 

1,540

 

 

17,023

 

 

3,232

 

 

2,279

 

 

(105,576

)

 

 

 

4,879

 

 

7,606

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

(12,322

)

 

 

 

(28

)

 

(12,350

)

Share issuances

15(b)

 

6,541

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,541

 

Warrants exercised

11(c)

 

9,696

 

 

(1,540

)

 

 

 

 

 

 

 

 

 

 

 

 

 

8,156

 

Share-based compensation

16

 

499

 

 

 

 

12,947

 

 

 

 

 

 

 

 

 

 

 

 

13,446

 

Employee warrants exercised

16

 

10,640

 

 

 

 

(10,563

)

 

 

 

 

 

 

 

 

 

 

 

77

 

Balance at June 30, 2019

 

 

111,605

 

 

 

 

19,407

 

 

3,232

 

 

2,279

 

 

(117,898

)

 

 

 

4,851

 

 

23,476

 

See accompanying notes to the condensed consolidated interim financial statements.

 

4


 

Sundial Growers Inc.

Condensed Consolidated Interim Statement of Cash Flows

(Unaudited - expressed in thousands of Canadian dollars)

 

 

Three months ended

June 30

 

Six months ended

June 30

 

 

Note

2020

 

2019

 

2020

 

2019

 

Cash provided by (used in):

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss from continuing operations for the period

 

 

(31,560

)

 

(12,350

)

 

(69,950

)

 

(29,052

)

Items not involving cash:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax recovery

 

 

 

 

 

 

 

 

(3,609

)

Change in fair value of biological assets

 

 

1,756

 

 

(12,174

)

 

(4,659

)

 

(12,866

)

Share-based compensation

16

 

1,885

 

 

13,446

 

 

3,121

 

 

26,154

 

Depreciation and amortization

7,8

 

2,946

 

 

1,501

 

 

5,869

 

 

2,513

 

Loss (gain) on disposition of PP&E

 

 

122

 

 

(15

)

 

(488

)

 

(15

)

Inventory obsolescence

6

 

10,026

 

 

 

 

17,741

 

 

 

Finance costs

 

 

(511

)

 

1,707

 

 

1,405

 

 

2,793

 

Loss on financial obligation

 

 

 

 

725

 

 

 

 

725

 

Unrealized foreign exchange loss (gain)

 

 

583

 

 

(289

)

 

(1,186

)

 

(422

)

Restructuring costs

 

 

448

 

 

 

 

448

 

 

 

Asset impairment

7

 

 

 

 

 

5,659

 

 

162

 

Change in non-cash working capital

 

 

1,799

 

 

(2,215

)

 

12,024

 

 

(14,849

)

Net cash used in operating activities from continuing operations

 

 

(12,506

)

 

(9,664

)

 

(30,016

)

 

(28,466

)

Net cash provided by operating activities from discontinued operations

3

 

756

 

 

 

 

4,820

 

 

 

Net cash used in operating activities

 

 

(11,750

)

 

(9,664

)

 

(25,196

)

 

(28,466

)

Investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

Additions to property, plant and equipment

7

 

(117

)

 

(33,437

)

 

(1,793

)

 

(64,037

)

Proceeds from disposal of PP&E

7

 

3

 

 

14

 

 

2,103

 

 

14

 

Change in non-cash working capital

 

 

(2,629

)

 

4,421

 

 

(10,690

)

 

12,874

 

Net cash used in investing activities from continuing operations

 

 

(2,743

)

 

(29,002

)

 

(10,380

)

 

(51,149

)

Net cash used in investing activities from discontinued operations

3

 

(1,671

)