AURORA CANNABIS INC.
Condensed Consolidated Interim Financial Statements
(Unaudited)
For the three months ended June 30, 2024 and 2023
(in Canadian Dollars)
Table of Contents
| Condensed Consolidated Interim Statements of Financial Position | |||||
| Condensed Consolidated Interim Statements of Income (Loss) and Comprehensive Income (Loss) | |||||
| Condensed Consolidated Interim Statements of Changes in Equity | |||||
| Condensed Consolidated Interim Statements of Cash Flows | |||||
| Notes to the Condensed Consolidated Interim Financial Statements | |||||
| Note 1 | Nature of Operations | Note 11 | Share-Based Compensation | |||||||||||||||||||||||||||||
| Note 2 | Material Accounting Policies and Judgments | Note 12 | Income (Loss) per share | |||||||||||||||||||||||||||||
| Note 3 | Biological Assets | Note 13 | Supplemental Cash Flow Information | |||||||||||||||||||||||||||||
| Note 4 | Inventory | Note 14 | Commitments and Contingencies | |||||||||||||||||||||||||||||
| Note 5 | Property, Plant and Equipment | Note 15 | Revenue | |||||||||||||||||||||||||||||
| Note 6 | Assets and Liabilities Held for Sale and Discontinued Operations | Note 16 | Segmented Information | |||||||||||||||||||||||||||||
| Note 7 | Intangible Assets and Goodwill | Note 17 | Fair Value of Financial Instruments | |||||||||||||||||||||||||||||
| Note 8 | Loans and Borrowings | Note 18 | Financial Instruments Risk | |||||||||||||||||||||||||||||
| Note 9 | Lease Liabilities | Note 19 | Subsequent Events | |||||||||||||||||||||||||||||
| Note 10 | Share Capital | |||||||||||||||||||||||||||||||
AURORA CANNABIS INC.
Condensed Consolidated Interim Statements of Financial Position
As at June 30, 2024 and March 31, 2024
(Amounts reflected in thousands of Canadian dollars)
| Note | June 30, 2024 | March 31, 2024 | |||||||||
| $ | $ | ||||||||||
| Assets | |||||||||||
| Current | |||||||||||
| Cash and cash equivalents | 115,487 | 113,439 | |||||||||
| Restricted cash | 13 | 66,680 | 65,782 | ||||||||
| Accounts receivable | 18(a) | 30,629 | 45,411 | ||||||||
| Marketable securities | — | 4,036 | |||||||||
| Derivative asset | 881 | 760 | |||||||||
| Biological assets | 3 | 36,204 | 42,774 | ||||||||
| Inventory | 4 | 165,754 | 143,602 | ||||||||
| Prepaids and other current assets | 9,443 | 9,402 | |||||||||
| Assets held for sale | 6(a) | 14,288 | 1,399 | ||||||||
| 439,366 | 426,605 | ||||||||||
| Property, plant and equipment | 5 | 283,729 | 294,324 | ||||||||
| Deposits and other long-term assets | 11,080 | 12,028 | |||||||||
| Lease receivable | 5,917 | 6,343 | |||||||||
| Intangible assets | 7 | 40,738 | 40,850 | ||||||||
| Goodwill | 7 | 43,180 | 43,180 | ||||||||
| Deferred tax assets | 14,679 | 15,343 | |||||||||
| Total assets | 838,689 | 838,673 | |||||||||
| Liabilities | |||||||||||
| Current | |||||||||||
| Accounts payable and accrued liabilities | 18(b) | 51,883 | 58,563 | ||||||||
| Income taxes payable | 18(b) | 2,041 | 1,547 | ||||||||
| Deferred revenue | 1,852 | 1,687 | |||||||||
| Loans and borrowings | 8 | 49,209 | 52,361 | ||||||||
| Lease liabilities | 9 | 4,817 | 4,856 | ||||||||
| Provisions | 5,795 | 5,606 | |||||||||
| Liabilities held for sale | 6(a) | 1,206 | — | ||||||||
| 116,803 | 124,620 | ||||||||||
| Loans and borrowings | 8 | 3,172 | 4,898 | ||||||||
| Lease liabilities | 9 | 44,906 | 42,676 | ||||||||
| Derivative liabilities | 10(c), 11(e), 17 | 2,920 | 2,309 | ||||||||
| Other long-term liability | 17 | 50,954 | 46,110 | ||||||||
| Deferred tax liability | 17,591 | 16,190 | |||||||||
| Total liabilities | 236,346 | 236,803 | |||||||||
| Shareholders’ equity | |||||||||||
| Share capital | 10 | 6,973,550 | 6,971,416 | ||||||||
| Reserves | 162,623 | 162,351 | |||||||||
| Accumulated other comprehensive loss | (208,298) | (206,058) | |||||||||
| Deficit | (6,366,257) | (6,367,936) | |||||||||
| Total equity attributable to Aurora Cannabis Inc. shareholders | 561,618 | 559,773 | |||||||||
| Non-controlling interests | 40,725 | 42,097 | |||||||||
| Total equity | 602,343 | 601,870 | |||||||||
| Total liabilities and equity | 838,689 | 838,673 | |||||||||
Nature of Operations (Note 1)
Commitments and Contingencies (Note 14)
Subsequent Event (Note 19)
The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements.
3
AURORA CANNABIS INC.
Condensed Consolidated Interim Statements of Income (loss) and Comprehensive Income (Loss)
Three months ended June 30, 2024 and 2023
(Amounts reflected in thousands of Canadian dollars, except share and per share amounts)
| Three months ended June 30, | |||||||||||||||||
| Note | 2024 | 2023(1) | |||||||||||||||
| $ | $ | ||||||||||||||||
| Revenue | 15 | 92,037 | 81,198 | ||||||||||||||
| Excise taxes | 15 | (8,602) | (6,466) | ||||||||||||||
| Net revenue | 83,435 | 74,732 | |||||||||||||||
| Cost of sales | 4 | 53,310 | 60,133 | ||||||||||||||
| Gross profit before fair value adjustments | 30,125 | 14,599 | |||||||||||||||
| Changes in fair value of inventory and biological assets sold | 3, 4 | 33,048 | 17,452 | ||||||||||||||
| Unrealized gain on changes in fair value of biological assets | 3 | (47,469) | (28,873) | ||||||||||||||
| Gross profit | 44,546 | 26,020 | |||||||||||||||
| Expense | |||||||||||||||||
| General and administration | 22,524 | 21,349 | |||||||||||||||
| Sales and marketing | 14,024 | 12,670 | |||||||||||||||
| Acquisition costs | 1,001 | 226 | |||||||||||||||
| Research and development | 987 | 1,101 | |||||||||||||||
| Depreciation and amortization | 5, 7 | 2,114 | 2,814 | ||||||||||||||
| Share-based compensation | 11 | 3,019 | 2,281 | ||||||||||||||
| 43,669 | 40,441 | ||||||||||||||||
| Income (loss) from operations | 877 | (14,421) | |||||||||||||||
| Other income (expenses) | |||||||||||||||||
| Interest and other income | 3,346 | 3,351 | |||||||||||||||
| Finance and other costs | (1,736) | (5,208) | |||||||||||||||
| Foreign exchange gain (loss) | 1,843 | (3,450) | |||||||||||||||
| Other gains | 3,500 | 59 | |||||||||||||||
| Restructuring charges | — | (432) | |||||||||||||||
| Impairment of property, plant and equipment | 5, 6(a) | (129) | — | ||||||||||||||
| 6,824 | (5,680) | ||||||||||||||||
| Income (loss) before taxes | 7,701 | (20,101) | |||||||||||||||
| Income tax recovery (expense) | |||||||||||||||||
| Current | (821) | (215) | |||||||||||||||
| Deferred, net | (2,036) | 119 | |||||||||||||||
| (2,857) | (96) | ||||||||||||||||
| Net income (loss) from continuing operations | 4,844 | (20,197) | |||||||||||||||
| Net income (loss) from discontinued operations, net of tax | 6(b) | 304 | (8,134) | ||||||||||||||
| Net income (loss) | 5,148 | (28,331) | |||||||||||||||
The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements.
(1) Comparative information has been adjusted due to discontinued operations see Note 6(b).
4
AURORA CANNABIS INC.
Condensed Consolidated Interim Statements of Income (loss) and Comprehensive Income (Loss)
Three months ended June 30, 2024 and 2023
(Amounts reflected in thousands of Canadian dollars, except share and per share amounts)
(Continued)
| Three months ended June 30, | |||||||||||||||||
| Note | 2024 | 2023(1) | |||||||||||||||
| $ | $ | ||||||||||||||||
| Net income (loss) from continuing operations | 4,844 | (20,197) | |||||||||||||||
| Net income (loss) from discontinued operations, net of tax | 6(b) | 304 | (8,134) | ||||||||||||||
| Net income (loss) | 5,148 | (28,331) | |||||||||||||||
| Other comprehensive loss (“OCI”) that will not be reclassified to net loss | |||||||||||||||||
| Other comprehensive income (loss) that may be reclassified to net loss | |||||||||||||||||
| Foreign currency translation gain (loss) | (2,240) | 1,829 | |||||||||||||||
| Total other comprehensive gain (loss) | (2,240) | 1,829 | |||||||||||||||
| Comprehensive income (loss) from continuing operations | 2,604 | (18,368) | |||||||||||||||
| Comprehensive income (loss) from discontinued operations | 304 | (8,134) | |||||||||||||||
| Comprehensive income (loss) | 2,908 | (26,502) | |||||||||||||||
| Net income (loss) from continuing operations attributable to: | |||||||||||||||||
| Aurora Cannabis Inc. | 6,216 | (18,764) | |||||||||||||||
| Non-controlling interests | (1,372) | (1,433) | |||||||||||||||
| Net income (loss) from discontinued operations attributable to: | |||||||||||||||||
| Aurora Cannabis Inc. | 6(b) | 304 | (8,134) | ||||||||||||||
| Non-controlling interests | — | — | |||||||||||||||
| Comprehensive income (loss) attributable to: | |||||||||||||||||
| Aurora Cannabis Inc. | 4,280 | (25,069) | |||||||||||||||
| Non-controlling interests | (1,372) | (1,433) | |||||||||||||||
| Income (loss) per share - basic and diluted | |||||||||||||||||
| Continuing operations | 12 | $0.12 | ($0.53) | ||||||||||||||
| Discontinued operations | 12 | $0.01 | ($0.23) | ||||||||||||||
| Total operations | 12 | $0.13 | ($0.76) | ||||||||||||||
The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements.
(1) Comparative information has been adjusted due to discontinued operations see Note 6(b).
5
AURORA CANNABIS INC.
Condensed Consolidated Interim Statements of Changes in Equity
Three months ended June 30, 2024
(Amounts reflected in thousands of Canadian dollars, except share amounts)
| Share Capital | Reserves | AOCI | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Note | Common Shares | Amount | Share-Based Compensation | Compensation Options/ Warrants/Shares Issued | Convertible Notes | Change in Ownership Interest | Obligation to Issue Shares | Total Reserves | Fair Value | Deferred Tax | Associate OCI Pick-up | Foreign Currency Translation | Total AOCI | Earnings (Deficit) | Non-Controlling Interests | Total | |||||||||||||||||||||||||||||||||||||||||||
| # | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | 54,545,797 | 6,971,416 | 217,498 | 27,667 | 419 | (86,800) | 3,567 | 162,351 | (209,866) | 18,919 | 208 | (15,319) | (206,058) | (6,367,936) | 42,097 | 601,870 | |||||||||||||||||||||||||||||||||||||||||||
| Share issued under RSU, PSU and DSU plans | 10(b) | 103,724 | 2,134 | (2,161) | — | — | — | — | (2,161) | — | — | — | — | — | — | — | (27) | ||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | 11 | — | — | 2,433 | — | — | — | — | 2,433 | — | — | — | — | — | — | — | 2,433 | ||||||||||||||||||||||||||||||||||||||||||
| Put option liability | — | — | — | — | — | — | — | — | — | — | — | — | — | (4,841) | — | (4,841) | |||||||||||||||||||||||||||||||||||||||||||
| Comprehensive income (loss) for the period | — | — | — | — | — | — | — | — | — | — | — | (2,240) | (2,240) | 6,520 | (1,372) | 2,908 | |||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | 54,649,521 | 6,973,550 | 217,770 | 27,667 | 419 | (86,800) | 3,567 | 162,623 | (209,866) | 18,919 | 208 | (17,559) | (208,298) | (6,366,257) | 40,725 | 602,343 | |||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements.
6
AURORA CANNABIS INC.
Condensed Consolidated Interim Statements of Changes in Equity
Three months ended June 30, 2023
(Amounts reflected in thousands of Canadian dollars, except share amounts)
| Share Capital | Reserves | AOCI | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Note | Common Shares(1) | Amount | Share-Based Compensation | Compensation Options/ Warrants | Convertible Notes | Change in Ownership Interest | Obligation to issue shares | Total Reserves | Fair Value | Deferred Tax | Associate OCI Pick-up | Foreign Currency Translation | Total AOCI | Deficit | Non-Controlling Interests | Total | |||||||||||||||||||||||||||||||||||||||||||
| # | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | 34,526,931 | 6,841,234 | 212,340 | 27,667 | 419 | (86,800) | 414 | 154,040 | (214,599) | 18,919 | 208 | (16,893) | (212,365) | (6,296,833) | 31,061 | 517,137 | |||||||||||||||||||||||||||||||||||||||||||
| Shares issued under equity financing | 2,127,212 | 15,687 | — | — | — | — | (414) | (414) | — | — | — | — | — | — | — | 15,273 | |||||||||||||||||||||||||||||||||||||||||||
| Share issuance costs | — | (548) | — | — | — | — | — | — | — | — | — | — | — | — | — | (548) | |||||||||||||||||||||||||||||||||||||||||||
| Deferred tax on share issuance costs | — | (120) | — | — | — | — | — | — | — | — | — | — | — | — | — | (120) | |||||||||||||||||||||||||||||||||||||||||||
| Exercise of RSUs, PSUs, and DSUs | 11(a) | 146 | 2 | (2) | — | — | — | — | (2) | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Share-based payments | 10(c) | — | — | 2,050 | — | — | — | — | 2,050 | — | — | — | — | — | — | — | 2,050 | ||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | 11 | — | — | — | — | — | — | — | — | — | — | — | — | — | (1,930) | — | (1,930) | ||||||||||||||||||||||||||||||||||||||||||
| Change in ownership interests in subsidiaries | 11(a)(b) | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 2,572 | 2,572 | ||||||||||||||||||||||||||||||||||||||||||
| Comprehensive loss for the period | — | — | — | — | — | — | — | — | — | — | — | 1,829 | 1,829 | (26,898) | (1,433) | (26,502) | |||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2023 | 36,654,289 | 6,856,255 | 214,388 | 27,667 | 419 | (86,800) | — | 155,674 | (214,599) | 18,919 | 208 | (15,064) | (210,536) | (6,325,661) | 32,200 | 507,932 | |||||||||||||||||||||||||||||||||||||||||||
(1) Comparative information has been adjusted due to 1:10 reverse stock split.
The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements.
7
AURORA CANNABIS INC.
Condensed Consolidated Interim Statements of Cash Flows
Three months ended June 30, 2024 and 2023
(Amounts reflected in thousands of Canadian dollars)
| Three months ended June 30, | |||||||||||||||||
| Note | 2024 | 2023(1) | |||||||||||||||
| $ | $ | ||||||||||||||||
| Operating activities | |||||||||||||||||
| Net income (loss) from continuing operations | 4,844 | (20,197) | |||||||||||||||
| Adjustments for non-cash items: | |||||||||||||||||
| Unrealized gain on changes in fair value of biological assets | 3 | (47,469) | (28,873) | ||||||||||||||
| Changes in fair value of inventory and biological assets sold | 4 | 33,048 | 17,452 | ||||||||||||||
| Depreciation of property, plant and equipment | 5 | 5,633 | 9,679 | ||||||||||||||
| Amortization of intangible assets | 7 | 107 | 245 | ||||||||||||||
| Share-based compensation | 11 | 3,019 | 2,281 | ||||||||||||||
| Impairment of property, plant and equipment | 5, 6(a) | 129 | — | ||||||||||||||
| Net interest accrual and accretion | 713 | 3,670 | |||||||||||||||
| Deferred tax recovery | 2,036 | (231) | |||||||||||||||
| Other losses (gains) | (2,521) | (112) | |||||||||||||||
| Foreign exchange loss (gain) | (2,313) | 2,129 | |||||||||||||||
| Deferred compensation amortization | 952 | 952 | |||||||||||||||
| Cash used in operating activities from continuing operations before changes in non-cash working capital | (1,822) | (13,005) | |||||||||||||||
| Changes in non-cash working capital | 13 | 10,682 | 3,814 | ||||||||||||||
| Net cash provided by (used in) operating activities from continuing operations | 8,860 | (9,191) | |||||||||||||||
| Net cash used in operating activities from discontinued operations | (485) | (2,046) | |||||||||||||||
| Net cash provided by (used) in operating activities | 8,375 | (11,237) | |||||||||||||||
| Investing activities | |||||||||||||||||
| Proceeds from disposal of marketable securities | 4,700 | — | |||||||||||||||
| Purchase of property, plant and equipment and intangible assets | 5 | (5,153) | (4,297) | ||||||||||||||
| Proceeds from disposal of property, plant and equipment and assets held for sale | 6(a) | 1,267 | 2,394 | ||||||||||||||
| Net cash used in investing activities from discontinued operations | — | (255) | |||||||||||||||
| Net cash provided by (used) in investing activities | 814 | (2,158) | |||||||||||||||
| Financing activities | |||||||||||||||||
| Proceeds from loans and borrowings | 8 | 671 | — | ||||||||||||||
| Repayment of loans and borrowings | 8 | (5,593) | (516) | ||||||||||||||
| Repayment of convertible debenture | — | (61,867) | |||||||||||||||
| Net payments of principal portion of lease liabilities | 9 | (1,384) | (1,438) | ||||||||||||||
| Shares issued for cash, net of issuance costs | — | 1,722 | |||||||||||||||
| Net cash used in financing activities from discontinued operations | — | (89) | |||||||||||||||
| Net cash used in financing activities | (6,306) | (62,188) | |||||||||||||||
| Effect of foreign exchange on cash and cash equivalents | 63 | (1,749) | |||||||||||||||
| Increase (decrease) in cash and cash equivalents | 2,946 | (77,332) | |||||||||||||||
| Increase (decrease) in restricted cash | 13 | (898) | 245 | ||||||||||||||
| Cash and cash equivalents, beginning of period | 113,439 | 234,942 | |||||||||||||||
| Cash and cash equivalents, end of period | 115,487 | 157,855 | |||||||||||||||
Supplemental cash flow information (Note 13)
The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements.
(1) Comparative information has been adjusted due to discontinued operations see Note 6(b).
8
AURORA CANNABIS INC.
Notes to the Condensed Consolidated Interim Financial Statements
Three months ended June 30, 2024 and 2023
(Amounts reflected in thousands of Canadian dollars, except share and per share amounts)
Note 1 Nature of Operations
Aurora Cannabis Inc. (the “Company” or “Aurora”) was incorporated under the Business Corporations Act (British Columbia) on December 21, 2006 as Milk Capital Corp. Effective October 2, 2014, the Company changed its name to Aurora Cannabis Inc. The Company’s shares are listed on the Nasdaq Capital Market (“Nasdaq”) and the Toronto Stock Exchange (“TSX”) under the trading symbol “ACB”, and on the Frankfurt Stock Exchange (“FSE”) under the trading symbol “21P1”.
The Company’s head office and principal address is 2207 90B St. SW Edmonton, Alberta T6X 1V8. The Company’s registered and records office address is Suite 1700, 666 Burrard Street, Vancouver, British Columbia, Canada, V6C 2X8.
The Company’s principal strategic business lines are focused on the production, distribution and sale of cannabis related products in Canada and internationally. Aurora currently conducts the following key business activities in the jurisdictions listed below:
•Production, distribution and sale of medical and consumer cannabis products in Canada pursuant to the Cannabis Act;
•Distribution of wholesale medical cannabis in the European Union (“EU”) pursuant to the German Medicinal Products Act and German Narcotic Drugs Act; and
•Distribution of wholesale medical cannabis in various international markets, including Australia, New Zealand, the Caribbean, South America and Israel.
The Company has a 50.1% controlling interest in Bevo Agtech Inc. (“Bevo”), the sole parent of Bevo Farms Ltd., a key supplier of propagated vegetables and ornamental plants in North America.
Note 2 Material Accounting Policies and Judgments
(a) Basis of Presentation and Measurement
The condensed consolidated interim financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (“IFRS”), and International Accounting Standards (“IAS”) 34, Interim Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”). Unless otherwise noted, all amounts are presented in thousands of Canadian dollars, except share and per share data.
The condensed consolidated interim financial statements are presented in Canadian dollars and are prepared in accordance with the same accounting policies, critical estimates and methods described in the Company’s annual consolidated financial statements, except for the adoption of new accounting policies (Note 2(d)). Given that certain information and footnote disclosures, which are included in the annual audited consolidated financial statements, have been condensed or excluded in accordance with IAS 34, these condensed consolidated interim financial statements should be read in conjunction with our annual audited consolidated financial statements as at and for the year ended March 31, 2024, including the accompanying notes thereto.
(b) Basis of Consolidation
The condensed consolidated interim financial statements include the financial results of the Company and its subsidiaries. Subsidiaries include entities which are wholly-owned as well as entities over which Aurora has the authority or ability to exert control over the investee’s financial and/or operating decisions (i.e. control), which in turn may affect the Company’s exposure or rights to the variable returns from the investee. The condensed consolidated interim financial statements include the operating results of acquired or disposed entities from the date control is obtained or the date control is lost, respectively. All intercompany balances and transactions are eliminated upon consolidation.
The Company’s principal subsidiaries during the three months ended June 30, 2024 are as follows:
| Major subsidiaries | Percentage Ownership | Functional Currency | ||||||
| Aurora Cannabis Enterprises Inc. (“ACE”) | 100% | Canadian Dollar | ||||||
| Aurora Deutschland GmbH (“Aurora Deutschland”) | 100% | European Euro | ||||||
| TerraFarma Inc. | 100% | Canadian Dollar | ||||||
| Whistler Medical Marijuana Corporation (“Whistler”) | 100% | Canadian Dollar | ||||||
| Bevo Agtech Inc. (“Bevo”) | 50.1% | Canadian Dollar | ||||||
| CannaHealth Therapeutics Inc. | 100% | Canadian Dollar | ||||||
| ACB Captive Insurance Company Inc. | 100% | Canadian Dollar | ||||||
| Indica Industries Pty Ltd. (“MedReleaf Australia”) | 100% | Australian Dollar | ||||||
All shareholdings are of ordinary shares or other equity. Other subsidiaries, while included in the condensed consolidated interim financial statements, are not material and have not been reflected in the table above.
9
AURORA CANNABIS INC.
Notes to the Condensed Consolidated Interim Financial Statements
Three months ended June 30, 2024 and 2023
(Amounts reflected in thousands of Canadian dollars, except share and per share amounts)
(c) Discontinued Operations
The Company reports financial results for discontinued operations separately from continuing operations to distinguish the financial impact of disposal transactions from ongoing operations. Discontinued operations reporting occurs when the disposal of a component or a group of components of the Company represents a strategic shift that will have an impact on the Company’s operations and financial results, and where the operations and cash flows can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the Company.
The results of discontinued operations are excluded from both continuing operations and business segment information in the condensed consolidated interim financial statements and the notes to the condensed consolidated interim financial statements, unless otherwise noted, and are presented net of tax in the condensed consolidated interim statements of income (loss) and comprehensive income (loss) for the current and comparative periods. Refer to Note 6(b) Discontinued Operations.
(d) Adoption of New Accounting Pronouncements
Amendments to IAS 1: Classification of Liabilities as Current or Non-current
The amendment clarifies the requirements relating to determining if a liability should be presented as current or non-current in the statement of financial position. Under the new requirement, the assessment of whether a liability is presented as current or non-current is based on the contractual arrangements in place as at the reporting date and does not impact the amount or timing of recognition. The amendment applies retrospectively for annual reporting periods beginning on or after January 1, 2024. The Company has applied the amendments effective April 1, 2024, retrospectively and it did not impact the classification of current on non-current liabilities.
(e) New Accounting Pronouncements Not Yet Adopted
The following IFRS standards have been recently issued by the IASB. Pronouncements that are irrelevant or not expected to have a significant impact have been excluded.
IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information
This standard sets out overall requirements with the objective to require an entity to disclose information about its sustainability related risks and opportunities that is useful to the primary users of general purpose financial reports in making decisions relating to providing resources to the entity. The standard applies for annual reporting periods beginning on or after January 1, 2025. The Company will continue to assess the impact of this standard.
IFRS S2 Climate-related Disclosures
This standard sets out to require an entity to disclose information about its climate-related risks and opportunities that is useful to primary users of general purpose financial reports in making decisions relating to providing resources to the entity. The standard applies for annual reporting periods beginning on or after January 1, 2025. The Company will continue to assess the impact of this standard.
10
AURORA CANNABIS INC.
Notes to the Condensed Consolidated Interim Financial Statements
Three months ended June 30, 2024 and 2023
(Amounts reflected in thousands of Canadian dollars, except share and per share amounts)
Note 3 Biological Assets
The following is a breakdown of biological assets:
| June 30, 2024 | March 31, 2024 | |||||||
| $ | $ | |||||||
| Indoor cannabis production facilities | 23,356 | 21,522 | ||||||
| Plant propagation production facilities | 12,650 | 21,252 | ||||||
| Outdoor cannabis production facilities | 198 | — | ||||||
| 36,204 | 42,774 | |||||||
The changes in the carrying value of biological assets during the period are as follows:
| $ | ||||||||
| Balance, March 31, 2024 | 42,774 | |||||||
| Production costs capitalized | 27,068 | |||||||
| Sale of biological assets | (22,617) | |||||||
| Foreign currency translation | 2 | |||||||
| Changes in fair value less cost to sell due to biological transformation | 47,469 | |||||||
| Transferred to inventory upon harvest | (58,492) | |||||||
| Balance, June 30, 2024 | 36,204 | |||||||
During the three months ended June 30, 2024, biological assets expensed to cost of sales of $22.6 million (three months ended June 30, 2023 – $14.6 million) included $3.9 million (three months ended June 30, 2023 – $1.7 million) related to the changes in fair value of biological assets sold.
a) Indoor cannabis production facilities
The following table highlights the sensitivities and impact of changes in significant assumptions on the fair value of biological assets grown at indoor cannabis production facilities:
| Significant inputs & assumptions | Range of inputs | Sensitivity | Impact on fair value | ||||||||||||||
| June 30, 2024 | March 31, 2024 | June 30, 2024 | March 31, 2024 | ||||||||||||||
| Average selling price per gram | $6.10 | $4.88 | Increase or decrease of $1.00 per gram | $4,603 | $5,490 | ||||||||||||
| Weighted average yield (grams per plant) | 68.61 | 68.61 | Increase or decrease by 5 grams per plant | $1,671 | $1,538 | ||||||||||||
| Weighted average effective yield | 100 | % | 100 | % | Increase or decrease by 5% | $1,149 | $1,057 | ||||||||||
| Cost per gram to complete production | $1.05 | $0.99 | Increase or decrease of $1.00 per gram | $4,711 | $5,619 | ||||||||||||
As of June 30, 2024, the weighted average fair value less cost to complete and cost to sell a gram of dried cannabis produced at the Company’s indoor cannabis cultivation facilities was $4.88 per gram (March 31, 2024 – $3.76 per gram).
During the three months ended June 30, 2024, the Company’s indoor cannabis biological assets produced 11,744 kilograms of dried cannabis, (June 30, 2023 – 9,585 kilograms).
b) Plant propagation production facilities
The following table highlights the sensitivities and impact of changes in significant assumptions on the fair value of biological assets grown at plant propagation production facilities:
| Significant inputs & assumptions | Range of inputs | Sensitivity | Impact on fair value | ||||||||||||||
| June 30, 2024 | March 31, 2024 | June 30, 2024 | March 31, 2024 | ||||||||||||||
| Average selling price per floral/bedding plant | $6.18 | $7.77 | Increase or decrease by 10% | $1,007 | $2,360 | ||||||||||||
| Average stage of completion in the production process | 47 | % | 59 | % | Increase or decrease by 10% | $837 | $3,464 | ||||||||||
As of June 30, 2024, the weighted average fair value less cost to complete and cost to sell per propagation plant was $2.12 per plant (March 31, 2024 – $2.87).
11
AURORA CANNABIS INC.
Notes to the Condensed Consolidated Interim Financial Statements
Three months ended June 30, 2024 and 2023
(Amounts reflected in thousands of Canadian dollars, except share and per share amounts)
Note 4 Inventory
The following is a breakdown of inventory:
| June 30, 2024 | March 31, 2024 | |||||||||||||||||||
| Capitalized cost | Fair value adjustment | Carrying value | Capitalized cost | Fair value adjustment | Carrying value | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Harvested cannabis | ||||||||||||||||||||
| Work-in-process | 44,764 | 39,868 | 84,632 | 25,977 | 32,519 | 58,496 | ||||||||||||||
| Finished goods | 22,770 | 20,401 | 43,171 | 34,871 | 10,782 | 45,653 | ||||||||||||||
| 67,534 | 60,269 | 127,803 | 60,848 | 43,301 | 104,149 | |||||||||||||||
| Extracted cannabis | ||||||||||||||||||||
| Work-in-process | 8,725 | 3,438 | 12,163 | 8,674 | 4,428 | 13,102 | ||||||||||||||
| Finished goods | 9,181 | 496 | 9,677 | 8,749 | 590 | 9,339 | ||||||||||||||
| 17,906 | 3,934 | 21,840 | 17,423 | 5,018 | 22,441 | |||||||||||||||
| Supplies and consumables | 14,395 | — | 14,395 | 14,987 | — | 14,987 | ||||||||||||||
| Merchandise and accessories | 1,716 | — | 1,716 | 2,025 | — | 2,025 | ||||||||||||||
| Ending balance | 101,551 | 64,203 | 165,754 | 95,283 | 48,319 | 143,602 | ||||||||||||||
During the three months ended June 30, 2024, inventory expensed to cost of sales was $63.7 million (three months ended June 30, 2023 – $63.0 million), which included $29.1 million (three months ended June 30, 2023 – $15.8 million) related to the changes in fair value of inventory sold.
During the three months ended June 30, 2024, the Company recognized $15.8 million in inventory provisions (three months ended June 30, 2023 – $18.4 million) consisting of cost of sales of $2.1 million (three months ended June 30, 2023 – $8.0 million) and changes in fair value of inventory sold of $13.7 million (three months ended June 30, 2023 – $10.4 million).
12
AURORA CANNABIS INC.
Notes to the Condensed Consolidated Interim Financial Statements
Three months ended June 30, 2024 and 2023
(Amounts reflected in thousands of Canadian dollars, except share and per share amounts)
Note 5 Property, Plant and Equipment
The following summarizes the carrying values of property, plant and equipment for the periods reflected:
| June 30, 2024 | March 31, 2024 | |||||||||||||||||||||||||
| Cost | Accumulated depreciation | Impairment | Net book value | Cost | Accumulated depreciation | Impairment | Net book value | |||||||||||||||||||
| Owned assets | ||||||||||||||||||||||||||
| Land | 43,967 | — | — | 43,967 | 43,914 | — | — | 43,914 | ||||||||||||||||||
| Buildings | 236,555 | (101,030) | — | 135,525 | 242,052 | (97,885) | (300) | 143,867 | ||||||||||||||||||
| Construction in progress | 30,040 | (6) | — | 30,034 | 26,330 | — | (645) | 25,685 | ||||||||||||||||||
| Computer software & equipment | 31,352 | (30,275) | — | 1,077 | 31,333 | (30,135) | — | 1,198 | ||||||||||||||||||
| Furniture & fixtures | 7,414 | (6,290) | — | 1,124 | 7,900 | (6,444) | — | 1,456 | ||||||||||||||||||
| Production & other equipment | 146,121 | (108,495) | (129) | 37,497 | 154,042 | (106,370) | (202) | 47,470 | ||||||||||||||||||
| Total owned assets | 495,449 | (246,096) | (129) | 249,224 | 505,571 | (240,834) | (1,147) | 263,590 | ||||||||||||||||||
| Right-of-use leased assets | ||||||||||||||||||||||||||
| Land | 13,890 | (1,665) | — | 12,225 | 13,890 | (1,601) | — | 12,289 | ||||||||||||||||||
| Buildings | 39,358 | (17,397) | — | 21,961 | 37,252 | (16,640) | (2,512) | 18,100 | ||||||||||||||||||
| Production & other equipment | 5,332 | (5,013) | — | 319 | 5,290 | (4,945) | — | 345 | ||||||||||||||||||
| Total right-of-use lease assets | 58,580 | (24,075) | — | 34,505 | 56,432 | (23,186) | (2,512) | 30,734 | ||||||||||||||||||
| Total property, plant and equipment | 554,029 | (270,171) | (129) | 283,729 | 562,003 | (264,020) | (3,659) | 294,324 | ||||||||||||||||||
The following summarizes the changes in the net book values of property, plant and equipment for the periods presented:
| Balance, March 31, 2024 | Additions | Disposals | Other (1) | Depreciation | Impairment | Foreign currency translation | Balance, June 30, 2024 | ||||||||||||||||||||||
| Owned assets | |||||||||||||||||||||||||||||
| Land | 43,914 | — | — | — | — | — | 53 | 43,967 | |||||||||||||||||||||
| Buildings | 143,867 | 37 | — | (5,093) | (3,150) | — | (136) | 135,525 | |||||||||||||||||||||
| Construction in progress | 25,685 | 4,879 | — | (532) | — | — | 2 | 30,034 | |||||||||||||||||||||
| Computer software & equipment | 1,198 | 41 | — | (3) | (157) | — | (2) | 1,077 | |||||||||||||||||||||
| Furniture & fixtures | 1,456 | 8 | (12) | (205) | (127) | — | 4 | 1,124 | |||||||||||||||||||||
| Production & other equipment | 47,470 | 111 | (55) | (7,207) | (2,771) | (129) | 78 | 37,497 | |||||||||||||||||||||
| Total owned assets | 263,590 | 5,076 | (67) | (13,040) | (6,205) | (129) | (1) | 249,224 | |||||||||||||||||||||
| Right-of-use leased assets | |||||||||||||||||||||||||||||
| Land | 12,289 | — | — | — | (64) | — | — | 12,225 | |||||||||||||||||||||
| Buildings | 18,100 | 5,991 | (562) | (835) | (758) | — | 25 | 21,961 | |||||||||||||||||||||
| Production & other equipment | 345 | 57 | — | — | (83) | — | — | 319 | |||||||||||||||||||||
| Total right-of-use lease assets | 30,734 | 6,048 | (562) | (835) | (905) | — | 25 | 34,505 | |||||||||||||||||||||
| Total property, plant and equipment | 294,324 | 11,124 | (629) | (13,875) | (7,110) | (129) | 24 | 283,729 | |||||||||||||||||||||
(1)Includes reclassification of construction in progress cost when associated projects are complete and transfers to assets held for sale (Note 6).
Depreciation relating to manufacturing equipment and production facilities for owned and right-of-use leased assets is capitalized to inventory and is expensed to cost of sales upon the sale of goods. During the three months ended June 30, 2024, the Company recognized $7.1 million (three months ended June 30, 2023 – $9.8 million) of depreciation expense of which $4.4 million (three months ended June 30, 2023 – $5.4 million) was reflected in cost of sales.
13
AURORA CANNABIS INC.
Notes to the Condensed Consolidated Interim Financial Statements
Three months ended June 30, 2024 and 2023
(Amounts reflected in thousands of Canadian dollars, except share and per share amounts)
Note 6 Assets and Liabilities Held for Sale and Discontinued Operations
(a) Assets and Liabilities Held for Sale
Assets held for sale are comprised of the following:
| Total | ||||||||||||||||||||
| Balance, March 31, 2024 | 1,399 | |||||||||||||||||||
| Additions | 14,089 | |||||||||||||||||||
| Proceeds from disposal | (1,200) | |||||||||||||||||||
| Balance, June 30, 2024 | 14,288 | |||||||||||||||||||
(1) The loss on disposal is recognized in other gains (losses) in the consolidated statements of loss and comprehensive loss.
During the three months ended June 30, 2024, the Company made a formal decision to exit from its operations in Uruguay that is operated through its wholly-owned subsidiary ICC Labs Inc. (“ICC”). Accordingly, ICC’s property, plant and equipment were reclassified to assets held for sale. In connection with right-of-use assets classified as assets held for sale, the related lease liability of $1.2 million was classified as liabilities held for sale.
(b) Discontinued Operations
In connection with the closures of the Aurora Nordic facility, Reliva, the dissolution of its partnership in Growery B.V., and the decision to exit its ICC operations in Uruguay, the Company has reported these former cash generating units as discontinued operations.
The following table summarizes the Company's condensed consolidated interim discontinued operations for the respective periods:
| Three months ended June 30, | Three months ended June 30, | |||||||||||||
| 2024 | 2023 | |||||||||||||
| Revenue | 199 | 456 | ||||||||||||
| Cost of sales (recovery) | (304) | 3,931 | ||||||||||||
| Changes in fair value of inventory and biological assets sold | — | 363 | ||||||||||||
| Unrealized loss (gain) on changes in fair value of biological assets | — | 764 | ||||||||||||
| Gross profit | 503 | (4,602) | ||||||||||||
| Expense | 264 | 1,012 | ||||||||||||
| Other expenses (income) | (65) | 158 | ||||||||||||
| Income taxes (recovery) | — | (49) | ||||||||||||
| Loss on disposal of discontinued operations | — | 2,411 | ||||||||||||
| 199 | 3,532 | |||||||||||||
| Net income (loss) from discontinued operations | 304 | (8,134) | ||||||||||||
14
AURORA CANNABIS INC.
Notes to the Condensed Consolidated Interim Financial Statements
Three months ended June 30, 2024 and 2023
(Amounts reflected in thousands of Canadian dollars, except share and per share amounts)
Note 7 Intangible Assets and Goodwill
The following is a continuity schedule of intangible assets and goodwill:
| June 30, 2024 | March 31, 2024 | |||||||||||||||||||||||||
| Cost | Accumulated amortization | Net book value | Cost | Accumulated amortization | Impairment | Net book value | ||||||||||||||||||||
| Definite life intangible assets: | ||||||||||||||||||||||||||
| Customer relationships | 42,529 | (37,419) | 5,110 | 42,439 | (37,349) | — | 5,090 | |||||||||||||||||||
| Permits and licenses | 43,386 | (43,319) | 67 | 54,002 | (43,305) | (10,652) | 45 | |||||||||||||||||||
| Patents | 985 | (794) | 191 | 982 | (793) | — | 189 | |||||||||||||||||||
| Intellectual property and know-how | 52,590 | (52,590) | — | 52,590 | (52,590) | — | — | |||||||||||||||||||
| Software | 17,234 | (16,522) | 712 | 18,661 | (16,408) | (1,504) | 749 | |||||||||||||||||||
| Indefinite life intangible assets: | ||||||||||||||||||||||||||
| Brand | 7,500 | — | 7,500 | 28,200 | — | (20,700) | 7,500 | |||||||||||||||||||
| Permits and licenses | 27,158 | — | 27,158 | 27,277 | — | — | 27,277 | |||||||||||||||||||
| Total intangible assets | 191,382 | (150,644) | 40,738 | 224,151 | (150,445) | (32,856) | 40,850 | |||||||||||||||||||
| Goodwill | 43,180 | — | 43,180 | 43,180 | — | — | 43,180 | |||||||||||||||||||
| Total | 234,562 | (150,644) | 83,918 | 267,331 | (150,445) | (32,856) | 84,030 | |||||||||||||||||||
The following summarizes the changes in the net book value of intangible assets and goodwill for the periods presented:
| Balance, March 31, 2024 | Additions | Other | Amortization | Foreign currency translation | Balance, June 30, 2024 | |||||||||||||||||||||
| Definite life intangible assets: | ||||||||||||||||||||||||||
| Customer relationships | 5,090 | — | 90 | (70) | — | 5,110 | ||||||||||||||||||||
| Permits and licenses | 45 | — | 35 | (13) | — | 67 | ||||||||||||||||||||
| Patents | 189 | — | — | — | 2 | 191 | ||||||||||||||||||||
| Software | 749 | 77 | (90) | (24) | — | 712 | ||||||||||||||||||||
| Indefinite life intangible assets: | ||||||||||||||||||||||||||
| Brand | 7,500 | — | — | — | — | 7,500 | ||||||||||||||||||||
| Permits and licenses | 27,277 | — | (138) | — | 19 | 27,158 | ||||||||||||||||||||
| Total intangible assets | 40,850 | 77 | (103) | (107) | 21 | 40,738 | ||||||||||||||||||||
| Goodwill | 43,180 | — | — | — | — | 43,180 | ||||||||||||||||||||
| Total | 84,030 | 77 | (103) | (107) | 21 | 83,918 | ||||||||||||||||||||
Goodwill arising from business combinations were allocated to the Cannabis segment and Plant Propagation segment for $24.5 million and $18.7 million, respectively (March 31, 2024 – $24.5 million and $18.7 million).
15
AURORA CANNABIS INC.
Notes to the Condensed Consolidated Interim Financial Statements
Three months ended June 30, 2024 and 2023
(Amounts reflected in thousands of Canadian dollars, except share and per share amounts)
Note 8 Loans and Borrowings
On August 25, 2022, through the acquisition of a controlling interest of 50.1% in Bevo, the Company acquired the loans under Bevo’s credit facility (the “Credit Agreement”). The credit agreement includes two term loans (“Term Facility 1” and “Term Facility 2”) of $52.6 million and a revolver of $18.0 million.
The changes in the carrying value of current and non-current credit facilities are as follows:
| Credit facilities | ||||||||
| Balance, March 31, 2024 | 57,259 | |||||||
| Drawings | 671 | |||||||
| Interest accretion | 44 | |||||||
| Principal repayments | (5,593) | |||||||
| Balance, June 30, 2024 | 52,381 | |||||||
| Current portion | (49,209) | |||||||
| Long-term portion | 3,172 | |||||||
Term Facility 1
Term Facility 1 represents the three tranches of advances which are now consolidated and have been fully drawn upon. The Company makes quarterly principal payments of $0.5 million. Any remaining principal balance will be due at maturity on January 21, 2025. As at June 30, 2024, the total amount drawn from Term Facility 1 was $35.0 million (March 31, 2024 – $35.5 million) with a borrowing rate of 8.3%.
Term Facility 2
On October 20, 2023, the Company entered into another amendment to the Credit Agreement to include an additional term loan (“Term Facility 2”) with multiple advances for up to $16.0 million and a maturity date of October 20, 2026, specifically to fund capital expansion. As at June 30, 2024, the total amount drawn from Term Facility 2 was $3.2 million (March 31, 2024 – $2.8 million) with a borrowing rate of 8.3%.
Revolver
The revolver provides available aggregate borrowings of up to $18.0 million. Interest payments are based on prime plus a margin that ranges between 0.25% and 1.75%. As at June 30, 2024, the total amount drawn from the revolver was $11.7 million (March 31, 2024 – $16.8 million), with a borrowing rate of 8.3%.
Creditor Agreement
On March 18, 2024, the Company entered into an unsecured Pari Passu Creditor Agreement (“Creditor Agreement”) with Bevo, in which participating shareholders of Bevo provided funds pursuant to the Creditor Agreement. The Creditor Agreement was for a total loan of $5.0 million and bears interest at a rate of 14.0% per annum. The principal and accrued interest are due on May 31, 2025. The Company advanced funds of $2.5 million, which are eliminated upon consolidation.
Total undiscounted loans and borrowings principal repayments as at March 31, 2025 are as follows:
| $ | |||||
| Next 12 months | 49,209 | ||||
| Over 1 year to 3 years | 3,172 | ||||
| Total long-term debt repayments | 52,381 | ||||
During the three months ended June 30, 2024, total interest expense for loans and borrowings of $3.3 million (three months ended June 30, 2023 – $0.8 million) was recognized as finance and other costs in the condensed consolidated interim statements of income (loss) and comprehensive income (loss). Accrued interest of $0.1 million (March 31, 2024 - nil) is recorded in accounts payable and accrued liabilities on the consolidated statements of financial position.
16
AURORA CANNABIS INC.
Notes to the Condensed Consolidated Interim Financial Statements
Three months ended June 30, 2024 and 2023
(Amounts reflected in thousands of Canadian dollars, except share and per share amounts)
Note 9 Lease Liabilities
The changes in the carrying value of current and non-current lease liabilities are as follows:
| Balance, March 31, 2024 | 47,532 | |||||||
| Lease additions | 6,048 | |||||||
| Lease payments | (2,134) | |||||||
Transfer to liabilities held for sale(1) | (1,248) | |||||||
| Lease modifications | (1,250) | |||||||
| Interest accretion | 775 | |||||||
| Balance, June 30, 2024 | 49,723 | |||||||
| Current portion | (4,817) | |||||||
| Long-term portion | 44,906 | |||||||
(1)Refer to Note 6(a) Assets and Liabilities Held for Sale.
Note 10 Share Capital
(a) Authorized
The authorized share capital of the Company is comprised of the following:
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) Shares Issued and Outstanding
At June 30, 2024, 54,649,521 Common Shares (March 31, 2024 – 54,545,797) were issued and outstanding. As at June 30, 2024, no Class “A” Shares and no Class “B” Shares were issued and outstanding.
(c) Share Purchase Warrants
A summary of warrants outstanding is as follows:
| Warrants | Weighted Average Exercise Price | |||||||
| # | $ | |||||||
| Balance, March 31, 2024 | 7,074,348 | 432.39 | ||||||
| Expired | (3,159) | 1,124.60 | ||||||
| Balance, June 30, 2024 | 7,071,189 | 432.40 | ||||||
The following summarizes the warrant derivative liabilities:
| U.S.$ equivalent | |||||||||||||||||||||||||||||
| June 2022 Offering | June 2022 Offering | ||||||||||||||||||||||||||||
| $ | $ | ||||||||||||||||||||||||||||
| Balance, March 31, 2024 | 476 | 353 | |||||||||||||||||||||||||||
| Unrealized gain on derivative liability | 5 | — | |||||||||||||||||||||||||||
| Balance, June 30, 2024 | 481 | 353 | |||||||||||||||||||||||||||
The following table summarizes the warrants that remain outstanding as at June 30, 2024:
| Exercise Price ($) | Expiry Date | Warrants (#) | ||||||
43.79 – 418.80 (1) | July 23, 2024 - November 30, 2025 | 7,069,819 | ||||||
1,160.89 (1) | August 22, 2024 | 1,370 | ||||||
| 7,071,189 | ||||||||
17
AURORA CANNABIS INC.
Notes to the Condensed Consolidated Interim Financial Statements
Three months ended June 30, 2024 and 2023
(Amounts reflected in thousands of Canadian dollars, except share and per share amounts)
Note 11 Share-Based Compensation
(a) Stock Options
A summary of stock options outstanding is as follows:
| Stock options (#) | Weighted average exercise price ($) | |||||||
| Balance, March 31, 2024 | 1,186,824 | 104.90 | ||||||
| Granted | 732,253 | 7.59 | ||||||
| Expired | (3,895) | 1,289.10 | ||||||
| Balance, June 30, 2024 | 1,915,182 | 65.28 | ||||||
The following table summarizes the stock options that are outstanding as at June 30, 2024:
| Exercise Price ($) | Expiry Date | Weighted average remaining life | Options outstanding (#) | Options exercisable (#) | ||||||||||
| 7.59 - 23.80 | May 31, 2027 - June 24, 2029 | 4.28 | 1,688,124 | 348,656 | ||||||||||
| 48.60 - 272.40 | January 10, 2025 - February 28, 2027 | 1.83 | 153,633 | 132,620 | ||||||||||
| 565.20 - 949.20 | August 28, 2024 - November 13, 2024 | 0.22 | 73,175 | 73,176 | ||||||||||
| 1,124.40 | July 12, 2024 | 0.03 | 250 | 250 | ||||||||||
| 1,915,182 | 554,702 | |||||||||||||
During the three months ended June 30, 2024, stock option expense of $0.8 million (three months ended June 30, 2023 – $0.5 million) was recognized in share-based compensation on the condensed consolidated interim statement of income (loss) and comprehensive income (loss). The stock options have a service requirement of three years and are amortized on an accelerated basis over that period and expire after five years.
Stock options granted during the respective periods highlighted below were fair valued based on the following weighted average assumptions:
| Three months ended June 30, 2024 | Three months ended June 30, 2023 | |||||||||||||||||||
Risk-free annual interest rate (1) | 3.80 | % | 4.34 | % | ||||||||||||||||
| Expected annual dividend yield | — | % | — | % | ||||||||||||||||
Expected stock price volatility (2) | 80.82 | % | 85.06 | % | ||||||||||||||||
Expected life of options (years) (3) | 2.55 | 2.67 | ||||||||||||||||||
| Forfeiture rate | 11.22 | % | 19.63 | % | ||||||||||||||||
| Weighted Average Value | $ | 3.85 | $ | 4.10 | ||||||||||||||||
(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 volatilities of the Company and certain companies in the same industry.
(3)The expected life in years represents the period of time that options granted are expected to be outstanding.
(b) Restricted Share Units (“RSU”)
A summary of the RSUs outstanding are as follows:
| RSUs | ||||||||
| # | ||||||||
| Balance, March 31, 2024 | 797,689 | |||||||
| Granted | 375,815 | |||||||
| Vested | (112,077) | |||||||
| Forfeited | (9,262) | |||||||
| Balance, June 30, 2024 | 1,052,165 | |||||||
During the three months ended June 30, 2024, RSU expense of $1.2 million (three months ended June 30, 2023 – $1.3 million) was recognized in share-based compensation on the consolidated statements of income (loss) and comprehensive income (loss). The RSUs have a service requirement of three years and are amortized on an accelerated basis over that period and expire after three years.
18
AURORA CANNABIS INC.
Notes to the Condensed Consolidated Interim Financial Statements
Three months ended June 30, 2024 and 2023
(Amounts reflected in thousands of Canadian dollars, except share and per share amounts)
(c) Deferred Share Units (“DSU”)
At the Company’s Annual General and Special Meeting held on November 30, 2018, shareholders approved the adoption of the DSU Plan, which was most recently amended and approved by shareholders at the 2022 AGM to change the limit from a fixed maximum plan to a rolling plan, subject to a global limit of 7.5% of the Company’s issues and outstanding Common Shares under all equity compensation plans in aggregate, and a rolling limit for all full value award plans of the Company of 4.0%, which includes RSU, PSU and DSU plans. Under the terms of the DSU plan, non-employee directors of the Company may be granted DSUs. Each non-employee director is entitled to redeem their DSUs for period of 90 days following their termination date, being the date of their retirement from the Board. The DSUs can be redeemed, at the Company’s sole discretion, for (i) cash; (ii) Common Shares issued from treasury; (iii) common shares purchased in the open market; or (iv) any combination of the foregoing.
| DSUs | ||||||||
| # | ||||||||
| Balance, March 31, 2024 | 277,206 | |||||||
| Issued | 42,015 | |||||||
| Balance, June 30, 2024 | 319,221 | |||||||
During the three months ended June 30, 2024, DSU expense of $0.3 million (three months ended June 30, 2023 – $0.3 million) was recognized in share-based compensation on the consolidated statements of income (loss) and comprehensive income (loss). The DSUs vest immediately upon issuance and have no expiry date.
(d) Performance Share Units (“PSUs”)
A summary of the PSUs outstanding is as follows:
| PSUs | ||||||||
| # | ||||||||
| Balance, March 31, 2024 | 700,880 | |||||||
Granted(1) | 593,209 | |||||||
| Cancelled | (7,812) | |||||||
| Balance, June 30, 2024 | 1,286,277 | |||||||
(1)Includes PSUs issued under cash settlement plan Note 11(e).
During the three months ended June 30, 2024, PSU expense of $0.7 million (three months ended June 30, 2023 – $0.2 million) was recognized in share-based compensation on the consolidated statements of income (loss) and comprehensive income (loss). The PSUs have a three years cliff vesting structure and are amortized completely in the third year and expire after three years.
PSUs granted during the respective periods highlighted below were fair valued based on the following weighted average assumptions:
| Three months ended June 30, | Three months ended June 30, | |||||||||||||
| 2024 | 2023 | |||||||||||||
Risk-free annual interest rate (1) | 3.75 | % | 4.76 | % | ||||||||||
| Dividend yield | — | % | — | % | ||||||||||
Expected stock price volatility (2) | 90.65 | % | 90.65 | % | ||||||||||
Expected stock price volatility of peer group (2) | 91.51 | % | 91.51 | % | ||||||||||
Expected life of options (years) (3) | 3 | 3 | ||||||||||||
| Forfeiture rate | 15.14 | % | 12.45 | % | ||||||||||
Equity correlation against peer group (4) | 39.14 | % | 39.14 | % | ||||||||||
(1)The risk-free rate is based on Canada government bonds with a remaining term equal to the expected life of the PSUs.
(2)Volatility was estimated by using the 20-day VWAP historical volatility of Aurora and the peer group of companies.
(3)The expected life in years represents the period of time that the PSUs granted are expected to be outstanding.
(4)The equity correlation is estimated by using 1-year historical equity correlations for the Company and the peer group of companies.
The weighted average fair value of PSUs granted during the three months ended June 30, 2024 was $9.63 per unit (three months ended June 30, 2023 – $8.75 per unit).
(e) Cash Settled DSUs and PSUs
During the three months ended June 30, 2024, the Company issued 42,015 DSUs and 462,547 PSUs (three months ended June 30, 2023 – DSUs 29,605 and nil PSUs) that will be settled in cash, pursuant to the Performance Share Unit and Restricted Share Unit Long-Term Cash
19
AURORA CANNABIS INC.
Notes to the Condensed Consolidated Interim Financial Statements
Three months ended June 30, 2024 and 2023
(Amounts reflected in thousands of Canadian dollars, except share and per share amounts)
Settled Plan and Non-Employee Directors Deferred Share Unit Cash Plan, respectively. The DSUs and PSUs issued under these plans are included in the continuities above.
The DSUs subject to cash settlement are classified as a derivative liability. They are initially measured at fair value and recorded as a derivative liability in the consolidated statements of financial position. DSUs are issued in recognition of past service for Directors and are therefore are expensed immediately at fair value to share-based compensation expense in the consolidated statements of income (loss) and comprehensive income (loss). The DSUs are remeasured each reporting period with the difference going through share-based compensation expense. Upon settlement, the DSU’s are remeasured and the derivative liability is extinguished at the remeasured amount. During the three months ended, June 30, 2024, included in the DSUs expense the Company recognized $0.3 million (three months ended June 30, 2023 – $0.2 million) in share-based compensation expense on the condensed consolidated interim statement of income (loss) and comprehensive income (loss). As at June 30, 2024, the related derivative liability is $1.6 million (March 31, 2024 - $1.2 million).
The PSUs subject to cash settlement are classified as a derivative liability. They are initially measured at fair value using a Monte Carlo simulation model and recorded as a derivative liability in the consolidated statements of financial position. The PSUs have a service requirement of three years and are amortized ratably over that period. The PSUs are remeasured at fair value each reporting period with the change in value reflected in the share-based compensation expense. During the three months ended, June 30, 2024, included in the PSUs expense is $0.3 million (three months ended June 30, 2023 – nil) in share-based compensation expense in the consolidated statements of income (loss) and comprehensive income (loss). As at June 30, 2024, the related derivative liability is $0.9 million (March 31, 2024 - $0.6 million).
Note 12 Income (Loss) Per Share
The following is a reconciliation of basic and diluted income income (loss) per share:
| Three months ended June 30, | Three months ended June 30, | |||||||||||||
| 2024 | 2023 | |||||||||||||
| Net income (loss) from continuing operations attributable to Aurora shareholders | $6,216 | ($18,764) | ||||||||||||
| Net income (loss) from discontinued operations attributable to Aurora shareholders | $304 | ($8,134) | ||||||||||||
| Net income (loss) attributable to Aurora shareholders | $6,520 | ($26,898) | ||||||||||||
| Weighted average number of Common Shares outstanding | 51,721,790 | 35,355,862 | ||||||||||||
| Basic income (loss) per share, continuing operations | $0.12 | ($0.53) | ||||||||||||
| Basic income (loss) per share, discontinued operations | $0.01 | ($0.23) | ||||||||||||
| Basic income (loss) per share | $0.13 | ($0.76) | ||||||||||||
Diluted income (loss) per share is the same as basic loss per share as the issuance of shares on the exercise of, RSU, DSU, PSU, warrants and share options are anti-dilutive.
20
AURORA CANNABIS INC.
Notes to the Condensed Consolidated Interim Financial Statements
Three months ended June 30, 2024 and 2023
(Amounts reflected in thousands of Canadian dollars, except share and per share amounts)
Note 13 Supplemental Cash Flow Information
The changes in non-cash working capital are as follows:
| Three months ended June 30, | Three months ended June 30, | |||||||||||||
| 2024 | 2023 | |||||||||||||
| $ | $ | |||||||||||||
| Accounts receivable | 17,822 | 8,242 | ||||||||||||
| Biological assets | (4,451) | (4,337) | ||||||||||||
| Inventory | 5,377 | 15,844 | ||||||||||||
| Prepaid and other current assets | (44) | (1,653) | ||||||||||||
| Accounts payable and accrued liabilities | (8,869) | (14,825) | ||||||||||||
| Income taxes payable | 494 | 285 | ||||||||||||
| Deferred revenue | 165 | 195 | ||||||||||||
| Provisions | 188 | — | ||||||||||||
| Other current liabilities | — | 63 | ||||||||||||
| Changes in non-cash working capital | 10,682 | 3,814 | ||||||||||||
Additional supplementary cash flow information is as follows:
| Three months ended June 30, | Three months ended June 30, | |||||||||||||
| 2024 | 2023 | |||||||||||||
| $ | $ | |||||||||||||
| Property, plant and equipment in accounts payable | — | (2,060) | ||||||||||||
| Right-of-use asset additions | 6,048 | — | ||||||||||||
| Amortization of prepaids | 3,039 | 4,984 | ||||||||||||
| Interest paid | 1,187 | 2,416 | ||||||||||||
| Interest received | (2,501) | (863) | ||||||||||||
Included in restricted cash as of June 30, 2024 is $3.4 million (March 31, 2024 – $3.4 million) attributed to collateral held for letters of credit and corporate credit cards, $0.8 million (March 31, 2024 – $0.8 million) related to the MedReleaf Australia acquisition, $22.7 million (March 31, 2024 – $22.7 million) for self-insurance, $0.1 million (March 31, 2024 – $0.1 million) attributed to international subsidiaries, and $39.6 million (March 31, 2024 – $38.8 million) of funds reserved for the segregated cell program for insurance coverage.
Note 14 Commitments and Contingencies
(a)Claims and Litigation
From time to time, the Company and/or its subsidiaries may become defendants in legal actions and the Company intends to take appropriate action with respect to any such legal actions, including by defending itself against such legal claims as necessary. Other than the claims described below, as of the date of this report, Aurora is not aware of any other material or significant claims against the Company.
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 current and former directors and officers on behalf of persons or entities who purchased, or otherwise acquired, publicly traded Aurora securities between October 23, 2018 and February 6, 2020. Mediation was held and a tentative settlement was reached on March 4, 2024. The proposed settlement must now be approved by a court.
On June 16, 2020, the Company and its subsidiary, ACE, were named in a purported class action proceeding 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 were found to have lower THC potency than the labeled amount, suggesting, among other things, that plastic containers may be leeching cannabinoids. While this matter is ongoing, the Company disputes the allegations and intends to vigorously defend against the claims. Estimating an amount or range of possible losses resulting from litigation proceedings is inherently difficult, particularly where the matters involve indeterminate claims for monetary damages and are in the stages of the proceedings where key factual and legal issues have not been resolved. For these reasons, the Company is currently unable to predict the ultimate timing or outcome of or reasonably estimate the possible losses or a range of possible losses resulting from the matter described above.
On June 15, 2020, a claim was commenced by a party to a former term sheet with the King'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 $18.0 million in damages. While this matter is ongoing, the Company believes the action to be without merit and intends to defend the claim.
21
AURORA CANNABIS INC.
Notes to the Condensed Consolidated Interim Financial Statements
Three months ended June 30, 2024 and 2023
(Amounts reflected in thousands of Canadian dollars, except share and per share amounts)
On August 10, 2020, a purported class action lawsuit was filed with the King's Bench of Alberta against Aurora and certain executive officers in the Province of Alberta on behalf of persons or entities who purchased, 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. Plaintiff and Defendant have each prepared factums for a leave application. Prior to the hearing, Defendants filed a request for adjournment and leave to amend their pleadings. The amended Statement of Claim was filed on March 8, 2024. The Company has filed a motion to strike the amendment. The Company disputes the allegations and intends to vigorously defend against the claims. Estimating an amount or range of possible losses resulting from litigation proceedings is inherently difficult, particularly where the matters involve indeterminate claims for monetary damages and are in the stages of the proceedings where key factual and legal issues have not been resolved. For these reasons, the Company is currently unable to predict the ultimate timing or outcome of or reasonably estimate the possible losses or a range of possible losses resulting from the matter described above.
On January 4, 2021, a civil claim was filed with the King’s Bench of Alberta against Aurora and Hempco by a former landlord regarding unpaid rent in the amount of $8.9 million, representing approximately $0.4 million for rent in arrears and costs, plus $8.5 million for loss of rent and remainder of the term. The Company filed a statement of defence on March 24, 2021. Plaintiffs brought an Application seeking summary judgment as against the Company and the Company has filed Affidavit evidence in response. Cross-examinations for the Company’s affiants and for Plaintiff’s affiant have been completed. While this matter is ongoing, the Company intends to continue to defend against the claims.
On November 1, 2022, a claim was commenced by a former employee of Aurora against Aurora Cannabis Enterprises Inc. and another former employee of Aurora (the “Defendant Employee”). The plaintiffs claim that the Defendant Employee entered a lease for a property owned by the plaintiffs in January 2017 and states that Aurora was a guarantor for the Defendant Employee. The claim states that the Defendant Employee left the property and caused damage. The plaintiffs further claim outstanding rent and legal fees. There is no record of any documentation of Aurora being a party to any such relationship. Plaintiffs have received a summary judgment against the Defendant Employee and will now attempt to recover their judgment against the Defendant Employee. Plaintiffs will then decide whether to pursue the indemnity claim against the Company. The Company disputes the allegations and intends to defend against the claims.
On November 15, 2022, the Company, its subsidiary ACE, and MedReleaf Corp. (which amalgamated with ACE in July 2020) were named in a purported class action proceeding in the Ontario Superior Court of Justice. The purported class action claims that the Company failed to warn of certain risks purported to be associated with the consumption of cannabis. The statement of claim was served upon the Company on November 22, 2022 and a statement of defence was filed and served. On January 24, 2024, the plaintiff’s delivered their motion record regarding class certification. We anticipate that a certification hearing will not be held before March 2025.
The Company is subject to litigation and similar claims in the ordinary course of our business, including claims related to employment, human resources, product liability and commercial disputes. The Company has received notice of, or are aware of, certain possible claims against us where the magnitude of such claims is negligible, or it is not currently possible for us to predict the outcome of such claims, possible claims or lawsuits due to various factors including: the preliminary nature of some claims; an incomplete factual record; and the unpredictable nature of opposing parties and their demands. Management is of the opinion, based upon legal assessments and information presently available, that it is unlikely that any of these claims would result in liability to the Company, to the extent not provided for through insurance or otherwise, would have a material effect on the consolidated financial statements, other than the claims described above.
In respect of the aforementioned claims, as at June 30, 2024 the Company has recognized total provisions of $0.3 million (March 31, 2024 – $2.3 million) in provisions on the condensed consolidated interim statements of financial position.
(b)Commitments
The Company has various lease commitments related to various office space, production equipment, vehicles, facilities and warehouses expiring up to June 2033. The Company has certain leases with optional renewal terms that the Company may exercise at its option.
In addition to lease liability commitments disclosed in Note 18(b) and loans and borrowing repayments in Note 8, the Company has $1.6 million in future capital commitments and purchase commitments payments, which are due over the next 12 months.
22
AURORA CANNABIS INC.
Notes to the Condensed Consolidated Interim Financial Statements
Three months ended June 30, 2024 and 2023
(Amounts reflected in thousands of Canadian dollars, except share and per share amounts)
Note 15 Revenue
The Company generates revenue from the transfer of goods and at a point-in-time from the revenue streams below. Net revenue from sale of goods is reflected net of actual returns and estimated variable consideration for future returns and price adjustments of nil for the three months ended June 30, 2024 (three months ended June 30, 2023 – $0.6 million). The estimated variable consideration is based on historical experience and management’s expectation of future returns and price adjustments. As of June 30, 2024, the net return liability for the estimated variable consideration was nil (March 31, 2024 – $1.2 million) and is included in deferred revenue on the condensed consolidated interim statements of financial position.
| Three months ended June 30, 2024 | Medical | Consumer | Bulk wholesale | Total Cannabis | Plant Propagation | Total | ||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Canada | 27,117 | 11,533 | 1,620 | 40,270 | 2,615 | 42,885 | ||||||||||||||
| Australia | 9,160 | — | — | 9,160 | — | 9,160 | ||||||||||||||
| Europe | 10,735 | — | — | 10,735 | — | 10,735 | ||||||||||||||
| U.S. | — | — | — | — | 20,466 | 20,466 | ||||||||||||||
| Other | 189 | — | — | 189 | — | 189 | ||||||||||||||
| Total net revenue | 47,201 | 11,533 | 1,620 | 60,354 | 23,081 | 83,435 | ||||||||||||||
| Three months ended June 30, 2023 | Medical | Consumer | Other Cannabis(1) | Total Cannabis | Plant Propagation | Total | ||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Canada | 25,440 | 12,842 | 371 | 38,653 | 1,846 | 40,499 | ||||||||||||||
| Australia | 5,476 | — | — | 5,476 | — | 5,476 | ||||||||||||||
| Europe | 10,399 | — | — | 10,399 | — | 10,399 | ||||||||||||||
| U.S. | — | — | — | — | 18,058 | 18,058 | ||||||||||||||
| Other | 300 | — | — | 300 | — | 300 | ||||||||||||||
| Total net revenue | 41,615 | 12,842 | 371 | 54,828 | 19,904 | 74,732 | ||||||||||||||
(1) Includes core and non-core wholesale bulk cannabis.
23
AURORA CANNABIS INC.
Notes to the Condensed Consolidated Interim Financial Statements
Three months ended June 30, 2024 and 2023
(Amounts reflected in thousands of Canadian dollars, except share and per share amounts)
Note 16 Segmented Information
As at June 30, 2024, the Company had two reportable operating segments: (i) Cannabis and (ii) Plant Propagation. During the year ended March 31, 2024, the Company changed its internal management reporting which resulted in a change in the composition of the operating segments. The comparative periods have been restated to conform with the change in segment composition, consolidating the former Canadian and EU Cannabis operating segments.
| Operating Segments | Cannabis | Plant Propagation | Corporate (1) | Total | |||||||||||||
| $ | $ | $ | $ | ||||||||||||||
| Three Months Ended June 30, 2024 | |||||||||||||||||
| Net revenue | 60,354 | 23,081 | — | 83,435 | |||||||||||||
| Gross profit (loss) before fair value adjustments | 27,332 | 3,517 | (724) | 30,125 | |||||||||||||
| Gross profit | 45,401 | (131) | (724) | 44,546 | |||||||||||||
| Selling, general, and administrative expense | 32,889 | 910 | 2,749 | 36,548 | |||||||||||||
| Income (loss) before taxes | 13,015 | (2,589) | (2,725) | 7,701 | |||||||||||||
| Three Months Ended June 30, 2023 | |||||||||||||||||
| Net revenue | 54,828 | 19,904 | — | 74,732 | |||||||||||||
| Gross profit (loss) before fair value adjustments | 13,646 | 953 | — | 14,599 | |||||||||||||
| Gross profit | 26,508 | (488) | — | 26,020 | |||||||||||||
| Selling, general and administrative expense | 30,394 | 438 | 3,187 | 34,019 | |||||||||||||
| Loss before taxes | (3,483) | (383) | (16,235) | (20,101) | |||||||||||||
(1)Net income (loss) 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.
| Geographical Segments | Canada | EU | Australia | Uruguay | Total | ||||||||||||
| $ | $ | $ | $ | $ | |||||||||||||
| Non-current assets | |||||||||||||||||
| June 30, 2024 | 295,552 | 29,179 | 39,907 | 14,089 | 378,727 | ||||||||||||
| March 31, 2024 | 308,816 | 29,368 | 38,197 | 14,001 | 390,382 | ||||||||||||
Included in net revenue for the three months ended June 30, 2024 are net revenues of approximately $15.4 million from Customer G (three months ended June 30, 2023 - $13.9 million from Customer G) in the Plant Propagation segment, contributing 10 per cent or more to the Company’s net revenue.
Note 17 Fair Value of Financial Instruments
The carrying values of the financial instruments at June 30, 2024 are summarized in the following table:
| Amortized cost | FVTPL | Total | ||||||||||||
| $ | $ | $ | ||||||||||||
| Financial Assets | ||||||||||||||
| Cash and cash equivalents | 115,487 | — | 115,487 | |||||||||||
| Restricted cash | 66,680 | — | 66,680 | |||||||||||
| Accounts receivable, excluding sales taxes and lease receivable | 27,053 | — | 27,053 | |||||||||||
| Derivative asset | — | 881 | 881 | |||||||||||
| Lease receivable | 8,172 | — | 8,172 | |||||||||||
| Financial Liabilities | ||||||||||||||
| Accounts payable and accrued liabilities | 51,883 | — | 51,883 | |||||||||||
| Lease liabilities | 49,723 | — | 49,723 | |||||||||||
| Derivative liabilities | — | 2,920 | 2,920 | |||||||||||
| Loans and borrowings | 52,381 | — | 52,381 | |||||||||||
24
AURORA CANNABIS INC.
Notes to the Condensed Consolidated Interim Financial Statements
Three months ended June 30, 2024 and 2023
(Amounts reflected in thousands of Canadian dollars, except share and per share amounts)
The following is a summary of financial instruments measured at fair value segregated based on the various levels of inputs:
| Notes | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| $ | $ | $ | $ | ||||||||||||||
| As at June 30, 2024 | |||||||||||||||||
| Derivative asset | — | 881 | — | 881 | |||||||||||||
| Other long term liability | 594 | — | 50,360 | 50,954 | |||||||||||||
| Derivative liabilities | 10(c), 11(e) | 2,047 | 873 | — | 2,920 | ||||||||||||
| As at March 31, 2024 | |||||||||||||||||
| Marketable securities | — | 4,036 | — | — | 4,036 | ||||||||||||
| Derivative asset | — | 760 | — | 760 | |||||||||||||
| Other long term liability | 591 | — | 45,519 | 46,110 | |||||||||||||
| Derivative liabilities | 10(c), 11(e) | 1,698 | 611 | — | 2,309 | ||||||||||||
Other long term liability includes the put option arising from the acquisition of Bevo. The put option is valued using a Monte Carlo simulation. The determination relies on forecasted information, of which the significant assumptions used within the model are revenue, cost of sales and operating expenses. As at June 30, 2024, the present value of the amount payable on exercise of the put option was $50.4 million which is recorded in other long term liability in the consolidated statements of financial position. The change of $4.84 million is recorded in deficit in the consolidated statements of financial position.
Note 18 Financial Instruments Risk
The Company is exposed to a variety of financial instrument related risks. The Board mitigates these risks by assessing, monitoring and approving the Company’s risk management processes.
(a)Credit risk
Credit risk is the risk of a potential loss to the Company if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company is moderately exposed to credit risk from its cash and cash equivalents, accounts receivable and loans receivable. The risk exposure is limited to their carrying amounts reflected on the condensed consolidated interim statements of financial position. The risk for cash and cash equivalents is mitigated by holding these instruments with highly rated Canadian financial institutions. Certain restricted funds in the amount of $39.6 million are retained by an insurer under the Segregated Accounts Companies Act governed by the Bermuda Monetary Authority. As the Company does not invest in asset-backed deposits or investments, it does not expect any credit losses. The Company periodically assesses the quality of its investments and is satisfied with the credit rating of the financial institutions and the investment grade of its Guaranteed Investment Certificates (“GICs”). The Company mitigates the credit risk associated with the loans receivable by managing and monitoring the underlying business relationship.
The Company provides credit to certain customers in the normal course of business and has established credit evaluation and monitoring processes to mitigate credit risk. Credit risk is generally limited for receivables from government bodies, which generally have low default risk. Credit risk for non-government customers is assessed on a case-by-case basis and a provision is recorded where required. As of June 30, 2024, $17.1 million of accounts receivable, net of allowances, are from non-government wholesale customers (March 31, 2024 – $22.8 million).
As at June 30, 2024, four customers made up 10% or more of trade accounts receivable (March 31, 2024 – two customers).
As at June 30, 2024, the provision for estimated credit losses is $1.1 million (March 31, 2024 – $1.3 million). During the three months ended June 30, 2024, the Company wrote off nil (March 31, 2024 – $2.1 million), and recognized a recovery of $0.2 million (June 30, 2023 – expense $0.2 million) recorded in the condensed consolidated interim statements of income (loss) and comprehensive income (loss).
The Company’s aging of trade receivables, net was as follows:
| June 30, 2024 | March 31, 2024 | |||||||
| $ | $ | |||||||
| 0 – 60 days | 16,149 | 33,239 | ||||||
| 61+ days | 7,548 | 7,303 | ||||||
| 23,697 | 40,542 | |||||||
25
AURORA CANNABIS INC.
Notes to the Condensed Consolidated Interim Financial Statements
Three months ended June 30, 2024 and 2023
(Amounts reflected in thousands of Canadian dollars, except share and per share amounts)
(b) Liquidity risk
The composition of the Company’s accounts payable and accrued liabilities was as follows:
| June 30, 2024 | March 31, 2024 | |||||||
| $ | $ | |||||||
| Trade payables | 10,623 | 20,325 | ||||||
| Accrued liabilities | 19,592 | 20,097 | ||||||
| Payroll liabilities | 19,177 | 15,496 | ||||||
| Excise tax payable | 2,272 | 2,107 | ||||||
| Income and sales tax payable | 2,143 | 1,940 | ||||||
| Other payables | 117 | 145 | ||||||
| 53,924 | 60,110 | |||||||
In addition to the commitments outlined in Note 14, the Company has the following undiscounted contractual obligations as at June 30, 2024, which are expected to be payable in the following respective periods:
| Total | ≤1 year | Over 1 year - 3 years | Over 3 years - 5 years | > 5 years | |||||||||||||
| $ | $ | $ | $ | $ | |||||||||||||
| Accounts payable and accrued liabilities | 51,883 | 51,883 | — | — | — | ||||||||||||
Lease liabilities (1) | 100,403 | 8,367 | 23,331 | 15,898 | 52,807 | ||||||||||||
| Loans and borrowings | 52,381 | 49,209 | 3,172 | — | — | ||||||||||||
Capital commitments(2) | 1,608 | 1,608 | — | — | — | ||||||||||||
| 206,275 | 111,067 | 26,503 | 15,898 | 52,807 | |||||||||||||
(1)Includes interest payable until maturity date.
(2)Relates to remaining commitments that the Company has made to vendors for equipment purchases and capital projects pertaining to existing construction.
Liquidity risk is the risk that the Company will not be able to meet its financial obligations associated with its financial liabilities when they are due. The Company manages liquidity risk through the management of its capital structure and resources to ensure that it has sufficient liquidity to settle obligations and liabilities when they are due. Our ability to fund our operating requirements depends on future operating performance and cash flows, which are subject to economic, financial, competitive, business and regulatory conditions, and other factors, some of which are beyond our control. Our primary short-term liquidity needs are to fund our net operating losses, capital expenditures to maintain existing facilities, convertible debenture repayment and lease payments. Our medium-term liquidity needs primarily relate lease payments and our long-term liquidity needs primarily relate to potential strategic plans.
As of June 30, 2024, the Company has access to the following capital resources available to fund operations and obligations:
•$115.5 million cash and cash equivalents; and
•access to the 2023 Shelf Prospectus (as defined below). The Company currently has access to securities registered for sale under the 2023 Shelf Prospectus currently covering U.S.$650.0 million of issuable securities. Of the U.S.$650.0 million of securities registered under the 2023 Shelf Prospectus and corresponding registration statement on form F-10 filed with the U.S. Securities and Exchange Commission in the U.S., approximately U.S.$225.3 million is allocated to the potential exercise of currently outstanding warrants issued in financing transactions from 2022. Following the closing of the bought deal offering on October 3, 2023 and the expiration of warrants during the year approximately U.S.$396.4 million is available for potential new issuances of Common Shares, warrants, options, subscription receipts, debt securities or any combination thereof during the 25-month period that the 2023 Shelf Prospectus remains effective. Volatility in the cannabis industry, stock market and the Company’s share price may impact the amount and our ability to raise financing under the 2023 Shelf Prospectus.
Based on all of the aforementioned factors, the Company believes that its reduction of operating costs, current liquidity position, and access to the 2023 Shelf Prospectus are adequate to fund operating activities and cash commitments for investing, financing and strategic activities for the foreseeable future. In addition, the Company could access restricted cash of $62.3 million relating to its self-insurance policy, if necessary.
Note 19 Subsequent Event
On July 31, 2024, the Company’s wholly-owned subsidiary, Aurora Cannabis Enterprises Inc., entered into a commercial collaboration agreement with Cogent International Manufacturing Ltd. (“Cogent”) a wholly-owned subsidiary of Vectura Fertin Pharma Inc., under which Cogent will initially launch its newly-developed CBD lozenge on Aurora’s Canadian medical cannabis patient platform (the “Agreement”). The Agreement, which is expected to have an initial term of 24 months, provides for a fixed fee to Aurora on a quarterly basis for the provision of certain marketing, distribution and data collection services to Cogent for a total of $9.8 million over the term of the Agreement, and allows for Aurora to earn net revenue on a percentage basis of sales.
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