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TLRY Tilray

Filed: 4 May 21, 5:04pm

Exhibit 99.4

DISCLAIMER FOR TILRAY Inc.
Ernst & Young LLP (“EY”) prepared the comments to the Unaudited Pro Forma Condensed Combined Financial Statements of Tilray (the “Report”) only for Tilray Inc. (the “Client”) pursuant to an agreement solely between EY and Client. EY did not perform its services on behalf of or to serve the needs of any other person or entity. Accordingly, EY expressly disclaims any duties or obligations to any other person or entity based on its use of the attached Report comments. Any other person or entity must perform its own due diligence inquiries and procedures for all purposes, including, but not limited to, satisfying itself as to the financial condition and control environment of Client, as well as the appropriateness of the accounting for any particular situation addressed by the Report comments.

EY did not perform an audit, review, examination or other form of attestation (as those terms are identified by Chartered Professional Accountants of Canada (“CPA Canada”), the American Institute of Certified Public Accountants (“AICPA”) or by the Public Company Accounting Oversight Board) of Client’s financial statements. Accordingly, EY did not express any form of assurance on Client’s accounting matters, financial statements, any financial or other information or internal controls. EY did not conclude on the appropriate accounting treatment based on specific facts or recommend which accounting policy / treatment Client should select or adopt.

The observations relating to accounting matters that EY provided to Client were designed to assist Client in reaching its own conclusions and do not constitute our concurrence with or support of Client’s accounting or reporting. Client alone is responsible for the preparation of its financial statements, including all of the judgments inherent in preparing them.

This information is not intended or written to be used, and it may not be used, for the purpose of avoiding penalties that may be imposed on a taxpayer.

PURPOSE:
The attached document was provided by Aphria Inc. to Tilray Inc. for inclusion in an 8K and registration statement related to the merger of the two entities. EY has updated select notes to reflect the change in valuation date from February 3, 2021 to April 21, 2021.  This document should be read in conjunction with the document ‘2.01.01.1 – Draft – TIL – Pro Forma Update Workbook’.  Number changes are highlighted in green and text changes are blacklined.  Note: EY will not be updating the quantification of any of the pro-forma adjustments that have been prepared by or updated by Aphria.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS OF TILRAY

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On December 15, 2020, Tilray, Inc. (“Tilray”) and Aphria Inc. (“Aphria”), entered into an Arrangement Agreement, under which the businesses of the two companies will be combined pursuant to a Plan of Arrangement (the “merger transaction”).

The following unaudited pro forma condensed combined financial statements (the “pro forma financial statements”) are based on the historical consolidated financial statements of Tilray and Aphria, as adjusted to give effect to the merger transaction.  The unaudited pro forma condensed combined balance sheet as at February 28, 2021 (the “pro forma balance sheet”) gives effect to the merger transaction as if it had occurred on February 28, 2021.  The unaudited pro forma condensed combined statement of net loss for the nine months ended February 28, 2021 and for the year ended May 31, 2020 (the “pro forma statements of net loss”) gives effect to the merger transaction as if it had occurred on June 1, 2020 and June 1, 2019, respectively.

The transaction accounting adjustments consist of those necessary to account for the merger transaction as a reverse acquisition in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).

The pro forma financial statements do not necessarily reflect what the combined company’s financial condition or results of operations would have been had the merger transaction occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of operations of the combined company. The actual financial condition and results of operations of the combined company may differ significantly from the pro forma amounts reflected herein due to a variety of factors.

Unaudited Pro Forma Condensed Combined Balance Sheet
February 28, 2021
(in ‘000 of United States dollars)

  
Aphria adjusted historical February 28, 2021
(note 6)
  
Tilray
historical
December 31, 2020
  Transaction accounting adjustments  Notes (note 4) 
Pro forma combined
February 28, 2021
 
Assets               
Current assets               
Cash and cash equivalents $210,590  $189,702  $76,106   H $476,398 
Accounts receivable, net  64,557   29,033          93,590 
Prepaids and other current assets  39,345   34,640          73,985 
Inventory  176,275   93,645   27,355   C  297,275 
Current portion of convertible notes receivable  4,800             4,800 
Total current assets  495,567   347,020   103,461       946,048 
Capital assets/Property and equipment, net  508,655   217,544   1,764   D  727,963 
Intangible assets, net  527,949   186,445   876,555   F  1,590,949 
Promissory notes receivable and other assets  2,365   4,356          6,721 
Equity method investments     9,300          9,300 
Other investments  8,902   14,369          23,271 
Goodwill  587,078   166,915   1,730,062   G  2,484,055 
Total assets $2,130,516  $945,949  $2,711,842      $5,788,307 
Liabilities                    
Current liabilities                    
Accounts payable $45,895  $17,776  $      $63,671 
Accrued expenses and other current liabilities  42,914   39,946   24,467   K  114,150 
           6,823   L    
Income taxes payable  16,749             16,749 
Warrant liability     120,647   (30,182)  H  90,465 
Current portion of lease liabilities/  1,384   2,913          4,297 
Accrued lease obligations                    
Current portion of long-term debt  20,307             20,307 
Total current liabilties  127,249   181,282   1,108       309,639 
Long-term liabilities                    
Lease liabilities/  35,478   30,623          66,101 
Accrued lease obligations                    
Long-term debt  183,962   48,470   2,028   J  234,460 
Convertible debentures/  490,970   257,789   (23,000)  I  725,759 
Convertible notes, net of issuance costs                    
Contingent consideration  60,068             60,068 
Other liabilities     4,612          4,612 
Deferred tax liability, net  24,217   49,274   217,778   M  291,269 
Total liabilities  921,944   572,050   197,914       1,691,908 
Shareholders’ equity                    
Common stock (1)
  1,641,138   16   27   B  43 
           (1,641,138)  B    
Warrants  284             284 
Additional paid-in capital  37,316   1,095,781   2,932,875   A,B  4,612,703 
           (1,095,781)  B    
           1,390   I    
           1,641,122   B    
Accumulated other comprehensive (loss) income  (7,505)  8,205   (8,205)  B  (7,505)
Accumulated deficit  (509,512)  (730,103)  730,103   B  (555,977)
           (24,467)  K    
           (6,823)  L    
           (15,175)  M    
Total shareholders' equity  1,161,721   373,899   2,513,928       4,049,548 
Non-controlling interests  46,851             46,851 
Total liabilities and shareholders' equity $2,130,516  $945,949  $2,711,842      $5,788,307 


(1) Consists of Aphria common shares and Tilray Class 2 common stock

Unaudited Pro Forma Condensed Combined Statement of Net Loss
For the 9 months Ended February 28, 2021
(in ‘000 of United States dollars, except per share and share amounts)

  
Aphria 9 month
period ending
February 28,
2021
(note 6)
  
Tilray Constructed
9 month period ending
December 31,
2020
(note 7)
  Transaction accouting adjustments  
Notes
(note 4)
  Pro Forma Combined 
Revenue $363,633  $158,380  $     $522,013 
Cost of goods sold  268,493   144,229   27,355   C

  440,035 
           (42)  D

    
Gross profit  95,140   14,151   (27,313)      81,978 
Operating expenses:                    
General and administrative  64,342   59,116   6,823   L

  130,281 
Share-based compensation  10,786      (8,859)  L

  1,927 
Selling/Sales and marketing  17,056   36,218          53,274 
Depreciation and amortization  17,693   10,131   (598)  D

  48,149 
           20,923   F

    
Marketing and promotion  11,751             11,751 
Research and development  447   3,050          3,497 
Impairment     31,275          31,275 
Loss from equity method investments     4,235          4,235 
Transaction costs  28,680      24,467   K

  53,147 
Total operating expenses  150,755   144,025   42,756       337,536 
Operating loss  (55,615)  (129,874)  (70,069)      (255,558)
Finance/Interest income (expense), net  (17,119)  (30,073)  3,944   I

  (43,003)
           245   J

    
Foreign exchange (gain) loss, net     41,238          41,238 
Change in fair value of warrant liability     (28,308)         (28,308)
Gain on debt conversion     61,118          61,118 
Non-operating/Other income (expense), net  (289,473)  (5,682)         (295,155)
Loss before income taxes  (362,207)  (91,581)  (65,880)      (519,668)
Income taxes (recovery)  (12,946)  (4,631)  (12,397)  M

  (29,267)
           707   M

    
                     
                     
Net loss $(349,261) $(86,950) $(54,190)     $(490,401)
Weighted average number of common shares - basic      132,562,924   278,297,241  Note 5   410,860,165 
Weighted average number of common shares - diluted      132,562,924   278,297,241  Note 5   410,860,165 
Loss per share - basic     $(0.66)         $(1.19)
Loss per share - diluted     $(0.66)         $(1.19)

Unaudited Pro Forma Condensed Combined Statement of Net Loss
For the Year Ended May 31, 2020
(in ‘000 of United States dollars, except per share and share amounts)

  
Aphria 12 month
period ending
May 31,
2020
(note 6)
  
Tilray Constructed
12 month
period ending
March 31,
2020
(note 7)
  Transaction accouting adjustments  
Notes
(note 4)
  Pro Forma Combined 
Revenue $405,326  $196,043  $     $601,369 
Cost of goods sold  332,854   214,116   27,355   C

  574,269 
           (56)  D

    
Gross profit  72,472   (18,073)  (27,299)      27,100 
Operating expenses:                    
General and administrative  75,710   120,264   6,823   L

  202,797 
Share-based compensation  18,079      (8,610)  L

  9,469 
Selling/Sales and marketing  15,697   73,949          89,646 
Depreciation and amortization  15,138   13,333   (798)  D

  55,571 
           27,898   F

    
Marketing and promotion  15,266             15,266 
Research and development  1,916   9,016          10,932 
Impairment  50,679   141,909          192,588 
Loss from equity method investments     6,252          6,252 
Acquisition-related (income) expenses, net     (35,851)         (35,851)
Transaction costs  4,299      37,028   K

  41,327 
Total operating expenses  196,784   328,872   62,341       587,997 
Operating loss  (124,312)  (346,945)  (89,640)      (560,897)
Finance/Interest income (expense), net  (19,371)  (34,463)  5,258   I

  (48,249)
           327   J

    
Foreign exchange (gain) loss, net     (21,946)         (21,946)
Change in fair value of warrant liability     (71,978)         (71,978)
Gain on debt conversion                
Non-operating/Other income (expense), net  14,195   (5,995)         8,200 
Loss before income taxes  (129,488)  (481,327)  (84,055)      (694,870)
Income taxes (recovery)  (8,352)  (5,404)  (13,727)  M

  (22,013)
           5,470   M

    
Net loss $(121,136) $(475,923) $(75,798)     $(672,857)
Weighted average number of common shares - basic      100,529,641   278,297,241  Note 5   378,826,882 
Weighted average number of common shares - diluted      100,529,641   278,297,241  Note 5   378,826,882 
Loss per share - basic     $(4.73)         $(1.78)
Loss per share - diluted     $(4.73)         $(1.78)

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(in ‘000 of United States dollars, except for shares, warrants, per share amounts and per warrant amounts, unless otherwise noted)

1. Basis of Presentation

The pro forma financial statements are based on the historical consolidated financial statements of Tilray and Aphria, adjusted to give effect to the merger transaction, and should be read in conjunction with the historical financial statements from which they are derived.  Pro forma adjustments are limited to the transaction accounting adjustments that reflect the accounting for the merger transaction in accordance with US GAAP.

The pro forma financial statements were prepared using the purchase method of accounting.  The merger transaction is accounted for as a reverse acquisition in which Tilray is the legal acquirer and Aphria is the acquirer for accounting purposes.  Accordingly, the pro forma financial statements represent a continuation of the financial statements of Aphria; the assets and liabilities of Aphria are presented at their historical carrying values and the assets and liabilities of Tilray are recognized on the effective date of the merger transaction and measured at fair value.

The pro forma financial statements are presented in United States dollars (“USD”) and prepared in accordance with US GAAP.  Since Aphria’s historical consolidated financial statements are presented in Canadian dollars (“CAD” or “C$”) and prepared in accordance with International Financial Reporting Standards (“IFRS”), the historical financial information of Aphria used in the pro forma financial statements has been reconciled to US GAAP and translated into USD (note 6). For comparative purposes certain line items were renamed or reclassified to conform with the pro forma financial presentation.

The pro forma balance sheet gives effect to the merger transaction as if it had occurred on February 28, 2021.  The pro forma statements of net loss gives effect to the merger transaction as if it had occurred on June 1, 2020 and June 1, 2019 for the nine months ended February 28, 2021 and year ended May 31, 2020, respectively.

The pro forma balance sheet combines the audited consolidated balance sheet of Tilray as at December 31, 2020 with the unaudited condensed consolidated statement of financial position (balance sheet) of Aphria as at February 28, 2021.  As the ending date of the fiscal period for Aphria differs from that of Tilray by more than 93 days,  the unaudited pro forma statement of operations (statement of net loss) for the nine months ended February 28, 2021 was derived by combining financial information from the unaudited condensed interim consolidated statements of net loss and comprehensive loss of Aphria for the nine months ended February 28, 2021 with financial information of Tilray for the nine months ended December 31, 2020, which was constructed by subtracting: (i) the financial information from the unaudited consolidated statement of operations for the three months ended March 31, 2020; from (ii) the financial information from the audited consolidated statement of operations for the year ended December 30, 2020 (note 7). The unaudited pro forma statement of operations (statement of net loss) for the year ended May 31, 2020 was derived by combining financial information from the audited consolidated statements of net loss and comprehensive loss of Aphria for the year ended May 31, 2020 with financial information of Tilray for the year ended March 31, 2020, which was constructed by subtracting: (i) the financial information from the unaudited consolidated statement of operations for the three months ended March 31, 2019; from (ii) the financial information from the audited consolidated statement of operations for the year ended December 30, 2019; and adding (iii) the financial information from the unaudited consolidated statement of operations for the three months ended March 31, 2020 (note 7 ).

The assumptions and estimates underlying the adjustments to the pro forma financial statements are described in the accompanying notes.

The pro forma adjustments are preliminary, subject to further revision as additional information becomes available and additional analyses are performed. The pro forma adjustments have been made solely for the purpose of providing unaudited pro forma combined financial information and actual adjustment, when recorded, may differ materially.

The pro forma financial statements have been prepared for illustrative purposes only and may not be indicative of the operating results or financial condition that would have been achieved if the merger transaction had been completed on the dates or for the periods presented, nor do they purport to project the results of operations or financial position for any future period or as of any future date. In addition to the pro forma adjustments, various other factors will have an effect on the financial condition and results of operations after the completion of the merger transaction.  The actual financial position and results of operations may differ materially from the pro forma amounts reflected herein due to a variety of factors.

The unaudited pro forma financial statements do not reflect operational and administrative cost savings that may be achieved as a result of the merger transaction.

2. Estimated Purchase Price

Tilray is the legal acquirer and, pursuant to the Plan of Arrangement, will (i) exchange each outstanding Aphria common share for 0.8381 of a Tilray Class 2 common share (the “Exchange Ratio”), and (ii) exchange outstanding equity instruments exercisable into Aphria common shares for instruments with similar terms that are exercisable into Tilray Class 2 common shares, adjusted to reflect the Exchange Ratio.

However, since the merger transaction is being accounted for as a reverse acquisition (note 1), the purchase price is calculated as the fair value of the hypothetical consideration Aphria would have to issue to acquire Tilray’s outstanding equity instruments and obtain the same percentage of ownership interest in the combined entity that will result from the merger transaction.

The estimated purchase price of $2,932,902 is based on the number of equity instruments of Tilray outstanding at December 31, 2020, adjusted for the exercise of 12,791,000 warrants (note 3, 4H), and Aphria’s closing share price of $13.88 on April 21, 2021 (the “Measurement Date”). The purchase price will change based on fluctuations in Aphria’s share price and the number of equity instruments of Tilray outstanding on the effective date of the merger transaction.  A 10% increase or decrease in Aphria’s share price would increase or decrease both the purchase price and goodwill by approximately $294,038, respectively, and a 25% increase or decrease in Aphria’s share price would increase or decrease both the purchase price and goodwill by approximately $735,086, respectively.

The following table summarizes the calculation of the purchase price hypothetically paid by Aphria (in thousands, except warrants, share and per share data):

Tilray Class 2 common stock outstanding at December 31, 2020 adjusted for warrants exercised (1)
  171,247,087 
Aphria common stock hypothetically issued based on Exchange Ratio  204,327,750 
Price per common stock of Aphria on Measurement Date $13.88 
Total estimated fair value of acquired Tilray Class 2 common stock $2,836,069 
Estimated fair value of Tilray stock-based compensation related to the pre-combination service period $96,833 
Total estimated purchase price $2,932,902 


(1)Represents 158,456,087 Tilray Class 2 common stock outstanding at December 31, 2020 and 12,791,000 warrants exercised from Jan 1, 2021 to the Measurement Date (note H)

The estimated fair value of the Tilray stock-based compensation related to the pre-combination service period consisted of $73,830 related to Tilray stock options and $23,003 related to restricted share units (“RSUs”). The fair values of the RSUs included in the purchase price are estimated using the market share price of Aphria on the purchase price Measurement Date. The fair values of the options included in the purchase price are calculated using the Black Scholes model, using the following assumptions:

Volatility 100%
Dividend yield 0%
Risk-free interest rate 0.04% to 1.31%
Expected term 0.07 to 7.91 years


3. Preliminary Purchase Price Allocation

A preliminary valuation analysis of the fair value of Tilray’s assets and liabilities has been performed at December 31, 2020, with the following exceptions:


The warrant liability has been valued at the Measurement Date, which reflects the exercise of 12,791,000 warrants between January 1, 2021 and the Measurement Date (note 2, 4H); and


The cash and cash equivalents balance at December 31, 2020 has been increased by $76,106 (note 4H) to reflect the cash received upon exercise of the warrants.

The purchase price has been allocated to such assets and liabilities, with the excess allocated to goodwill.  The following table summarizes the preliminary purchase price allocation:

Cash and cash equivalents $265,808 
Accounts receivable  29,033 
Inventory  121,000 
Prepayments and other current assets  34,640 
Property and equipment  219,308 
Intangible assets  1,063,000 
Interest in equity investees  9,300 
Other investments  14,369 
Promissory notes receivable and other assets  4,356 
Accounts payable  (17,776)
Accrued expenses and other current liabilities  (39,946)
Accrued lease obligations  (33,536)
Warrant liability  (90,465)
Deferred tax liability  (251,877)
Convertible debentures  (236,179)
Long-term debt  (50,498)
Other liabilities  (4,612)
Goodwill  1,896,977 

The preliminary purchase price allocation has been used to prepare the pro forma adjustments (note 4). The purchase price allocation will be finalized following the effective date of the merger transaction when the valuation analysis is complete. The final allocation could differ materially from the preliminary allocation used in the pro forma adjustments.

4. Pro Forma Adjustments

Adjustments to the pro forma financial statements are limited to those that reflect the accounting for the merger transaction in accordance with US GAAP.  The pro forma financial statements give effect to the merger transaction as if it had occurred on February 28, 2021 for purposes of the pro forma balance sheet and June 1, 2020 for purposes of the pro forma statement of net loss for the nine months ended February 28, 2021 and June 1, 2019 for purposes of the pro forma statement of net loss for the year ended May 31, 2020.

The pro forma adjustments are as follows:

A – Purchase price
Records the purchase price consideration, which is the fair value of the equity interests hypothetically issued by Aphria to acquire Tilray (note 2).

B – Equity
Eliminates Tilray’s historical equity balances and reallocates Aphia’s equity balances so the equity structure appearing in the pro forma balance sheet reflects the legal equity structure of Tilray, including the equity interests issued by Tilray to effect the merger transaction.

The following table summarizes how the equity balances in the pro forma balance sheet were determined:

  Common stock  Additional paid-in capital  Warrants  Accumulated other comprehensive (loss) income  Accumulated deficit  Total 
Aphria as at February 28, 2021 $1,641,138  $37,316  $284  $(7,505) $(509,512) $1,161,721 
Total estimated purchase price (note 2, 4A)  27   2,932,875            2,932,902 
Tilray as at December 31, 2020  16   1,095,781      8,205   (730,103)  373,899 
Eliminate Tilray as at December 31, 2020     (1,095,781)     (8,205)  730,103   (373,883)
Reallocate balance to reflect Tilray structure  (1,641,138)  1,641,122            (16)
Equity component of Tilray convertible notes (note 4I)     1,390            1,390 
Accumulated deficit impact of pro forma adjustments (note 4K, 4L, 4M)              (46,465)  (46,465)
Pro forma – February 28, 2021 $43  $4,612,703  $284  $(7,505) $(555,977) $4,049,548 

The $27 pro forma balance as part of the total estimated purchase price represents the $0.0001 par value of the estimated 265,506,241 of Tilray Class 2 common stock issued on the merger transaction.

C – Inventory
Increases Tilray’s inventory to a fair value of approximately $121,000, an increase of $27,355 from the carrying value. The fair value was determined based on the estimated selling price of the inventory, less the remaining manufacturing and selling costs and a normal profit margin on those manufacturing and selling efforts. After the merger transaction, the $27,355 step-up in inventory value will increase cost of sales as the inventory is sold, which is reflected in the pro forma statements of net loss and represents a nonrecurring charge for the nine months ended February 28, 2019 and the year ended May 31, 2020. The fair value calculation is preliminary and subject to change.

D – Capital assets
Included in the opening Tilray capital assets is $199,559 of property and equipment, net and $17,985 of operating lease, right-of-use assets. Increases Tilray’s capital assets to an estimated fair value of approximately $217,544, an overall increase of $1,764 from the carrying value. The overall increase represents an estimated increase of $2,110 relating to finance lease right-of-use assets and an increase of $274 relating to operating lease right-of-use assets (note 4E) offset by an estimated decrease of $620 to capital assets.  The estimated useful lives, excluding land, range from 4 to 27 years.  The estimated fair value of property and equipment, excluding finance lease right-of-use assets is determined primarily using an income approach, which requires a forecast of expected future cash flows. After the merger transaction, the estimated impact of the combined change in the value and useful lives of property plant and equipment will be an estimated decrease in amortization expense in the pro forma statement of net loss recognized as follows:

  
Year ended
May 31, 2020
  9 months ended February 28, 2021 
  CAD  CAD 
Cost of sales $(56) $(42)
Depreciation and amortization expenses  (798)  (598)

The estimated fair value and estimated useful life calculations are preliminary and subject to change. The preliminary estimates of fair value and estimated useful lives will likely differ from the final amounts after completing a detailed valuation analysis, and the difference could have a material effect on the accompanying pro forma financial statements. A 10% change in the estimated fair value of property and equipment, excluding finance lease right-of-use assets, would cause a corresponding increase or decrease in the balance of goodwill. A 10% change would also cause the annual amortization expense in the pro forma statement of net loss to increase or decrease by approximately $646, assuming a weighted average useful life of depreciable property and equipment of 18.4 years.

E – Leases
Included in Tilray’s capital assets carrying value (note 4D) is $13,167 and $17,985 related to finance lease right-of-use assets and operating lease right-of-use assets, respectively. The carrying value has been adjusted to the corresponding carrying value of finance and operating lease liabilities of $15,277 and $18,259, respectively, resulting in a pro forma increase of $2,110 and $274. The corresponding impact to amortization expense on the finance lease right-of-use assets are included in capital assets (note 4D). The finance and operating lease liabilities, and corresponding right-of-use assets may differ from the final amounts after completing the detailed incremental borrowing rate analysis.

F – Intangible assets
Increases Tilray’s intangible assets to an estimated fair value of approximately $1,063,000, an increase of $876,555 from the carrying value. As part of the preliminary valuation analysis, the identified intangible assets include distribution channels, customer relationships, know how, developed technology, licenses, brands and trademarks.  The fair value of identifiable intangible assets is determined primarily using an income approach, which requires a forecast of expected future cash flows. For purposes of the preliminary fair value, the mid point of the estimated range has been used. After the merger transaction, the $876,555 increase in the value of intangible assets will increase amortization expense over the respective estimated useful lives, which is reflected in the pro forma income statement through a $20,923 and $27,898 increase in amortization expenses for the nine months ended February 28, 2021 and year ended May 31, 2020, respectively.

The following table summarizes the estimated fair values (mid point) of Tilray’s identifiable intangible assets and, where applicable, their estimated useful lives:

  Estimated fair value  
Estimated useful life
(years)
 
Definite-lived intangible assets      
Distribution channels $137,000   15 
Customer relationships  85,000   15 
Know how  47,000   2 
Developed technology  6,000   10 
   275,000     
Indefinite-lived intangible assets        
Licenses  660,000  Indefinite 
Brands  116,000  Indefinite 
Trademarks  12,000  Indefinite 
   788,000     
  $1,063,000     

The preliminary estimates of fair value and estimated useful lives will likely differ from the final amounts after completing a detailed valuation analysis, and the difference could have a material effect on the accompanying pro forma financial statements. A 10% change in the estimated fair value of intangible assets would cause a corresponding increase or decrease in the balance of goodwill. A 10% change would also cause the annual amortization expense in the pro forma statement of net loss to increase or decrease by approximately $3,890, assuming an overall weighted average useful life of definite-lived intangible assets of 12.7 years.

G – Goodwill
Adjusts goodwill in the pro forma balance sheet as follows:

Reversal of Tilray's historical goodwill $(166,915)
Goodwill recognized in purchase accounting  1,896,977 
Pro forma increase to goodwill $1,730,062 

H – Warrant liability
Decreases Tilray’s warrant liability to an estimated fair value of approximately $90,465, a decrease of $30,182 from the carrying value to reflect the estimated fair value at the Measurement Date. The 19,000,000 outstanding warrants at December 31, 2020 are reduced for the additional exercise of 12,791,000 warrants at a price of $5.95 from January 1, 2021 to the Measurement Date. The resulting increase in cash on exercise of $76,106 is an adjustment to the carrying value of cash in the purchase price allocation. The remaining 6,209,000 warrants outstanding on the Measurement Date have an estimated fair value of $14.57 per warrant, using Tilray’s market share price on the Measurement Date as an input.

I – Convertible notes
Adjusts the carrying value of the liability component of the convertible notes from $257,789 in Tilray’s historical balance sheet to an estimated fair value of $234,789, a decrease of $23,000. The fair value is determined using the expected cash flows, discounted by the estimated interest rate of similar nonconvertible debt based on current market rates. The combined instrument’s fair value of $236,179 is adjusted to present the equity component of $1,390 in equity (note 4B), with the remaining $234,789 recorded as a liability. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. The adjusted debt discount is to be amortized as additional non-cash interest expense over the remaining term of the convertible notes using the interest method with an effective rate of 11.7 % per annum.

The change in the value of the convertible notes is estimated to decrease finance expense over the term of the notes, which is reflected in the pro forma statement of net loss through a $3,944 and $5,258 decrease in finance expenses for the nine months ended February 28, 2021 and year ended May 31, 2020, respectively.

J – Long-term debt
Adjusts the carrying value of Tilray’s Senior Facility from $48,470 in Tilray’s historical balance sheet to $50,498, an increase of $2,028. The adjustment reflects removal of the unamortized transaction costs which are not recognized in a business combination.

The change in the value of the long-term debt is estimated to decrease finance expense over the term of the notes, which is reflected in the pro forma income statement through a $245 and $327 decrease in finance expenses for the nine months ended February 28, 2021 and year ended May 31, 2020, respectively.

K – Transaction costs
Recognizes in the pro forma balance sheet and pro forma statement of net loss for the nine months ended February 28, 2021 $24,467 of nonrecurring transaction costs directly related to the merger transaction that are expected to be incurred by Aphria and Tilray subsequent to February 28, 2021 and December 31, 2020, respectively.  Also recognizes $37,028 of transaction costs in the pro forma statement of net loss for the year ended May 31, 2020, which is comprised of the $24,467 referred to above and $12,561 expensed in the historical financial statements of Aphria and Tilray for the nine months ended February 28, 2021 and December 31, 2020, respectively.

The following table summarizes the nonrecurring transaction costs related to the merger transaction included in each of the pro forma statements of net loss:

  Aphria  Tilray  Total 
Expensed in historical financial statements $10,329  $2,232  $12,561 
Estimated future costs  13,838   10,629   24,467 
Total recognized in pro forma statements of net loss $24,167  $12,861  $37,028 


L – Compensation arrangements
Recognized in the pro forma balance sheet and both of the pro forma income statements is $6,823 of nonrecurring compensation costs related to severance payments and retention payments. This pro forma adjustment excludes any related severance or other compensation costs which may be triggered upon an announcement of a new executive team or other headcount restructuring that may result from the merger transaction.

The following table summarizes the nonrecurring compensation costs related to the merger transaction included in each of the pro forma income statements:

  Aphria  Tilray  Total 
Expensed in historical financial statements $  $  $ 
Accrued in pro forma adjustment     6,823   6,823 
Total recognized in pro forma statement of net loss $  $6,823  $6,823 

Also recognized in the pro forma statement of net loss is compensation costs related to the difference between Tilray’s historical share-based compensation expense and the estimated share-based compensation expense related to replacement stock options and restricted stock units hypothetically issued by Aphria as consideration. The portion of the fair value of the replacement share-based awards related to compensation costs will be recognized ratably over post-merger service periods ranging from 0 to 3 years. The stock-based compensation expense is estimated to decrease by $8,859 and $8,610 for the nine months ended February 28, 2021 and year ended May 31, 2020, respectively, which is reflected in the pro forma income statements.

The total pro forma adjustment to stock-based compensation expense excludes the impact of accelerated vesting of Aphria’s stock-based awards that is subject to the approval by Aphria’s Board of Directors, which has not yet occurred, the final compensation costs could differ materially from those included in the pro forma adjustments.

M – Income taxes
The pro forma income tax adjustments to the pro forma balance sheet results in an overall increase in the deferred income tax liability of $217,778 relating to the following:


Increase of $202,603 related to Tilray’s increase in taxable temporary differences due primarily to fair value increases in inventory, property and equipment, and intangibles, offset by a partial reversal of the valuation allowance on net operating losses carrying forward in several legal entities and jurisdictions; and


Increase of $15,175 related to restrictions on Aphria’s losses in several legal entities and jurisdictions, and valuation allowances due to the impact of the merger transaction.


The pro forma income tax adjustments to the pro forma statement of net loss are comprised of the following amounts:

(a)Tax impact of pro forma adjustments:

Pro forma adjustments 
Year ended
May 31, 2020
  
9 months ended
February 28, 2021
 
C - Inventory (cost of sales) $27,355  $27,355 
D - Property and equipment (depreciation expense)  (854)  (640)
F - Intangible assets (amortization expense)  27,898   20,923 
I - Convertible debt (interest expense)  (5,258)  (3,944)
J - Long-term debt (interest expense)  (327)  (245)
K - Transaction costs  37,028   24,467 
L – Compensation  (1,787)  (2,036)
   67,569   (9,533)
         
M – Deferred tax expense (recovery)  (9,533)  (7,706)
M - Income taxes - benefit of current year losses  (4,194)  (4,691)
  $(13,727) $(12,397)

The $13,727 for the year ended May 31, 2020 and the $12,397 for the nine months ended February 28, 2021 deferred tax recovery is comprised of the following:


$9,533 and 7,706, respectively, which relates to the tax-effect of pro-forma adjustments, C, D, F.  The remaining pro-forma statement of loss adjustments are not tax-effected due to the amounts being non-deductible for tax purposes, or the benefit of the deductible expense cannot be recognized due to a valuation allowance in the legal entity and jurisdiction to which it relates; and


$4,194 and $4,691, respectively, which relates to the deferred tax asset that can be recognized for a portion of the current period loss.

(b)Reversal of $707 and $5,470 of deferred tax recoveries recorded by Aphria during the nine months ended February 28, 2021 and the twelve months ended May 31, 2020 which would either not be eligible for recovery or require a valuation allowance as a result of the merger transaction.

5. Pro Forma Loss Per Share

  
Year ended
May 31, 2020
  
9 months ended
February 28, 2021
 
Historical Tilray basic weighted average shares  100,529,641   132,562,924 
Adjustment for warrants exercised (note 3, 4H)  12,791,000   12,791,000 
Incremental shares issued in merger transaction (note 4B)  265,506,241   265,506,241 
Pro forma combined basic and diluted weighted average shares  378,826,882   410,860,165 

On a pro forma basis, the combined company incurred a net loss for the nine months ended February 28, 2021 and the year ended May 31, 2020. As such, all potential shares are excluded from the calculation of pro forma diluted loss per share because they are anti-dilutive.

6. Adjustments to the Historical Financial Information of Aphria

The historical financial information of Aphria was prepared in accordance with IFRS as issued by the IASB and presented in CAD. The historical financial information was translated from CAD to USD using the following historical exchange rates:

 CAD to USD
Period end exchange rate as at February 28, 20210.7883
Average exchange rate for the nine months ended February 28, 20210.7620
Average exchange rate for the year ended May 31, 20200.7460

The table below presents the conversion from IFRS to US GAAP adjustments of Aphria’s adjusted unaudited condensed consolidated statement of financial position as at February 28, 2021:

Adjusted Unaudited Condensed Consolidated Statement of Financial Position (Balance Sheet) of Aphria
(in ‘000)

  
As at
February 28, 2021
IFRS - CAD
  
IFRS to US GAAP differences
CAD
  
Notes
(note 6)
  
As at
February 28, 2021
US GAAP - CAD
  
As at
February 28, 2021
US GAAP - USD
 
Assets               
Current assets               
Cash and cash equivalents $267,134  $     $267,134  $210,590 
Accounts receivable, net  81,890         81,890   64,557 
Prepaids and other current assets  34,732   15,178  vi   49,910   39,346 
Inventory  313,794   (90,189) i

  223,605   176,275 
Biological assets  27,065   (27,065) i

      
Current portion of convertible notes receivable  6,089          6,089   4,800 
Total current assets  730,704   (102,076)      628,628   495,568 
Capital assets  644,711   518  iii   645,229   508,655 
Intangible assets  669,703          669,703   527,949 
Promissory notes receivable and other assets  3,000          3,000   2,365 
Other investments  11,292          11,292   8,902 
Goodwill  745,908   (1,200) vii   744,708   587,078 
Total assets $2,805,318  $(102,758)     $2,702,560  $2,130,517 
Liabilities                    
Current liabilities                    
Accounts payable $58,218  $      $58,218  $45,895 
Accrued expenses and other current liabilities  110,012   (55,575) ii   54,437   42,914 
Income taxes payable  21,246          21,246   16,749 
Current portion of lease liabilities  1,756          1,756   1,384 
Current portion of long-term debt  25,759          25,759   20,307 
Total current liabilties  216,991   (55,575)      161,416   127,249 
Long-term liabilities                    
Lease liabilities  45,004          45,004   35,478 
Long-term debt  233,356          233,356   183,962 
Convertible debentures  622,796          622,796   490,970 
Contingent consideration  76,196          76,196   60,068 
Deferred tax liability, net  44,625   (13,906) vi   30,719   24,217 
Total liabilities  1,238,968   (69,481)      1,169,487   921,944 
Shareholders’ equity                    
Common stock  2,079,173   2,610  ii   2,081,783   1,641,138 
Warrants  360          360   284 
Additional paid-in capital (1)
  29,661   17,674  ii   47,335   37,316 
Accumulated other comprehensive loss  (6,047)  (3,473) v

  (9,520)  (7,505)
Accumulated deficit  (595,182)  (88,033) i

  (646,316)  (509,512)
       35,291  ii         
       381  iii         
       (1,046) iv         
       3,473  v

        
       (1,200) vii         
Total shareholders' equity  1,507,965   (34,323)      1,473,642   1,161,721 
Non-controlling interests  58,385   1,046  iv   59,431   46,851 
Total liabitilities and shareholders' equity $2,805,318  $(102,758)     $2,702,560  $2,130,516 

(1) Historically reported as contributed surplus.

Adjusted Unaudited Condensed Consolidated Statements of Operations (Statements of Loss) of Aphria
(in ‘000)

  
Nine months ended
February 28, 2021
IFRS - CAD
  IFRS to US GAAP differences CAD  
Notes
(note 6)
  Presentation reclassification  
Nine months ended
February 28, 2021
US GAAP - CAD
  
Nine months ended
February 28, 2021
US GAAP - USD
 
Revenue $459,859  $     $17,336  $477,195  $363,633 
Cost of goods sold  335,008      i

  17,336   352,344   268,493 
Gross profit before fair value adjustments  124,851             124,851   95,140 
Fair value adjustment on sale of inventory  102,600   (102,600)  i

         
Fair value adjustment on growth of biological assets  (124,209)  124,209   i

         
Gross profit  146,460   (21,609)         124,851   95,140 
Operating expenses:                        
General and administrative  82,239   2,197  iii      84,436   64,342 
Share-based compensation  54,127   (39,973) ii      14,154   10,786 
Selling  22,383             22,383   17,056 
Amortization  24,848   (1,630) iii      23,218   17,693 
Marketing and promotion  15,421             15,421   11,751 
Research and development  586             586   447 
Transaction costs  37,637             37,637   28,680 
   237,241   (39,406)         197,835   150,755 
Operating loss  (90,781)  17,797          (72,984)  (55,615)
Finance income (expense), net  (23,302)  837  iii      (22,465)  (17,119)
Non-operating income, net  (383,626)  3,750  v

     (379,876)  (289,473)
Loss before income taxes  (497,709)  22,384          (475,325)  (362,207)
Income taxes (recovery)  (11,020)  (6,041) vi      (16,989)  (12,946)
       72  vi             
Net loss $(486,689) $28,353      $  $(458,336) $(349,261)

Adjusted Unaudited Condensed Consolidated Statements of Operations (Statements of Loss) of Aphria
(in ‘000)

  
Year ended
May 31, 2020
IFRS - CAD
  IFRS to US GAAP differences CAD  
Notes
(note 6)
  Presentation reclassification  
Year ended
May 31, 2020
US GAAP - CAD
  
Year ended
May 31, 2020
US GAAP - USD
 
Revenue $543,339  $     $31,611  $574,950  $405,326 
Cost of goods sold  409,580   5,000  i

  31,611   446,191   332,854 
Gross profit before fair value adjustments  133,759   (5,000)         128,759   72,472 
Fair value adjustment on sale of inventory  57,039   (57,039) i

         
Fair value adjustment on growth of biological assets  (115,255)  115,255  i

         
Gross profit  191,975   (63,216)         128,759   72,472 
Operating expenses:                        
General and administrative  99,977   1,512  iii      101,489   75,710 
Share-based compensation  22,500   1,735  ii      24,235   18,079 
Amortization  21,747   (1,455) iii      20,292   15,138 
Selling  21,042             21,042   15,697 
Marketing and promotion  20,464             20,464   15,266 
Research and development  2,568             2,568   1,916 
Impairment  63,971   75  iii      67,935   50,679 
       3,889  iv             
Transaction costs  5,763             5,763   4,299 
   258,032   5,756          263,788   196,784 
Operating loss  (66,057)  (68,972)         (135,029)  (124,312)
Finance income (expense), net  (26,347)  380  iii      (25,967)  (19,371)
Non-operating income, net  11,687   7,341  v

     19,028   14,195 
Loss before income taxes  (80,717)  (61,251)         (141,968)  (129,488)
Income taxes (recovery)  3,917   (15,179) vi      (11,196)  (8,352)
       66  vi             
Net loss $(84,634) $(46,138)     $  $(130,772) $(121,136)

IFRS differs in certain material respects from US GAAP. The following material adjustments have been made to reflect Aphria’s historical consolidated statement of loss on a US GAAP basis for purposes of the unaudited pro forma financial information (expressed in thousands of CAD):

i – Inventory and biological assets
Cannabis plants are accounted for as biological assets and agricultural products under IFRS and US GAAP, respectively. Under IFRS, biological assets are accounted for at fair value less costs to sell and are revalued at each subsequent reporting date up to the point of harvest, upon which time they are transferred into inventories. Any change in fair value is recognized in the period of change within profit or loss. Under US GAAP, agricultural products are accounted for at cost in accordance with guidance on property, plant and equipment or inventories depending on their nature.

The following table reflects the removal of the fair value adjustment that was included in the cost basis of inventories and biological assets under IFRS to reflect cannabis plants at cost in accordance with Accounting Standards Codification 330, Inventory as required under US GAAP and includes a corresponding impact to accumulated deficit:

  
As at
February 28, 2021
 
  CAD 
Inventory $(90,189)
Biological assets  (27,065)
Deferred tax liability, net  (29,221)
Accumulated deficit  (88,033)

The following table reflects the removal of the changes in fair value recognized in the period of change within the statement of operations:

  
Year ended
May 31, 2020
  9 months ended February 28, 2021 
  CAD  CAD 
Cost of goods sold $5,000  $ 
Fair value adjustment on sale of inventory  (57,039)  (102,600)
Fair value adjustment on growth of biological assets  115,255   124,209 
Income taxes (recovery)  (15,179)  (6,041)

ii – Share-based payments
Under US GAAP, Restricted Stock Units (“RSUs”) and Deferred Stock Units (“DSUs”) that can be settled in either cash or equity at the option of Aphria should be classified as equity. Currently, Aphria classifies its RSUs and DSUs as liabilities. Under US GAAP, Aphria measures and recognizes compensation expense for these awards on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards based on their grant date fair value.

The following table reflects the removal of the RSU and DSU liability in accrued expenses and other current liabilities and the reclassification of the awards to equity:

  
As at
February 28,
2021
 
  CAD 
Accrued expenses and other current liabilities $(55,575)
Common stock  2,610 
Additional paid-in capital  17,674 
Accumulated deficit  35,291 

This adjustment also reflects the impact to share-based compensation of C$1,735 for the year ended May 31, 2020 and (C$39,973) for the nine months ended February 28, 2021.

iii – Leases
Under US GAAP, at lease commencement, a lessee classifies a lease as a finance lease or an operating lease (unless the short-term lease recognition exemption is elected). Under IFRS, lessees do not classify leases and all leases are treated under a single model (unless the short-term leases or leases of low-value asset recognition exemptions are elected). For operating leases under US GAAP, the subsequent measurement of the lease liability is based on the present value of the remaining lease payments using the discount rate determined at lease commencement (which would result in the same amount of lease liability as in IFRS), while the right-of-use asset is remeasured at the amount of the lease liability, adjusted for the remaining balance of any lease incentives received, cumulative prepaid or accrued rents, unamortized initial direct costs and any impairment. This treatment under US GAAP generally results in straight-line expense being incurred over the lease term and recorded to general and administrative expenses. IFRS generally yields front-loaded expense recognition. Under IFRS, a constant interest rate is applied to the lease liability, interest expense decreases as cash payments are made during the lease term and the lease liability decreases. Therefore, more interest expense is incurred in the early periods and less in the later periods. This trend in the interest expense, combined with straight-line depreciation of the right-of-use asset, results in a front-loaded expense recognition pattern.

The following table reflects the adjustments to the right-of-use asset for operating leases under US GAAP, the corresponding impact to accumulated deficit and reclassifies the right-of-use asset from property and equipment, net to operating lease, right-of-use assets:

  
As at
February 28,
2021
 
  CAD 
Capital assets $518 
Deferred tax liability, net  137 
Accumulated deficit  381 

For the operating leases under US GAAP, the following table reflects the removal of amortization and interest expense recognized under IFRS and instead includes the straight-line operating lease expense as calculated under US GAAP in general and administrative expenses. Furthermore, additional impairment was recognized for the year ended May 31, 2020 under US GAAP for leases that were fully impaired under IFRS as a result of the adjustments to the associated right-of-use assets:

  
Year ended
May 31, 2020
  9 months ended February 28, 2021 
  CAD  CAD 
General and administrative expenses $1,512  $2,197 
Amortization expenses  (1,455)  (1,630)
Impairment of assets  75    
Finance income (expense), net  (380)  (837)
Income taxes (recovery)  66   72 

iv – Non-controlling interest on acquisition
Under US GAAP, non-controlling interest is measured at fair value on acquisition date. Under IFRS, Aphria measures non-controlling interest at the proportionate share of the fair value of the acquiree’s net identifiable assets and goodwill recorded on consolidation by Aphria would only reflect the acquirer’s share. This approach does not exist under US GAAP and the adjustment reflects the increase in non-controlling interests and accumulated deficit of C$1,046 as of February 28, 2021. As a result of the different approach in recognizing non-controlling interest there is an increase in impairment for the year ended May 31, 2020 of C$3,889.

v – Investments in debt securities
US GAAP requires the use of three categories for the classification and measurement of debt securities based on the entity’s investment intent: held-to-maturity (“HTM”) - measured at amortized cost, trading - measured at fair value through profit or loss (“FVTPL”), available-for-sale (“AFS”) - measured at fair value through other comprehensive income (“FVOCI”). Under US GAAP, Aphria will classify its investments in debt securities as available-for-sale, measured at FVOCI. Since amounts were previously recognized at FVTPL under IFRS, this will result in a presentation reclassification difference.

This adjustment reflects the reversal of gains and losses recorded by Aphria for its investments in debt securities from non-operating income (expense), net into other comprehensive income of (C$7,341) for the year ended May 31, 2020; (C$3,750) for the nine months ended February 28, 2021. This also results in a reclassification of amounts recognized in accumulated deficit to accumulated other comprehensive loss of C$3,473 as of February 28, 2021.

vi – Income taxes
For the purposes of the IFRS to US GAAP adjustments Aphria’s effective income tax rate was 26.5% for the year ended May 31, 2020 and for the nine months ended February 28, 2021. The effective income tax rate was used in determining adjustments to:


Deferred tax liability of (C$13,906) as of February 28, 2021 as a result of the removal of the fair value adjustment of (C$27,065) from biological assets and inventory offset by an increase to the right-of-use asset under US GAAP C$94 and a reclassification of income taxes on intercompany transfers of inventory of C$15,178 that remain within the consolidated group from deferred tax liability to prepaids and other current assets and C$137 from adjustment to leases. Under US GAAP, income tax expense paid by the transferor on intercompany profits from the transfer or sale of inventory within a consolidated group are deferred on consolidation, resulting in the recognition of a prepaid asset for the taxes paid rather than deferred taxes as required under IFRS.

Deferred income tax recoveries of C$15,179 for the year ended May 31, 2020 and C$6,041 for the nine months ended February 28, 2021 as a result of the removal of the fair value adjustments from biological assets and inventory under US GAAP.

Income taxes of C$66 for the year ended May 31, 2020 and C$72 for the nine months ended February 28, 2021 as a result of decreases to operating lease expense under US GAAP.

vii – Cannway Pharmaceuticals Inc.
In the fiscal year ending May 31, 2016, Aphria acquired 100% of the issued and outstanding shares of Cannway Pharmaceuticals Inc. Under IFRS, Aphria treated this transaction as a business combination and accordingly recorded goodwill of C$1,200. Under US GAAP, the transaction did not meet the definition of a business and is considered an asset acquisition. This adjustment reflects the removal of goodwill and includes a corresponding impact to accumulated deficit as the asset is fully amortized as of February 28, 2021.

7. Adjustments to the Historical Financial Information of Tilray
The historical financial information of Tilray was prepared in accordance with US GAAP as issued by the FASB and presented in USD. Tilray’s fiscal year end is December 31 and historical financial information was used to present pro forma financial statements based on the fiscal year of Aphria being May 31.  The constructed statements of net loss reclassify previously disclosed amounts to conform with Tilray’s presentation as of December 31, 2020.

  Adjusted Unaudited Condensed Consolidated Statements of Net Loss of Tilray
(in ‘000 USD)

  
Year ended
December 31, 2020
  
3 months ended
March 31, 2020
  Constructed 9 months ended December 31, 2020 
Revenue $210,482  $52,102  $158,380 
Cost of sales  185,827   41,598   144,229 
Gross profit  24,655   10,504   14,151 
General and administrative expenses  85,883   26,767   59,116 
Sales and marketing expenses  54,666   18,448   36,218 
Research and development expenses  4,411   1,361   3,050 
Depreciation and amortization expenses  13,722   3,591   10,131 
Impairment of assets  61,114   29,839   31,275 
Loss from equity method investments  5,983   1,748   4,235 
Operating loss  (201,124)  (71,250)  (129,874)
Foreign exchange (gain) loss, net  (13,169)  28,069   (41,238)
Change in fair value of warrant liability  100,286   71,978   28,308 
Gain on debt conversion  (61,118)     (61,118)
Interest expenses, net  39,219   9,146   30,073 
Other expense (income), net  10,333   4,651   5,682 
Loss before income taxes  (276,675)  (185,094)  (91,581)
Deferred income tax recoveries  (5,376)  (1,272)  (4,104)
Current income tax (recoveries) expenses  (226)  301   (527)
Net loss $(271,073) $(184,123) $(86,950)
Net loss per share - basic and diluted $(2.15) $(1.73) $(0.66)
Weighted average shares used in computation of net loss per share - basic and diluted  126,041,710   106,463,352   132,562,924 


Adjusted Unaudited Condensed Consolidated Statements of Net Loss of Tilray
(in ‘000 USD)

  
Year ended
December 31, 2019
  
3 months ended
March 31, 2019
  
3 months ended
March 31, 2020
  Constructed 12 months ended March 31, 2020 
Revenue $166,979  $23,038  $52,102  $196,043 
Cost of sales  190,475   17,957   41,598   214,116 
Gross profit (loss)  (23,496)  5,081   10,504   (18,073)
General and administrative expenses  110,903   17,406   26,767   120,264 
Sales and marketing expenses  63,813   8,312   18,448   73,949 
Research and development expenses  9,172   1,517   1,361   9,016 
Depreciation and amortization expenses  11,607   1,865   3,591   13,333 
Impairment of assets  112,070      29,839   141,909 
Acquisition-related (income) expenses, net  (31,427)  4,424      (35,851)
Loss from equity method investments  4,504      1,748   6,252 
Operating loss  (304,138)  (28,443)  (71,250)  (346,945)
Foreign exchange (gain) loss, net  (5,944)  179   28,069   21,946 
Change in fair value of warrant liability        71,978   71,978 
Gain on debt conversion            
Interest expenses, net  34,690   8,744   9,146   35,092 
Finance income from ABG  (764)  (135)     (629)
Other expense (income), net  (2,501)  (3,845)  4,651   5,995 
Loss before income taxes  (329,619)  (33,386)  (185,094)  (481,327)
Deferred income tax recoveries  (8,847)  (3,777)  (1,272)  (6,342)
Current income tax (recoveries) expenses  397   (240)  301   938 
Net loss $(321,169) $(29,369) $(184,123) $(475,923)
Net loss per share - basic and diluted $(3.20) $(0.31) $(1.73) $(4.73)
Weighted average shares used in computation of net loss per share - basic and diluted  100,455,677   94,875,351   106,463,352   100,529,641