NOVA

C A N N A B I S I N C .

(FORMERLY YSS CORP.)

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Three and Nine Months Ended September 30, 2021 and 2020

(Unaudited, expressed in thousands of Canadian dollars)

Nova Cannabis Inc.

Condensed Interim Consolidated Statements of Financial Position

(Unaudited, in thousands of Canadian dollars)

As at

As at

Note

September 30,

December 31,

2021

2020

$

$

Assets

15,464

1,202

Current assets:

Cash

5

Restricted cash

-

235

Receivables

420

273

Inventory

6,630

2,558

Prepaid expenses and deposits

3,802

2,234

Deposits

7

26,316

6,502

Intangible assets

29,115

17,273

Property and equipment

8

968

368

Goodwill

47,913

32,264

Right‐of‐use assets

3b

440

429

19,270

-

Liabilities

17

124,022

56,836

Current liabilities:

8,067

3,194

Accounts payable and accrued liabilities

Revolving credit facility

6, 17

-

22

Redemption obligation

5

-

1,128

Current portion of lease liabilities

8

5,146

3,509

Warrant liabilities

11

172

-

8

13,385

7,853

Lease liabilities

46,741

31,922

Shareholders' equity:

10

60,126

39,775

Equity attributable to shareholders

97,618

37,273

Contributed surplus

1,974

-

Deficit

(35,696)

(20,212)

63,896

17,061

Commitments

20

124,022

56,836

Subsequent event

21

The accompanying notes are an integral part of the condensed interim consolidated financial statements.

Nova Cannabis Inc. | Third Quarter Condensed Interim Consolidated Financial Statements

1

Nova Cannabis Inc.

Condensed Interim Consolidated Statements of Changes in Equity

Nine Months Ended September 30, 2021 and 2020

(Unaudited, in thousands of Canadian dollars)

Partner's

Contributed

capital

Deficit

Total

contribution

surplus

$

$

$

$

Opening balance - as at January 1, 2020

13,500

-

(18,139)

(4,639)

Net earnings and comprehensive income for the period

-

-

1,098

1,098

Issuance of partnership units

23,773

-

-

23,773

Balance - as at September 30, 2020

37,273

-

(17,041)

20,232

Share capital

Contributed

Deficit

Total

(note 10)

surplus

$

$

$

$

Opening balance - as at January 1, 2021

37,273

-

(20,212)

17,061

Loss and comprehensive loss for the period

-

-

(15,484)

(15,484)

Business combination (note 3b)

22,750

200

-

22,950

Issuance of common shares

40,057

-

-

40,057

Share issuance costs (note 3d)

(3,594)

653

-

(2,941)

Warrants transferred to contributed surplus (note 11)

-

1,121

-

1,121

Common shares issued for asset acquisition (note 4)

1,132

-

-

1,132

Balance - as at September 30, 2021

97,618

1,974

(35,696)

63,896

The accompanying notes are an integral part of the condensed interim consolidated financial statements.

Nova Cannabis Inc. | Third Quarter Condensed Interim Consolidated Financial Statements

2

Nova Cannabis Inc.

Condensed Interim Consolidated Statements of Profit and Loss and Comprehensive Income and Loss Three and Nine Months Ended September 30, 2021 and 2020

(Unaudited, in thousands of Canadian dollars except for per common share data)

Three months ended

Nine months ended

September 30,

September 30,

Note

2021

2020

2021

2020

$

$

$

$

Sales

38,655

15,978

86,738

46,049

Cost of sales

32,136

10,627

70,260

30,571

Gross margin

14

6,519

5,351

16,478

15,478

Selling and distribution expenses

5,677

2,643

13,784

8,439

Administrative expenses

15

1,552

147

5,218

442

Management fee

17

312

500

1,125

1,500

Operating (loss) profit before depreciation,

(1,022)

2,061

(3,649)

5,097

remeasurements and provisions

7, 8

Depreciation and amortization

2,745

1,326

7,561

3,758

Impairment, lease remeasurements and other costs

16

1,282

(1,114)

2,086

(1,161)

Operating (loss) profit

(5,049)

1,849

(13,296)

2,500

Finance costs

896

476

2,210

1,402

Net loss (gain) on fair value adjustments

292

-

(22)

-

Net (loss) earnings and comprehensive (loss)

(6,237)

1,373

(15,484)

1,098

income

Basic and diluted (loss) earnings per share

13

(0.11)

0.10

(0.31)

0.08

The accompanying notes are an integral part of the condensed interim consolidated financial statements.

Nova Cannabis Inc. | Third Quarter Condensed Interim Consolidated Financial Statements

3

Nova Cannabis Inc.

Condensed Interim Consolidated Statements of Cash Flows

Three and Nine Months Ended September 30, 2021 and 2020

(Unaudited, in thousands of Canadian dollars)

Three months ended

Nine months ended

September 30,

September 30,

Note

2021

2020

2021

2020

Cash provided by (used in)

$

$

$

$

(6,237)

1,373

(15,484)

1,098

Operating activities:

(Loss) earnings for the period

Adjustments to reconcile (loss) earnings to net

cash flows from operating activities:

7

1,127

494

3,311

1,410

Depreciation of property and equipment

Depreciation of right-of-use assets

8

1,581

832

4,076

2,333

Acquisition related expense

4

1,175

-

1,175

-

Loss on disposal of assets

6a

37

-

174

15

Non-cash interest on revolving credit facility

-

-

39

-

Lease remeasurements

8

107

(1,114)

54

(1,161)

Impairment of property and equipment

7

-

-

607

-

Impairment of right-of-use assets

8

-

-

250

-

Net loss (gain) on fair value adjustments

292

-

(22)

-

Cash (used in) provided by operating activities

(1,918)

1,585

(5,820)

3,695

before changes in non-cash working capital

18

Net change in non-cash working capital items

1,073

1,118

(3,563)

6,416

(845)

2,703

(9,383)

10,111

Investing activities:

(6,891)

(792)

(8,728)

(6,720)

Purchase of property and equipment

Purchase of intangible assets

(11)

-

(11)

-

Proceeds on disposal of property and equipment

3b

-

28

-

28

Business combination, cash acquired

-

-

406

-

Redemption obligation payment

5

-

-

(1,084)

(823)

(6,902)

(764)

(9,417)

(7,515)

Financing activities:

8

(1,696)

(865)

(4,028)

(2,321)

Principal portion of lease payments

Proceeds from revolving credit facility

6a

-

-

3,335

-

Repayments of revolving credit facility

-

-

(3,396)

-

Repayments of long-term debt

6b

-

-

(200)

-

Issuance of common shares, net of cash share

-

-

37,116

-

issuance costs

(1,696)

(865)

32,827

(2,321)

(Decrease) increase in cash and restricted cash

(9,443)

1,074

14,027

275

Cash and restricted cash - Beginning of period

Cash and restricted cash - End of period

24,907

1,386

1,437

2,185

Deduct: Restricted cash - End of period

15,464

2,460

15,464

2,460

-

(392)

-

(392)

Cash - End of period

15,464

2,068

15,464

2,068

The accompanying notes are an integral part of the condensed interim consolidated financial statements.

Nova Cannabis Inc. | Third Quarter Condensed Interim Consolidated Financial Statements

4

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Nova Cannabis Inc. published this content on 18 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 November 2021 17:22:11 UTC.