/R E P E A T -- Canopy Growth Corporation Reports Third Quarter Fiscal 2019 Financial Results: Gross Sales of $98M; Net Revenue hits record $83M/

CANOPY GROWTH CORPORATION

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2018 AND 2017

Three Months Ended

Nine Months Ended

UNAUDITED

December 31,

December 31,

December 31,

December 31,

(Expressed in CDN $000's)

2018

2017

2018

2017

(Restated)

(Restated)

Net inflow (outflow) of cash related to the following activities:

Operating

Net loss

$

74,860

$

11,014

$

(346,732)

$

227

Adjustments for:

Depreciation of property, plant and equipment

5,257

2,324

15,703

6,360

Amortization of intangible assets

2,633

2,863

7,869

9,175

Share of loss on equity investments

2,089

-

9,021

170

Fair value changes in biological assets included in inventory sold and other charges

28,105

24,204

105,989

47,836

Unrealized gain on changes in fair value of biological assets

(22,267)

(28,845)

(90,500)

(79,221)

Share-based compensation

64,090

19,015

194,686

30,249

Loss on disposal of property, plant and equipment and intangible assets

(397)

385

1,443

553

Other assets

1,902

(5,286)

(16,908)

(1,932)

Other income and expense

(215,188)

(40,972)

(45,919)

(40,972)

Income tax (recovery) expense

1,041

7,595

(1,398)

9,635

Non-cash interest and FX impact on assets

1,804

-

1,394

-

Changes in non-cash operating working capital items

(40,692)

(14,020)

(129,547)

(26,675)

Net cash used in operating activities

(96,763)

(21,723)

(294,899)

(44,595)

Investing

Purchases and deposits of property, plant and equipment and assets in process

(202,057)

(60,581)

(495,236)

(86,107)

Purchases of intangible assets and intangibles in process

(33,800)

(751)

(40,140)

(1,033)

Proceeds on disposals of property and equipment

-

-

-

75

Purchases of marketable securities

(799,418)

-

(802,247)

(118)

Proceeds on assets classified as held for sale

-

-

-

7,000

Investments in associates

15,238

(12,887)

(27,201)

(18,824)

Investments in other financial assets

(44,376)

(19,020)

(74,071)

(27,732)

Net cash outflow on acquisition of BC Tweed NCI

-

-

(1,000)

-

Net cash outflow on acquisition of Spectrum Chile NCI

3

-

(996)

-

Net cash inflow (outflow) on acquisition of  subsidiaries

(344,899)

(3,241)

(344,472)

(3,600)

Net cash used in investing activities

(1,409,309)

(96,480)

(1,785,363)

(130,339)

Financing

Payment of share issue costs

(11,798)

(1,166)

(18,617)

(1,345)

Proceeds from issuance of common shares and warrants

5,072,500

244,990

5,072,500

269,990

Proceeds from issuance of shares by Canopy Rivers

-

-

91,218

35,113

Proceeds from exercise of stock options

15,104

4,109

28,730

7,544

Proceeds from exercise of warrants

18,551

154

18,684

681

Issuance of long-term debt

-

-

600,000

-

Payment of long-term debt issue costs

-

-

(16,380)

-

Repayment of finance lease obligations

(2,624)

-

(2,728)

-

Repayment of long-term debt

(2,856)

(387)

(3,499)

(1,141)

Net cash provided by financing activities

5,088,877

247,700

5,769,908

310,842

Effect of exchange rate changes on cash and cash equivalents

103,664

-

103,664

-

Net cash inflow

3,686,469

129,497

3,793,310

135,908

Cash and cash equivalents, beginning of period

429,401

115,494

322,560

101,800

Cash and cash equivalents, end of period

$

4,115,870

$

244,991

$

4,115,870

$

237,708

CANOPY GROWTH CORPORATION

Adjusted EBITDA¹Non-GAAP Measure

Three Months Ended

Nine Months Ended

(In CDN$000's)

December 31,
2018

December 31,
2017

December 31,
2018

December 31,
2017

(Restated)

(Restated)

Adjusted EBITDA¹Reconciliation

Loss from operations - as reported

$

(157,241)

$

(26,032)

$

(316,427)

$

(31,249)

IFRS fair value accounting related to biological assets and inventory

Fair value changes in biological assets included in inventory sold and other charges

28,105

24,204

105,989

47,836

Unrealized gain on changes in fair value of biological assets

(22,267)

(28,845)

(90,500)

(79,221)

5,838

(4,641)

15,489

(31,385)

Share-based compensation expense (per statement of cash flows)²

64,090

19,015

194,686

30,249

Excess space provision included in general and administration expenses

(178)

-

4,068

-

Acquisition Costs

4,520

790

9,606

2,491

Depreciation and amortization (per statement of cash flows)

7,890

5,187

23,572

15,535

76,322

24,992

231,932

48,275

Adjusted EBITDA

$

(75,081)

$

(5,681)

$

(69,006)

$

(14,359)

1 - Adjusted EBITDA is Earnings Before Interest, Tax, and Depreciation, stock compensation, fair value changes and other non-cash items, and as adjusted for acquisition related items.

2 - Includes $23,849 and $8,914 for the three months ended December 31, 2018 and 2017, respectively, in share-based compensation expense related to acquisition milestones