The British Columbia Securities Commission (BCSC) has granted Ponderous Panda Capital Corp. (the Filer) an exemption from the requirement that audited financial statements must be accompanied by an auditor’s report expressing an unmodified opinion. This exemption pertains to the financial statements of the business acquired by the Filer for the year ended December 31, 2019, under section 3.3 of National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards (NI 52-107).
The exemption was sought because the Filer’s auditor, PricewaterhouseCoopers LLP, could not verify the opening inventory quantities of the acquired business as of January 1, 2019, and therefore issued a modified opinion. However, the auditor was able to obtain sufficient evidence for the inventory balances as of December 31, 2019.
The Filer, a capital pool company listed on the TSX Venture Exchange, is in the process of a business combination with Wildpack Beverage Alberta Inc. (the Target), which will result in the Target becoming a subsidiary of the Filer. The Target, a non-reporting issuer, was previously a holding company with minimal operations until it acquired significant assets and liabilities of two operating entities in June 2020.
The exemption is conditional upon the Filer filing the required financial statements with the Filing Statement and the Resulting Issuer filing the financial statements within the prescribed period under section 4.10(2) of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102). The only modification in the auditor’s report must be related to the opening inventory (the Inventory Modification).
The decision is based on the understanding that the exemption meets the test set out in the securities legislation and is consistent with the guidance provided in paragraph 5.8(2) of Companion Policy 41-101CP to National Instrument 41-101 General Prospectus Requirements, which allows for qualified opinions on opening inventory under certain conditions.