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EX-99.3 - EX-99.3 - Daseke, Inc.ex-99d3.htm
EX-99.1 - EX-99.1 - Daseke, Inc.ex-99d1.htm
EX-23.1 - EX-23.1 - Daseke, Inc.ex-23d1.htm
8-K/A - 8-K/A - Daseke, Inc.f8-ka.htm

Exhibit 99.2

 

image1.jpeg

 

 

 

 

 

 

 

 

AVEDA TRANSPORTATION AND ENERGY SERVICES INC.

 

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three months ended March 31, 2018 and 2017

(Unaudited)

 

 

 

 

 


 

Picture 2

 

AVEDA TRANSPORTATION AND ENERGY SERVICES INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

(Unaudited)

(In thousands of Canadian dollars)

 

 

 

 

 

 

 

 

 

 

 

 

    

Note

    

March 31,
2018

    

December 31,
2017

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash

 

 

 

$

212 

 

$

238 

 

Trade and other receivables

 

 

 

 

49,053 

 

 

46,068 

 

Prepaid expenses

 

 

 

 

2,420 

 

 

2,703 

 

 

 

 

 

 

51,685 

 

 

49,009 

 

 

 

 

 

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

 

 

 

 

Equipment and leaseholds

 

 

 

 

90,621 

 

 

88,538 

 

Intangible assets

 

 

 

 

210 

 

 

275 

 

Total assets

 

 

 

$

142,516 

 

$

137,822 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Trade and other payables

 

 

 

$

33,885 

 

$

30,423 

 

Current tax payable

 

 

 

 

85 

 

 

184 

 

 

 

 

 

 

33,970 

 

 

30,607 

 

 

 

 

 

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

 

 

 

 

 

Loans and borrowings

 

 

 

39,776 

 

 

38,880 

 

Note payable

 

 

 

 

34,814 

 

 

33,872 

 

 

 

 

 

 

74,590 

 

 

72,752 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

Share capital

 

 

 

 

112,448 

 

 

112,448 

 

Warrants

 

 

 

 

139 

 

 

139 

 

Contributed surplus

 

 

 

 

14,460 

 

 

14,443 

 

Accumulated other comprehensive income

 

 

 

 

13,181 

 

 

12,443 

 

Deficit

 

 

 

 

(106,272)

 

 

(105,010)

 

 

 

 

 

 

33,956 

 

 

34,463 

 

Total liabilities and shareholders’ equity

 

 

 

$

142,516 

 

$

137,822 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

Approved by the Board of Directors

 

 

 

 

"David Werklund"

 

"Paul Shelley"

 

Director

 

Director

 

 

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Picture 2

 

AVEDA TRANSPORTATION AND ENERGY SERVICES INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands of Canadian dollars, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

    

Note

    

2018 

    

2017 

 

Revenue

 

 

 

$

60,202 

 

$

40,962 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

Direct operating

 

 

 

 

54,622 

 

 

38,030 

 

Selling and administrative

 

 

 

 

5,025 

 

 

4,475 

 

Foreign exchange loss (gain)

 

 

 

 

 

 

(2)

 

Loss (gain) on disposal of equipment

 

 

 

 

103 

 

 

(16)

 

Finance costs

 

 

 

 

1,656 

 

 

1,751 

 

Loss before income taxes

 

 

 

 

(1,205)

 

 

(3,276)

 

 

 

 

 

 

 

 

 

 

 

Income taxes:

 

 

 

 

 

 

 

 

 

Current tax expense

 

 

 

 

57 

 

 

136 

 

 

 

 

 

 

57 

 

 

136 

 

Net loss

 

 

 

 

(1,262)

 

 

(3,412)

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

Foreign currency translation differences

 

 

 

 

738 

 

 

(301)

 

Comprehensive loss

 

 

 

$

(524)

 

$

(3,713)

 

 

 

 

 

 

 

 

 

 

 

Loss per share

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

$

(0.02)

 

$

(0.10)

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

 

57,362 

 

 

35,167 

 

 

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

 

 

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Picture 2

 

AVEDA TRANSPORTATION AND ENERGY SERVICES INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

(In thousands of Canadian dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Share
Capital

    

Warrants

    

Contributed
Surplus

    

Accumulated
Other
Comprehensive
Income

    

Deficit

    

Total

 

Balance, January 1, 2018

 

$

112,448 

 

$

139 

 

$

14,443 

 

$

12,443 

 

$

(105,010)

 

$

34,463 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

(1,262)

 

 

(1,262)

 

Foreign currency translation differences

 

 

 

 

 

 

 

 

738 

 

 

 

 

738 

 

Stock-based compensation expense

 

 

 

 

 

 

17 

 

 

 

 

 

 

17 

 

Balance, March 31, 2018

 

$

112,448 

 

$

139 

 

$

14,460 

 

$

13,181 

 

$

(106,272)

 

$

33,956 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Share
Capital

    

Warrants

    

Contributed
Surplus

    

Accumulated
Other
Comprehensive
Income

    

Deficit

    

Total

 

Balance, January 1, 2017

 

$

91,476 

 

$

 

$

13,856 

 

$

14,407 

 

$

(96,991)

 

$

22,748 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

(3,412)

 

 

(3,412)

 

Issuance of common shares

 

 

20,825 

 

 

 

 

 

 

 

 

 

 

20,825 

 

Issuance of warrants

 

 

 

 

139 

 

 

 

 

 

 

 

 

139 

 

Foreign currency translation differences

 

 

 

 

 

 

 

 

(301)

 

 

 

 

(301)

 

Stock-based compensation expense

 

 

 

 

 

 

162 

 

 

 

 

 

 

162 

 

Balance, March 31, 2017

 

$

112,301 

 

$

139 

 

$

14,018 

 

$

14,106 

 

$

(100,403)

 

$

40,161 

 

 

 

 

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Picture 2

 

AVEDA TRANSPORTATION AND ENERGY SERVICES INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands of Canadian dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

    

Note

    

2018 

    

2017 

 

Cash provided by (used in)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating activities:

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

$

(1,262)

 

$

(3,412)

 

Items not affecting cash:

 

 

 

 

 

 

 

 

 

Depreciation of equipment and leaseholds

 

 

 

 

3,762 

 

 

3,875 

 

Amortization of intangible assets

 

 

 

 

65 

 

 

65 

 

Finance costs

 

 

 

 

1,656 

 

 

1,751 

 

Foreign exchange loss (gain)

 

 

 

 

 

 

(2)

 

Loss (gain) on disposal of equipment and leaseholds

 

 

 

 

103 

 

 

(16)

 

Stock-based compensation expense

 

 

 

 

17 

 

 

162 

 

Income tax expense

 

 

 

 

57 

 

 

136 

 

Changes in non-cash balances relating to operations

 

 

 

1,623 

 

 

4,103 

 

Income tax paid

 

 

 

 

(160)

 

 

 

Finance costs paid

 

 

 

 

(1,785)

 

 

(1,472)

 

Net cash provided by operating activities

 

 

 

 

4,077 

 

 

5,190 

 

 

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

 

 

Purchase of equipment and leaseholds

 

 

 

 

(3,929)

 

 

(495)

 

Proceeds from disposal of equipment and leaseholds

 

 

 

 

11 

 

 

16 

 

Net cash used in investing activities

 

 

 

 

(3,918)

 

 

(479)

 

 

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

 

Issuance of common shares, net of share issuance costs

 

 

 

 

-

 

 

20,964 

 

Repayment of loans and borrowings

 

 

 

(187)

 

 

(25,936)

 

Net cash used in financing activities

 

 

 

 

(187)

 

 

(4,972)

 

 

 

 

 

 

 

 

 

 

 

Effect of foreign exchange rate changes on cash balances

 

 

 

 

 

 

 

Change in cash

 

 

 

 

(26)

 

 

(261)

 

 

 

 

 

 

 

 

 

 

 

Cash, beginning of period

 

 

 

 

238 

 

 

344 

 

 

 

 

 

 

 

 

 

 

 

Cash, end of period

 

 

 

$

212 

 

$

83 

 

 

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

 

 

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Picture 6

 

Aveda Transportation and Energy Services Inc.

 

Notes to the Condensed Consolidated Interim Financial Statements

(Dollar amounts are Canadian dollars, all amounts, except per share amounts, are in thousands unless otherwise specified)

 

Three months ended March 31, 2018 and 2017 (Unaudited)

 

1.    Reporting Entity

 

Aveda Transportation and Energy Services Inc. (the "Company") was incorporated pursuant to the laws of the Province of Alberta and is a publicly-traded company listed on the TSX Venture Exchange ("TSXV") under the symbol "AVE". The Company’s registered office is Suite 1600, 333 – 7th Avenue S.W., Calgary, Alberta, T2P 3C4. The Company’s primary business activity is the provision of specialized equipment and services for the transportation of equipment required for the exploration, development and production of petroleum resources. The Company operates in Western Canada and the United States.

 

2.    Basis of Preparation

 

a)    Statement of Compliance

 

These condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board (“IASB”) and effective as of March 31, 2018.

 

These condensed consolidated interim financial statements were authorized for issue by the Board of Directors on May 29, 2018.

 

b)    Basis of Measurement

 

These condensed consolidated interim financial statements have been prepared on the historical cost basis.

 

c)    Functional and Presentation Currency

 

These condensed consolidated interim financial statements are presented in Canadian dollars which is the functional currency of the Company and its Canadian subsidiary. The Company’s United States ("U.S.") subsidiaries have a functional currency of U.S. dollars. As the Company has operations in the United States, the consolidated financial results may vary between periods due to the effect of foreign exchange fluctuations in translating the revenues and expenses of its operations in the United States to Canadian dollars. All financial information presented in Canadian dollars has been rounded to the nearest thousand except for per share amounts.

 

d)    New Standards and Interpretations not yet Adopted

 

IFRS 16, Leases

 

This standard introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee is required to recognize a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. The Company intends to adopt IFRS 16 in its financial statements for the annual period beginning on January 1, 2019. The Company is currently in the process of identifying leasing contracts to determine the impact that the adoption of IFRS 16 may have on its financial statements.

 

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Picture 6

 

Aveda Transportation and Energy Services Inc.

 

Notes to the Condensed Consolidated Interim Financial Statements

(Dollar amounts are Canadian dollars, all amounts, except per share amounts, are in thousands unless otherwise specified)

 

Three months ended March 31, 2018 and 2017 (Unaudited)

 

3.    Significant Accounting Policies

 

The accounting policies applied by the Company in these condensed interim financial statements are the same as those applied by the Company in its financial statements as at and for the year ended December 31, 2017, except for the adoption of IFRS 15, Revenue from Contracts with Customers, and IFRS 9, Financial Instruments. The Company adopted the two standards on January 1, 2018.

 

These unaudited condensed interim financial statements should be read in conjunction with the audited financial statements and notes thereto as at and for the year ended December 31, 2017 as filed on SEDAR.

 

a)    IFRS 15 – Revenue from Contracts

 

The Company adopted IFRS 15, “Revenue from Contracts with Customers” on January 1, 2018. The Company reviewed its revenue streams and major contracts with customers using the IFRS 15 five-step model and there were no material changes to revenue recognition or net earnings. Under this method, there was no effect to opening deficit from the application of IFRS 15 to revenue contracts in progress at January 1, 2018.

 

Revenue recognition policy:

 

The majority of the Company’s revenue is sourced from moving oil and gas rigs for the energy sector (see note 4 b)). The contracts underlying such service work are generally fixed price and the work performed generally lasts 1 to 3 days and performance obligations in the underlying contract are satisfied over time and, accordingly, revenue is recognized as those obligations are satisfied.

 

b)    IFRS 9 – Financial Instruments

 

The Company adopted IFRS 9, “Financial Instruments” on January 1, 2018. The transition to IFRS 9 had no material effect on the Company’s financial statements.

 

IFRS 9 contains three principal classification categories for financial assets: measured at amortized cost, fair value through other comprehensive income (“FVOCI”); or fair value through profit or loss (“FVTPL”). The classification of financial assets under IFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. IFRS 9 eliminates the previous IFRS 39 categories of held to maturity, loans and receivables and available for sale. Under IFRS 9, derivatives embedded in contracts where the host is a financial asset in the scope of the standard are never separated. Instead, the hybrid financial instrument as a whole is assessed for classification. The new standard also introduces an expected credit loss model for evaluating impairment of financial assets, which results in credit losses being recognized earlier than the previous standard.

 

The classification of cash was changed from fair value to assets at amortized costs. Changes in the classification of cash did not result in an adjustment to carrying values. Accounts receivable continue to be measured at amortized cost and are now classified as “assets amortized costs”. The Company’s classification of accounts payable, accrued liabilities, loans and borrowings, and notes payable changed from other financial liabilities to financial liabilities at amortized cost and they continue to be carried at

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Picture 6

 

Aveda Transportation and Energy Services Inc.

 

Notes to the Condensed Consolidated Interim Financial Statements

(Dollar amounts are Canadian dollars, all amounts, except per share amounts, are in thousands unless otherwise specified)

 

Three months ended March 31, 2018 and 2017 (Unaudited)

 

amortized cost. This did not result in a change in the carrying values. The Company has not designated any financial instruments as FVOCI or FVTPL. The Company does not have any hedging relationships.

 

4.    Segment Information

 

a)    Operational Segments

 

The Company has two operating segments. These two operating segments have been differentiated by the geography in which the business operates. The following table provides financial results by segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

Period ended March 31, 2018

 

 

    

United States

    

Canada

    

Corporate

    

Total

 

Revenue

 

54,986 

 

5,216 

 

 

60,202 

 

Net loss

 

(724)

 

(444)

 

(94)

 

(1,262)

 

Depreciation and amortization

 

3,162 

 

664 

 

 

3,827 

 

Capital expenditures

 

3,304 

 

625 

 

 

3,929 

 

Total assets

 

121,706 

 

20,744 

 

66 

 

142,516 

 

Adjusted EBITDA1 (loss)

 

4,588 

 

(111)

 

(78)

 

4,399 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period ended March 31, 2017

 

 

    

United States

    

Canada

    

Corporate

    

Total

 

Revenue

 

36,474 

 

4,488 

 

 

40,962 

 

Net loss

 

(2,224)

 

(967)

 

(221)

 

(3,412)

 

Depreciation and amortization

 

3,256 

 

684 

 

 

3,940 

 

Capital expenditures

 

356 

 

139 

 

 

495 

 

Total assets

 

110,977 

 

19,639 

 

150 

 

130,766 

 

Adjusted EBITDA1 (loss)

 

3,141 

 

(526)

 

(56)

 

2,559 

 

 

(1)   Adjusted EBITDA (loss) is earnings or loss before interest, taxes, depreciation and amortization, excluding foreign exchange gains or losses, write downs of intangible assets, goodwill impairment, financing costs, gains or losses on disposal of assets, stock based compensation, fees and expenses on settlement of debt and losses on extinguishment of debt, acquisition related costs and earn out adjustments, and gain or loss on business combination.

 

b)    Lines of Service

 

The Company earns revenue predominantly by providing specialized transportation services required for the drilling exploration, development and production of petroleum resources. In addition, the Company rents equipment for oilfield operations, provides

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Picture 6

 

Aveda Transportation and Energy Services Inc.

 

Notes to the Condensed Consolidated Interim Financial Statements

(Dollar amounts are Canadian dollars, all amounts, except per share amounts, are in thousands unless otherwise specified)

 

Three months ended March 31, 2018 and 2017 (Unaudited)

 

production and completion services, heavy haul services in Canada, and storage services which have all been included in the other category below. The following table provides revenue by lines of service:

 

 

 

 

 

 

 

 

 

Three months ended March 31,

 

 

    

2018 

    

2017 

 

Rig moving services

 

54,704 

 

36,579 

 

Other

 

5,498 

 

4,383 

 

Consolidated revenue

 

60,202 

 

40,962 

 

 

5.    Loss Per Share

 

a)    Basic and Diluted Loss Per Share

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31,

 

 

    

2018 

    

2017 

 

Basic and diluted

 

 

 

 

 

 

 

Net loss

 

$

(1,262)

 

$

(3,412)

 

Weighted average number of common shares outstanding

 

 

57,362 

 

 

35,167 

 

Basic loss per share

 

$

(0.02)

 

$

(0.10)

 

 

The weighted average number of common shares outstanding is calculated as follows:

 

 

 

 

 

 

 

 

 

Three months ended March 31,

 

 

    

2018 

    

2017 

 

Issued common shares  at January 1

 

57,362 

 

19,080 

 

Weighed average shares  issued in the quarter

 

 

16,087 

 

Weighted average number  of common shares  at March 31

 

57,362 

 

35,167 

 

 

As at March 31, 2018 and 2017, all options and instruments were excluded from the diluted weighted average number of common shares calculation as their effect would have been anti-dilutive.

 

6.    Changes in Non-Cash Balances Relating to Operations

 

 

 

 

 

 

 

 

 

Three months ended March 31

    

 

2018 

    

 

2017 

 

Trade and other receivables

 

$

(1,826)

 

$

(5,554)

 

Prepaid expenses

 

 

339 

 

 

801 

 

Trade and other payables

 

 

3,088 

 

 

8,861 

 

Impact of  foreign exchange

 

 

22 

 

 

(5)

 

 

 

$

1,623 

 

$

4,103 

 

 

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Picture 6

 

Aveda Transportation and Energy Services Inc.

 

Notes to the Condensed Consolidated Interim Financial Statements

(Dollar amounts are Canadian dollars, all amounts, except per share amounts, are in thousands unless otherwise specified)

 

Three months ended March 31, 2018 and 2017 (Unaudited)

 

7.    Loans and Borrowings

 

As at March 31, 2018, the Company had utilized $41,001 (December 31, 2017 - $40,344) of its revolving credit facility resulting in Undrawn Availability (as defined in the facility agreement) on this facility of $33,011 (December 31, 2017 - $34,338). Loans and borrowings are reported net of unamortized finance fees on the balance sheet. As at March 31, 2018 unamortized finance fees were $1,225 (December 31, 2017 - $1,464).

 

8.    Subsequent Events

 

On April 16, 2018, the Company entered into a formal Arrangement Agreement with Daseke, Inc. (“Daseke”) whereby Daseke proposed to acquire all of the Common Shares of the Company (the “Transaction”) for $0.90 per share plus contingent consideration (if any) should certain EBITDA levels be met post Transaction. Should the Transaction be completed, it would be subject to customary shareholder and regulatory approvals, none of which had been obtained at the time these financial statements were approved.

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