Subversive Acquisition LP — Audit Report / Information 2020

Mar 31, 2021

SUBVERSIVE ACQUISITION LP

FINANCIAL STATEMENTS

AS AT AND FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in U.S. Dollars)

Deloitte LLP Bay Adelaide East 8 Adelaide Street West Suite 200 Toronto, ON M5H 0A9 Canada

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Tel: 416-601-6150 Fax: 416 601 6151 www.deloitte.ca

Independent Auditor’s Report

To the Unitholders and the Board of Directors of Subversive Acquisition LP

Opinion

We have audited the financial statements of Subversive Acquisition LP (the “LP”), which comprise the statements of financial position as at December 31, 2020 and 2019, and the statements of income (loss), equity (deficiency) and cash flows for the year or period then ended, and notes to the financial statements, including a summary of significant accounting policies (collectively referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the LP as at December 31, 2020 and 2019, and its financial performance and its cash flows for the year or period then ended in accordance with International Financial Reporting Standards (“IFRS”).

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards (“Canadian GAAS”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the LP in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 2 in the financial statements, which indicates the LP’s limited working capital position, its dependence on the continued support of its Sponsor and/or the completion of the Qualifying Transaction or on the approval of an extension of the permitted timeline should the Qualifying Transaction not be completed by April 8, 2021. As stated in Note 2 these events or conditions indicate that a material uncertainty exists that may cast significant doubt on the LP’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Except for the matter described in the Material Uncertainty Related to Going Concern section, we have determined that there are no other key audit matters to communicate in our auditor’s report.

Other Information

Management is responsible for the other information. The other information comprises Management’s Discussion and Analysis.

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Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor’s report. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the LP’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the LP or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the LP’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the LP’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the LP’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the LP to cease to continue as a going concern.

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• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Mervyn Ramos.

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Chartered Professional Accountants Licensed Public Accountants March 29, 2021

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Financial Statements

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Audited Financial Statements

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Audited Financial Statements

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Audited Financial Statements

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Financial Statements

SUBVERSIVE ACQUISITION LP NOTES TO THE FINANCIAL STATEMENTS

As at and for the years ended December 31, 2020 and 2019 (expressed in U.S. dollars)

1. CORPORATE INFORMATION

Subversive ACQUISITION LP (the “ LP ”, “ we ”, “ our ” or “ us ”) is a limited partnership formed under the laws of the Province of Ontario for the purpose of effecting, directly or indirectly, an acquisition of one or more businesses or assets, by way of a merger, amalgamation, arrangement, equity exchange, asset acquisition, equity purchase, reorganization, or any other similar business combination involving the LP, which we refer to as the “Qualifying Transaction”. Subversive Real Estate Sponsor LLC (“ Subversive Sponsor ”), Inception Altanova Sponsor, LLC and CG Investments Inc. IV are sponsors of the LP (collectively, the “ Sponsors ”). The amended and restated limited partnership agreement (the “ A&R LPA ”) of the LP is filed on SEDAR at www.sedar.com.

The LP was established under the Limited Partnership Act (Ontario) on November 12, 2019. The LP’s head office is located at 135 Grand Street, 2nd Floor, New York, New York 10013 and its registered office is located at 333 Bay Street, Suite 3400, Toronto, Ontario, M5H 2S7, Canada.

Effective February 22, 2021 the Limited Partnership changed its name from “Subversive Real Estate Acquisition REIT LP” to “Subversive ACQUISITION LP”.

The December 31, 2020 financial statements were authorized for issuance by the Board of Directors of the General Partner of the LP on March 29, 2021.

2. SIGNIFICANT EVENTS

Due to its negative working capital position, the LP’s ability to continue as a going concern is dependent upon the continued support of its Sponsors, and/or upon the completion of the Qualifying Transaction or on the approval of an extension of the permitted timeline should the Qualifying Transaction not be completed. There can also be no assurance that we will be successful in completing our Qualifying Transaction. In the event a Qualifying Transaction does not occur the escrowed cash will be returned to Class A restricted voting unit holders and the Sponsors will have no recourse against the escrowed cash.

These uncertainties may cast significant doubt upon the LP’s ability to continue as a going concern and the ultimate appropriateness of using accounting principles applicable to a going concern. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should the LP be unable to continue as a going concern. If the LP is not able to continue as a going concern, the LP may be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in these financial statements. These differences may be material.

On November 12, 2019, the LP issued the general partner interest to Subversive Real Estate Acquisition REIT (GP) Inc. (the “ General Partner ”), the LP’s General Partner, in exchange for proceeds of U.S.$10.00. The General Partner is responsible for the management and control of the LP in accordance with the A&R LPA. On November 12, 2019, the LP issued one proportionate voting unit (“ Proportionate Voting Unit ”) to Subversive Sponsor. On December 31, 2019, the LP issued 58,820 Proportionate Voting Units of the LP to the Founders (“ Founders’ Proportionate Voting Units ”) at approximately U.S.$0.425 per Proportionate Voting Unit for aggregate proceeds of U.S.$25,000. Our Sponsors and the General Partners’ former and current directors and officers, Michael Auerbach, Leland Hensch, Richard Acosta, Omar Mangalji, Scott Baker, Octavio Boccalandro, Craig Hatkoff, Anne Sullivan, Eric Clarke, Michael Miller, Dylan Marcoot and Dylan Hart, comprise our Founders.

Financial Statements

SUBVERSIVE ACQUISITION LP NOTES TO THE FINANCIAL STATEMENTS As at and for the years ended December 31, 2020 and 2019

On January 8, 2020, the LP closed its initial public offering (the “ Offering ”) of 20,000,000 Class A Restricted Voting units (the “ Class A Restricted Voting Units ”) at U.S.$10.00 per Class A Restricted Voting Unit, for gross proceeds of U.S.$200,000,000. Each Class A Restricted Voting Unit consists of one restricted voting unit of the LP (each, a “ Restricted Voting Unit ”) and one right of the LP (each, a “ Right ”). Each Restricted Voting Unit, unless previously redeemed, will be automatically renamed “Limited Partnership Units” following the closing of the Qualifying Transaction (the “ Closing ”). Each Right represents the entitlement to automatically receive, for no additional consideration, one-eighth (1/8) of one Restricted Voting Unit (which at such time will represent one-eighth (1/8) of a Limited Partnership Unit, subject to adjustment under the terms of the Qualifying Transaction). The LP’s Class A Restricted Voting Units commenced trading on the Neo Exchange Inc. (the " Exchange ") under the symbol SVX.UN on January 8, 2020. The Class A Restricted Voting Units separated into Restricted Voting Units and Rights on February 18, 2020, and trade under the symbols “SVX.U” and “SVX.RT.U”, respectively.

In connection with the Offering, the LP granted the underwriters a non-transferable option to purchase up to an additional 3,000,000 Class A Restricted Voting Units, at a price of U.S.$10.00 per Class A Restricted Voting Unit, to cover over-allotments, if any, and for market stabilization purposes. The underwriters partially exercised the over-allotment option to acquire 2,500,000 Class A Restricted Voting Units and the over-allotment closed on January 23, 2020. Due to the partial exercise of the over-allotment option, an aggregate of 1,259 Proportionate Voting Units were relinquished without compensation by the Sponsors on January 23, 2020. As a result, following the exercise of the over-allotment option and relinquishment of the 1,259 Proportionate Voting Units, the Founders own an aggregate of 57,561 Proportionate Voting Units (excluding Proportionate Voting Units underlying the Class B Units).

Concurrent with the closing of the Offering, the Sponsors purchased an aggregate of 512,000 class B Units (“ Class B Units ”) at an offering price of U.S.$10.00 per Class B Unit, for gross proceeds of U.S.$5,120,000. Each Class B Unit consists of 1/100 of a Proportionate Voting Unit and one Right. In connection with the partial exercise of the over-allotment, the Sponsors purchased an aggregate of 12,500 additional Class B Units, for additional gross proceeds of U.S.$125,000.

The proceeds of U.S.$225,000,000 from the Offering were placed in an escrow account (the “ Escrow Account ”) with Olympia Trust Company (“ Olympia ”), pursuant to an escrow agreement between the LP and Olympia (the “ Escrow Agreement ”) and will be released upon consummation of the Qualifying Transaction in accordance with the terms and conditions of the Escrow Agreement.

On October 7, 2020 the LP announced that it had entered into binding agreements to acquire real properties in the amount of approximately US$97.4 million and originate or acquire US$85.4 million of first lien mortgages..

On November 26, 2020, the LP announced that it has determined not to proceed with its previously announced qualifying transaction and that it was exploring an alternative qualifying transaction. The LP also announced that Michael Auerbach and Leland Hensch will become the Chief Executive Officer and Chief Financial Officer, respectively, of the general partner of the LP (the "General Partner"), effective immediately.

On January 4, 2021, the LP announced that it executed a confidential definitive agreement in connection with a potential transaction, which would, if consummated, qualify as the LP’s qualifying transaction. Accordingly, the LP is permitted until April 8, 2021 (15 months following the closing of its initial public offering) to conclude its qualifying transaction.

On January 26, 2021, the LP announced the details of the previously announced entry into a definitive agreement in connection with a potential transaction which would, if consummated, qualify as the LP’s qualifying transaction. Pursuant to the qualifying transaction, the LP will combine with Intercure Ltd.

Financial Statements

SUBVERSIVE ACQUISITION LP NOTES TO THE FINANCIAL STATEMENTS

As at and for the years ended December 31, 2020 and 2019

(“Intercure”) (dba Canndoc) (TASE: INCR), Israel’s leading cannabis company. Canndoc, a wholly owned subsidiary of Intercure, is Israel’s largest licensed cannabis producer and one of the first to offer Good Manufacturing Practices (GMP) certified and pharmaceutical-grade medical cannabis products in pharmacies across Israel.

Concurrently, the LP also announced a US$65 million private placement, pursuant to which, in connection with the closing of the Qualifying Transaction, it will issue 6.5 million units at a price per unit of US$10.00 (the “Private Placement”).

Under the terms of the Qualifying Transaction, Intercure is valued at US$300 million pre-Qualifying Transaction and Private Placement.

Both the Qualifying Transaction and Private Placement are subject to a number of closing conditions, including obtaining shareholder approval from Intercure’s shareholders and listing approval from the NASDAQ.

3. BASIS OF PREPARATION

Basis of preparation

These financial statements of the LP are prepared in accordance with International Financial Reporting Standards (“IFRS’), as issued and effective as at December 31, 2020 and 2019 by the International Accounting Standards Board (“IASB”) and with interpretation of the International Financial Interpretations Committee (“IFRIC”).

Basis of measurement

The audited financial statements of the LP have been prepared on a historical cost basis except for certain financial assets which are carried at fair value. The LP’s functional and presentation currency is the U.S. dollar.

Use of estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant assumptions were used in determining the fair value of Rights attached to the Class A Restricted Voting Units at inception.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Financial instruments

Financial assets and liabilities are recognized when the LP becomes a party to the contractual provisions of the instrument. Financial assets are derecognized when the rights to receive cash flows from the assets have expired or are assigned, and the LP has transferred substantially all risks and rewards of ownership in respect of the asset. Financial liabilities are derecognized when the related obligation is discharged, cancelled or when it expires.

Management determines the classification of financial instruments at initial recognition with reflection of the business model and cash flow characteristics of the financial instruments. Financial assets are classified at fair value through profit or loss (‘‘FVTPL’’) or at amortized cost. Financial liabilities are classified at amortized cost.

Financial Statements

SUBVERSIVE ACQUISITION LP NOTES TO THE FINANCIAL STATEMENTS As at and for the years ended December 31, 2020 and 2019

Financial instruments classified as FVTPL are carried at fair value in the Balance Sheet and any gains or losses are recorded in net income in the period in which they arise. There were no items classified as FVTPL. Financial instruments classified at amortized cost include securities held in escrow. The Class A Restricted Voting Units subject to redemption have been classified as liabilities for accounting purposes and are recorded at amortized cost.

Expected credit losses on financial assets at amortized cost

These financial assets are recognized at fair value and subsequently measured at amortized cost. At each reporting date, the LP measures the loss allowance on these financial assets at an amount equal to the lifetime expected credit losses if the credit risk has increased significantly since initial recognition. If, at the reporting date, the credit risk has not increased significantly since initial recognition, the LP shall measure the loss allowance at an amount equal to 12-month expected credit losses. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default in payments are all considered indicators that a loss allowance may be required.

Income tax

Pursuant to the Limited Partnership Agreement (“the Partnership”), all of the investment income, expense and realized capital gains and losses of the Partnership are allocated to the limited partners and the General Partner. These financial statements do not provide for income taxes as the limited partners and the General Partner are taxed individually on their share of the Partnership’s income.

Per unit information

Basic income or loss per Class B Unit is calculated by dividing the net income or loss by the weighted average number of Class B Units, Proportionate Voting Units and General Partnership Unit outstanding during the period. The calculation excludes the effect of Class A Restricted Voting Units, as the Class A Restricted Voting Units have been classified in these financial statements as financial liabilities.

5. RESTRICTED CASH HELD IN ESCROW

The following cash balances were held in escrow at Olympia trust company as at December 31, 2020:

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These balances are valued at amortized cost which approximates fair value due to the short-term nature of the items.

6. CLASS A RESTRICTED VOTING UNITS SUBJECT TO REDEMPTION

Authorization

The LP is authorized to issue an unlimited number of Class A Restricted Voting Units. The holders of Class A Restricted Voting Units have no pre-emptive rights or other subscription rights and there are no sinking fund provisions applicable to these units.

Financial Statements

SUBVERSIVE ACQUISITION LP NOTES TO THE FINANCIAL STATEMENTS

As at and for the years ended December 31, 2020 and 2019

Voting Rights

The holders of the Class A Restricted Voting Units are entitled to vote on and receive notice of meetings on all matters requiring unitholder approval (including any proposed extension to the permitted timeline and approval of the Qualifying Transaction if otherwise required under applicable law) other than the election and/or removal of directors of the General Partner and auditors of the LP prior to Closing. Prior to the Qualifying Transaction, holders of the Class A Restricted Voting Units are not entitled to vote at (or receive notice of or meeting materials in connection with) meetings held only to consider the election and/or removal of directors and auditors.

Redemption Rights

Only holders of Class A Restricted Voting Units are entitled to have their units redeemed and receive the escrow proceeds (net of applicable taxes and other permitted deductions) in the event the Qualifying Transaction does not occur within the permitted timeline, in the event of the Qualifying Transaction, and in the event of an extension to the permitted timeline. The Rights which were issued with the Class A Restricted Voting units have no redemption rights.

Classification

The LP has classified its Class A Restricted Voting Units as financial liabilities within the balance sheet. The LP recorded a discount to the $225,000,000 of gross proceeds from the Offering in the amount of $19,988,541, representing the fair value of the Rights, and $2,946,522, representing the transaction costs associated with the Class A Restricted Voting Units. The fair value of the Rights was arrived at by dividing the $225,000,000 of Class A Restricted Voting Unit gross proceeds by the fully diluted unit value of the LP and dividing the quotient by eight. The difference between the estimated fair value of the Rights and the Class A Restricted Voting Unit value at the time of the Offering is allocated to the Class A Restricted Voting Unit liability within the balance sheet. The aggregate discount of $22,935,063 is being amortized over 12 months using the effective interest rate method. For the period from January 1, 2020 through December 31, 2020, the LP recorded $22,279,568 of amortization of the issue costs in connection with the Rights. Interest earned on the escrow funds of $1,074,760 has been credited to the Class A Restricted Voting Units.

7. UNITHOLDERS’ DEFICIENCY

The LP is authorized to issue an unlimited number of Class B Units. The holders of Class B Units have no pre-emptive rights or other subscription rights and there are no sinking fund provisions applicable to these units.

Voting Rights

The holders of the Class B Units are entitled to vote at all meetings of unitholders and on all matters requiring a unitholder vote, with the exception of an extension of the permitted timeline, which will only be voted upon by holders of Class A Restricted Voting Units.

Redemption Rights

Holders of Class B Units, being the Founders, do not have access to, and cannot benefit from, any proceeds held in the escrow account, and as such, do not have any redemption rights with respect to their Class B Units. The Founders (including the Sponsors) will, however, be entitled to such redemption rights using proceeds from the escrow account with respect to any Class A Restricted Voting Units they may acquire pursuant to or following the Offering.

Financial Statements

SUBVERSIVE ACQUISITION LP NOTES TO THE FINANCIAL STATEMENTS As at and for the years ended December 31, 2020 and 2019

8. TRANSACTION COSTS

Transaction costs are directly related to the Offering and consist mainly of legal, accounting, printing, filing and underwriting costs. Transaction costs incurred from January 1, 2020 through December 31, 2020 were allocated between Unitholders’ Equity and units subject to redemption on the following basis:

	Class A Restricted Voting Units Class A Rights Class B Units Total
Professional fees (legal, accounting, etc.)	$ 847,411 $ 82,622 $ 21,784 $ 951,817
Underwriters’ commission	$ 1,765,836 $ 172,168 - $1,938,005
Listing	$ 155,996 $ 15,460 - $ 171,455
Other	$ 177,279 $ 17,285 $ 4,557 $ 199,121
Total	$ 2,946,522 $ 287,535 $ 26,341 $3,260,398

The Underwriters are entitled to an underwriting commission equal up to $12,375,000 or 5.5% of the gross proceeds of the Class A Restricted Voting Units issued under the Offering. The LP paid $1,938,005 to the Underwriters at the closing of the Offering, of which $1,413,750 was used to settle CG Investment Inc. IV’s Class B Unit sponsors share purchase obligation. The balance of the underwriting commission of $10,436,995, or 4.6% of the gross proceeds (the “Deferred Amount”) of the Class A Restricted Voting Units, has been deferred and will only be paid upon successful completion of the Qualifying Transaction as follows: (A) as to 3.6% of the gross proceeds to the Underwriters; and (B) as to 1.0% of the gross proceeds, released only at the General Partner’s sole discretion, in whole or in part, as it sees fit, for payment to parties of the General Partner’s choosing and may be paid to the Underwriters. If the Qualifying Transaction is not consummated within the permitted timeline, no Deferred Amount shall be payable. Due to its association with an uncertain future Qualifying Transaction, the contingent liability of deferred underwriting commission balance has not been recorded in the Financial Statements. Transaction costs were prorated between Class A Restricted Voting Units, Class A Rights and Class B Units by the amount of proceeds received.

9. FINANCIAL INSTRUMENTS

All financial instruments for which fair value is recognized or disclosed are categorized within a fair value hierarchy, described as follows:

Level 1 − Quoted market prices in an active market (that are unadjusted) for identical assets or liabilities

Level 2 − Valuation techniques based on inputs that are quoted prices of similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; inputs other than quoted prices used in a valuation model that are observable for that instrument; and inputs that are derived from or corroborated by observable market data by correlation or other means

Level 3 − valuation techniques with significant unobservable market inputs.

The cash and securities held in escrow are measured using level 1 inputs.

10. FINANCIAL RISK MANAGEMENT

Market risk

Market risk is the risk that a material loss arises from fluctuations in a financial instrument’s fair value. For purposes of this disclosure, the LP segregates market risk into two categories: fair value risk and interest rate risk.

Financial Statements

SUBVERSIVE ACQUISITION LP NOTES TO THE FINANCIAL STATEMENTS

As at and for the years ended December 31, 2020 and 2019

Fair value risk

Fair value risk is the potential for loss from an adverse movement in market prices. The LP has minimal fair value risk as the only financial instruments carried at fair value are cash and cash and securities held in escrow.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in interest rates. The LP’s exposure to interest rate risk is nominal.

11. CAPITAL MANAGEMENT

The LP defines the capital that it manages as its Class A Restricted Voting Units and its Unitholders’ Equity.

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The LP’s primary objective in managing capital is to ensure capital preservation in order to benefit from acquisition opportunities as they arise. To the extent that the LP requires additional funding for general ongoing expenses or in connection with the Qualifying Transaction, the LP may seek funding by way of unsecured loans from the Sponsors and/or its affiliates, which loans would bear interest at no more than the U.S. dollar prime rate plus 1.0%. The lender under the loans would not have recourse against the funds held in the escrow account, and thus the loans will not reduce the value thereof. Such loans will collectively be subject to a maximum aggregate principal amount equal to 10% of the escrowed funds and may only be repayable in cash no earlier than the Closing. Such loans may only be convertible into units and/or Rights in connection with the Closing. The LP may also seek to raise additional funds through a rights offering in respect of units available to our unitholders, in accordance with the requirements of applicable securities legislation and the Exchange’s rules, and subject to the consent of the Underwriters, subject to the conditions outlined further in the Prospectus.

12. GENERAL AND ADMINISTRATIVE EXPENSES

The LP had the following general and administrative expenses for the period from January 1, 2020 through December 31, 2020:

December 31, 2020:
Fees connected to qualifying transaction	$ 3,853,094
Regulatory	32,981
Administrative	254,447
Total	$ 4,140,522

13. RELATED PARTY TRANSACTIONS

On March 12, 2020 the LP formally engaged Atlas Management, LLC (“Atlas”) as an independent contractor for the provision of consulting services (the “Services”). Such Services include assistance with the identification and evaluation of real estate assets as potential acquisition targets for the Qualifying Transaction; and the negotiation, execution and closing of such acquisitions, together with such ancillary services as may reasonably be requested from time to time by the LP. Atlas has agreed to make its

Financial Statements

SUBVERSIVE ACQUISITION LP NOTES TO THE FINANCIAL STATEMENTS

As at and for the years ended December 31, 2020 and 2019

Management Team available to perform the Services. Its Management Team includes Richard Acosta, Michael Miller, Eric Clarke, Dylan Marcoot and Dylan Hart, all of whom are Founders of the LP. The term of the LP’s engagement with Atlas will continue until the LP successfully closes the Qualifying Transaction, or if no such transaction takes place on or prior to such time, at the end of any period (including any extensions) permitted for the LP to complete the Qualifying Transaction. During the term, the LP shall pay a consulting fee of $62,500 per month (inclusive of applicable taxes) to Atlas.

The LP has executed an administrative services agreement with Subversive Sponsor, which will make available to the LP administrative support and certain related services as may be required by the LP, including the utilization of office space and utilities. Pursuant to the agreement, in exchange for the administrative services the LP shall pay to Subversive Sponsor a payment of $10,000 per month. For the period from October 1,2020 to December 31, 2020, the LP did not make any payments to Subversive Sponsor. The LP did accrue for the obligation, recording $30,000 of administrative fees, which such amount is included in General & Administrative expenses in the LP’s statement of income and in Accrued Expenses in the LP’s balance sheet and further broken down in footnote 12.

14. SUBSEQUENT EVENTS

On January 4, 2021, the LP announced that it executed a confidential definitive agreement in connection with a potential transaction, which would, if consummated, qualify as the LP’s qualifying transaction. Accordingly, the LP is permitted until April 8, 2021 (15 months following the closing of its initial public offering) to conclude its qualifying transaction.

On January 26, 2021, the LP announced the details of the previously announced entry into a definitive agreement in connection with a potential transaction which would, if consummated, qualify as the LP’s qualifying transaction. Pursuant to the qualifying transaction, the LP will combine with Intercure Ltd. (“Intercure”) (dba Canndoc) (TASE: INCR), Israel’s leading cannabis company. Canndoc, a wholly owned subsidiary of Intercure, is Israel’s largest licensed cannabis producer and one of the first to offer Good Manufacturing Practices (GMP) certified and pharmaceutical-grade medical cannabis products in pharmacies across Israel.

Concurrently, the LP also announced a US$65 million private placement, pursuant to which, in connection with the closing of the Qualifying Transaction, it will issue 6.5 million units at a price per unit of US$10.00 (the “Private Placement”).

Under the terms of the Qualifying Transaction, Intercure is valued at US$300 million pre-Qualifying Transaction and Private Placement.

Both the Qualifying Transaction and Private Placement are subject to a number of closing conditions, including obtaining shareholder approval from Intercure’s shareholders and listing approval from the NASDAQ.

On March 15, 2021 the LP filed its final prospectus in connection with its qualifying transaction which is available on the LP’s SEDAR profile at www.sedar.com .

The LP will hold a meeting on April 6, 2021 and the holders of the Restricted Voting Units and Proportionate Voting Units, will be asked to pass a special resolution relating to the proposed plan of arrangement, pursuant to which the qualifying transaction will be completed. In addition, the unitholders may be asked to pass a special resolution to extend the date by which the LP has to consummate a qualifying transaction. Please refer to SEDAR for more detail.