Adira Energy Ltd.

December 29, 2017

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – An issuer proposes to complete a reverse take-over transaction with a target company – The issuer applied for relief from the requirements in section 4.10(2)(a)(ii) of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) and Item 5.2 of Form 51-102F3 Material Change Report to file, in respect of the proposed transaction, historical audited annual financial statements of the target company – Target company is unable to provide the required historical financial statements due to being unable to access the proper accounting records of certain of the Target’s subsidiaries in order to prepare consolidated financial statements for the period prior to July 1, 2015 – Litigation has failed to resolve this issue and continues to be ongoing – Issuer will provide alternative financial statements in the listing statement in respect of the target company including audited consolidated financial statements for the six-month period ended December 31, 2015, audited annual consolidated financial statements for the year ended December 31, 2016 and audited consolidated interim financial statements for the six month period ended June 30, 2017 – Relief granted, subject to condition that the listing statement contains the alternative financial statements and that the listing statement is filed on SEDAR following acceptance by the Canadian Securities Exchange.

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Obligations, s. 4.10(2)(a)(ii).

Form 51-102F3 Material Change Report, Item 5.2.

December 29, 2017

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the Jurisdiction)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

ADIRA ENERGY LTD.

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Applicant for a decision under the securities legislation (the Legislation) of the Jurisdiction for an exemption from the requirements in subparagraph 4.10(2)(a)(ii) of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) and item 5.2 of Form 51-102F3 Material Change Report (Form 51-102F3) to file audited annual financial statements for each of the two most recently completed financial years for the Target (as defined below) (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) The Ontario Securities Commission is the principal regulator for this application (the Principal Regulator), and

(b) The Applicant has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Alberta and British Columbia (together with Ontario, the Reporting Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meanings if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Applicant:

Adira

1. The Applicant was incorporated under the Canada Business Corporations Act on February 20, 1997 and has a financial year end of December 31.

2. The head office of the Applicant is located at 4101 Yonge Street, Suite 706, Toronto Ontario, M2P 1N6.

3. The Applicant is a reporting issuer in the provinces of British Columbia, Alberta and Ontario.

4. The common shares of the Applicant are currently listed for trading (with a current trade halt on the Applicant’s common shares as of November 5, 2015 pending the completion of the Transaction (as defined below)) on the TSX Venture Exchange.

5. The Applicant is a reporting issuer under the Legislation in each of the Reporting Jurisdictions and is not in default of securities legislation in any jurisdiction.

Adira’s Transaction with S.M.A.A.R.T. Holdings Inc.

6. The Applicant has entered into a letter of intent with S.M.A.A.R.T. Holdings Inc. (the Target) pur-suant to which, among other things, the Target will conduct a reverse take-over of the Applicant (the Transaction) and the Applicant will list on the Canadian Securities Exchange (CSE).

7. The Target was incorporated under the Business Corporations Act (British Columbia) on April 28, 2015 with a financial year end of December 31, is a privately held company and is not a reporting issuer in any jurisdiction in Canada. The Target is not in default of securities legislation in any jurisdiction.

8. The Target operates a national network of physician-staffed medical cannabis clinics operating under the name Empower Clinics (Empower). In addition to the clinic business, Empower also expects to garner royalties from the sale of proprietary medical cannabis products manufactured, dispensed, and delivered by third party channel partners.

9. In accordance with the CSE’s Form 2A (the Listing Statement), financial statement disclosure concerning the Target will be in accordance with National Instrument 41-101 General Prospectus Requirements (NI 41-101), which states that issuers like the Target are required to include two years of audited financial statements (similar to what is required for an IPO venture issuer).

10. As a result of an acquisition undertaken by the Target, it is unable to access the proper accounting records in order to prepare consoli-dated financial statements for the period prior to July 1, 2015. This is due to being unable to receive the proper authority to prepare and include same from the previous owner of certain of the Target’s subsidiaries. Litigation has failed to resolve this issue and continues to be ongoing. The resulting lack of records and consent would result in the Applicant being unable to provide the mandated financial statements for the Target in both the Listing Statement and the applicable material change report to be filed in accordance with NI 51-102.

11. In addition to applying to the Principal Regulator for the Exemption Sought, the Applicant will also apply to the CSE for a waiver from the equivalent financial statement requirements in the Listing Statement.

Historical Financial Statements

12. In accordance the requirements of the CSE as outlined in the Listing Statement, financial statement disclosure for the Applicant will include the following (the Applicant Financial State-ments):

(a) audited annual financial statements of the Applicant for the years ended December 31, 2016 and December 31, 2015; and

(b) unaudited interim financial statements of the Applicant for the nine-month period ended September 30, 2017 (with comparatives).

13. Subsection 4.10(2)(a) of NI 51-102 provides that if a reporting issuer completes a reverse takeover, it must file the following financial statements for the reverse takeover acquirer, unless the financial statements have already been filed:

(a) financial statements for all annual and interim periods ending before the date of the reverse takeover and after the date of the financial statements included in an information circular or similar document, or under item 5.2 of the Form 51-102F3 Material Change Report, prepared in connection with the transaction; or

(b) if the reporting issuer did not file a document referred to in subparagraph (i), or the document does not include the financial statements for the reverse takeover acquirer that would be required to be included in a prospectus, the financial statements prescribed under securities legislation and described in the form of prospectus that the reverse takeover acquirer was eligible to use prior to the reverse takeover for a distri-bution of securities in the jurisdiction.

14. Item 5.2 of Form 51-102F3 requires a material change report filed in respect of a closing of the Transaction to include, for each entity that results from the Transaction, disclosure (including financial statements) prescribed under securities legislation and described in the form of prospectus that the entity would be eligible to use.

15. The financial statement requirements for a prospectus are found in NI 41-101 and Form 41-101F1 Information Required in a Prospectus (Form 41-101F1). Item 32.1 (as modified by Item 32.4) of Form 41-101F1 includes the following requirements:

The financial statements of an issuer required under this item to be included in a prospectus must include:

(a) the financial statements of any prede-cessor entity that formed, or will form, the basis of the business of the issuer, even though the predecessor entity is, or may have been, a different legal entity, if the issuer has not existed for two years, and

(b) the financial statements of a business or businesses acquired by the issuer within two years before the date of the prospectus or proposed to be acquired, if a reasonable investor reading the pros-pectus would regard the primary business of the issuer to be the business or businesses acquired, or proposed to be acquired, by the issuer.

16. Subsection 5.3(1) of the Companion Policy to NI 41-101 notes that a reverse takeover such as the Transaction is an example of when a reasonable investor might regard the primary business of the issuer to be the acquired business.

17. Absent the Exemption Sought, the Applicant will be required to file audited financial statements for the Target in accordance with item 32.2 of Form 41-101F1 including, inter alia, a statement of comprehensive income, a statement of changes in equity and a statement of cash flows for the Target that includes periods prior to July 1, 2015.

18. In lieu of the financial statements specified in paragraph 17 above, the Applicant will include in the Listing Statement the following financial statements in respect of the Target (the Target Financial Statements):

(a) audited consolidated financial statements of the Target for the six-month period ended December 31, 2015;

(b) audited annual consolidated financial statements of the Target for the year ended December 31, 2016; and

(d) unaudited interim financial statements for the Target for the nine-month period ended September 30, 2017.

19. The Applicant Financial Statements and the Target Financial Statements, together with the other disclosure prescribed by the Listing Statement, will provide disclosure of all material facts relating to the Applicant following the completion of the Transaction, and the Target, and will contain sufficient information to permit investors to make a reasoned assessment of the Applicant's business following completion of the Transaction.

Decision

The Principal Regulator is satisfied that the decision meets the test set out in the Legislation for the Principal Regulator to make the decision.

The decision of the Principal Regulator under the Legislation is that the Exemption Sought is granted provided that:

1. the Listing Statement includes the Target Financial Statements; and

2. the Listing Statement is filed on SEDAR forthwith following acceptance by the CSE.

“Sonny Randhawa”

Deputy Director, Corporate Finance Branch

Ontario Securities Commission